WARRANT
REGISTRATION RIGHTS AGREEMENT
AUTOTOTE CORPORATION
Warrants to Purchase 2,900,000 Shares of Class A Common Stock
Dated as of September 6, 2000
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
and
LB I GROUP INC.
This Warrant Registration Rights Agreement (this "Agreement") is made and
entered into as of September 6, 2000, among Autotote Corporation, a Delaware
corporation (the "Company"), and Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation and LB I Group Inc. (collectively, the "Initial Holders").
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, the Company has agreed to provide the registration rights set
forth in this Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Warrants.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Advice: As defined in Section 4(b) hereof.
Black Out Notice: As defined in Section 4(b) hereof.
Black Out Period: As defined in Section 3(a) hereof.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Holder: As defined in Section 2 hereof.
NASD: National Association of Securities Dealers, Inc.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Registration Statement: Any registration statement of the Company relating
to the registration for resale of Transfer Restricted Securities that is filed
pursuant to the provisions of this Agreement and including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
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Rule 144: Rule 144 promulgated under the Act.
Transfer Restricted Securities: Each Warrant and Warrant Security until
the earlier to occur of (i) the date on which such Warrant or Warrant Security
(other than any Warrant Security issued upon exercise of a Warrant in accordance
with a Registration Statement) has been disposed of in accordance with a
Registration Statement and (ii) the date on which such Warrant or Warrant
Security (or the related Warrant) is distributed to the public pursuant to Rule
144 under the Act.
Warrants: Collectively, (i) the Warrant, of even date herewith, issued to
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation initially to acquire
2,320,000 shares of Class A Common Stock, (ii) the Warrant, of even date
herewith, issued to LB I Group Inc. initially to acquire 580,000 shares of Class
A Common Stock, and (iii) any additional warrants of the same series as the
foregoing which may be issued from time to time in accordance with the terms
hereof and thereof.
Warrant Securities: Collectively, the shares of Class A Common Stock
issuable upon exercise or redemption of the Warrants, as adjusted pursuant to
the terms of the Warrants from time to time, and all other securities which
issuable upon exercise or redemption of the Warrants pursuant to their terms.
2. Holders
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such person is the holder of record of Transfer Restricted
Securities.
3. Shelf Registration
(a) Shelf Registration. The Company shall prepare and cause to be filed
with the Commission on or before 90 days from the Closing Date pursuant to Rule
415 under the Act a Registration Statement on the appropriate form relating to
resales of Transfer Restricted Securities by the Holders thereof and the
issuance of Warrant Securities upon the exercise or redemption of the Warrants
sold pursuant to such Registration Statement. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective by the Commission on or before 180 days after the Closing
Date.
To the extent necessary to ensure that the Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 3(a), the Company shall use its
commercially reasonable efforts to keep any Registration Statement required by
this Section 3(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Section 4(a) hereof and in
conformity in all material respects with the requirements of this Agreement, the
Act and the policies, rules
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and regulations of the Commission as announced from time to time, until the
second anniversary of the effective date of the Registration Statement;
provided, however, that such obligation shall expire before such date if the
Company delivered to each Holder a written opinion of counsel to the Company
(which opinion of counsel shall be reasonably satisfactory to the Initial
Holders) that all Holders (other than Affiliates of the Company) of Warrants and
Warrant Securities may resell the Warrants and the Warrant Securities without
registration under the Act and without restriction as to the manner, timing or
volume of any such sale; and provided, further, that notwithstanding the
foregoing, any Affiliate of the Company may, with notice to the Company, require
the Company to keep the Registration Statement continuously effective for
resales by such Affiliate for so long as such Affiliate holds Warrants or
Warrant Securities, including as a result of any market-making activities or
other trading activities of such Affiliate. Notwithstanding the foregoing, the
Company shall not be required to amend or supplement the Registration Statement,
any related prospectus or any document incorporated therein by reference, for a
period (a "Black Out Period") not to exceed, for so long as this Agreement is in
effect, an aggregate of 60 days in any calendar year, in the event that (i) an
event occurs and is continuing as a result of which the Registration Statement,
any related prospectus or any document incorporated therein by reference as then
amended or supplemented would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (ii)(A) the Company determines in its
good faith judgment that the disclosure of such event at such time would have a
material adverse effect on the business, operations or prospects of the Company
or (B) the disclosure otherwise relates to a material business transaction which
has not yet been publicly disclosed; provided, however, that such Black Out
Period shall be extended for any period, not to exceed an aggregate of 30 days
in any calendar year, during which the Commission is reviewing any proposed
amendment or supplement to the Registration Statement, any related prospectus or
any document incorporated therein by reference which has been filed by the
Company.
