Exhibit 10.12
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of _____
___, 2007, by and among Sonterra Resources, Inc. (f/k/a River Capital Group,
Inc.), a Delaware corporation, with headquarters currently located at Xxxxx 000,
0 Xxxx Xxxxxx, Xxxxxxxx Xxxxxxx XX00 (xxx "Company"), and The Longview Fund,
L.P., a California limited partnership ("Buyer").
WHEREAS:
A. In connection with the Securities Exchange and Additional Note
Purchase Agreement, by and among the parties hereto and dated as of August __,
2007 (the "Securities Exchange Agreement"), the Company has agreed, upon the
terms and subject to the conditions of the Securities Exchange Agreement, to
issue at the Exchange Closing (as defined in the Securities Exchange Agreement)
to the Buyer (i) senior secured notes of the Company, (ii) shares (the "New
Common Shares") of the Company's common stock, $0.001 par value (the "Common
Stock"), and (iii) a warrant to purchase shares of Common Stock (such warrant,
together with any warrant issued in exchange or substitution therefor or
replacement thereof, and as the same may be amended, restated or modified and in
effect from time to time, the "Warrant"; and the shares of Common Stock issuable
upon exercise of the Warrant being referred to herein as the "Warrant Shares");
B. Pursuant to the Securities Exchange Agreement, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "1933 Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Buyer
hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "1934 Act" means, collectively, the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, or
any similar successor statute.
b. "Business Day" means any day other than Saturday,
Sunday or any other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
c. "Demand Registration Filing Deadline" means the date
that is thirty (30) days after delivery to the Company of a Demand Registration
Request; provided, however, that in the case of a Demand Registration for an
offering pursuant to Rule 415, the "Demand Registration Filing Deadline" shall
mean the later of such date and the earliest date that the Company is permitted
to file the Registration Statement by the SEC.
d. "Effectiveness Deadline" means the Initial
Effectiveness Deadline, an Additional Warrant Share Registration Effectiveness
Deadline or a Demand Registration Effectiveness Deadline, as applicable.
e. "Filing Deadline" means the Initial Filing Deadline,
an Additional Warrant Share Registration Filing Deadline or a Demand
Registration Filing Deadline, as applicable.
f. "Initial Effectiveness Date" means the date the
Initial Registration Statement is declared effective by the SEC.
g. "Initial Effectiveness Deadline" means the later of
(i) the date that is 120 days after the Exchange Closing Date and (ii) the
Initial Filing Date.
h. "Initial Filing Date" means the date on which the
Initial Registration Statement is filed with the SEC.
i. "Initial Filing Deadline" means the date (such date,
the "Target Date") that is thirty (30) days after the Exchange Closing Date;
provided, however that, if on the Exchange Closing Date the Warrant Registrable
Securities are not then eligible for sale on a delayed or continuous basis by
the Investors pursuant to Rule 415, the Initial filing Deadline shall be the
later of (i) the Target Date and (ii) the earlier of (A) the date that is the
tenth (10th) Business Day following the date on which the Investors shall have
delivered to the Company the information required by Item 508 of Regulation S-K
under the Securities Act with respect to a plan of distribution for the Warrant
Registrable Shares other than in accordance with Rule 415 and (B) the first date
on which the Warrant Registrable Securities are eligible for sale on a delayed
or continuous basis by the Investors pursuant to Rule 415.
j. "Initial Registration Statement" means a registration
statement or registration statements of the Company filed under the 1933 Act
pursuant to Section 2(a) hereof covering the Warrant Registrable Securities.
k. "Investor" means the Buyer, any transferee or
assignee thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 11 and any transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 11.
l. "Permitted Registration Amount" means the lesser of
(i) the number of Registrable Securities requested to be included in a
Registration Statement for a Demand Registration or a Piggyback Registration, as
applicable and (ii) the maximum number of Registrable Securities the Company is
permitted to include in such Registration Statement by the SEC.
m. "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
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n. "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a governmental or any department or agency
thereof, or any other legal entity.
o. "Register," "registered," and "registration" refer to
a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and the declaration or ordering of
effectiveness of such Registration Statement(s) by the SEC.
p. "Registrable Securities" means (i) the New Common
Shares, (ii) the Warrant Shares issued or issuable upon exercise of the Warrant,
(iii) any other shares of Common Stock held by Buyer on the date of this
Agreement, or issuable upon exercise, exchange or conversion of any other
securities held by Buyer on the date of this Agreement, (such shares, the "Other
Common Shares"), and (iv) any shares of capital stock of the Company issued or
issuable with respect to the Warrant, the New Common Shares, the Warrant Shares
or the Other Common Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise provided, however, that
any such Registrable Securities shall cease to be Registrable Securities when
(A) a Registration Statement with respect to the sale of such securities becomes
effective under the 1933 Act and such securities are disposed of in accordance
with such Registration Statement, (B) such securities are sold in accordance
with Rule 144 (as defined in Section 10) or (c) such securities become
transferable without any restrictions in accordance with Rule 144(k) (or any
successor provision).
q. "Registration Statement" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering Registrable Securities.
r. "Rule 415" means Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous or delayed
basis.
