REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
THIS
REGISTRATION RIGHTS AGREEMENT is made as of August 31, 2006, by and between
WINWIN GAMING, INC., a Delaware corporation (together with any successor
thereto, the “Company”),
and
SOLIDUS NETWORKS, INC., dba PayByTouch Solutions, a Delaware corporation
(“PBT”).
BACKGROUND
The
Company and PBT have entered into a Second Amended and Restated Joint Venture
Agreement, dated as of August 31, 2006 (as amended, restated, supplement
or
otherwise modified from time to time, the “JV
Agreement”),
pursuant to which, among other things, PBT has agreed to purchase shares
of the
Company’s Series A-1 Preferred Stock, US$0.01 par value per share (the
“Series
A-1 Preferred Stock”),
and
shares of the Company’s Series A Preferred Stock, US$0.01 par value per share
(the “Series
A Preferred Stock”).
The
Company and PBT desire to provide for certain arrangements with respect to
the
registration of shares of capital stock of the Company under the Securities
Act
(as defined herein).
The
execution and delivery of this Agreement is a condition precedent to the
transaction contemplated by the JV Agreement.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Certain
Definitions.
Capitalized terms used in this Agreement and not otherwise defined shall
have
the following respective meanings:
“Agreement”
shall
mean this Registration Rights Agreement, as amended, restated, supplemented
or
otherwise modified from time to time.
“Commission”
shall
mean the United States Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act and the Exchange
Act.
“Common
Stock”
shall
mean the Company’s Common Stock, US$0.01 par value per share, and any other
common equity securities now or hereafter issued by the Company, and any
other
shares of stock issued or issuable with respect thereto (whether by way of
a
stock dividend or stock split or in exchange for or in replacement of or
upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any similar successor
federal statute, and the rules and regulations of the Commission thereunder,
all
as the same shall be in effect at the time.
“New
Securities”
shall
mean equity securities of the Company, whether now authorized or not, or
rights,
options, or warrants to purchase said equity securities, or securities of
any
type whatsoever that are, or may become, convertible into or exchangeable
into
or exercisable for said equity securities.
“Person”
shall
mean any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department
thereof).
“Preferred
Stock”
shall
mean the Series A-1 Preferred Stock and the Series A Preferred
Stock.
“Registrable
Securities”
shall
mean (a)
the
shares of Common Stock issued or issuable upon conversion of any Preferred
Stock, (b) any other shares of Common Stock issued or issuable pursuant to
the
JV Agreement or any option granted pursuant thereto, and (c) any additional
shares of Common Stock issued or distributed by way of a dividend, stock
split
or other distribution in respect of any share of Preferred Stock or any share
of
Common Stock into which any share of Preferred Stock was converted, or acquired
by way of any rights offering or similar offering made in respect thereof;
provided,
however,
that
notwithstanding anything to the contrary contained herein, “Registrable
Securities” shall not at any time include any securities (i) registered and sold
pursuant to the Securities Act, or (ii) sold pursuant to Rule 144 promulgated
under the Securities Act.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any similar successor federal
statute, and the rules and regulations of the Commission thereunder, all
as the
same shall be in effect at the time.
2. Registrations.
(a) Demand
Registration.
(i) If
the
Company shall be requested in writing by holders (the “Holders”)
of a
majority of the Registrable Securities to file a registration statement for
Registrable Securities having an aggregate offering price to the public of
not
less than US$15,000,000 under the Securities Act (a “Demand
Notice”)
in
accordance with this Section 2(a),
then
the Company shall use best efforts to effect such a registration statement.
Upon
receipt of a Demand Notice, the Company shall, within 10 days, give written
notice of such proposed registration to all Holders and shall offer to include
in such proposed registration any Registrable Securities requested to be
included in such proposed registration by such Holders who respond in writing
to
the Company’s notice within 30 days after delivery of such notice (which
response shall specify the number of Registrable Securities proposed to be
included in such registration). The Company shall promptly use best efforts
to
effect such registration as soon as practicable on an appropriate form,
including Form S-2 or S-3, if available, under the Securities Act of the
Registrable Securities which the Company has been so requested to register;
provided,
however,
that
the Company shall not be obligated to effect any registration under the
Securities Act in the following circumstances:
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(A) after
the
Company has already filed two registration statements initiated by the Holders
of Registrable Securities pursuant to this Section 2(a);
or
(B) during
any period in which any other registration statement (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto) pursuant to which Registrable Securities are to
be or
were sold has been filed and not withdrawn or has been declared effective
within
the prior 90 days.
