REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 25, 2005, by and among Winwin Gaming, Inc., a Delaware corporation,
with headquarters located at 0000 X. Xxxxxx Xxx. Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000 (the "Company"), and the undersigned buyers (each, a "Buyer" and
collectively, the "Buyers").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the "Securities Purchase Agreement"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to (i) issue and sell to the Buyers shares of the
Company's common stock, par value $0.01 per share (the "Common Stock");
B. If the Common Stock sold pursuant to the Securities Purchase
Agreement is not registered for resale by the 120th day after the date hereof,
the Company shall be required to issue a warrant (the "Warrant") to each Buyer
as provided herein, which Warrant will be exercisable to purchase shares of
Common Stock (the "Warrant Shares"); and
C. To induce the Buyers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (as so amended, the "1933
Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyers hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Investor" means a Buyer, any transferee or assignee thereof to whom
a Buyer assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.
"Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
"Register," "registered" and "registration" refer to a registration
effected by preparing and filing one or more Registration Statements (as defined
below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC").
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"Registrable Securities" means (i) the Common Stock issued pursuant
to the Securities Purchase Agreement or otherwise owned by Buyers as of the date
hereof that is not currently registered for resale, (ii) the Warrant Shares
issued or issuable upon exercise of the Warrants, (iii) any shares of capital
stock issued or issuable with respect to the Common Stock, the Warrants or the
Warrant Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, and (iv) any other shares of Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in (i), (ii) or (iii) above; provided, however, that the foregoing
definition shall exclude in all cases any Registrable Securities sold by a
person in a transaction in which his or her rights under this Agreement are not
assigned. Notwithstanding the foregoing, a Registrable Security ceases to be a
Registrable Security when (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act under Section 4(1) thereof so that all transfer
restrictions, and restrictive legends with respect thereto, if any, are removed
upon the consummation of such sale.
"Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare and, as soon as
possible but in no event later than 45 days after the date hereof (the "Filing
Deadline"), file with the SEC a Registration Statement or Registration
Statements (as is necessary) on Form SB-2 covering the resale of all of the
Registrable Securities. In the event that Form SB-2 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(d). The initial
Registration Statement prepared pursuant hereto shall register for resale all
the Registrable Securities. The Registration Statement shall be declared
effective by the SEC as soon as possible, but in no event later than 120 days
after the date hereof (the "Effectiveness Deadline").
b. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Person's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held by
such Investors.
c. Legal Counsel. Each Investor holding more than 2,000,000 shares
of Registrable Securities (a "Major Investor") shall each have the right to
select legal counsel to review and oversee any offering pursuant to this Section
2 ("Legal Counsel"), the expenses of which up to $10,000 per Legal Counsel shall
be paid by the Company. Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement.
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d. Effect of Failure to File and Obtain and Maintain Effectiveness
of Registration Statement. If (i) a Registration Statement covering all of the
Registrable Securities and required to be filed by the Company pursuant to this
Agreement is not declared effective by the SEC on or before the applicable
Effectiveness Deadline or (ii) on any day after the Registration Statement has
been declared effective by the SEC sales of all the Registrable Securities
required to be included on such Registration Statement cannot be made pursuant
to the Registration Statement (including, without limitation, because of a
failure to keep the Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement or a failure to register sufficient shares of Common Stock), then, as
partial relief for the damages to any Investor by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), a Trigger Event (as defined in the Warrant) shall be deemed to have
occurred and the number of shares issuable upon the exercise of the Warrant
shall be as specified in the Warrant. The Warrant Shares shall be deemed
Registrable Securities and shall be required to be registered as any other
Registrable Securities.
3. ADDITIONAL OBLIGATIONS.
The Company and the Investors shall have the following additional
obligations:
The Company shall keep the Registration Statement filed pursuant to
Section 2 hereof effective pursuant to Rule 415 at all times after it has been
declared effective until the earlier of (i) the date as of which the Investors
may sell all of the Registrable Securities without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto) and (ii) the date
on which (A) the Investors shall have sold all the Registrable Securities and
(B) none of the Warrants are outstanding (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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, in light of the circumstances in which
they were made, not misleading. The Company shall submit to the SEC, within one
(1) business day after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on the Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 24 hours after the submission of such request.
The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Company shall file such amendments or supplements with the SEC
on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement the Registration Statement.
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The Company shall permit Legal Counsel to review and comment upon a
Registration Statement and all amendments and supplements thereto at least seven
(7) days prior to their filing with the SEC, and not file any document in a form
to which Legal Counsel reasonably objects. The Company shall furnish to each
Major Investor and their respective attorney, without charge, (i) any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.
