RIGHTS AGREEMENT
RIGHTS AGREEMENT (the "Agreement") dated as of the 20th day of June
1996, by and among International Sports Wagering Inc., a Delaware corporation
(the "Company") and ▇▇▇▇▇ ▇▇▇▇▇▇, residing at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇▇"):
W I T N E S S E T H:
WHEREAS, the Company wishes to ▇▇▇▇▇ ▇▇▇▇▇▇ certain pre-emptive and
registration rights in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
1. Registration Rights.
1.1 Definitions. As used in this Agreement:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and the subsequent declaration or ordering of the
effectiveness of such registration statement.
(b) The term "Registrable Securities" means (i) the shares of
Common Stock par value $.001 per share now or hereafter owned by ▇▇▇▇▇▇ (the
"Shares"), and (ii) any other shares of Common Stock of the Company issued as or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the Shares, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned; provided, however, that Shares or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof so that all transfer restrictions,
and restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale.
(c) The number of shares of "Registrable Securi- ties then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(d) The term "Holder" means any holder of outstanding
Registrable Securities who acquired such Registrable Securities in a transaction
or series of transactions not involving any registered public offering.
(e) The term "Form S-3" means such form under the Securities
Act of 1933, as amended (the "Act") as in effect on the date hereof or any
registration form under the Act subsequently adopted by the Securities and
Exchange Commission ("SEC") which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
1.2 Demand Registration.
(a) If the Company shall receive at any time after the earlier
of (i) May 31, 1998 or (ii) 180 days after the closing of the Company's initial
registered public offering of Common Stock under the Securities Act of 1933, a
written request from the Holders of a majority of the Registrable Securities
then outstanding that the Company file a registration statement under the Act
covering the registration of at least fifty percent (50%) of the Registrable
Securities then outstanding (or a lesser percent if the anticipated aggregate
offering price, net of underwriting discounts and commissions, would equal or
exceed $5,000,000), then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Holders and shall,
subject to the limitations of subsection 1.2(b), effect as soon as practicable,
and in any event within 120 days of the receipt of such request, the
registration under the Act of all Registrable Securities which the Holders
request to be registered within twenty (20) days of the mailing of such notice
by the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
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provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
it requires a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders and any
other holders of Common Stock entitled to registration rights whose shares of
Common Stock were to be included in such registration statement, in proportion
(as nearly as practicable) to the amount of Common Stock of the Company owned by
each such person.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 1.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore reasonable to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve month period.
(e) If within thirty (30) days after the request to register
Registerable Securities the Company gives notice that it intends to initiate an
initial firmly underwritten registered public offering within forty-five (45)
days of the time of the request, then the Company shall have the right to defer
such filing, provided that it initiates such public offering such filing within
such forty-five (45) day period.
1.3 "Piggyback" Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
Common Stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
either to the sale of securities to participants in a Company stock option,
stock purchase or similar plan or to an SEC Rule 145 transaction), the Company
shall, at such time,
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promptly give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 3.5, the Company shall, subject
to the provisions of Section 1.8, cause to be registered under the Act all of
the Registrable Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section
1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder keep
such registration statement effective for up to one hundred twenty (120) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the
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Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters on the date that the registration statement with respect to
such securities becomes effective, a letter dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5 Furnish Information. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Holder's Registrable Securities.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation), all registration, filing and qualification fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and
the reasonable fees and expenses of one special counsel all of the selling
stockholders (provided, however that the maximum expense of such special counsel
which the Company shall be obligated to pay shall be $10,000) shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 1.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
Holders participating therein shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2.
