EXHIBIT 10.79
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of August 17, 2001 by and between SportsTrac Systems, Inc., a Delaware
corporation (the "Company"), and First Allied Securities, Inc., a New York
corporation (the "Investor").
INTRODUCTION
The Company executed in favor of the Investor a Warrant dated the date
hereof between the Company and the Investor, the form of which is attached
hereto as Exhibit A (the "Warrant Agreement"), pursuant to which the Investor
may acquire from the Company certain units of the Company's securities, which
units are composed of Common Stock and certain other warrants to purchase Common
Stock (the Warrant Agreement and the certain other warrants underlying the units
are hereinafter referred to as the "Warrants"). This Agreement has been executed
and delivered pursuant to the Warrant Agreement.
1. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Commission: The Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.
Common Stock: The shares of Common Stock, par value $0.01 per share, of
the Company as existing on the date hereof.
Company: As defined in the first paragraph of this Agreement.
Exchange Act: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. Reference to a particular section of
the Exchange Act shall include a reference to the comparable section, if any, of
any such similar Federal statute.
Form S-3: Form S-3 or any comparable or successor form or forms adopted
under the Securities Act.
Holder: Any Investor who holds Registrable Securities and any holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 8 hereof.
Initiating Holders: Any holder or holders of Registrable Securities
holding greater than or equal to 25% of the Registrable Securities (by number of
shares at the time issued and outstanding) and initiating a request pursuant to
Section 2.1 hereof for the registration of all or part of such holder's or
holders' Registrable Securities.
Other Stockholders: Persons other than Holders who, by virtue of
agreements with the Company, are entitled or permitted to include their
securities in certain registrations hereunder.
Person: A corporation, an association, a partnership, an organization,
business, an individual, a governmental or political subdivision thereof or a
governmental agency.
Registrable Securities: (a) any shares of Common Stock issued or
issuable pursuant to the Warrant Agreement (including without limitation shares
issued or issuable upon exercise of the Warrants whether issued on the date
hereof or hereafter pursuant to a right in the Warrant Agreement) and (b)
securities issued or issuable with respect to any Common Stock referred to in
the foregoing subdivision (a) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) they shall have
been distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (iv) they shall have ceased to be
outstanding.
register, registered and registration: These terms shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2 hereof, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, the reasonable fees and
disbursements of not more than one counsel retained collectively by the holder
or holders of more than 50% of the Registrable Securities being registered, and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts, commissions, and
non-accountable expense allowance and transfer taxes, if any, provided that, in
any case where Registration Expenses are not to be borne by the Company, such
expenses shall not include salaries of the Company personnel or general overhead
expenses of the Company, auditing fees, premiums or other expenses relating to
liability insurance required by underwriters of the Company or other expenses
for the preparation of financial statements or other data normally prepared by
the Company in the ordinary course of its business or which the Company would
have incurred in any event.
Securities Act: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. References to a particular section of the
Securities Act shall include a reference to the comparable section, if any, of
any such similar Federal statute.
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2. Registration under Securities Act, etc.
2.1 Demand Registration.
(a) Request. Upon the written request of one or more Initiating
Holders requesting that the Company effect the registration under the Securities
Act of all or part of such Initiating Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration
thereof within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition
of such Registrable Securities); and
(iii) all shares of Common Stock which the Company and any
Other Stockholders may elect to register in connection with the
offering of Registrable Securities pursuant to this Section 2.1, all to
the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities
and the additional shares of Common Stock, if any, so to be registered;
provided that the Company shall not be required to effect (i) more than one
registration pursuant to this Section 2.1, (ii) the registration of Registrable
Securities pursuant to this Section 2.1 unless the aggregate number of shares of
Registrable Securities requested to be registered by all holders of Registrable
Securities is equal to or greater than 25% of the Registrable Securities
originally issuable under the Warrant Agreement or have a market value (based
upon the closing price of such Registrable Securities quoted on the securities
exchange or over-the-counter quotation system on which such Registrable
Securities are listed or quoted, as the case may be, on the trading day
immediately preceding any request pursuant to this Section 2.1) of at least $5
million at the close of the last trading day prior to such request, (iii) during
the period starting with the date thirty (30) days prior to the Company's good
faith estimate of the date of filing of, and ending on a date ninety (90) days
after the effective date of, a Company-initiated registration (provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective), and (iv) the registration of
Registrable Securities pursuant to this Section 2.1 if (x) in the good faith
judgment of the board of directors of the Company, such registration would be
seriously detrimental to the Company and the board of directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (y) the Company shall furnish to such
Holders a certificate signed by the president of the Company stating that in the
good faith judgment of the
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board of directors of the Company, it would be seriously detrimental to the
Company for such registration statement to be filed in the near future and that
it is, therefore, essential to defer the filing of such registration statement,
then the Company shall have the right to defer such filing for the period during
which such registration would be seriously detrimental (provided that the
Company may not defer the filing for a period of more than one hundred eighty
(180) days after receipt of the request of Initiating Holders, and, provided
further, that the Company shall not defer its obligation in this manner more
than once in any twelve-month period).
