OPTION AGREEMENT
OPTION AGREEMENT, effective as of October 19, 1998, by and between LAS
VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation with offices at
0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxxx 00, Xxx Xxxxx, Xxxxxx 00000 ("LVDGT"),
and ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi
Enterprises, Inc., 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000 ("ASIG"):
W I T N E S S E T H :
WHEREAS, ASIG and LVDGT are entering into an investment agreement (the
"Investment Agreement") simultaneously herewith which Investment Agreement
provides for the purchase by ASIG of certain capital stock of LVDGT. All
terms used but not defined herein shall have the meanings ascribed to them in
the Investment Agreement.
WHEREAS, to induce ASIG to enter into the Investment Agreement, ASIG is
hereby granted options to purchase Shares (as defined herein) on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, ASIG and LVDGT hereby agree
as follows:
SECTION 1. Definitions.
For purposes of this Agreement, the following capitalized terms shall
have the respective meanings indicated below.
"Act" shall mean the Securities Act of 1933, as it may be amended.
"Additional Shares" shall mean all Shares (including treasury Shares)
issued or sold (or, deemed to be issued) by LVDGT after the date hereof,
whether or not subsequently reacquired or retired by LVDGT.
"Affiliate" shall mean any Person which, directly or indirectly,
controls, is controlled by or is under common control with the relevant Person
and, if such Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust
whose principal beneficiary is such individual, or one or more members of such
immediate family or any Person who is controlled by any such member or trust.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean a member of the board of directors, a
partner or an officer of such Person, or any other Person having, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee, by
voting agreement or by proxy) of voting securities or similar equity
interests, by contract or otherwise. Any Person owning or controlling
directly or indirectly 10% or more of the voting securities or similar equity
interests of another Person shall be deemed to be an Affiliate of such person.
"Business Day" shall mean any other than a Saturday or a Sunday or a day
on which commercial banking institutions in the City of New York are
authorized by law or other governmental action to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar days.
"Convertible Securities" shall mean any evidence of indebtedness, shares
of stock (other than Shares) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares.
"Current Market Price" shall mean on any date specified herein, the
average daily Market Price during the period of the most recent 20 days,
ending on such date, on which the national securities exchanges were open for
trading, except that if no Shares are then listed or admitted to trading on
any national securities exchange or quoted in the over-the-counter market, the
Current Market Price shall be the Market Price on such date.
"Employee Options" shall mean options (other than the Option) to
subscribe for, purchase or otherwise acquire Additional Shares at an exercise
price equal to no less than the Current Market Price on the date of issuance
of such options, which options are issued to bona-fide employees of or
consultants to LVDGT (other than members of the Boreta family) pursuant to a
stock option plan adopted by the Board of Directors of LVDGT.
"Employee Shares" shall mean Additional Shares issued upon exercise of an
Employee Option.
"Market Price" shall mean on any date specified herein, the amount per
share of the Shares, equal to (a) the last sale price of such Shares, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which
such Shares is then listed or admitted to trading, or (b) if such Shares are
not then listed or admitted to trading on any national securities exchange but
it designated as a national market system security by the NASD, the last
trading price of the Shares on such date, or (c) if there shall have been not
trading on such date or if the Shares are not so designated, the average of
the closing bid and asked prices of the Shares on such date as shown by the
NASD automated quotation system, or (d) if such Shares are not then listed or
admitted to trading on any national exchange or quoted in the over-the-counter
market, the higher of (x) the book value thereof as determined by any firm of
independent public accountants of recognized standing selected by the Board of
Directors of LVDGT as of the last day of any month ending with 60 days
preceding the date as of which the determination is to be made or (y) the fair
value thereof determined in good faith by the Board of Directors of LVDGT as
of a date which is within 180 days of the date as of which the determination
is to be made.
"NASD" shall mean The National Association of Securities Dealers, Inc.
