REGISTRATION RIGHTS AGREEMENT
Exhibit
10.18
REGISTRATION
RIGHTS
AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made
as of April 3, 2008, by and between Boo Koo Holdings, Inc, a Delaware
corporation (the "Company"),
and
Holigan Racing, L.P., a Texas limited partnership (the "Investor").
WHEREAS,
the Company and the Investor are parties to that certain Settlement Agreement
of
even date herewith (the "Settlement
Agreement");
WHEREAS,
in connection with the Settlement Agreement, the Company has issued a Senior
Secured Convertible Promissory Note, dated the date hereof (the "Note")
to the
Investor; and
WHEREAS,
in connection with the issuance of the Note, the Company has agreed to grant
certain registration rights with respect to shares of Common Stock of the
Company issuable to the Investor pursuant to the terms of the Note.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, and other good and valuable consideration, the parties hereby agree
as
follows:
1. Definitions.
For
purposes of this Agreement, the following terms shall have the following
respective meanings:
"Affiliate"
means,
with respect to any specified Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with such
Person, including without limitation any general partner, managing member,
officer or director of such Person.
"Common
Stock"
means
shares of the Company's common stock, par value $0.0001 per share.
"Damages"
means
any loss, damage, or liability (joint or several) to which a party hereto may
become subject under the Securities Act, the Exchange Act, or other federal
or
state law, insofar as such loss, damage, or liability (or any action in respect
thereof) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
of
the Company, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) an omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by an indemnifying party (or any of its agents or
Affiliates) pursuant to Section 2.8 hereof of the Securities Act, the Exchange
Act, any state securities law, or any rule or regulation promulgated under
the
Securities Act, the Exchange Act, or any state securities law.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
"Excluded
Registration"
means
(i) a registration relating to the sale of securities to employees of the
Company or a subsidiary pursuant to a stock option, stock purchase, or similar
plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities; or (iv) a registration in
which
the only Common Stock being registered is Common Stock issuable upon conversion
of debt securities that are also being registered.
"Form
S-1"
means
such form under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by
the
SEC.
"Form
S-2"
means
such form under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by
the
SEC.
"Form
S-3"
means
such form under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by the SEC
that
permits incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
"GAAP"
means
generally accepted accounting principles in the United States.
"Holder"
means
any holder of Registrable Securities who is a party to this
Agreement.
"Immediate
Family Member"
means a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or
sister-in-law, including adoptive relationships, of a natural person referred
to
herein.
"Initiating
Holders"
means,
collectively, Holders who properly initiate a registration request under this
Agreement.
"Person"
means
any individual, corporation, partnership, trust, limited liability company,
association or other entity.
"Registrable
Common Stock"
means
(i) shares of issued and outstanding Common Stock that were received upon
conversion of all or any part of the Note and (ii) any shares of Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security that is issued as) a dividend or other distribution
with respect to, or in exchange for, or in replacement of, the shares referenced
in clause (i) above; provided,
however,
that any
such securities shall cease to be Registrable Common Stock when (A) such
securities shall have been registered under the Securities Act and the
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and (B) excluding for purposes of
Section 2 any shares for which registration rights have terminated pursuant
to
Section 2.13 of this Agreement..
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"Registrable
Securities"
means
(i) the Common Stock issuable or issued upon conversion the Note issued by
the
Company to the Investor on the date hereof pursuant to the Settlement Agreement
and (ii) any Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right, or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
shares referenced in clause (i) above; provided,
however,
that any
such securities shall cease to be Registrable Securities when (A) such
securities shall have been registered under the Securities Act and the
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and (B) excluding for purposes of
Section 2 any shares for which registration rights have terminated pursuant
to
Section 2.13 of this Agreement.
"Registrable
Securities then outstanding"
means,
at the time of any determination, the number of shares determined by adding
(i)
the number of shares of outstanding Common Stock that are Registrable
Securities, plus (ii) the number of shares of Common Stock that remain issuable
upon conversion of the Note.
"SEC"
means
the Securities and Exchange Commission.
"SEC
Rule 144"
means
Rule 144 promulgated by the SEC under the Securities Act.
"SEC
Rule 145"
means
Rule 145 promulgated by the SEC under the Securities Act.
