EXHIBIT 4.1
[FORM OF REPRESENTATIVES' OPTION AGREEMENT]
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE UNITS ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. HOWEVER, NEITHER THE OPTIONS NOR
SUCH UNITS MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) A
POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION STATEMENT, (ii) A
SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
THE TRANSFER OF THIS OPTION IS
RESTRICTED AS DESCRIBED HEREIN.
INTERNATIONAL SPORTS WAGERING INC.
Option for the Purchase of Units of Common Stock
and Warrants
No. __ 150,000 Units
THIS CERTIFIES that, for receipt in hand of $150.00 and other value
received, ____________________________, ____________________________________
(the "Holder"), is entitled to subscribe for and purchase from International
Sports Wagering Inc., a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time after [closing
date], and before 5:00 P.M. on [five years after closing date], New York time
(the "Exercise Period"), 150,000 units (the "Option Units"), at a price of
$_____ per Share (the "Exercise Price"). Subject to adjustment as provided
herein, each Option Unit is comprised of one share (the "Unit Share") of the
Company's common stock, par value $0.001 per share (the "Common Stock"), and one
warrant, each entitling the Holder to purchase one share of Common Stock (the
"Unit Warrant") which share shall be issued pursuant to a Warrant Agreement,
dated _____________, 1996 (the "Public Warrant Agreement"), between the Company
and American Stock Transfer & Trust Company as warrant agent (the "Warrant
Agent"). This Option is the option or one of the options (collectively,
including any options issued upon the exercise or transfer of any such options
in whole or in part, the "Options") issued pursuant to the Underwriting
Agreement, dated __________, between the Company and Barington Capital Group,
L.P. and GKN Securities Corp., as representatives of the several Underwriters
named therein. As used herein the term "this Option" shall mean and include this
Option and any Option or Options hereafter issued as a consequence of the
exercise or transfer of this Option in whole or in part. This Option may not be
sold, transferred, assigned or hypothecated until [one year after the effective
date] except that it may be transferred, in whole or in part, to (i) one or more
officers or partners
of the Holder (or the officers or partners of any such partner); (ii) any other
underwriting firm or member of the selling group which participated in the
public offering of Units which commenced on [effective date] (or the officers or
partners of any such firm); (iii) a successor to the Holder, or the officers or
partners of such successor; (iv) a purchaser of substantially all of the assets
of the Holder; or (v) by operation of law; and the term the "Holder" as used
herein shall include any transferee to whom this Option has been transferred in
accordance with the above.
Each Unit Warrant shall entitle the holder thereof to purchase one share of
Common Stock (the shares of Common Stock issuable upon exercise of the Unit
Warrants being collectively referred to as the "Warrant Shares"). Each Unit
Warrant shall be identical in all respects to the warrants (the "Public
Warrants") issued pursuant to the Public Warrant Agreement and sold to the
public. If this Option is exercised after the expiration of the exercise period
of the Public Warrants, any Option Unit with respect to which this Option is
exercised will be comprised of only one Unit Share and will not include a Unit
Warrant.
1. This Option may be exercised during the Exercise Period, as to the whole
or any lesser number of whole Option Units, by the surrender of this Option
(with the election at the end hereof duly executed) to the Company at its office
at 000 Xxxxx Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, or at such other place
as is designated in writing by the Company, together with a certified or bank
cashier's check payable to the order of the Company in an amount equal to the
Exercise Price multiplied by the number of Option Units for which this Option is
being exercised (the "Unit Purchase Price").
2. (a) In lieu of the payment of the Unit Purchase Price, the Holder shall
have the right (but not the obligation), to require the Company to convert this
Option, in whole or in part, into Units (the "Conversion Right") as provided for
in this Section 2. Upon exercise of the Conversion Right, the Company shall
deliver to the Holder (without payment by the Holder of any of the Unit Purchase
Price) that number of Units (the "Conversion Units") equal to the quotient
obtained by dividing (x) the value of this Option (or portion thereof as to
which the Conversion Right is being exercised if the Conversion Right is being
exercised in part) at the time the Conversion Right is exercised (determined by
subtracting the aggregate Unit Purchase Price of the Units as to which the
Conversion Right is being exercised in effect immediately prior to the exercise
of the Conversion Right from the aggregate Current Market Price (as defined in
Section 6(g) hereof) of the Units as to which the Conversion Right is being
exercised) by (y) the Current Market Price of one Unit immediately prior to the
exercise of the Conversion Right.
