REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of the 30th day of June, 1999 by and between Predict It,
Inc., a Delaware corporation (the "Company"), Xxxx Xxxxx, Xxxxxx Xxx, and Xxxxx
Xxxxxxx (collectively with Xxxx Xxxxx and Xxxxxx Xxx, the "Shareholders").
R E C I T A L S :
WHEREAS, the Shareholders are acquiring shares of the common
stock, par value $.001 per share, of the Company (the "Shares", or sometimes
hereinafter referred to as the "Securities"), pursuant to the Agreement and Plan
of Merger and Reorganization by and among the Company, PII Acquisition Corp.,
the Shareholders, and Virtual Stock Exchange, Inc., dated as of June 30, 1999
(the "Merger Agreement"); and
WHEREAS, the Company desires to grant to the Shareholders
certain registration rights relating to the Shares and the Shareholders desire
to obtain such registration rights, subject to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Definitions and References. For purposes of this Agreement,
in addition to the definitions set forth above and elsewhere herein, the
following terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
(b) The terms "register", "registered" and
"registration" shall refer to a registration effected by
preparing and filing a registration statement or similar
document in compliance with the 1933 Act (as herein defined)
and the declaration or ordering of effectiveness of such
registration statement or document.
(c) For purposes of this Agreement, the term
"Registrable Stock" shall mean (i) the Shares, (ii) any shares
of the common stock of the Company, par value $.001 per share
(the "Common Stock") issued as, or issuable upon the
conversion or exercise of any warrant, right, option or other
convertible security which is issued as, a dividend or other
distribution with respect to, or in exchange for, or in
replacement of, the Shares, and (iii) any Common Stock issued
by way of a stock split of the Shares. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable
Stock when (v) a registration statement covering such
Registrable Stock has been declared effective and such
Registrable Stock has been disposed of pursuant to such
effective registration statement, (w) such Registrable Stock
is sold pursuant to Rule 144 (or any similar provision then in
force) under the 1933 Act, (x) such Registrable Stock is
eligible to be sold pursuant to Rule 144(k) under the 1933
Act, (y) such Registrable Stock has been otherwise
transferred, no stop transfer order affecting such stock is in
effect and the Company has delivered new certificates or other
evidences of ownership for such Registrable Stock not bearing
any legend indicating that such shares have not been
registered under the 1933 Act, or (z) such Registrable Stock
is sold by a person in a transaction in which the rights under
the provisions of this Agreement are not assigned.
(d) The term "Holders" shall mean the Shareholders or
any transferee or assignee thereof to whom the rights under
this Agreement are assigned in accordance with Section 10
hereof; provided, that the Shareholders or such transferee or
assignee shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act
of 1933, as amended.
(f) An "affiliate of such Holder" shall mean a person
who controls, is controlled by or is under common control with
such Holder, or the spouse or children (or a trust exclusively
for the benefit of the spouse and/or children) of such Holder,
or, in the case of a Holder that is a partnership, its
partners.
(g) The term "Person" shall mean an individual,
corporation, partnership, trust, limited liability company,
unincorporated organization or association or other entity,
including any governmental entity.
(h) References in this Agreement to any rules,
regulations or forms promulgated by the Commission shall
include rules, regulations and forms succeeding to the
functions thereof, whether or not bearing the same
designation.
2. Demand Registration.
(a) Commencing December 30, 1999, Holders of, in the
aggregate, at least a majority of the Registrable Stock (the
"Requesting Holders") may make a written request to the
Company (specifying that it is being made pursuant to this
Section 2) that the Company file a registration statement
under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 0000 Xxx)
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covering the registration of Registrable Stock (if and only if
the Registrable Securities have not already been registered
under the 1933 Act pursuant to Section 4 hereof). In such
event, the Company shall (x) within ten (10) days thereafter
notify in writing all other Holders of Registrable Stock of
such request, and (y) use its best efforts to cause to be
registered under the 1933 Act all Registrable Stock of the
Requesting Holders and such other Holders who have requested,
within sixty (60) days after the Company has given such
notice, their Registrable Stock be registered. The Requesting
Holders shall be entitled to exercise their rights under this
Section 2(a) once and only once.
