Document:

EXHIBIT
10.01

 

[FORMFACTOR LETTERHEAD]

 

 

 

March 1, 2008

 

Jean Bernard Vernet

[Home Address]

 

Dear Jean,

 

We welcome the
opportunity to offer you a salaried, exempt position with FormFactor, Inc.
(the “Company”) as Senior Vice President and Chief Financial Officer with a
start date to be determined upon your acceptance.   We look forward to having you join us at
this exciting time for the Company.  We
are very impressed with your background, demonstrated abilities, and
fundamental understanding of the challenges involved in a fast paced, growing
company, and look forward to your participation in meeting the opportunities
ahead.

 

In your capacity as Senior
Vice President and CFO you will report to Mario Ruscev, President, and will
receive an annual salary of $325,000, which will be paid bi-weekly in
accordance with, and subject to, the Company’s normal payroll procedures.  Additionally, you will be eligible to
participate in the key management bonus plan at a target rate of 90% of your
earned annual salary. This bonus is conditioned upon the company’s performance
and your individual achievement of objectives. 
For the 1st half of 2008, the semi-annual bonus is
guaranteed at 100% of base salary and will be prorated based upon your start
date through the end of the bonus period. As long as you remain a regular
full-time employee of the Company, you are eligible to receive certain employee
benefits that are offered to our regular full-time employees which may from
time to time change at the Company’s discretion. These currently include:

 

·                  Medical, Dental and Vision Insurance Benefits

 

·                  Short-Term and Long-Term Disability Insurance Coverage

 

·                  Group Life Insurance

 

·                  Paid Time-Off

 

·                  401k Plan

 

·                  401(k) match

 

·                  401(k) Variable Compensation Plan

 

·                  Section 125 Flex Spending Plan

 

·                  Employee Assistance Program

 

·                  Employee Stock Purchase Plan

 

Coverage for the
above-mentioned medical, dental, vision, disability and life insurance benefits
begin on your date of hire.  Dependent
coverage is also available through this plan. Employee and dependent
contributions to the plan are outlined in our employee benefits guide.

 

You will be entitled to
fifteen days (15) of paid time-off annually. 
Paid time-off will accrue at the rate of 4.62 hours per pay period
starting from your first day of employment. Paid time-off may be used for
vacation or sick leave.

 

Following your employment
commencement date, you will be granted a stock option, entitling you to
purchase 50,000 shares of common stock of the Company.  The exercise price of your option will be set
at the fair market value of the Company’s common stock as determined by the
closing price on the Nasdaq National Market on the date of grant, which will be
your date of hire.  The “Vesting
Commencement Date” will also be your date of

 

 

 

hire.  The option shall be subject to the terms and
conditions of the Company’s 2002 Equity Incentive Plan.  The option vests over a four-year
period.  On the first anniversary of the
Vesting Commencement Date, the option shall be vested as to twenty-five percent
(25%) of the shares covered by the option. The remaining Shares subject to the
option shall then vest on a monthly basis commencing one year after the Vesting
Commencement Date in increments of 1/36 of the remaining shares subject to the
option.

 

You will also be granted
under the Plan, as of the date you commence employment with the Company,
Restricted Stock Units (“RSUs”) which represent the right to receive 20,000
shares of Company stock upon vesting. 
The RSUs shall vest in four equal installments on the anniversary of
your date of hire on each of 2009, 2010, 2011 and 2012.

 

Your agreement to accept
this offer is contingent upon your ability to show proof of your legal right to
work for the Company in the United States as well as successfully completing a
background check required for all new hires.

 

The Company will pay you a
one time “sign on” bonus of $100,000 which you will receive as a separate
check, less applicable withholding taxes, included with your first paycheck.

 

Should your employment
with FormFactor be terminated voluntarily at any time during the 12-month
period after your start date, a pro-rated portion of the “sign on” bonus must
be paid back to the Company within 30 days.

 

The Company will assist
you in the following areas for your relocation to a convenient area to our
offices in Livermore, California:

 

-Up to two (2) months of temporary
living;

-Moving of household goods (refer to “Movement
of Household Goods Policy” for definitions)

-Storage of household goods for up to two (2) months;

-One (1) roundtrip airfare for two (2) people
for a house hunting trip;

-Rental car for up to 30 days

-One-way travel costs for you and your
family from your home to the Bay Area

-Reimbursement of the real estate agent’s
commission on the sale of your current home up to a maximum of $40,000.

 

-Any of the above non qualified relocation
allowances or expenses (as defined by the IRS) will be grossed up for taxes.

 

-The following expense will not be grossed
up for taxes:

-Pay you one month’s salary as a
miscellaneous relocation allowance payable when you close escrow on your residence
in California.

 

All relocation
transactions must be completed within one year of start date.

 

Should you resign from
FormFactor voluntarily at any time during the 12-month period after your start
date, any relocation assistance paid to you or paid on your behalf must be paid
back to the Company within 30 days.

 

Consistent with company
policy we will enter in to a change of control agreement with you after you
begin employment with the company.

 

You should be aware that
your employment with the Company is for no specified period and constitutes at
will employment.  As a result, you are
free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude
its employment relationship with you at any time, with or without cause.

 

 

 

I have enclosed our
standard Agreement Regarding Employment, Confidential Information, Invention
Assignment, and Arbitration as a condition of your employment.  We will not be able to commence your
employment until we have received a signed copy of this document.  If you accept this offer, please return a
signed copy to me.