(b) The Conversion Right provided under this Section 2 may be exercised in
whole or in part and at any time and from time to time while any Options remain
outstanding. In order to exercise the Conversion Right, the Holder shall
surrender to the Company, at its offices, this Option with the Notice of
Conversion at the end hereof duly executed. The presentation and surrender shall
be deemed a waiver of the Holder's obligation to pay all or any portion of the
aggregate purchase price payable for the Units as to which such Conversion Right
is being exercised. This Option (or so much thereof as shall have been
surrendered for conversion) shall be deemed to have been converted immediately
prior
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to the close of business on the day of surrender of such Option for conversion
in accordance with the foregoing provisions.
3. Upon each exercise of the Holder's rights to purchase Option Units or
Conversion Units, the Holder shall be deemed to be the holder of record of the
Option Units or Conversion Units issuable upon such exercise or conversion,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Option Units or Conversion Units shall not then
have been actually delivered to the Holder. As soon as practicable after each
such exercise or conversion of this Option, the Company shall issue and deliver
to the Holder a certificate or certificates for the Option Units or Conversion
Units issuable upon such exercise or conversion, registered in the name of the
Holder or its designee. If this Option should be exercised or converted in part
only, the Company shall, upon surrender of this Option for cancellation, execute
and deliver a new Option evidencing the right of the Holder to purchase the
balance of the Option Units (or portions thereof) subject to purchase hereunder.
4. Any Options issued upon the transfer or exercise or conversion in part
of this Option shall be numbered and shall be registered in a Option Register as
they are issued. The Company shall be entitled to treat the registered holder of
any Option on the Option Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Option on the part of any other person, and shall not be liable for any
registration or transfer of Options which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Option shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Option or Options to the person entitled thereto. This
Option may be exchanged, at the option of the Holder thereof, for another
Option, or other Options of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Option
Units (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Options to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder.
5. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Option Units and/or Conversion Units
and the Unit Warrants, such number of shares of Common Stock as shall, from time
to time, be sufficient therefor. The Company covenants that all shares of Common
Stock issuable upon exercise of this Option and the Unit Warrants, upon receipt
by the Company of the full Exercise Price
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therefor, and all shares of Common Stock issuable upon conversion of this
Option, shall be validly issued, fully paid, nonassessable, and free of
preemptive rights.
6. (a) Upon the occurrence of any event (an "Event") as a result of which
an adjustment is made to the exercise price (the "Public Exercise Price") of any
of the Public Warrants, the number of Unit Shares issuable thereafter upon
exercise of this Option shall be adjusted to equal the number of Unit Shares
issuable prior to such Event multiplied by a fraction, the numerator of which
shall be the Public Exercise Price in effect prior to such Event and the
denominator of which shall be the Public Exercise Price subsequent to such
Event.
(b) Notwithstanding any other provision of this Option, any adjustment of
the exercise price and/or the number of the Warrant Shares purchasable upon the
exercise of the Unit Warrants shall be determined solely by the antidilution and
other adjustment provisions contained in the Public Warrant Agreement (which
provisions are incorporated herein by reference) as if such Unit Warrants were
and had been outstanding on and from the date of original issuance of the Public
Warrants.
(c) All calculations under this Section 6 shall be made to the nearest cent
or to the nearest one-thousandth of a share, as the case may be.
