EXHIBIT 12
(REV2)
Neither this Warrant nor the shares of Common Stock
issuable upon exercise of this Warrant has been
registered under the Securities Act of l933, as
amended (the "Act") and may not be sold, pledged,
hypothecated or otherwise transferred or offered for
sale unless a registration statement has become and
is then effective with respect to such Warrant or
Common Stock or a written opinion of counsel that the
proposed sale, pledge, hypothecation or other
transfer is exempt from registration under the Act
has been provided the Company.
MID-STATE RACEWAY, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. CAP-4
200,000 Shares
FOR VALUE RECEIVED, Mid-State Raceway, Inc. (the "Company"), a
New York corporation, hereby certifies that All Capital, LLC or permitted
assigns (the "Holder") is entitled to purchase from the Company, at any time or
from time to time subsequent to the date hereof (the "Effective Date") and prior
to 5:00 P.M., New York City time then current, on August 31, 2007 , Two Hundred
Thousand (900,000) fully paid and nonassessable shares of the common stock, par
value $.10 per share, of the Company (the "Common Stock") at the rate of Two
($2.00) Dollars per share (the "Exercise Price").
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised, in whole at any time or in
part from time to time, subsequent to the Effective Date and prior to 5:00 P.M.,
New York City time then current, on August 31, 2007, by the Holder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in subparagraph 8 (a) hereof, together with
proper payment for shares of Common Stock made by either, at the election of the
Holder: (a) certified or official bank check, drawn on a bank with offices in
the
continental United States, payable in U.S. dollars to the order of the Company
and/or (b) by application of up to all of unpaid principal and/or interest
evidenced by that certain Consolidated Secured Promissory Note of even date
executed by the Company in favor of All Capital, LLC in the initial principal
amount of $15,000,000 (the "Note"). If this Warrant is exercised in part, this
Warrant must be exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Warrant covering the shares of Common
Stock for which this Warrant has not been exercised. Upon such surrender of this
Warrant, the Company will issue or cause to be issued a certificate or
certificates in the name of the Holder for the largest number of whole shares of
the Common Stock to which the Holder shall be entitled.
(b) Anything herein to the contrary notwithstanding , this
Warrant shall not be exercisable (by the Holder and/or at the request of the
Company) to the extent of more than 50,000 shares of Common Stock, if the
stockholders of the Company approve the Exclusive Option Agreement (as defined
in that certain Loan Commitment dated March 22, 2002 executed by the Company and
Capital One, LLC) and the transactions therein described are consummated.
2. RESERVATION OF WARRANT SHARES. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and in
reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock as from time to time
shall be receivable upon the exercise of this Warrant, free and clear of all
restrictions on sale or transfer (except as hereinafter provided) and free and
clear of all liens, claims and encumbrances and rights and options of third
parties, including without limitation pre-emptive rights.
3. PROTECTION AGAINST DILUTION. (a) If, at any time or from time to
time after the Effective Date, the Company shall distribute to the holders of
the Common Stock (i) securities, other than shares of Common Stock, or (ii)
property, excluding cash, without payment therefore, with respect to the Common
Stock, then, and in each such case, the Holder, upon the exercise of this
Warrant, shall be entitled to receive the securities and properties which the
Holder would have held on the date of such exercise if, on the Effective Date
the Holder had been the holder of record of the number of shares of Common Stock
subscribed for upon such exercise and, during the period from the Effective Date
to and including the date of such exercise, had retained such shares and
securities and properties receivable by the Holder during such period. Notice of
each such distribution shall be forthwith mailed by the Company to the Holder.
(b) In case the Company shall subsequent to the Effective Date (i) pay
a dividend or make a distribution on its capital stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its Common Stock
any shares of capital stock of the Company, the Exercise Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Warrant surrendered for exercise immediately thereafter would be entitled to
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receive the number of shares of Common Stock or other capital stock of the
Company which he would have owned immediately following such action had such
Warrant been exercised immediately prior thereto. An adjustment made pursuant to
this subparagraph 3 (b) shall become effective immediately after the record date
in the case of any such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination,
reconstruction or reclassification. If, as a result of an adjustment made
pursuant to this subparagraph 3 (b), the holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital stock of
the Company, the Board of Directors (whose determination, providing the same is
applied equally to all holders of Common Stock, shall be conclusive and shall be
described in a written notice to the Holders of the Warrants promptly after such
adjustment) shall determine the allocation between or among shares of such
classes of capital stock or shares of Common Stock and other capital stock.
