ATTACHED IS A FORM OF STOCKHOLDERS' AGREEMENT WHICH EACH OF THE FOLLOWING
INDIVIDUALS HAS EXECUTED WITH THE COMPANY AND XXXXX XXXXXX:
XXXXXXX XXXXXXXX
XXX STUDENT
XXXX XXXXXXXXXX
XXXXXX XXXXXXXX
XXXXXXX X. XXXXXXX
XXXXXX XXXXXXXXX
XXXXX XXXXXX
FANG WAN
XXXXXX XXXXX
NOUGZAR BOUKIIA
XXX XXXXXXXX
THE ONLY PROVISION OF THE AGREEMENT THAT SURVIVES AFTER THE OFFERING IS SECTION
10 GRANTING CERTAIN REGISTRATION RIGHTS. ALL OTHER PROVISIONS TERMINATE UPON THE
OFFERING.
STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of _____________, among INTERNATIONAL SPORTS WAGERING
INC., a corporation organized under the laws of the State of Delaware, having an
office at 000 Xxxxx Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000 (the
"Corporation"), XXXXX XXXXXX, having an address at 00 Xxxxxxx Xxxx, Xxxxx, X.X.
00000 (the "Principal Stockholder"); and _______________ having an address at
_______________________________________ (the "Other Stockholder"; the Principal
Stockholder and the Other Stockholder are sometimes hereinafter referred to
collectively as the "Stockholders").
W I T N E S S E T H:
WHEREAS, each of the Stockholders is the holder of the number of shares of
the Corporation's common stock, $.001 par value (the "Common Stock"), set forth
on SCHEDULE A annexed hereto and made a part hereof; and
WHEREAS, the Stockholders desire to provide for continuity and stability
in the affairs of the Corporation and to impose certain restrictions with
respect to the transfer or other disposition of the Common Stock upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereby agree as follows:
1. Restrictions on Disposition of Shares.
(a) The Other Stockholder shall not at any time during the period
after the date of this Agreement and prior to the second (2nd) anniversary of
the date of this Agreement (the "Initial Holding Period"), sell, assign,
transfer, grant a proxy to any person to vote or otherwise act in respect of,
grant a participation in, grant a security interest in, pledge, encumber or
otherwise dispose of, whether by operation of law or otherwise (any of the
foregoing being referred to hereinafter as a "Disposition"), any shares of
Common Stock, now owned or hereafter acquired by the Other Stockholder, other
than to the Principal Stockholder or his designee or to an Other Stockholder
Affiliate (as defined in Section 1.(c) hereof), except with the Principal
Stockholder's prior written consent.
(b) (i) At any time after the Initial Holding Period, the Other
Stockholder shall not, without the prior written consent of the Principal
Stockholder, effect a Disposition of any shares of Common Stock, now owned or
hereafter acquired by the Other Stockholder, other than to the Principal
Stockholders or his designee, or to the Corporation except upon the following
terms and conditions: Notwithstanding the foregoing, if at any time after the
expiration of the Initial Holding Period, the Other Stockholder desires to sell
all or any portion of the shares of Common Stock held by the Other Stockholder
(the "Offered Shares"), and the Other Stockholder shall have received an
irrevocable bona fide, arm's-length, written offer (the "Bona
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Fide Offer") for the purchase of the Offered Shares, for cash, notes or other
consideration, or any combination thereof, from a prospective purchaser (the
"Prospective Purchaser"), the Other Stockholder shall give a notice in writing
(the "Option Notice") to each of the Corporation and the Principal Stockholder
containing a copy of the original executed Bona Fide Offer, setting forth the
price and terms and conditions of the proposed sale, the name and address of the
Prospective Purchaser, and the effective date of such Option Notice. For a
period of 20 business days following the effective date of such Option Notice
(the "Principal Stockholder's Option Period"), the Principal Stockholder shall
have an option, on the terms and conditions set forth in this Section 1.(b), to
purchase all or any portion of the Offered Shares. The Principal Stockholder's
option may be exercised by giving a written counter-notice (a "Notice of
Exercise") to the Other Stockholder within the Principal Stockholder's Option
Period, setting forth the number of the Offered Shares with respect to which the
Principal Stockholder's option is exercised. If, upon the expiration of the
Principal Stockholder's Option Period, the Principal Stockholder has failed to
exercise his option to purchase all of the Offered Shares, then for a period of
15 business days following the expiration of the Principal Stockholder's Option
Period (the "Corporation's Option Period"), the Corporation shall have an
option, on the terms and conditions set forth in this Section 1.(b), to purchase
all of the remaining Offered Shares. The Corporation's option
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may be exercised by giving a Notice of Exercise to the Other Stockholder within
the Corporation's Option Period, setting forth the number of the Offered Shares
with respect to which the Corporation's option is exercised.