1.7 Expenses of "Piggyback" Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for
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each Holder (which right may be assigned as provided in Section 1.13), including
(without limitation) all registration, filing, and qualification fees, printers,
accounting fees relating or apportionable thereto and the reasonable fees and
expenses of one special counsel of the selling stockholders (provided, however
that the maximum expense of such special counsel which the Company shall be
obligated to pay shall be $10,000), but excluding underwriting discounts and
commissions relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities that the underwriters
reasonably believe is compatible with the success of the Offering, then the
Company shall be required to include in the offering only that number of such
securities including Registrable Securities, which the underwriters believe will
not jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling stockholders according to the total
amount of securities entitled to be included therein owned by each selling
stockholder; provided, however, that if such offering is the initial public
offering of the Company's securities, in which case the selling stockholders may
be excluded if the underwriters make the determination described above and no
other stockholder's securities are included. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
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1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Act, the 1934
Act, any state securities law or any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and the Company will pay as
incurred to each such Holder, underwriter or controlling person, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each
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case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 1.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided that in no event shall any indemnity under this subsection
1.10(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.10.
(d) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
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pursuant to a registration on Form S-3, the Company agrees to use its reasonable
efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders of the Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distri-
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bution of all or such portion of such Holder's or Holders' registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within 15 days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 1.12, (1) if Form S-3 is not available for
such offering by the Holders; (2) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $500,000; (3) if the Company shall furnish to the
Holders a certificate signed by the president of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
detrimental to the Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than 120 days after receipt of the request of the Holder or Holders under this
Section 1.12; provided, however, that the Company shall not utilize this right
more than twice in any twelve month period; (4) if the Company has, already
effected two registrations on Form S-3 for the Holders pursuant to this Section
1.12; (5) if the Holders can sell Registrable Securities pursuant to Rule 144 or
otherwise free of the registration requirements of the Securities Act; (6) if
the Company has effected another S-3 registration within 12 months prior to
receipt of a request pursuant to this Section 1.12; or (7) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the Company, shall be borne by
the Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Section 1.2 or 1.3.
1.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may only
be assigned by a Holder to a transferee or assignee of the Shares provided that
the Company is, within a
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reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and provided, further, that
such assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Act.
1.14 "Market Stand-still" Agreement. Holders holding Registrable
Securities exceeding one percent (1%) of the outstanding stock of the Company
hereby agree that during the 180- day period following the effective date of a
registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and its underwriter, sell or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any Common
Stock of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that: all officers and
directors of the Company and all other Holders holding Registrable Securities
exceeding one percent (1%) of the outstanding stock of the Company whether or
not pursuant to this Agreement) enter into similar agreements. To enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of the Investors (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
1.15 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided for in this Section 1 after three (3) years
following the consummation of the Company's initial sale of its Common Stock in
a bona fide, firm commitment underwriting pursuant to a registration statement
on Form S-1 under the Securities Act of 1933, as amended, which results in
aggregate gross cash proceeds to the Company of at least $5,000,000 (other than
a registration statement relating either to the sale of securities to employees
of the Company pursuant to a stock option, stock purchase or similar plan or a
SEC Rule 145 transaction) or at and after such time following the Company's
initial public offering as such Holder holds Registrable Securities equal to 5%
or less of the outstanding stock of the Company.
2. Additional Rights.
2.1 Pre-emptive Right. Subject to the terms and conditions specified
in this Section 2.1, the Company hereby grants to ▇▇▇▇▇▇, a pre-emptive right
with respect to future sales by the Company of its New Securities (as
hereinafter defined).
(a) If at any time during the term of this Agreement the
Company proposes to offer, issue, sell or otherwise dispose of shares of the
Common Stock or any other class or
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series of common stock or preferred stock of the Company, or options, rights,
warrants, conversion rights or appreciation rights relating thereto, or any
other type of equity security that the Corporation may lawfully issue
(collectively, the "New Securities") to any person or entity other than ▇▇▇▇▇▇
or any affiliates thereof:
(b) The Company shall, prior to any such issuance or sale,
give notice in accordance with Section 3.5 (a "Preemptive Notice") to the
Investors setting forth the purchase price of such New Securities, the type and
aggregate number of New Securities to be so offered, issued, sold or otherwise
disposed of, the terms, price and conditions of such offer, issuance, sale or
other disposition and the rights, powers and duties inhering in such additional
New Securities.