 

Additionally, you will be
required to comply at all times with the Company’s various rules, policies and
procedures, including those set forth in our Employee Handbook, our Statement
of Corporate Code of Business Conduct (“Corporate Code”), and our Statement of
Policy regarding Insider Trading (“Insider Trading Policy”).  Copies of these three documents, and all our
policies and procedures will be available in hard copy and on inFORM - our
internal intranet site.  Within 30 days
of the commencement of your employment, you will be required to provide the
Company with signed acknowledgements relating to the Employee Handbook, the
Corporate Code and the Insider Trading Policy. 
You should understand that, while referenced in this offer letter, the
Company rules, policies and procedures are not incorporated by reference into
this offer letter, and they can be changed, replaced or withdrawn at any time
at the discretion of the Company.

 

In the event of any
dispute or claim relating to or arising out of our employment relationship, you
and the Company agree that all such disputes shall be fully and finally
resolved by binding arbitration conducted by the American Arbitration Association
in Alameda County, California.  However,
the parties shall continue to have the right to seek judicial relief in the
form of injunctive and/or equitable relief, including but not limited to relief
for threatened or actual misappropriation of trade secrets or other unfair
competition.

 

To indicate your
acceptance of the Company’s offer, please sign and date this letter in the
space provided below and return it to me. 
A duplicate original is enclosed for your records.  This letter, along with the agreement
relating to proprietary rights between you and the Company, set forth the terms
of your employment with the Company and supersede any prior representations or
agreements, whether written or oral. 
This letter may not be modified or amended except by a written
agreement, signed by an officer of the Company and by you.

 

Jean, we look forward to
your favorable reply and to a productive, fun and exciting work
relationship.  To confirm your acceptance
of this offer, please sign and date one copy of this letter and return to me.
The other copy is for you to retain for your records. This offer, if not
accepted, will expire ten (10) days from the offer date. Please call me if
you have any questions.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ HANK FEIR

  
	
   

  	
  Hank Feir

  
	
   

  	
  VP Human Resources,

  
	
   

  	
  FormFactor, Inc

  

 

 

 

ACCEPTED AND AGREED TO
this 10 day of March, 2008

 

 

	
  /s/ JEAN BERNARD VERNET

  	
   

  	
  Anticipated start date:
  April 1 08

  
	
  Jean Bernard VernetExhibit
10.41

 

DISTRIBUTION, SERVICE AND SUPPORT AGREEMENT

 

This Distribution,
Service and Support Agreement (this “Agreement”) is made and entered
into as of  June 4, 2007,  by and among Happ Controls, Inc., an
Illinois corporation and Suzo and any of its affiliates (AESI together with
Happ and Suzo, the “Service Provider”), and VendingData Corporation,  a Nevada corporation (“Principal”).

 

RECITALS

 

A.            The Principal is engaged in the
business of manufacturing and marketing Products (as defined in Section 1.1)
throughout the world.

 

B.             Service Provider is engaged in the
business of distributing gaming components, servicing and supporting electronic
gaming devices, and performing final manufacturing assemblies as necessary,
product and/or gaming jurisdiction dependent, and has the experience and skills
necessary to provide the Service and Support (as defined in Section 1.1)
for the Principal’s Products throughout the Territory (as defined in Section 1.1).

 

C.             The Principal desires to retain
Service Provider to provide Distribution Service and Support for the Principal’s
Products throughout the Territory, and Service Provider desires to provide such
Distribution, Service and Support for the Principal’s Products throughout the
Territory, all upon and subject to the terms and conditions set forth in this
Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing and mutual covenants and agreements contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           Definitions.  As
used in this Agreement, the following capitalized terms shall have the meanings
indicated below:

 

“Authorized
Gaming Customers” shall mean legalized gaming establishments, including but
not limited to: casinos, racinos, and card clubs.

 

“Principal’s Products”
shall mean equipment
or mechanical, electromechanical or electronic components used in legalized
gaming establishments marketed by the Principal which are licensed for sale and
play or use in the Territory.

 

“Distribution,
Service and Support” shall mean any sale, installation, conversion,
repair, replacement and adjustment necessary to maintain the Principal’s Products
in, or restore the Principal’s Products to, good working order under normal use
and operating conditions.

 

“Territory”
shall mean the geographic area identified in Exhibit A attached
hereto.

 

1

 

ARTICLE II

APPOINTMENT OF SERVICE
PROVIDER

 

2.1           Appointment of
Service Provider.  For and during the
Term (as defined in Section 3.1), and subject to the terms and
conditions of this Agreement, the Principal appoints Service Provider as the
exclusive distributor and service provider to provide Distribution, Service and
Support for the Principal’s Products throughout the Territory.

 

2.2           Other Representatives and Service Providers.  During
the Term, the Principal will not appoint any other person, firm, corporation or
other entity to provide the Distribution, Service and Support for the Principal’s
Products within the Territory.