(ii) Upon the timely giving of the Notice of Exercise by the
Principal Stockholder and/or the Corporation, the Principal Stockholder and/or
the Corporation, as the case may be, shall be obligated to purchase from the
Other Stockholder, and the Other Stockholder shall be obligated to sell to the
Principal Stockholder and/or the Corporation, as the case may be, the number of
the Offered Shares with respect to which each such party's option has been
exercised, at the price and on the terms and conditions specified in the Bona
Fide Offer; provided, however, that if the Principal Stockholder and/or the
Corporation do not give Notice(s) of Exercise setting forth their intention to
purchase all of the Offered Shares, then in such event any Notice(s) of Exercise
shall be null and void. If the Bona Fide Offer was for consideration consisting
of other than cash or notes (or a combination thereof), or for consideration
consisting in part of other than cash or notes (or a combination thereof), then
the consideration to be paid by the Principal Stockholder and/or the
Corporation, as the case may be, for the Offered Shares shall consist of cash or
notes, to the extent that the consideration in the Bona Fide Offer consisted of
cash or notes, and, to the extent such consideration consisted of other than
cash or notes, a cash consideration equal to the fair market
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value of such non-cash or non-note consideration set forth in the Bona Fide
Offer, which fair market value shall promptly be determined by an investment
banker mutually acceptable to the Other Stockholder, the Principal Stockholder
and the Corporation. If such parties are unable to agree within 60 days after
the expiration of the Corporation's Option Period, the appraisal shall be
conducted by an investment banker designated, upon the application of the Other
Stockholder, the Principal Stockholder or the Corporation, by the American
Arbitration Association in New York, New York. The cost of the appraisal shall
be borne equally by the Other Stockholder, on the one hand, and the Principal
Stockholder and/or the Corporation, on the other hand (such share of the
Principal Stockholder and/or the Corporation to be borne by each of such parties
in proportion to the number of the Offered Shares with respect to which each
such party's option has been exercised). The decision of such investment banker
shall be final and binding upon the Other Stockholder, the Principal Stockholder
and the Corporation, and each of their respective heirs, legatees,
administrators, executors, successors and assigns.
(iii) If the Notice(s) of Exercise shall not have been duly
given as to all of the Offered Shares as aforesaid by the Principal Stockholder
and the Corporation, the Other Stockholder may, within a period of 60 days after
the expiration of the Corporation's Option Period, sell the Offered Shares to
the Prospective Purchaser upon the terms and conditions, and for
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a price not lower than the price, set forth in the Bona Fide Offer; provided,
however, that if the sale to the Prospective Purchaser is not completed within
such 60-day period, the Offered Shares shall continue to remain subject to all
the provisions of this Section 1.(b). If the Other Stockholder obtains the right
to sell the Offered Shares to a Prospective Purchaser pursuant to this Section
1.(b), such Prospective Purchaser shall, as a condition to such sale, be
required to execute and deliver a counterpart of this Agreement, whereby such
Prospective Purchaser agrees to be subject to and bound by all of the terms and
provisions of this Agreement to the same extent as the Stockholders party
hereto.
(iv) The closing of any purchase by the Principal Stockholder
or the Corporation under this Section 1.(b) shall take place at the office of
the Corporation or at such other place designated by the Corporation or the
Principal Stockholder, as the case may be, on a date designated by the
Corporation or the Principal Stockholder, as the case may be, which date shall
not be more than 30 days following the expiration of the Principal Stockholder's
or the Corporation's Option Period, as the case may be.
