REGISTRATION RIGHTS AGREEMENT
Exhibit 4.5
THIS REGISTRATION RIGHTS AGREEMENT (“Agreement”) is made and entered into as of June 29, 2004, by and among Southwest Casino and Hotel Corp., a Minnesota corporation (the “Company”), and each of the investors (“Investor”) executing this Agreement who are listed on Schedule 1 attached hereto (and who are collectively referred to as the “Investors”).
RECITALS
WHEREAS, the Company has entered into a Subscription Agreement and Letter of Investment Intent dated June 29, 2004 (the “Subscription Agreement”), pursuant to which the Investor has subscribed to purchase, and, upon acceptance by the Company, the Company has agreed to issue and sell, the Company’s 8% Convertible Demand Note(s) (the “Notes”) to certain of the Holders to the extent and in such amounts as set forth therein; and
WHEREAS, as a condition to the obligations of the purchasers under the Subscription Agreement, the Company has agreed to grant the registration rights with respect to the Registrable Common (as defined herein) on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Holders hereby agree as follows.
Section 1. Definitions.
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used herein without definition have the meanings specified in the Notes.
1.1 “Affiliate” means any Person which controls, is controlled by or is under common control with any other Person or Persons. For the purposes of this definition, “control” has the meaning specified as of the date of this Agreement for that word in Rule 405 promulgated by the Commission under the Securities Act.
1.2 “Board” means the Board of Directors of the Company.
1.3 “Capital Raising Transaction” means a private placement of convertible debt or equity securities of the Company or the Public Company following consummation of a merger transaction in which the Company’s equity owners (including holders of all outstanding options, warrants, 8% Convertible Demand Notes and other securities that are convertible into equity of the Company) become owner of at least ninety-two and four-tenths percent (92.4%) of the outstanding equity capital of the Public Company on a fully diluted basis.
1.4 “Commission” means the United States Securities and Exchange Commission, and any successor thereto.
1.5 “Common Stock” means the Company’s common stock, $.01 par value.
1.6 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated from time to time thereunder.
1.7 “Holders” means the (i) Investors, each of whom is a party to this Agreement, and (ii) any subsequent legal or beneficial owner of the Company’s 8% Convertible Demand Notes who has become a party to this Agreement in accordance with Section 11.9 of this Agreement.
1.8 “Lock-Out Period” means the ninety (90) day period of time as described in Section 10 of this Agreement.
1.9 “Person” means an individual, partnership, limited partnership, corporation, business trust, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture or other entity of whatever nature.
1.10 “PIPE Transaction” means the potential transaction involving the private placement in public equity of the Company or the Public Company following the Reverse Merger Transaction or the Company otherwise becoming a Public Company.
1.11 “Public Company” means a corporation which has its common stock registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the periodic reporting requirements, and has timely filed such reports during the past 12 months, pursuant to Sections 13 and 14 of the Exchange Act, or a corporation that voluntarily files reports under Section 15(d) of the Exchange Act, and has timely filed such reports during the past 12 months, the capital stock of which corporation is traded on a nationally recognized securities medium, not less than the National Association of Securities Dealers, Inc.’s OTC Electronic Bulletin Board and with which the Company’s Board of Directors agrees to conduct a Reverse Merger Transaction and closes the same.
1.12 “Registrable Common” means (a) any shares of Common Stock which have been issued or are issuable upon the conversion of the Company’s 8% Convertible Demand Notes (issued on, 2004) and (b) any share of Common Stock issued as a dividend, stock split, reclassification, recapitalization or other distribution with respect to or in exchange for or replacement of such 8% Convertible Demand Notes or Common Stock, provided, however, that shares of Common Stock shall no longer be Registrable Common when they shall have been effectively registered under the Securities Act and sold by the Holder thereof in accordance with such registration or sold by the Holder pursuant to Rule 144, or when registration under the Securities Act would no longer be required for the immediate public distribution of such shares of Common Stock as a result of the provisions of Rule 144.
