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Exhibit 7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of this 8th day of June
2001 (the "Agreement"), is made and entered into by and between eLOT, Inc., a
Virginia corporation ("Parent"), and PlasmaNet, Inc., a Delaware corporation
("Seller").
RECITALS
WHEREAS, Parent, eLOTTONET Inc., a Delaware Corporation, and Seller
are parties to a Strategic Cooperation Agreement dated June 8, 2000 and an
Amendment No. 1 to Strategic Cooperation Agreement of even date herewith (the
"Strategic Cooperation Agreement"); and
WHEREAS, the execution and delivery of this Agreement by Parent is a
condition to Seller's willingness to enter into the Strategic Cooperation
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and representations contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in Strategic Cooperation Agreement. Capitalized
terms used in this Agreement without definition shall have the respective
meanings assigned to such terms in the Strategic Cooperation Agreement.
1.2 Definition of Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"Agreement" has the meaning specified in the first paragraph of this
Agreement.
"Parent" has the meaning specified in the first paragraph of this
Agreement.
"Piggyback Notice" has the meaning specified in Section 2.1(a).
"Piggyback Registration" has the meaning specified in Section
2.1(a).
"Registrable Securities" means shares of Parent Common Stock issued
or issuable to Seller under the Strategic Cooperation Agreement excluding such
shares to the extent (i) resale thereof has already been registered under the
Securities Act or (ii) they have been
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sold or otherwise transferred by Seller or are eligible for sale under Rule 144
under the Securities Act without volume or manner of sale restrictions.
"Securities Act" has the meaning specified in Section 2.1(a).
"Seller" has the meaning specified in the first paragraph of this
Agreement.
"Shelf Registration" has the meaning specified in Section 2.2(a).
"Strategic Cooperation Agreement" has the meaning specified in the
Recitals to this Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1 Piggyback Registrations.
(a) Right to Piggyback on Registrations. Whenever Parent proposes to
register any Parent Common Stock under the Securities Act of 1933, as amended
(the "Securities Act"), in an underwritten offering, Parent will give prompt
written notice (a "Piggyback Notice") to Seller and, subject to the limitations
contained in this Section 2.1(a) and Section 2.1(b), will include all
Registrable Securities with respect to which Parent has received written request
from Seller for inclusion therein within ten (10) business days after the
receipt of the Piggyback Notice (a "Piggyback Registration"). The right of
Seller to include its Registrable Securities in a Piggyback Registration
pursuant to this Section 2.1(a) shall be conditioned upon Seller's participation
in such underwriting and the inclusion of Seller's Registrable Securities in
such underwriting as provided herein. Seller shall, as a condition to its
participation in such underwritten offering, enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected by Parent for such underwriting. If Seller disapproves of the terms of
any such underwriting, Seller may elect to withdraw therefrom by written notice
to Parent and the managing underwriter, delivered at least five (5) business
days prior to the effective date of the registration statement.
(b) Priority on Registrations. If the managing underwriters advise
Parent in writing that in their opinion the number of securities requested to be
included in a Piggyback Registration exceeds the number (if any) which can be
sold in such offering without adversely affecting the marketability of the
offering, Parent will include in such registration (i) first, the maximum number
of securities Parent proposes to sell which, in the opinion of such
underwriters, can be sold without adversely affecting the marketability of the
offering, and (ii) second, the maximum number of Registrable Securities being
registered by Seller which, on any pro rata basis with other selling
securityholders in such Piggyback Registration, in the
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opinion of such underwriters, can be sold without adversely affecting the
marketability of the offering.
(c) No Obligation to Effect a Piggyback Registration. Parent shall
be entitled to withdraw a Piggyback Registration at any time in its sole
direction, and nothing in this Agreement shall require Parent to effect a
Piggyback Registration.