(c) Notwithstanding anything to the contrary contained herein, the
Other Stockholder and any Other Stockholder Affiliate shall have the right at
any time during the term of this Agreement and at any time during such party's
lifetime or upon such party's death to transfer, whether by sale, by gift inter
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vivos, by will, or by laws of descent and distribution, or otherwise, all or any
portion of the shares of Common Stock of the Corporation then owned by it to (i)
the Other Stockholder's spouse, children or grandchildren, (ii) a trust for the
benefit of the Other Stockholder's spouse, children or grandchildren, or (iii) a
partnership the general partner of which is the Other Stockholder or a
corporation all of whose outstanding shares are owned of record and
beneficially, by the Other Stockholder (each of the foregoing parties described
in clauses (i)-(iii) above being an "Other Stockholder Affiliate" and being
deemed to be included in the definition of the Other Stockholder for all
purposes of this Agreement) and the provisions of Section 1.(b) hereof shall not
apply to any such transfer. Any permitted assignee or designee of the Other
Stockholder or an Other Stockholder Affiliate pursuant to this Section 1.(c)
shall, as a condition to such transfer, be required to execute and deliver a
counterpart of this Agreement, whereby such party agrees to be subject to and
bound by all of the terms and provisions of this Agreement to the same extent as
the Stockholders party hereto, and unless such an agreement is so executed and
delivered, such transfer shall be null and void.
2. Certain Prohibited Transfers. Notwithstanding anything to the contrary
contained herein, the Other Stockholder shall not, at any time during the term
of this Agreement, effect a Disposition of any shares of Common Stock, now owned
or hereafter acquired by the Other Stockholder, to any person or entity
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engaged in any business that is competitive with any business then engaged in by
the Corporation, or to any person or entity which directly or indirectly
controls, or is controlled by, or is under common control with, any such person
or entity.
3. Section 3 is intentionally omitted.
4. Legend on Share Certificates. All certificates representing shares of
Common Stock now or hereafter issued by the Corporation to any Stockholder or to
any of such Stockholder's permitted assignees or designees shall be subject to
this Agreement and shall bear the following legends:
"The shares evidenced by this certificate or any certificate issued
in exchange or transfer therefor are and will be subject to, and may not
be transferred except in accordance with, the terms of a certain
Stockholders Agreement, dated as of June 20, 1996 (as the same may be
subsequently amended, modified, restated or supplemented), by and among
certain stockholders of the Corporation and the Corporation, which
agreement provides, among other things, for restrictions on the sale,
transfer and disposition of the shares of the Corporation, an executed
copy of which agreement is on file at the principal office of the
Corporation."
"The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state and may be offered and sold only if so registered or if the
Corporation has been furnished with an opinion of counsel, reasonably
satisfactory to the Corporation, to the effect that an exemption from such
registration is available to the holder of the shares."
5. Term. The term of this Agreement shall commence as of the date first
above written and except as otherwise provided herein shall continue until the
earliest to occur of (a) the tenth (10th) anniversary of the date hereof; (b)
the Corporation
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being adjudicated bankrupt or insolvent, or an order being entered, remaining
unstayed by appeal or otherwise for 120 days, appointing a receiver or trustee
for the Corporation, or for substantially all of its property, or approving a
petition seeking reorganization or other similar relief under the bankruptcy or
other similar laws of the United States or of any state, or the Corporation
filing a petition seeking any of the foregoing or consenting thereto, or filing
a petition to take advantage of any debtors' acts, or making a general
assignment for the benefit of creditors, or admitting in writing its inability
to pay its debts as they mature; (c) the consummation of an underwritten public
offering of equity securities of the Corporation pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") that provides gross proceeds to the Corporation of not less
than $5,000,000; and (d) the termination of this Agreement pursuant to a written
agreement executed by all of the parties hereto; provided, however, that the
Stockholders' rights under Section 10 hereof shall survive any termination of
this Agreement; and provided, further, however, that Section 1 of this Agreement
shall terminate in any event on the fifth (5th) anniversary of the date hereof.