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1.13 “Register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and the declaration or ordering of the effectiveness of such registration statement.
1.14 “Reverse Merger Transaction” means the consummation and closing of a reverse merger transaction, contemplated to be effected in the form of a tax free “A” reorganization pursuant to I.R.C. Section 368(a)(2)(E), with the Public Company, upon the completion of which the Company shall survive as a subsidiary of the Public Company, and resulting in the current shareholders of the Company (including holders of all outstanding options, warrants, the Conversion Shares and all securities that are convertible into equity of the Company, holders of the Company’s Series A Convertible Subordinated Debentures in the currently outstanding principal amount of $362,500 and including a pool of options or warrants to purchase 1,500,000 shares of Public Company Stock reserved for grant to management of the Public Company who assumes such positions after the Reverse Merger Date) owning at least ninety-two and four-tenths percent (92.4%) of the Public Company Stock.
1.15 “Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any successor rule thereto.
1.16 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated from time to time thereunder.
Section 2. Registration Rights.
2.1 Piggyback Registration.
2.1.1 After consummation and closing of a Reverse Merger Transaction or the Company otherwise becoming a Public Company, and subject to the Carve Back Right described in Section 2.1.3, if the Company shall determine to proceed with the actual preparation and filing of a registration statement under the Securities Act in connection with the proposed offer and sale for cash of its Common Stock by holders of its securities purchased from the Company in a PIPE Transaction or other Capital Raising Transaction (other than in response to a Registration Request, the Company’s IPO, registration on a Form S-8 or similar form, or a registration on a form that does not permit the inclusion of shares by its security holders), then the Company shall give written notice of its determination to all record Holders of Registrable Common (a “Participation Notice”) at least thirty (30) days prior to filing such registration statement. Upon the written request of a record Holder of any Registrable Common given within fifteen (15) days after receipt of a Participation Notice, the Company will, except as herein provided, cause all such Registrable Common, the record Holders of which have so requested registration thereof, to be included in such registration statement, provided that, with respect to all shares of Registrable Common for which registration has been requested, holders of the 8% Convertible Demand Notes so
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requesting to have shares of Registrable Common included in such registration statement, all to the extent required to permit the sale or other disposition by the prospective seller or sellers of the Registrable Common, to be so registered. If any registration pursuant to this Section 2.1 shall be underwritten in whole or in part, the Company may require that the Registrable Common requested for inclusion pursuant to this Section 2.1 be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters.
2.1.2 Nothing contained in this Agreement shall prevent the Company from, at any time, abandoning or delaying any such registration initiated by it in order to comply with applicable securities laws. All registration expenses in such case shall be borne by the Company.
2.1.3 If, in the judgment of the Company’s managing underwriter of such public offering or the Company’s placement agent in the PIPE Transaction or Capital Raising Transaction (the “Carve Back Right”), the inclusion of any or all of the Registrable Common originally covered by a request for registration would interfere with the successful marketing of the shares of Common Stock offered by the Company or would negatively impact the trading market of the Common Stock, then the number of Registrable Common otherwise to be included in the public offering or registered hereunder may be reduced pro rata (by number of shares) among the Holders thereof requesting inclusion of such registration, which reduction may be to zero.
2.1.4 The right of any Holder to include Registrable Common in any underwritten registration pursuant to this Agreement shall be conditioned upon such Holder’s full participation in such underwriting and the inclusion of such Holder’s Registrable Common in the underwriting. All Holders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected.
2.1.5 The Company shall not be obligated to effect or take any action to effect, any registration pursuant to Section 2.1 more than two (2) times.