(c) In case the Company shall subsequent to the Effective Date issue or
sell any rights, options, warrants or securities convertible into Common Stock
entitling the holders thereof to purchase Common Stock or to convert such
securities into Common Stock at a price per share (the "Price", as defined) less
than the then current Exercise Price in effect on the date of such issuance or
sale, the Exercise Price shall be adjusted as of the date of such issuance or
sale so that the same shall equal to the Price (subject to further adjustment as
herein provided). For purposes of this subparagraph 3(c), the term "Price" shall
be and mean the amount determined by dividing (i) the total amount, if any,
received or receivable by the Company in consideration of the issuance or sale
of such rights, options, warrants or convertible securities plus the total
consideration, if any, payable to the Company upon exercise or conversion
thereof (the "Total Consideration"), by (ii) the number of additional shares of
Common Stock issuable upon exercise or conversion of such securities. Any
property (other than cash) received in consideration for, or exercise of, any
such rights, options, warrants or convertible securities shall be valued at fair
market value on the date of receipt by the Company, as determined by the Board
of Directors.
(d) If, subsequent to the Effective Date, shares of Common Stock are
issued by the Company for consideration in an amount per share less than the
applicable Exercise Price, then and in that event (and effective as of the date
of issuance of such Common Stock) the Exercise Price shall be reduced by that
amount determined by multiplying the then effective Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
issued and the denominator of which shall be the sum of (i) the total number of
issued and outstanding shares of Common Stock prior to such issuance plus (ii)
that number of shares of Common Stock issuable upon conversion of all of the
then issued and outstanding preferred stock of the Company by its terms
convertible into Common Stock; provided, however, that in no event shall the
Exercise price be less than the par value of the Common Stock. The determination
of the Exercise Price shall be made as of the Exercise Date which shall be the
date upon which this Warrant is surrendered, in each instance, to the Company
upon exercise pursuant to the provisions of Paragraph 1 hereof. To the extent
permitted by law, each exercise shall be deemed to have been effective on
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the Exercise Date, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock are issuable upon such
exercise shall be deemed to have become holders of record of the shares
represented thereby.
(e) In case, subsequent to the Effective Date, of any consolidation or
merger to which the Company is a party other than a merger or consolidation in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), the Holder of
a Warrant shall have the right thereafter to convert such Warrant into the kind
and amount of securities, cash or other property which he would have owned or
have been entitled to receive immediately after such consolidation merger,
statutory exchange, sale or conveyance had such Warrant been converted
immediately prior to the effective date of such consolidation, merger, statutory
exchange, sale or conveyance and in any such case, if necessary, appropriate
adjustment shall be made in the application of the provisions set forth in this
Paragraph 3 with respect to the rights and interests thereafter of the Holders
of the Warrants to the end that the provisions set forth in this Paragraph 3
shall thereafter correspondingly be made applicable, as nearly as may reasonably
be, in relation to any shares of stock or other securities or property
thereafter deliverable on the conversion of the Warrants. The above provisions
of this subparagraph 3(e) shall similarly apply to successive consolidations,
mergers, statutory exchanges, sales or conveyances. Notice of any such
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so proposed to be made shall be mailed to the Holder not less than 30
days prior to such event. A sale of all or substantially all of the assets of
the Company for a consideration consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.
(f) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least $0.02
per share of Common Stock; provided, however, that any adjustments which by
reason of this subparagraph 3(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and provided
further, however, that adjustments shall be required and made in accordance with
the provisions of this Paragraph 3 (other than this subparagraph 3(f)) not later
than such time as may be required in order to preserve the tax-free nature of a
distribution to the Holders of Warrants or Common Stock. A conversion of
preferred stock convertible into Common Stock into Common Stock shall not
precipitate an adjustment to the Exercise Price pursuant to this Paragraph 3.