6. Representations and Warranties of the Corporation. The Corporation
hereby acknowledges, represents and warrants to the Stockholders as follows:
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(a) The Corporation is a corporation validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The Corporation's authorized capital stock consists of
2,500,000 shares of Common Stock, par value $.001 per share of which 1,970,288
shares are issued and outstanding and 500,000 shares of Preferred Stock, par
value $.001 per share, of which none are issued and outstanding. True and
correct copies of the Certificate of Incorporation and the By-laws of the
Corporation are available to the Other Stockholder upon request.
(b) The Corporation has full power and authority (corporate or
otherwise) to execute, deliver and perform this Agreement, and the execution,
delivery and performance of this Agreement will not result in (i) the breach of
or default under, with or without the giving of notice or passage of time, or
both, its Certificate of Incorporation, By-Laws, any mortgage, indenture,
contract, agreement or other arrangement to which it is a party or by which it
or its properties may be bound, (ii) the violation of any law, statute, rule,
decree, order, judgment or regulation binding upon it, or (iii) (except as
contemplated by this Agreement) the creation or imposition of any lien or
encumbrance on any of its properties or assets.
(c) This Agreement and all transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Corporation and constitute a legal,
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valid and binding obligation of the Corporation enforceable against it in
accordance with its terms. The Board of Directors of the Corporation has adopted
appropriate resolutions authorizing the Corporation to enter into this Agreement
and undertaking to fulfill all the terms of this Agreement.
(d) The Corporation owns of record the patent application listed on
SCHEDULE B annexed hereto; provided, however, that the Corporation makes no
representation or warranty with respect to the patentability of any invention
claimed on such SCHEDULE D or the validity or enforceability of any patent that
may be issued to the Corporation.
7. Representations and Warranties of the Stockholders. Each of the
Stockholders hereby acknowledges, represents and warrants to the remaining
Stockholders and to the Corporation as follows:
(a) Such Stockholder owns the number of shares of the Common Stock
set forth on SCHEDULE A annexed hereto, free and clear of all liens, claims,
encumbrances, proxies, pledges, security interests, charges, encumbrances, title
retention agreements or any other liability, claim or restriction on
transferability of any nature whatsoever, other than pursuant to this Agreement.
(b) Such Stockholder has full power and authority to execute,
deliver and perform this Agreement, and the execution, delivery and performance
of this Agreement will not result in (i) the breach of or default under, with or
without the giving of
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notice or passage of time, or both, any mortgage, indenture, contract, agreement
or other arrangement to which it is a party or by which it or its properties may
be bound, (ii) the violation of any law, statute, rule, decree, order, judgment
or regulation binding upon it, or (iii) (except as contemplated by this
Agreement) the creation or imposition of any lien or encumbrance on any of its
properties or assets.
8. Tag Along Rights.
(a) Subject to the provisions of Section 8.(c) hereof, the Principal
Stockholder shall not, during the term of this Agreement, sell, transfer or
otherwise dispose of any of the shares of Common Stock beneficially owned in the
Corporation to any party unless the Principal Stockholder shall first notify the
Other Stockholder in writing of the terms and conditions of such proposed sale,
transfer or other disposition and shall obtain for the Other Stockholder prior
to any such sale, transfer or other disposition, a put option for a period of at
least 15 days to sell, transfer or otherwise dispose to such person on the same
per share terms and at the same per share price as the proposed sale, transfer
or other disposition by the Principal Stockholder, up to that number of shares
of Common Stock then owned by the Other Stockholder that bears the same
proportion to the total number of shares of Common Stock at the time owned by
the Other Stockholder as the number of shares of Common Stock being sold,
transferred or otherwise disposed of by the Principal Stockholder
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bears to the total number of shares of Common Stock at the time owned by the
Principal Stockholder.