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an
underwritten offering, they shall so advise the Company as a
part of their request pursuant to Section 2(a) above, and the
Company shall include such information in the written notice
referred to in clause (x) of Section 2(a) above. In such
event, the Holder's right to include its Registrable Stock in
such registration shall be conditioned upon such Holder's
participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten
offering to the extent provided in this Section 2. All Holders
proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting Holders
and shall be approved by the Company, which approval shall not
be unreasonably withheld; provided, that 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 and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting
agreement shall be conditions precedent to the obligations of
such Holders; and provided further, that no Holder shall 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, the Registrable Stock of such Holder and such Holder's
intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) In any registration pursuant to this Section 2, the
Company shall include in such registration (i) first, the
Registrable Stock of the Holders, (ii) second, the securities
the Company proposes to sell, if any, (iii) third, the
securities of any other securityholder of the Company who has
demand registration rights pursuant to an agreement with the
Company, and (iv) fourth, other securities requested to be
included in such registration. Notwithstanding the foregoing
or any other provision of this Section 2 to the contrary, if
the managing underwriter of an underwritten offering of the
Registrable Stock requested to be registered pursuant to this
Section
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2 (or, in the case of a non-underwritten offering, in the
written opinion of the placement agent, or if there is none,
the Company), advises the Requesting Holders in writing that
in its opinion marketing factors require a limitation of the
number of Registrable Stock to be underwritten, the number of
shares of Registrable Stock that may be included in such
underwritten offering shall be allocated among all Holders,
including the Requesting Holders, in proportion (as nearly as
practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of
filing the registration statement; provided, that in the event
of such limitation of the number of shares of Registrable
Stock to be underwritten, no other securities of the Company
shall be included in such registration and the Holders shall
be entitled to an additional demand registration pursuant to
this Section 2. If any Holder of Registrable Stock disapproves
of the terms of the underwriting, such Holder may elect to
withdraw by written notice to the Company, the managing
underwriter and the Requesting Holders. The securities so
withdrawn shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to
the contrary, the Company shall not be required to effect a
registration pursuant to this Section 2 during the period
starting with the fourteenth (14th) day immediately preceding
the date of an anticipated filing by the Company of, and
ending on a date ninety (90) days following the effective date
of, a registration statement pertaining to a public offering
of securities for the account of the Company; provided, that
the Company shall actively employ in good faith all reasonable
efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate
of the date of filing such registration statement shall be
made in good faith.
(e) The Company shall be obligated to effect and pay
for a total of only one (1) registration pursuant to this
Section 2, unless increased pursuant to Section 2(c) hereof;
provided, that a registration requested pursuant to this
Section 2 shall not be deemed to have been effected for
purposes of this Section 2(e), unless (i) it has been declared
effective by the Commission, (ii) the offering of Registrable
Stock pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the
Commission (other than any such action prompted by any act or
omission of the Holders), and (iii) no limitation of the
number of shares of Registrable Stock to be underwritten has
been required pursuant to Section 2(c) hereof.
