Exhibit 10.57
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August
9, 2001, by and among Mikohn Gaming Corporation, a Nevada corporation (the
"Company"), and each of the purchasers (individually, a "Purchaser" and,
collectively, the "Purchasers") listed on the Schedule of Purchasers attached as
Exhibit A hereto.
WHEREAS, the Company has agreed to issue and sell to the Purchasers
pursuant to a Purchase Agreement, dated as August 2, 2001 (the "Purchase
Agreement"), by and among the Company and the Purchasers, up to an aggregate of
1,500,000 shares of its common stock, par value $.10 per share (the "Common
Stock" and, such shares, the "Common Shares"), subject to the terms and
conditions set forth in the Purchase Agreement; and
WHEREAS, in order to induce the Purchasers to purchase the Common Shares,
the Company has agreed to provide the registration rights set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS
-----------
Capitalized terms used but not defined herein shall have the
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized terms shall have the following respective
meanings:
"Business Day" means any day, excluding Saturday, Sunday and any day
------------
which is in the City of New York a legal holiday or a day upon which banking
institutions in the City of New York are required or authorized by law or other
governmental action to close.
"Effectiveness Deadline" has the meaning set forth in Section 3(a).
----------------------
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
"Filing Deadline" has the meaning set forth in Section 3(a).
---------------
"Holder" has the meanings set forth in Section 2.
------
"Liquidated Damages" has the meaning set forth in Section 4.
------------------
"Prospectus" means the prospectus included in the Shelf Registration
----------
Statement at the time the Shelf Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Shelf Registration Statement" has the meaning set forth in Section
----------------------------
3(a).
"Transfer Restricted Shares" means Common Shares and any other
--------------------------
securities of the Company issued or issuable upon the exercise or conversion
thereof or in exchange therefor or upon any similar event with respect thereto,
whether by way of stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, other reorganization or otherwise. As
to any particular Transfer Restricted Shares held by any particular person, once
issued such securities shall cease to be Transfer Restricted Shares when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) such securities
shall have been distributed by such person to a non-affiliate of such person
pursuant to Rule 144 under the Securities Act, (iii) such securities shall have
been otherwise transferred, new certificates for such securities not bearing a
legend restricting further transfer shall have been issued to such person and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
statute then in force, or (iv) such securities shall have ceased to be
outstanding.
SECTION 2. HOLDERS
-------
A person is deemed to be a holder of Transfer Restricted Shares
(each, a "Holder") whenever such person owns Transfer Restricted Shares.
SECTION 3. SHELF REGISTRATION
------------------
(a) Shelf Registration.
------------------
The Company shall cause to be filed, on or prior to 60 days
after the Closing Date (the "Filing Deadline"), a shelf registration statement
pursuant to Rule 415 under the Securities Act (which may be an amendment to any
previously filed registration statement (the "Shelf Registration Statement")),
relating to all of the Transfer Restricted Shares, and shall use its reasonable
best efforts to cause such Shelf Registration Statement to become effective on
or prior to 60 days after the Filing Deadline (such 60th day the "Effectiveness
Deadline").
The Company shall use its reasonable best efforts to keep any Shelf
Registration Statement required by this Section 3(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Section 5(a) to the extent necessary to ensure that it is available for sales
of Transfer Restricted Shares and in conformity with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the SEC
as announced from time to time, for a period of at least two years (as extended
pursuant to Section 5(b)) following the Closing Date, or such shorter period as
will terminate when all Transfer Restricted Shares covered by the Shelf
Registration Statement have been sold pursuant thereto.
2
(b) Provision by Holders of Certain Information in Connection with
--------------------------------------------------------------
the Shelf Registration Statement.