"Option" shall mean the right of ASIG to purchase, at ASIG's election, in
accordance with the terms of this Agreement, a number of Shares up to the
Option Number, upon payment of the aggregate Option Price for the number of
Shares so purchased, subject to adjustment as provided herein.
"Option Number" shall mean 347,975 Shares, as such number may be adjusted
as provided herein.
"Option Price" shall be, on a per Share basis, $1.8392. The Option Price
shall be adjusted and readjusted from time to time as provided herein and, as
so adjusted or readjusted, shall remain in effect until a further adjustment
or readjustment thereof is required hereby. In the event of a Shares
dividend, Shares split, or combination of Shares which results in a
proportionate increase or decrease in the number of Shares, the Option Price
then in effect shall be decreased (in the case of a proportionate increase in
Shares outstanding) or increased (in the case of a proportionate decrease in
Shares outstanding) in the same proportion. In the event of a
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recapitalization, reorganization, consolidation, merger or similar transaction
where Shares are changed into or exchanged for a different number of Shares or
different capital stock or other securities, the Option Price then in effect
shall apply to so much of the different shares of capital stock or other
securities as are received with respect to each Share so changed or exchanged.
ASIG shall be given prompt written notice of any such event, which notice
shall include in reasonable detail the calculation of any adjustments to the
Option Price.
"Other Options" shall mean rights or options (other than the Option) to
subscribe for, purchase or otherwise acquire either Additional Shares or
Convertible Securities.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Shares" shall mean the shares of the common stock of LVDGT, no par
value, outstanding at any time.
SECTION 2. Options.
2.1 Grant of Option. LVDGT hereby grants to ASIG the Option, which is
immediately exercisable. The Option may be exercised in full or in any number
of partial exercises at any time or times at or prior to the tenth anniversary
hereof.
2.2 Exercise of Option. An Option may be exercised in whole or in part
by ASIG by serving written notice (the "Option Notice") upon LVDGT specifying
the number of Shares then to be purchased. An Option shall be exercisable at
a purchase price equal to the product of the number of Shares to be purchased
multiplied by the Option Price then in effect. The closing for each such
purchase shall be held at the offices of LVDGT on a day not later than 30
Business Days after the date of the Option Notice. At the closing, LVDGT
shall deliver to ASIG, against payment of the purchase price specified in this
Section 2.2, certificates for the Shares purchased, free and clear of all
pledges, options, claims, liens, security interests and encumbrances of any
kind, other than the requirements of federal and state securities laws
respecting limitations on the subsequent transfer thereof, which certificates
shall be duly endorsed in blank or with appropriate duly executed blank stock
transfer powers attached, with signatures guaranteed by a commercial bank or
trust company or a member firm of a national securities exchange and with all
requisite stock transfer tax stamps attached or provided for.
SECTION 3. Adjustment of Shares Issuable Upon Exercise.
3.1 General; Option Price. The number of Shares which ASIG shall be
entitled to receive upon each exercise of the Option shall be determined by
multiplying the number of Shares which would otherwise (but for the provisions
of this Section) be issuable upon such exercise, as designated by ASIG, by the
fraction of which (a) the numerator is the Option Price in effect on the date
hereof and (b) the denominator is the Option Price in effect on the date of
such exercise.
3.2 Adjustment of Option Price.
3.2.1 Issuance of Additional Shares. In case LVDGT at any time or
from time to time after the date hereof shall issue or sell Additional Shares
(including Additional Shares deemed to be issued pursuant hereto) without
consideration or for a consideration per Share less than the greater of the
Current Market Price and the Option Price in effect immediately prior to such
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issue or sale, then, and in each such case, subject to Section 3.7, such
Option Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying
such Option Price by a fraction
(a) the numerator of which shall be (i) the number of Shares
outstanding immediately prior to such issue or sale plus (ii) the number of
Shares which the aggregate consideration received by LVDGT for the total
number of such Additional Shares so issued or sold would purchase at the
greater of such Current Market Price and such Option Price, and
(b) the denominator of which shall be the number of Shares
outstanding immediately after such issue or sale,
provided that, for the purposes of this subsection, (x) immediately after any
Additional Shares are deemed to have been issued pursuant to Section 3.3 or
3.4, such Additional Shares shall be deemed to be outstanding and (y) treasury
shares shall not be deemed to be outstanding.
