FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into effective as of the _____ day of ________, 1998, by and among
SPINTEK GAMING TECHNOLOGIES, INC., a California corporation ("Company"), and the
individual or entity identified on the signature pages attached hereto who is a
holder of a 6% Secured Convertible Note due February 28, 2008 of the Company
acquired pursuant to an offering dated February 25, 1998 (the "Purchaser").
W I T N E S S E T H:
THAT FOR AND IN CONSIDERATION of the premises and the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which is hereby acknowledged by all of the
parties hereto, the parties, intending to be legally bound, agree as follows:
WHEREAS, the Company has offered for sale up to $5,000,000 of 6% Secured
Convertible Notes due February 28, 2008 (individually a "Note" and collectively
the "Notes") pursuant to a Private Placement Offering dated February 25, 1998
(the "Offering"); and
WHEREAS, the Notes are convertible into shares of Common Stock of the
Company (the "Common Stock");
WHEREAS, the Purchaser, as well as the other individuals and entities which
have purchased the Notes (such individuals and entities collectively being
referred to herein as the "Purchasers") are, pursuant to the terms of the
Offering, being granted by the Company certain registration rights with respect
to the Common Stock which is issuable to the Purchasers upon conversion of the
Notes.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
(b) "Holder" shall mean the Purchaser which holds Registrable
Securities and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with
Section 13 hereof.
(c) "Initiating Holders" shall mean any Purchaser or transferees
of a Purchaser under Section 13 hereof.
(d) "Register," "registered" and "registration" refer to a
registration effected by
preparing and filing with the Commission a registration statement in
compliance with the Securities Act, and the declaration or ordering of
the effectiveness of such registration statement.
(e) "Registrable Securities" means any Common Stock of the
Company issued or issuable in respect of the conversion of any of the
Notes; and any other securities issued or issuable upon any stock
split, stock dividend, recapitalization, or similar event.
(f) "Registration Expenses" shall mean all expenses, except
Selling Expenses as defined below, incurred by the Company in
complying with Section 6 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, the expense of any special audits incident to or
required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by
the Company) and the reasonable fees and disbursements of one counsel
for all Holders.
2. Restrictions on Transferability. The Purchaser will cause any
proposed purchaser, assignee, pledgee or transferee of the Registrable
Securities held by the Purchaser to agree to take and hold such securities
subject to the provisions and conditions of this Agreement.
3. [INTENTIONALLY OMITTED.]
4. Restrictions on Registration. The registration rights referred to in
this Agreement apply only to shares of Common Stock. Notwithstanding the
foregoing, in the event of a notice of proposed registration pursuant to Section
6(a)(i) hereof, the Holder of the Note may exercise its rights of conversion and
elect to register the Common Stock received pursuant to such conversion and the
Company shall take all steps reasonably appropriate herewith in order to insure
that the Holder's rights to convert and register are protected.
5. [INTENTIONALLY OMITTED.]
6. Company Registration.
(a) Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its securities, either for its
own account or for the account of a security Holder or holders, other than
(1) a registration relating solely to employee benefit plans; (2) a
registration relating solely to a Commission Rule 145 transaction; or (3)
any other registration which is not appropriate for the registration for
the Registerable Securities for sale to the public, then the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in written
request or requests, made within twenty (20) days after receipt of
such written notice from the Company, by any Holder.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 6(a)(i). In such event the right of any Holder to
registration pursuant to Section 6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company. Notwithstanding any other
provision of this Agreement, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities
that may be included in the registration and the number of shares of
Registrable Securities that may be included in the registration shall be
allocated among all Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the
number of shares allocated to any Holder or other shareholder to the
nearest one hundred (100) shares. If any Holder or other shareholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing underwriter.
Any securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration, and shall not be transferred in a public
distribution prior to ninety (90) days after the effective date of the
registration statement relating thereto, or such other shorter period of
time as the underwriters may require. The Company may include shares of
Common Stock held by shareholders other than Holders in a registration
statement pursuant to Section 6 if, and to the extent that, the amount of
Registrable Securities otherwise includible in such registration statement
would not thereby be diminished.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this
Section 6 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
7. [INTENTIONALLY OMITTED.]