--------------------------------
No Holder of Transfer Restricted Shares may include any of its
Transfer Restricted Shares in the Shelf Registration Statement unless and until
such Holder furnishes to the Company in writing, within 20 days after receipt of
a request therefor, the information specified in Item 507 or 508 of Regulation
S-K, as applicable, of the Securities Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Shares shall be entitled to Liquidated Damages
pursuant to Section 4 unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
------------------
If (a) the Shelf Registration Statement is not filed with the SEC on
or prior to the Filing Deadline, (b) the Shelf Registration Statement has not
been declared effective by the SEC on or prior to the Effectiveness Deadline, or
(c) the Shelf Registration Statement is filed and declared effective but
thereafter ceases to be effective or fails to be usable for its intended purpose
without being succeeded immediately by a post-effective amendment to such Shelf
Registration Statement that cures such failure and that is itself declared
effective immediately (each such event referred to in clauses (a) through (c), a
"Registration Default"), then, subject to Section 3(b), the Company hereby
agrees to pay to each Holder of Common Shares affected thereby liquidated
damages ("Liquidated Damages") in the amount of 0.05 share of Common Stock for
every Common Share purchased by such Holder pursuant to the Purchase Agreement
(rounded up to the nearest share, taking into account all Common Shares
purchased by such Holder pursuant to the Purchase Agreement). In addition, for
each month following the occurrence of a Registration Default that such
Registration Default continues, on or before the last day of such month, the
Company hereby agrees to pay to each Holder of Common Shares affected thereby
Liquidated Damages in the amount of 0.02 share of Common Stock for every Common
Share purchased by such Holder pursuant to the Purchase Agreement (rounded up to
the nearest share, taking into account all Common Shares purchased by such
Holder pursuant to the Purchase Agreement); provided, however, that the Company
-------- -------
shall in no event be required to pay Liquidated Damages for more than one
Registration Default at any given time.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto. All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Share at the time
such security ceases to be a Transfer Restricted Share shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 5. REGISTRATION PROCEDURES
-----------------------
(a) Shelf Registration Statement
----------------------------
In connection with the Shelf Registration Statement, the
Company shall:
3
(i) use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Shares being sold in accordance
with the intended method or methods of distribution thereof (as indicated
in the information furnished to the Company pursuant to Section 3(b)), and
pursuant thereto the Company will prepare and file with the SEC the Shelf
Registration Statement on any appropriate form under the Securities Act,
which form shall be available for the sale of the Transfer Restricted
Shares in accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with the
provisions of this Agreement;
(ii) use its reasonable best efforts to keep the Shelf Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 of this Agreement; and
upon the occurrence of any event that would cause the Shelf Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of a material fact or omit to state any material fact necessary
to make the statement therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Shares during the period required
by this Agreement, the Company shall file promptly an appropriate amendment
to the Shelf Registration Statement curing such defect, and, if the SEC
review is required, use its reasonable best efforts to cause such amendment
to be declared effective as soon as practicable;
(iii) prepare and file with the SEC such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the
applicable period set forth in Section 3, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act,
and to comply fully with Rules 424, 430A and 462, as applicable, under the
Securities Act in a timely manner; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
the Shelf Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the sellers thereof
set forth in the Shelf Registration Statement or supplement to the
Prospectus;
(iv) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
the Shelf Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the SEC for
amendments to the Shelf Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the SEC of any stop order suspending the effectiveness of
the Shelf Registration Statement under the Securities Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Shelf Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the
4
Shelf Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided that the
--------
Company determines in its good faith judgment that the disclosure of such
fact or happening or event at such time would have a material adverse
effect on the business, financial condition, operations or prospects of the
Company or the disclosure otherwise relates to a material business
transaction which has not yet been publicly disclosed); and if at any time
the SEC shall issue any stop order suspending the effectiveness of the
Shelf Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Shares under state
securities or blue sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(v) subject to Section 5(a)(ii), if any fact or event contemplated
by Section 5(a)(iv)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Shelf Registration Statement
or related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Shares, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(vi) furnish to each Holder in connection with such sale, if any,
before filing with the SEC, copies of the Shelf Registration Statement or
any Prospectus included therein or any amendments or supplements to the
Shelf Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of the Shelf
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file the Shelf
Registration Statement or Prospectus or any amendment or supplement to the
Shelf Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holder shall reasonably object
within five Business Days after the receipt thereof; a Holder shall be
deemed to have reasonably objected to such filing if the Shelf Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the
Securities Act;
(vii) promptly prior to the filing of any document that is to be
incorporated by reference into the Shelf Registration Statement or
Prospectus, provide copies of such document to each Holder in connection
with such exchange or sale, if any, make the Company's representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such Holder may reasonably request;
5
(viii) make available at reasonable times for inspection by each
Holder and any attorney or accountant retained by such Holder, all
financial and other records, pertinent corporate documents of the Company
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, attorney or accountant
in connection with the Shelf Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; provided, however, that such persons shall first agree in
-------- -------
writing with the Company that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the time