(b) In order to exercise such put option, the Other Stockholder
must, within 15 days after the giving of the notice of a proposed sale, transfer
or other disposition of the Common Stock by the Principal Stockholder referred
to in Section 7(a) hereof, deliver to the Principal Stockholder written notice
that the Other Stockholder has elected to sell, transfer or otherwise dispose of
the Other Stockholder's shares of Common Stock pursuant to this Section 8 upon
the same terms and at the same per share price as the proposed sale, transfer or
other disposition by the Principal Stockholder, whereupon such sale, transfer or
other disposition by the Other Stockholder shall be completed contemporaneously
with the proposed sale, transfer or other disposition by the Principal
Stockholder.
(c) Notwithstanding anything to the contrary contained in this
Section 8, the Principal Stockholder, or any Principal Stockholder's Affiliate,
shall have the right at any time during the term of this Agreement to transfer,
whether by sale, by gift inter vivos, by will, or by laws of descent and
distribution, or otherwise, all or any portion of the shares of Common Stock of
the Corporation then owned by it to (i) any such party's spouse, children or
grandchildren, (ii) a trust for the benefit of any such party or such party's
spouse, children or grandchildren, or (iii) a partnership the general partner of
which is the Principal Stockholder or a corporation all of whose outstanding
shares are
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owned of record and beneficially, by the Principal Stockholder (each of the
foregoing parties described in clauses (i)-(iii) above being a "Principal
Stockholder Affiliate" and being deemed to be included in the definition of the
Principal Stockholder for all purposes of this Agreement) and the provisions of
Section 8.(a) hereof shall not apply to any such transfer. Any permitted
assignee or designee of the Principal Stockholder or any Principal Stockholder
Affiliate thereof pursuant to this Section 8.(c) shall, as a condition to such
transfer, be required to execute and deliver a counterpart of this Agreement,
whereby such party agrees to be subject to and bound by all of the terms and
provisions of this Agreement to the same extent as the Stockholders party
hereto, and unless such an agreement is so executed and delivered, such transfer
shall be null and void.
(d) Notwithstanding anything to the contrary contained in this
Section 8, the rights granted to the Other Stockholder in this Section 8 shall
not apply to any transfer by the Principal Stockholder in one or more
transactions of up to a total of 5% of the shares of Common Stock held by him as
of the date hereof, as adjusted to reflect any stock dividends, splits,
contributions, recapitalizations or other similar events; provided that if the
Principal Stockholder proposes to sell or transfer other than pursuant to
Section 8(c) more than 5% of the shares of Common Stock held by him as of the
date hereof in a single transaction or series of related transactions then the
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rights granted to the Other Stockholder in Section 8 shall be applicable.
9. Drag Along. At any time prior to the time the Principal Stockholder
ceases to own less than forty (40%) percent of the issued and outstanding shares
of Common Stock of the Corporation, the Principal Stockholder may, if he elects
(the "Drag Along Election") at any time during such period to sell all of his
shares of Common Stock to a bona fide third-party purchaser not related to,
controlled by or under common control with the Principal Stockholder, cause a
sale of all of the then issued and outstanding shares of Common Stock of the
Corporation owned by the Other Stockholder to be made to such third-party
purchaser in an arm's-length transaction for cash and/or registered, freely
marketable securities. Any such sale of all of the issued and outstanding shares
of the Corporation held by the Other Stockholder must be made on the same terms
and conditions, including the price per share, upon which the Principal
Stockholder has agreed to sell all of his shares of Common Stock to the
third-party purchaser. The Principal Stockholder can trigger a Drag Along
Election by providing a written notice of such election (the "Drag Along
Notice") to the Other Stockholder, such Drag Along Notice to include the price
per share being paid to the Principal Stockholder by such third-party purchaser
and the other material terms and conditions of such sale. Upon the Other
Stockholder's receipt of a Drag Along Notice, the Other Stockholder shall fully
cooperate with the
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Principal Stockholder and shall take all actions and steps to effect such sale
as the Principal Stockholder may deem necessary, desirable or appropriate,
including, without limitation, the prompt delivery to the Principal Stockholder
of duly endorsed stock powers with respect to all of the shares of Common Stock
at such time owned by the Other Stockholder.