 

ARTICLE III

TERM AND TERMINATION

 

3.1           Term.   The term of this Agreement shall be two (2) years
from the date of this Agreement (the “Initial Term”) and shall
automatically extend for successive periods of one (1) year each (the “Renewal
Terms”), unless otherwise terminated by either Service Provider or the
Principal upon written notice of termination to the other party at least ninety
(90) days prior to the date of effect of the Renewal Term.  Any Renewal Term shall be upon the same terms
and conditions stated in this Agreement; provided that, any fees payable to
Service Provider by the Principal pursuant to this Agreement shall be subject
to adjustment as mutually agreed to by the parties in good faith.  The Initial Term, together with any Renewal
Terms, is hereinafter collectively referred to as the “Term.”

 

3.2           Termination of
this Agreement.  This Agreement may
be terminated prior to the expiration of the Term by written notice to the
other party (which notice shall specify the specific grounds for termination
and the termination date) as follows:

 

(a)           by either Service Provider or the
Principal if there has been a material breach by the other party of any of the
provisions in this Agreement, and such breach is not cured within thirty (30)
days after written notice of such breach is given by the non-breaching party to
the breaching party; or

 

(b)           by Service Provider or the Principal,
effective immediately, if

 

(i)            Either the Service Provider or the
Principal fails to make any payment to the receiving party when due; or

 

(ii)           Any law or regulation should be
adopted in the Territory that would restrict Service Provider’s termination
rights or otherwise invalidate any provisions in this Agreement; or

 

2

 

(c)           by either Service Provider or the
Principal if the other party becomes the subject of any voluntary or
involuntary bankruptcy, receivership, or other insolvency proceedings and such
proceedings shall not be dismissed within forty-five (45) days;  or

 

(d)           by either Service Provider or the
Principal if the other party makes any false or untrue statements or
representations to the other party in this Agreement or in the performance of
its respective obligations under this Agreement.

 

(e)           by either Service Provider or the
Principal without cause upon 180 days written notice.

 

3.3           Effect of Termination.

 

(a)           Termination of this Agreement will
not release either Service Provider or the Principal from any liability or
obligation which, at the time of such termination, has already accrued or which
thereafter may accrue in respect to any act or omission prior to such
termination, nor will any such termination affect in any way the survival of
any right, duty or obligation of any party which is expressly stated elsewhere
in this Agreement to survive the termination.

 

(b)           Under no circumstances shall Service
Provider be liable to the Principal by reason of termination, expiration or non
renewal of this Agreement for compensation, reimbursement, or damages for lost
profits, loss of prospective compensation or unjust enrichment, goodwill or
loss thereof or expenditures, investments, leases, or any type of commitment
made by the Principal in connection with its business or in reliance on the
existence of this Agreement.

 

(c)           Upon termination of this Agreement
the following additional provisions shall apply:

 

(i)            Service Provider shall cease to
represent itself as a service provider for the Principal’s Products and the
Principal shall cease to claim that Service Provider is the service provider
for the Principal’s Products.

 

(ii)           Service Provider shall within thirty
(30) days of the termination of this Agreement return to the Principal, at the
Principal’s sole cost and expense, or destroy all technical and commercial
materials which the Principal has furnished to the Service Provider, as well as
all demonstration models if any, which are still in Service Provider’s possession.

 

(iii)          The Principal shall purchase from the
Service Provider, all excess spare parts and finished goods related to the
Principal’s Products in the Service Provider’s possession at the same price
such spare parts were purchased by the Service Provider and upon payment the
Service Provider shall deliver those spare parts and finished goods to a
location as reasonably directed by the Principal at the Principal’s sole cost
and expense.

 

(iv)          The Principal shall assume all Service
Contracts originally tendered by the Principal and additional contracts from
the Service Provider, all excess spare parts related 

 

3

 

to the Principal’s
Products in the Service Provider’s possession at the same price such spare parts
were purchased by the Service Provider.

 

(v)           Service Provider shall have the
right, in its sole discretion, to notify any persons, including, but not
limited to, any governmental authorities or customers that this Agreement has terminated.

 

ARTICLE IV

LIMITATION ON
REPRESENTATION

 

4.1           Relationship of Parties.  The relationship of Service Provider and the
Principal which is created under this Agreement is that of an independent
contractor.  This Agreement is not
intended to create and shall not be construed as creating between Service
Provider and the Principal the relationship of affiliate, principal and agent,
joint venture, partnership, or any other similar relationship, the existence of
which is hereby expressly denied. 
Neither Service Provider nor the Principal shall have (nor shall it hold
itself out as having) any right, power or authority to make or incur any
legally binding agreement, obligation, representation, warranty or commitment
on behalf of the other party.

 

ARTICLE V

OBLIGATIONS OF THE SERVICE
PROVIDER

 

5.1           Services to be Performed by the
Service Provider.  The Service
Provider shall provide the following services, as reasonably requested by the Principal.

 

(a)           Sales, Distribution, Service and
Support.  The Service Provider shall
provide exclusive Sales, Distribution, Service and Support for the Principal’s
Products and shall not provide sales, distribution, service, and support for
products which compete with products of the Principal.

 

(b)           Documentation.  The Service Provider, as applicable, shall
provide reasonable documentation to the Principal regarding all Service and
Support performed by the Service Provider on the Principal’s Products pursuant
to all of the Principal’s Work Orders and all spare parts used in connection
therewith.  The Service Provider, as
applicable, shall provide such documentation within thirty (30) days of the end
of each calendar month.  A copy of the
Principal’s Work Order form is attached hereto as Exhibit B.