3.2.2 Extraordinary Dividends and Distributions. In case LVDGT at
any time or from time to time after the date hereof shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Other Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Shares, other than
(a) a dividend payable in Additional Shares or (b) a regular periodic cash
dividend at a rate not in excess of 110% of the rate of the last regular
periodic cash dividend theretofore paid, then, and in each such case, subject
to Section 3.7, the Option Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any
class of securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Option Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, in the Shares trade on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, less the amount
of such dividend or distribution (as determined in good faith by the Board of
Directors of LVDGT) applicable to one Share, and
(y) the denominator of which shall be such Current Market
Price,
provided that, in the event that the amount of such dividend as so determined
is equal to or greater than 50% of such Current Market Price or in the event
that such fraction is less than 1/2, in lieu of the foregoing adjustment,
adequate provision shall be made so that ASIG shall receive a pro rata share
of such dividend based upon the maximum number of shares at the time issuable
to ASIG (determined without regard to whether the Option is exercisable at
such time).
3.3 Treatment of Other Options and Convertible Securities. In case
LVDGT at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to received, any Other Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares (as set forth in the instrument relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Other Options or, in the case of
Convertible Securities and Other Options therefor, the conversion or exchange
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of such Convertible Securities, shall be deemed to be Additional Shares issued
as of the time of such issue, sale, grant or assumption or, in case such a
record date shall have been fixed, as of the close of business on such record
date (or, if the Shares trade on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading), provided that such Additional Shares
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 3.5) of such Shares would be less than the
greater of the Current Market Price and the Option Price in effect on the date
of and immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, in the
Shares trade on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be, and provided, further, that in any
such case in which Additional Shares are deemed to be issued
(a) no further adjustment of the Option Price shall be made
upon the subsequent issue or sale of Convertible Securities or Shares upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, except in the case of any such Other Options or Convertible
Securities which contain provisions requiring an adjustment, subsequent to the
date of the issue or sale thereof, of the number of Additional Shares issuable
upon the exercise of such Other Options or the conversion or exchange of such
Convertible Securities by reason of (x) a change of control of LVDGT, (y) the
acquisition by any Person or group of Persons of any specified number of
percentage of the voting securities of LVDGT or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a separate
issuance of Additional Shares, Other Options or Convertible Securities, as the
case may be;
(b) if such Other Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to LVDGT, or decrease in the number of Additional Shares
issuable, upon the exercise, conversion or exchange thereof (by change of rate
or otherwise), the Option Price computed upon the original issue, sale, grant
or assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible Securities, which are
outstanding at such time;
(c) upon the expiration (or purchase by LVDGT and cancellation
or retirement) of any such Other Options which shall not have been exercised
or the expiration of any rights of conversion or exchange under any such
Convertible Securities which (or purchase by LVDGT and cancellation or
retirement of any such Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised, the Option Price computed
upon the original issue, sale, grant or assumption thereof (or upon the
occurrence of the records date, or date prior to the commencement of ex-
dividend trading, as the case may be, with respect thereto), and any sub
sequent adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Other Options for Shares or
Convertible Securities, the only Additional Shares issued or sold were the
Additional Shares, if any, actually issued or sold upon the exercise of such
Other Options or the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration actually received by
LVDGT for the issue, sale, grant or assumption of all such Other Options,
whether or not exercised, plus the consideration actually received by LVDGT
upon such exercise, or the issue or sale of all such Convertible Securities
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which were actually converted or exchanged, plus the additional consideration,
if any, actually received by LVDGT upon such conversion or exchange (less the
consideration, if any, actually paid by LVDGT to purchase all such Other
Options), and
(ii) in the case of Other Options for Convertible
Securities, only the Convertible Securities, if any, actually issued or sold
upon the exercise of such Other Options were issued at the time of the issue,
sale, grant or assumption of such Other Options, and the consideration
received by LVDGT for the Additional Shares deemed to have then been issued
was the consideration actually received by LVDGT for the issue, sale, grant or
assumption of all such Other Options, whether or not exercised, plus the
consideration deemed to have been received by LVDGT (pursuant to Section 3.5)
upon the issue or sale of such Convertible Securities with respect to which
such Other Options were actually exercised (less the consideration, if any,
actually paid by LVDGT to purchase all such Other Options);
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Option Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the issue,
sale, grant or assumption of such Other Options or Convertible Securities; and
(e) in the case of any such Other Options which expire by
their terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Option Price shall be made until the
expiration or exercise of all such Other Options, whereupon such adjustment
shall be made in the manner provided in subdivision (c) above.