"Securities
Act"
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
"Selling
Expenses"
means
all underwriting discounts, selling commissions, and stock transfer taxes
applicable to the sale of Registrable Securities, and fees and disbursements
of
counsel for any Holder, except for the fees and disbursements of the Selling
Holder Counsel borne and paid by the Company as provided in Section
2.6.
2. Registration
Rights.
The
Company covenants and agrees as follows:
2.1 Demand
Registration.
(a) If,
at
any time after the date of this Agreement, the Company receives a request from
Holders holding greater than fifty percent (50%) of the Registrable Securities
then outstanding that the Company file a registration statement to
register shares of Registrable Common Stock,
then
the Company shall (i) within ten (10) days after the date such request is given,
give notice thereof (the "Demand
Notice")
to all
Holders, other than the Initiating Holders; and (ii) as soon as practicable,
and
in any event within sixty (60) days after the date such request is given by
the
Initiating Holders, file a registration statement under the Securities Act
covering all Registrable Securities that the Initiating Holders requested to
be
registered and any additional Registrable Securities requested to be included
in
such registration by any other Holders, as specified by notice given by each
such Holder to the Company within twenty (20) days of the date the Demand Notice
is given, and in each case, subject to the limitations of Section 2.1(c) and
Section 2.3.
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(b) Notwithstanding
the foregoing obligations, if the Company furnishes to Holders requesting a
registration pursuant to this Section 2.1 a certificate signed by the Company's
chief executive officer stating that in the good faith judgment of the Company's
Board of Directors it would be materially detrimental to the Company and its
stockholders for such registration statement to either become effective or
remain effective for as long as such registration statement otherwise would
be
required to remain effective, because such action would (i) materially interfere
with a significant acquisition, corporate reorganization, or other similar
transaction involving the Company; (ii) require premature disclosure of material
information that the Company has a bona fide business purpose for preserving
as
confidential; or (iii) render the Company unable to comply with requirements
under the Securities Act or Exchange Act, then the Company shall have the right
to defer taking action with respect to such filing, and any time periods with
respect to filing or effectiveness thereof shall be tolled correspondingly,
for
a period of not more than thirty (30) days after the request of the Initiating
Holders is given; provided,
however,
that the
Company may not invoke this right more than once in any twelve (12) month
period; and, provided further, that the Company shall not register any
securities for its own account or that of any other stockholder during such
thirty (30) day period other than an Excluded Registration.
(c) The
Company shall not be obligated to effect, or to take any action to effect,
any
registration pursuant to Section 2.1(a): (i) during the period that is sixty
(60) days before the Company's good faith estimate of the date of filing of,
and
ending on a date that is one hundred eighty (180) days after the effective
date
of, a Company-initiated registration, provided, that the Company is actively
employing in good faith commercially reasonable efforts to cause such
registration statement to become effective; or (ii) after the Company has
effected one registration pursuant to Section 2.1(a). A registration shall
not
be counted as "effected" for purposes of this Section 2.1(c) until such time
as
the applicable registration statement has been declared effective by the SEC,
unless the Initiating Holders withdraw their request for such registration,
elect not to pay the registration expenses therefor, and forfeit their right
to
one demand registration statement pursuant to Section 2.6, in which case such
withdrawn registration statement shall be counted as "effected" for purposes
of
this Section 2.1(c).
2.2 "Piggyback"
Registration.
If the
Company proposes to register (including, for this purpose, a registration
effected by the Company for stockholders other than the Holders) any of its
securities under the Securities Act in connection with the public offering
of
such securities solely for cash (other than in an Excluded Registration), the
Company shall, at such time, promptly give each Holder notice of such
registration. Upon the request of each Holder given within twenty (20) days
after such notice is given by the Company, the Company shall, subject to the
provisions of Section 2.3, cause to be registered all Registrable Common Stock
that
each
such
Holder has requested to be included in such registration. The Company shall
have
the right to terminate or withdraw any registration initiated by it under this
Section 2.2 before the effective date of such registration, whether or not
any
Holder has elected to include Registrable Securities in such registration.
The
expenses (other than Selling Expenses) of such withdrawn registration shall
be
borne by the Company in accordance with Section 2.6.
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2.3 Underwriting
Requirements.