All calculations under this Paragraph 3 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. Anything in this Paragraph 3
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Exercise Price, in addition to those required by this
Paragraph 3, as it in its description shall deem to be advisable in order that
any stock dividend or subdivision of shares hereafter made by the Company to its
shareholders shall not be taxable.
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(g) Whenever the Exercise Price is adjusted as provided in
this Paragraph 3 and upon any modification of the rights of a Holder of Warrants
in accordance with this Paragraph 3, the Company shall promptly mail to the
Holders of the Warrants a certificate of the chief financial officer or
secretary of the Company setting forth the Exercise Price and the number of
shares of Common Stock as to which this Warrant may be exercised after such
adjustment or the effect of such modification, a brief statement of the facts
requiring such adjustment or modification and the manner of computing the same.
(h) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to its Common Stock, the Company
shall mail a notice thereof to the Holder not less than 15 days prior to the
record date fixed for determining shareholders entitled to participate in such
dividend or other distribution but in any event not less than 45 days prior to
the date such dividend or distribution is intended to be made by the Company.
4. FULLY PAID STOCK; TAXES. The Company agrees that the shares of the
Common Stock represented by each and every certificate delivered on the exercise
of this Warrant shall, at the time of such delivery, be validly issued and
outstanding, fully paid and non-assessable (except to the extent set forth in
the Business Corporation Law), and not subject to pre-emptive rights, and the
Company will take all such actions as may be necessary to assure that the par
value or stated value, if any, per share of the Common Stock is at all times
equal to or less than the then Exercise Price. The Company further covenants and
agrees that it will pay, when due and payable, any and all Federal and state
stamp, original issue or similar taxes which may be payable in respect of the
issue of any shares of Common Stock or certificate therefor.
5. TRANSFERABILITY. This Warrant and the shares of Common Stock
issuable upon the exercise of this Warrant (collectively the "Securities") may
not be transferred, sold, assigned, conveyed, pledged or hypothecated except in
conformity with the provisions of the Securities Act of 1933, as amended (the
"Act") and the rules and regulations ("Regulations") promulgated thereunder by
the Securities and Exchange Commission. Prior to any proposed transfer of any of
the Securities (in the absence of an effective Registration Statement under the
Act with respect to such Securities), the holder of such Securities shall
deliver to the Company a written opinion of counsel to the effect that such
proposed Transfer may be effected without registration under the Act. Each
certificate representing shares of Common Stock (issuable upon exercise of the
Warrants) and the Warrants shall contain the following legend, if in the
Company's reasonable judgment, applicable securities law so require:
"The ______________ represented by this certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act") and may not be sold, pledged, hypothecated or
otherwise transferred or offered for sale unless a
registration statement has become and is then effective with
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respect to such _______________ or a written opinion of
counsel that the proposed sale, pledge, hypothecation or other
transfer is exempt from registration under the Act has been
provided to the Company."
In addition, the Company may place stop transfer instructions concerning those
shares in its stock transfer records. The Holder, by accepting this Warrant,
consents and agrees with the Company and every subsequent holder of this Warrant
that until the Warrant is transferred on the books of the Company, the Company
may treat the registered Holder as the absolute owner thereof for all purposes,
notwithstanding any notice to the contrary. The Company agrees to make such
transfer promptly on its books if the transfer is effected consistent with the
terms of this Paragraph 5.
6. LOSS, ETC., OF WARRANT. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, and upon
reimbursement of the Company's reasonable incidental expenses, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
7. WARRANT HOLDER NOT SHAREHOLDER. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
8. COMMUNICATION. No notice or other communication under this Warrant
shall be effective unless (but any notice or other communication shall be
effective and shall be deemed to have been given if) the same is in writing and
is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at P.O. Box 860, Vernon, New York 13476, or
such other address as the Company has designated in writing to the Holder.