(c) ▇▇▇▇▇▇ shall have the right (the "Preemptive Right") to
acquire the percentage of such New Securities proposed to be so offered, issued,
sold or otherwise disposed of equal to the number of shares of Common Stock then
held by ▇▇▇▇▇▇ divided by the aggregate number of shares of the Company's Common
Stock and stock options outstanding (assuming all such stock options were
exercised) immediately prior to such offer, issuance, sale or other disposition
of New Securities; provided, however, that the terms and conditions of this
Section 2.1 shall not apply to any offer, issuance, sale or other disposition of
(i) New Securities issued in connection with any stock split, stock dividend, or
recapitalization of the Company, (ii) New Securities issuable upon exercise of
any warrant, option or convertible securities if the issuance thereof was
subject to the pre-emptive right granted in this Section 2.1, (iii) New
Securities or rights to acquire New Securities to any person or entity pursuant
to a stock option plan established by the Company for the benefit of its
employees, officers, directors, agents or consultants, or otherwise granted to
an employee of, or consultant to, the Company in connection with such person or
entity's employment or retention by the Company; (iv) New Securities or rights
to acquire New Securities to a person or entity in connection with the
acquisition by the Company of all or a substantial portion of the stock, assets
or business of such person or entity; (v) New Securities or rights to acquire
New Securities to a financial institution in connection with the making of, or
the agreement to make, loans to, or other financial arrangements with, the
Company by such financial institution; (vi) New Securities or rights to acquire
New Securities to a person or entity in connection with license arrangements of
the Company; (vii) New Securities or rights to acquire New Securities to
strategic corporate investors as determined by not less than 80% of the Board of
Directors; and (viii) New Securities or rights to acquire New Securities
pursuant to any underwritten public offering of New Securities of the Company
pursuant to an effective registration statement under the Securities Act.
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(d) ▇▇▇▇▇▇ may exercise such Preemptive Right, in whole or in
part, on the terms and conditions and for the purchase price set forth in the
Preemptive Notice, by giving to the Company notice to such effect, within 10
days after the giving of the Preemptive Notice. The closing of the sale of New
Securities by the Company to those exercising their Preemptive Right shall take
place simultaneously with the closing of the sale of New Securities to third
parties. After the expiration of such 10-day period, the Company shall have the
power to offer, issue, sell and otherwise dispose of any or all of the New
Securities referred to in the applicable Preemptive Notice as to which no
Preemptive Right has been exercised but only upon the terms and conditions, and
for a purchase price not lower than the purchase price, set forth in the
Preemptive Notice. If the Company does not offer, issue, sell or otherwise
dispose of the New Securities referred to in the applicable Preemptive Notice on
the terms and conditions set forth in such Preemptive Notice within 90 days
after the expiration of such 10-day period, then any subsequent proposal by the
Company to offer, issue, sell or otherwise dispose of Equity Securities shall be
subject to this Section 2.1.
2.2 Termination. The rights granted in Section 2.2 shall terminate
and be of no further force or effect upon the first to occur of (a) any merger
or sale of the Company in which the Company is not the surviving corporation
(other than a merger with or into a wholly-owned subsidiary) or any transaction
in which more than 50% of the voting power of the Company is disposed of; (b)
the consummation of the Company's sale of its Common Stock or other securities
pursuant to a registration statement under the Securities Act of 1933, as
amended, (other than a registration statement relating either to sale of
securities to employees of the Company pursuant to its stock option, stock
purchase or similar plan or a SEC Rule 145 transaction); or (c) if ▇▇▇▇▇▇ and
his affiliates cease to own at least twenty-five percent (25%) of the
outstanding voting securities of the Company.