s. "Trading Day" means any day on which the Common Stock
is traded on the Principal Market; provided that "Trading Day" shall not include
any day on which the Common Stock is scheduled to trade, or actually trades, on
the Principal Market for less than 4.5 hours.
t. "Warrant Registrable Securities" means (i) the
Warrant Shares issued or issuable upon exercise of the Warrant and (ii) any
shares of capital stock issued or issuable with respect to the Warrant or the
Warrant Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise; provided, however, that any such Warrant
Registrable Securities shall cease to be Warrant Registrable Securities when (A)
a Registration Statement with respect to the sale of such securities becomes
effective under the 1933 Act and such securities are disposed of in accordance
with such Registration Statement, (B) such securities are sold in accordance
with Rule 144, or (C) such securities become transferable without any
restrictions in accordance with Rule 144(k) (or any successor provision).
u. "Principal Market" means, with respect to the Common
Stock, the OTC Bulletin Board; provided however, that, if after the date of this
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Agreement the Common Stock is listed on a national securities exchange,
"Principal Market" shall mean such national securities exchange; and, with
respect to any other security, "Principal Market" means the principal securities
exchange or trading market for such security.
v. "Weighted Average Price" means, for any security as
of any date, the dollar volume-weighted average price for such security on its
Principal Market during the period beginning at 9:30 a.m. New York City time (or
such other time as its Principal Market publicly announces is the official open
of trading) and ending at 4:00 p.m. New York City time (or such other time as
its Principal Market publicly announces is the official close of trading) as
reported by Bloomberg Financial Markets (or any successor thereto) ("Bloomberg")
through its "Volume at Price" functions, or if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period
beginning at 9:30 a.m. New York City time (or such other time as such
over-the-counter market publicly announces is the official open of trading), and
ending at 4:00 p.m. New York City time (or such other time as such
over-the-counter market publicly announces is the official close of trading) as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for
such security on such date on any of the foregoing bases, the Weighted Average
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the applicable Investor. If the Company and the
applicable Investor are unable to agree upon the fair market value of the Common
Stock, then such dispute shall be resolved by the Chicago office of an
investment banking firm mutually agreeable to the applicable Investor and the
Company. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during any
period during which the Weighted Average Price is being determined.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Exchange Agreement.
2. INITIAL MANDATORY REGISTRATION.
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a. Initial Mandatory Registration. The Company shall
prepare, and, as soon as practicable but in no event later than the Initial
Filing Deadline, file with the SEC a Registration Statement on Form S-3 (subject
to Section 2(c)), covering the resale of all of the Warrant Registrable
Securities. The Initial Registration Statement prepared pursuant hereto shall
register for resale at least that number of Warrant Registrable Securities equal
to 100% of the number of Warrant Shares issued or issuable upon exercise of the
Warrant as of the second Trading Day immediately preceding the date the Initial
Registration Statement is initially filed with the SEC. The Company shall use
its reasonable best efforts to have the Initial Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the
Initial Effectiveness Deadline.
b. Allocation of Registrable Securities. The initial
number of Warrant Registrable Securities included in the Initial Registration
Statement (or any other Registration Statement filed pursuant to this Section 2)
and each increase in the number of Warrant Registrable Securities included
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therein shall be allocated pro rata among the Investors based on the number of
such Warrant Registrable Securities held by each Investor at the time such
Registration Statement or increase thereof is declared effective by the SEC. In
the event that an Investor sells or otherwise transfers any of such Investor's
Warrant Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Warrant Registrable Securities included
in such Registration Statement for such transferor. Any shares of Common Stock
included in the Initial Registration Statement (or any other Registration
Statement filed pursuant to this Section 2) and which remain allocated to any
Person which ceases to hold any Warrant Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Warrant Registrable Securities then held by such
Investors which are covered by such Registration Statement. For purposes hereof,
the number of Warrant Registrable Securities held by an Investor includes all
Warrant Registrable Securities issuable upon the exercise of Warrants held by
such Investor, without regard to any limitations on exercise of the Warrant. In
no event shall the Company include any securities other than Registrable
Securities in any Registration Statement filed pursuant to this Section 2.
c. Ineligibility for Form S-3. In the event that Form
S-3 is not available for the registration of the resale of the Warrant
Registrable Securities hereunder, the Company shall (i) register the Warrant
Registrable Securities on Form S-1, Form SB-2 or another appropriate form
reasonably acceptable to the holders of two-thirds of the Warrant Registrable
Securities, and (ii) undertake to register the Warrant Registrable Securities on
Form S-3 (by post-effective amendment to the existing Registration Statement or
otherwise) as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Warrant
Registrable Securities has been declared effective by the SEC.