(b) the Holder at the address specified on the records of the
Company, or such other address as the Holder has designated in writing to the
Company.
9. ISSUANCE. This Warrant has been issued pursuant to the terms and
conditions of a certain 10% Convertible Secured Promissory Note ("CS Note")
executed by the Company in favor of Xxxxxx, LLC (and assigned by Xxxxxx, LLC to
All Capital, LLC); which CS Note has been consolidated with and into a
Consolidated Secured Promissory Note of even date in the amount of $15,000,000
executed by the Company in favor of All Capital, LLC. This Warrant has been
issued in lieu, instead and in replacement for the conversion rights set forth
in the CS Note.
10. REGISTRATION RIGHTS. The Company does hereby irrevocably give and
grant to the Holder those registration rights set forth in Exhibit "A" annexed
hereto; which registration rights are hereby incorporated herein by reference
with the same full force
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and effect as if set forth herein in full.
11. HEADINGS. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
12. APPLICABLE LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in New York.
13. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon, and
inure to the benefit of, the Company and the Holder and their respective
successors and permitted assigns.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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14. ATTORNEYS FEES. In the event of any dispute or controversy arising
out of or relating to this Warrant, the prevailing party shall be entitled to
recover reasonable attorneys fees from the other party hereto.
IN WITNESS WHEREOF, Mid-State Raceway, Inc. has caused this Warrant to
be signed by its President and its corporate seal to be hereunto affixed this
28th day of August, 2002.
Mid-State Raceway, Inc.
By: /s/ XXXXXX XXXXXXX
-----------------------------
Xxxxxx Xxxxxxx, President
{Corporate Seal}
Accepted and Agreed:
All Capital, LLC
By: /s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx
Manager
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SUBSCRIPTION
The undersigned ___________________________________,
pursuant to the provisions of the foregoing Warrant, hereby agrees to subscribe
for and purchase ____________ shares of the Common Stock of Mid-State Raceway,
Inc., covered by said Warrant, and makes payment therefor in full at the price
per share provided by said Warrant.
Dated:_________________________ Signature_____________________
Address_______________________
ASSIGNMENT
FOR VALUE RECEIVED, ____________________________ hereby
sells, assigns and transfers unto _______________________ the foregoing Warrant
and all rights evidenced thereby, and does irrevocably constitute and appoint
________________________ attorney, to transfer said Warrant on the books of
Mid-State Raceway, Inc.
Dated:________________________ Signature ________________________
Address___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _______________________ hereby assigns and
transfers unto __________________________ the right to purchase ____________
shares of the Common Stock of Mid-State Raceway, Inc. by the foregoing Warrant,
and a proportionate part of said Warrant and the rights evidenced hereby, and
does irrevocably constitute and appoint ______________________, attorney, to
transfer that part of said Warrant on the books of Mid-State Raceway, Inc.
Dated: _______________________ Signature_______________________
Address_________________________
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EXHIBIT "A"
TO
WARRANT
BETWEEN
MID-STATE RACEWAY, INC. AND MID-STATE DEVELOPMENT, CORP.
AND
ALL CAPITAL, LLC
1.1. RACEWAY REGISTRATION. Whenever Raceway proposes to file a
registration statement relating to any of its capital stock under the Securities
Act of 1933, as amended (the " Securities Act"), other than a registration
statement relating to any of its capital stock required to be filed in respect
of employee benefit plans of Raceway on Form S-8 or any similar form from time
to time in effect or any registration statement on Form S-4 or similar successor
form relating to securities issues in connection with a reorganization, Raceway
shall, at least twenty-one days (or if such twenty-one period is not
practicable, then a reasonable shorter period which shall not be less than seven
days) prior to such filing, give written notice of such proposed filing to the
Holder. Upon receipt by Raceway not more than seven days (unless the notice
given to the Holder pursuant to the previous sentence is less than ten days, in
which case such seven-day period shall be shortened to five days) after such
notice of a written request from any Holder for registration of his Registerable
Securities (as defined below), Raceway shall include such Registerable
Securities in such registration statement or in a separate registration
statement concurrently filed, and shall use all reasonable efforts to cause such
registration statement to become effective with respect to such Registerable
Securities, unless the managing underwriter therefor concludes in its reasonable
judgment that compliance with this Section 1.1 would materially adversely affect
such offering. "Registerable Securities means any and all shares of Common Stock
acquired by the Holder at any time and from any source.