(b) Provision by Holders of Certain Information in Connection with the
Registration Statement. No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Registration Statement pursuant
to this Agreement unless and until such Holder furnishes to the Company in
writing, within 10 days after receipt of a request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, or such other
information as the Company may reasonably request under the Act for use in
connection with any Registration Statement or Prospectus or preliminary
prospectus included therein or in any application to the NASD. Each Holder
agrees to promptly furnish additional information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
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4. Registration Procedures
(a) In connection with the Registration Statement and any related
Prospectus required by this Agreement, the Company shall:
(i) comply in all material respects with all the provisions of this
Section 4(a) and use its commercially reasonable efforts to effect such
registration to permit the sale of the Transfer Restricted Securities
being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the
Company pursuant to Section 3(b) hereof), and pursuant thereto the Company
will prepare and cause to be filed with the Commission a Registration
Statement relating to the registration on any appropriate form under the
Act, which form shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance
with the provisions hereof;
(ii) use its commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 of this
Agreement. Upon the occurrence and during the continuance of any event
that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain an untrue statement of material fact or
omit to state any material fact necessary to make the statement therein,
in the light of the circumstances under which they were made, not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company shall, subject to Section 3(a), file promptly an appropriate
amendment to such Registration Statement or a supplement to the
Prospectus, as applicable, curing such defect, and, in the case of an
amendment, use its commercially reasonable efforts to cause such amendment
to be declared effective as soon as practicable thereafter;
(iii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3; use its commercially reasonable
efforts to cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Act, and to comply in all material respects with Rules 424,
430A and 462, as applicable, under the Act in a timely manner; and comply
in all material respects with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
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(iv) promptly advise each Holder whose Transfer Restricted
Securities have been included in the Registration Statement (each, a
"Relevant Holder") and the Initial Holders and, if reasonably requested in
writing by such person, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any applicable Registration Statement or
any post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
under the Act or of the suspension by any state securities commission of
the qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company shall use its commercially
reasonable efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
(v) subject to Section 4(a)(ii), if any fact or event contemplated
by Section 4(a)(iv)(D) hereof shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(vi) furnish to each Relevant Holder and the Initial Holder, before
filing with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including, upon reasonable request,
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such persons in connection with such sale, if any, for a period
of
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at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such person shall reasonably object in
writing to the Company within five Business Days after the receipt
thereof. Such person shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue
statement of a material fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading or fails to comply with the
applicable requirements of the Act;
(vii) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Relevant Holder and the Initial
Holder, make the Company's representatives available for discussion of
such document and other customary due diligence matters, upon reasonable
notice, and, to the extent reasonably practicable, include such
information in such document prior to the filing thereof as such persons
may reasonably request;
(viii) make available, at reasonable times and upon reasonable
notice, for inspection by each Relevant Holder and the Initial Holders and
any attorney or accountant retained by such persons, all financial and
other records and pertinent corporate documents of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested in writing by any such person, attorney or accountant
in connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; provided, however, that any information that is reasonably
and in good faith designated by the Company in writing as confidential at
the time of delivery of such information shall be kept confidential by
such persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such information is required by
law (including any disclosure requirements pursuant to federal securities
laws in connection with the filing of such Registration Statement or the
use of any Prospectus, except if the Company obtains "confidential
treatment" for any document or information in accordance with the rules of
the Commission), (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard such
information by such person or (iv) such information becomes available to
such person from a source other than the Company and its subsidiaries and
such source is not known, after due inquiry, by such person to be bound by
a confidentiality agreement;
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(ix) if reasonably requested by any Relevant Holder or by the
Initial Holders, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as any such person reasonably requests to have
included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(x) furnish to the Initial Holders and each Relevant Holder upon