2.2 Shelf Registration.
(a) Parent shall file a "shelf" registration statement with respect
to the resale by Seller of all Registrable Securities on any appropriate form
pursuant to Rule 415 under the Securities Act (the "Shelf Registration") as
promptly as practicable after the date hereof (but in no event beyond thirty
(30) days from the date hereof) and shall use its best efforts to have such
Shelf Registration declared effective as soon as practicable thereafter and take
all other actions reasonably necessary in order to permit public resale
(including any distribution by Seller of Parent Common Stock to its
shareholders) by Seller of the Registrable Securities on a continuous basis. An
offering of Registrable Securities pursuant to the Shelf Registration may not be
effected in the form of an underwritten offering.
(b) The Company shall use all reasonable commercial efforts, in
light of the circumstances, to keep the Shelf Registration continuously
effective for a period of one (1) year following the last date upon which shares
of Parent Common Stock are issued to Seller under the Strategic Cooperation
Agreement or such shorter period that will terminate when all the Registrable
Securities covered by the Shelf Registration have been sold pursuant to the
terms of the Shelf Registration or may be sold pursuant to Rule 144(k) under the
Securities Act.
(c) Parent shall notify Seller promptly (i) when the registration
statement has become effective with respect to the Shelf Registration and when
any post-effective amendments and supplements thereto become effective, (ii) of
the issuance of any stop order suspending the effectiveness of the Shelf
Registration or the initiation of any proceedings for that purpose, and (iii) of
the happening of any event during the period the registration statement with
respect to the Shelf Registration is effective as a result of which such
registration statement or the related prospectus contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statement therein not misleading.
(d) Parent may delay effecting or causing to be effected a
supplement or post-effective amendment to the registration statement with
respect to the Shelf Registration or the related prospectus that would be
required under the Securities Act if Parent has a valid business purpose to
delay disclosure of material non-public information relating to any transaction,
for a period not to exceed 60 days in any 365-day period; provided that Parent
shall
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notify Seller in writing of its intention to effect such delay, the valid
business purpose of such delay (it being understood by Seller that the
information creating the predicate for such valid business purpose may
constitute material and non-public information which will subject Seller to
restrictions on trading in Parent's securities under federal and state
securities laws until such time as such information has been made publicly
available) and of the date of which such supplement or post-effective amendment
has been filed or declared effective, as the case may be.
(e) Parent may require Seller to furnish to Parent such information
regarding the proposed distribution by Seller of such Registrable Securities as
Parent may from time to time reasonably request in writing. Seller agrees to
furnish promptly to Parent all information required to be disclosed in order to
make the information previously furnished to Parent by Seller not materially
misleading.
(f) Seller agrees that, upon receipt of any notice from Parent of
the happening of any event described in Section 2.2(c)(iii) or 2.2(d) hereof,
Seller will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement with respect to the Shelf Registration until
Seller receives copies of a supplemented or amended prospectus or is otherwise
advised by Parent that disposition of Registrable Securities may resume.
2.3 Registration Expenses. All expenses of Parent incurred in
connection with the registration, filing or qualification of Registrable
Securities hereunder, including, without limitation, all registration, filing
and qualification fees, printing and accounting fees, listing fees and expenses,
fees and expenses of compliance with securities or blue sky laws, fees and
disbursements of counsel for Parent, shall be borne by Parent. Seller shall be
responsible for its own expenses (including underwriting discounts and
commissions) in connection any Piggyback Registration or Shelf Registration.
2.4 Indemnification.
(a) Parent agrees to indemnify Seller, its officers and directors
and each person who controls Seller (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by (i) any
untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto, (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by Parent of any federal or state
securities laws or rules, except in each such case insofar as the same are
caused by or contained in any information furnished in writing to such Parent or
any underwriter by Seller or any underwriter expressly for use in a registration
statement (it being agreed that the information that has been supplied by any
underwriter for use in a registration statement shall be determined by reference
to the indemnification provisions of the underwriting agreement applicable to
such registration).