 

(c)           Training.  The Service Provider at the Principal’s sole
cost and expense shall offer training and support as reasonably requested by the
Principal to ensure that the Principal’s Authorized Gaming Customers have an
appropriate level of knowledge with regard to the Principal’s Products.  The level of training provided by the Service
Provider to each Authorized Gaming Customer shall be mutually agreed to by the
Service Provider, on the one hand, the Principal, on the other hand.  In addition, upon reasonable request by the
Principal, the Service Provider shall distribute, to the Principal’s Authorized
Gaming Customers supporting documentation for the Principal’s Products,
including, service manuals, updates, and technical 

 

4

 

bulletins. 
Any such documentation shall be delivered to the Service Provider from the
Principal with instructions for distribution and at no cost to the Service
Provider.  Service Provider expressly
disclaims any responsibility or liability for any of the information included
in such documentation.

 

(d)           Licenses, Taxes and Fees.  Service Provider shall maintain all its existing
material business and gaming licenses necessary under the laws of the
applicable jurisdictions, and pay all applicable taxes and fees with respect to
the discharge of Service Provider’s Service and Support of the Principal’s
Products, except that nothing in this section shall be construed in a manner
that would require Service Provider to acquire gaming licenses or product
approvals in any jurisdiction.

 

(e)           Reasonable Efforts.  Service Provider shall use its reasonable
efforts to sell service and support the Principal’s Products to the Principal’s
Authorized Gaming Customers.

 

(f)            Duties non-delegable.  The Principal is retaining the services of
Service Provider based, in part, upon Service Provider’s experience and
expertise in the gaming industry. 
Subject to the provisions of Section 11.8 of this Agreement,
the Service Provider shall not delegate its duties under this Agreement absent
the written consent of the Principal, which consent shall not be unreasonably
withheld.

 

(g)           Sales Forecasts and Orders.  The
Service Provider shall provide on the first (1st) business day of
each month a rolling 90-day forecast. The Service Provider shall place written
orders with the Principal on or before the 15th of each calendar
month, covering quantities to be delivered during the next three month’s
period.  The quantity ordered for
delivery for the second month shall be firm with respect to eighty percent
(80%).  The quantity ordered for delivery
for the third month shall be firm with respect to fifty percent (50%).  The Service Provider and Principal shall meet
to establish and mutually agree upon minimums of unit placements and/or sales
revenues to be met for the subsequent year, on or before December 1st
of each calendar year.  Minimum
requirements shall begin in quarter one (1), 2008.

 

5.2           Service Call Authorization.  In reference to all existing contracts with
gaming establishments, during the initial period of 60 days, all service calls
for Service and Support of the Principal’s Products shall be routed through the
Principal’s Call Center toll free telephone number (800) 937-4835 (the “Call
Center”).  The Principal’s Authorized
Gaming Customers shall directly contact the Call Center, which will determine
whether the service call warrants the dispatch of a Service Provider support
technician.  If the Principal, in its
reasonable discretion, determines that a Service Provider support technician
should be dispatched it will contact Service Provider and request such
service.  If a Principal’s Authorized
Gaming Customer contacts the Service Provider directly for any Service and
Support of the Principal’s Products, the Service Provider, as applicable, will
direct the Principal’s Authorized Gaming Customer to contact the Call
Center.  The Principal must authorize any Service and Support of the Principal’s
Products, prior to the performance of any such Service and Support by Service
Provider.  Service Provider shall use its
reasonable efforts to respond to the Principal’s  request for Service and Support of the Principal’s
Products within twenty-four (24) hours following receipt of the request, excluding
weekends and holidays, provided, that, Service Provider shall not incur any

 

5

 

liability to the Principal or any of the
Principal’s Authorized Gaming Customers for its failure to provide such Service
and Support within twenty-four (24) hours following any request by the Principal
for such Service and Support. Notwithstanding the above, both the Principal and
Service Provider will diligently work to relocate all call center operations,
for both sales and customer support services, to the Service Provider within 60
days of commencement of this agreement in order to obtain seamless and optimal
support operations for the Authorized Gaming Establishments.

 

In reference to
new contracts for the Principal’s Products awarded to the Service Provider, the
Service Provider shall provide all sales and support services, as
aforementioned above, to those gaming establishments.

 

ARTICLE VI

OBLIGATIONS OF THE PRINCIPAL

 

6.1           Services to be
Performed by the Principal.  The
Principal shall provide the following services, as reasonably requested by
Service Provider from time to time to assist Service Provider in the
performance of its duties under this Agreement:

 

(a)           Training.  The Principal will provide training regarding
the Principal’s Products to all new and existing Service Provider service and
sales personnel, as reasonably requested by Service Provider, at the Principal’s
sole cost and expense, including, but not limited to all reasonable travel and
other expenses.  The location, content,
frequency, and extent of such training shall be determined by the mutual
agreement of Service Provider and the Principal.

 

(b)           Spare Parts.  The Principal shall at all times maintain a
quantity of spare parts adequate, in Service Provider’s reasonable judgment,
for the Service and Support of the Principal’s Products.  The Principal shall provide to Service
Provider service information and access to spare parts for all current Principal’s
Products and will provide service information and access to spare parts for all
discontinued Principal’s Products.  The Principal
shall use its best efforts to deliver any spare parts ordered by the Service
Provider within the lead times given on orders submitted by the Service
Provider.  The Principal shall be solely
responsible for any delay or failure to perform the Service and Support on the Principal’s
Products which results from the Principal’s failure to timely deliver any spare
parts ordered by the Service Provider.