reasonable request, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including, upon the reasonable request of such Person, all
documents incorporated by reference therein and all exhibits (including,
if so requested, exhibits incorporated therein by reference);
(xi) deliver to the Initial Holders and each Relevant Holder,
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
persons reasonably may request; the Company hereby consents to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each Initial Holder and each Relevant Holder in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto and all
market-making activities of the Initial Holders, as the case may be;
(xii) upon the request of any Relevant Holder or the Initial
Holders, enter into such customary agreements (including underwriting
agreements) as are customary in comparable offerings and make such
customary representations and warranties and take all such other
reasonable actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any applicable Registration Statement contemplated by this Agreement as
may be reasonably requested in writing by any Relevant Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company shall:
(A) upon the reasonable request of any Relevant Holder,
furnish (or in the case of paragraphs (2) and (3), use its
commercially reasonable efforts to cause to be furnished) to each
such Holder, upon the effectiveness of the Registration Statement:
(1) a certificate, signed on behalf of the Company by
(x) the President or any Vice President and (y) a principal
financial or account-
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ing officer of the Company, confirming the matters such person
may reasonably request;
(2) an opinion, dated the date of effectiveness of the
Registration Statement, of counsel for the Company covering
such matters as such person may reasonably request, and in any
event including a statement to the effect that such counsel
has participated in conferences with officers and other
representatives of the Company and representatives of the
independent public accountants for the Company and has
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements; and that such counsel advises that, on the
basis of the foregoing, no facts came to such counsel's
attention that caused such counsel to believe that the
applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date contained an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and schedules
and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of
effectiveness of the Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings; and
(B) deliver such other documents and certificates as may be
reasonably requested in writing by such Holders to evidence
compliance with the matters covered in clause (A) above and with any
customary conditions contained in the underwriting agreement or
other such agreements entered into by the Company pursuant to this
clause;
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(xiii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any and
all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject
it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not so subject;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Registered Securities in such denominations and
such names as the selling Holders may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xv) use its commercially reasonable efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xiii)
above;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Relevant Holder or its
designee with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository Trust
Company;
(xvii) otherwise use its commercially reasonable efforts to comply
in all material respects with all applicable rules and regulations of the
Commission so long as any provision of this Agreement shall be applicable,
and make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective date
of the Registration Statement (as such term is defined in Rule 158(c)
under the Act); and
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(xviii) provide promptly to each Relevant Holder and the Initial
Holders, upon reasonable request, each document filed after the date of
this Agreement with the Commission pursuant to the requirements of Section
13 or Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security and the Initial Holders agree that, upon receipt of
the notice from the Company of the commencement of a Black Out Period (in each
case, a "Black Out Notice"), such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus referred to in Section 4(a)(v) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (the "Advice"). Each Holder
receiving a Black Out Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
which have been replaced by the Company with more recently dated Prospectuses or
(ii) deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of the Black Out Notice. The time period regarding the effectiveness of
such Registration Statement set forth in Section 3 hereof shall be extended by a
number of days equal to the number of days in the period from and including the
date of delivery of the Black Out Notice to and including the date when each
Holder that received a Black Out Notice shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 4(a)(v) hereof or
shall have received the Advice.
5. Registration Expenses
All expenses incident to the Company's performance of or compliance with
this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees; (ii) all reasonable fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all reasonable expenses of printing (including printing Prospectuses), messenger
and delivery services and telephone; (iv) all reasonable fees and disbursements
of counsel for the Company; (v) all applications and filing fees in connection
with listing the Warrant Securities on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
reasonable fees and disbursements of independent certified public accountants of
the Company (including the expenses of any special audit and comfort letters
required by or incident to such performance). Notwithstanding anything in this
Section 5 to the contrary, the Company shall not be required to pay any
underwriting discounts, commissions or transfer taxes, if any, relating to the
sale of disposition of any Holder's Transfer Restricted Securities.