(ii) If
the
Holders requesting to be included in a registration pursuant to this
Section 2(a)
so
elect, the offering of such Registrable Securities pursuant to such registration
shall be in the form of an underwritten offering. The Holders of a majority
of
the Registrable Securities requested to be included in such registration
shall
select one or more nationally recognized firms of investment bankers reasonably
acceptable to the Company to act as the lead managing underwriter or
underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering,
which shall also be reasonably acceptable to the Company.
(iii) With
respect to any registration pursuant to this Section 2(a),
the
Company may include in such registration any Common Stock; provided,
however,
that if
the managing underwriter advises the Company that the inclusion of all
Registrable Securities and Common Stock requested to be included by the Company
in such registration would interfere with the successful marketing (including
pricing) of all such securities, then the number of Registrable Securities
and
Common Stock proposed to be included in such registration shall be included
in
the following order:
(A) first,
the
Registrable Securities shall be included, pro rata among the participating
Holders based upon the number of Registrable Securities held by such Holders
at
the time of such registration; and
(B) second,
Common
Stock requested to be included by the Company.
(iv) At
any
time before the registration statement covering Registrable Securities becomes
effective, Holders of a majority of the Registrable Securities requested
to be
included in such registration may request the Company to withdraw or not
to file
the registration statement. In that event, if such request of withdrawal
shall
have been caused by, or made in response to, a material adverse effect or
change
in the Company’s financial condition, operations, business or prospects, such
Holders of Registrable Securities shall not be deemed to have used one of
their
demand registration rights under this Section 2(a).
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(b) Registrations
on Form S-3.
Notwithstanding anything contained in Section 2
to the
contrary, at such time as the Company shall have qualified for the use of
Form S-3 promulgated under the Securities Act or any successor form
thereto, Holders of Registrable Securities shall have the right to request
in
writing up to two registrations on Form S-3 or any such successor forms of
Registrable Securities, which request or requests shall (i) specify the number
of Registrable Securities intended to be sold or disposed of and the Holders
thereof, (ii) state the intended method of disposition of such Registrable
Securities, and (iii) relate to Registrable Securities having an anticipated
aggregate offering price of at least US$5,000,000. A requested registration
on
Form S-3 or any such successor forms in compliance with this Section 2(b)
shall
not count as a demand registration pursuant to Section 2(a),
but
shall otherwise be treated as a registration initiated pursuant to and shall,
except as otherwise expressly provided in this Section 2(b),
be
subject to Section 2(a).
(c) Piggyback
Registration.
If, at
any time or times the Company shall seek to register any shares of its Common
Stock under the Securities Act for sale to the public for its own account
or on
the account of others (except with respect to registration statements on
Form X-0, X-0 or another form not available for registering the Registrable
Securities for sale to the public), the Company will promptly give written
notice thereof to all Holders. If within ten (10) business days after their
receipt of such notice one or more Holders request in writing the inclusion
of
some or all of the Registrable Securities owned by them in such registration,
the Company will use best efforts to effect the registration under the
Securities Act of such Registrable Securities. In the case of the registration
of shares of capital stock by the Company in connection with any underwritten
public offering, if the principal underwriter determines that the number
of
Registrable Securities to be offered must be limited, the Company shall not
be
required to register Registrable Securities of the Holders in excess of the
amount, if any, of shares of the capital stock which the principal underwriter
of such underwritten offering shall reasonably and in good faith agree to
include in such offering in addition to any amount to be registered for the
account of the Company; provided, however, that in no event shall the
Registrable Securities to be included by PBT or its designee be reduced to
below
25% of the total amount of securities included in the registration.
(d) Obligations
Subject to Existing Obligations.