2.2 Required Registration.
2.2.1 If, at any time during the six (6) months after termination of the Lock-Out Period, the Company shall receive a written request from the record Holder or Holders of a majority of the outstanding Registrable Common for registration under the Securities Act of the Registrable Common (a “Registration Request”):
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(a) the Company shall promptly give written notice to all other record Holders of Registrable Common that such registration is to be effected (“Registration Notice”); and
(b) subject to the limitations and requirements set forth in this Section 2.2, the Company shall use its commercially reasonable efforts to prepare and file a registration statement under the Securities Act covering the Registrable Common which is the subject of the Registration Request and such additional Registrable Common for which it has received written requests to register by such other record Holders within fifteen (15) days after the delivery of the Registration Notice, and shall use its commercially reasonable efforts to cause such registration statement to become effective as soon as is reasonably practicable after receipt of the Registration Request.
2.2.2 The Company shall be obligated to proceed with filing the registration statement contemplated in this Section 2.2 only if (i) the Holders of at least a majority of the then Registrable Common request registration of such Registrable Common in the registration to be effected pursuant to the Registration Request and (ii) the registration to be effected pursuant to the Registration Request has anticipated aggregate gross offering proceeds of at least $1,000,000.
2.2.3 If the Company shall furnish to the Holder(s) of Registrable Common for which registration has been requested within thirty (30) days of a Registration Request a certificate signed by the CEO, President or CFO of the Company stating that (i) the Company pursuant to an action approved by the Board of Directors already has a present plan to commence preparation of a registration statement and to file the same within ninety (90) days, or (ii) in the good faith judgment of the Board of Directors of the Company it would be seriously detrimental to the Company and its shareholders for such registration statement to be filed in due course pursuant to the terms hereof and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer undertaking any actions to effect such filing for a period ending not later than ninety (90) days from the date of the President’s certificate required herein; provided, however, that the Company may not utilize the rights under this Section 2.2.3 more than once.
2.2.4 If the Holders submitting the Registration Request (the “Initiating Holders”) intend to distribute the Registrable Common covered by such request by means of an underwriting, the Registration Request shall so indicate and the Company shall include such information in the Registration Notice. The Company shall select the managing underwriter. Notwithstanding any other provision of this Section 2, if the managing underwriter advises the participating Holders in writing that marketing or other factors require reducing the number of shares to be underwritten, then the number of shares of Registrable Common included in the underwriting shall be reduced pro rata among all participating
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Holders in proportion (as nearly as practicable) to the amount of Registrable Common owned by each participating Holder; provided, however that such reduction shall be made only if all other securities to be included (other than the Registrable Common) already have been entirely excluded from the underwriting.
2.2.5 In the event that the Holders of a majority of the Registrable Common for which registration has been requested pursuant to this Section 2.2 determine for any reason not to proceed with a registration at any time before a registration statement has been declared effective by the Commission, and such registration statement, if theretofore filed with the Commission, is withdrawn with respect to the Registrable Common covered thereby, and the Holders of such Registrable Common agree to bear their own expenses incurred in connection therewith and to reimburse the Company for the expenses incurred by it attributable to the registration of such Registrable Common, and, if such Holders in fact so reimburse the Company, then the Holders of such Registrable Common shall not be deemed to have exercised their right to require the Company to register Registrable Common pursuant to this Section 2.2 (such a withdrawn registration for which the Company has been so reimbursed a “Withdrawn Registration”).
2.2.6 If, at the time a Registration Request is received by the Company, the Company has already determined to proceed with the actual preparation and filing of a registration statement under the Securities Act in connection with the Company’s proposed offer and sale for cash of its securities, the Registration Request shall be deemed to have been given pursuant to Section 2.1 rather than this Section 2.2, and the rights and obligations of the Holders and the Company with respect to the Registration Request shall be governed by Section 2.1 hereof.
2.2.7 Notwithstanding any other provision in this Agreement, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2.2 after the Company has effected one (1) registration pursuant to this Section 2.2 (it being understood that a Withdrawn Registration shall not be considered to have been effected).
