Contract
Exhibit
10.16
Execution
Copy
THIS
NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
IN
THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN OPINION
OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE
COMPANY THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY
BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
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Date:
April 3, 2008
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$1,400,000.00
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For
value
received, BOO KOO HOLDINGS, INC., a Delaware corporation (the "Maker"
or the
"Company"),
hereby
promises to pay to the order of HOLIGAN RACING, L.P., a Texas limited
partnership (together with its successors and permitted assigns, the
"Holder"),
in
accordance with the terms hereinafter provided, the principal amount of
ONE
MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO/100 ($1,400,000.00).
The
Maker is issuing this senior secured convertible promissory note (this
"Note")
to the
Holder pursuant to the Settlement Agreement and Release (the "Settlement
Agreement")
of even
date herewith among, Maker, Boo Koo Beverages, Inc., a Delaware corporation
and
wholly owned subsidiary of Maker ("Beverages"),
and
Holder. As used herein, the term "Issuance
Date"
means
April 3, 2008.
All
payments under or pursuant to this Note shall be made in United States Dollars
in immediately available funds to the Holder at the address of the Holder as
set
forth in the Security Agreement (as defined below), or at such other place
as
the Holder may designate from time to time in writing to the Maker, or by wire
transfer of funds to the Holder's account, instructions for which are attached
hereto as Exhibit A, or in Common Stock (as defined below) pursuant to
Section
1.3
hereof.
The outstanding principal balance of this Note shall be due and payable on
March
31, 2010 (the "Maturity
Date")
or at
such earlier time as provided herein.
This
Note
is secured by a Guarantee and Security Agreement dated the date hereof (the
"Security
Agreement")
by and
among Maker and Holder in favor of the Holder covering certain collateral (the
"Collateral"),
all as
more particularly described and provided therein, and is entitled to the
benefits thereof. The Security Agreement, the Uniform Commercial Code financing
statements on form UCC-1 filed in connection with the Security Agreement and
any
and all other documents executed and delivered by the Maker to the Holder under
which the Holder is granted liens on assets of the Maker are collectively
referred to as the "Security
Documents."
ARTICLE
I
THE
NOTE
Section
1.1 Payment
of Principal.
The
outstanding principal balance of this Note shall be paid in eight (8) equal
quarterly installments payments of $175,000.00 each (each an "Installment
Payment").
Installment Payments shall be due and payable on June 30, 2008,
September 30, 2008, December 31, 2008, March 31, 2009,
June 30, 2009, September 30, 2009, December 31, 2009, and
March 31, 2010 (each such date a "Payment
Date").
The
Maker may prepay all or a portion of the principal amount (and accrued interest,
if any) of this Note at any time and from time to time without penalty. Any
partial prepayment shall be applied to the Installment Payments in inverse
order
of maturity.
Section
1.2 Mandatory
Prepayments.
Upon
the sale of any material assets other than in the ordinary course of business
by
the Maker, Beverages, or any other subsidiary of Maker, or any combination
thereof, or upon the sale by Maker, Beverages, or any other subsidiary of Maker,
or any combination thereof, of any equity security (each, a "Capital
Transaction"),
the
Maker shall, promptly with the receipt by the Maker, Beverages, or any other
subsidiary of Maker, or any combination thereof, of the cash proceeds from
any
such Capital Transaction, pay to the Holder an amount equal to 25% of the gross
cash proceeds received from such Capital Transaction Any
payment made by the Maker pursuant to this Section
1.2
shall be
applied to the Installment Payments in their inverse order of
maturity.
Section
1.3 Cash
or Stock.
At the
option of the Holder, Installment Payments or prepayments of principal may
be
paid in cash or shares of Common Stock, par value $0.0001 per share (the
"Common
Stock"),
of the
Maker. If Holder elects to receive an Installment Payment on a Payment Date
in
shares of Common Stock, the Holder must deliver notice of such election five
(5)
business day prior to such Payment Date. The number of shares of Common Stock
to
be issued to the Holder on such Payment Date shall equal to the result obtained
by dividing (x) the $175,000.00 by (y) the Conversion Price (as defined in
Section
3.2(a) below).