3. Obligations of the Company. Whenever required under Section
2 to use its best efforts to effect the registration of any Registrable Stock,
the Company shall, as expeditiously as possible:
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(a) prepare and file with the Commission, not later
than sixty (60) days after receipt of a request to file a
registration statement with respect to such Registrable Stock,
a registration statement on any form for which the Company
then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of
such issue of Registrable Stock in accordance with the
intended method of distribution thereof, and use its best
efforts to cause such registration statement to become
effective as promptly as practicable thereafter; provided,
that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will (i)
furnish to one (1) counsel selected by the Requesting Holders
copies of all such documents proposed to be filed at least
five (5) days prior to filing, and (ii) notify each such
Holder of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement (and
any prospectus used in connection therewith) as may be
necessary to keep such registration statement effective for a
period of not less than eighteen (18) months or such shorter
period which will terminate when all Registrable Stock covered
by such registration statement has been sold (but not before
the expiration of the forty (40) or ninety (90) day period
referred to in Section 4(3) of the 1933 Act and Rule 174
thereunder, if applicable) or ceases to be Registrable Stock,
and comply with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such registration
statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in
such registration statement;
(c) furnish to each Holder and any underwriter of
Registrable Stock to be included in a registration statement
copies of such registration statement as filed and each
amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus)
and such other documents as such Holder may reasonably request
in order to facilitate the disposition of the Registrable
Stock owned by such Holder;
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws
of such jurisdictions as any selling Holder or any underwriter
of Registrable Stock reasonably requests, and do any and all
other acts which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Stock owned by such Holder;
provided, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d)
hereof, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process
in any such jurisdiction;
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(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with
or approved by such other governmental agencies or other
authorities as may be necessary by virtue of the business and
operations of the Company to enable the selling Holders
thereof to consummate the disposition of such Registrable
Stock;
(f) notify each selling Holder of such Registrable
Stock and any underwriter thereof, at any time when a
prospectus relating thereto is required to be delivered under
the 1933 Act (even if such time is after the period referred
to in Section 3(b)), of the happening of any event as a result
of which the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Stock, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances, being made not misleading;
(g) make available for inspection by any selling
Holder, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), and
cause the Company's officers, directors and employees to
supply all information reasonably requested by any such
Inspector, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, in connection
with such registration statement. Records or other information
which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records or other information is
necessary to avoid or correct a misstatement or omission in
the registration statement, or (ii) the release of such
Records or other information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each
selling Holder shall, upon learning that disclosure of such
Records or other information is sought in a court of competent
jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records or other
information deemed confidential;
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(h) furnish, at the request of any Requesting Holder,
on the date that such shares of Registrable Stock are
delivered to the underwriters for sale pursuant to such
registration or, if such Registrable Stock is not being sold
through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock
becomes effective, (1) a signed opinion, dated such date, of
the legal counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and
if such Registrable Stock is not being sold through
underwriters, then to the Requesting Holders as to such
matters as such underwriters or the Requesting Holders, as the
case may be, may reasonably request and as would be customary
in such a transaction; and (2) a letter dated such date, from
the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable
Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver
such letter to such Holder, then to the Company (i) stating
that they are independent certified public accountants within
the meaning of the 1933 Act and that, in the opinion of such
accountants, the financial statements and other financial data
of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act, and (ii) covering
such other financial matters (including information as to the
period ending not more than five (5) business days prior to
the date of such letter) with respect to the registration in
respect of which such letter is being given as the Requesting
Holders may reasonably request and as would be customary in
such a transaction;
(i) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Stock to be so
included in the registration statement;
(j) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not
later than ninety (90) days after the close of the period
covered thereby, an earnings statement covering the period of
at least twelve (12) months beginning not later than the first
day of the Company's fiscal quarter next following the
effective date of the Registration Statement; and
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(k) use its best efforts to cause all such Registrable
Stock to be listed on the Nasdaq SmallCap Market and/or any
other securities exchange on which similar securities issued
by the Company are then listed or traded.
The Company may require each selling Holder of Registrable
Stock as to which any registration is being effected to furnish to the Company
such information regarding the distribution of such Registrable Stock as the
Company may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f)
hereof, such Holder will forthwith discontinue disposition of Registrable Stock
pursuant to the registration statement covering such Registrable Stock until
such Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) hereof, and, if so directed by the Company, such
Holder 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
covering such Registrable Stock current at the time of receipt of such notice.
In the event the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement (including the period referred to in
Section 3(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 3(f) hereof to and
including the date when each selling Holder of Registrable Stock covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 3(f) hereof.