d. Sufficient Number of Shares Registered. In the event
the number of shares available under the Initial Registration Statement filed
pursuant to Section 2(a) (or any Registration Statement previously filed
pursuant to this Section 2(d)) is insufficient to cover all of the Warrant
Registrable Securities required to be covered by the Initial Registration
Statement (or Registration Statement previously filed pursuant this Section
2(d)) or an Investor's allocated portion of such Warrant Registrable Securities
pursuant to Section 2(b), the Company shall, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises (an
"Additional Warrant Share Registration Filing Deadline"), amend the Initial
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to register for resale at
least that number of Warrant Registrable Securities equal to 100% of the number
of Warrant Shares issued or issuable upon exercise of the Warrant as of the
Trading Day immediately preceding the date of the filing of such amendment or
new Registration Statement with the SEC. The Company shall use its reasonable
best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof, but in any event
not later than seventy-five (75) days following the filing thereof (an
"Additional Warrant Share Registration Effectiveness Deadline"). For purposes of
the foregoing provision, the number of shares available under the Initial
Registration Statement (or any Registration Statement previously filed pursuant
to this Section 2(d)) shall be deemed "insufficient to cover all of the Warrant
Registrable Securities" if, as of any date of determination, the number of
Warrant Registrable Securities equal to the number of Warrant Shares issued or
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issuable as of such time upon exercise of the Warrant is greater than the number
of Warrant Registrable Securities available for resale under such Registration
Statement.
e. Effect of Failure to File and Obtain and Maintain
Effectiveness of Mandatory Registration Statement. If (A) a Registration
Statement covering Registrable Securities and required to be filed by the
Company pursuant to Section 2(a) or Section 2(d) is not (I) filed with the SEC
on or before the applicable Filing Deadline or (II) declared effective by the
SEC on or before the applicable Effectiveness Deadline, or (B) on any day after
Registration Statement has been declared effective by the SEC sales of all the
Registrable Securities required to be included on such Registration Statement
cannot be made (other than during an Allowable Grace Period (as defined in
Section 5(t)) pursuant to such Registration Statement (including because of a
failure to keep the such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement or to register sufficient shares of Common Stock, as determined in
accordance with Section 2(e), or because a post-effective amendment to such
Registration Statement has been filed but not been declared effective), then, as
partial relief for the damages to any holder of Warrants by reason of any such
delay in or reduction of its ability to sell the underlying shares of Common
Stock (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall pay to such holder an amount in cash equal
to the product of (X) the total Aggregate Exercise Price (as defined in the
Warrant) of the Warrant held by such holder, multiplied by (Y) the sum of (I)
0.02, if such Registration Statement is not filed by the applicable Filing
Deadline, plus (II) 0.02, if such Registration Statement is not declared
effective by the applicable Effectiveness Deadline, plus (III) the product of
(I) 0.000667 multiplied by (II) the sum (without duplication) of (1) the number
of days after the applicable Filing Deadline that such Registration Statement is
not filed with the SEC, plus (2) the number of days after the applicable
Effectiveness Deadline that such Registration Statement is not declared
effective by the SEC, plus (3) the number of days after such Registration
Statement has been declared effective by the SEC that such Registration
Statement is not available (other than during an Allowable Grace Period) for the
sale of at least all the Warrant Registrable Securities required to be included
on such Warrant Registration Statement pursuant to this Section 2. The payments
to which a holder shall be entitled pursuant to this Section 2(e) are referred
to herein as "Warrant Share Registration Delay Payments." Warrant Registration
Delay Payments shall be paid on the earlier of (I) the last day of the calendar
month during which such Warrant Registration Delay Payments are incurred and
(II) the third Business Day after the event or failure giving rise to the
Registration Delay Payments is cured. In the event the Company fails to make
Warrant Share Registration Delay Payments in a timely manner, such Warrant
Registration Delay Payments shall bear interest, in each case until paid in
full, at a rate equal to the lesser of (A) 2.0% per month (equivalent to a per
annum rate of 24.0%), prorated for partial months, and (B) the highest lawful
interest rate.
3. DEMAND REGISTRATION.
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a. Long-Form Registrations. Subject to the terms of this
Agreement, any Investors holding at least two-thirds (2/3) of the
then-outstanding Registrable Securities may at any time following the Exchange
Closing Date request (any such request, a "Long-Form Demand Registration
Request") registration of all or part of their Registrable Securities on Form
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S-1, Form SB-2 or any similar long-form registration. Within five (5) days after
receipt of any request pursuant to this Section 3(a), the Company will give
written notice of such request to all other Investors holding Registrable
Securities. The Company shall prepare, and, as soon as practicable but in no
event later than the Demand Registration Filing Deadline, file with the SEC a
Registration Statement, and the Company shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion within twenty (20) days after delivery of the Company's
notice; provided, however, that if at the time of issuance of such Long-Form
Demand Registration Request, the Registrable Securities are eligible to be sold
on a delayed or continuous basis pursuant to Rule 415 and the Demand
Registration is for an offering pursuant to Rule 415, the Company shall not be
required to include in such Demand Registration Statement a number of
Registrable Securities in excess of the Permitted Registration Amount. All
registrations requested pursuant to this Section 3(a) are referred to herein as
"Long-Form Demand Registrations." The Company is obligated to effect no more
than three (3) Long-Form Demand Registrations in any 12-month period.