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(b) Seller will furnish to Parent in writing such information as
Parent reasonably requests for inclusion in any such registration statement or
prospectus and will indemnify Parent, each other selling securityholder, each
underwriter, if any, their respective directors and officers and each person who
controls Parent or any such other selling securityholder or underwriter (within
the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from (i) any untrue or alleged untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission was contained in any information so
furnished in writing by Seller or (ii) any other violation by Seller of any
Federal or state securities laws in connection with sales under such
registration statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. The failure to give timely notice will
not relieve the receiving party of any obligation unless such delay unduly
prejudices such party's ability to defend such claim. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director, or controlling person
of such indemnified party and will survive the transfer of securities after the
completion of the applicable offering.
(e) If the indemnification provided for in this Section 2.4 is
unavailable to a party entitled to indemnification in respect of any losses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the aggregate losses as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a
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material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action; provided,
however, that, in any such case: (1) Seller shall not be required to contribute
any amount in excess of the public offering price of all Registrable Securities
offered and sold by Seller pursuant to such registration statement; and (2) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE III
MISCELLANEOUS
3.1 Entire Agreement; Waivers. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
3.2 Successors and Assigns. This Agreement shall be binding on, and
shall inure to the benefit of, the parties to it and their respective permitted
successors and assigns.
3.3 Effect of Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction of any of its provisions.
3.4 Notices.
(a) A notice required or permitted to be given by one party to
another under this Agreement must be in writing and is treated as being duly
given if it is: (i) sent by air courier to that other party's address; (ii)
delivered personally or by commercial delivery service to that other party's
address; (iii) mailed by registered or certified mail (return receipt requested)
to that other party's address; or (iv) sent by facsimile to the other party
(with printed acknowledgment of completed transmission).
(b) A notice given to a party in accordance with Section 3.4(a) is
treated as having been duty given and received: (i) when delivered (if left at
that party's address or delivered personality or by commercial delivery service
to that other party's address); (ii) two (2) business days after delivery to the
courier (if sent by air courier); or (iii) on the business day of
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receipt of the transmission (if given by facsimile and sent to the facsimile
receiver number of that party with printed acknowledgment of completed
transmission).
To Parent: eLOT, Inc.
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Attention: ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller: Plasmanet, Inc.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copies to: Hall ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for purposes of this paragraph by giving notice
of the new address to each of the other parties in the manner set forth above.
3.5 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York applicable to agreements
made and to be performed wholly within such jurisdiction without regard to the
conflicts of laws provisions thereof. Each of the parties agrees to personal
jurisdiction in any action brought in any court, Federal or State, within the
State of New York having subject matter jurisdiction over matters arising under
this Agreement. Any suit, action or proceeding arising out of or relating to
this
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Agreement shall only be instituted in a Federal or State court located in the
State of New York. Each party waives any objection which it may have now or
hereafter to the laying of the venue of such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
3.6 Waiver of Jury Trial. Each party hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
the actions of the parties in the negotiations, administration, performance and
enforcement thereof.
3.7 Parties in Interest. Except as specifically provided in Section
2.4, nothing in this Agreement, express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties to it and their respective and permitted successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation or action
against any party to this Agreement.
3.8 Severability. Should any provision of this Agreement be
determined to be invalid, it shall be severed from this Agreement and the
remaining provisions shall remain in full force and effect.
3.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
3.10 Attorneys' Fees. Should it become necessary for any party to
this Agreement to employ an attorney (i) to assert any right or enforce any
obligation under this Agreement or (ii) to defend against any action brought by
another party which action arises out of this Agreement, then the prevailing
party shall be entitled to recover reasonable attorneys' fees from the
nonprevailing party.
3.11 Assignment. Seller shall not assign this Agreement without
first obtaining the written consent of Parent. Parent shall not assign its
rights hereunder without the consent of Seller.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
eLOT, INC.
By:
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Name:
Title:
PLASMANET, INC.
By:
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Name:
Title: