REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
EXECUTION COPY
This Registration Rights Agreement (this “Agreement”) is made and entered into as of
May 3, 2007, among VendingData Corporation, a Nevada corporation (the “Company”), and
purchaser identified on the signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”).
R
E C I T A L S
WHEREAS, the Company will sell $1,650,000 of the Company’s Common Stock to the Purchasers
pursuant to that certain Securities Purchase Agreement (“Purchase Agreement”) dated as of
May 3, 2007 by and among the Company and the Purchasers.
A G R E E M E N T
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Lenders agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 6(d).
“Effectiveness Period” shall have the meaning set forth in Section 2.
“Effective Date” means the date that the Registration Statement has been
declared effective by the Commission.
“Filing Date” means, with respect to the initial Registration Statement
required hereunder, means August 30, 2007.
“Holder” or “Holders” means the holder or holders, as the case may be,
from time to time of Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Losses” shall have the meaning set forth in Section 5(a).
“Plan of Distribution” shall have the meaning set forth in Section 2.
“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Registrable Securities” means all of (i) the Shares; and (ii) any shares of
Common Stock issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing; provided, however, a
security shall no longer be a Registrable Security once it has been sold, or may be sold,
without volume restrictions pursuant to Rule 144(k) or sold pursuant to a Registration
Statement.
“Registration Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Selling Shareholder Questionnaire” shall have the meaning set forth in Section
3(a).
2. Shelf Registration. The Company shall use its best efforts to prepare and file
with the Commission, on or before the Filing Date, a “Shelf” Registration Statement covering the
resale of the Registrable Securities for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith) and shall contain
substantially the “Plan of Distribution” attached hereto as Annex A, as modified by
the Company as necessary to conform to comments from the Commission. Subject to the terms of this
Agreement, the Company shall use its best efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the filing thereof, and
shall use its best efforts to keep such Registration Statement continuously effective under the
Securities Act until the earlier of (i) all Registrable Securities covered by such
Registration Statement have been sold, or (ii) May 3, 2008 (the “Effectiveness Period”).
- 2 -
3. Registration Procedures
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five Trading Days prior to the filing of each Registration Statement
and not less than two Trading Day prior to the filing of any related amendment or supplement
thereto, the Company shall, furnish to each Holder the selling stockholder and plan of
distribution sections made a part thereof, along with any other section that specifically
references a Holder. Each Holder agrees to be named in the Registration Statement and to
carry out the offer and sale of Registrable Securities held by such Holder in a conformance
with the Plan of Distribution attached hereto as Annex A, as modified by the Company as
necessary to conform to comments from the Commission. Each Holder agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement as Annex B (a
“Selling Shareholder Questionnaire”) by the end of the fourth Trading Day following
the date on which such Holder receives the Selling Shareholder Questionnaire and draft
materials in accordance with this Section. The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements therein (in
the case of prospectuses, in the light of the circumstances in which they were made) not
misleading.
(b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period, except for periods based on
events described in Section 3(c), (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this Agreement),
and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond promptly
to any comments received from the Commission with respect to a Registration Statement or any
amendment thereto; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable to the Company with respect to the
disposition of all Registrable Securities covered by a Registration Statement during the
applicable period in accordance with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.
- 3 -
(c) Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (ii) through (iv) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as promptly as
reasonably possible (i) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of the issuance by the Commission or any
other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable
Securities; (iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction; or (iv) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in a Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus or
other documents so that, in the case of a Registration Statement or the Prospectus, as the
case may be, it will not contain any untrue statement of a 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. Any and all of
such information contemplated by subparagraphs (i) through (iv) shall remain confidential to
each Holder until such information otherwise becomes public, unless disclosure by a Holder
is required by law.
(d) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed copy of each such
final Prospectus and each final amendment or supplement thereto, promptly after the filing
of such documents with the Commission, for Holder’s delivery in connection with a sale of
the Registrable Securities.
(f) Subject to the terms of this Agreement, the Company hereby consents to the use of
each Prospectus and each amendment or supplement thereto, provided by the Company pursuant
to subpart (e) above, by each of the selling Holders in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(g) Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from the Registration or
qualification) of such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction where it is
not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such
jurisdiction.
- 4 -
(h) If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall be free, to
the extent permitted by the Securities Act, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names as any such
Holders may request.
(i) Upon the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither a Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a
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. If the Company
notifies the Holders in accordance with clauses (ii) through (iv) of Section 3(c) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Holders shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable.
(j) Comply with all applicable rules and regulations of the Commission.
(k) The Company may require each selling Holder to furnish to the Company a certified
statement as to (i) the number of shares of Common Stock beneficially owned by such Holder,
(ii) the natural persons thereof that have voting and dispositive control over the shares of
Common Stock, and (iii) any affiliation between the Holder and either the Company’s
independent accountants or any member of the NASD.