b. Short-Form Registrations. In addition to the
Long-Form Registrations provided pursuant to Section 3(a), at any time following
the Exchange Closing Date that the Company is eligible to use a Form S-3 (or any
similar short-form registration) for resale of Common Stock by selling security
holders, Investors holding at least two-thirds (2/3) of the then-outstanding
Registrable Securities may request (any such request, or any Long-Form Demand
Registration Request, a "Demand Registration Request") registrations of all or
part of their Registrable Securities on Form S-3 or any similar short-form
registration ("Short-Form Demand Registrations" and, together with the Long-Form
Demand Registrations, "Demand Registrations"). Within five (5) Business Days
after receipt of any request pursuant to this Section 3(b), the Company will
give written notice of such request to all other Investors holding Registrable
Securities. The Company shall prepare, and, as soon as practicable but in no
event later than the Demand Registration Filing Deadline, file with the SEC a
Registration Statement, and the Company shall include in such Registration
Statement all Registrable Securities with respect to which the Company has
received written requests for inclusion within twenty (20) days after delivery
of the Company's notice; provided, however, that if the Demand Registration is
for an offering pursuant to Rule 415, the Company shall not be required to
include in such Demand Registration Statement a number of Registrable Securities
in excess of the Permitted Registration Amount. Demand Registrations will be
Short-Form Registrations whenever the Company is permitted to use Form S-3 or
any applicable short form therefor. If a Short-Form Registration is to be an
underwritten public offering, and if the underwriters for marketing or other
reasons request the inclusion in the Registration Statement of information which
is not required under the 1933 Act to be included in a Registration Statement on
the applicable form for the Short-Form Registration, the Company will provide
such information as may be reasonably requested for inclusion by the
underwriters in the Short-Form Registration. The Company is not obligated to
effect more than three (3) Short-Form Demand Registrations in any 12-month
period.
c. Filing Deadlines and Effectiveness Dates. The Company
shall use its reasonable best efforts to have any Registration Statement filed
pursuant to this Section 3 declared effective by the SEC as soon as practicable,
but in no event later than the date which is seventy-five (75) days after the
date such Registration Statement is initially filed with the SEC (the "Demand
Registration Effectiveness Deadline").
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d. Allocation and Priority of Registrable Securities in
a Demand Registration.
i. The Company will not include in any Demand
Registration any securities which are not Registrable Securities without the
prior written consent of the Investors holding securities representing at least
two-thirds (2/3) of the Registrable Securities to be included in such Demand
Registration. If a Demand Registration is for an offering pursuant to Rule 415
and the number of Registrable Securities required by the Investors to be
included therein exceeds the Permitted Registration Amount, the initial number
of Registrable Securities included in any Registration Statement in respect of
such Demand Registration and each increase in the number of Registrable
Securities included therein shall be allocated pro rata among the Investors
holding Registrable Securities on the basis of the number of Registrable
Securities owned by such Investors, with further successive pro rata allocations
among the Investors if any such Investor has requested the registration of less
than all of the Registrable Securities such Investor is entitled to register. In
the event that an Investor sells or otherwise transfers any of such Investor's
Registrable Securities, each transferee shall be allocated a pro rata portion of
the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Demand Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Demand
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. For purposes hereof, the number of
Registrable Securities held by an Investor includes all shares of Common Stock
issuable upon exercise of Warrants (and upon conversion, exercise or exchange of
other securities held by Buyer on the date of this Agreement) held by such
Investor, with further successive pro rata allocations among the Investors if
any such Investor has requested the registration of less than all of the
Registrable Securities such Investor is entitled to register.
ii. If a Demand Registration is an underwritten
public offering and the managing underwriters advise the Company in writing that
in their opinion the inclusion of the number of Registrable Securities and other
securities requested to be included creates a substantial risk that the price
per share of Common Stock will be reduced, the Company will include in such
registration, prior to the inclusion of any securities which are not Registrable
Securities, the number of Registrable Securities requested to be included which
in the opinion of such underwriters can be sold without creating such a risk,
pro rata among the respective Investors holding Registrable Securities on the
basis of the number of Registrable Securities owned by such Investors, with
further successive pro rata allocations among the Investors if any such Investor
has requested the registration of less than all such Registrable Securities such
Investor is entitled to register.
e. Selection of Underwriters. The Investors holding at
least two-thirds (2/3) of the Registrable Securities included in any Demand
Registration shall have the right to elect that the Demand Registration shall be
underwritten and, if so elected, to select the investment bank(s) and manager(s)
to administer the offering, subject to the Company's approval, which shall not
be unreasonably withheld, conditioned or delayed.