The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, (ii) upon the effectiveness of any Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
The Company shall (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
"blue sky" laws of such jurisdictions in the United States as Legal Counsel or
any Investor reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
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As promptly as possible after becoming aware of such event (and in
any event within one (1) business day thereafter, by email, fax or other
communication), the Company shall notify Legal Counsel and each Investor in
writing of the happening of any event as a result of which the prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to each Investor and one (1) copy to each Legal Counsel (or such other
number of copies as such Investor or Legal Counsel may reasonably request). The
Company shall also promptly notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be
delivered to each Legal Counsel and each Investor by facsimile on the same day
of such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
The Company shall prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction. If such an order or suspension is issued, the Company shall
procure the withdrawal of such order or suspension at the earliest possible
moment and shall notify each Legal Counsel and each Investor who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
At the request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request
(i) a letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.
The Company shall make available for inspection during normal
business hours by (i) any Investor or their designated representative
(collectively, the "Inspectors"), all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably deemed necessary by each Inspector, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall hold in strict confidence and shall not make any disclosure (except to an
Investor, its employees or professional advisors) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified in writing, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under the 1933
Act, (b) the release of such Records is ordered pursuant to a subpoena or order
from a court or governmental body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector has knowledge. Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential.
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The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
The Company shall cause all the Registrable Securities covered by a
Registration Statement to be listed continuously throughout the Registration
Period on each securities exchange or market, if any, on which equity securities
issued by the Company are then listed.
The Company shall cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request.
The Company shall provide a transfer agent and registrar of all such
Registrable Securities not later than the effective date of such Registration
Statement.
The Company shall provide each Investor with contact information for
the Company's transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration
Reserved.
The Company shall cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
The Company shall make generally available to its security holders
as soon as possible, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 0000 Xxx) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.
The Company shall otherwise comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.
Within two (2) business days after the Registration Statement which
includes the Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that the Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.
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The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
At least seven (7) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify each Investor in writing
of the information the Company requires from each such Investor if such Investor
elects to have any of such Investor's Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect timely the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.
Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f), and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company), or destroy all copies in
such Investor's possession of, any prospectus covering such Registrable
Securities current at the time of receipt of such notice. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in connection
with any sale of Registrable Securities with respect to which an Investor has
entered into a contract for sale prior to the Investor's receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of 3(f) and for which the Investor has not yet
settled. Notwithstanding the foregoing, the Company acknowledges that the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) that interrupts an Investor's ability to sell
Registrable Securities shall constitute a material breach of the Company's
obligations under Section 3(a) hereof.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
brokerage commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
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6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint
or several (collectively, "Claims"), incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an Indemnified Person is or may be a party thereto (collectively,
"Indemnified Damages"), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky" laws of
any jurisdiction in which Registrable Securities are offered, or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder, in each case relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any material
violation by the Company of this Agreement (the matters in the foregoing clauses
(i) through (iv) being, collectively, "Violations"). The Company shall reimburse
the Indemnified Persons for any legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim as such
fees or expenses are incurred; provided, however, that the indemnity agreement
contained in this Section 6(a) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs solely in reliance
upon and in conformity with information furnished in writing to the Company by
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) shall not be available to the extent such Claim is based on a failure
of the Investor to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(d); and (iii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.
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In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs solely in
reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; and, such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to such Investor
(i.e., proceeds net of underwriting discounts, fees, commissions and any other
expenses payable by such Investor) as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors.
The foregoing indemnity agreements contained in Sections 6(a) and
(b) are subject to the condition that, insofar as they relate to any Violation
made in a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the Registration Statement in
question becomes effective or in the amended prospectus filed with the SEC
pursuant to Rule 424(b) promulgated under the 1933 Act (the "Final Prospectus"),
such indemnity agreements shall not inure to the benefit of any Indemnified
Party if a copy of the Final Prospectus was furnished in a timely manner to the
Indemnified Party and was not furnished to the Person asserting the Indemnified
Damages at or prior to the time such action is required by the 1933 Act.
Promptly after receipt by an Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Party (or, if there is more than one Indemnified Party, a
majority in interest of the Indemnified Parties); provided, however, that an
Indemnified Party shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the Indemnified Party, the representation by such counsel
of the Indemnified Party and the indemnifying party would be inappropriate due
to actual or potential differing interests between such Indemnified Party and
any other party represented by such counsel in such proceeding. The Indemnified
Party shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent; provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Party under this Section 6, except to
the extent that the indemnifying party is materially prejudiced in its ability
to defend such action.
9
The indemnification required by this Section 6 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 Indemnified Damages are incurred.
The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of any Indemnified Party against the
indemnifying party or others and (ii) any liabilities the indemnifying party may
be subject to pursuant to the law.