 

(c)           Spare Parts List
and Pricing. The Principal will upon execution of this Agreement provide to
Service Provider its current Spare Parts Price Lists and will promptly notify
Service Provider of any changes to its Spare Parts Price Lists.  A copy of the Principal’s current Finished
Goods & Spare Parts Price List is attached hereto as Exhibit C.

 

(d)           Governmental
Investigations. The Principal agrees that it will reimburse Service
Provider for the costs and provide any required technical support in connection
with required regulatory approvals of any the Principal’s Products, including,
but not limited to, identifying testing locations for the Principal’s Products,
if any such testing is required

 

6

 

6.2           Assumption of
Principal’s Service Contracts by Service Provider.  In the case that the Service Provider assumes
contracts for service where the billing rate is less than $125 per machine per
month, Principal agrees to subsidize the difference between $125 per month per
machine and the customers’ rate.  Service
Provider agrees to use its best efforts to renegotiate contracts that are less
than $125 per month per machine.  Amounts
due under this section will be billed monthly with net 30 terms.

 

ARTICLE VII

FEES, PAYMENT TERMS AND ACCOUNTING

 

7.1           Service and
Support Fees.  In consideration of
the Service and Support provided by the Service Provider to the Principal for
the Principal’s Products, The Principal shall pay to the Service Provider
and/or Happ, as applicable, the following fees (the “Service Fee”):

 

(a)           a handling fee of
five percent (5%) of the price paid by the Service Provider, as applicable, for
spare parts sent to the Principal under warranty; and

 

(b)           within the US and
Canada, sixty-five dollars ($65) per hour for all Service and Support performed
by the Service Provider, as applicable, for the Principal’s Products and thirty-five
dollars ($35) per hour for all travel time associated with such Service and
Support; for other territories, as mutually agreed by the parties; and

 

(c)           fees established
above will only be in place until the service contracts are transferred directly
to the Service Provider.  The Principal
shall provide the Service Provider copies of all pertinent and necessary
customer contracts which are currently in place.  Standard Service Agreement is attached hereto
as Exhibit D. The Principal and Service Provider shall mutually
agree to customer notification letter informing the customer of the contract
re-assignments.

 

7.2           Payment Terms.

 

(a)           The Service Fee
shall be calculated monthly based on all Work Orders submitted by the Service
Provider for Service and Support performed during such month (the “Monthly
Work Order Report”).  The Service Fee
for each month shall be paid by the Principal to the Service Provider, as
applicable, within thirty (30) days from the date the Principal receives the
Monthly Work Order Report.

 

(b)           The Service
Provider, as applicable, shall pay the Principal for all spare parts and
finished goods ordered in accordance with Section 8.3 of this
Agreement within thirty (30) days from the date of invoice submitted by the
Principal to the Service Provider.

 

7.3           Dispute
Resolution Procedure. If any party disagrees with any computation or
statement delivered by the other party (the “Objecting Party”), the
Objecting Party may, within ten (10) days after the receipt of such
computation or statement, deliver a written notice (an “Objection Notice”)
to the other party (the “Non-Objecting Party”) setting forth in detail
any and 

 

7

 

all items of disagreement related to such computation or statement.  If the Objecting Party does not deliver an
Objection Notice, the calculations as set forth in any such computation or
statement shall be deemed final, conclusive and binding on the parties.  The Service Provider, as applicable, and the
Principal will use commercially reasonable efforts to resolve any disagreements
relating to any computations or statement, but if they do not obtain a final
resolution within twenty (20) days after the Non-Objecting Party has received
the Objection Notice, then the Service Provider, on the one hand, or the
Principal, on the other hand, may refer the items in dispute to a nationally
recognized firm of independent public accountants as to which the Service
Provider, on the one hand, and the Principal, on the other hand, mutually agree
(the “Firm”), to resolve any remaining disagreements.  The Service Provider, on the one hand, and the
Principal, on the other hand, will direct the Firm to render a determination
within twenty (20) days of its retention, and the Service Provider, on the one
hand, and the Principal, on the other hand, and their respective agents will
cooperate with the Firm during its engagement. 
The determination of the Firm will be conclusive and binding upon the
Service Provider, on the one hand, and the Principal, on the other hand, and the
Service Provider or the Principal, as applicable, will make any payment owed to
the other party, within ten (10) days of the Firm’s determination.  The Service Provider, as applicable, and the
Principal shall each pay half of the costs and expenses of the Firm.

 

7.4           Accounting. The
Service Provider shall maintain appropriate books of account and records, of
all its operations under or in connection with this Agreement and shall make
accurate entries concerning all transactions relevant to this Agreement.  During the Term, the Principal and its
employees, agents and representatives, shall have the right, at their own
expense, on reasonable notice to the Service Provider, as applicable, (but in
no event need such notice be more than ten (10) business days) and during
regular business hours, to examine, photocopy, and make extracts from such
books of account and other records, documents and materials (including, but not
limited to, invoices, purchase orders, sales records, and reorders) to the
extent needed to confirm the Service Fees, any other fees owed in connection
herewith.