Notwithstanding anything contained in Section 2
to the
contrary, the Company’s obligations under this Section 2 shall be subject to its
obligations pursuant to Section 4(k) of the Securities Purchase Agreement
by and
between the Company and Xxx Xxxxxxx Private Opportunities Fund, dated as
of
February 25, 2005 (the “Existing
Obligations”).
The
Company will not increase, extend or otherwise amend any of the Existing
Obligations without the prior written consent of the Holders of a majority
of
the then outstanding Registrable Securities, and will promptly notify the
Holders of the expiration of the Existing Obligations.
3. Further
Obligations of the Company.
Whenever the Company is required hereunder to register any Registrable
Securities, it agrees that it shall also do the following:
(a) Pay
all
expenses of such registrations and offerings in connection with any
registrations pursuant to Section 2
hereof;
provided,
however, that
the
Company shall have no obligation to pay or otherwise bear any portion of
the
underwriters’ commissions or discounts attributable to the Registrable
Securities being offered and sold by the Holders or the fees and expenses
of any
counsel for the selling Holders in connection with the registration of the
Registrable Securities;
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(b) Use
its
best efforts to diligently prepare and file with the Commission a registration
statement and such amendments and supplements to said registration statement
and
the prospectus used in connection therewith as may be necessary to keep said
registration statement effective until the Holder or Holders have completed
the
distribution described in the registration statement relating thereto (but
for
no more than one hundred eighty (180) days or such lesser period until all
such
Registrable Securities are sold) and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by said
registration statement for such period; provided,
however,
that
(i) such 180-day period shall be extended for a period of time equal to the
period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 that are intended to be offered on a
continuous or delayed basis, subject to compliance with applicable Commission
rules, such 180-day period shall be extended for up to an additional 120
days,
if necessary, to keep the registration statement effective until all such
Registrable Securities are sold;
(c) Furnish
to each selling Holder such copies of each preliminary and final prospectus
as
such Holder may reasonably request to facilitate the public offering of its
Registrable Securities;
(d) Enter
into and perform its obligations under any reasonable underwriting agreement
required by the proposed underwriter, if any, in such form and containing
such
terms as are customary;
(e) Use
its
best efforts to register or qualify the securities covered by said registration
statement under the securities or “blue sky” laws of such jurisdictions as any
selling Holder may reasonably request provided the Company shall not be required
to qualify to do business or file a general consent to service of process
in
connection therewith;
(f) Immediately
notify each selling Holder, at any time when a prospectus relating to his,
her
or its Registrable Securities is required to be delivered under the Securities
Act, of the happening of any event (other than an event relating to a Holder
or
a plan of distribution delivered by a Holder) as a result of which such
prospectus contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading, and, to the
extent
required by the Securities Act, at the request of any such selling Holder,
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
will
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading;
(g) Cause
upon or immediately after the effectiveness of a registration all such
Registrable Securities to be listed on each securities exchange or quotation
system on which the Common Stock of the Company are then listed or quoted;
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(h) Make
available to each selling Holder, any underwriter participating in any
disposition pursuant to a registration statement, and any attorney, accountant
or other agent or representative retained by any such selling Holder or
underwriter, all financial and other records, pertinent corporate documents
and
properties of the Company, as shall be reasonably necessary to enable them
to
exercise their due diligence responsibility, subject to appropriate
confidentiality undertakings;
(i) use
its
best efforts to furnish, at the request of any Holder requesting registration
of
Registrable Securities pursuant to this Section 2, on the date on which
such Registrable Securities are sold to the underwriter, (i) an opinion,
dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in
an underwritten public offering, addressed to the underwriters, if any, and
(ii)
a “comfort” letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any;
(j) Otherwise
use its best efforts to comply with the securities laws of the United States
and
other applicable jurisdictions and all applicable rules and regulations of
the
Commission and comparable governmental agencies in other applicable
jurisdictions and make generally available to its Holders, in each case as
soon
as practicable, but not later than forty-five (45) days after the close of
the
period covered thereby or ninety (90) days after the closing of the fiscal
year,
as the case may be, an earnings statement of the Company which will satisfy
the
provisions of Section 11(a) of the Securities Act;
(k) Provide
an institutional transfer agent and registrar and a CUSIP number for all
Registrable Securities on or before the effective date of the registration
statement; and
(l) Make
available for inspection by any Holder, any underwriter participating in
any
disposition pursuant to the registration statement, and any attorney,
accountant, or other agent of any Holder or underwriter, all financial and
other
records, pertinent corporate documents, and properties of the Company, and
cause
the Company’s officers, directors and employees to supply all information
requested by any Holder, underwriter, attorney, accountant, or agent in
connection with the registration statement; provided that an appropriate
confidentiality agreement is executed by any such Holder, underwriter, attorney,
accountant or other agent.