Section
1.4 Interest.
If no
Event of Default (as defined in Section 2.1 hereof) shall have occurred, the
outstanding principal balance of this Note shall not bear interest. However,
upon the occurrence of an Event of Default, the Maker shall pay interest in
cash
to the Holder, payable on demand, on the outstanding principal balance of this
Note from the date of the Event of Default through the Maturity Date at the
rate
of sixteen percent (16%) per annum. Interest shall be computed on the basis
of a
360-day year of twelve (12) 30-day months and shall accrue from the date of
occurrence of an Event of Default (including any cure period set forth
herein).
Section
1.5 Ranking
and Covenants.
(a) Except
as
set forth on Schedule 1 attached hereto, no indebtedness of the Maker or
Beverages or any other subsidiary of Maker is senior to this Note in right
of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. Until this Note is fully paid and discharged in full,
the Maker shall not, and shall not permit Beverages or any other subsidiary
of
Maker to, directly or indirectly, incur any indebtedness for borrowed money
(excluding accounts payable incurred in the ordinary course of business) unless
such indebtedness is expressly subordinated to this Note pursuant to a written
subordination agreement acceptable in form, scope and substance to the Holder
in
its sole and absolute discretion.
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(b) Except
for Permitted Liens (as defined in Section
4.11 below),
until
this Note is fully paid and discharged in full, the Maker shall not, and shall
not permit Beverages or any other subsidiary of Maker to, directly or
indirectly, incur any Lien (as defined in Section 4.11
below)
on or
with respect to any of the Collateral now owned or hereafter acquired, or any
interest therein or any income or profits therefrom, without the prior written
consent of the Holder.
(c) Until
this Note is fully paid and discharged in full, Maker shall not, and shall
not
permit Beverages or any other subsidiary of Maker to, directly or indirectly,
without the prior written consent of the Holder, redeem, purchase or otherwise
acquire any of the Company's capital stock or set aside any monies for such
a
redemption, purchase or other acquisition.
(d) The
Maker
shall perform any and all acts and execute any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statement and continuation statement) for filing under the provisions of the
Uniform Commercial Code (the "UCC"),
and
the rules and regulations thereunder, or any other statute, rule or regulation
of any applicable jurisdiction which are necessary at the request of the Holder
or its counsel in order to maintain in favor of the Holder of the Note, a valid
and perfected lien on and security interest in the Collateral.
Section
1.6 Payment
on Non-Business Days.
Whenever any payment to be made shall be due on a Saturday, Sunday or a public
holiday under the laws of the State of Texas, such payment may be due on the
next succeeding business day and such next succeeding day shall be included
in
the calculation of the amount of accrued interest payable, if any, on such
date.
Section
1.7 This
Note
may not be sold, transferred or otherwise disposed of by the Holder to any
Person without the express written consent of the Company, which consent shall
not be unreasonably withheld.
Section
1.8 Replacement.
Upon
receipt of a duly executed and notarized written statement from the Holder
with
respect to the loss, theft or destruction of this Note (or any replacement
hereof) and a standard indemnity reasonably satisfactory to the Maker, or,
in
the case of a mutilation of this Note, upon surrender and cancellation of such
Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of
such lost, stolen, destroyed or mutilated Note.
The
Holder hereby unconditionally agrees to indemnify and hold harmless the Maker
against any claims, loss, liabilities, damages and expenses that may arise
directly or indirectly on account of the actual or alleged loss, mutilation,
theft or destruction of the original Note or the issuance of a new Note in
exchange for said Note.
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ARTICLE
II
EVENTS
OF DEFAULT; REMEDIES
Section
2.1 Events
of Default.