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The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any person, including special experts, retained by the
Company.
6. Indemnification
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, officers, partners, employees, representatives and agents and each
person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) directly or indirectly caused by,
related to, based upon, arising out of or in connection to any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Transfer Restricted Securities, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any Holder furnished in writing to the
Company by any such Holder.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors and
officers, and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company, to the same extent
as the foregoing indemnity from the Company set forth in Section 6(a) hereof,
but only with reference to information relating to such Holder furnished in
writing to the Company by such Holder expressly for use in any Registration
Statement. In case any action or proceeding shall be brought against the Company
or its directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company, and the Company, such
directors or officers or such controlling person shall have the rights and
duties given to each Holder by the preceding paragraph. In no event shall any
Holder, its directors, officers or any person who controls such Holder be liable
or responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages that such Holder, its directors, officers or any person who controls
such
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Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 6(a) or 6(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing,
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that,
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 6(a) and 6(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 6(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party, unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 6(a), and by
the Company, in the case of parties indemnified pursuant to Section 6(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without the indemnifying party's written consent if the settlement
is entered into more than 60 days after the indemnifying party shall have
received a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the expense
of the indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement request.
Except as provided in the preceding sentence, no indemnifying party shall be
liable for any settlement effected without its consent. The indemnifying party
shall not, without the prior written consent of the indemnified party, effect
any settlement or compromise of, or consent to the entry of judgment
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with respect to, any pending or threatened action in respect of which the
indemnified party is or could have been a party and indemnity or contribution
may be or could have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have been the
subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this Section 6
is unavailable to an indemnified party under Section 6(a) or Section 6(b) hereof
(other than by reason of exceptions provided in those sections) in respect of
any losses, claims, damages, liabilities, expenses or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities, expenses or judgments
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and of the Holders, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or by the Holders, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities,
expenses and judgments referred to above shall be deemed to include, subject to
the limitations set forth in Section 6(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities, expenses or judgments referred to above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities, expenses or judgments. Notwithstanding the
provisions of this Section 6, no Holder, its directors, its officers or any
person, if any, who controls such Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (i) the amount paid by such
Holder for such Transfer Restricted
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Securities plus (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
(e) The Company agrees that the indemnity and contribution provisions of
this Section 6 shall apply to the Initial Holders to the same extent, on the
same conditions, as it applies to Holders.
7. Rule 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
8. Miscellaneous
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply in all material respects with its obligations under Section 3
hereof may result in material irreparable injury to the Initial Holders or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Holders or any Holder may obtain such relief as
may be required under applicable law to specifically enforce the Company's
obligations under Section 3 hereof.
(b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
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(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless (i) in the case of this Section
8(c)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities, and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the Company or its
Affiliates).
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered, return receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Company; and
(ii) if to the Company:
Autotote Corporation
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
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The address or person or entity to whose attention any notice or
communication shall be given may be changed in accordance with the provisions of
this Section 8(e).
Upon the date of filing a Registration Statement, notice shall be
delivered to the Initial Holders (in the form attached hereto as Exhibit A) and
shall be addressed to: Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
Attention: Xxxxxx Xxxxxxxx (Compliance Department), 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent Holders; provided, however, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Warrants. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and such person shall be entitled to receive the
benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
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referred to herein with respect to the registration rights granted with respect
to the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AUTOTOTE CORPORATION
By:________________________________
Name:
Title:
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:_________________________________
Name:
Title:
XXXXXX BROTHERS INC.
By:_________________________________
Name:
Title:
EXHIBIT A
NOTICE OF FILING OF
WARRANT REGISTRATION STATEMENT
To: Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx (Compliance Department)
Fax: (000) 000-0000
From: Autotote Corporation
Warrants to Purchase Shares of Class A Common Stock
Date:
For your information only (NO ACTION REQUIRED):
Today, __________, we filed a Shelf Registration Statement with the
Securities and Exchange Commission. We currently expect this registration
statement to be declared effective within ___ business days of the date hereof.