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f. Effect of Failure to File and Obtain and Maintain
Effectiveness of a Demand Registration Statement. If (i) a Registration
Statement covering Registrable Securities and required to be filed by the
Company pursuant to Section 3(a) or Section 3(b) of this Agreement is not (A)
filed with the SEC on or before the applicable Filing Deadline or (B) declared
effective by the SEC on or before the applicable Effectiveness Deadline, or (ii)
on any day after any such Registration Statement has been declared effective by
the SEC sales of all the Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 5(t)) pursuant to such Registration Statement
(including because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement or to register sufficient shares of Common Stock, as
determined in accordance with this Section 3, or because a post-effective
amendment to such Registration Statement has been filed but not been declared
effective), then, as partial relief for the damages to any holder of Registrable
Securities by reason of any such delay in or reduction of its ability to sell
the underlying shares of Common Stock (which remedy shall not be exclusive of
any other remedies available at law or in equity), the Company shall pay to such
holder an amount in cash equal to the product of (i) the sum of (A) the total
Aggregate Exercise Price (as defined in the Warrant) of the Warrant held by such
holder, plus (B) the product of (I) the total number of New Common Shares and
Other Common Shares held by such holder, multiplied by (II) the arithmetic
average of the Weighted Average Price of the Common Stock on each of the five
(5) consecutive Trading Days immediately preceding the Exchange Closing Date
(subject to appropriate adjustment for any stock dividend, stock split, stock
combination or other similar transaction occurring during such period)
multiplied by (ii) the sum of (a) 0.02, if such Registration Statement is not
filed by the applicable Filing Deadline, plus (b) 0.02, if such Registration
Statement is not declared effective by the applicable Effectiveness Deadline,
plus (c) the product of (X) 0.000000 multiplied by (Y) the sum (without
duplication) of (1) the number of days after the applicable Filing Deadline that
such Registration Statement is not filed with the SEC, plus (2) the number of
days after the applicable Effectiveness Deadline that such Registration
Statement is not declared effective by the SEC, plus (3) the number of days
after such Registration Statement has been declared effective by the SEC that
such Registration Statement is not available (other than during an Allowable
Grace Period) for the sale of at least all the Registrable Securities required
to be included on such Registration Statement pursuant to this Section 3. The
payments to which a holder shall be entitled pursuant to this Section 3(f) are
referred to herein as "Demand Registration Delay Payments." Demand Registration
Delay Payments shall be paid on the earlier of (I) the last day of the calendar
month during which such Demand Registration Delay Payments are incurred and (II)
the third Business Day after the event or failure giving rise to the Demand
Registration Delay Payments is cured. In the event the Company fails to make
Demand Registration Delay Payments in a timely manner, such Demand Registration
Delay Payments, shall bear interest, in each case until paid in full, at a rate
equal to the lesser of (A) 2.0% per month (equivalent to a per annum rate of
24.0%), prorated for partial months, and (B) the highest lawful interest rate.
4. PIGGYBACK REGISTRATIONS.
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a. Right to Piggyback. Whenever the Company proposes to
register any of its securities under the 1933 Act (other than pursuant to
Section 2 or 3 of the Agreement) in connection with a public offering of such
securities for cash (other than a registration relating solely to the sale of
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securities to participants in a stock incentive plan of the Company, in their
capacity as such) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice (and in any event within five (5) Business Days
after its receipt of notice of any exercise of demand registration rights other
than under this Agreement), which notice shall describe the offering
contemplated thereby, to all Investors of its intention to effect such a
registration and will include in such registration all Registrable Securities
held by any Investors (in accordance with the priorities set forth in Sections
4(b) and 4(c) below) with respect to which the Company has received written
requests for inclusion within twenty (20) days after the delivery of the
Company's notice; provided, however, that if the Piggyback Registration is for
an offering pursuant to Rule 415, the Company shall not be required to include
in such Demand Registration Statement a number of Registrable Securities in
excess of the Permitted Registration Amount.
b. Allocation and Priority of Registrable Security in a
Piggyback Registration.
i. If the Registrable Securities are then
eligible for sale on a delayed or continuous basis pursuant to Rule 415 and a
Piggyback Registration is for an offering pursuant to Rule 415 and the number of
Registrable Securities required by the Investors to be included therein exceeds
the Permitted Registration Amount, the initial number of Registrable Securities
included in any Registration Statement in respect of such Piggyback Registration
and each increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Investors holding Registrable Securities on the
basis of the number of Registrable Securities owned by such Investors, with
further successive pro rata allocations among the Investors if any such Investor
has requested the registration of less than all of the Registrable Securities
such Investor is entitled to register. In the event that an Investor sells or
otherwise transfers any of such Investor's Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining number of
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Piggyback Registration
Statement and which remain allocated to any Person which ceases to hold any
Registrable Securities covered by such Piggyback Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement. For purposes hereof, the number of Registrable
Securities held by an Investor includes all shares of Common Stock issuable upon
exercise of the Warrant (and upon conversion, exercise or exchange of other
securities) held by such Investor.
ii. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in the registration creates a substantial
risk that the price per share of Common Stock in the offering will be reduced,
the Company will include in such registration first, the securities that the
Company proposes to sell, second, the Registrable Securities requested to be
included in such registration, pro rata among the Investor on the basis of the
number of shares of Registrable Securities owned by the Investors, with further
successive pro rata allocations among the Investors if any such Investor has
requested the registration of less than all of the Registrable Securities such
Investor is entitled to register, and third, any other securities requested to
be included in such registration.
10
iii. Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration on behalf of
holders of the Company's securities and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in the registration creates a substantial risk that the price per
share of Common Stock in the offering will be reduced, the Company will include
in such registration first, the securities requested to be included therein by
the holders requesting such registration and the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such securities on the basis of the number of shares of Common Stock or
Registrable Securities owned by such holders, with further successive pro rata
allocations among such holders if any such holder has requested the registration
of less than all of the Registrable Securities such holder is entitled to
register, and second, other securities requested to be included in such
registration.
c. Selection of Underwriters. In connection with any
Piggyback Registration, (i) Investors holding at least two-thirds (2/3) of the
Registrable Securities requested to be registered shall have the right to elect
that such registration be underwritten and to select the managing underwriters
(subject to the approval of the Company, which shall not be unreasonably
withheld, conditioned or delayed) to administer any offering of the Company's
securities covered by Section 5(b)(iii), and (ii) the Company shall have the
right to select the managing underwriters (subject to the approval of Investors
holding securities representing at least two-thirds (2/3) of the Registrable
Securities requested to be registered, which shall not be unreasonably withheld,
conditioned or delayed) to administer any offering of the Company's securities
covered by Section 5(b)(ii).