10. Registration Rights.
(a) As used in this Section 10, the following terms shall have the
following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Public Offering" shall mean a firm commitment underwritten public
offering of the Common Stock having aggregate minimum gross proceeds to the
Corporation of $5,000,000 (based upon the then current market price or fair
value estimated by the Corporation's underwriter or underwriters).
"Register", "registered" and "registration" shall refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and the applicable rules and regulations promulgated thereunder,
and the declaration or ordering of the effectiveness of such registration
statement.
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"Registration Expenses" shall mean all of the costs, fees and expenses
incurred by the Corporation in compliance with this Section 10, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Corporation (but not counsel for any
Stockholder participating in the registration), blue sky fees and the expense of
any audits incident to or required by any such registration.
(b) Piggyback Registrations.
(i) Right to Piggyback. Whenever the Corporation proposes to
effectuate a Public Offering or to otherwise register any of its securities
under the Securities Act (other than a registration (A) on Form S-8 or S-4 or
any successor or similar form, (B) relating to Common Stock issuable upon
exercise of employee stock options or in connection with any employee benefit or
similar plan of the Corporation, or (C) in connection with a direct or indirect
acquisition by the Corporation of another company in a manner which would permit
registration of Common Stock for sale to the public under the Securities Act)
and the registration form to be used may be used for the registration of the
shares of Common Stock of the Corporation (a "Piggyback Registration"), the
Corporation will give prompt written notice (the "Piggyback Registration
Notice") to each Stockholder and the other stockholders of the Corporation, if
any, who may have similar piggyback registration rights of its intention to
effect such a registration and will, subject to Section 10.(b)(ii) hereof, use
its best efforts to include in such registration all
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of the shares of Common Stock with respect to which the Corporation has received
written requests from any Stockholder and such other stockholders of the
Corporation for inclusion therein within 45 days after the date of the
Corporation's Piggyback Registration Notice to the Stockholders and such other
stockholders.
(ii) Priority on Piggyback Registrations. Notwithstanding any
provision to the contrary contained herein, if a Piggyback Registration is an
underwritten primary registration on behalf of the Corporation, and the
Corporation's underwriter or underwriters advise the Corporation in writing that
the number of securities requested to be included in such registration by the
Corporation and the Stockholders and other stockholders of the Corporation
exceeds the number of securities which in the estimation of such underwriter or
underwriters can reasonably be expected to be sold in such offering, or if such
underwriter determines that the sale of shares by selling stockholders in such
offering would in any way adversely affect the offering by the Corporation, the
Corporation will include in such registration (a) first, the securities the
Corporation proposes to sell, and (b) second, if and only if additional shares
of Common Stock can be included in such registration in the estimation of the
Corporation's underwriter or underwriters, the shares of Common Stock, if any,
which were requested by the Stockholders and the other stockholders to be
included in such registration, on a pro rata basis with respect to each such
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Stockholder and other stockholders based upon its respective percentage
ownership of the aggregate number of shares of Common Stock requested to be
included in such registration by all of the stockholders of the Corporation
electing to participate in such registration. No such reduction shall reduce the
securities being offered by the Corporation for its own account to be included
in the registration and underwriting. If any Stockholder or any other
stockholder disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Corporation and the Corporation's
underwriter, delivered at least 25 days prior to the effective date of the
registration statement. Any shares of Common Stock excluded or withdrawn from
such underwriting shall be withdrawn from the registration. All Stockholders and
other stockholders proposing to distribute their shares of Common Stock through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected by the Corporation for such
underwriting.
(c) Registration Expenses. In the event of a Piggyback Registration,
the Corporation shall bear all of the Registration Expenses except that each
Stockholder and each of the other stockholders of the Corporation participating
in a Piggyback Registration shall be responsible for (i) its own legal fees and
expenses in connection with such registration and (ii) its proportionate share
of all fees and commissions payable to brokers and underwriters in connection
with such registration,
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such proportionate share to be equal to a fraction the numerator of which is the
number of shares of Common Stock being so registered by such Stockholder or
other stockholder, as the case may be, and the denominator of which is the
aggregate number of shares of Common Stock being registered by the Corporation
and all of the stockholders of the Corporation (including the Stockholders)
participating in such registration.