4. Cooperation
by Prospective Sellers.
(a) Each
prospective seller of Registrable Securities shall furnish to the Company
in
writing such information as the Company may reasonably request from such
seller
in connection with any registration statement with respect to such Registrable
Securities.
(b) The
failure of any prospective seller of Registrable Securities to furnish any
information or documents in accordance with any provision contained in this
Agreement shall not affect the obligations of the Company under this Agreement
to any remaining sellers who furnish such information and documents unless,
in
the reasonable opinion of counsel to the Company and/or the underwriters,
such
failure impairs or adversely affects the offering or the legality of the
registration statement or causes the request not to meet the requirements
of
Section 2
of this
Agreement.
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(c) Upon
receipt of a notice (telephonic or written) from the Company or the underwriter
of the happening of an event which makes any statement made in a registration
statement or related prospectus covering Registrable Securities untrue or
which
requires the making of any changes in such registration statement or prospectus
so that they will not contain any untrue statement of material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein in light of the circumstances under which they were made
not
misleading, the Holders of Registrable Securities included in such registration
statement shall discontinue disposition of such Registrable Securities pursuant
to such registration statement until such Holders’ receipt of copies of the
supplemented or amended prospectus contemplated in Section 3(f)
hereof
or until advised by the Company or the underwriters that dispositions may
be
resumed. If the Company gives any such notice, the time period mentioned
in
Section 3(b)
shall be
extended by the number of days elapsing between the date of notice and the
date
that each seller receives copies of the supplemented or amended prospectus
contemplated by Section 3(f).
(d) Each
Holder of Registrable Securities included in any registration statement will
effect sales of such securities in accordance with the plan of distribution
given to the Company.
(e) At
the
end of any period during which the Company is obligated to keep any registration
statement current and effective as provided in this Agreement, the Holders
of
Registrable Securities included in such registration statement shall discontinue
sales of shares pursuant to such registration statement, unless it receives
notice from the Company of its intention to continue effectiveness of such
registration statement with respect to such shares which remain unsold and
such
Holders shall notify the Company of the number of shares registered which
remain
unsold promptly upon expiration of the period during which the Company is
obligated to maintain the effectiveness of the registration
statement.
(f) No
Person
may participate in any underwritten registration pursuant to this Agreement
unless such Person (i) agrees to sell such Person’s securities on the basis
provided in any underwriting arrangements made with respect to such registration
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
by
the terms of such underwriting arrangements.
5. Indemnification;
Contribution.