(l) The Company shall use its best efforts either to cause all of the Registrable
Securities covered by a Registration Statement to be listed on the primary securities
exchange or stock market on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or stock market.
(m) If requested by a Holder, the Company shall as soon as practicable (i) incorporate
in a prospectus supplement or post-effective amendment such information as a Holder
reasonably requests to be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be sold in
such offering; (ii) make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by a Holder holding
any Registrable Securities.
- 5 -
4. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in
compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing), (ii) printing expenses incurred by the Company (including, without limitation, expenses
of printing certificates for Registrable Securities, (iii) messenger, telephone and delivery
expenses incurred by the Company, (iv) fees and disbursements of counsel for the Company, (v)
Securities Act liability insurance incurred by the Company, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties), the expense of any
annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the Holders.
5. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, members, shareholders, partners, and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from and against
any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred,
arising out of or relating to (1) any untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or relating to any
omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not misleading, (2) any
violation by the Company of the Securities Act, Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s
- 6 -
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a Registration Statement,
such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it
being understood that the Holder has approved Annex A hereto for this purpose), (ii) in the
case of an occurrence of an event of the type specified in Section 3(c)(ii)-(iv), the use by
such Holder of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 6(d), or (iii) any such untrue statement,
omission or violation is directly related to and primarily the result of a material breach
of this Agreement or violation of law by Holder; or (3) any violation of this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents, attorneys and
employees, each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents,
attorneys or employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising out of or
based solely upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act, (y) a material breach of this Agreement or violation of
law by Holder, or (z) any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for inclusion in such
Registration Statement or such Prospectus or (ii) to the extent that such information
relates to such Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in a
Registration Statement (it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (iii) in the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(iv), the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no
event shall the liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have
the right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that such failure
shall have prejudiced the Indemnifying Party.
- 7 -
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and a material conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying
Party, in which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and the reasonable
fees and expenses of no more than one separate counsel shall be at the expense of the
Indemnifying Party. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party owing under this Section 5 (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified Party.
(d) Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable
by such Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including
any untrue statement of a material fact or omission of a material fact, has been taken or
made by, or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by
such party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.
- 8 -
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by such Holder.
The indemnity and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Reports Under the 1934 Act.
With a view to making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the Commission that may at any time
permit the Holders to sell securities of the Company to the public without registration (“Rule
144”), the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144;
(b) file with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the
“1934 Act”) so long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the Securities Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to permit the Holders to
sell such securities pursuant to Rule 144 without registration.
7. Miscellaneous
(a) Piggyback on Registrations. The Company and its security holders (other
than the Holders in such capacity pursuant hereto) designated by the Company may include
securities of the Company in the Registration Statement in addition to the Registrable
Securities.
(b) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable or an exemption
therefrom to it in connection with sales of Registrable Securities pursuant to a
Registration Statement.
- 9 -
(c) Discontinued Disposition. Each Holder agrees by its acquisition of
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is
advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed. The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as
it practicable.
(d) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the same shall be
in writing and signed by the Company and the Holders of at least a majority the then
outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(e) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be delivered as set forth in
the Purchase Agreement, as the case may be.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign its rights (except by merger) or
obligations hereunder without the prior written consent of at least a majority of the
Holders of the then-outstanding Registrable Securities. The rights under this Agreement
shall be automatically assignable by any Holder to any transferee of 50% or more of such
Holder’s Registrable Securities if: (i) such Holder agrees in writing with the transferee or
assignee to assign such rights and a copy of such agreement is furnished to the Company
promptly after such assignment; (ii) the Company is, promptly after such transfer or
assignment, furnished with written notice of (a) the name and address of such transferee or
assignee and (b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions contained
herein; and (v) such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement.
- 10 -
(g) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof.
(h) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile transmission or by
e-mail delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or “.pdf” signature page were an
original thereof.
(i) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Nevada, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the State of Nevada. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or proceeding to
enforce any provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
- 11 -
(l) Headings. The headings in this Agreement are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect any of the
provisions hereof.