3.4 Treatment of Share Dividends, Share Splits, Etc. In case LVDGT at
any time or from time to time after the date hereof shall declare or pay any
dividend on the Shares payable in Shares, or shall effect a subdivision of the
outstanding Shares into a greater number of Shares (by reclassification or
otherwise than by payment of a dividend in Shares), then, and in each such
case, Additional Shares shall be deemed to have been issued (a) in the case of
any such dividend, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at the
close of business on the day immediately prior to the day upon which such
corporate action becomes effective.
3.5 Computation of Consideration. For the purposes of this Section,
(a) the consideration for the issue or sale of any Additional
Shares shall, irrespective of the accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at the
net amount of cash received by LVDGT, without deducting any expenses paid or
incurred by LVDGT or any commissions or compensations paid or concessions or
discounts allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value thereof at the time
of such issue or sale, as determined in good faith by the Board of Directors
of LVDGT, and
(iii) in case Additional Shares are issued or sold
together with other stock or securities or other assets of LVDGT for a
consideration which covers both, be the portion of such consideration so
received, computed as provided in clauses (i) and (ii) above, allocable to
such Additional Shares, all as determined in good faith by the Board of
Directors of LVDGT;
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(b) Additional Shares deemed to have been issued pursuant to
Section 3.3, relating to Other Options and Convertible Securities, shall be
deemed to have been issued for a consideration per share determined by
dividing
(i) the total amount, if any, received and receivable by
LVDGT as consideration for the issue, sale, grant or assumption of the Other
Options or Convertible Securities in question, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration to protect against dilution) payable to LVDGT
upon the exercise in full of such Other Options or the conversion or exchange
of such Convertible Securities or, in the case of Other Options for
Convertible Securities, the exercise of such Other Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, in
each case computing such consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of Shares (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Other Options or the conversion
or exchange of such Convertible Securities; and
(c) Additional Shares deemed to have been issued pursuant to
Section 3.4, relating to stock dividends, stock splits, etc., shall be deemed
to have been issue for no consideration.
3.6 Adjustments for Combinations, Etc. In case the outstanding Shares
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of Shares, the Option Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
3.7 Minimum Adjustment of Option Price. If the amount of any adjustment
of the Option Price required pursuant to this Section would be less than one
percent (1%) of the Option Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent (1%) of such
Option Price.
3.8 Employee Options; Employee Shares. Notwithstanding anything to the
contrary contained herein, no adjustment to the Option Price shall be required
to be made hereunder with respect to the grant or exercise of Employee Options
or the issuance of Employee Shares.
4. Consolidation, Merger, Etc.
4.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, Etc. In case LVDGT after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into LVDGT and
LVDGT shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Shares shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property,
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or (c) shall transfer all or substantially all of its properties or assets to
any other Person, or (d) shall effect a capital reorganization or
reclassification of the Shares (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares for which
adjustment in the Option Price is provided herein), then, and in the case of
each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Option, ASIG, upon the
exercise hereof at any time after the consummation of such transaction, shall
be entitled to receive (at the aggregate Option Price in effect at the time of
such consummation for all Shares issuable upon such exercise immediately prior
to such consummation), in lieu of the Shares issuable upon such exercise prior
to such consummation, the highest amount of securities, cash or other property
to which such holder would actually have been entitled as a shareholder upon
such consummation if such holder had exercised the rights represented by this
Option immediately prior thereto (determined without regard to whether the
Option is exercisable at such time).
