Stock Option Agreement - Las Vegas Sands Inc., Sheldon G. Adelson and Robert G. Goldstein
LAS VEGAS SANDS, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), dated January 2, 2002 is
made effective as of November 30, 1997 (the "Date of Grant"), between Las Vegas
Sands, Inc., a Nevada corporation (the "Company"), Sheldon G. Adelson
("Adelson") and Robert G. Goldstein (the "Participant") is entered into to
clarify and set forth in a single instrument all of the understandings and
commitments with respect to the options to acquire shares of the Company's
Common Stock (the "Shares") promised by the Company to the Participant under an
Employment Agreement.
Recitals
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WHEREAS, the Company has adopted the Las Vegas Sands, Inc.
1997 Fixed Stock Option Plan (the "Plan"), which Plan is incorporated herein by
reference and made a part of this Agreement. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan;
WHEREAS, the Company's Board of Directors (the "Board") has
determined that it would be in the best interests of the Company and its
stockholders to grant the option provided for herein (the "Option") to the
Participant pursuant to the Plan and the terms set forth herein;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Grant of the Option. Subject to compliance with applicable Nevada Gaming
Laws, including the receipt of all necessary approvals from the Nevada Gaming
Commission and the State Gaming Control Board ("Nevada Gaming Authorities")
prior to the execution of this Agreement, the Company hereby grants to the
Participant the right and Option to purchase, on the terms and conditions
hereinafter set forth the number of Shares set forth on Exhibit A attached
hereto, subject to adjustment as set forth in the Plan. The price of the Shares
subject to the Option shall be as determined by the provisions of Section 3 of
this Agreement. The Option is intended to be a non-qualified stock option, and
is not intended to be treated as an option that complies with Section 422 of the
Internal Revenue Code of 1986, as amended.
2. Vesting and Exercisability. The Option shall be fully vested and
immediately exercisable on the Date of Grant.
3. Exercise of Option.
(a) Exercise Price. The Exercise Price for the Shares to be acquired
upon the exercise of the Option (the "Exercise Price") shall be the amount
set forth on Exhibit A.
(b) Period of Exercise. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise the Option in whole but not in part
at any time after receiving all necessary licenses and approvals from the
Nevada Gaming Authorities and prior to the earliest to occur of the
following (the "Option Expiration Dates"):
(i) the tenth anniversary of the Date of Grant;
(ii) the date three days prior to a Change in Control
Acceleration Event;
(iii) the date three days prior to a Public Offering Acceleration
Event; and
(iv) the date of the Participant's termination of employment for
Cause (as defined below).
If the Option is not exercised as of the Option Expiration Date, it shall
immediately terminate and expire, provided, however, that no Option shall
expire pursuant to Section 3(b)(ii) or (iii) unless the Company has given
the Participant notice of the Accelerated Exercise Period promptly upon
learning of the time (or approximate time) when the Accelerated Exercise
Period will occur but in no event shall such notice be given later than ten
(10) days prior to the Change of Control Acceleration Event or the Public
Offering Acceleration Event.
(c) Method of Exercise.
(i) Subject to Section 3(b), the Option may be exercised by
delivering to the Company at its principal office the Exercise Notice
attached hereto as Exhibit B, together with proof that the Participant
has obtained from the Nevada Gaming Authorities all licenses or
approvals necessary to exercise the Option and to hold the Shares.