of delivery of such information shall be kept confidential by such persons,
unless (A) disclosure of such information is required by court or
administrative order or is necessary to respond to inquires of regulatory
authorities, (B) disclosure of such information is required by law
(including any disclosure requirements pursuant to federal securities laws
in connection with the filing of the Shelf Registration Statement or the
use of any Prospectus), (C) such information becomes generally available to
the public other than as a result of a disclosure or failure to safeguard
such information by such person or (D) such information becomes available
to such person from a source other than the Company and its subsidiaries
and such source is not known, after due inquiry, by such person to be bound
by a confidentiality agreement; provided further, that the foregoing
-------- -------
investigation shall be coordinated on behalf of such persons by one
representative designated by and on behalf of such persons and any such
confidential information shall be available from such representative to
such persons so long as any person agrees to be bound by such
confidentiality agreement;
(ix) if requested by any Holder in connection with such exchange or
sale, promptly include in the Shelf Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holder may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Shares; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(x) furnish to each Holder in connection with such exchange or
sale, if any, without charge, at least one copy of the Shelf Registration
Statement, as first filed with the SEC, and of each amendment thereto,
including all documents incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference);
(xi) deliver to each Holder, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Holder reasonably may request; the Company
hereby consents to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each Holder in connection with the
offering and the sale of the Transfer Restricted Shares covered by the
Prospectus or any amendment or supplement thereto;
(xii) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the
6
disposition of the Transfer Restricted Shares pursuant to the Shelf Registration
Statement as may be reasonably requested by such Holder in connection with any
sale or resale pursuant to any applicable Registration Statement. In such
connection, the Company shall:
(1) upon the request of any Holder, furnish (or in the case
of paragraphs (B) and (C) below, use its reasonable best efforts to cause
to be furnished) to such Holder, upon the effectiveness of the Shelf
Registration Statement:
(A) a certificate, dated such date, signed on behalf of
the Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company, confirming,
as of the date thereof, the matters set forth in Sections 2.13 and
4.1(a) of the Purchase Agreement and such other similar matters as such
Holder may reasonably request;
(B) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of independent counsel to the Company,
covering matters of the type customarily covered in opinions of
issuer's counsel requested in underwritten offerings, such as the
effectiveness of the Shelf Registration Statement and such other
matters as may be reasonably requested by such Holders; without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
the Shelf Registration Statement or the related Prospectus; and
(C) a customary comfort letter or letters, dated as of
the date of effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with underwritten offerings; and
(2) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with the
matters covered in clause (1) above and with any customary conditions
contained in any agreement entered into by the Company pursuant to this
clause (xii);
(xiii) prior to any public offering of Transfer Restricted Shares,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Shares under the
securities or blue sky laws of such jurisdictions as the selling Holders may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Shares covered by the Shelf Registration Statement; provided, however, that
-------- -------
the Company shall not be required to register or qualify as a foreign
7
corporation where the Company is not now so qualified or to take any action
that would subject the Company to the service of process in suits or to
taxation, other than as to matters and transactions relating to the Shelf
Registration Statement, in any jurisdiction where the Company is not now so
subject;
(xiv) in connection with any sale of Transfer Restricted Shares that
will result in such securities no longer being Transfer Restricted Shares,
cooperate with the Holders to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Shares to be sold and not
bearing any restrictive legends; and to register such Transfer Restricted
Shares in such denominations and such names as the selling Holders may
request at least two Business Days prior to such sale of Transfer Restricted
Shares;
(xv) use its reasonable best efforts to cause the disposition of the
Transfer Restricted Shares covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Shares, subject to the proviso
contained in clause (xiii) above;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders with regard to the Shelf Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of
Rule 158 (which need not be audited) covering a twelve-month period beginning
after the effective date of the Shelf Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Securities Act); and
(xvii) provide promptly to each Holder, upon request, each document
filed with the SEC pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(b) Restrictions on Holders.
-----------------------
Each Holder agrees by acquisition of a Transfer Restricted Share that,
upon receipt of the notice referred to in Section 5(a)(iv)(C) or any notice from
the Company of the existence of any fact of the kind described in Section
5(a)(iv)(D) (in each case, a "Suspension Notice"), such Holder will forthwith
discontinue disposition of Transfer Restricted Shares pursuant to the Shelf
Registration Statement until (i) such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 5(a)(v), or (ii) such
Holder is advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus (in each case, the
"Recommencement Date"); provided, however, that any Suspension Period occurring
-------- -------
as a result of notice from the Company of the existence of any fact of the kind
described in Section 5(a)(iv)(D) shall not exceed, for so long as this Agreement
is in effect, the shorter of (x) the period ending on the date the information
responsible for the Suspension Period is disclosed to the public and (y) 60 days
(provided that no two Suspension Periods shall occur during any period of 135
--------
consecutive days). Each Holder receiving a
8
Suspension Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
which have been replaced by the Company with more recently dated Prospectuses or
(ii) deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Shares that was current at the time of receipt
of the Suspension Notice. The time period regarding the effectiveness of the
Shelf Registration Statement set forth in Section 3, shall be extended by a
number of days equal to the number of days in the period from and including the
date of delivery of the Suspension Notice to the Recommencement Date.
