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Title: |
Letter Agreement |
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2003 |
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$32 |
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ID: |
#340585 |
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[GRAPHIC OMMITTED - GEMSTAR TV GUIDE]
Stephen H. Kay
E.V.P.& General Counsel
August 29, 2003
VIA FACSIMILE AND FEDERAL EXPRESS
Board of Directors of Youbet.com, Inc.
c/o Victor Gallo, General Counsel
Youbet.com, Inc.
5901 De Soto Avenue
Woodland Hills, California 93637
Dear Sirs:
This is to advise you that Gemstar-TV Guide International, Inc.
believes that the proposed amendments to Youbet's certificate of incorporation
and by-laws, as set forth in Youbet's definitive proxy statement dated August
25, 2003, violate the terms of certain agreements between Youbet and ODS
Technologies, L.P. ("TVG"), a subsidiary of Gemstar. Unless these proposed
amendments are withdrawn promptly, TVG intends to vigorously enforce its rights
under these agreements to the fullest extent possible. Furthermore, we are
simply astonished that in today's corporate governance environment, Youbet's
Board of Directors would approve the issuance of a proxy statement that fails to
disclose the impact that these proposals would have on TVG's rights and the
potential exposures that such action creates for Youbet.
As you are aware, TVG holds a warrant that upon exercise will
result in TVG owning 51% of the outstanding common stock of Youbet and the right
to receive additional shares upon exercise of options and other rights
outstanding at the date of exercise. In addition, pursuant to the Warrant and
the Warrant Issuance Agreement, upon exercise of the Warrant, Youbet is
obligated to permit TVG to designate 60% of the number of members of Youbet's
Board of Directors. Various provisions of the Warrant and Warrant Issuance
Agreement currently obligate Youbet to refrain from taking any action that has
the purpose or effect of frustrating the rights granted to TVG thereunder.
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