Within five (5) business days of the delivery of such notice to the
Company, the Participant shall deliver to the Company at its principal
office payment in full of the Exercise Price if he wishes to exercise
the Option. Upon receipt by the Company of the Exercise Price the
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Option will be deemed exercised. The payment of the Exercise Price may
be made--
(A) in cash, or its equivalent; or
(B) if there shall be a public market for the Shares, by
exchanging Shares owned by the Participant (which are not the
subject of any pledge or other security interest and which have
been owned by the Participant for at least 6 months), subject to
receipt of any necessary licenses or approvals from the Nevada
Gaming Authorities and subject to such rules as may be
established by the Company, through delivery of irrevocable
instructions to a broker to sell the Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the
Company an amount equal to the aggregate exercise price; or
(C) by the delivery of a promissory note and pledge
agreement of the Participant in the form attached hereto as
Exhibits C (the "Note") and D (the "Pledge Agreement") providing
for payment, with interest on the unpaid balance accruing at a
fair market rate as of the date of exercise, which the parties
understand shall mean the "Applicable Federal Rate" as such term
is used in Code section 7872 unless, based upon the financial
position and credit worthiness of the Participant, a higher rate
is appropriate, upon the earlier of:
(I) 90 days after a demand for repayment; or
(II) the later of:
(x) a Public Offering Acceleration Event, or
(y) the expiration of any applicable "lock up"
period, but in no event longer than six months
following the Public Offering Acceleration
Event, and upon such other terms and conditions
(including the security, if any therefor) as the
Company may determine, or by a combination of
the foregoing, provided that the combined value
of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to
the Company as of the date of such tender plus
the principal amount of any Note is at least
equal to such aggregate Exercise Price;
provided, further, that if --
(D) the Participant's employment with the Company is
terminated for any reason;
(E) the Participant continues to own the Shares; and
(F) the Note remains outstanding, then the interest rate on
the Note shall increase, upon such termination, to the greater of
the Company's weighted average cost of capital or the rate
established pursuant to Section 3(c)(i)(C) above.
(ii) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, the Option may not be exercised prior to
the completion of any registration or qualification of the Option or
the Shares under applicable state and federal securities or other
laws, or under any ruling or regulation of any governmental body or
national securities exchange that the Board shall in its sole
discretion determine to be necessary or advisable. In addition, the
Participant may not acquire any interest in an Option under this
Agreement until such time as the Nevada Gaming Authorities approve the
granting of such Option. In the event that any Nevada Gaming Authority
denies the granting of the Option, the Participant shall not be
entitled to receive the Option or any other compensation or
remuneration under this Agreement in lieu of such Option.
(iii) Upon the Company's determination that the Option has been
validly exercised as to any of the Shares, the Company shall issue or
transfer certificates in the Participant's name for such Shares.
However, the Company shall not be liable to the Participant for
damages relating to any delays in issuing or transferring the
certificates to him, any loss of the certificates, or any mistakes or
errors in the issuance or transfer of the certificates or in the
certificates themselves.
4. Restrictions. All Shares issued pursuant to the exercise of this Option
shall be subject to the restrictions set forth in the Stockholders Agreement to
be executed in connection with the exercise, among the Company and the
stockholders named therein in substantially the form attached hereto as Exhibit
E (the "Stockholders Agreement").
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5. Redemption.
(a) Redemption Rights. Some or all of the Shares issued pursuant to
the exercise of the Option and held by the Participant for a period of at
least six months following exercise of the Option, shall, at the written
request of the Participant (or his personal representative), be redeemed by
the Company as follows:
(i) in the case of
(A) a termination of Participant's employment with the
Company due to death or Disability (as defined below);
(B) a voluntary termination by the Participant of his
employment with the Company;
(C) a termination of Participant's employment by the Company
other than for Cause; or
(D) a redemption request made by the Participant while still
employed by the Company, the Company shall pay to the Participant
an amount equal to the Fair Market Value on the date of
redemption of the Shares being redeemed, which price shall:
(E) to the extent the Participant paid for the Exercise