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(a) Incident
to any registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, the Company will, to the extent permitted by
law,
indemnify and hold harmless each Holder who offers or sells any such Registrable
Securities in connection with such registration statement (including its
partners (including partners of partners and stockholders of any such partners),
and directors, officers, stockholders, affiliates, employees, representatives
and agents of any of them, and each person who controls any of them within
the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), from and against any and all losses, claims, damages, reasonable
expenses and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and
any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted, as the same are incurred), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses,
claims, damages or liabilities arise out of or are based on (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement (including any related preliminary or definitive
prospectus, or any amendment or supplement to such registration statement
or
prospectus), (ii) any omission or alleged omission to state in such document
a
material fact required to be stated in it or necessary to make the statements
in
it not misleading; provided,
however,
that
the Company will not be liable to the extent that (1) such loss, claim, damage,
expense or liability arises from and is based on an untrue statement or omission
or alleged untrue statement or omission made in reliance on and in conformity
with information furnished in writing to the Company by or on behalf of such
Holder in accordance with Section 4(a)
of this
Agreement for use in such registration statement, or (2) in the case of a
sale
directly by such Holder (including a sale of Registrable Securities through
any
underwriter retained by such Holder to engage in a distribution solely on
behalf
of such Holder), such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected
in a
final or amended prospectus, and such Holder failed to deliver a copy of
the
final or amended prospectus at or prior to the confirmation of the sale of
the
Registrable Securities to the Person asserting any such loss, claim, damage
or
liability in any case where such delivery is required by the Securities Act
or
any state securities laws, or (iii) any violation or alleged violation by
any
other party hereto, of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities
Act,
the Exchange Act or any state securities law. With respect to such untrue
statement or omission or alleged untrue statement or omission in the information
furnished in writing to the Company by or on behalf of such Holder in accordance
with Section 4(a)
of this
Agreement for use in such registration statement, such Holder will severally
and
not jointly indemnify and hold harmless the Company (including its directors,
officers, employees, representatives and agents), each other Holder (including
its partners (including partners of partners and stockholders of such partners)
and directors, officers, employees, representatives and agents of any of
them,
and each person who controls any of them within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), from and against
any and all losses, claims, damages, reasonable expenses and liabilities,
joint
or several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, as the same are incurred), to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law
or
otherwise, provided,
however,
that
the indemnification obligations of the Holder contained in this Section
5(a)
shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
the
Holder, which consent shall not be unreasonably withheld; and provided,
further,
that,
in no event shall any indemnity under this Section
5(a)
exceed
the net proceeds from the offering received by such Holder, except in the
case
of fraud or willful misconduct by such Holder.
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(b) If
the
indemnification provided for in Section 5(a)
above
for any reason is held by a court of competent jurisdiction to be unavailable
to
an indemnified party in respect of any losses, claims, damages, expenses
or
liabilities referred to therein, then each indemnifying party under this
Section 5,
in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, expenses or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the
other Holders from the offering of the Registrable Securities or (ii) if
the
allocation provided by clause (i) above is not permitted by applicable law,
in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and
the other Holders in connection with the statements or omissions which resulted
in such losses, claims, damages, expenses or liabilities, as well as any
other
relevant equitable considerations. The relative benefits received by the
Company
and the Holders shall be deemed to be in the same respective proportions
that
the net proceeds from the offering received by the Company and the Holders,
in
each case as set forth in the table on the cover page of the applicable
prospectus, bear to the aggregate public offering price of the Registrable
Securities. The relative fault of the Company and the Holders 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 or on behalf of the Company
or the Holders and the parties’ relative intent, knowledge and access to
information.
The
Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 5(b)
were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No person found 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 found
guilty
of such fraudulent misrepresentation.
(c) The
amount paid by an indemnifying party or payable to an indemnified party as
a
result of the losses, claims, damages and liabilities referred to in this
Section 5
shall be
deemed to include, subject to the limitations set forth above, any legal
or
other expenses reasonably incurred by such indemnified party in connection
with
investigating or defending any such action or claim, payable as the same
are
incurred. The indemnification and contribution provided for in this Section 5
will
remain in full force and effect regardless of any investigation made by or
on
behalf of the indemnified parties or any officer, director, employee, agent
or
controlling person of the indemnified parties. No indemnifying party, in
the
defense of any such claim or litigation, shall enter into a consent of entry
of
any judgment or enter into a settlement without the consent of the indemnified
party, which consent will not be unreasonably withheld. Any indemnified party
that proposes to assert the right to be indemnified under this Section 5
will,
promptly after receipt of notice of commencement or threat of any claim or
action against such party in respect of which a claim is to be made against
an
indemnifying party under this Section 5
notify
the indemnifying party in writing (such written notice, an “Indemnification
Notice”)
of the
commencement or threat of such action, enclosing a copy of all papers served
or
notices received (if applicable), but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability that the
indemnifying party may have to any indemnified party under the foregoing
provisions of this Section 5
unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. The indemnified
party
will have the right to retain its own counsel in any such action if (i) the
employment of counsel by the indemnified party has been authorized by the
indemnifying party, (ii) the indemnified party’s counsel, shall have reasonably
concluded that there is a reasonable likelihood of a conflict of interest
between the indemnifying party and the indemnified party in the conduct of
the
defense of such action or (iii) the indemnifying party shall not in fact
have
employed counsel to assume the defense of such action within a reasonable
period
of time following its receipt of the Indemnification Notice, in each of which
cases the fees and expenses of the indemnified party’s separate counsel shall be
at the expense of the indemnifying party; provided,
however,
that
the indemnified party shall agree to repay any expenses so advanced hereunder
if
it is ultimately determined by a court of competent jurisdiction that the
indemnified party to whom such expenses are advanced is not entitled to be
indemnified; and provided,
further,
that so
long as the indemnified party has reasonably concluded that no conflict of
interest exists, the indemnifying party may assume the defense of any action
hereunder with counsel reasonably satisfactory to the indemnified
party.