The
occurrence of any of the following events shall be an "Event
of Default"
under
this Note:
(a) the
Maker
shall fail to make any Installment Payment on the date such Installment Payment
is due, and such default is not fully cured within five (5) business days after
the occurrence thereof; or
(b) the
Company's notice to the Holder, including by way of public announcement, at
any
time, of its inability to comply or its intention not to comply with proper
requests for conversion of this Note into shares of Common Stock;
or
(c) the
Maker
shall fail to timely deliver the shares of Common Stock upon conversion of
the
Note in accordance with ARTICLE
III
hereof;
or
(d) default
shall be made in the performance or observance of (i) any covenant, condition
or
agreement contained in this Note and such default is not fully cured within
ten
(10) business days after the Holder delivers written notice to the Maker of
the
occurrence thereof or (ii) any covenant, condition or agreement contained in
the
Security Documents, the Registration Rights Agreement of even date herewith
between Maker and Holder (the "Registration
Rights Agreement"),
or any
other transaction document which is not covered by any other provisions of
this
Section 2.1 and such default is not fully cured within ten (10) business days
after the Holder delivers written notice to the Maker of the occurrence thereof;
or
(e) any
material representation or warranty made by either of the Maker herein or in
the
Security Documents, the Registration Rights Agreement, or any other transaction
document shall prove to have been false or incorrect or breached in a material
respect on the date as of which made and the Holder delivers written notice
to
the Maker of the occurrence thereof; or
(f) the
Maker
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of
all
or a substantial part of its property or assets, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors'
rights generally, (v) acquiesce in writing to any petition filed against it
in
an involuntary case under United States Bankruptcy Code (as now or hereafter
in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
or (vi) issue a notice of bankruptcy or winding down of its operations or issue
a press release regarding same; or
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(g) a
proceeding or case shall be commenced in respect of the Maker, without its
application or consent, in any court of competent jurisdiction, seeking (i)
the
liquidation, reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of
its
assets in connection with its liquidation or dissolution or (iii) similar relief
in respect of it under any law providing for the relief of debtors, and such
proceeding or case described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of thirty (30) days or
any
order for relief shall be entered in an involuntary case under United States
Bankruptcy Code (as now or hereafter in effect) or under the comparable laws
of
any jurisdiction (foreign or domestic) against either of the Maker or action
under the laws of any jurisdiction (foreign or domestic) analogous to any of
the
foregoing shall be taken with respect to either of the Maker and shall continue
undismissed, or unstayed and in effect for a period of thirty (30)
days.
Section
2.2 Remedies
Upon An Event of Default.
If an
Event of Default shall have occurred and shall be continuing, the Holder of
this
Note may at any time at its option,
(a) declare
the entire unpaid principal balance of this Note, together with all interest,
if
any, accrued hereon, due and payable, and thereupon, the same shall be
accelerated and so due and payable, without presentment, demand, protest, or
notice, all of which are hereby expressly unconditionally and irrevocably waived
by the Maker; provided,
however, that
upon
the occurrence of an Event of Default described in paragraphs (f)
and
(g)
of
Section
2.1,
the
outstanding principal balance and accrued interest hereunder shall be
automatically due and payable; or
(b) demand
that the principal amount of this Note then outstanding shall be converted
into
shares of Common Stock at the Conversion Price (as defined in Section
3.2(a) below)
then in
effect; or
(c) exercise
or otherwise enforce any one or more of the Holder's rights, powers, privileges,
remedies and interests under this Note, the Security Agreement, or applicable
law.
In
connection with the Holder's exercise of any of its remedies hereunder, the
Maker shall use its commercially reasonable efforts to cooperate with the Holder
to the end that the Holder's rights hereunder will be effectuated.
ARTICLE
III
CONVERSION;
ANTIDILUTION
Section
3.1 Conversion.
At any
time on or after the Issuance Date, this Note shall be convertible (in whole
or
in part), at the option of the Holder (the "Optional
Conversion"),
into
such number of fully paid and non-assessable shares of Common Stock (the
"Conversion
Rate")
as is
determined by dividing (x) that portion of the outstanding principal balance
under this Note as of such date that the Holder elects to convert by (y) the
Conversion Price (as defined in Section
3.2(a)
hereof)
then in effect; provided,
however,
that the
Conversion Price shall be subject to adjustment as described in Section
3.4
of this
Note. The Holder shall deliver this Note to the Company simultaneously at such
time that this Note is fully converted. With respect to partial conversions
of
this Note, the Company shall keep and attach hereto written records of the
amount of this Note converted as of each Conversion Date.