1.2. GENERAL PROVISIONS. Raceway will use all reasonable
efforts to cause any registration statement referred to in Section 1.1 to become
effective and to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of 45 days from the
effective date of the registration statement and the date on which the Holder
completes his distribution of Registerable Securities that have been registered
pursuant to Section 1.1. Raceway will use all reasonable efforts to effect such
qualifications under applicable blue sky or other state securities laws as may
be reasonable requested by the Holder (provided that Raceway shall not be
obligated to file a general consent to service of process or qualify to do
business as a foreign corporation or otherwise subject itself to taxation in any
jurisdiction solely for the purpose of any such
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qualification) to permit or facilitate such sale or other distribution. Raceway
will cause the Registerable Securities for which registration is effected under
Section 1.1 to be listed on any national securities exchange or quoted on any
quotation system on which the shares of Common Stock are listed or quoted.
1.3 INFORMATION, DOCUMENTS, ETC. Upon making a request for
registration pursuant to Section 1.1, the Holder shall furnish to Raceway such
information as Raceway may reasonably request and shall be required in
connection with any registration, qualification or compliance referred to
herein. Raceway agrees that it will furnish to each such Holder the number of
prospectuses, offering circulars or other documents, or any amendments or
supplements thereto, incident to any registration, qualification or compliance
referred to in this Exhibit "A" the Holder from time to time may reasonably
request.
1.4. EXPENSES. Raceway will bear all expenses of registrations
pursuant to this Exhibit "A" (other than underwriting discounts and commissions
and brokerage commissions and fees, if any, payable with respect to shares of
Registerable Securities sold by the Holder), including, without limitation,
registration fees, printing expenses, expenses of compliance with blue sky or
other state securities laws, the fees of one counsel for the Holder, and legal
and audit fees incurred by Raceway in connection with such registration and
amendments or supplements in connection therewith.
1.5. COOPERATION. In connection with any registration of
Registerable Securities pursuant to this Exhibit "A", Raceway agrees to:
(a) enter into such customary agreements (including
an underwriting agreement containing
such representations and warranties by Raceway and such other terms and
provisions, including indemnification provisions, as are customarily contained
in underwriting agreements for comparable offerings and, if no underwriting
agreement is entered into, an indemnification agreement on such terms as is
customary in transactions of such nature) and take all such other actions as the
Holder or the underwriters, if any, participation in such offering and sale may
reasonable request in order to expedite or facilitate such offering and sale;
(b) furnish, at the request of the Holder or any
underwriters participating in such offering and sale, (i) a comfort letter or
letters, dated the date of the final prospectus with respect to the Registerable
Securities from the independent certified public accountants of Raceway and
addressed to the Holder and any underwriters participating in such offering and
sale, which letter or letters shall state that such accountants are independent
with respect to Raceway within the meaning of Rule 1.01 of the Code of
Professional Ethics of the American Institute of Certified Public Accountants
and shall address such matters as the Holders and underwriter may reasonably
request and as may be customary in transactions of a similar nature for similar
entities and (ii) an opinion, dated the date of the closing for the sale of the
Registerable Securities of the counsel
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representing Raceway with respect to such offering and sale, addressed to the
Holder and any such underwriters, which opinion shall address such matters as
they may reasonably request and as may be customary in transactions of a similar
nature for similar entities; and
(c) make available for inspection by the Holder, the
underwriters, if any, participating
in such offering and sale (which inspecting underwriters shall, if reasonably
possible, be limited to any manager or managers for such participating
underwriters), counsel for the Holder, one accountant or accounting firm
retained by the Holders and any such underwriters, or any other agent retained
by the Holder or such underwriters, all financial and other records, corporate
documents and properties of Raceway, and supply such additional information, as
they shall reasonably request.