(a) If,
pursuant to Section 2.1, the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwritten
offering, they shall so advise the Company as a part of their request made
pursuant to Section 2.1, and the Company shall include such information in
the
Demand Notice. The underwriter(s) will be selected by the Initiating Holders,
subject only to the reasonable approval of the Company. In such event, the
right
of any Holder to include such Holder's Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company
as
provided in Section 2.4(e)) enter into an underwriting agreement in customary
form with the underwriter(s) selected for such underwriting. Notwithstanding
any
other provision of this Section 2.3, if the managing underwriter(s) advise(s)
the Initiating Holders in writing that marketing factors require a limitation
on
the number of shares to be underwritten, then the Initiating Holders shall
so
advise all Holders of Registrable Securities that otherwise would be
underwritten pursuant hereto, and the number of Registrable Securities that
may
be included in the underwriting shall be allocated among such Holders of
Registrable Securities, including the Initiating Holders, in proportion (as
nearly as practicable) to the number of Registrable Securities owned by each
Holder or in such other proportion as shall mutually be agreed to by all such
selling Holders; provided,
however,
that the
number of Registrable Securities held by the Holders to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100
shares.
(b) In
connection with any offering involving an underwriting of shares of the
Company's capital stock pursuant to Section 2.2, the Company shall not be
required to include any of the Holders' Registrable Securities in such
underwriting unless the Holders accept the terms of the underwriting as agreed
upon between the Company and its underwriters, and then only in such quantity
as
the underwriters in their sole discretion determine will not jeopardize the
success of the offering by the Company. If the total number of securities,
including Registrable Securities, requested by stockholders to be included
in
such offering exceeds the number of securities to be sold (other than by the
Company) that the underwriters in their reasonable discretion determine is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters and the Company in their sole
discretion determine will not jeopardize the success of the offering. If the
underwriters determine that less than all of the Registrable Securities
requested to be registered can be included in such offering, then the
Registrable Securities that are included in such offering shall be allocated
among the selling Holders in proportion (as nearly as practicable) to) the
number of Registrable Securities owned by each selling Holder or in such other
proportions as shall mutually be agreed to by all such selling Holders. To
facilitate the allocation of shares in accordance with the above provisions,
the
Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares. Notwithstanding the foregoing, in no event
shall the number of Registrable Securities included in the offering be reduced
unless all other securities (other than securities to be sold by the Company)
are first entirely excluded from the offering; provided,
however, that
if
the Company pays to Investor 25% of the proceeds from a Capital Transaction
(as
such term is defined in the Note) as a prepayment on the Note, the Registrable
Securities may be reduced to permit registration of securities pursuant to
registration rights granted by the Company in connection with such Capital
Transaction.. For purposes of the provision in this Section 2.3(b) concerning
apportionment, for any selling Holder that is a partnership, limited liability
company, or corporation, the partners, members, retired partners, retired
members, stockholders, and Affiliates of such Holder, or the estates and
Immediate Family Members of any such partners, retired partners, members, and
retired members and any trusts for the benefit of any of the foregoing Persons,
shall be deemed to be a single "selling Holder," and any pro rata reduction
with
respect to such "selling Holder" shall be based upon the aggregate number of
Registrable Securities owned by all Persons included in such "selling Holder,"
as defined in this sentence.
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(c) For
purposes of Section 2.1, a registration shall not be counted as "effected"
if,
as a result of an exercise of the underwriter's cutback provisions in Section
2.3(a), fewer than fifty percent (50%) of the total number of Registrable
Securities that Holders have requested to be included in such registration
statement are actually included.
2.4 Obligations
of the Company.
