"5.17 Demand Registration. If, on or at any time after the Effectiveness Date there is no currently effective �Shelf� Registration Statement, then at any time thereafter, upon written notice (a �Demand�) from a Holder or Holders holding at least 50% of the Registrable Securities requesting that the Company effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holder or Holders, which notice shall specify the intended method or methods of disposition of such Registrable Securities, the Company shall, within five (5) days after receiving the Holder�s or Holders� Demand, give written notice (the �Request Notice�) of such registration request to all other Holders, except if all the Registrable Securities are held by a single Holder, no Request Notice shall be required. The Request Notice shall offer to each such Holder the opportunity to include in such Registration Statement such number of Registrable Securities as such Holder may request within ten (10) days after the date of the Request Notice, subject to the limitations of this Section 2(a) and to compliance with the other provisions of this Agreement. As promptly as possible after such ten (10) day period, but no later than the 30th day following receipt of the Demand, the Company shall file a Registration Statement with the Commission for purposes of effecting, in the manner set forth in this Section 2 and Section 3 hereof, the registration under the Securities Act of all such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in the Holder�s or Holders� request and shall use its best efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, provided that:
if the filing of a Registration Statement in respect of a Demand would require the Company (A) to make an Adverse Disclosure or (B) if the Company has already commenced a bona fide financing plan through a formal �all hands� meeting or comparable action, and, in the good- faith business judgment of a majority of the Board of Directors, a Demand registration at the time and on the terms requested would have a material adverse effect on the ability of the Company to obtain such financing, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing of such Registration Statement ..."
The meaning of "Adverse Disclosure?" From the same document:
"�Adverse Disclosure� means public disclosure of material non-public information, which disclosure in the good faith judgment of a majority of the Board of Directors of the Company after consultation with counsel to the Company would have a material adverse effect on the ability of the Company to consummate a material acquisition, disposition or other comparable extraordinary transaction."
My conclusion from the presence of the Adverse Disclosure language is that Vendingdata has weaknesses that are not public knowledge, ones that might scare away potential equity investors, and which Vendingdata would prefer not to reveal in a registration statement. I do admire Vendingdata's lawyers for getting the Adverse Disclosure language into the document and feel pity for anyone considering making an equity investment in Vendingdata.
call it what you will kidecar, your vocabulary choices being limited as they are, it would appear to me that what you are seeing is a result of a very capable management's legal team's advice. As a shareholder, I'll not question or second guess that advice, knowing its coming from very competent counsel. What you make of it is of little consequence.. umm.. no, let me restate that... is of 'no' consequence.