1.6. UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of Raceway's capital stock, Raceway
shall not be required under Section 1.1 to include any of the Holder's
securities in such underwriting unless the Holder accepts the terms of the
underwriting as agreed upon between Raceway and the underwriters selected by it
(or by other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
adversely affect the success of the offering by Raceway. If the total amount of
securities, including Registerable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
Raceway that the underwriters determine in their sole discretion will not
adversely affect the success of the offering, then Raceway shall be required to
include in the offering only that number of such securities, including
Registerable Securities, which the underwriters determine in their sole
discretion will not adversely affect the success of the offering (the securities
so included to be apportioned pro rata among the selling shareholders according
to the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder which is a holder of
Registerable Securities and which is a partnership or corporation the partners,
retired partners and shareholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
shareholder", and any pro rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling shareholder", as defined in this sentence.
1.7. DELAY OF REGISTRATION. The Holder shall not l have any
right to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Exhibit "B".
1.8. ACTION TO SUSPEND EFFECTIVENESS; SUPPLEMENT TO
REGISTRATION STATEMENT. (a) Raceway will notify the Holder and his counsel
promptly of (i) any action by the Securities and Exchange Commission to suspend
the effectiveness of the registration statement covering the Registerable
Securities or the institution or threatening of any
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proceeding for such purpose (a "stop order") or (ii) the receipt by Raceway of
any notification with respect to the suspension of the qualification of
Registerable Securities for the sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Immediately upon receipt of any
such notice, the Holder shall cease to offer to sell any Registerable Securities
pursuant to the registration statement in the jurisdiction to which such stop
order or suspension relates. Raceway will use all reasonable efforts to prevent
the issuance of any such stop order or the suspension of any such qualification
and, if any such stop order is issued or any such qualification is suspended, to
obtain as soon as possible the withdrawal or revocation thereof, and will notify
the Holder and his counsel at the earliest practicable date of the date on which
the Holder may offer an sell Registerable Securities pursuant to the
registration statement.
(b) Within the applicable period referred to in Section 1.1
following the effectiveness of a registration statement filed pursuant to this
Exhibit "A", Raceway will notify the Holder and his counsel promptly of the
occurrence of any event or the existence of any state of facts that, in the
judgment of Raceway, should be set forth in such registration statement.
Immediately upon receipt of such notice, the Holder shall cease to offer or sell
any Registerable Securities pursuant to such registration statement, cease to
deliver or use such registration statement and, if for requested by Raceway,
return to Raceway, at its expense, all copies (other than permanent file copies)
of such registration statement, in each case until such registration statement
has been amended or supplemented as hereinafter provided. Raceway will, as
promptly as practicable, take such action as may be necessary to amend or
supplement such registration statement in order to set forth or reflect such
event or state of facts. Raceway will furnish copies of such proposed amendment
or supplement to the Holder and his counsel and will not file or distribute such
amendment or supplement without the prior consent of the Holders, which consent
shall not be unreasonably withheld.
1.9. INDEMNIFICATION. (a) In the event of the registration of
any of the shares of Common Stock under the Securities Act pursuant to the
provision of this Exhibit "A", Raceway will, to the extent permitted by law,
indemnify and hold harmless the Holder, his Affiliates and Associates and each
other person, if any, who controls the Holder for purposes of the Securities Act
(each, an "indemnified persons") against any losses, claims, damages or
liabilities, joint or several, to which such indemnified person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of material fact contained
or incorporated by shares were registered under the Securities Act, any final
prospectus contained therein (as such may be amended or supplemented) or any
document incorporated by reference therein, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading
in light of the circumstances in which made, and will reimburse each such
indemnified person for any legal or any other expenses reasonably incurred by
such indemnified person in connection with investigation or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that Raceway will
not be liable in any such
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case to the extent that any such loss, claim, damage or liability (i) arises out
of or is based upon in untrue statement or alleged untrue statement or omission
or alleged omission made or incorporated by reference in such registration
statement or such final prospectus (as such may be amended or supplemented) in
reliance upon and in conformity with written information furnished to Raceway by
such indemnified person specifically for use in the preparation thereof or (ii)
arises in connection with a sale of Registerable Securities by such indemnified
person in contravention of Section 1.1(b) hereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such indemnified person and shall survive any transfer of such Securities by the
Holders.