Section 3. Registration Procedures. When the Company is required by the terms of this Agreement to effect the registration of Registrable Common under the Securities Act, the Company will do the following:
3.1 Filing. Prepare and file with the Commission a registration statement with respect to such securities, and use its commercially reasonable efforts to cause such registration statement to become and remain effective for such period as may be reasonably necessary to effect the sale of such securities, not to exceed six (6) months;
3.2 Period of Effectiveness. Prepare and file with the Commission such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective for such period
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as may be reasonably necessary to effect the sale of such securities, not to exceed nine (9) months;
3.3 Copies. Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, formal prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;
3.4 Blue Sky. Use its commercially reasonable efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders may reasonably request in writing within twenty (20) days following the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified;
3.5 Notification. Notify the Holders participating in such registration, promptly after it shall receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed;
3.6 Amendment Notice. Notify such Holders promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;
3.7 Update. Prepare and promptly file with the Commission and promptly notify such Holders of the filing of such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading;
3.8 Stop Orders. Advise such Holders, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and
3.9 Compliance Issues. Not file any amendment or supplement to such registration statement or prospectus to which a majority in interest of such Holders shall have reasonably objected on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act or the rules
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and regulations promulgated thereunder, after having been furnished with a copy thereof at least two (2) business days prior to the filing thereof, unless in the opinion of counsel for the Company the filing of such amendment or supplement is reasonably necessary to protect the Company from any liabilities under any applicable federal or state law and such filing will not violate applicable law.
Section 4. Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2 and 3 with respect to the Registrable Common of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Common held by him or it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Common.
Section 5. Expenses. With respect to each registration requested pursuant to Sections 2.2 or 2.3 hereof (except as otherwise provided in such Section) and with respect to each inclusion of Registrable Common in a registration statement pursuant to Section 2.2 hereof (except as otherwise provided in such Section), the Company shall bear the following fees, costs and expenses: all registration, filing and NASD (or exchange) fees, printing expenses, fees and disbursements of counsel and accountants for the Company, fees and disbursements of counsel for the underwriter or underwriters of such securities (if the Company and/or selling security Holders are required to bear such fees and disbursements), all internal Company expenses, all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified, and the premiums and other costs of policies of insurance against liability (if any) arising out of such public offering. All fees and disbursements of any legal counsel, accountants or advisors for the selling security Holders, underwriting discounts and commissions and transfer taxes relating to the shares included in the offering by the selling security Holders, and any other expenses incurred by the selling security Holders not expressly included above, shall be borne by the selling security Holders.
Section 6. Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.
Section 7. Indemnification. In the event that any Registrable Common is included in a registration statement under Section 2.1 or 2.2 hereof.
7.1 Indemnification by Company. To the fullest extent permitted by law, the Company will indemnify and hold harmless each Holder of Registrable Common which are included in a registration statement pursuant to the provisions hereof, its directors, officers, partners, shareholders and legal counsel and any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or such underwriter within the meaning of the Securities Act, from and against, and will reimburse such Holder and each such underwriter and controlling Person with
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respect to, any and all loss, damage, claims or liability (collectively, “Losses”), joint or several, to which any of them may become subject under the Securities Act, state securities laws or otherwise, and the Company will pay to each such Holder, director, officer, partner, shareholder, legal counsel, underwriter or controlling person any legal or other costs or expenses reasonably incurred by such person in connection with investigating or defending any such Loss, insofar as such Losses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such Loss arises out of or is based upon an untrue statement or omission so made in conformity with information furnished by such Holder, director, officer, partner, shareholder, legal counsel, such underwriter or such controlling Person; provided further, however, that the indemnity agreement in this Section 7.1 shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, and that the foregoing indemnity obligation with respect to any preliminary prospectus shall not inure to the benefit of any Holder on account of any Loss whatsoever arising from the sale of any Registrable Common by such Holder to any person if (A) a copy of the prospectus (as amended or supplemented if such amendments or supplements shall have been furnished to such Holder prior to the confirmation of the sale involved) shall not have been sent or given by or on behalf of such Holder to such person, if required by law, with or prior to the written confirmation of the sale involved, and (B) the untrue statement or omission of a material fact contained in such preliminary prospectus from which such Loss arose was corrected in the prospectus (as amended or supplemented if such amendments or supplements thereto shall have been furnished as aforesaid).