Whenever required under this Section 2 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
registration statement to become effective (including, without limitation,
by
responding to comments from the SEC to the registration statement, and, if,
required by the SEC staff, by reducing the number of Registrable Shares to
be
registered) and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement
effective for a period of up to one hundred twenty (120) days or, if earlier,
until the distribution contemplated in the registration statement has been
completed; provided,
however,
that (i)
such one hundred twenty (120) day period shall be extended for a period of
time
equal to the period the Holder refrains, at the request of an underwriter of
Common Stock (or other securities) of the Company, from selling any securities
included in such registration;
(b) prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the Securities Act in order to
enable the disposition of all securities covered by such registration
statement;
(c) furnish
to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Holders may reasonably request in order to facilitate their
disposition of their Registrable Securities;
(d) use
its
commercially reasonable efforts to register and qualify the securities covered
by such registration statement under such other securities or blue-sky laws
of
such jurisdictions as shall be reasonably requested by the selling Holders;
provided that the Company shall not be required to qualify to do business or
to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
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(e) in
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the underwriter(s) of such offering;
(f) use
its
commercially reasonable efforts to cause all such Registrable Securities covered
by such registration statement to be listed on a national securities exchange
or
trading system and each securities exchange and trading system (if any) on
which
similar securities issued by the Company are then listed;
(g) provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration;
(h) promptly
make available for inspection by the selling Holders, any managing
underwriter(s) participating in any disposition pursuant to such registration
statement, and any attorney or accountant or other agent retained by any such
underwriter or selected by the selling Holders, all financial and other records,
pertinent corporate documents, and properties of the Company, and cause the
Company's officers, directors, employees, and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant, or agent, in each case, as necessary or advisable to verify the
accuracy of the information in such registration statement and to conduct
appropriate due diligence in connection therewith; provided,
however,
the
Company shall not disclose material non-public information to the Holders or
to
any such advisor or representative of the Holders, unless prior to disclosure
of
such information the Company identifies such information as being material
non-public information and provides the Holders, such advisors and
representatives with the opportunity to accept or refuse to accept such material
non-public information for review;
(i) notify
each selling Holder, promptly after the Company receives notice thereof, of
the
time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement
has
been filed; and
(j) after
such registration statement becomes effective, notify each selling Holder of
any
request by the SEC that the Company amend or supplement such registration
statement or prospectus.
2.5 Obligation
of Holders.
(a) It
shall
be a condition precedent to the obligations of the Company to take any action
pursuant to this Section 2 with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as is reasonably required to effect the
registration of such Holder's Registrable Securities.
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(b) Each
Holder agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of a registration
statement hereunder, unless the Holder has notified the Company of its election
to exclude all of its Registrable Securities from such registration
statement.
(c) The
Holders agree that, upon receipt of any notice from the Company of the happening
of any event rendering a registration statement no longer effective, the Holders
will immediately discontinue disposition of Registrable Securities pursuant
to
the registration statement covering such Registrable Securities, until the
Holder's receipt of copies of the supplemented or amended prospectus filed
with
the SEC and declared effective and, if so directed by the Company, the Holders
shall deliver to the company or destroy (and deliver to the Company a
certificate of destruction) all copies in the Holder's possession of the
prospectus covering the Registrable Securities current at the time of receipt
of
such notice.
2.6 Expenses
of Registration.
All
expenses (other than Selling Expenses) incurred in connection with
registrations, filings, or qualifications pursuant to Section 2, including
all
registration, filing, and qualification fees; printers' and accounting fees;
fees and disbursements of counsel for the Company; and the reasonable fees
and
disbursements of one counsel for the selling Holders ("Selling
Holder Counsel"),
shall
be borne and paid by the Company; provided,
however,
that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.1 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all selling Holders
shall
bear such expenses pro rata based upon the number of Registrable Securities
that
were to be included in the withdrawn registration), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
registration pursuant to Section 2.1(a); and, provided
further,
that, if
at the time of such withdrawal, the Holders shall have learned of a material
adverse change in the condition, business, or prospects of the Company from
that
known to the Holders at the time of their request and have withdrawn the request
with reasonable promptness after learning of such information, then the Holders
shall not be required to pay any of such expenses and shall not forfeit their
right to one registration pursuant to Section 2.1(a). All Selling Expenses
relating to Registrable Securities registered pursuant to this Section 2 shall
be borne and paid by the Holders pro rata on the basis of the number of
Registrable Securities registered on their behalf.
2.7 Delay
of Registration.
No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any registration pursuant to this Agreement as the result
of
any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.8 Indemnification.