(d) In any case in which this Section 6 shall require that an adjustment in
the number of Unit Shares be made effective as of a record date for a specified
event, the Company may elect to defer, until the occurrence of such event,
issuing to the Holder, if the Holder exercised this Option after such record
date, the shares of Common Stock, if any, issuable upon such exercise over and
above the number of Unit Shares, if any, issuable upon such exercise on the
basis of the number of Unit Shares in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due xxxx or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(e) Whenever there shall be an adjustment as provided in this Section 6,
the Company shall promptly cause written notice thereof to be sent by registered
mail, postage prepaid, to the Holder, at its address as it shall appear in the
Option Register, which notice shall be accompanied by an officer's certificate
setting forth the number of Unit Shares issuable as part of each Option Unit and
the exercise price and the number of Warrant Shares purchasable upon the
exercise of each Unit Warrant after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and the computation thereof,
which officer's certificate shall be conclusive evidence of the correctness of
any such adjustment absent manifest error.
(f) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise or
conversion of this Option. If any fraction of a share would be issuable on the
exercise or conversion of this Option (or specified portions thereof), the
Company shall purchase such fraction for an amount in cash
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equal to the same fraction of the Current Market Price of such share of Common
Stock on the date of exercise or conversion of this Option.
(g) (i) Prior to the Separation Date (as defined in the Public Warrant
Agreement), the Current Market Price per Unit on any date shall be deemed to be
the average of the daily closing prices for the 30 consecutive trading days
immediately preceding the date in question. The closing price for each day shall
be (x) the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange (including, for purposes hereof,
the NASDAQ National Market System) on which the Units are listed or admitted to
trading, (y) if the Units are not listed or admitted to trading on any national
securities exchange, the highest reported bid price for the Common Stock as
furnished by the National Association of Securities Dealers, Inc. through NASDAQ
or a similar organization if NASDAQ is no longer reporting such information, or
(z) if on any such date the Units are not listed or admitted to trading on any
national securities exchange and is not quoted by NASDAQ or any similar
organization, as determined by reference to the "pink sheets" published by the
National Quotation Bureau or, if not so published, by such other method of
determining market value as the board of directors of the Company shall in good
faith from time to time deem to be fair, whose determination shall be conclusive
absent manifest error, shall be used.
(ii) At any time after the Separation Date, the Current Market Price
per Unit shall be the aggregate of the Current Market Price per share of Common
Stock and the Current Market Price per Warrant. The Current Market Price per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive trading days immediately preceding the
date in question. The closing price for each day shall be (x) the last reported
sales price regular way or, in case no such reported sale takes place on such
day, the closing bid price regular way, in either case on the principal national
securities exchange (including, for purposes hereof, the NASDAQ National Market
System) on which the Common Stock is listed or admitted to trading, (y) if the
Common Stock is not listed or admitted to trading on any national securities
exchange, the highest reported bid price for the Common Stock as furnished by
the National Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information, or (z) if on any
such date the Common Stock is not listed or admitted to trading on any national
securities exchange and is not quoted by NASDAQ or any similar organization, as
determined by reference to the "pink sheets" published by the National Quotation
Bureau or, if not so published, by such other method of determining market value
as the board of directors of the Company shall in good faith from time to time
deem to be fair, whose determination shall be conclusive absent manifest error,
shall be used. The Current Market Price per Warrant on any date shall be deemed
to be the average of the daily closing prices for the 30 consecutive trading
days immediately preceding the date in question. The closing price for each day
shall be (x) the last reported sales price regular way or, in case no such
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System) on which the Warrants are
listed or admitted to trading, (y) if the Warrants are not listed or admitted to
trading on any national securities exchange, the highest
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reported bid price for the Common Stock as furnished by the National Association
of Securities Dealers, Inc. through NASDAQ or a similar organization if NASDAQ
is no longer reporting such information, or (z) if on any such date the Warrants
are not listed or admitted to trading on any national securities exchange and is
not quoted by NASDAQ or any similar organization, as determined by reference to
the "pink sheets" published by the National Quotation Bureau or, if not so
published, by such other method of determining market value as the board of
directors of the Company shall in good faith from time to time deem to be fair,
whose determination shall be conclusive absent manifest error, shall be used.
7. (a) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise or conversion of this Option solely
the kind and amount of shares of stock and other securities, property, cash, or
any combination thereof receivable upon such consolidation, merger, sale, lease,
or conveyance by a holder of the number of shares of Common Stock and the Unit
Warrants for which this Option might have been exercised or converted
immediately prior to such consolidation, merger, sale, lease, or conveyance, and
(ii) make effective provision in its certificate of incorporation or otherwise,
if necessary, to effect such agreement. Such agreement shall provide for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in Section 6.