7.2 Indemnification by Holders. Each Holder of Registrable Common which is included in a registration statement pursuant to the provisions hereof will indemnify and hold harmless the Company, its directors and officers, each Person, if any, who controls the Company within the meaning of the Securities Act, any other Holder selling securities pursuant to such registration statement, any controlling Person of any such selling Holder, any underwriter and any controlling Person of any such underwriter (each, an “Indemnitee”) from and against, and will reimburse any Indemnitee with respect to, any and all Losses to which such Indemnitee may become subject under the Securities Act, state securities laws or otherwise, and the Holder will pay to each such Indemnitee any legal or other costs or expenses reasonably incurred by such person in connection with investigating or defending any such Loss, insofar as such Losses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each
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case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in conformity with information furnished in writing by such Holder to the Company specifically for use in the preparation thereof, and provided, however, that the indemnity agreement in this Section 7.2 shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the indemnifying Holder, which consent shall not be unreasonably withheld, and that the foregoing indemnity obligation with respect to any preliminary prospectus shall not inure to the benefit of the Company on account of any Loss whatsoever arising from the sale of any Registrable Common by the Holder to any person if (A) a copy of the prospectus (as amended or supplemented if such amendments or supplements shall have been furnished to such Holder prior to the confirmation of the sale involved) shall not have been sent or given by or on behalf of such Holder to such person, if required by law, with or prior to the written confirmation of the sale involved, and (B) the untrue statement or alleged untrue statement or omission or alleged omission of a material fact contained in such preliminary prospectus from which such Loss arose was corrected in the prospectus (as amended or supplemented if such amendments or supplements thereto shall have been furnished as aforesaid); provided, further that the obligations of such Holders under this Section 7.2 shall be limited to an amount equal to the net proceeds received by each such Holder of Registrable Common sold as contemplated herein.
7.3 Indemnification Procedures. Promptly after receipt by a party entitled to indemnification pursuant to this Section 7 (each, an “Indemnified Party”) of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions such Indemnified Party will, if a claim is to be made against the party obligated to provide indemnification pursuant to this Section 7 (each, an “Indemnifying Party”), promptly notify the Indemnifying Party of the commencement thereof; but the omission to provide such notice will not relieve the Indemnifying Party from any liability hereunder, except to the extent that the delay in giving, or failing to give, such notice has a material adverse effect upon the ability of the Indemnifying Party to defend against the claim. In case such action is brought against an Indemnified Party, the Indemnifying Party shall have the right to participate in and, at the Indemnifying Party’s option, to assume the defense thereof, singly or jointly with any other Indemnifying Party similarly notified, with counsel satisfactory to the Indemnified Party; provided, however, that if the defendants in any action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to any Indemnified Parties that are different from or additional to those available to the Indemnifying Party, or if there is a conflict of interest which would prevent counsel for the Indemnifying Party from also representing the Indemnified Party, the Indemnified Party shall have the right to select counsel to participate in the defense of such action on behalf of such Indemnified Party at the expense of the Indemnifying Party; provided that the Indemnifying Party shall be responsible for the expense of only one such special counsel selected jointly by the Indemnified Parties, if there is more than one Indemnified Party. After notice from an Indemnifying Party to any Indemnified Party of such Indemnifying Party’s election to assume the defense or the action, the Indemnifying
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Party will not be liable to such Indemnified Party pursuant to this Section 7 for any legal or other expense subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the Indemnified Party shall have employed counsel in accordance with the proviso of the preceding sentence, or (ii) the Indemnifying Party shall not have employed counsel satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after the notice of the commencement of the action, or (iii) the Indemnifying Party has authorized the employment of counsel for the Indemnified Party at the expense of the Indemnifying Party.