If any
Registrable Securities are included in a registration statement under this
Section 2:
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(a) To
the
extent permitted by law, the Company will indemnify and hold harmless each
selling Holder, and the partners, members, officers, directors, and stockholders
of each such Holder; legal counsel and accountants for each such Holder; any
underwriter (as defined in the Securities Act) for each such Holder; and each
Person, if any, who controls such Holder or underwriter within the meaning
of
the Securities Act or the Exchange Act, against any Damages, and the Company
will pay to each such Holder, underwriter, controlling Person, or other
aforementioned Person any legal or other expenses reasonably incurred thereby
in
connection with investigating or defending any claim or proceeding from which
Damages may result, as such expenses are incurred; provided,
however,
that the
indemnity agreement contained in this Section 2.8(a) shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable for any Damages to the
extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of any such Holder, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such registration;
provided, further, that the Company shall not be liable in any such case to
the
extent such Damages arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission in a registration
statement or prospectus, if such untrue statement or alleged untrue statement
or
omission or alleged omission is completely corrected in an amendment or
supplement to the registration statement or prospectus and has been made
available to the seller of the Registrable Securities pursuant to the terms
hereof and the seller of Registrable Securities thereafter fails to deliver
such
prospectus as so amended or supplemented prior to or concurrently with the
sale
of Registrable Securities to the person asserting such Damages.
(b) To
the
extent permitted by law, each selling Holder, severally and not jointly, will
indemnify and hold harmless the Company, and each of its directors, each of
its
officers who has signed the registration statement, each Person (if any), who
controls the Company within the meaning of the Securities Act, legal counsel
and
accountants for the Company, any underwriter (as defined in the Securities
Act),
any other Holder selling securities in such registration statement, and any
controlling Person of any such underwriter or other Holder, against any Damages,
in each case only to the extent that such Damages arise out of or are based
upon
actions or omissions made in reliance upon and in conformity with written
information furnished by or on behalf of such selling Holder expressly for
use
in connection with such registration; and each such selling Holder will pay
to
the Company and each other aforementioned Person any legal or other expenses
reasonably incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such expenses are
incurred; provided,
however,
that the
indemnity agreement contained in this Section 2.8(b) shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided further that in no event shall the aggregate
amounts payable by any Holder by way of indemnity or contribution under Sections
2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder
(net of any Selling Expenses paid by such Holder), except in the case of fraud
or willful misconduct by such Holder.
(c) Promptly
after receipt by an indemnified party under this Section 2.8 of notice of the
commencement of any action (including any governmental action) for which a
party
may be entitled to indemnification hereunder, such indemnified party will,
if a
claim in respect thereof is to be made against any indemnifying party under
this
Section 2.8, give the indemnifying party notice of the commencement thereof.
The
indemnifying party shall have the right to participate in such action and,
to
the extent the indemnifying party so desires, participate jointly with any
other
indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided,
however,
that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain
one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such action. The failure to give notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Section 2.8, to the extent that such failure materially
prejudices the indemnifying party's ability to defend such action. The failure
to give notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
2.8.
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(d) To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either (i) any party otherwise entitled
to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment
or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not
be
enforced in such case, notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities
Act
may be required on the part of any party hereto for which indemnification is
provided under this Section 2.8, then, and in each such case, such parties
will
contribute to the aggregate losses, claims, damages, liabilities, or expenses
to
which they may be subject (after contribution from others) in such proportion
as
is appropriate to reflect the relative fault of each of the indemnifying party
and the indemnified party in connection with the statements, omissions, or
other
actions that resulted in such loss, claim, damage, liability, or expense, as
well as to reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact, or the omission or alleged omission of a material
fact, relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission;
provided,
however,
that, in
any such case, (x) no Holder will be required to contribute any amount in excess
of the public offering price of all such Registrable Securities offered and
sold
by such Holder pursuant to such registration statement, and (y) no Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation; and provided further that in no
event shall a Holder's liability pursuant to this Section 2.8(d), when combined
with the amounts paid or payable by such Holder pursuant to Section 2.8(b),
exceed the proceeds from the offering received by such Holder (net of any
Selling Expenses) paid by such Holder), except in the case of willful misconduct
or fraud by such Holder.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
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(f) Unless
otherwise superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the Company and
Holders under this Section 2.8 shall survive the completion of any offering
of
Registrable Securities in a registration under this Section 2, and otherwise
shall survive the termination of this Agreement.
2.9 Reports
Under Exchange Act.
