CO-SALE AGREEMENT
This Co-Sale Agreement is made as of the 19th day of October, 1998 by and
among LAS VEGAS DISCOUNT GOLF & TENNIS INC. (the "Company"), a Colorado
corporation, XXX XXXXXX, XXXX XXXXXX and XXXX XXXXXX (collectively the
"Boretas") and BORETA ENTERPRISES LTD. (the "Family Company"; the Family
Company and the Boretas are each a "Significant Shareholder," and collectively
are the "Significant Shareholders") and ASI GROUP, L.L.C., a Nevada limited
liability company ("ASI").
In consideration of the mutual covenants set forth herein, the parties
agree as follows:
1. Definitions.
(a) "Stock" shall mean shares of the Company's Common and Preferred
Stock now owned beneficially or of record or subsequently acquired
beneficially or of record directly or indirectly by the Significant
Shareholders.
(b) "Preferred Stock" shall mean the Company's or LVDG&T's outstanding
Preferred Stock of any series or designation.
(c) "Common Stock" shall mean the Company's Common Stock and shares of
Common Stock issued or issuable upon conversion of the Company's Preferred
Stock.
2. Sale by Significant Shareholders.
(a) On each occasion that any Significant Shareholder proposes to sell
or transfer to any person any shares of Stock in one or more related
transactions, such Significant Shareholder shall promptly give written notice
(the "Notice") to ASI at least twenty (20) days prior to the closing of such
sale or transfer. The Notice shall describe in reasonable detail the proposed
sale or transfer including, without limitation, the number of shares of Stock
to be sold or transferred, the nature of such sale or transfer, the considera
tion to be paid, and the name and address of each prospective purchaser or
transferee. In the event that the sale or transfer is being made pursuant to
the provisions of Section 3(a) or 3(b) hereof, the Notice shall state under
which Section the sale or transfer is being made.
(b) ASI shall have the right, exercisable upon written notice to such
Significant Shareholder within fifteen (15) days after receipt of the Notice,
to participate in such sale of Stock on the same terms and conditions. To the
extent ASI exercises such right of participation in accordance with the terms
and conditions set forth below, the number of shares of Stock that the
Significant Shareholder may sell in the transaction shall be correspondingly
reduced.
(c) ASI may sell all or any part of that number of shares of Common
Stock equal to the product obtained by multiplying (i) the aggregate number of
shares of Stock covered by the Notice by (ii) a fraction the a numerator of
which is the number of shares of Common Stock owned by ASI at the time of the
sale or transfer and the denominator of which is the total number of shares of
Common Stock owned by the Significant Shareholders and ASI at the time of the
sale or transfer.
(d) ASI shall effect its participation in the sale by promptly
delivering to the Significant Shareholders for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent:
(i) the type and number of shares of Common Stock which ASI elects
to sell; or
(ii) that number of shares of Series B Convertible Preferred Stock
which is at such time convertible into the number of shares of Common Stock
which ASI elects to sell; provided, however, that if the prospective purchaser
objects to the delivery of Series B Convertible Preferred Stock in lieu of
Common Stock, ASI shall convert such Preferred Stock into Common Stock and
deliver Common Stock as provided in Section 2(d)(i) above. The Company agrees
to make any such conversion concurrent with the actual transfer of such shares
to the purchaser.
(e) The Stock certificate or certificates that ASI delivers to the
Significant Shareholders pursuant to Section 2(d) shall be transferred to the
prospective purchaser in consummation of the sale of the Common Stock pursuant
to the terms and conditions specified in the Notice, and the Significant
Shareholders shall concurrently therewith remit to ASI that portion of the
sale proceeds to which ASI is entitled by reason of its participation in such
sale. To the extent that any prospective purchaser or purchasers prohibits
such assignment or otherwise refuses to purchase shares or other securities
from ASI, the Significant Shareholders shall not sell to such prospective
purchaser or purchasers any Stock unless and until, simultaneously with such
sale, the Significant Shareholders shall purchase such shares or other
securities from ASI.
(f) The exercise or non-exercise of the rights of ASI hereunder to
participate in one or more sales of Stock made by the Significant Shareholders
shall to adversely affect its rights to participate in subsequent sales of
Stock subject to Section 2(a).
3. Exempt Transfers.
Notwithstanding the foregoing, the co-sale rights of ASI shall not apply to
(a) any pledge of Stock made pursuant to a bona fide third party loan
transaction with a party not affiliated with or a stockholder of any
significant shareholder that creates a mere security interest; (b) any
transfer to the ancestors, descendants or spouse or to trusts for the benefit
of such persons or a Significant Shareholder; (c) any bona fide gift; or (d)
any sale or sales of not more than 25,000 shares of Common Stock individually
or in the aggregate during the term hereof (as adjusted for stock splits,
reverse stock splits and the like effected after the date of this Agreement);
provided that (i) the transferring Shareholder shall inform ASI of such
pledge, transfer or gift prior to effecting it and (ii) the pledgee,
transferee or donee shall furnish ASI with a written agreement to be bound by
and comply with all provisions of Section 2. Such transferred Stock shall
remain "Stock: hereunder, and such pledge, transferee or donee shall be
treated as a "Shareholder" for purposes of this Agreement.