Price of the Option using a Note in accordance with Section
3(c)(i)(C) above, be applied to the amounts of principal and
interest which are due and remain unpaid as of the date of
redemption as follows:
(I) upon redemption of all or any portion of the first
25% of the Shares subject to the Pledge Agreement; only the
accrued interest on the Note shall be paid;
(II) upon redemption of all or any portion of the
second 25% of the Shares subject to the Pledge Agreement,
all of the redemption proceeds shall be applied to the Note
interest and principal;
(III) upon the redemption of any portion of the third
25% of the Shares subject to the Pledge Agreement, one-half
of the redemption proceeds shall be applied to the Note
interest and principal unless one-half of the portion of the
third 25% retained by the Participant, when valued at the
then prevailing redemption price, shall be less than the
remaining interest and principal due on the Note, in which
event a greater portion of the redemption proceeds shall be
applied to the Note so that one-half of the portion of the
third 25% retained by the Participant, when valued at the
then prevailing redemption price, shall be equal to or
greater than the remaining interest and principal due on the
Note; and
(IV) upon the redemption of all or any portion of the
fourth 25% of the Shares subject to the Pledge Agreement, if
there shall then be any balance of interest or principal
remaining due on the Note, such portion of the redemption
proceeds shall be applied to the Note as necessary to fully
pay the balance thereof; and
(F) to the extent the redemption price exceeds the amount
remaining unpaid on the Note or if no Note is outstanding, such
redemption price (or portion thereof) shall be payable by the
Company, with interest on the unpaid balance accruing at a fair
market rate as of the date of redemption, which the parties
understand shall mean the "Applicable Federal Rate" as such term
is used in Code section 7872 unless, based upon the financial
position and credit worthiness of the Company, a higher rate is
appropriate, in thirty-six (36) equal consecutive monthly
installments, commencing ninety (90) days following the date on
which the Fair Market Value is established; and
(i) in the case of a termination for Cause (as defined below) or
a termination as a result of the failure of the Nevada Gaming
Authorities to grant the Participant a casino key employee and equity
holder license, Participants shall be deemed to have elected
redemption as of his termination of employment or six months after
share exercise was completed, whichever is later, and the Company
shall pay to the Participant an amount equal to the lesser of the
exercise price for such Shares or the Fair Market Value on the date of
redemption, which price shall--
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(A) to the extent the Participant paid for the Exercise
Price of the Option using a Note in accordance with Section
3(c)(i)(C) above, be used to offset any amounts of principal and
interest which are due and unpaid as of the date of redemption;
and
(B) to the extent the redemption price exceeds the amount
remaining unpaid on the Note or if no Note is outstanding, such
redemption price shall be payable, with interest on the unpaid
balance accruing at a fair market rate as of the date of
redemption, which the parties understand shall mean the
"Applicable Federal Rate" as such term is used in Code section
7872 unless, based upon the financial position and credit
worthiness of the Company, a higher rate is appropriate, in
thirty-six (36) equal consecutive monthly installments commencing
ninety (90) days following the date on which Fair Market Value is
established.
(b) Definitions. For purposes of this Agreement:
"Cause" shall mean:
(i) conviction of a felony, misappropriation of any material
funds or property of the Company, commission of fraud or embezzlement
with respect to the Company, or any material act or acts of dishonesty
relating to the Participant's employment by the Company resulting or
intended to result in direct or indirect personal gain or enrichment
at the expense of the Company;
(ii) use of alcohol or drugs that renders the Participant
materially unable to perform the functions of his or her job or carry
out his or her duties to the Company;
(iii) materially failing to fulfill his duties and
responsibilities;
(iv) committing any act or acts of serious and willful misconduct
(including disclosure of confidential information) that is likely to
cause a material adverse effect on the business of the Company or to
subject the Company to possible disciplinary action by the Nevada
Gaming Authorities; or
(v) loss or failure to obtain a license, work card, or other
approval from the Nevada Gaming Authorities that is necessary or for
which the Company deems advisable relating to the Participant's
employment by the Company or the holding or exercise of an Option
hereunder.
"Disability" shall mean that the Participant is unable to perform the duties of
his employment for a continuous period of three months due to severe illness or
accident or other grave mental or physical incapacity.