(b) In the event of the registration of any
shares of Common Stock under the Securities Act pursuant to the provisions
hereof, the Holder will, to the extent permitted by law, indemnify and hold
harmless Raceway, each director of Raceway, each officer of Raceway who signs
the registration statement and each other person, if any, who controls Raceway
for purposes of the Securities Act against losses, claims, damages or
liabilities, joint or several, to which Raceway or such director, officer or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of material fact contained in any registration statement under which
such shares were registered under the Securities Act, any final prospectus
contained therein (as such may be amended or supplemented) or any document
incorporated by reference therein, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading
in light of the circumstances in which made, which untrue statement or alleged
untrue statement or omission or alleged omission has been made in reliance upon
and in conformity with written information furnished to Raceway by the Holder
specifically for use in the preparation thereof, and will reimburse Raceway and
each such director, officer or controlling person for any legal or any other
expenses reasonably incurred by Raceway or such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action.
(c) If the indemnification provided for in
this Section 1.9 is unavailable to a party that would have been an indemnified
party hereunder in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to herein, then each party that would have
been in indemnifying party thereunder shall, in lieu of indemnifying such
indemnified party, contribute to the extent permitted by law to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative default of the indemnifying party on the one
hand and such indemnified party on the other hand in connection with the
statement or omission which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or
such indemnified party and
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the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Xxxxxxx acknowledges and
agrees that it would not be just and equitable if contribution pursuant to this
Section 1.9(c) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 1.9(c). the amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 1.9(c) shall include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim (which shall
be limited as provided in this Section 1.9(c) if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof). No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentations.
(d) Indemnification or, if appropriate,
contribution similar to that specified
in the preceding provisions of this Section 1.9 (with appropriate modifications)
shall be given by Raceway and the Holder with respect to statements or omission
contained in applications or other written information filed in any state or
other jurisdiction in connection with the registration or other qualification of
Registerable Securities under applicable state securities or blue sky laws or
regulations.
(e) In the event of any underwritten
offering of Registerable Securities under the Securities Act pursuant to this
Exhibit "A", Raceway and the Holder agree, to the extent practicable, to enter
into an underwriting agreement, in customary form, with the underwriters
thereof, which underwriting agreement may contain additional provisions with
respect to indemnification and contribution.
1.10 REGISTRATION RIGHTS OF TRANSFEREE. Notwithstanding
anything to the contrary contained herein, the Holder may assign his rights
under this Exhibit "A" with respect to any shares of Common Stock transferred by
any Holders to the transferee thereof, provided that such transferred shares
represent all the shares of Common Stock owned by and issuable to such Holder.
1.12 EFFECTIVE DATE OF REGISTRATION RIGHTS. The Holders shall
be entitled to exercise any right provided for in this Exhibit "A" during the
five years commencing on the date hereof.
1.13 COMPULSORY REGISTRATION RIGHTS. In addition to and not in
lieu of the registration rights granted to the Holder pursuant to the provisions
of subparagrapsh 1.1 through 1.12 hereof, the Holder shall have the right, on
two occasions, to compel Raceway, to register for sale by the Holder not less
than 25,000 shares of Registerable Securities pursuant to the Securities Act.
Any such registration shall be implemented in accordance with the provisions of
subparagraphs 1.1 through 1.12 hereof except that the costs of such registration
(other than costs associated with the preparation of audited financial
statements which the Company is otherwise required to prepare and provide to
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stockholders annually and which will be borne by the Company) shall be borne by
the Holder; provided however that to the extent any other party (including for
this purpose the Company) desires to include share of Common Stock in such
Registration Statement, the costs otherwise required to be borne by the Holder
as hereinabove provided shall be pro rated among all parties whose shares of
Common Stock are included in such Registration Statement; such pro ration to be
made on a per share basis.
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