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(d) In
the
event of an underwritten offering of Registrable Securities under this
Agreement, the Company shall enter into standard indemnification and
underwriting agreements with the underwriter thereof.
6. Right
to Delay.
For
one
period not to exceed 90 days in any twelve (12) month period, the Company
shall
not be obligated to prepare and file, or prevented from delaying or abandoning,
a Registration Statement pursuant to this Agreement at any time when the
Company, in its good faith judgment, reasonably believes:
(a) that
the
filing thereof at the time requested, or the offering of Registrable Securities
pursuant thereto, would materially and adversely affect (i) a pending or
scheduled public offering of the Company’s securities, (ii) any significant
acquisition, merger, recapitalization. consolidation, reorganization or other
similar transaction by or of the Company, (iii) pre-existing and continuing
negotiations, discussions or pending proposals with respect to any of the
foregoing transactions, or (iv) the financial condition of the Company in
view
of the disclosure of any pending or threatened litigation, claim, assessment
or
governmental investigation which may be required thereby; and
(b) that
the
failure to disclose any material information with respect to the foregoing
would
cause a violation of the Securities Act or Exchange Act.
The
Company shall not register any securities for the account of itself or any
other
stockholder during such 90-day period other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction, a registration on any form that does not include substantially
the
same information as would be required to be included in a registration statement
covering the sale of the Registrable Securities, or a registration in which
the
only Common Stock being registered is Common Stock issuable upon conversion
of
debt securities that are also being registered).
7. Transferability
of Registration Rights.
The
registration rights set forth in this Agreement are transferable to any
transferee of Registrable Securities. Each subsequent Holder of Registrable
Securities must consent in writing to be bound by the terms and conditions
of
this Agreement in order to acquire the rights granted pursuant to this
Agreement.
10
8. Rights
Which May Be Granted to Subsequent Investors.
Other
than transferees of Registrable Securities under Section 7
hereof,
the Company shall not, without the prior written consent of the Holders of
a
majority of the outstanding Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company which
would allow such holder or prospective holder to include such securities
in any
registration unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only
to
the extent that the inclusion of such securities will not reduce the amount
of
the Registrable Securities of the Holders that are included.
9. Right
of First Offer.
Subject
to the terms and conditions specified in this Section 9,
and
applicable securities laws, in the event the Company proposes to offer or
sell
any New Securities, the Company shall first make an offering of such New
Securities to PBT or its designee in accordance with the following provisions
of
this Section 9.
PBT or
its designee shall be entitled to apportion the right of first offer hereby
granted it among itself and its partners, members and affiliates in such
proportions as it deems appropriate.
(a) The
Company shall deliver a notice, in accordance with the provisions of
Section 10(a)
hereof,
(the “Offer
Notice”)
to PBT
stating (i) its bona fide intention to offer such New Securities, (ii) the
number of such New Securities to be offered, and (iii) the price and terms,
if
any, upon which it proposes to offer such New Securities.