4. Prohibited Transfers.
(a) In the event a Significant Shareholder should sell any Stock in
contravention of the co-sale rights of ASI under this Agreement (a "Prohibited
Transfer"), ASI, in addition to such other remedies as may be available at
law, in equity or hereunder, shall have the put option provided below, and the
Significant Shareholders shall be bound by the applicable provisions of such
option.
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(b) In the event of a Prohibited Transfer, ASI shall have the right to
sell to the Significant Shareholders the type and number of shares of Common
Stock equal to the number of shares ASI would have been entitled to transfer
to the purchaser had the Prohibited Transfer under Section 2(c) hereof been
effected pursuant to and in compliance with the terms hereof. Such sale shall
be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold to the
Significant Shareholders shall be equal to the price per share paid by the
purchaser to Significant Shareholders in this Prohibited Transfer.
Significant Shareholders shall also reimburse ASI for any and all fees and
expenses, including legal fees and expenses, incurred pursuant to the exercise
or the attempted exercise of ASI's rights under Section 2.
(ii) Within ninety (90) days after the later of the dates on which
ASI (A) received notice of the Prohibited Transfer or (B) otherwise became
aware of the Prohibited Transfer, ASI shall, if exercising the option created
hereby, deliver to Significant Shareholders the certificate or certificates
representing shares to be sold, each certificate to be properly endorsed for
transfer.
(iii) Significant Shareholders shall, upon receipt of the
certificate or certificates for the shares to be sold by ASI, pursuant to this
Section 4(b), pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 5(b)(i), in cash or by
other means acceptable to ASI.
(iv) Notwithstanding the foregoing, any attempt by a Significant
Shareholder to transfer Stock in violation of Section 2 hereof shall be void
and the Company agrees it will not effect such a transfer nor will it treat
any alleged transferee as the holder of such shares without the written
consent of ASI.
5. Legend.
(a) Each certificate representing shares of Stock now or hereafter owned
by the Significant Shareholder or issue to any person in connection with a
transfer pursuant to Sections(a) and 3(b) hereof shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN CO-SALE AGREEMENT AMONG THE INITIAL HOLDER OF THE SECURITIES, THE
COMPANY AND CERTAIN STOCKHOLDER(S) OF THE COMPANY. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
(b) Each Significant Shareholder agrees that the Company may instruct
its transfer agent to impose transfer restrictions on the shares represented
by certificates bearing the legend referred to in Section 5(a) above to
enforce the provisions of this Agreement and the Company agrees to promptly do
so. The legend shall be removed upon termination of this Agreement.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Nevada.
6.2 Amendment. Any provision may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of the party or
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parties affected thereby. Any amendment or waiver effected in accordance with
clauses (a), (b) and (c) of this Section shall be binding upon ASI, its
successors and assigns, the Company and Significant Shareholders in question.
6.3 Assignment of Rights. This Agreement and the rights and obligations
of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives.
6.4 Term. This Agreement shall terminate on the fifth anniversary
hereof.
6.5 Ownership. Each Significant Shareholder represents and warrants
that it/he is the sole legal and beneficial owner of the shares of stock
subject to this Agreement and that no other person has any interest (other
than a community property interest) in such shares.
6.6 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five (5) days after deposit in the United States mail,
by registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such
other address as such party may designate by ten (10) days' advance written
notice to the other parties hereto.
6.7 Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.8 Attorney Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
The foregoing agreement is hereby executed as of the date first above written.
SAINT XXXXXXX GOLF CORPORATION, ASI GROUP, L.L.C., a Nevada limited
a Nevada corporation liability company
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxx Xxxx Xxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx Xxxx Xxxxxx
Title: President Title: President
LAS VEGAS DISCOUNT GOLF &
TENNIS INC., a Nevada
corporation
By: /s/ Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: President
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/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
/s/ Xxx Xxxxxx
Xxx Xxxxxx
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
XXXXXX ENTERPRISES LTD.
By: /s/ Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: General Partner
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CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions if I and/or my spouse agree
to sell all or part of the shares of the company held of record by either or
both of us, including my community property interest in such shares, if any,
co-sale rights (as described in the Agreement) must be granted to ASI by the
seller. I hereby agree that those shares and my interest in them, if any, are
subject to the provisions of the Agreement and that I will take no action at
any time to hinder operations of, or violate, the Agreement.
/s/ Xxxx Xxxxxx
(Signature)
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CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions if I and/or my spouse agree
to sell all or part of the shares of the company held of record by either or
both of us, including my community property interest in such shares, if any,
co-sale rights (as described in the Agreement) must be granted to ASI by the
seller. I hereby agree that those shares and my interest in them, if any, are
subject to the provisions of the Agreement and that I will take no action at
any time to hinder operations of, or violate, the Agreement.
/s/ Xxxxxx Xxxxxx
(Signature)
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