4.2 Assumption of Obligations. Notwithstanding anything contained
in this Option to the contrary, LVDGT will not effect any of the transactions
described in subdivision (a) through (d) of Section 4.1 unless, prior to the
consummation thereof, each Person (other than LVDGT) which may be required to
deliver any stock, securities, cash or property upon the exercise of this
Option as provided herein shall assume, by written instrument delivered to,
and reasonably satisfactory to, the holder of this Option, (a) the obligations
of LVDGT under this Option (and if LVDGT shall survive the consummation of
such transaction, such assumption shall be in addition to, and shall not
release LVDGT from, any continuing obligations of LVDGT under this Option),
and (b) the obligation to deliver to such holder such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions
of this Section 4, such holder may be entitled to receive, and such Person
shall have similarly delivered to such holder an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to such holder, stating
that this Option shall thereafter continue in full force and effect and the
terms hereof (including, without limitation, all of the provisions of this
Section 4) shall be applicable to the stock, securities, cash or property
which such Person may be required to deliver upon any exercise of this Option
or the exercise of any rights pursuant hereto.
SECTION 5. Representations, Warranties and Covenants of LVDGT.
LVDGT jointly and severally represents, warrants and covenants to ASIG as
follows:
(a) Organization and Qualification. LVDGT is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado.
(b) Authority Relative to this Agreement. LVDGT has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated thereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
actions and no other proceedings on the part of LVDGT or its respective
stockholders are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by LVDGT, and (assuming this Agreement is the valid and binding
obligation of ASIG) constitutes a valid and binding agreement of LVDGT,
enforceable against LVDGT in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to
8
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(c) No Violation. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
and thereby will not (i) constitute a breach or violation of or default under
the Certificate of Incorporation or the By-laws of LVDGT or (ii) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties or assets
of LVDGT under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which LVDGT is a party or to which LVDGT or any of
its properties or assets may be subject, other than, in the case of clause
(ii), such events that would not, either individually or in the aggregate,
prevent or delay the consummation of the transactions contemplated hereby.
The (i) execution, delivery and performance of this Agreement by LVDGT will
not require the consent or approval of any other party, and (ii) the
execution, delivery and performance by LVDGT of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach or violation of or default under any law, rule or regulation or any
judgment, decree, order, governmental permit or license to which LVDGT is
subject. To the knowledge of LVDGT, no challenges to the validity or
effectiveness of this Agreement, or any other agreement or instrument
necessary to consummate the transactions contemplated hereby, have been made
by any governmental authority or other person.
(d) Ownership of Shares. Upon payment of the Option Price,
ASIG will acquire, good and valid title to the Shares received, free and clear
of any lien, charge, encumbrance, security interest, claim or right of others
of whatever nature other than the requirements of the federal and state
securities laws respecting limitations on the subsequent transfer thereof, and
shall be free or preemptive rights.
SECTION 6. Representations, Warranties and Covenants of ASIG.
ASIG hereby represents, warrants and covenants:
(a) That ASIG, either individually or together with ASIG's
advisers, has knowledge and experience in financial and business matters; is
familiar with all of the financial and other features of LVDGT; is capable of
evaluating the merits and risks of an investment in LVDGT; and is able to bear
the economic risk of an investment in the Option and, upon exercise of the
Option, the Shares.
(b) That AEI's acquisition of the Option and in the event of
the exercise thereof, the Shares is based upon and will be based upon ASIG's
independent evaluation of the long-term prospects of LVDGT, and that ASIG has
been furnished with such financial and other information as it has requested
concerning LVDGT.