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.1.
(c) Effective Registration Statement. The registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after the Company
has filed a registration statement with respect thereto solely by reason of the
refusal to proceed of the Initiating Holders (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to the
Company) shall be deemed to have been effected by the Company at the request of
such Initiating Holders unless the Initiating Holders shall have elected to pay
all Registration Expenses in connection with such registration, (ii) if, after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason (other than a stop order, injunction or other
order or requirement resulting from some act or omission by the Initiating
Holders), or (iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by such Initiating
Holders.
(d) Underwritten Offering. If any offering of Registrable Shares
pursuant to this Section 2.1 involves an underwritten offering, the Company
shall (after first consulting with the Initiating Holders) select the investment
banking firm or firms to manage the underwritten offering.
The right of any Holder to registration pursuant to this Section 2.1
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of Initiating
Holders and such Holder with respect to such participation and inclusion) to the
extent provided herein. A Holder may elect to include in such underwriting all
or a part of the Registrable Securities held by such Holder.
If the Company shall request inclusion in any registration pursuant to
this Section 2.1 of securities being sold for its own account, or if an Other
Stockholder shall request inclusion in any registration pursuant to this Section
2.1, the Initiating Holders shall, on behalf of all Holders, offer to include
such securities in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Agreement (including
without limitation Section 2.6 hereof). In such event, the Company shall
(together with all Holders and other persons proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders. If a person who has
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requested inclusion in such registration as provided above does not agree to the
terms of any such underwriting, such person shall be excluded therefrom by
written notice from Company, the underwriter or Initiating Holders. The
securities so excluded shall also be withdrawn from registration. Any
Registrable Securities or other securities excluded shall also be withdrawn from
such registration.
(e) Priority in Demand Registrations. Notwithstanding any other
provision of this Section 2.1, if any financial advisor retained by the
Initiating Holders or the Company shall advise the Company in writing that, in
its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in the contemplated offering
within a price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering the Registrable Securities requested to
be included in such registration by the holder or holders of Registrable
Securities, the securities the Company proposes to sell and other securities of
the Company included in such registration by the holders thereof, pro rata among
such holders on the basis of the number of such securities requested to be
included by such holders and the Company.
2.2 Piggyback Registration.
(a) Right to Include Registrable Securities. If the Company at any time
proposes to register any of its securities under the Securities Act (other than
by a registration on Form X-0, X-0, X-00 or S-15 or any successor or similar
forms and other than pursuant to Section 2.1 or 2.3 hereof), whether or not for
sale for its own account, it will each such time give prompt written notice to
all holders of Registrable Securities of its intention to do so and of such
holders' rights under this Section 2.2. Upon the written request of any such
holder made within 10 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to request that such
registration be effected as a registration under Section 2.1 hereof, and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to, effect any registration upon
request under Section 2.1
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hereof. In no event shall the Company be required to effect more than two
registrations of Registrable Securities pursuant to this Section 2.2.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.2.
(c) Piggyback Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by this Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in this Section 2.2 and subject to the
provisions of Section 2.2(d) hereof, use its reasonable best efforts to arrange
for such underwriters to include all the Registrable Securities to be offered
and sold by such holder among the securities to be distributed by such
underwriters.