(b) In case of any reclassification or change of the shares of Common Stock
issuable upon exercise or conversion of the Option (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise or conversion of this Option
solely the kind and amount of shares of stock and other securities, property,
cash, or any combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of Common Stock and
Unit Warrants for which this Option might have been exercised or converted
immediately prior to such reclassification, change, consolidation, or merger.
Thereafter, appropriate provision shall be made for adjustments which shall be
as nearly equivalent as practicable to the adjustments in Section 6.
(c) The above provisions of this Section 7 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
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8. In case at any time the Company shall propose
(a) to pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per
share than the most recent such cash dividend) to all holders of Common
Stock; or
(b) to issue any rights, warrants, or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common
Stock or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 7; or
(d) to effect any liquidation, dissolution, or winding-up of the
Company; or
(e) to take any other action which would cause an adjustment to the
Public Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Option Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Public Exercise Price.
9. The issuance of any shares or other securities upon the exercise or
conversion of this Option, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
10. (a) If, at any time during the seven-year period commencing upon
completion of the Company's initial public offering, the Company shall file a
registration
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statement (other than on Form X-0, Xxxx X-0, or any successor form)
with the Securities and Exchange Commission (the "Commission") while any
Underwriters' Securities (as hereinafter defined) are outstanding, the Company
shall give all the then holders of any Underwriters' Securities (the "Eligible
Holders") at least 45 days prior written notice of the filing of such
registration statement. If requested by any Eligible Holder in writing within 30
days after receipt of any such notice, the Company shall, at the Company's sole
expense (other than the fees and disbursements of counsel for the Eligible
Holders and the underwriting discounts, if any, payable in respect of the
Underwriters' Securities sold by any Eligible Holder), register or qualify all
or, at each Eligible Holder's option, any portion of the Underwriters'
Securities of any Eligible Holders who shall have made such request,
concurrently with the registration of such other securities, all to the extent
requisite to permit the public offering and sale of the Underwriters' Securities
through the facilities of all appropriate securities exchanges and the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable. Notwithstanding the foregoing, if the
managing underwriter of any such offering shall advise the Company in writing
that, in its opinion, the distribution of all or a portion of the Underwriters'
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then any
Eligible Holder who shall have requested registration of his or its
Underwriters' Securities shall delay the offering and sale of such Underwriters'
Securities (or the portions thereof so designated by such managing underwriter)
for such period, not to exceed 90 days (the "Delay Period"), as the managing
underwriter shall request, provided that no such delay shall be required as to
any Underwriters' Securities if any securities of the Company are included in
such registration statement and eligible for sale during the Delay Period for
the account of any person other than the Company and any Eligible Holder unless
the securities included in such registration statement and eligible for sale
during the Delay Period for such other person shall have been reduced pro rata
to the reduction of the Underwriters' Securities which were requested to be
included and eligible for sale during the Delay Period in such registration. As
used herein, "Underwriters' Securities" shall mean the Options and the Option
Units and the Conversion Units and the Unit Shares, the Unit Warrants and the
Warrant Shares which, in each case, have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Act.
(b) If, at any time during the five-year period commencing [one year after
effective date,] the Company shall receive a written request, from Eligible
Holders who in the aggregate own (or upon exercise of all Options then
outstanding would own) a majority of the total number of shares of Common Stock
then included (or upon such exercise would be included) in the Underwriters'
Securities (the "Majority Holders"), to register the sale of all or part of such
Underwriters' Securities, the Company shall, as promptly as practicable, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of the Underwriters' Securities through the facilities
of all appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and counsel
to cause such registration statement to become effective as promptly as
practicable; provided, however, that the Company shall only be obligated to file
one such registration statement for which all expenses incurred in connection
with such
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registration (other than the fees and disbursements of counsel for the
Eligible Holders and underwriting discounts, if any, payable in respect of the
Underwriters' Securities sold by the Eligible Holders) shall be borne by the
Company and one additional such registration statement for which all such
expenses shall be paid by the Eligible Holders. Within three business days after
receiving any request contemplated by this Section 10(b), the Company shall give
written notice to all the other Eligible Holders, advising each of them that the
Company is proceeding with such registration and offering to include therein all
or any portion of any such other Eligible Holder's Underwriters' Securities,
provided that the Company receives a written request to do so from such Eligible
Holder within 30 days after receipt by him or it of the Company's notice.