8. Stand Off Agreement. Each Holder of Registrable Securities shall,
upon the reasonable request of the underwriter's managing an underwritten
offering, agree not to sell, make any short sell of, grant any option for the
purchase of, or otherwise dispose of any Registrable Securities (other than
those included in the registration) without the prior written consent of such
managing underwriter for a period of time (not to exceed one hundred eighty
(180) days from the effective date of such registration); provided, however,
that all executive officers and directors of the Company agree to similar
restrictions.
9. Expenses of Registration and Expiration. All Registration Expenses
incurred in connection with registration(s) pursuant to Section 6, shall be
borne by the Company; provided, however, that such Registration Expenses shall
be borne by the Company with respect to no more than two (2) such registrations
in any twelve month period, and provided further that the Company will not be
obligated to bear registration expenses with respect to registrations under Blue
Sky laws in more than ten (10) states. Unless otherwise stated, all Selling
Expenses relating to securities registered on
behalf of the Holders shall be borne by the Holders of such securities pro rata
on the basis of the number of shares so registered. Registration Expenses not
otherwise covered herein shall be borne by all selling shareholders and, if it
participates, the Company on a pro-rata basis. In addition, any rights granted
pursuant to Section shall expire three (3) years to the day following the
effective date of a public offering of the Company's Common Stock committed
underwriting which yields to the Company, after all expenses, not less than
$10,000,000.
10. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company shall:
(a) Keep such registration, qualification or compliance pursuant to
this Agreement effective for a period of one hundred eighty (180) days or until
the Holder or Holders have completed the distribution described in the
Registration Statement relating thereto, whichever occurs first; and
(b) Furnish such number of Prospectuses and such other documents
incident thereto as the Holder from time to time may reasonably request.
11. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
12. Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 6, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or action in respect
thereof) arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; or (ii) any violation by such Holder
of the Securities Act or any rule or regulation promulgated under the Securities
Act applicable to Holder in connection with any such registration, qualification
or compliance. Notwithstanding the foregoing, the liability of each Holder under
this subsection (b) shall be limited to an amount equal to the initial public
offering price of the shares sold
by such Holder, unless such liability arises out of or is based on willful
conduct by such Holder.
(c) Each party entitled to indemnification under this Section 12 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 6 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
13. Transfer of Registration Rights. The rights to cause the Company to
register securities granted to the Purchaser under this Agreement may be
assigned at any time without the prior written consent of the Company to a
transferee or assignee (other than a competitor of the Company) in connection
with any transfer or assignment of Registrable Securities by the Purchaser;
provided that such transferee or assignee (i) holds or acquires at least twenty
percent (20%) of the Registrable Securities originally held by the Purchaser
(appropriately adjusted for recapitalization); or (ii) is an affiliate of a
Holder (which term shall include, in the case of a Holder that is a partnership,
the partner of a Holder, or in the case of a corporation, a shareholder of a
Holder), without any requirement as to minimum holding by such transferee or
assignee; provided further, however, that if such assignee or transferee holds
less than 20% of the Registrable Securities then his or its rights to register
such securities may only be exercised when the Purchaser is exercising its
rights. In addition to the foregoing, such transfer must otherwise be effected
in accordance with applicable securities laws.
14. Notice of Proposed Transfers. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i)
transfers not involving a change in beneficial ownership or (ii) transactions
involving distribution without consideration of Restricted Securities by any of
the Purchasers to any of its partners, or retired parties, or to the estate of
any of its partners or retired partners), unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
the holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer, sale, assignment or pledge. Each such notice
shall describe the manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied, at such
holder's expense by either (i) an opinion of legal counsel who shall be, and
whose legal opinion shall be, reasonably satisfactory to the Company addressed
to the Company to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Commission to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Commission that action be taken with respect thereto, whereupon the
holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the holder to the Company. Each certificate evidencing
the Restricted Securities Transferred as above provided shall bear, except if
such transfer is made pursuant to Rule 144, the appropriate restrictive legend
set forth in Section 15, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such holder and the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
COMPANY:
SPINTEK GAMING TECHNOLOGIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Address for Notices:
000 Xxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
PURCHASER:
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Signature
Print Name:___________________________
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Title (if applicable)
Address for Notices:
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