5. RELATED OBLIGATIONS.
-------------------
Whenever the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2 or Section 3, the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, or the Company is otherwise obligated to
file a Registration Statement pursuant to this Agreement, the Company shall use
its reasonable best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the
SEC a Registration Statement with respect to the applicable Registrable
Securities (but in no event later than the Applicable Filing Deadline) and use
its reasonable best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than the applicable Effectiveness Deadline). No
later than the first Business Day after such Registration Statement becomes
effective, the Company shall file with the SEC the final prospectus included
therein pursuant to Rule 424 (or successor thereto) promulgated under the 1933
Act. The Company shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) (or successor
thereto) promulgated under the 1933 Act or (ii) the date on which the Investors
shall have sold all the Registrable Securities covered by such Registration
Statement to Persons that are not Investors (the "Registration Period"). Such
Registration Statement (including any amendments or supplements thereto and any
11
prospectuses (preliminary, final, summary or free writing) contained therein or
related thereto shall not contain any untrue statement of a material fact or
omit to state 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. The term "reasonable best efforts" shall mean, among other
things, that the Company shall submit to the SEC, within two (2) Business Days
after the Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff of the SEC has no further
comments on the Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement (which prospectus supplements shall be filed pursuant to
Rule 424 (or successor thereto) promulgated under the 0000 Xxx) as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of any amendment or supplement to a
Registration Statement or prospectus that is required to be filed pursuant to
this Agreement (including pursuant to this Section 5(b)) by reason of the
Company filing a report under the 1934 Act, the Company shall have incorporated
such report by reference into such Registration Statement, if applicable and
permitted by law, or shall file such amendments or supplements with the SEC on
the same day. The Company shall use its reasonable best efforts to cause any
post-effective amendment to a Registration Statement to become effective as soon
as practicable after such filing. No later than the first Business Day after a
post-effective amendment to a Registration Statement becomes effective, the
Company shall file with the SEC the final prospectus included therein pursuant
to Rule 424 (or successor thereto) promulgated under the 1933 Act.
c. The Investors holding securities representing at
least two-thirds, (2/3) of the Registrable Securities to be included in any
Registration Statement shall have the right to select one legal counsel to
review such Registration Statements ("Legal Counsel"), which shall be Xxxxxx
Xxxxxx Xxxxxxxx LLP or such other counsel as thereafter designated by the
holders of at least two-thirds (2/3) of the Registrable Securities to be
included in such Registration Statement. The Company shall reasonably cooperate
with Legal Counsel in performing the Company's obligations under this Agreement.
Without limiting the foregoing, the Company shall (A) permit Legal Counsel to
review and comment upon (i) the Initial Registration Statement or Registration
Statement with respect to a Long Form Registration, at least five (5) Business
Days prior to its filing with the SEC, (ii) any Registration Statement with
respect of a Short-Form Registration, at least three (3) Business Days prior to
its filing with the SEC, and (iii) all other Registration Statements and all
amendments and supplements to all Registration Statements, within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
document, registration statement, amendment or supplement described in the
foregoing clause (A) in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the effectiveness of a
12
Registration Statement or any amendment or supplement thereto without providing
prior notice thereof to Legal Counsel and each Investor. The Company shall
furnish to Legal Counsel, without charge, (i) promptly after the same is
prepared and filed with the SEC, one copy of any Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits and (ii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 5.
d. The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference that have not been filed via XXXXX, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, at least
one copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any prospectus (preliminary, final, summary or free writing), as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
e. The Company shall use its reasonable best efforts to
(i) register and qualify, unless an exemption from registration and
qualification applies, the resale by the Investors of the Registrable Securities
covered by a Registration Statement under the securities or "blue sky" laws of
all the states of the United States and any other jurisdiction reasonably
requested by any Investor, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 5(e) or (y) subject itself to general taxation in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.
f. The Company shall notify Legal Counsel and each
Investor in writing of the happening of any event, as promptly as practicable
after becoming aware of such event, as a result of which any prospectus included
in, or relating to, a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (provided
that in no event shall such notice contain any material, nonpublic information),
13
and promptly prepare and file with the SEC a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
at least one copy of such supplement or amendment to Legal Counsel and each
Investor. The Company shall also promptly notify Legal Counsel and each Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
on the same day of such effectiveness and by overnight mail), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
g. The Company shall use its reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
h. At the reasonable request (in the context of the
securities laws) of any Investor, or in the case of an underwritten offering
upon the request of any underwriter, the Company shall furnish to such Investor
or underwriter, as the case may be, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as such
Investor or underwriter may reasonably request (i) a "comfort letter," dated
such date, from the Company's independent registered certified public
accountants in form and substance as is customarily given by registered
independent registered certified public accountants to underwriters in an
underwritten public offering, addressed to the Investors and any underwriters
(or if such accountants are prohibited by generally accepted auditing standards
from issuing such a "comfort letter" to an Investor, the Company shall furnish
to such Investor an "agreed upon procedures" letter covering the same matters to
the greatest extent possible, and otherwise in customary form and substance),
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to such Investor or underwriter, as the case may be.