Section 8. Exceptions to and Termination of Registration Obligations. The Company shall not be obligated to (a) honor a request or a demand to register its Registrable Common under either Section 2.1 or Section 2.2 if all such Registrable Common which could be registered pursuant to such demand is otherwise eligible for immediate sale by the Holder thereof under Rule 144 promulgated under the Securities Act or (b) effect a registration during the Lock-Out Period. Pursuant to Section 10 below, the Company shall not be obligated to effect a registration until the expiration of the Lock-Out Period. The Company shall also not be obligated to effect a registration if the Company delivers to the holders of the Registrable Securities within thirty (30) days of any Registration Request notice permitted by Section 2.2.3 and so files within such period described in the notice. This Agreement, and the registration rights set forth herein, shall terminate on the earlier to occur of (a) a date that is two (2) years following the closing of the Company’s Reverse Merger Transaction or (b) at any time following the Company’s Reverse Merger Transaction that all Holders who make demand for registration hereunder are able to sell their entire holdings during any ninety (90) day period under Rule 144(k).
Section 9. Cooperation. Any Holder whose Registrable Common are to be included in a Registration Statement either filed pursuant to a demand or as part of a Company registration agrees to cooperate with all reasonable requests by the Company necessary to effectuate the purposes of this Agreement, including by timely providing the Company with all information necessary to file a registration statement.
Section 10. “Lock-Out” Agreement. Each Holder hereby agrees that, following the effective date of a registration of the Company’s securities (or securities of the Public Company) under the Securities Act, for the period of time not to exceed ninety (90) days following the effective date of any registration statement whether to register securities acquired in connection with the Company’s PIPE Transaction, the Company’s Capital Raising Transaction, or the Company’s IPO and to the extent requested by the Company’s underwriter(s) or placement agent, such Holder shall not sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of any securities of the Company (or the Public Company) held by such Holder, directly or indirectly, whether through trade in the public securities markets, OTCBB or private transactions or through any other means, except transfers to donees who agree to be similarly bound) during the Lock-Out Period. Each
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Holder acknowledges and agrees that the Company may impose stop-transfer instructions during such Lock-Out Period with respect to the securities of each Holder subject to this restriction if necessary to enforce such restrictions.
Section 11. Miscellaneous.
11.1 Waivers, Amendments and Approvals. In each case in which the approval of the Holders is required by the terms of this Agreement, such requirement shall be satisfied by a vote or the written action of Holders of at least a majority of the Registrable Common, unless a higher percentage is specifically required by the terms of this Agreement. Any term or provision of this Agreement requiring performance by or binding upon the Company or Holders 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 by a writing signed by the Company and the Holders of at least a majority of the then outstanding Registrable Common. Any amendment or waiver effected in accordance with this Section shall be binding upon the Holders (including permitted assigns pursuant to Section 11.9 hereof). The waiver by a party of any breach hereof or default in payment of any amount due hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any other default or succeeding breach or default. Written notice of any such waiver, consent or agreement of amendment, modification or supplement shall be given to the record Holders of Registrable Common who did not give written consent thereto.
11.2 Written Changes, Waivers, Etc. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in Section 11.1.
11.3 Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by reputable overnight courier service (charges prepaid), mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or transmitted by facsimile or electronic mail (with request for immediate confirmation of receipt in a manner customary for communications of such type and with physical delivery of the communication being made by one of the other means specified in this section as promptly as practicable thereafter), as follows:
11.3.1 To a Holder, addressed to such Holder at the address(es) set forth on Schedule 1 hereto.
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11.3.2 To the Company, to:
Southwest Casino and Hotel Corp.
Attention: Xxxxxx X. Xxx, President
2000 Xxxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Any party may change its address for such communications by giving notice thereof to the other parties in conformity with this Section.