(c) That ASIG is acquiring the Option and will acquire the
Shares which may be transferred to ASIG upon the exercise of the Option for
ASIG's own account, for investment purposes only, and not with a view to the
resale, transfer or other disposition thereof.
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(d) That ASIG will not offer, sell, hypothecate, transfer or
otherwise dispose of the Option or any of the Shares, as the case may be,
unless:
(i) A registration statement covering such of the Shares
which are to be so transferred has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
such sale, transfer or other disposition is accompanied by a prospectus
relating to a registration statement which is in effect under the Act covering
such of the Shares which are to be sold, transferred or otherwise disposed of
and meeting the requirements of Section 10 of the Act; or
(ii) Counsel satisfactory to LVDGT renders an opinion in
writing and addressed to LVDGT, reasonably satisfactory in form and substance
to LVDGT, that in the opinion of such counsel, registration under the Act or
the Exchange Act is not required in order to effect such proposed transaction
SECTION 7. Reservation of Shares, Etc.
LVDGT will at all times reserve and keep available, solely for issuance
and delivery upon exercise of the Option the number of Shares from time to
time issuable upon full exercise of the Option. All Shares issuable upon
exercise of the Option at any time shall be duly authorized and, when issued
upon such exercise, shall be validly issued and fully paid and nonassessable
with no liability on the part of ASIG.
SECTION 8. No Dilution or Impairment.
LVDGT will not by amendment of its organizational documents or through
any consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Option, but
will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the holder of this Option against dilution or
other impairment. Without limiting the generality of the foregoing, LVDGT (a)
will not permit the par value of any Shares receivable upon the exercise of
this Option to exceed the amount payable therefor upon such exercise, (b) will
take all such action as may be necessary or appropriate in order that LVDGT
may validly and legally issue fully paid and non-assessable Shares on the
exercise of the Option from time to time, (c) will not take any action which
results in any adjustment of the Option Price if the total number of Shares
issuable after the action upon full exercise of the Option would exceed the
total number of Shares then authorized by LVDGT's certificate of incorporation
and available for the purpose of issue upon such exercise, and (d) will not
issue any capital stock of any class which is preferred as to dividends or as
to the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage of par value or a sum determined by
reference to a formula based on a published index of interest rates, an
interest rate publicly announced by a financial institution or a similar
indicator of interest rates in respect of participation in dividends and to a
fixed sum or percentage of par value in any such distribution of assets. In
case any event shall occur as to which any of the provisions of this Option
are not strictly applicable but the failure to make any adjustment would not
fairly protect the purchase rights represented by this Option in accordance
with the essential intent and principles contained herein, then, in each such
case, LVDGT shall, at its sole cost and expense, appoint a firm of independent
certified public accountants of recognized national standing (which may be the
regular auditors of LVDGT), which shall give their opinion upon the
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adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve, without dilution, the
purchase rights represented by this Option. Upon receipt of such opinion,
LVDGT will promptly mail a copy thereof to the holder of this Option and shall
make the adjustments described therein.
SECTION 9. Registration.
9.1 Issuance of Shares. If any Shares required to be reserved for
purposes of exercise of this Option require registration with or approval of
any governmental authority under any federal or state law (other than the Act)
before such Shares may be issued upon exercise, LVDGT will, at its expense and
as expeditiously as possible, cause such Shares to be duly registered or
approved, as the case may be. At any such time as Shares are listed on any
national securities exchange, LVDGT will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice
of issuance, the Shares issuable upon exercise of the then outstanding portion
of the Option and maintain the listing of such Shares after their issuance;
and LVDGT will also list on such national securities exchange, will register
under the Securities Exchange Act of 1934 and will maintain such listing of,
any other securities that at any time are issuable upon exercise of the
Option, if and at the time that any securities of the same class shall be
listed on such national securities exchange by LVDGT.