(c) In the event of a registration pursuant to the provisions of this
Section 10, the Company shall use its best efforts to cause the Underwriters'
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder or such holders
may reasonably request; provided, however, that the Company shall not be
required to qualify to do business in any state by reason of this Section 10(c)
in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or qualification
contemplated by this Section 10 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document, and communication for such period of time as
shall be required to permit the Eligible Holders to complete the offer and sale
of the Underwriters' Securities covered thereby. The Company shall in no event
be required to keep any such registration or qualification in effect for a
period in excess of nine months from the date on which the Eligible Holders are
first free to sell such Underwriters' Securities; provided, however, that, if
the Company is required to keep any such registration or qualification in effect
with respect to securities other than the Underwriters' Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Underwriters' Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(e) In the event of a registration pursuant to the provisions of this
Section 10, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other documents, as any Eligible Holder may reasonably request to
facilitate the disposition of the Underwriters' Securities included in such
registration.
(f) In the event of a registration pursuant to the provisions of this
Section 10, the Company shall furnish each Eligible Holder of any Underwriters'
Securities so registered with an opinion of its counsel (reasonably acceptable
to the Eligible Holders) to the effect that (i) the registration statement has
become effective under the Act and no order suspending the effectiveness of the
registration statement, preventing or suspending the use of the registration
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statement, any preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the Commission or any securities or
blue sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) the registration statement and
each prospectus forming a part thereof (including each preliminary prospectus),
and any amendment or supplement thereto, complies as to form with the Act and
the rules and regulations thereunder, and (iii) such counsel has no knowledge of
any material misstatement or omission in such registration statement or any
prospectus, as amended or supplemented. Such opinion shall also state the
jurisdictions in which the Underwriters' Securities have been registered or
qualified for sale pursuant to the provisions of Section 10(c).
(g) In the event of a registration pursuant to the provision of this
Section 10, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses, and customary closing
conditions, including, but not limited to, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Underwriters'
Securities.
(h) The Company agrees that until all the Underwriters' Securities have
been sold under a registration statement or pursuant to Rule 144 under the Act,
it shall keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Underwriters'
Securities to sell such securities under Rule 144.
(i) Except for rights granted to holders of the Options and rights existing
prior to the issuance of the Options, the Company will not, without the written
consent of the Majority Holders, grant to any persons the right to request the
Company to register any securities of the Company, provided that the Company may
grant such registration rights to other persons so long as such rights are
subordinate to the rights of the Eligible Holders.
11. (a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all loss, liability, charge, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 11, but not be
limited to, attorneys' fees and any and all reasonable expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any registration statement,
preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, relating to the sale of
any of the Underwriters' Securities, or (B) in any application or other document
or communication (in this Section 11 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
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order to register or qualify any of the Underwriters' Securities under the
securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
such Eligible Holder by or on behalf of such person expressly for inclusion in
any registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Option. The foregoing agreement to indemnify shall be
in addition to any liability the Company may otherwise have, including
liabilities arising under this Option.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability pursuant to this Section 11(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) and payment of
expenses. Such indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel reasonably satisfactory to such indemnified party or
parties to have charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 11 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify the Eligible Holders of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of any Underwriters' Securities or any preliminary
prospectus, prospectus, registration statement, or amendment or supplement
thereto, or any application relating to any sale of any Underwriters'
Securities.
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(b) The Holder agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Underwriters' Securities held by the Holder,
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the
Company to the Holder in Section 11(a), but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder by or on behalf of the Holder expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 11(b), the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
11(a).