4. Incidental Registration. Commencing December 30, 1999, if
the Company determines that it shall file a registration statement under the
1933 Act (other than a registration statement on a Form S-4 or S-8 or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its Common Stock to be sold for cash, at each such time the
Company shall promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than forty (40) days from the date of
such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than twenty (20) days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Holder has so requested
to be registered. In any registration pursuant to this Section 4, the Company
shall include in such registration, (a) first, the securities the Company
proposes to sell (if the Company is filing such registration statement on its
own behalf) or the securities of the selling securityholders of the Company who
have demanded such registration, (b) second, the securities the Company proposes
to sell (if the Company is filing such registration statement on behalf of
selling securityholders of the Company) or the securities of other
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securityholders of the Company who have demand registration rights, including
the Holders who have not as of such time exercised their demand rights as set
forth in Section 2 above (if the Company is filing such registration statement
on its own behalf), (c) third, the securities of securityholders of the Company
who have incidental registration rights, including any of the Registrable Stock
requested to be registered pursuant to this Section 4, and (d) fourth, other
securities of the Company requested to be registered. Notwithstanding the
foregoing, if, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the written
opinion of the placement agent, or if there is none, the Company), the total
amount of securities to be registered pursuant to subsection (b) of this Section
4, including such Registrable Stock, will exceed the maximum amount of the
Company's securities which can be marketed (i) at a price reasonably related to
the then current market value of such securities, or (ii) without otherwise
materially and adversely affecting the entire offering, then the amount of
Registrable Stock to be offered for the accounts of Holders shall be reduced pro
rata to the extent necessary to reduce the total amount of securities to be
included in such offering to the recommended amount; provided, that if
securities are being offered for the account of other Persons as well as the
Company, such reduction shall not represent a greater fraction of the number of
securities intended to be offered by Holders than the fraction of similar
reductions imposed on such other Persons other than the Company over the amount
of securities they intended to offer.
5. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law,
each Holder whose Registrable Stock is included in a
registration statement agrees not to effect any public sale or
distribution of the issue being registered or a similar
security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the 1933 Act, during the
fourteen (14) days prior to, and during the one hundred eighty
(180) day period beginning on, the effective date of such
registration statement (except for Registrable Stock included
as part of the registration), if and to the extent requested
by the Company in the case of a non-underwritten public
offering or if and to the extent requested by the managing
underwriter or underwriters in the case of an underwritten
public offering.
(b) Restrictions on Public Sale by the Company and
Others. The Company agrees (i) not to effect any public sale
or distribution of any securities similar to those being
registered, or any securities convertible into or exchangeable
or exercisable for such securities, during the fourteen (14)
days prior to, and during the ninety (90) day period beginning
on, the effective date of any registration statement in which
Holders are participating (except as part of such
registration), if and to the extent requested by the Holders
in the case of a non-underwritten public offering or if and to
the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering;
and (ii) that any
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agreement entered into after the date of this Agreement
pursuant to which the Company issues or agrees to issue any
securities convertible into or exchangeable or exercisable for
such securities (other than pursuant to an effective
registration statement) shall contain a provision under which
holders of such securities agree not to effect any public sale
or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant
to Rule 144 under the 1933 Act.
6. Expenses of Registration. The Company agrees to pay all
expenses incurred in connection with each registration pursuant to Sections 2
and 4 of this Agreement, excluding underwriter's discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, and fees and
disbursements of counsel for the Company. The selling Holders shall bear and pay
the underwriting commissions and discounts and broker commissions applicable to
the Registrable Stock offered for their account in connection with any
registrations, filings and qualifications made pursuant to this Agreement.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees
to indemnify, to the full extent permitted by law, each
Holder, its officers, directors and agents and each Person who
controls such Holder (within the meaning of the 0000 Xxx)
against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or
preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement therein (in the case of a
prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The
Company will also indemnify any underwriters of the
Registrable Stock, their officers and directors and each
Person who controls such underwriters (within the meaning of
the 0000 Xxx) to the same extent as provided above with
respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such
information with respect to such Holder as the Company
reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify,
to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the
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meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in the
registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or necessary to
make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission was
made in reliance upon and in conformity with any information
with respect to such Holder so furnished in writing by such
Holder. Notwithstanding the foregoing, the liability of each
such Holder under this Section 7(b) shall be limited to an
amount equal to the public offering price of the Registrable
Stock sold by such Holder, unless such liability arises out of
or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt
written notice to the indemnifying party after the receipt by
such Person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory to
such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld).