11.4 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party under this Agreement shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence thereto, or of a similar breach of 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. Any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach of default under the Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.
11.5 Other Remedies. Any and all remedies herein expressly conferred upon a party shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby or by law on such party, and the exercise of any one remedy shall not preclude the exercise of any other.
11.6 Attorneys’ Fees. Should suit be brought to enforce or interpret any part of this Agreement, the prevailing party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys’ fees to be fixed by the court (including, without limitation, costs, expenses and fees on any appeal). The prevailing party shall be the party entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. A party not entitled to recover its costs shall not be entitled to recover attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the amount of a judgment for purposes of determining if a party is entitled to recover costs or attorneys’ fees.
11.7 Entire Agreement. This Agreement, the schedules hereto, the documents referenced herein and the exhibits thereto, constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto and thereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
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11.8 Severability. Should any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby.
11.9 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon and be enforceable by, the respective heirs, successors and assigns of the parties hereto; provided, however, that if notice is given to the Company, the rights of a Holder hereunder may be assigned only (i) to a partner or retired partner of the assigning Holder if such assigning Holder is a partnership or to any affiliate of an assigning Holder which is also an accredited investor within the meaning of the Securities Act, (ii) to any family member of, or trust for the benefit of, the assigning Holder, (iii) to any affiliated entities of the assigning Holder if such affiliated entities are managed by the same manager or managing partner or management company, or managed by an entity controlling, controlled by or under common control with such manager, managing partner or management company, or (iv) concurrent with the sale or transfer to such assignee of at least 25,000 shares (subject to adjustment for any stock dividend, stock split, subdivision, combination or other recapitalization of the Company) of the Registrable Common then held by such Holder. Any Holder making an assignment in connection with the sale or transfer of only a portion of its shares shall retain its rights under this Agreement for the shares not sold or transferred. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Notwithstanding any provision contained elsewhere in this Agreement, upon the transfer of shares by any of the parties hereto, no claims or causes of action arising out of or related to this Agreement existing as of the transfer date shall be transferred by such party to any respective heir, successor, assign or permitted transferee, provided that the transfer of shares shall not be deemed a waiver by the transferring party of any such claim or cause of action.
11.10 Assignment to and Assumption by Parent Company. Company covenants and agrees to include as a condition precedent to consummation of the Reverse Merger Transaction with the Public Company in any definitive merger agreement entered into with the Public Company that the Public Company will expressly assume this Registration Rights Agreement and will succeed to and be substituted for the Company, with the same effect as if the Public Company had been named in this Agreement in the Company’s place.
11.11 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Minnesota.
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11.12 Counterparts. This Agreement may be executed concurrently 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.
(BALANCE OF PAGE INTENTIONALLY BLANK)
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IN WITNESS WHEREOF, this Agreement is hereby executed as of the date first written above.