SECTION 6. REGISTRATION EXPENSES
---------------------
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether the Shelf Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state blue sky or securities
laws; (iii) all expenses of printing, messenger and delivery services and
telephone; (iv) all reasonable fees and disbursements of counsel for the Company
and the Holders; (v) all application and filing fees; and (vi) all reasonable
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any person, including special experts,
retained by the Company.
(b) In connection with the Shelf Registration Statement the Company
will reimburse the Holders of Transfer Restricted Shares who are selling or
reselling Common Shares pursuant to the "Plan of Distribution" contained in the
Shelf Registration Statement for the reasonable fees and disbursements of not
more than one counsel for all of the Holders. Each Holder, and not the Company,
shall be exclusively responsible for such Holder's pro rata share of
underwriter's fees incurred by the Holders in connection with the Shelf
Registration Statement.
SECTION 7. INDEMNIFICATION
---------------
(a) The Company agrees to indemnify and hold harmless each Holder,
its directors, officers and each person, if any, who controls such Holder
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against any and all losses, claims, damages,
liabilities and judgments (including without limitation the legal fees and other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto),
provided by the Company to the Holders or to any prospective purchaser of Common
Shares, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
9
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by such Holders. This
indemnity shall not limit any other rights the Holders may have against the
Company with respect to any such losses, claims, damages, liabilities or
judgments.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, officers, attorneys, accountants,
agents and representatives, and each person, if any, who controls (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act)
the Company, to the same extent as the foregoing indemnity from the Company set
forth in Section 7(a) above, but only with reference to information relating to
such Holder furnished in writing to the Company by such Holder expressly for use
in the Shelf Registration Statement or any amendment or supplement thereto. In
no event shall any Holder, its directors, officers, or any person who controls
such Holder be liable or responsible under this Section 7 for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Shares pursuant to the Shelf
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Shares, plus (ii) the amount of any damages that such
Holder, its directors, officers, or any person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. This indemnity shall not limit any
other rights the Company may have against the Holders with respect to any such
losses, claims, damages, liabilities or judgments.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b), such
person (the "Indemnified person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying person") in writing, and the
Indemnifying person shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the Indemnified person and
shall pay all fees and expenses of such counsel as incurred (except that in the
case of any action in respect of which indemnity may be sought pursuant to both
Sections 7(a) and 7(b), a Holder shall not be required to assume the defense of
such action pursuant to this Section 7(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of such Holder). Any
Indemnified person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified person unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the Indemnifying person, (ii) the Indemnifying person shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the Indemnified person or (iii) the named parties in any such action (including
any impleaded parties) include both the Indemnifying person and the Indemnified
person, and the Indemnified person shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying person (in which case the
Indemnifying person shall not have the right to assume the defense of such
action on behalf of the Indemnified person). It is understood that the
Indemnifying person shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any
10
local counsel) for all Indemnified persons, and that all such fees and expenses
shall be reimbursed as they are incurred. Any such separate firm for the
indemnified Holders shall be designated in writing by a majority of the
indemnified Holders, in the case of parties indemnified pursuant to Section
7(a), and any such separate firm for the Company, its directors, its officers
and such control persons shall be designated in writing by the Company, in the
case of parties indemnified pursuant to Section 7(b). The Indemnifying person
shall indemnify and hold harmless the Indemnified person from and against any
and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
Business Days after the Indemnifying person shall have received a request from
the Indemnified person for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the Indemnifying
person) and, prior to the date of such settlement, the Indemnifying person shall
have failed to comply with such reimbursement request. No Indemnifying person
shall, without the prior written consent of the Indemnified person, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the Indemnified person
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the Indemnified person, unless such settlement,
compromise or judgment (i) includes an unconditional release of the Indemnified
person from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
Indemnified person.
(d) To the extent that the indemnification provided for in this
Section 7 is unavailable to an Indemnified person in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
Indemnifying person, in lieu of indemnifying such Indemnified person hereunder,
shall contribute to the amount paid or payable by such Indemnified person as a
result of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the indemnified Holder, on the other hand, from
their sale of Transfer Restricted Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company, on the one hand, and
the indemnified Holder, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and the indemnified Holder, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or by the indemnified Holder, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 7(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation
11
(even if the Holders were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified person as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
person in connection with investigating or defending any matter including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 7, in no event
shall a Holder, its directors, officers, or any person who controls such Holder,
be required to contribute, in the aggregate, pursuant to this Section 7 any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of Transfer Restricted Shares pursuant to the Shelf
Registration Statement exceeds the sum of (i) the amount paid by such Holder for
such Transfer Restricted Shares, plus (ii) the amount of any damages that such
Holder, its directors, officers, or any person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective principal amount
of the Transfer Restricted Shares held by each Holder hereunder and not joint.