The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law. (d) Priority in Piggyback Registrations. If (i) a registration pursuant
to this Section 2.2 involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment, best efforts or other basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction and (ii) the managing underwriter of such
underwritten offering shall inform the Company and holders of the Registrable
Securities requesting inclusion of their Registrable Securities in such
registration by letter of its belief that the distribution of all or a specified
number of the securities requested to be included in such registration
concurrently with the securities being distributed by such underwriters would
interfere with the successful marketing of the securities being distributed by
such underwriters (such writing to state the basis of such belief and the
approximate number of such securities which may be distributed without such
effect), then the Company will be obligated to include in such registration
statement the Registrable Shares of the Holders in sequence, in accordance with
the following:
(x) in the case of an offering by the Company for its own
account, (A) first, any and all securities for sale by the Company, and
(B) second, Registrable Shares requested to be included in such
registration by the Holders and securities requested to be included in
such registration statement by Other Stockholders pursuant to any other
registration rights that may have been, or may hereafter be, granted by
the Company, pro rata based on the number of such securities requested
to be included by such Holders and such Other Stockholders;
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(y) in the case of an offering by the Company for the account
of any of its securityholders (other than the Holders), (A) first,
securities requested to be registered by any such securityholder
pursuant to the exercise of demand registration rights, and (B) second,
Registrable Shares requested to be registered by the Holders,
securities for the account of the Company and securities requested to
be included in such registration statement by Other Stockholders
pursuant to any other registration rights that may have been, or may
hereafter be, granted by the Company, pro rata based on the number of
such securities requested to be included by such Holders, the Company
and such Other Stockholders.
2.3 Registration on Form S-3.
(a) After the closing of an initial public offering of any
security of the Company pursuant to an effective registration statement under
the Securities Act, the Company shall use its best efforts to qualify for
registration on Form S-3. If the Company has qualified for the use of Form S-3,
in addition to the rights contained in Sections 2.1 and 2.2 hereof, Holders of
Registrable Securities shall have the right to request registrations on Form S-3
(such requests shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended methods of
dispositions of such shares by such Holder or Holders); provided, however, that
the Company shall not be obligated to effect any such registration if Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) on Form S-3 at an aggregate price to the public of
less than $1,000,000; further provided, however, that in no event shall the
Company be required to effect more than two registrations of Registrable
Securities pursuant to this Section 2.3.
(b) If a request complying with the requirements of Section
2.3(a) hereof is delivered to the Company, the provisions of Sections
2.1(a)(ii), 2.1(b), 2.1(c), 2.1(d) and 2.1(e) hereof shall apply to such
registration.
2.4 Registration Procedures. Notwithstanding any other provision of
this Agreement, the Company will have no obligation to effect the registration
of any Registrable Securities under the Securities Act as provided in Sections
2.1, 2.2 and 2.3 hereof unless and until such Registrable Securities shall have
been issued by the Company, and the Company agrees to immediately issue the
Registrable Securities when required to do so under the Warrants. If and
whenever the Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities Act as provided
in Sections 2.1, 2.2 and 2.3 hereof, the Company shall, as expeditiously as
possible:
(i) prepare and (within 90 days after the end of the period
within which requests for registration may be given to the Company, or
in any event as soon thereafter as possible, and in the case of a
registration pursuant to Section 2.1 hereof such filing to be made
within 90 days after the initial request of one or more Initiating
Holders of Registrable Securities or in any event as soon thereafter as
possible) file with the Commission the requisite registration statement
to effect such registration (including such audited financial
statements as may be required
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by the Securities Act or the rules and regulations promulgated
thereunder) and thereafter use its best efforts to cause such
registration statement to become and remain effective, provided,
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto, and further provided that
before filing such registration statement or any amendments thereto,
the Company will furnish to the counsel selected by the holders of
Registrable Securities which are to be included in such registration
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 and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement, and use best efforts
to keep such registration statement effective until the earlier of such
time as all of such securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement or (A) in the case of a
registration pursuant to Section 2.1 or 2.2 hereof , the expiration of
180 days after such registration statement becomes effective (provided,
however, that such 180-day period shall be extended for a period of
time equal to the period Holder refrains from selling any securities
included in such registration at the request of an underwriter of
common stock (or other securities) of the Company) or (B) in the case
of a registration pursuant to Section 2.3 hereof which are intended to
be offered on a continuous or delayed basis, such 120-day period shall
be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 145,
or any successor rule under the Securities Act, permits an offering on