With a
view to making available to the Holders the benefits of SEC Rule 144 and any
other rule or regulation of the SEC that may at any time permit a Holder to
sell
securities of the Company to the public without registration, the Company
shall:
(a) make
and
keep available adequate current public information, as those terms are
understood and defined in SEC Rule 144, at all times after the date of this
Agreement;
(b) use
commercially reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and
the Exchange Act (at any time after the Company has become subject to such
reporting requirements); and
(c) furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) to the extent accurate, a written statement by the Company
that
it has complied with the reporting requirements of SEC Rule 144, the Securities
Act, and the Exchange Act (at any time after the Company has become subject
to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after the
Company so qualifies); (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company;
and
(iii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC that permits the selling of any
such
securities without registration (at any time after the Company has become
subject to the reporting requirements under the Exchange Act) or pursuant to
Form S-3 (at any time after the Company so qualifies to use such
form).
2.10 Removal
of Legends and Delivery of Certificates.
The
Company shall instruct its transfer agent to remove any legends from shares
of
Common Stock eligible to be sold under Rule 144 of the Securities Act and to
issue such unlegended certificates to any Holder within three (3) business
days
following such Holder's request so long as the Holder has provided reasonable
assurances to the Company, and based thereon the Company has determined, that
such shares of Common Stock can be sold pursuant to Rule 144.
2.11 Limitations
on Subsequent Registration Rights.
From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities
then
outstanding, enter into any agreement with any holder or prospective holder
of
any securities of the Company that would (i) allow such holder or prospective
holder to include such securities in any registration unless, under the terms
of
such agreement, such holder or prospective holder may include such securities
in
any such registration only to the extent that the inclusion of such securities
will not reduce the number of the Registrable Securities of the Holders that
are
included, or (ii) allow such holder or prospective holder to initiate a demand
for registration of any securities held by such holder or prospective holder;
provided,
however,
that the
limitations set forth in this Section 2.11 shall not apply to registration
rights granted in connection with a Capital Transaction if, in connection with
any such Capital Transaction, the Company pays to Investor 25% of the proceeds
received in such Capital Transaction as a prepayment on the Note.
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2.12 "Market
Stand off" Agreement.
Each
Holder hereby agrees that it will not, without the prior written consent of
the
managing underwriter, during the period commencing on the date of the final
prospectus relating to the registration by the Company for its own behalf of
shares of its Common Stock or any other equity securities under the Securities
Act on a registration statement on Form X-0, Xxxx X-0, or Form S-3, and ending
on the date specified by the Company and the managing underwriter (such period
not to exceed ninety (90) days, which period may be extended upon the request
of
the managing underwriter, to the extent required by any Financial Industry
Regulatory Authority ("FINRA")
rules,
for an additional period of up to fifteen (15) days if the Company issues or
proposes to issue an earnings or other public release within fifteen (15) days
of the expiration of the 90-day lockup period), (i) lend; offer; pledge; sell;
contract to sell; sell any option or contract to purchase; purchase any option
or contract to sell; grant any option, right, or warrant to purchase; or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable
(directly or indirectly) for Common Stock held immediately before the effective
date of the registration statement for such offering or (ii) enter into any
swap
or other arrangement that transfers to another, in whole or in part, any of
the
economic consequences of ownership of such securities, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash, or otherwise. The foregoing
provisions of this Section 2.11 shall not apply to the sale of any shares to
an
underwriter pursuant to an underwriting agreement, and shall be applicable
to
the Holders only if all officers and directors are subject to the same
restrictions and the Company uses commercially reasonable efforts to obtain
a
similar agreement from all stockholders individually owning more than one
percent (1%) of the Company's outstanding Common Stock. The underwriters in
connection with such registration are intended third party beneficiaries of
this
Section 2.11 and shall have the right, power, and authority to enforce the
provisions hereof as though they were a party hereto. Each Holder further agrees
to execute such agreements as may be reasonably requested by the underwriters
in
connection with such registration that are consistent with this Section 2.11
or
that are necessary to give further effect thereto. Any discretionary waiver
or
termination of the restrictions of any or all of such agreements by the Company
or the underwriters shall apply pro rata to all Holders subject to such
agreements, based on the number of shares subject to such
agreements.
2.13 Termination
of Registration Rights.