(c) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 11(a) or 11(b)
(subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Option expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the
Underwriters' Securities included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an indemnified
party), as a second entity, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, on the
basis of relevant equitable considerations such as the relative fault of the
Company and such Eligible Holders in connection with the facts which resulted in
such losses, liabilities, claims, damages, and expenses. The relative fault, in
the case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and the
Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 11(c). In no case shall any Eligible Holder be
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responsible for a portion of the contribution obligation imposed on all Eligible
Holders in excess of its pro rata share based on the number of shares of Common
Stock owned (or which would be owned upon exercise of all Underwriters'
Securities) by it and included in such registration as compared to the number of
shares of Common Stock owned (or which would be owned upon exercise of all
Underwriters' Securities) by all Eligible Holders and included in such
registration. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 11(c), each person, if any, who controls any Eligible Holder within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent, and counsel of each such
Eligible Holder or control person shall have the same rights to contribution as
such Eligible Holder or control person and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed any such
registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 11(c). Anything in this
Section 11(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 11(c) is intended to supersede any
right to contribution under the Act, the Exchange Act or otherwise.
12. Unless registered pursuant to the provisions of Section 10 hereof, the
Unit Shares or Conversion Units and Unit Warrants issued upon exercise or
conversion of the Options shall be subject to a stop transfer order and the
certificate or certificates evidencing such Option Units shall bear the
following legend:
"THE [SHARES] [WARRANTS] REPRESENTED BY THIS CERTIFICATE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
HOWEVER, SUCH [SHARES] [WARRANTS AND SHARES] MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION
STATEMENT, (ii) A SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii)
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
13. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Option (and upon surrender of any
Option if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses, the Company shall execute and deliver to the Holder thereof
a new Option of like date, tenor, and denomination.
14. The Holder of any Option shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Option.
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15. This Option shall be construed in accordance with the laws of the State
of New York applicable to contracts made and performed within such State,
without regard to principles of conflicts of law.
16. The Company irrevocably consents to the jurisdiction of the courts of
the State of New York and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Option, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Option, or a breach of this Option or any such document
or instrument. In any such action or proceeding, the Company waives personal
service of any summons, complaint or other process and agrees that service
thereof may be made in accordance with Section 12 of the Underwriting Agreement.
Within 30 days after such service, or such other time as may be mutually
agreed upon in writing by the attorneys for the parties to such action or
proceeding, the Company shall appear to answer such summons, complaint or other
process.
Dated: , 1996
INTERNATIONAL SPORTS WAGERING INC.
By:_______________________________________
Xxxxx Xxxxxx, Chairman of the Board
[Seal]
______________________________
Secretary
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Option.)
FOR VALUE RECEIVED, _____________ hereby sells, assigns, and transfers unto
__________________ a Option to purchase __________ Units, par
value $.001 per Unit, of International Sports Wagering Inc. (the "Company"),
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint ________________ attorney to transfer such
Option on the books of the Company, with full power of substitution.
Dated:_______________________________
Signature:__________________________________
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Option in every particular, without alteration or
enlargement or any change whatsoever.
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To: International Sports Wagering Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Option Units covered by the within Option and tenders payment herewith in the
amount of $_________ in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
____________________________________________________
____________________________________________________
____________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Option Units shall not be all the Option Units covered by
the within Option, that a new Option for the balance of the Option Units covered
by the within Option be registered in the name of, and delivered to, the
undersigned at the address stated below.
Dated:_______________________________ Name________________________________
(Print)
Address:______________________________ ___________________________________
(Signature)
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To: International Sports Wagering Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
CASHLESS EXERCISE FORM
(To be executed upon conversion of the attached Option)
The undersigned hereby irrevocably elects to surrender its Option for the
number of Units as shall be issuable pursuant to the cashless exercise
provisions of the within Option, in respect of _____ Units underlying the within
Option, and requests that certificates for such securities be issued in the name
of and delivered to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Units shall not be all the Units exchangeable or
purchasable under the within Option, that a new Option for the balance of the
Units covered by the within Option be registered in the name of, and delivered
to, the undersigned at the addressed stated below.
Dated:_______________________________ Name________________________________
(Print)
Address:______________________________ ____________________________________
(Signature)
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