a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective
amendment that (I) includes any prospectus required by Section 10(a)(3)
of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the
registration statement, the incorporation by reference of information
required to be included in (1) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange
Act in the registration statement;
(iii) furnish to each seller of Registrable Securities covered
by such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
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conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities
owned by such Seller;
(iv) use its best efforts (A) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws of such jurisdictions as shall reasonably be requested by such
seller, (B) to keep such registrations or qualifications in effect for
so long as such registration statement remains in effect, and (C) take
any other action .which may be reasonably necessary or advisable to
enable each seller to consummate the disposition in such jurisdictions
of the securities owned by such seller, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not, but for the requirements of this subdivision (iv), be obligated to
be so qualified, to subject itself to taxation in any such jurisdiction
or to consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such 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 Registrable Securities;
(vi) cause the Registrable Shares included in any registration
statement to be (i) listed on (.)each securities exchange, if any, on
which similar securities issued by the Company are then listed, 'or
(ii) authorized to be quoted and/or listed (to the extent applicable)
on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") or the National Market System of NASDAQ if the
Registrable Shares so qualify;
(vii) provide a CUSIP number for the Registrable Shares
included in any registration statement not later than the effective
date of such registration statement;
(viii) furnish to each Holder selling securities in such
registration and underwriter a signed counterpart of (i) an opinion or
opinions of counsel to the Company, and (ii) a comfort letter or
comfort letters from the Company's independent public accountants, each
in customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the
Holders selling securities in such registration or managing underwriter
reasonably requests;
(ix) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon the
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
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make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to such seller (and each
underwriter, if any) a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first day of the full calendar
month after the effective date of such registration statement, if such
earnings statement is necessary to satisfy the provisions of Section
11(a) of the Securities Act, and will furnish to each such seller at
least five business days (or such shorter reasonable time period as
given circumstances shall dictate) prior to the filing thereof a copy
of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder; and
(xi) enter into such agreements and take such other actions as
sellers of such Registrable Securities holding more than 50% of the
shares so to be sold shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by
applicable law or the Commission in connection therewith. Each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the occurrence of any event
of the kind described in subdivision (ix) of this Section 2.4, such holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (ix) of this Section 2.4 and, if so
directed by the Company, will 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 relating to such Registrable Securities current at the time of
receipt of such notice.
2.5 Preparation; Reasonable Investigation. (a) In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the
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opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
(b) Certain Information. The Company agrees to include in any
registration statement that includes Registrable Securities filed under Section
2.1, 2.2 or 2.3 hereof, all information which holders of Registrable Securities
being registered shall reasonably request (after giving due regard to the
confidentiality of such information).
2.6 Holdback Agreements.
(a) So long as the Holder and'its affiliates beneficially own more than
five percent of the outstanding Common Stock or the Holder has the right to
designate one or more members of the Company's board of directors, if requested
by the Company and an underwriter of common stock (or other securities) of the
Company, the Holder shall not effect any public sales or distributions of Common
Stock held by the Holder (other than those included in the registration) during
the seven days prior to and the ninety (90) day period following the effective
date of a registration statement of the Company filed under the Securities Act,
provided that all Holders and officers and directors of the Company and
beneficial owners of more than five percent of the Company's outstanding Common
Stock enter into and remain bound by similar agreements.
The obligations described in this Section 2.6(a) shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future.
(b) The Company agrees (x), if so required by the managing underwriter,
not to effect any public sale or distribution of its equity securities or
securities convertible into or exchangeable or exercisable for any of such
securities during the seven days prior to and the 90 days after any underwritten
registration pursuant to Section 2.1 or 2.3 hereof has become effective, except
as part of such underwritten registration and except pursuant to registrations
on Form X-0, X-0, X-00 or S-15 or any successor or similar forms thereto, and
(y) use its best reasonable efforts to cause each holder of its securities or
any securities convertible into or exchangeable or exercisable for any of such
securities, in each case purchased directly from the Company at any time after
the date of this Agreement (other than in a public offering) to agree not to
effect any such public sale or distribution of such securities during such
period.