"Fair Market Value" of a Share shall mean:
(i) If there is no public market for the Shares, the fair market
value agreed to by the Company and the Participant or, in the absence
of such agreement, the fair market value determined and agreed to by
two national investment banking firms (the "Appraisers"), one chosen
by the Company and one chosen by the Participant. In the absence of
agreement of the Appraisers, Fair Market Value shall be determined by
a third independent appraiser mutually chosen by the Appraisers. Such
determination shall be final and binding on all parties. The costs and
expenses of the appraisers shall be shared equally by the Company and
the Participant, and
(ii) If there is a public market for the Shares, then the mean
between the high and low sales price of the Shares as reported on the
composite tape for securities traded on the New York Stock Exchange
for such date (or if not then trading on the New York Stock Exchange,
the mean between the high and low sales price of the Shares on the
stock exchange or over-the-counter market on which the Shares are
principally trading on such date) or, if there were no sales on such
date, on the closest preceding date on which there were sales of
Shares.
(c) Redemption Procedure. Any redemption of Shares provided for in
this Section shall take place--
(i) within thirty (30) days following termination for Cause or a
termination as a result of the failure of the Nevada Gaming
Authorities to grant the Participant a casino key employee and equity
holder license;
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(ii) in the case of a termination by reason of the Participant's
death or Disability, upon such date set out by the Participant, or his
estate, as the case may be, in a written notice to the Company
specifying all or any portion of the Shares to be redeemed, given at
least thirty (30) days in advance of the applicable redemption date;
or
(iii) within thirty (30) days following written notice to the
Company of the intent to redeem all or any portion of the Shares in
the case of any other termination of the Participant's employment with
the Company or if Participant is currently employed with the Company.
The Participant (or his personal representative), upon redemption of all or
any portion of his Shares shall surrender to the Company the certificates
for his Shares and only such portion as has been surrendered shall
thereupon be canceled; provided, however, that if the Participant is
redeeming Shares in accordance with clause (i) above, then upon such
redemption the Participant shall surrender to the Company all certificates
for Shares and whether so surrendered or not, such Shares shall thereupon
be canceled. The Company shall then, upon receipt of the Shares and
determination of the Fair Market Value, deliver to the Participant (or his
personal representative) a promissory note for the sum payable in
accordance with the terms of Section 5(a)(ii) above. Such note shall be, in
all respects, subject to the limitations and restrictions, if any, imposed
by any note, credit facility, indenture, mortgage, line of credit or
similar contractual arrangement with an institutional or similar lender by
which the Company may become bound ("Lender Restrictions"), whether in the
form of financial covenants or otherwise and whether arising prior to or
after execution and delivery of the note. No failure of the Company to pay
sums due on the note on account of the Lender Restrictions shall result in
a default and all such payments to the extent (and only to the extent)
prohibited by the Lender Restrictions, shall be deferred and accrue until
such time as they may be paid without violating the Lender Restrictions.
(d) Redemption Provisions Void. Whenever (and for so long as) the
Shares are publicly traded, either on a registered securities exchange or
in the over-the-counter market, all provisions regarding the redemption of
Shares by the Company shall be void.
6. No Right to Continued Employment. Neither the Plan nor this Agreement
shall be construed as giving the Participant the right to be retained in the
employ of, or in any consulting relationship to, the Company or any Affiliate.
If, the Company or an Affiliate at any time dismisses Participant or
discontinues any consulting relationship, such discontinuance or dismissal may
be made, free from any liability or any claim under the Plan or this Agreement,
except as otherwise expressly provided herein.