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Section
3.2 Conversion
Price.
(a) The
term
"Conversion
Price"
shall
mean $0.75, subject to adjustment under Section
3.4
hereof.
References herein to the Conversion Price mean the Conversion Price as from
time
to time adjusted pursuant to the provisions of Section
3.4
and in
effect on the applicable date.
(b) The
term
"Conversion
Shares"
shall
mean such shares of Common Stock issuable upon Conversion of this
Note.
Section
3.3 Mechanics
of Conversion.
The
Holder shall give the Company five (5) business days' prior written notice
(the
"Optional
Conversion Notice")
of each
Optional Conversion. The date on which each conversion is effected is herein
referred to as a "Conversion
Date."
Not
later than five (5) Trading Days after each Conversion Date (the last day of
each such period, a "Delivery
Date"),
the
Company or its designated transfer agent, as applicable, shall issue and deliver
to the Depository Trust Company ("DTC")
account
on the Holder's behalf via the Deposit Withdrawal Agent Commission System
("DWAC")
as
specified in the Optional Conversion Notice, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled. Notwithstanding the foregoing, in the alternative,
not
later than the Delivery Date, the Company shall deliver to the applicable Holder
by express courier a certificate or certificates representing the number of
shares of Common Stock being acquired upon the conversion of this Note. If,
in
the case of any Optional Conversion such DWAC transfer or certificate or
certificates are not delivered to or as directed by the applicable Holder by
the
Delivery Date, the Holder shall be entitled by written notice to the Company
at
any time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company shall
immediately return this Note tendered for conversion, whereupon the Company
and
the Holder shall each be restored to their respective positions immediately
prior to the delivery of such notice of revocation.
Section
3.4 Adjustment
of Conversion Price.
(a) The
Conversion Price shall be subject to adjustment from time to time as
follows:
(i) Adjustments
for Stock Splits and Combinations.
If the
Company shall at any time or from time to time after the Issuance Date, effect
a
stock split of the outstanding Common Stock, the applicable Conversion Price
in
effect immediately prior to the stock split shall be proportionately decreased.
If the Company shall at any time or from time to time after the Issuance Date,
combine the outstanding shares of Common Stock, the applicable Conversion Price
in effect immediately prior to the combination shall be proportionately
increased. Any adjustments under this Section
3.4(a)(i)
shall be
effective at the close of business on the date the stock split or combination
occurs.
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(ii) Adjustments
for Certain Dividends and Distributions.
If the
Company shall at any time or from time to time after the Issuance Date make
or
issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in shares of Common
Stock, then, and in each event, the applicable Conversion Price in effect
immediately prior to such event shall be decreased as of the time of such
issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying the applicable Conversion
Price then in effect by a fraction:
(1) the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close
of
business on such record date; and
(2) the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close
of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution.
(iii) Adjustments
for Reclassification, Exchange or Substitution.
If the
Common Stock issuable upon conversion of this Note at any time or from time
to
time after the Issuance Date shall be changed to the same or different number
of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination
of
shares or stock dividends provided for in clauses (i)
and
(ii)
of
Section
3.4(a),
or a
reorganization, merger, consolidation, or sale of assets provided for in
Section
3.4(a)(iv)),
then,
and in each event, an appropriate revision to the Conversion Price shall be
made
and provisions shall be made (by adjustments of the Conversion Price or
otherwise) so that the Holder shall have the right thereafter to convert this
Note into the kind and amount of shares of stock and other securities receivable
upon reclassification, exchange, substitution or other change, by holders of
the
number of shares of Common Stock into which such Note might have been converted
immediately prior to such reclassification, exchange, substitution or other
change, all subject to further adjustment as provided herein.
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(iv) Adjustments
for Reorganization, Merger, Consolidation or Sales of Assets.