Failure by such Person to provide said notice to the
indemnifying party shall itself not create liability except to
the extent of any injury caused thereby. No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim or litigation. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim,
it will not be obligated to pay the fees and expenses of more
than one (1) counsel with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnity
provided for in this Section 7 is unavailable to, or is
insufficient to hold harmless, an indemnified party, then the
indemnifying party shall contribute to the amount paid or
payable by the
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indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party
on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, or provides a lesser
sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other
but also the relative fault of the indemnifying party and the
indemnified party as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such
indemnifying party or indemnified parties; and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Section 7(c), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7 (d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. 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.
If indemnification is available under this Section 7,
the indemnifying parties shall indemnify each indemnified
party to the full extent provided in Sections 7(a) and (b)
without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable
consideration provided for in this Section 7.
8. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the 1933 Act and the Securities
Exchange Act of 1934, as amended, and the rules
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and regulations adopted by the Commission thereunder; and it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable Stock without
registration under the 1933 Act within the limitation of the exemptions provided
by (a) Rule 144 under the 1933 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, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
10. Transfer of Registration Rights. The registration rights
of any Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided, that such
transfer may otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall give the Company
written notice at or prior to the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being transferred; provided further, that
such transferee shall agree in writing, in form and substance satisfactory to
the Company, to be bound as a Holder by the provisions of this Agreement; and
provided further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by such
transferee is restricted under the 1933 Act. Except as set forth in this Section
10, no transfer of Registrable Stock shall cause such Registrable Stock to lose
such status.
11. Mergers, Etc. The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to "Registrable Stock" shall be deemed to
be references to the securities which the Holders would be entitled to receive
in exchange for Registrable Stock under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 11 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely of
(i) cash, (ii) securities of the acquiring corporation which may be immediately
sold to the public without registration under the 1933 Act, or (iii) securities
of the acquiring corporation which the acquiring corporation has agreed to
register within ninety (90) days of completion of the transaction for resale to
the public pursuant to the 1933 Act.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to
the Holders in this Agreement.
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(b) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written
consent of the Holders of at least a majority of the
Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(c) Successors and Assigns. Except as otherwise
expressly provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto or their
respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(d) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the
State of New York applicable to contracts made and to be
performed wholly within that state, excluding only its
conflicts of laws principles that would defer to the
substantive laws of another jurisdiction.
(e) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
(f) Headings. The headings in this Agreement are used
for convenience of reference only and are not to be considered
in construing or interpreting this Agreement.
(g) Notices. Any notice required or permitted under
this Agreement shall be given in writing and shall be
delivered in person or by telecopy or by overnight courier
guaranteeing no later than second business day delivery,
directed to (i) the Company at the address set forth below its
signature hereof (with a copy, which copy shall not constitute
notice, to Camhy Karlinsky & Xxxxx LLP, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. XxXxxx, Esq.) or
(ii) a Holder at the address set forth below its signature
hereof. Any party may change its address for notice by giving
ten (10) days advance written notice to the other parties.
Every notice or other communication hereunder shall be deemed
to have been duly given or served on the date on which
personally delivered, or on the date actually received, if
sent by telecopy or overnight courier service, with receipt
acknowledged.
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(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be
in any way impaired thereby, it being intended that all of the
rights and privileges of the Holders shall be enforceable to
the fullest extent permitted by law.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect
to such subject matter.
(j) Enforceability. This Agreement shall remain in full
force and effect notwithstanding any breach or purported
breach of, or relating to, the Merger Agreement.
(k) Recitals. The recitals are hereby incorporated in
this Agreement as if fully set forth herein.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PREDICT IT INC.
By:
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Name:
Title:
Address:
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Telecopy No.:
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Xxxx Xxxxx
Address:
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Telecopy No.:
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Xxxxxx Xxx
Address:
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Telecopy No.:
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Xxxxx Xxxxxxx
Address:
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Telecopy No.:
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