(b) By
written notification received by the Company, within twenty (20) calendar
days
after mailing of the Offer Notice, PBT or its designee may elect to purchase
or
obtain, at the price and on the terms specified in the Offer Notice, up to
that
portion of such New Securities which equals the proportion that the number
of
shares of Common Stock issued and held, or issuable upon conversion of the
Preferred Stock (and any other securities convertible into, or otherwise
exercisable or exchangeable for, shares of Common Stock) then held, by PBT
bears
to the total number of shares of Common Stock of the Company then outstanding
(assuming full conversion and exercise of all convertible or exercisable
securities).
(c) If
all
New Securities referred to in the Offer Notice are not elected to be purchased
or obtained as provided in Section 9(b)
hereof,
the Company may, during the sixty (60) day period following the expiration
of
the period provided in Section 9(b)
hereof,
offer the remaining unsubscribed portion of such New Securities (collectively,
the “Refused
Securities”)
to any
person or persons at a price not less than, and upon terms no more favorable
to
the offeree than, those specified in the Offer Notice. If the Company does
not
enter into an agreement for the sale of the New Securities within such period,
or if such agreement is not consummated within sixty (60) days following
the
execution thereof, the right provided hereunder shall be deemed to be revived
and such New Securities shall not be offered unless first reoffered to PBT
or
its designee in accordance with this Section 9.
(d) The
right
of first offer in this Section 9
shall
not be applicable to New Securities issued:
| i. |
upon
conversion of shares of Preferred Stock;
|
11
| ii. |
to
officers, directors, employees and consultants of the Company pursuant
to
stock incentive plans, or other stock arrangements that have been
approved
by the Board of Directors of the Company including the directors
elected
by the holders of a majority of the Preferred Stock (the “Series
A Directors”);
|
| iii. |
as
a dividend or distribution on the Corporation’s Common Stock or Preferred
Stock;
|
| iv. |
upon
the written consent of PBT that expressly states that the right of
first
offer in this Section 9 shall not apply to such New
Securities;
|
| v. |
upon
the exercise or conversion of any options or other convertible securities
outstanding as of the date hereof;
|
| vi. |
pursuant
to a loan arrangement or debt financing from a bank, equipment lessor
or
similar financial institution approved by the Board of Directors,
including the Series A Directors; or
|
| vii. |
in
connection with strategic transactions (but excluding any merger,
consolidation, acquisition or similar business combination) that
have been
approved by the Board of Directors of the Corporation including the
Series
A Directors.
|
(e) The
right
of first offer set forth in this Section 9
may not
be assigned or transferred except that such right is assignable by PBT to
any
affiliate of PBT.
10. Miscellaneous.
(a) Notices.
Except
as
otherwise expressly provided herein, all notices, requests, demands, claims,
and
other communications hereunder will be in writing. Any such notice, request,
demand, claim, or
other
communication hereunder shall be deemed duly given (i) upon confirmation
of
facsimile, (ii) one (1) business day following the date sent when sent by
overnight delivery and (iii) five (5) business days following the date mailed
when mailed by registered
or certified mail return receipt requested and postage prepaid at the following
addresses (or
such
other address for a party as shall be specified by such party by like
notice):
All
communications shall be sent to PBT at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, and to the Company at 0000 Xxxx Xxxxxx, Xxxxx
000,
Xxx Xxxxx, XX 00000, or at such other address(es) as PBT or the Company may
designate by ten (10) days advance written notice to the other parties
hereto.
(b) Entire
Agreement.
This
Agreement, together with the instruments and other documents hereby contemplated
to be executed and delivered in connection herewith, contains the entire
agreement and understanding of the parties hereto, and supersedes any prior
agreements or understandings between or among them, with respect to the subject
matter hereof.
(c) Successors
and Assigns.
The
terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
12
(d) Successor
Indemnification.
In the
event that the Company or any of its successors or assigns (i) consolidates
with
or merges into any other entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person
or
entity, then, and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of the Company assume the
obligations of the Company with respect to indemnification of members of
the
Board of Directors as in effect immediately prior to such transaction, whether
in the Company’s bylaws, Certificate of Incorporation, or elsewhere, as the case
may be.