(d) Registration Procedures. In connection with any Piggyback
Registration, the Corporation will use its best efforts to effect the
registration and the sale of the securities offered thereby and the Corporation
will as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement with respect to such securities, which registration statement will
state that the Stockholders and other stockholders covered thereby may sell
their shares of Common Stock under such registration statement and use its best
efforts to cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Corporation will furnish to the counsel selected by a
majority of the selling stockholders covered by such registration statement
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to
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keep such registration statement effective for the period set forth in
subparagraph (d)(vi) hereof and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period;
(iii) furnish to each stockholder participating in such
registration such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such stockholder may reasonably request in order to facilitate the public
offering of the securities covered by such registration statement;
(iv) use its best efforts to register or qualify the shares of
Common Stock offered pursuant to such registration by the Stockholders under
such other securities or blue sky laws of such jurisdictions as any Stockholder
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable each Stockholder to consummate the
disposition in such jurisdictions of the shares of Common Stock owned by such
Stockholder (provided that the Corporation will not be required to (a) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (b) subject itself to taxation in
any such jurisdiction, or (c) consent to general service of process in any such
jurisdiction, and provided further that
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notwithstanding any provision to the contrary contained herein, if any
jurisdiction in which such shares of Common Stock shall be qualified shall
require that expenses in that jurisdiction be borne by the stockholders
participating in the registration rather than the Corporation, then such
expenses shall be payable by the stockholders participating in the registration
pro rata (based upon the percentage ownership of each stockholder of shares of
Common Stock being registered with respect to all of the shares of Common Stock
being registered by all of the stockholders), to the extent required by such
jurisdiction);
(v) notify each stockholder selling shares of Common Stock, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any fact necessary to make the statements
contained therein not misleading, and, at the request of any such stockholder,
the Corporation will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; and
(vi) keep such registration effective for a period of 90 days
or until the selling stockholders have completed the
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distribution described in the registration statement relating thereto, whichever
first occurs.
(e) Indemnification.
(i) The Corporation will indemnify each Stockholder
participating in a Piggyback Registration, and each of its agents, employees,
controlling persons within the meaning of the Securities Act, officers,
directors and partners and each underwriter, if any, participating in such
registration and each person which controls any such underwriter within the
meaning of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus, offering circular or other document
incident to any such registration or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements contained therein not misleading, or any violation by the
Corporation of the Securities Act or any rule or regulation thereunder
applicable to the Corporation in connection with any such registration and will
reimburse such Stockholder, each of its agents, employees, officers, directors
and partners, and each person controlling such Stockholder and each such
underwriter and each person which controls any such underwriter, for any legal
and any other expenses reasonably incurred by any such party in connection with
investigating or defending any such claim, loss, damage,
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liability or action; provided, however, that the Corporation will not be liable
in any such case to the extent that any such claim, loss, damage, liability,
action or expense arises out of or is based on any untrue statement or omission
based upon written information furnished to the Corporation by such Stockholder,
or any such agent, employee, officer, director, partner or controlling person or
any underwriter or controlling person thereof and stated to be specifically for
use therein.
(ii) Each Stockholder will, if shares of Common Stock held by
it are included in the securities as to which a Piggyback Registration is being
effected, indemnify the Corporation and each of its employees, agents,
controlling persons within the meaning of the Securities Act, directors,
partners and officers and each underwriter, if any, participating in such
registration and each person which controls any such underwriter within the
meaning of the Securities Act, and each other stockholder participating in such
registration and each of their agents, employees, controlling persons within the
meaning of the Securities Act, officers, directors and partners, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document incident to such registration or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements
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contained therein not misleading, or any violation by such Stockholder of the
Securities Act or any rule or regulation thereunder applicable to such
Stockholder in connection with any such registration and will reimburse the
Corporation and such other stockholders and each of their agents, employees,
directors, officers, partners, underwriters and control persons for any legal or
any other expenses reasonably incurred by any such party in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Corporation by such Stockholder or any agent, employee, officer, director,
partner or controlling person thereof and stated to be specifically for use
therein; provided, however, that the obligations of each Stockholder hereunder
are several only and not joint and the aggregate obligations of each Stockholder
hereunder shall be limited to an amount equal to the gross proceeds received by
such Stockholder from the offering of the shares of Common Stock registered by
such Stockholder.