This Section 7(d) shall not limit any other rights the Company may have against
the Holders, or that the Holders may have against the Company, with respect to
any such losses, claims, damages, liabilities or judgments.
SECTION 8. RULE 144 AND OTHER INFORMATION
------------------------------
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Shares remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Shares, adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 under the Securities Act in order to permit sales
of such Transfer Restricted Shares pursuant to Rule 144 under the Securities Act
and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all
filings required thereby in a timely manner in order to permit sales of such
Transfer Restricted Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act.
SECTION 9. MISCELLANEOUS
-------------
(a) Remedies.
--------
The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Section 3 may result in material
irreparable injury to the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as may
be required to specifically enforce the Company's obligations under Section 3.
The Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
12
(b) No Inconsistent Agreements.
--------------------------
The Company will not, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions. The Company has not previously entered into any agreement
granting any registration rights with respect to its securities to any person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date.
(c) Notices.
-------
All notices and other communications hereunder shall be in
writing and shall be deemed sufficiently given and served for all purposes (i)
when personally delivered or given by machine-confirmed facsimile, (ii) one
business day after a writing is delivered to a national overnight courier
service or (iii) three business days after a writing is deposited in the United
States mail, first class postage or other charges prepaid and registered, return
receipt requested, in each case, addressed as follows (or at such other address
for a party as shall be specified by like notice): (A) in the case of the
Company, to Mikohn Gaming Corporation, Attention: President, 000 Xxxxx Xxxx, Xxx
Xxxxx, XX 00000, (000) 000-0000 (Facsimile No.), and (B) in the case of any
Holder, at the address set forth on the stock records of the Company.
(d) Amendments and Waivers.
----------------------
No modifications or amendments to, or waivers of, any provision
of this Agreement may be made, except pursuant to a document signed by the
Company and Holders of a majority of the outstanding Transfer Restricted Shares.
(e) Interpretation.
--------------
When a reference is made in this Agreement to Sections,
paragraphs, clauses or Exhibits, such reference shall be to a Section,
paragraph, clause or Exhibit to this Agreement unless otherwise indicated. The
words "include," "includes," and "including" when used herein shall be deemed in
each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement has been negotiated by the respective parties hereto
and their attorneys and the language hereof will not be construed for or against
either party. The phrases "the date of this Agreement," "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to August 9, 2001. The words "hereof," "herein," "herewith," "hereby"
and "hereunder" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(f) No Third-Party Beneficiaries.
----------------------------
No person or entity not a party to this Agreement shall be deemed
to be a third-party beneficiary hereunder or entitled to any rights hereunder.
13
(g) Successors and Assigns.
----------------------
Other than with respect to transferees as to which the Common
Shares held by such transferee have ceased to be Transfer Restricted Shares,
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders; provided, however, that
-------- -------
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Shares in violation of the terms or of the
Purchase Agreement. If any transferee of any Holder shall acquire Transfer
Restricted Shares in any manner, whether by operation of law or otherwise, such
Transfer Restricted Shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Shares such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
person shall be entitled to receive the benefits.
(h) Entire Agreement.
----------------
This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted with respect to the Transfer Restricted Shares.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(i) Severability.
------------
If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws, then, if possible, such illegal,
invalid or unenforceable provision will be modified to such extent as is
necessary to comply with such present or future laws and such modification shall
not affect any other provision hereof; provided that if such provision may not
--------
be so modified such illegality, invalidity or unenforceability will not affect
any other provision, but this Agreement will be reformed, construed and enforced
as if such invalid, illegal or unenforceable provision had never been contained
herein.
(j) GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
(k) Gaming Laws.
-----------
Each of the provisions of this Agreement is subject to and shall
be enforced in compliance with applicable gaming laws.
14
(l) Counterparts.
------------
This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to each the other parties, it being understood that all parties
need not sign the same counterpart.
(signature page follows)
15
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
MIKOHN GAMING CORPORATION
By:__________________________________
Name:
Title:
_____________________________________
as a PURCHASER
By:__________________________________
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
16
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
----------------------
Name and Address Number of
of Purchaser Common Shares
--------------------------------------------------------------------------------
