EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 28, 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").
RECITALS
WHEREAS, the Company will sell $4,306,250 of the Company's Common Stock and
Warrants to the Purchasers pursuant to that certain Securities Purchase
Agreement ("Purchase Agreement") dated as of March 27, 2007 by and among the
Company and the Purchasers.
AGREEMENT
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.
"Effectiveness Deadline" means the date (i) in the event that the
Registration Statement is not subject to a full review by the Commission,
one-hundred and fifty (150) calendar days after the Closing Date or (ii) in
the event that the Registration Statement is subject to a full review by
the Commission, one-hundred and eighty (180) calendar days after the
Closing Date.
"Filing Date" means, with respect to the initial Registration
Statement required hereunder, means June 15, 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).
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"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Legal Counsel" shall be Xxxxxxx Xxxx & Xxxxx LLP or such other
counsel as hereafter designated by the Holders of a majority of the
Registrable Securities.
"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; (ii) the
Underlying Shares; and (iii) 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.
(a) Shelf Registration. On or prior to the Filing Date, and subject to
the availability of Rule 415, the Company shall prepare and file with the
Commission a "Shelf"
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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 a
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 may be sold
without volume restrictions pursuant to Rule 144(k), as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company's transfer agent and the affected
Holders, or (ii) March 28, 2009 (the "Effectiveness Period"). Within two
Trading Days after the Registration Statement is declared effective, the
Company shall (i) file a final Prospectus with the Commission pursuant to
Rule 424 and (ii) notify the Holders via facsimile of effectiveness of the
Registration Statement.
(b) Sufficient Number of Shares Registered. In the event the number of
shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities required to
be covered by such Registration Statement or an Holder's allocated portion
of the Registrable Securities pursuant to Section 2(b), the Company shall
amend the applicable Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both,
so as to cover all of the Registrable Securities as of the trading day
immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises.
The Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following
the filing thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed
"insufficient to cover all of the Registrable Securities" if at any time
the number of shares of Common Stock available for resale under the
Registration Statement is less than the product determined by multiplying
(i) the total number of Registrable Securities as of such time by (ii)
0.90. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the exercise of the Warrants and such
calculation shall assume that the Warrants are then exercisable for shares
of Common Stock at the then prevailing Exercise Price (as defined in the
Warrants).
(c) Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be
filed by the Company pursuant to this Agreement is (A) not filed with the
Commission on or before the respective Filing Date (a "FILING FAILURE") or
(B) not declared effective by the Commission on or before the respective
Effectiveness Deadline (an "EFFECTIVENESS FAILURE") or (ii) on any day
after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made
(other than during an Allowable Grace Period (as defined in Section 3(j))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement
effective, to disclose such information as is necessary
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for sales to be made pursuant to such Registration Statement, to register a
sufficient number of shares of Common Stock or to maintain the listing of
the Common Stock) (a "MAINTENANCE FAILURE") then, as partial relief for the
damages to any holder by reason of any such delay in or reduction of its
ability to sell the underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to each holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one percent (1%) of the
aggregate Subscription Amount (as such term is defined in the Purchase
Agreement) of such Holder's Registrable Securities included in such
Registration Statement on each of the following dates: (i) the day of a
Filing Failure; (ii) the day of an Effectiveness Failure; (iii) the initial
day of a Maintenance Failure; (iv) on every thirtieth day after the day of
a Filing Failure and thereafter (pro rated for periods totaling less than
thirty days) until such Filing Failure is cured; (v) on every thirtieth day
after the day of an Effectiveness Failure and thereafter (pro rated for
periods totaling less than thirty days) until such Effectiveness Failure is
cured; and (vi) on every thirtieth day after the initial day of a
Maintenance Failure and thereafter (pro rated for periods totaling less
than thirty days) until such Maintenance Failure is cured. The payments to
which a holder shall be entitled pursuant to this Section 2(c) are referred
to herein as "REGISTRATION DELAY PAYMENTS." Registration Delay Payments
shall be paid on the earlier of (I) the dates set forth above and (II) the
third Business Day after the event or failure giving rise to the
Registration Delay Payments is cured. Notwithstanding anything herein or in
the Purchase Agreement to the contrary, in no event shall the aggregate
amount of Registration Delay Payments exceed, in the aggregate, five
percent (5%) of the aggregate Subscription Amount.