7. CONTRIBUTION.
If the indemnification provided for in Section 6 is unavailable to
or insufficient to hold harmless an Indemnified Party under subsection (a) or
(b) thereof in respect of any Claim or Indemnified Damages, then each
indemnifying party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Claim or Indemnified Damages in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the Investor on the other in connection with the statements or
omissions or other matters which resulted in such Claim or Indemnified Damages,
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, in the case of an untrue
statement, whether the untrue statement relates to information supplied by the
Company on the one hand or an Investor on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement. The Company and the Investors agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if all Investors were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 7. The amount
paid or payable by an Indemnified Party as a result of the Claims or Indemnified
Damages referred to above in this Section 7 shall be deemed to include 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 Section 7, no Investor shall be required to contribute any
amount in excess of the net amount of proceeds (i.e., proceeds net of
underwriting discounts, fees, commissions and any other expenses payable by such
Investor) received by the Investor from the sale of the Registrable Securities.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Contribution (together with any
indemnification or other obligations under this Agreement) by any Investor
(including any Indemnified Party associated with such Investor) shall be limited
in amount to the net amount of proceeds (i.e., proceeds net of underwriting
discounts, fees, commissions and any other expenses payable by such Investor)
received by such Investor from the sale of the Registrable Securities.
10
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
make and keep adequate public information available, as those terms
are understood and defined in Rule 144, at all times;
file with the SEC in a timely manner all reports and other documents
required of the Company under the 1934 Act so long as (i) the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company's obligations under Section 4(c) of the Securities Purchase
Agreement) and (ii) the filing of such reports and other documents is required
for the applicable provisions of Rule 144; and
furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 and the 1934 Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Major Investors who then hold a majority of the Registrable Securities
represented by the Major Investors. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the Registrable Securities.
11
11. MISCELLANEOUS.
A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Winwin Gaming, Inc.
0000 X. Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Xxxxx X. Xxxxxxxxxx
Xxxxxx Xxxx & Priest LLP
000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Legal Counsel:
If to a Buyer or Legal Counsel, to it at the address
and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's
representatives, if any, specified on the Schedule of
Buyers
, or at such other address and/or facsimile number and/or to the attention of
such other Person as the recipient party has specified by written notice given
to each other party in accordance with the above provisions five (5) days prior
to the effectiveness of such change.
12
Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
California, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of California. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City
of San Francisco, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
This Agreement, the Securities Purchase Agreement and the constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, the Securities Purchase Agreement and the Warrants supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
Subject to the requirements of Section 9, this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
permitted successors and assigns.
The headings in this Agreement are for convenience of reference only
and shall not form part of, or affect the interpretation of, this Agreement.
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other parties; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
13
Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding a majority of the Registrable Securities,
determined as if all of the Warrants have been exercised.
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
******
14
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of the date first written above.
COMPANY:
WinWin Gaming, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
15
BUYERS:
Xxx Xxxxxxx Private Opportunities
Fund L.P.
By: /s/ Xxxxxxx Xxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxx Xxxxxxx
Title:
16
REGISTRATION RIGHTS AGREEMENT
BUYER SIGNATURE PAGE AND JOINDER AGREEMENT
By executing this page in the space provided, the undersigned hereby
agrees (i) that the undersigned is a "Buyer," as defined in the Registration
Rights Agreement, dated February 25, 2005, among WinWin Gaming, Inc. and the
initial Buyers party thereto (as amended, modified and supplemented from time to
time, the "Agreement"), (ii) that the undersigned is a party to the Agreement
for all purposes and (iii) that the undersigned is bound by all of the terms and
conditions of the Agreement.
For Individuals:
________________________________________
Print Name Above
________________________________________
Sign Name Above
For Entities:
________________________________________
Print Name Above
By:
_____________________________________
Name:
Title:
17
SCHEDULE OF BUYERS
Investor's (and Investor's
Representative's, if any) Address
Investor Name and Facsimile Number
------------------------------------------- ---------------------------------
Xxx Xxxxxxx Private Opportunities Fund L.P. c/o Xxx Xxxxxxx Capital Management
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
18
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Integrity Stock Transfer
0000 X. Xxxxx Xxxxxx Xxxxxxx
Building 5 Xxxxx 000
Xxxxxxxxx, XX 00000
Attn:
------------------------------
Re: Winwin Gaming, Inc.
Ladies and Gentlemen:
We are counsel to WinWin Gaming, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement") entered into by and
among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company (i) issued to the Holders shares of its Common
Stock, par value $0.01 per share (the "Common Shares"), and (ii) warrants
exercisable for shares of its Common Stock (the "Warrants"). Pursuant to the
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the "Registration Rights Agreement") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
Common Shares and the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form SB-2 (File No. 333-_____________) (the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
This letter shall serve as our standing notice to you that the
Common Stock is, as of this date, freely transferable by the Holders pursuant to
the Registration Statement. Unless you receive separate notice or instructions
from us following the date hereof and preceding a request by a Holder for a
legend-free certificate or reissue thereof, you need not require further letters
from us to effect any future legend-free issuance or reissuance of shares of
Common Stock to the Holders as contemplated by the Company's Irrevocable
Transfer Agent Instructions dated ________ __, 2005. This letter shall serve as
our standing opinion with regard to this matter.
Very truly yours,
XXXXXX XXXX & PRIEST LLP
By:
-------------------------------------
cc: [LIST NAMES OF HOLDERS]
19