i. At the reasonable request (in the context of the
securities laws) of any Investor or, in the case of an underwritten offering,
upon the request of any underwriter, the Company shall make available for
inspection during regular business hours by (i) any Investor, (ii) Legal Counsel
and (iii) one firm of accountants or other agents retained by the Investors
(collectively, the "Inspectors"), and in the case of an underwritten offering by
any underwriter all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the "Records"),
as shall be reasonably deemed necessary by such Inspector or underwriter, as the
case may be, and cause the Company's officers, directors and employees to supply
all information that any Inspector or underwriter may reasonably request;
provided, however, that each Inspector shall agree to hold in strict confidence
and shall not make any disclosure (except to an Investor or underwriter) or use
of any Record or other information that the Company determines in good faith to
14
be confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement of which the Inspector has knowledge. Each Investor agrees that
it shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investor's ability to sell Registrable Securities in a manner that
is otherwise consistent with applicable laws and regulations, provided that such
Investor receiving information pursuant to this Section 5(i) complies with its
confidentiality obligations pursuant to this Section 5(i).
j. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
k. The Company shall use its reasonable best efforts to
(i) cause all the Registrable Securities covered by a Registration Statement to
be listed on each securities exchange or trading market on which securities of
the same class or series issued by the Company are listed, and (ii) without
limiting the generality of the foregoing, arrange for at least three market
makers to register with the National Association of Securities Dealers, Inc.
(the "NASD") as such with respect to such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 5(k).
l. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the underwriters, if any, and, to
the extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request.
m. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the effective date
of the applicable Registration Statement.
15
n. If requested by an Investor, the Company shall (i) as
soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as such Investor requests to be included therein
relating to the sale and distribution of Registrable Securities, including
information with respect to such Investor, the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) as soon as practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by an Investor.
o. The Company shall use its reasonable best efforts to
cause the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental agencies
or authorities in the United States as may be necessary to consummate the
disposition of such Registrable Securities.
p. The Company shall make generally available to its
security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the 0000 Xxx) covering a
12-month period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of a Registration Statement.
q. The Company shall otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
r. Within one (1) Business Day after a Registration
Statement that covers applicable Registrable Securities is ordered effective by
the SEC, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in substantially the form attached hereto as
Exhibit A, provided that if the Company changes its transfer agent, it shall
immediately deliver any previously delivered notices under this Section 5(r) and
any subsequent notices to such new transfer agent.
s. To the extent not made by the underwriters in the
case of an underwritten offering, the Company shall make such filings with the
NASD, pursuant to NASD Rule 2710 or otherwise (including providing all required
information and paying required fees thereto), as and when requested by any
Investor, or in the case of an underwritten offering, by any underwriter, and
make all other filings and take all other actions reasonably necessary to
expedite and facilitate the disposition by the Investors of Registrable
Securities pursuant to a Registration Statement, including promptly responding
to any comments received from the NASD.
t. Notwithstanding anything to the contrary in Section
5(f), at any time after the applicable Registration Statement has been declared
effective by the SEC, the Company may delay the disclosure of material
non-public information concerning the Company the disclosure of which at the
time is not, in the good faith opinion of the Board of Directors of the Company
16
and its counsel, in the best interest of the Company and not, in the opinion of
counsel to the Company, otherwise required (a "Grace Period"); provided, that
the Company shall promptly (i) notify the Investors in writing of the existence
of material non-public information giving rise to a Grace Period (provided that
in each notice the Company shall not disclose the content of such material
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which the
Grace Period ends; and, provided further, that (A) no Grace Period shall exceed
fifteen (15) consecutive days, (B) during any 365 day period such Grace Periods
shall not exceed an aggregate of thirty (30) days and (C) the first day of any
Grace Period must be at least ten (10) Trading Days after the last day of any
prior Grace Period (a Grace Period that satisfies all of the requirements of
this Section 5(t) being referred to as an "Allowable Grace Period"). For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 5(g) hereof shall not be applicable during the
period of any Allowable Grace Period. Upon expiration of the Grace Period, the
Company shall again be bound by the provisions of the first sentence of Section
5(f) with respect to the information giving rise thereto unless such material
non-public information is no longer applicable.
u. The Company shall not register any of its securities
for sale for its own account (other than for issuance to employees, directors
and consultants, of the Company under an employee benefit plan or for issuance
in a business combination transaction), except pursuant to a firm commitment
underwritten offering. Except pursuant to this Agreement, the Company shall not
file any Registration Statement (other than on Form S-8) with the SEC prior to
the date that the Initial Registration Statement is declared effective by the
SEC.
v. The Company shall enter into such customary
agreements (including, in the case of underwritten offering, an underwriting
agreement) and take such other actions as the any of the Investors or
underwriters, if any, may reasonably request in order to expedite and facilitate
the disposition of the Registrable Securities and any other securities covered
by a Registration Statement.