The
right of any Holder to request registration or inclusion of Registrable
Securities in any registration pursuant to Section 2.1 or Section 2.2 shall
terminate upon the earliest to occur of:
(a) when
all
of such Holder's Registrable Securities could be sold without restriction under
SEC Rule 144; provided,
however,
that
this Agreement shall be reinstated and remain in full force and effect at any
time before the sixth anniversary of this Agreement when the Holder's
Registrable Securities cannot be sold without restriction under SEC
Rule 144; and
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(b) the
fifth
anniversary of the date of this Agreement.
3. Miscellaneous.
3.1 Successors
and Assigns.
The
rights under this Agreement may be assigned (but only with all related
obligations and upon written notice to the Company) by a Holder to a transferee
of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a
Holder's Immediate Family Member or trust for the benefit of an individual
Holder or one or more of such Holder's Immediate Family Members; or (iii) after
such transfer, holds at least 10,000 shares of Registrable Securities (subject
to appropriate adjustment for stock splits, stock dividends, combinations,
and
other recapitalizations). For the purposes of determining the number of shares
of Registrable Securities held by a transferee, the holdings of a transferee
(1)
that is an Affiliate or stockholder of a Holder; (2) who is a Holder's Immediate
Family Member; or (3) that is a trust for the benefit of an individual Holder
or
such Holder's Immediate Family Member shall be aggregated together and with
those of the transferring Holder; provided further that all transferees who
would not qualify individually for assignment of rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices,
or
taking any action under this Agreement. The terms and conditions of this
Agreement inure to the benefit of and are binding upon the respective successors
and permitted assignees of the parties. Nothing in this Agreement, express
or
implied, is intended to confer upon any party other than the parties hereto
or
their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
3.2 Governing
Law.
This
Agreement and any controversy arising out of or relating to this Agreement
shall
be governed by and construed in accordance with the General Corporation Law
of
the State of Delaware as to matters within the scope thereof, and as to all
other matters shall be governed by and construed in accordance with the internal
laws of State of Texas, without regard to conflict of law principles that would
result in the application of any law other than the law of the State of
Texas.
3.3 Counterparts;
Facsimile.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed and delivered by facsimile
signature and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
3.4 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are for convenience only and are
not
to be considered in construing or interpreting this Agreement.
3.5 Notices.
All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given upon the earlier of actual
receipt or: (i) personal delivery to the party to be notified; (ii) when sent,
if sent by electronic mail or facsimile during the recipient's normal business
hours, and if not sent during normal business hours, then on the recipient's
next business day; (iii) five (5) days after having been sent by registered
or
certified mail, return receipt requested, postage prepaid; or (iv) one (1)
business day after the business day of deposit with a nationally recognized
overnight courier, freight prepaid, specifying next-day delivery, with written
verification of receipt. All communications shall be sent to the respective
parties at their addresses as set forth on Schedule A hereto, or to the
principal office of the Company and to the attention of the Chief Executive
Officer, in the case of the Company, or to such email address, facsimile number,
or address as subsequently modified by written notice given in accordance with
this Section 3.5.
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3.6 Amendments
and Waivers.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) only with the written consent of the
Company and the holders of a majority of the Registrable Securities then
outstanding. No waivers of or exceptions to any term, condition, or provision
of
this Agreement, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such term, condition, or
provision.
3.7 Severability.
In case
any one or more of the provisions contained in this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Agreement, and such invalid, illegal, or unenforceable provision shall be
reformed and construed so that it will be valid, legal, and enforceable to
the
maximum extent permitted by law.
3.8 Aggregation
of Stock.
All
shares of Registrable Securities held or acquired by Affiliates shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement and such Affiliated persons may apportion such
rights as among themselves in any manner they deem appropriate.
3.9 Entire
Agreement.
This
Agreement (including any Schedules and Exhibits hereto) constitutes the full
and
entire understanding and agreement among the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties is expressly canceled.
3.10 Delays
or Omissions.
No
delay or omission to exercise any right, power, or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power, or remedy of such nonbreaching
or
nondefaulting party, nor shall it be construed to be a waiver of or acquiescence
to any such breach or default, or to any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
All
remedies, whether under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
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Name:__________________________________________________
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Title:_________________________________________________________
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HOLIGAN
RACING, L.P.
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By:__________________________________________________________
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Name:__________________________________________________
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Title:_________________________________________________________
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