(e) Amendments
and Waivers.
Except
as
otherwise expressly set forth in this Agreement, any term of this Agreement
may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holders of
a
majority of the Preferred Stock. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall
be
deemed to be, or construed as, a further or continuing waiver of any such
term,
condition or provision.
(f) Counterparts;
Facsimile Execution.
This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original but all of which shall constitute but one and the
same
instrument. One or more counterparts of this Agreement may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
Facsimile execution and delivery of this Agreement is legal, valid and binding
for all purposes.
(g) Captions.
The
captions of the sections, subsections and paragraphs of this Agreement have
been
added for convenience only and shall not be deemed to be a part of this
Agreement.
(h) Severability.
Each
provision of this Agreement shall be interpreted in such manner as to validate
and give effect thereto to the fullest lawful extent, but if any provision
of
this Agreement is determined by a court of competent jurisdiction to be invalid
or unenforceable under applicable law, such provision shall be ineffective
only
to the extent so determined and such invalidity or unenforceability shall
not
affect the remainder of such provision or the remaining provisions of this
Agreement; provided,
however,
that
the Company and the Holders of a majority of the Registrable Securities shall
negotiate in good faith to attempt to implement an equitable adjustment in
the
provisions of this Agreement with a view toward effecting the purposes of
this
Agreement by replacing the provision that is invalid or unenforceable with
a
valid and enforceable provision the economic effect of which comes as close
as
possible to that of the provision that has been found to be invalid and
unenforceable.
(i) Governing
Law.
The
execution, interpretation, and performance of this Agreement shall be governed
by the laws of the State of California without giving effect to any choice
in
conflict of law provision or rule (whether of the State of California or
any
other jurisdiction) that would cause the application of the law of any other
jurisdiction other than the State
of
California.
13
(j) Dispute
Resolution.
Any
unresolved controversy or claim arising out of or relating to this Agreement,
except as (i) otherwise provided in this Agreement, or (ii) any such
controversies or claims arising out of either party’s intellectual property
rights for which a provisional remedy or equitable relief is sought, shall
be
submitted to arbitration by one arbitrator mutually agreed upon by the parties,
and if no agreement can be reached within 30 days after names of potential
arbitrators have been proposed by the American Arbitration Association (the
“AAA”),
then
by one arbitrator having reasonable experience in corporate finance transactions
of the type provided for in this Agreement and who is chosen by the AAA.
The
arbitration shall take place in San Francisco, California, in accordance
with
the AAA rules then in effect, and judgment upon any award rendered in such
arbitration will be binding and may be entered in any court having jurisdiction
thereof. There shall be limited discovery prior to the arbitration hearing
as
follows: (a) exchange of witness lists and copies of documentary evidence
and
documents relating to or arising out of the issues to be arbitrated, (b)
depositions of all party witnesses and (c) such other depositions as may
be
allowed by the arbitrators upon a showing of good cause. Depositions shall
be
conducted in accordance with the California Code of Civil Procedure, the
arbitrator shall be required to provide in writing to the parties the basis
for
the award or order of such arbitrator, and a court reporter shall record
all
hearings, with such record constituting the official transcript of such
proceedings. The prevailing party shall be entitled to reasonable attorney’s
fees, costs, and necessary disbursements in addition to any other relief
to
which such party may be entitled.
(k) Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event that
any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties hereto shall be entitled to seek specific
performance of the terms hereof (without necessity of posting a bond in
connection therewith), in addition to any other remedy at law or equity
otherwise permitted hereunder.
[Signature
page follows]
14
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date first set forth above.
|
Solidus
Networks, Inc.
By:__________________________
Name:
Title:
|
|
|
WinWin
Gaming, Inc.
By:/s/
Xxxxxxx
Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
President / CEO
|
|
[Signature
page to Registration Rights Agreement]
15
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date first set forth above.
|
Solidus
Networks, Inc.
By:
/s/
Xxxxx
Xxxxxxxx
Name:
Xxxxx Xxxxxxxx
Title:
EVP & GC
|
|
|
WinWin
Gaming, Inc.
By:______________________
Name:
Title:
|
|
16