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,
(i) 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, (ii) cause its officers, directors and
counsel to respond to all reasonable inquiries from the Holders as shall be
necessary for each Holder to conduct a reasonable investigation within the
meaning of the Securities Act and (iii) permit each Holder and Legal
Counsel to review and comment upon the Registration Statement and all
amendments and supplements to all Registration Statements. 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
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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; (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 as promptly as
reasonably possible 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. The Company shall furnish to Legal Counsel, without charge
copies of any correspondence from the Commission or the staff of the
Commission to the Company or its representatives relating to any
Registration Statement.
(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.
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(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) If NASDR Rule 2710 requires any broker-dealer to make a filing
prior to executing a sale by a Holder, the Company shall (i) make an Issuer
Filing with the NASDR, Inc. Corporate Financing Department pursuant to
proposed NASDR Rule 2710(b)(10)(A)(i), (ii) respond within five Trading
Days to any comments received from NASDR in connection therewith, and (iii)
pay the filing fee required in connection therewith.
(h) 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.
(i) 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.
(j) 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
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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. The Company shall be entitled to exercise its right under this
Section 3(j) to suspend the availability of a Registration Statement and
Prospectus, provided that each period (each, a Grace Period") shall not
exceed thirty (30) consecutive days and during any three hundred sixty five
(365) such Grace Periods shall not exceed an aggregate of sixty (60) days
and the first day of any Grace Period must be at least five (5) trading
days after the last day of any prior Grace Period (each, an "Allowable
Grace Period").
(k) Comply with all applicable rules and regulations of the
Commission.
(l) 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.
(m) 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.
(n) 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.
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
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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, (B) in compliance with applicable
state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities) and (C) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with NASD Regulation, Inc. pursuant to the NASD Rule
2710, so long as the broker is receiving no more than a customary brokerage
commission in connection with such sale, (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
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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
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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.
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.
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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) Remedies. In the event of a breach by the Company or by a Holder,
of any of their respective obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect
of such breach, it shall not assert or shall waive the defense that a
remedy at law would be adequate.
-11-
(b) No Piggyback on Registrations. Except as set forth on Schedule
6(b) attached hereto, neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the initial Registration Statement other than
the Registrable Securities.
(c) 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.
(d) 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.
(e) Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file
with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of
its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with the
stock option or other employee benefit plans, then the Company shall send
to each Holder a written notice of such determination and, if within
fifteen days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Holder
requests to be registered.
(f) 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.
-12-
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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 New York, 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 New York. The parties hereby waive all
-13-
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..
(l) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.
(m) 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.
(n) 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.
(o) 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]
-14-
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
VENDINGDATA CORPORATION
By: /s/ Xxxx Xxxxxxx
------------------------------------
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.
GLG NORTH AMERICAN OPPORTUNITY FUND
By: /s/ Xxx Xxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxx
Title: Legal Counsel, GLG Partners LP
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
-17-
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.
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.
-18-
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.
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.
-19-
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
_______, 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.
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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:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
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4. BROKER-DEALER STATUS:
(a) Are you a broker-dealer?
Yes[ ] No [ ]
(b) If "yes" to Section 4(a), did you receive your Registrable Securities
as compensation for investment banking services to the Company.
Yes[ ] No [ ]
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[ ] No [ ]
(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[ ] No [ ]
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:
______________________________________________________________________
______________________________________________________________________
-22-
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.
-23-
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
Fax: 000-000-0000
-24-
SCHEDULE 6(B)
PIGGYBACK REGISTRATIONS
The Company intends to include on the initial Registration Statement:
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