(iii) Each party entitled to indemnification under this
Section 10.(e) (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has
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actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that the Indemnified Party may
participate in such defense at such Indemnified Party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 10.(e). The parties to this Agreement reserve any rights to make a claim
under this Agreement for damages actually incurred by reason of any failure of
the Indemnified Party to give prompt notice of a claim. To the extent counsel
for the Indemnifying Party shall have a conflict in representing both an
Indemnified Party and the Indemnifying Party or if an Indemnifying Party does
not assume the defense of any such claim or litigation, the Indemnified Party
shall be entitled to separate counsel at the expense of the Indemnifying Party.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the prior consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation and the
acknowledgement by the claimant or plaintiff to such Indemnified Party that
there was no wrongdoing or culpability on the part of the Indemnified Party in
respect to such claim or litigation. Each Indemnified Party
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shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
(f) Information Provided by Stockholders. Each Stockholder holding
shares of Common Stock included in any Piggyback Registration shall furnish to
the Corporation such information regarding such Stockholder and the intended
method of disposition of its shares of Common Stock proposed by such Stockholder
as the Corporation may reasonably request in writing and as shall be reasonably
required in connection with any such Piggyback Registration. Each Stockholder
agrees to sell its securities in accordance with the terms of any underwriting
arrangements approved pursuant to Section 10.(g) hereof and shall complete and
execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably and customarily required under the
terms of such underwriting arrangements.
(g) Selection of Underwriters. The Corporation shall have the right,
in its sole discretion, to select the investment banker(s) and manager(s) in
connection with any Piggyback Registration (such banker(s) and manager(s) to be
a firm or firms of nationally recognized standing), to administer the offering
of any such registration of securities of the Corporation pursuant to this
Section 10.
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(h) Holdback Agreements. Each Stockholder hereby agrees that it
shall not, to the extent requested by the Corporation or any underwriter of
securities of the Corporation, sell or otherwise transfer or dispose of any
shares of Common Stock for a period of up to 180 days following the effective
date of a registration statement of the Corporation filed under the Securities
Act.
(i) Delay of Registration. No Stockholder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any registration
of the securities of the Corporation as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 10.
11. Section 11 is intentionally omitted.
12. Notices. All notices, offers and acceptances ("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 shall also be sent in similar fashion to the Corporation and
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000,
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Attention: Xxxxxxx X. Xxxxxxx, Esq. All Notices shall be deemed given when
delivered, sent or transmitted in accordance herewith.
13. 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) The provisions of this Agreement shall apply, to the full extent
set forth herein with respect to the shares of Common Stock now or hereinafter
owned by each Stockholder, to any and all securities of the Company or any
successor or assign of the Company (whether by merger, consolidation or
otherwise) that may be issued in respect of, in exchange for, or in substitution
of such shares of Common Stock, and shall be appropriately adjusted for any
stock dividends, stock splits, reverse splits, combinations, recapitalizations
and the like occurring after the date hereof.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legatees,
distributees, executors, administrators, successors and permitted assigns. 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
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administrators of such transferee and the Corporation may refuse to permit the
transfer of such stock on its books.
(d) 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.
(e) This Agreement may be executed in counterparts, each of which
shall be deemed an original, but which shall together constitute a single
instrument.
(f) 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 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
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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.
(g) This Agreement shall be governed by the laws of the State of New
York applicable to contracts made and wholly performed within that State.
(h) All captions and headings contained in this Agreement are for
the convenience of the parties only and shall not affect the interpretation or
construction of this Agreement.
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IN WITNESS WHEREOF, the parties have signed and sealed this Agreement.
INTERNATIONAL SPORTS WAGERING INC.
By:
---------------------------
Xxxxx Xxxxxx, Chairman
of the Board, Chief Executive
Officer and President
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