 

ARTICLE VIII

FINISHED GOODS AND SPARE PARTS

 

8.1           Inventory of Finished
Goods and Spare Parts.  In order to
provide Distribution sales and Service and Support for the Principal’s Products
throughout the Territory, the Service Provider shall stock and maintain a
reasonable inventory of finished goods and spare parts, provided that the Principal
has sufficient finished goods and spare parts in stock to satisfy the Service
Provider’s demand for such finished goods and spare parts. The Principal and
the Service Provider, shall work together to determine a mutually agreeable
level of finished goods and spare parts inventory to be maintained by the
Service Provider. The initial inventory
of finished equipment for Principal’s products ShufflePro, RandomPlus, and Deck
Checker, shall be 25 units of each product with a follow-on order of an
additional 25 units to be placed no later than January 31, 2008.  Payments terms for the initial as well as all
subsequent orders shall be net 30 upon shipment of the product to the Service Provider.
The Service Provider shall provide on the first (1st) business day
of each month a rolling 90-day forecast to the Principal to insure 

 

8

 

that the Principal has adequate time to plan
for manufacturing and production to meet component sourcing and delivery
schedules.

 

8.2           Pricing of Finished
Goods and Spare Parts.  The Principal
shall sell all finished goods and spare parts ordered by the Service Provider at
the price listed on the Principal’s Price List less a discount of thirty-five
percent (35%), provided, that, in the event the Principal makes any change to
its Price Lists and it fails to deliver such updated list to the Service
Provider, the Principal shall only sell the finished goods and spare parts
which are the subject of such order to the Service Provider, as applicable, at
the price set forth in the Price List prior to the delivery by the Principal to
the Service Provider of an updated Price List. 
If a finished good or spare part is not listed on the Price List, the
Service Provider, as applicable, shall contact the Principal to obtain the
Principal’s standard retail price less a discount of thirty-five percent (35%).
Finished Goods & Spare Parts Price Listing is attached hereto as Exhibit C.

 

8.3           Ordering.  The Service Provider, as applicable, shall
order spare parts by either submitting (a) a Principal’s purchase order
form or (b) a form agreed upon by the parties to the Principal which
specifies the finished good and or spare part required and the lead time for
delivery.  All purchase orders for spare
parts shall be subject to acceptance or rejection, in whole or in part, by the
Principal, in its reasonable discretion. 
A copy of a Principal’s Purchase Order form is attached hereto as Exhibit E.

 

8.4           Inspection and Acceptance.  The Principal shall prepare for shipment all
spare parts ordered by the Service Provider. The Service Provider shall have
the right to inspect and accept product received from the Principal to insure
product is free of defect and meets the Principals published specifications for
the product. If the product is defective and does not meet the Principals’
published specifications, the Service Provider shall have the right to return
the product to the Principal for a replacement.

 

8.5           Invoice. The
Principal shall invoice the Service Provider, as applicable, for the spare
parts ordered in accordance with the discount and payment terms set forth in Section 8.2
of this Agreement.

 

8.6           Shipment.  All products to ship FOB shipping point,
freight prepaid by Principal.  Other than
the price of the spare part(s) or finished goods, the Service Provider
shall not be liable for any other charges or fees, including without limitation
service charges, freight charges, handling charges, shipping charges,
assessments or other expenses for spare parts and/or finished goods shipped
from the Principal to the Service Provider’s warehouse located at 2015 Helm
Drive, Las Vegas, NV 89119. The Principal shall not be liable for any other
charges or fees, including without limitation service charges, freight charges,
handling charges, shipping charges, assessments or other expenses for spare parts
and/or finished goods shipped from the Service Provider’s designated location
to the Authorized Gaming Customers.

 

9

 

ARTICLE IX

WARRANTIES; LIMITATION ON LIABILITY

 

9.1           No Warranties and
Limitation of Liability by Service Provider.  ALL SERVICE AND SUPPORT PROVIDED BY SERVICE
PROVIDER UNDER THIS AGREEMENT IS PROVIDED WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND IS PROVIDED “AS IS”, AND ANY STATEMENTS OR
REPRESENTATIONS MADE BY ANY OTHER PERSON TO THE CONTRARY ARE VOID.  IN NO EVENT WILL SERVICE PROVIDER BE LIABLE
TO PRINCIPAL FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, INCLUDING LOSS OF PROFITS, GOODWILL OR REVENUES.  Without limiting the generality of the
foregoing, Service Provider shall not have any liability for any failure to discover
report or repair any latent defect of condition or defect of design in any Principal’s
Product.

 

9.2           The Principal’s
Warranties.  The Principal warrants
that all equipment, parts, supplies and accessories manufactured by the Principal
are free from defect and in good operating condition at the time of shipment
and for a period of one (1) year thereafter.  The Principal will replace or repair, at its sole
cost and expense, any equipment, part, supply and/or accessories manufactured
by the Principal which is defective.  All
warranties shall survive inspection, acceptance (as defined in Section 8.4),
delivery and payment.