If at
any time or from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in clauses
(i)
and
(ii)
of
Section
3.4(a),
or a
reclassification, exchange or substitution provided for in Section
3.4(a)(iii)),
or a
merger or consolidation of the Company with or into another corporation where
the holders of outstanding voting securities of the Company prior to such merger
or consolidation do not own over fifty percent (50%) of the outstanding voting
securities of the merged or consolidated entity, immediately after such merger
or consolidation, or the sale of all or substantially all of the Company's
properties or assets to any other person (an "Organic
Change"),
then
as a part of such Organic Change, (A) if the surviving entity in any such
Organic Change is a public company that is registered pursuant to the Securities
Exchange Act of 1934, as amended, and its common stock is listed or quoted
on a
national exchange or the OTC Bulletin Board, an appropriate revision to the
Conversion Price shall be made and provision shall be made (by adjustments
of
the Conversion Price) so that the Holder shall have the right thereafter to
convert such Note into the kind and amount of shares of stock and other
securities or property of the Company or any successor corporation as it would
have received as a result of such Organic Change if it had converted this Note
into Common Stock immediately prior to such Organic Change, and (B) if the
surviving entity in any such Organic Change is not a public company that is
registered pursuant to the Securities Exchange Act of 1934, as amended, or
its
common stock is not listed or quoted on a national securities exchange or the
OTC Bulletin Board, the Holder shall have the right to demand prepayment. In
any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section
3.4(a)(iv)
with
respect to the rights of the Holder after the Organic Change to the end that
the
provisions of this Section
3.4(a)(iv)
(including any adjustment in the applicable Conversion Price then in effect
and
the number of shares of stock or other securities deliverable upon conversion
of
this Note) shall be applied after that event in as nearly an equivalent manner
as may be practicable.
(b) No
Impairment.
The
Company shall not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith, assist
in the carrying out of all the provisions of this Section
3.4
and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the Holder against impairment. In the event
a
Holder shall elect to convert any Notes as provided herein, the Company cannot
refuse conversion based on any claim that such Holder or any one associated
or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of said Notes shall have issued and the Company posts
a
surety bond for the benefit of such Holder in an amount equal to one hundred
percent (100%) of the amount of the Notes the Holder has elected to convert,
which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the proceeds of which shall be payable to such Holder (as
liquidated damages) in the event it obtains judgment.
(c) Certificates
as to Adjustments.
Upon
occurrence of each adjustment or readjustment of the Conversion Price or number
of shares of Common Stock issuable upon conversion of this Note pursuant to
this
Section
3.4,
the
Company at its expense shall promptly compute such adjustment or readjustment
in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment and readjustment, showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon written
request of the Holder, at any time, furnish or cause to be furnished to the
Holder a like certificate setting forth such adjustments and readjustments,
the
applicable Conversion Price in effect at the time, and the number of shares
of
Common Stock and the amount, if any, of other securities or property which
at
the time would be received upon the conversion of this Note. Notwithstanding
the
foregoing, the Company shall not be obligated to deliver a certificate unless
such certificate would reflect an increase or decrease of at least one percent
(1%) of such adjusted amount.
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(d) Issue
Taxes.
The
Maker shall pay any and all issue and other taxes, excluding federal, state
or
local income taxes, that may be payable in respect of any issue or delivery
of
shares of Common Stock on conversion of this Note pursuant thereto; provided,
however,
that the
Maker shall not be obligated to pay any transfer taxes resulting from any
transfer requested by the Holder in connection with any such
conversion.
(e) Fractional
Shares.
No
fractional shares of Common Stock shall be issued upon conversion of this Note.
In lieu of any fractional shares to which the Holder would otherwise be
entitled, the Maker shall pay in cash any remainder resulting from after the
number of whole shares is determined as a result of any conversion.
(f) Reservation
of Common Stock.
The
Company shall at all times when this Note shall be outstanding, reserve and
keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of this Note. The Company shall, from time to time in accordance
with
Delaware law, increase the authorized number of shares of Common Stock if at
any
time the unissued number of authorized shares shall not be sufficient to satisfy
the Company's obligations under this Section
3.4(f).
