1
PGS-10/12/98 - Option Agreement
EXHIBIT 4.2
-----------
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 ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("LVDGT"), and
ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi Enterprises,
Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("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
-1-
2
PGS-10/12/98 - Option Agreement
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
-2-
3
PGS-10/12/98 - Option Agreement
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 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.
-3-
4
PGS-10/12/98 - Option Agreement
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
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,
-4-
5
PGS-10/12/98 - Option Agreement
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 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
-5-
6
PGS-10/12/98 - Option Agreement
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
-6-
7
PGS-10/12/98 - Option Agreement
of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent 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 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
-7-
8
PGS-10/12/98 - Option Agreement
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;
(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
-8-
9
PGS-10/12/98 - Option Agreement
(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.
-9-
10
PGS-10/12/98 - Option Agreement
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, 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.
-10-
11
PGS-10/12/98 - Option Agreement
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 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
-11-
12
PGS-10/12/98 - Option Agreement
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.
(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
-12-
13
PGS-10/12/98 - Option Agreement
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
-13-
14
PGS-10/12/98 - Option Agreement
recognized national standing (which may be the regular auditors of LVDGT), which
shall give their opinion upon the 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.
-14-
15
PGS-10/12/98 - Option Agreement
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:
If to LVDGT: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
If to ASIG: c/o Agassi Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: International Merchandising Corporation
IMG Center, Suite 100
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
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
-15-
16
PGS-10/12/98 - Option Agreement
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.
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/ ▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------- --------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Title: President Title: President
-16-