2.7 Indemnification.
(a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless, in the case of any registration
statement covering Registrable Securities, the holder of any Registrable
Securities covered by such registration statement, its directors and officers,
each
11
other Person who participates as an underwriter in the offering or sale of such
securities and each other Person; if any, who controls such holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or any
such director or officer or underwriter or controlling Person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, 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, and the Company will
reimburse such holder, and each such director, officer, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such holder, as the case may be, specifically
stating that it is for use in the preparation thereof and, provided further that
the Company shall not be liable to any Person who participates as an
underwriter, in the offering or sale of Registrable Securities or to any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim;
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
securities by such holder.
(b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.4 hereof, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such Registrable
Securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 2.7) the Company, each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus,
12
summary prospectus, amendment or supplement. Such indemnity shall be limited to
the extent allowable by applicable law and shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action 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, or a covenant not to xxx, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 2.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority, other than
the Securities Act.
(e) Indemnification Payments. The indemnification required by this
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the preceding
subdivisions of this Section 2.7 is unavailable to an indemnified party in
respect of any expense, loss, damage or liability 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 expense, loss, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the holder or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the
13
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the holder or underwriter, as the case may be, on the other
in connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission to state a material fact relates to information
supplied by the Company, by the holder or by the underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, that the foregoing contribution
agreement shall not inure to the benefit of any indemnified Person if
indemnification would be unavailable to such indemnified Person by reason of the
proviso contained in the first sentence of subdivision (a) of this Section 2.7,
and in no event shall the obligation of any indemnifying party to contribute
under this subdivision (f) exceed the amount that such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this Section 2.7 had been
available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subdivision (f)
were determined by pro rata allocation (even if the holders and any underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations refereed
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in the preceding sentence and subdivisions
(c) of this Section 2.7, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
3. Rule 144. The Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any holder of Registrable Securities, make publicly available
other information) and will take such
14
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
4. Limitations on Registration of Issues of Securities. From and after
the date of this Agreement, the Company shall not enter into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or.prospective holder any registration rights the terms of which are more
favorable than the registration rights granted to the Holders hereunder unless
prior to entering into such agreement the Company has (i) given notice to the
Holders of such agreement and (ii) given the Holders the option (which option
must be exercised within 30 days of receipt of such notice) either to continue
under this Agreement or to tertnlinate this Agreement and enter into an
agreement with the Company with terms identical to the terms of such agreement.
5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of more than 50% of the shares of Registrable Securities. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent; provided, however,
that no amendment shall be made to Section 2.7 hereof without the written
consent of the Company and the holder or holders of 100% of the shares of
Registrable Securities.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
7. Notices. Except as otherwise provided in this Agreement, all
communications provided for hereunder shall be in writing and either hand
delivered or sent by prepaid commercial courier, telecopy or first-class
registered or certified mail, postage prepaid, and addressed
if to the Investor: First Allied Securities, Inc.
000 X Xxxxxx
00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, General Counsel
15
Facsimile: (000) 000-0000
with a copy to: Akerman Senterfitt & Xxxxxx, P.A. 00
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
if to the Company: SportsTrac Systems, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000 Attention:
Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to: Doerner, Saunders, Xxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or at such other address the Investor or the Company shall have given notice to
other. Notices sent by commercial courier services for next day delivery shall
be deemed given and received the day after they are sent, notices sent by
telecopy shall be deemed given and received the day they are sent, and notices
sent by mail shall be deemed given and received five (5) days after being mailed
as aforesaid.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities, provided, that the transferee or assignee of such rights assumes the
obligations of such Holder under this Agreement by a written agreement
reasonably acceptable to the Company.
9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York without reference to the principles of conflicts of laws.
[next page is signature page]
16
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.
THE COMPANY:
SPORTSTRAC SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxx
President & CEO
THE INVESTOR:
FIRST ALLIED SECURITIES, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
General Counsel
17