2.3 Assignment of Rights. Subject to compliance with all applicable
securities laws, the rights granted under Section 2.1 may be assigned by ▇▇▇▇▇▇
to a transferee or assignee of such party's shares of the Company's stock. In
the event that ▇▇▇▇▇▇ shall assign its rights pursuant to Section 2.1 in
connection with the transfer of less than all of his shares of the Company's
stock, ▇▇▇▇▇▇ shall also retain his rights as to the proportion of shares not
transferred.
3. Miscellaneous.
3.1 Assignment. Subject to the provisions of Section 1.13 and 2.3
hereof, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective
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successors and assigns of the parties hereto. This Agreement shall be binding
upon any person to whom shares of Common Stock are transferred in violation of
the provisions hereof and the successors, assigns, heirs, legatees,
distributees, executors and administrators of such transferee and the
Corporation may refuse to permit the transfer of such stock on its books.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
3.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflict of laws.
3.4 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but which shall together constitute a
single instrument.
3.5 Notices. All notices ("Notices") hereunder shall be in writing,
signed by the party giving or making the same, and shall be delivered personally
or sent by internationally recognized courier service or by telex or facsimile
transmission to each party entitled to receive the same, at such party's last
known address on the books of the Corporation, unless such party shall have
previously notified in writing the party sending such Notice of a change of
address, in which case it shall be sent to the new address. A copy of each such
Notice to the Corporation shall also be sent in similar fashion to ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. All Notices shall be deemed given
when delivered, sent or transmitted in accordance herewith.
3.6 Amendment and Waiver. Any provision of this Agreement may be
amended only by a written agreement signed by ▇▇▇▇▇▇ and the Company.
3.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
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conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
3.8 Stock Splits, Stock Dividends, etc. In the event of any
additional issuance of securities to ▇▇▇▇▇▇, including but not limited to, any
securities issued on a stock split, stock dividend, recapitalization,
reorganization or combination, or upon exercise of any stock option or warrant,
the securities issued to ▇▇▇▇▇▇ shall be subject to this Agreement.
3.9 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
3.10 Captions. The captions and headings contained in this agreement
are for the convenience of the parties only and shall not effect the
interpretation or construction of this Agreement.
3.11 Miscellaneous.
(a) This Agreement contains the entire understanding of the
parties hereto concerning the subject matter hereof and supersedes any and all
prior agreements made by the parties with respect thereto and may not be
amended, terminated or discharged, except by an instrument in writing, signed by
the party to be charged.
(b) Each of the parties agrees to execute and deliver any and
all documents or other instruments and shall do or cause to be done all such
acts or things as may reasonably be necessary or proper to carry out the
purposes of this Agreement.
(c) The parties hereto irrevocably consent that any suit,
legal action or proceeding with respect to any of the rights or obligations
arising directly or indirectly under or relating to this Agreement may be
brought in any New York State or United States federal court located in the
Borough of Manhattan, City and State of New York, and by execution and delivery
of this Agreement each party hereby irrevocably submits to and accepts with
regard to any such suit, legal action or proceeding, for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party irrevocably consents to the service of process in
any
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such suit, legal action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, return receipt requested, to it
at its address set forth herein. The foregoing shall not limit the right of any
party to serve process in any other manner permitted by law. Each party hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any suit, legal action or proceeding arising directly or
indirectly under or relating to this Agreement in any court located in the
Borough of Manhattan, City and State of New York and hereby further irrevocably
waives any claim that a court located in the Borough of Manhattan, City and
State of New York is not a convenient forum for any such suit, legal action or
proceeding. Each party hereby (i) irrevocably waives any right it may have under
the laws of any jurisdiction to commence by publication any suit, legal action
or proceeding with respect to this Agreement, and (ii) irrevocably agrees that
any suit, legal action or proceeding commenced by it with respect to any rights
or obligations arising directly or indirectly under or relating to this
Agreement shall be brought exclusively in any New York State or United States
federal court located in the Borough of Manhattan, City and State of New York.
The parties hereto have executed this Agreement as of the day and year
first above written.
COMPANY:
INTERNATIONAL SPORTS WAGERING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (201) 256-____
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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