(g) Regulatory
Compliance.
If any
shares of Common Stock to be reserved for the purpose of conversion of this
Note
require registration or listing with or approval of any governmental authority,
stock exchange or other regulatory body under any federal or state law or
regulation or otherwise before such shares may be validly issued or delivered
upon conversion, the Company shall, at its sole cost and expense, in good faith
and as expeditiously as possible, endeavor to secure such registration, listing
or approval, as the case may be.
Section
3.5 No
Rights as Stockholder.
Nothing
contained in this Note shall be construed as conferring upon the Holder, prior
to the conversion of this Note, the right to vote or to receive dividends or
to
consent or to receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or of any other
matter, or any other rights as a stockholder of the Company.
ARTICLE
IV
MISCELLANEOUS
Section
4.1 Notices.
(b) Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated in the
Security Agreement (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business
hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to
such
address, or upon actual receipt of such mailing, whichever shall first occur.
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(c) The
Maker
will give written notice to the Holder at least ten (10) days prior to the
date
on which the Company takes a record (x) with respect to any dividend or
distribution upon the Common Stock, (y) with respect to any pro rata
subscription offer to holders of Common Stock or (z) for determining rights
to
vote with respect to any Organic Change, dissolution, liquidation or winding-up
but in no event shall such notice be provided to the Holder prior to such
information being made known to the public. The Maker also will give written
notice to the Holder at least ten (10) days prior to the date on which any
Organic Change, dissolution, liquidation or winding-up will take place but
in no
event shall such notice be provided to the Holder prior to such information
being made known to the public. .
Section
4.2 Governing
Law; Consent to Jurisdiction.
The
parties acknowledge and agree that any claim, controversy, dispute or action
relating in any way to this agreement or the subject matter of this agreement
shall be governed solely by the laws of the State of Texas, without regard
to
any conflict of laws doctrines. The parties irrevocably consent to being served
with legal process issued from the state and federal courts located in Texas
and
irrevocably consent to the exclusive personal jurisdiction of the federal and
state courts situated in the State of Texas. The parties irrevocably waive
any
objections to the personal jurisdiction of these courts. Said courts shall
have
sole and exclusive jurisdiction over any and all claims, controversies, disputes
and actions which in any way relate to this Note or the subject matter of this
agreement. The parties also irrevocably waive any objections that these courts
constitute an oppressive, unfair, or inconvenient forum and agree not to seek
to
change venue on these grounds or any other grounds. Nothing in this Section
4.2
shall affect or limit any right to serve process in any other manner permitted
by law.
Section
4.3 Headings.
Article
and section headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of this Note
for
any other purpose.
Section
4.4 Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief.
The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note, at law or in equity (including, without
limitation, a decree of specific performance and/or other injunctive relief),
no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a Holder's
right to pursue actual damages for any failure by the Maker to comply with
the
terms of this Note. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder hereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Maker (or the
performance thereof). The Maker acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder
and
that the remedy at law for any such breach may be inadequate. Therefore Maker
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available rights and remedies,
at
law or in equity, to seek and obtain such equitable relief, including but not
limited to an injunction restraining any such breach or threatened breach,
without the necessity of showing economic loss and without any bond or other
security being required.
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Section
4.5 Enforcement
Expenses.
The
Maker agrees to pay all reasonable costs and expenses of the Holder incurred
as
a result of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.
Section
4.6 Binding
Effect.
The
obligations of the Maker and the Holder set forth herein shall be binding upon
the successors and assigns of each such party, whether or not such successors
or
assigns are permitted by the terms hereof.
Section
4.7 Amendments.
This
Note may not be modified or amended in any manner except in writing executed
by
the Maker and the Holder.
Section
4.8 Compliance
with Securities Laws.