(m) Independent Nature of Holders’ Obligations and Rights. The obligations of
each Holder hereunder are several and not joint with the obligations of any other Holder
hereunder, and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any Holder pursuant
hereto or thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Holder to be joined as an additional party in
any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
SIGNATURE PAGES FOLLOW]
- 12 -
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of
the date first written above.
| VENDINGDATA CORPORATION |
||||
| By: | ||||
| Xxxx Xxxxxxx, | ||||
| President and Chief Executive Officer | ||||
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.
| KAIA PARTNERS, LP |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| GIMMEL PARTNERS, LP |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| XXXXXXX X. XXXXX | ||||
| Xxxxxxx X. Xxxxx | ||||
| I.E.S. HOLDINGS LTD. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
ANNEX A
Plan of Distribution
The selling stockholders may, from time to time, sell any or all of their shares of common
stock on any stock exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed prices, at prevailing market prices at the time
of the sale, at varying prices determined at the time of sale, or at negotiated prices. The
selling stockholders may use any one or more of the following methods when selling shares:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers; |
||
| • | block trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction; |
||
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its
account; |
||
| • | an exchange distribution in accordance with the rules of the applicable exchange; |
||
| • | privately negotiated transactions; |
||
| • | short sales; |
||
| • | broker-dealers may agree with the selling stockholders to sell a specified number of
such shares at a stipulated price per share; |
||
| • | a combination of any such methods of sale; and |
||
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.
The selling stockholders may also engage in puts and calls and other transactions in our
securities or derivatives of our securities and may sell or deliver shares in connection with these
trades.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved. Any profits on
the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne
by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act. In connection with sales of the shares of common
stock or otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the shares of common stock in the course
of hedging in positions they assume. The selling stockholders may also sell shares of common stock
short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short
sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers
that in turn may sell such shares.
- 15 -
The selling stockholders may from time to time pledge or grant a security interest in some or
all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the shares of common stock from time
to time under this prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.
The selling stockholders and any broker-dealers or agents that are involved in selling the
shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the shares of
common stock. We have agreed to indemnify the selling stockholders against certain claims, damages
and liabilities, including liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or coordinating broker acting in connection
with a proposed sale of shares of common stock by any selling stockholder. If we are notified by
any selling stockholder that any material arrangement has been entered into with a broker-dealer
for the sale of shares of common stock, if required, we will file a supplement to this prospectus.
If the selling stockholders use this prospectus for any sale of the shares of common stock, they
will be subject to the prospectus delivery requirements of the Securities Act.
Under the securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in some states the
shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling stockholder will sell any or all of the shares of
common stock registered pursuant to the shelf registration statement, of which this prospectus
forms a part.
- 16 -
The selling stockholders and any other person participating in such distribution will be
subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or entity to engage in
market-making activities with respect to the shares of common stock.
Once sold under the shelf registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other than our affiliates.
- 17 -
ANNEX B
VendingData Corporation
Selling Securityholder Notice and Questionnaire
The undersigned beneficial owner of common stock, par value $0.001 per share (the “Common
Stock”), of VendingData Corporation, a Nevada corporation (the “Company”), (the
“Registrable Securities”) understands that the Company has filed or intends to file with
the Securities and Exchange Commission (the “Commission”) a registration statement on Form
S-3 (the “Registration Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities,
in accordance with the terms of the Registration Rights Agreement, dated as of May 3, 2007 (the
“Registration Rights Agreement”), among the Company and the Holders named therein. A copy
of the Registration Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it and listed below in Item
3 (unless otherwise specified under such Item 3) in the Registration Statement.
- 18 -
The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:
QUESTIONNAIRE
| 1. | Name. |
| (a) | Full Legal Name of Selling Securityholder | |||
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: | |||
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): | |||
| 2. | Address for Notices to Selling Securityholder: |
Telephone: |
||
Fax: |
||
Contact Person: |
||
| 3. | Beneficial Ownership of Registrable Securities: |
| (a) | Type and Number of Registrable Securities beneficially owned: | |||
- 19 -
| 4. | Broker-Dealer Status: |
| (a) | Are you a broker-dealer? |
Yes o No o
| (b) | If “yes” to Section 4(a), did you receive your Registrable Securities as compensation for investment banking services to the Company. |
Yes o No o
| Note: | If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| (c) | Are you an affiliate of a broker-dealer? |
Yes o No o
| (d) | If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes o No o
| Note: | If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| 5. | Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder. |
Except as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable Securities
listed above in Item 3.
| (a) | Type and Amount of Other Securities beneficially owned by the Selling Securityholder: |
- 20 -
6. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
7. Relationships with the Company’s Independent Accountant:
Except as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with
the Company’s independent accountants, Xxxxxx Xxxxxx Xxxxxx & Xxxx, of Las Vegas , Nevada
(or its predecessors or affiliates) during the past three years.
State any exceptions here:
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof at any time while the
Registration Statement remains effective.
By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 7 and the inclusion of such information in the
Registration Statement and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement and the related
prospectus.
- 21 -
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Dated: | Beneficial Owner: | |||||||||
| By: | ||||||||||
| Name: | ||||||||||
| Title: | ||||||||||
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL
BY OVERNIGHT MAIL, TO:
Xxxxxx Xxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
Fax: 000-000-0000
- 22 -