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COMPANY: |
SOUTHWEST CASINO AND HOTEL CORP. |
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8% CONVERTIBLE DEMAND NOTE INVESTORS: |
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Xxxxx Xxxxxxxxx |
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Xxxx X. Xxxxx Revocable Trust dated 2/9/95 |
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Xxx Xxxxxxxxx |
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Xxxxx 1995 Revocable Trust |
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Xxxx Xxxxxxxx |
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The Xxxx Xxxxx Trust |
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Xxxxx X. Xxxxx June 1992 Non-Exempt Trust |
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Xxxx Xxxxxxx |
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Xxxxxx Xxxxxx |
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Xxxxxx Xxxxx |
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Xxxx X. Xxxxxxxx |
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Xxxx X. XxXxxxx |
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Xxxxxx Xxxxxx |
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Xxxxx X. Xxxxxxxx Revocable Trust |
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Xxxxxxx Xxxxxx |
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Stubbvo Partners, LLC |
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Chicago Real Estate Consulting Group, LLC |
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Xxxxxx Xxxxxx |
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Xxxxxx Xxxxx |
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Xxxxxxx X. Xxxx III |
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Xxxxxx Xxxx |
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Xxxxxxx X. XxXxxxx |
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[SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT]
17
SCHEDULE 1
LIST OF HOLDERS OF 8% CONVERTIBLE DEMAND NOTES
Names and
Addresses of Holders of
8% Convertible Demand Notes
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Xxxxx Xxxxxxxxx |
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[need address] |
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Xxxx X. Xxxxx Revocable Trust dated 2/9/95 |
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100 Xxxxx Xxxxx Xxxx #000 |
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Xxxxxxxx Xxx, XX 00000 |
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Xxx Xxxxxxxxx |
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11000 X.X. 0xx Xxxxxx |
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Xxxxx 000 |
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Xxxxxxxx, XX 00000 |
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Xxxxx 1995 Revocable Trust |
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200 Xxxxx Xxxx |
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Xxx Xxxxxxx, XX 00000 |
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Xxxx Xxxxxxxx |
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140 Xxxxxxxxxxx Xxxx XX |
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Xxxxxxxxx, XX 00000 |
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The Xxxx Xxxxx Trust |
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9 Xxxxxxx Xxxxx |
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Xxxxxxxxxxxx, XX 00000 |
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Xxxxx X. Xxxxx June 1992 Non-Exempt Trust |
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120 Xxxxx XxXxxxx Xxxxxx |
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Xxxxx 0000 |
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Xxxxxxx, XX 00000 |
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Xxxx Xxxxxxx |
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10000 Xxxx Xxxxxxx Xxxxx #000 |
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Xxxxxx, XX 00000 |
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Xxxxxx Xxxxxx |
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10000 Xxxxxxxxx Xxxxxx #000 |
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Xxxx Xxxxxxx, XX 00000 |
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Xxxxxx Xxxxx |
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830 Xxxx Xxxxxx |
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Xxxxxx, XX 00000 |
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Xxxx X. Xxxxxxxx |
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150 Xxxxxxx Xxxxxx |
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Xxxxxxxx, XX 00000 |
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Xxxx X. XxXxxxx |
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71 Xxxxxxxx Xxxxxx |
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Xxxxxxxxx Xxxxx, XX 00000 |
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Xxxxxx Xxxxxx |
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670 Xxxxx Xxxxxxxx Xxxxxx |
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Xxxxx 0000 |
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Xxxxxxx, XX 00000 |
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Xxxxx X. Xxxxxxxx Revocable Trust |
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510 Xxxxx Xxxxx Xxxxxx |
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Xxxxxxxx, XX 00000 |
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Xxxxxxx Xxxxxx |
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4200 Xxxxxx Xx. |
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Xxxxxxxx Xxxxxxx, XX 00000 |
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Stubbvo Partners, LLC |
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4200 Xxxxxx Xx. |
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Xxxxxxxx Xxxxxxx, XX 00000 |
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Chicago Real Estate Consulting Group, LLC |
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440 Xxxxx Xxxxxxxx |
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Xxxxx 00000 |
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Xxxxxxx, XX 00000 |
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Xxxxxx Xxxxxx |
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1400 000xx Xxxxxx |
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Xxx Xxxxxxxx, XX 00000 |
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Xxxxxx Xxxxx |
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4200 Xxxxxxxx Xxxx |
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Xxxxxxxx, XX 00000 |
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Xxxxxxx X. Xxxx III |
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13000 Xxxxx Xxxx |
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Xxxx Xxxxxxx, XX 00000 |
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Xxxxxx Xxxx |
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310 Xxxxxx Xxxxxx |
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Xxx Xxxxxxxxx, XX 00000 |
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Xxxxxxx X. XxXxxxx |
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2300 Xxxxxx Xxxx Xxxx |
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Xxxxxxxxxx, XX 00000 |