7. Legend on Certificates.
(a) The certificates representing the Shares purchased by exercise of
the Option shall, in addition to the restrictions set forth in Sections 3,
4 and 5 hereof, be subject to such stop transfer orders or the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares are listed, any
applicable Federal or state laws, the Company's Articles of Incorporation
or Bylaws and the Stockholders Agreement, and the Company may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) All certificates for shares or other securities of the Company or
any Affiliate delivered under the Plan pursuant to any Option or the
exercise thereof shall be subject to Nevada Gaming Laws and all local
gaming laws and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
8. Transferability. The Option and, prior to a Public Offering Acceleration
Event, the Shares may not be assigned, alienated, pledged to anyone other than
the Company, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution
after receipt of all necessary licenses and approvals from the Nevada Gaming
Authorities, and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company or any Affiliate; provided that the designation of a beneficiary shall
not constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance and provided further that Shares acquired upon the exercise of an
Option may be pledged to the Company or, to a financial institution to secure a
loan the proceeds of which are used to pay the Company the Exercise Price of the
Option or the taxes payable in connection with such exercise provided the holder
first obtains all necessary licenses and approvals from the Nevada Gaming
Authorities. No such permitted transfer of the Option or the Shares to heirs or
legatees of the Participant shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of such
evidence as the Company may deem necessary to establish the validity of the
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transfer, the acceptance by the transferee or transferees of the terms and
conditions hereof and receipt of all necessary approvals from the Nevada Gaming
Authorities. During the Participant's lifetime, the Option is exercisable only
by the Participant.
9. Withholding.
(a) The Participant may be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any payment due or transfer made under
the Option or under the Plan or from any compensation or other amount owing
to a Participant, the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of
the Option, its exercise, or any payment or transfer under the Option or
under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such
taxes.
(b) Without limiting the generality of clause (a) above, the
Participant may, in the reasonable discretion of the Company, satisfy, in
whole or in part, the foregoing withholding liability by delivery of Shares
owned by the Participant (which are not subject to any pledge or other
security interest and which have been owned by the Participant for at least
6 months) with a Fair Market Value equal to such withholding liability or
by having the Company withhold from the number of Shares otherwise issuable
pursuant to the exercise of the Option a number of Shares with a Fair
Market Value equal to such withholding liability.
10. Securities Laws. Upon the acquisition of any Shares pursuant to the
exercise of the Option, the Participant will make or enter into such written
representations, warranties and agreements as the Company may reasonably request
in order to comply with applicable securities laws or with this Agreement.
11. Notices. Any notice necessary under this Agreement shall be addressed
to the Company at its principal executive office and to the Participant at the
address appearing in the personnel records of the Company for the Participant or
to either party at such other address as either party hereto may hereafter
designate in writing to the other. Any such notice shall be deemed effective
upon receipt thereof by the addressee.
12. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEVADA AND THE NEVADA
GAMING LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
13. Option Subject to Plan. By entering into this Agreement the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan. The Option is subject to the Plan. The terms and provisions of the Plan as
it may be amended from time to time are hereby incorporated herein by reference.
In the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions of the Plan
will govern and prevail.
14. Full Satisfaction. By entering into this Agreement, the Participant
agrees and acknowledges that the grant of this Option is in full satisfaction of
the Company's (and its Affiliates') obligations with respect to the Option grant
contemplated by the Participant's Employment Agreement or contract, whichever is
applicable.
15. Assumption by Adelson. Adelson has the right, in his sole discretion,
to assume the obligations of the Company, and to succeed to the rights of the
Company, herein, to grant the Option and to administer the Plan as provided for
in the Plan, such assumption and succession to be evidenced by the execution of
an instrument solely by Adelson. In the absence of such an assumption, Adelson
shall have no obligations under this Agreement or the Plan.
16. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed an original, and all of which,
collectively, shall be considered one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
LAS VEGAS SANDS, INC.
By:
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/s/Robert G. Goldstein
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ROBERT G. GOLDSTEIN
/s/Sheldon G. Adelson
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SHELDON G. ADELSON
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LIST OF EXHIBITS
A - Employee Participant Data
B - Exercise Notice
C - Note
D - Pledge Agreement
E - Stockholders Agreement
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EXHIBIT A
Per Share
Name of Employee Number of Shares Exercise Price Exercise Price
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Robert G. Goldstein 9,980 (represents .9980% $271.04 $2,704,979
of the equity (on a diluted
basis) based on 1,000,000
shares outstanding)
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