The
Holder of this Note acknowledges that this Note is being acquired solely for
the
Holder's own account and not as a nominee for any other party, and for
investment and not with a view to the distribution hereof. This Note and any
Note issued in substitution or replacement therefor shall be stamped or
imprinted with a legend in substantially the following form:
"THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN
THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN OPINION
OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE
COMPANY THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY
BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS."
Section
4.9 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege, nor shall
any waiver by the Holder of any such right or rights on any one occasion be
deemed a waiver of the same right or rights on any future occasion.
Section
4.10 Maker's
Waivers.
(a) Except
as
otherwise specifically provided herein, the Maker and all others that may become
liable for all or any part of the obligations evidenced by this Note, hereby
waive presentment, demand, notice of nonpayment, protest and all other demands'
and notices in connection with the delivery, acceptance, performance and
enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
JURY.
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(b) THE
MAKER
ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL
TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS
RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE
HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.
Section
4.11 Definitions.
For the
purposes hereof, the following term shall have the following
meaning:
"Lien"
means
any mortgage, charge, pledge, lien (statutory or other), security interest,
hypothecation, assignment for security, claim or preference or priority or
other
encumbrance upon or with respect to any property of any kind. A Person shall
be
deemed to own subject to a Lien any property which such Person has acquired
or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Permitted
Liens"
shall
have the meaning given such term in the Security Agreement.
"Person" shall
have the meaning given such term in the Security Agreement.
"Trading
Day"
means
(a) a day on which the Common Stock is traded on the Pink Sheets, OTC Bulletin
Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board,
a day
on which the Common Stock is quoted in the over-the-counter market as reported
by the Pink Sheets LLC (or any similar organization or agency succeeding its
functions of reporting prices); provided,
however, that
in
the event that the Common Stock is not listed or quoted as set forth in (a)
or
(b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
any
day which shall be a legal holiday or a day on which banking institutions in
the
State of Texas are authorized or required by law or other government action
to
close.
Section
4.12 Usury.
All
agreements between the Maker and the Holder are hereby expressly limited to
provide that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Holder for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the maximum
amount which the Holder is permitted to receive under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the
limit
of validity prescribed by law, then, ipso facto, the obligation to be fulfilled
shall automatically be reduced to the limit of such validity, and if from any
circumstance the Holder shall ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal balance of any of the Maker's
obligations to the Holder, and not to the payment of interest hereunder. To
the
extent permitted by applicable law, all sums paid or agreed to be paid for
the
use, forbearance or detention of the indebtedness evidenced by this Note shall
be amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full, to the end that the rate or amount of
interest on account of such indebtedness does not exceed any applicable usury
ceiling. As used herein, the term "applicable law" shall mean the all
applicable provisions of constitutions, statutes, laws, rules and
regulations
in
effect as of the date hereof, provided, however, that in the event there is
a
change in such applicable law which results in a higher permissible rate of
interest, then this Note shall be governed by such new law as of its effective
date. This provision shall control every other provision of all agreements
between the Maker and the Holder.
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IN
WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the
Issuance Date set out above.
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By:
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Print Name:
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Title:
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EXHIBIT
A
WIRE
INSTRUCTIONS
Payee:
__________________________________________________________________
Bank:
___________________________________________________________________
Address:
________________________________________________________________
__________________________________________________________
Bank
No.:
_______________________________________________________________
Account
No.: ____________________________________________________________
Account
Name: ___________________________________________________________
Exhibit
A-1
FORM
OF NOTICE OF OPTIONAL CONVERSION INTO SHARES OF COMMON
STOCK
(To
be
Executed by the Registered Holder in order to Convert the Note into Shares
of
Common Stock)
The
undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note into shares of Common Stock of BOO KOO
HOLDINGS, INC. (the "Company") according to the conditions hereof, as of the
date written below.
Date
of
Conversion:
____________________________________________________________________________________
Applicable
Conversion Price:
___________________________________________________________________________
Signature:
___________________________________________________________________________________________
[Print
Name]
_________________________________________________________________________________________
Address:
____________________________________________________________________________________________
Notice-1
Schedule
1
Existing
Indebtedness
Schedules-1
Schedule
2
Existing
Liens
Schedules-2