 

ARTICLE X

INDEMNIFICATION

 

10.1         Indemnification.  The
Principal agrees to indemnify and hold Service Provider, its parents,
subsidiaries and their respective shareholders, directors, officers, employees,
agents, successors and assigns harmless from and against any losses, damages or
expenses of whatever form or nature, including reasonable attorneys’ fees and
other costs of legal  defense that they may
sustain or incur as a result of any acts or omissions of the Principal or any
affiliate, or any of their respective shareholders, directors, officers,
employees or agents, including, but not limited to, (a) any breach by the
Principal of any covenant, agreement, representation or warranty contained in
this Agreement or (b) grossly negligent, reckless, wanton, malicious or tortuous
conduct in connection with the transactions contemplated by this Agreement or (c) in
connection with product that does not work consistent with or otherwise
violated gaming regulations in any jurisdiction.  (d) In addition, Principal shall
indemnify and hold harmless Service Provider, its affiliated companies, and its
employees, officers and directors against any and all claims, liabilities,
damages and costs, including reasonable attorneys’ fees and settlement amounts,
incurred by any claims arising from any product liability claim, actual or
alleged infringement of any patent, copyright, trademark or other intellectual
property right by a product supplied by the Principal pursuant to this
Agreement.  As a condition of
Principal’s indemnification obligation, Service Provider must:

 

  i.                                    promptly
notify Principal in writing of any such infringement claim or suit;

 ii.                                    allow
Principal to have control of the defense of such infringement claim or suit
including control in all negotiations relating to settlement. Provided however,
that Principal may not settle any claim, which creates any liability against
Service Provider without first obtaining Service Provider’s written consent;
and

 

10

 

 

iii.                               assist
Principal, as reasonably requested, in the defense of such claim or suit.
Principal will reimburse Service Provider for agreed, reasonable out-of-pocket
costs incurred in providing such assistance.

 

The provisions of this Section 10.1 shall survive the
expiration or earlier termination of this Agreement.

 

ARTICLE XI

GENERAL PROVISIONS

 

11.1         Complete
Agreement; Amendment.  This
Agreement, including its recitals and exhibits, constitutes the entire
agreement between the parties and supersedes all agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof, and no party to this Agreement shall
be bound by nor charged with any oral or written agreements, representations,
warranties, statements, promises or understandings not specifically set forth
in this Agreement or the exhibits hereto. 
This Agreement may not be amended, altered or modified except by a
writing signed by all of the parties hereto.

 

11.2         Notices.  All notices given pursuant to this Agreement
(except for notices relating to purchase orders which may be transmitted via
email or any other customary means agreed upon by the parties) shall be sent
by: (a) certified mail, return receipt requested, in which case notice
will be deemed delivered three (3) business days after deposit, postage
prepaid in the United States mail; (b) a nationally recognized overnight
courier, in which case notice will be deemed delivered one (1) business
day after deposit with such courier; (c) facsimile transmission, in which
case notice will be deemed delivered upon electronic verification that
transmission to the recipient was completed, provided that notices sent by
facsimile transmission on a day other than a business day, or before 9:00 a.m.
or after 5:00 p.m. recipient’s time on a business day, shall be deemed
given on the first business day following the date of transmission; or (d) personal
delivery.  Addresses and facsimile number
of the parties are as follows:

 

	
   

  	
  As to:

  	
  Happ Controls, Inc

  
	
   

  	
   

  	
  106 Garlisch

  
	
   

  	
   

  	
  Elk Grove
  Village60007

  
	
   

  	
   

  	
  Attention: David
  Reginelli

  
	
   

  	
   

  	
  Telephone No.

  	
  847-593-6161 x7111

  
	
   

  	
   

  	
  Facsimile No.

  	
  847-952-3276

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  As to

  	
  VendingData Corporation

  
	
   

  	
   

  	
  1120 Town Center. Dr.

  
	
   

  	
   

  	
  Suite 260

  
	
   

  	
   

  	
  Las Vegas, NV 89144

  
	
   

  	
   

  	
  Attention: Mark Newburg

  
	
   

  	
   

  	
  Telephone No.

  	
  702-617-4742

  
	
   

  	
   

  	
  Facsimile No.

  	
  702-617-4737

  

 

11

 

The above addresses and facsimile numbers
may be changed by written notice to the other parties, provided that no notice
of a change of address or facsimile number will be effective until actual
receipt of such notice.

 

11.3         Governing Law.  This Agreement shall be construed and
governed by and under the substantive laws of the State of Nevada, without
regard to its conflicts of laws principles. 
Any action, suit or other legal proceeding which is commenced to resolve
any matter arising under or relating to any provision of this Agreement may be
commenced and prosecuted in state or federal court in Clark County, Nevada, and
the parties consent to the non-exclusive jurisdiction of such court.  Process in any action or proceeding
referenced in the preceding sentence may be served on any party anywhere.

 

11.4         Waiver of Jury Trial.  Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury of any claim or cause of action in
any legal proceeding arising out of or related to this Agreement or the
transactions or events contemplated hereby or any course of conduct, course of
dealing, statements (whether verbal or written) or actions of any party
hereto.  The parties hereto each agree
that any and all such claims and causes of action shall be tried by the court
without a jury.  Each of the parties
hereto further waives any right to seek to consolidate any such legal
proceeding in which a jury trial has been waived with any other legal
proceeding in which a jury trial cannot or has not been waived.

 

11.5         Attorneys’ Fees.  In the event of any legal proceeding
regarding this Agreement, and upon a final determination by a court of
competent jurisdiction, with respect thereto, the non-prevailing party shall
reimburse the prevailing party for costs and expenses (including reasonable
attorneys’ fees) incurred in such legal proceeding.