9.2 Registrable Securities. The Shares issued upon exercise of the
Option shall be considered "Registrable Securities" pursuant to and under the
Investment Agreement and the holders of such Shares shall have all the rights
and privileges of holders of Registrable Securities as set forth in the
Investment Agreement, which is incorporated herein by reference.
SECTION 10. Specific Performance; Remedies.
The parties acknowledge and agree that irreparable damage will result to
ASIG in the event that this Agreement is not specifically enforced.
Therefore, the rights to, or obligations of, purchase and sale of the Shares
hereunder shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies
and all other remedies provided for in this Agreement or available at law or
in equity shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which either party may have under this
Agreement or otherwise.
SECTION 11. Severability.
If any provisions of this Agreement shall, for any reason, be adjudged by
any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the provision of this
Agreement directly involved in the controversy in which such judgment shall
have been rendered.
SECTION 12. Notices.
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if mailed by first
class, registered mail, return receipt required, postage and registry fees
prepaid, and addressed as follows:
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If to LVDGT: 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx
Xxxxx 00
Xxx Xxxxx, Xxxxxx 00000
If to ASIG: c/o Agassi Enterprises, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
with a copy to: International Merchandising Corporation
IMG Center, Suite 100
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxx
Either party by notice in writing mailed to the other party may change the
name and address to which notices, requests, demands and other communications
shall be mailed.
SECTION 13. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to any conflict of law principles
that might require the application of the laws of another jurisdiction.
SECTION 14. Arbitration.
The parties agree to submit to arbitration any dispute related to this
Agreement and agree that the arbitration process shall be the exclusive means
for resolving disputes which the parties cannot resolve. Any arbitration
hereunder shall be conducted under the Dispute Resolution Rules of the
American Arbitration Association ("AAA") as modified herein. Arbitration
proceedings shall take place in Las Vegas, Nevada, before a single arbitrator
who shall be a lawyer. All arbitration proceedings shall be confidential.
Neither party shall disclose any information about the evidence produced by
the other party in the arbitration proceedings, except in the course of
judicial, regulatory, or arbitration proceeding, or as may be demanded by
government authority. Before making any disclosure permitted by the preceding
sentence, a party shall give the other party reasonable advance written notice
of the intended disclosure and an opportunity to prevent disclosure. Each
party shall have the right to take the deposition of one individual and any
expert witness designated by the other party. Additional discovery may be had
only where the arbitrator so orders, upon a showing of substantial need. Only
evidence that is directly relevant to the issues may be obtained in discovery.
Each party bears the burden of persuasion of any claim or counterclaim raised
by that party. The arbitration provisions of this Agreement shall not prevent
any party from obtaining injunctive relief from a court of competent
jurisdiction to enforce the obligations for which such party may obtain
provisional relief pending a decision on the merits by the arbitrator. Each
of the parties hereby consents to the jurisdiction of Nevada courts for such
purpose. The arbitrator shall have authority to award any remedy or relief
that a court of the State of Nevada could grant in conformity to applicable
law, except that the arbitrator shall have no authority to award attorneys'
fees or punitive damages. Any arbitration award shall be accompanied by a
written statement containing a summary of the issues in controversy, a
description of the award, and an explanation of the reasons for the award.
The arbitrator's award shall be final and judgment may be entered upon such
award by any court.
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SECTION 15. Amendments, Etc.
This Agreement may not be modified or amended, and no provision hereof
may be waived, except by an instrument in writing signed by the parties
hereto.
SECTION 16. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, and permitted
assigns and transferees. No party hereto may assign their rights and
obligations hereunder without the prior written consent of the other party
hereto; except that ASIG may, after providing LVDGT with written notice,
transfer and assign its rights under this Agreement to any member of ASIG, any
other entity wholly owned by any such member or to one or more trusts for such
member's estate planning purposes.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. ASI GROUP, L.L.C.
By: Sunbelt Communications Company,
a Member
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxx Xxxx Xxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx Xxxx Xxxxxx
Title: President Title: President
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