 

11.6         Waiver.  No consent or waiver, express or implied, by
a party to or of any breach or default by any other party in the performance by
such party of its obligations under this Agreement shall be deemed or construed
to be a consent or waiver to or of any breach or default in the performance by
such party of the same or any other obligations of such party hereunder.  Failure on the part of a party to complain of
any act or failure to act of any other party or to declare any other party in
default, irrespective of how long such failure continues, shall not constitute
a waiver by such party of such default or its rights under this Agreement.  The giving of consent by a party in any one
instance shall not limit or waive the necessity to obtain such party’s consent
in any future instance.

 

11.7         Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the greatest extent possible.

 

12

 

11.8         Assignment.  This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party hereto
without the prior written consent of the other parties hereto; provided,
however, that nothing in this Agreement shall or is intended to limit
the ability of either the Service Provider to assign its rights or delegate its
responsibilities, liabilities and obligations under this Agreement, in whole or
in part, without the consent of the Principal to (i) any affiliate or
subsidiary of the Service Provider, as applicable, or (ii) any buyer of
all or substantially all of the assets or equity interests of the Service
Provider as applicable.

 

11.9         Delivery by Facsimile or Other
Electronic Transmission.  This
Agreement and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine or other electronic transmission (including e-mail of a document in
Portable Document Format (“PDF”)), shall be treated in all manner and respects
as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof
delivered in person.  At the request of
any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall reexecute original forms thereof and deliver them to
all other parties.  No party hereto or to
any such agreement or instrument shall raise the use of a facsimile machine or
other electronic transmission (including email of a document in PDF) to deliver
a signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine or other
electronic transmission (including e-mail of a document in PDF) as a defense to
the formation or enforceability of a contract and each such party forever
waives any such defense.

 

11.10       Counterparts. This Agreement may
be executed in any number of counterparts and any party to this Agreement may
execute any such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. 
This Agreement shall become binding when one or more counterparts taken
together shall have been executed and delivered by the parties.  It shall not be necessary in making proof of
this Agreement or any counterpart hereof to produce or account for any of the
other counterparts.

 

11.11       No Third Party Beneficiaries.  The
provisions of this Agreement are not intended to benefit any third parties.

 

11.12       No Other Terms and Conditions. Service Provider and the Principal acknowledge and agree that any
terms and conditions of any purchase order, sales acknowledgement, or other
document submitted to the other by either party which conflict with the terms
and conditions of this Agreement shall be of no force or effect, and the terms
and conditions hereof control and supersede such conflicting documents and any
course of conduct or usage of the trade inconsistent with any of the terms and
conditions hereof.

 

11.13       Interpretation.  All
section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement. 
Words used herein, regardless of the 

 

13

 

number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and
any other gender, masculine, feminine, or neuter as the context requires.

 

11.14       No Strict Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent and agreement, and no rule of strict construction shall be applied
against any party.

 

11.15       Joint Preparation.  Each party to this Agreement (a) has
participated in the preparation of this Agreement; (b) has read and
understands this Agreement; and (c) has been represented by counsel of its
own choice in the negotiation and preparation of this Agreement.  Each party represents that this Agreement is
executed voluntarily and should not be construed against any party hereto
solely because it drafted all or a portion hereof.

 

11.16       Compliance with
Gaming Laws.  This Agreement is
intended to only authorize and facilitate the Manufacture, Distribution,
Service and Support of the Principal’s Products and is subject to and
conditioned upon all applicable foreign, federal, state and local laws relating
to the Principal’s Products. The Principal shall reimburse the Service Provider
for all costs and expenses and provide any necessary technical support to
comply with any applicable foreign, federal, state and local laws relating to
the Principal’s Products.

 

11.17       Force Majeure.  Service Provider and the Principal agree that
neither party shall have liability for its inability to perform its obligations
under this Agreement to the extent that its ability to perform under this
Agreement is prevented or delayed by any cause beyond its reasonable control,
including, but not limited to, strikes, labor disputes, civil disturbances,
rebellion, invasion, epidemic, hostilities, terrorism, war, embargo, natural
disaster, acts of God, fire, sabotage, loss and destruction of property,
changes in laws, supervening legislation, or other events or situations which
such party was unable to prevent or overcome despite its exercise of reasonable
due diligence.

 

11.18       Survival.  Notwithstanding any expiration or termination
of this Agreement, the provisions of Article X, Sections  3.3,
7.2, 11.1, 11.2, 11.3, 11.6, 11.8, 11.13,
11.14, 11.18 and the last sentence of Section 5.1(c) shall
survive.

 

[Signature Page Follows]

 

14

 

IN WITNESS
WHEREOF, the parties hereto have caused this Service and Support Agreement to
be executed by their respective duly authorized representatives the day and
year first set forth above.

 

	
   

  	
  HAPP CONTROLS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Reginelli

  	
   

  
	
   

  	
  Name:

  	
  David Reginelli

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer/Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VENDINGDATA CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Mark Newburg

  	
   

  
	
   

  	
  Name:

  	
  Mark Newburg

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  	
   

  

 

15

 

Exhibit A

 

Exclusive Territory

 

North America (including Mexico), Europe, South Africa and the Russian
Federation.  Central and South America
will be included pending agreement with SHG’s regional distributor.

 

The Service Provider will work with the Principal to establish a
sub-distribution agreement with mutually agreed distributor for South Africa.

 

Non-Exclusive Territory

 

The Caribbean and Oklahoma

 

16

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