6. OBLIGATIONS OF THE INVESTORS.
----------------------------
a. At least seven (7) Business Days prior to the first
anticipated filing date of a Registration Statement and at lease five (5)
Business Days prior to the filing of any amendment or supplement Registration
Statement, the Company shall notify each Investor in writing of the information,
if any, the Company requires from each such Investor if such Investor elects to
have any of such Investor's Registrable Securities included in such Registration
Statement or, with respect to an amendment or a supplement, if such Investor's
Registrable Securities are included in such Registration Statement (each an
"Information Request"). Provided that the Company shall have complied with its
obligations set forth in the preceding sentence, it shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company, in response
to an Information Request, such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
17
b. Each Investor agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any Registration Statement in which any Registrable Securities held by
such Investors are being included.
c. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5(g) or the first sentence of Section 5(f) or written notice from the Company of
an Allowable Grace Period, such Investor will promptly discontinue disposition
of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(g) or the first
sentence of Section 5(f) or receipt of notice that no supplement or amendment is
required or that the Allowable Grace Period has ended. Notwithstanding anything
to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Exchange Agreement in connection with any sale
of Registrable Securities with respect to which an Investor provides reasonable
evidence that such Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any event of
the kind described in Section 5(g) or the first sentence of Section 5(f) and for
which the Investor has not yet settled.
7. EXPENSES OF REGISTRATION.
------------------------
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2, 3, 4 and 5, including all registration,
listing and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company shall be paid by the Company. The
Company shall also reimburse the Investors for the reasonable fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2, 3, 4 and 5, of this Agreement.
8. INDEMNIFICATION.
---------------
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each Investor and any
underwriter, and the directors, officers, partners, members, managers,
employees, agents, representatives of, and each Person, if any, who controls any
Investor or underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency
authority, or body (including the SEC or any state securities commission,
authority or self-regulatory organization, in the United States or anywhere else
18
in the world), whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final, summary or free writing
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including any state securities law,
or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any material
violation of this Agreement by the Company (the matters in the foregoing clauses
(i) through (iv) being, collectively, "Violations"). Subject to Section 8(c),
the Company shall reimburse the Indemnified Persons, promptly as such expenses
are incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 8(a): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person for such Indemnified Person expressly
for use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto if such prospectus (or amendment or
supplement thereto) was timely filed with the SEC and furnished by the Company
to such Investor pursuant to Section 5(d), and (ii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, conditioned or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 11.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 8(a), the Company, each of its directors,
each of its officers who signs the Registration Statement, and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
(each an "Indemnified Party"), against any Claim or Indemnified Damages to which
any of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 8(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
19
however, that the indemnity agreement contained in this Section 8(b) and the
agreement with respect to contribution contained in Section 9 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, further, however, that
the aggregate liability of the Investor in connection with any Violation shall
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement giving rise to
such Claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive any transfer of the Registrable Securities by an Investor pursuant to
Section 11.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 8 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
8, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be. In any such proceeding, any
Indemnified Person or Indemnified Party may retain its own counsel, but, except
as provided in the following sentence, the fees and expenses of that counsel
will be at the expense of that Indemnified Person or Indemnified Party, as the
case may be, unless (i) the indemnifying party and the Indemnified Person or
Indemnified Party, as applicable, shall have mutually agreed to the retention of
that counsel, (ii) the indemnifying party does not assume the defense of such
proceeding in a timely manner or (iii) in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, the representation by
such counsel for the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall pay
reasonable fees for up to one separate legal counsel (plus local counsel) for
the Investors, and such legal counsel shall be selected by the Investors holding
at least two-thirds (2/3) in interest of the Registrable Securities included in
the Registration Statement to which the Claim relates. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise with respect to
any pending or threatened action or claim in respect of which indemnification or
contribution may be or has been sought hereunder (whether or not the Indemnified
Party or Indemnified Person is an actual or potential party to such action or
claim) which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
20
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 8,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
d. The indemnification required by this Section 8 shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
e. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
9. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 8 to the fullest extent permitted by law; provided, however, that:
(i) no Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale, shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited to an amount equal to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
the Registration Statement giving rise to such action or claim for
indemnification less the amount of any damages that such seller has otherwise
been required to pay in connection with such sale.
10. REPORTS UNDER THE 1934 ACT.
--------------------------
With a view to making available to the Investors the benefits
of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Exchange Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
21
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144 and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company (or
information regarding the locations thereof on the SEC's XXXXX filing system),
and (iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
11. ASSIGNMENT OF REGISTRATION RIGHTS.
---------------------------------
The rights under this Agreement shall be automatically
assignable by the Investors to any transferee or assignee of all or any portion
of Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such transfer or
assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such securities
by the transferee or assignee is restricted under the 1933 Act or applicable
state securities laws; (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with
the applicable requirements of the Securities Exchange Agreement.
12. AMENDMENT OF REGISTRATION RIGHTS.
--------------------------------
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold at least two-thirds (2/3) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
13. MISCELLANEOUS.
-------------
a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
22
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
Sonterra Resources, Inc.
000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to:
Xxxxx & XxXxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxx
Xxx Xxxx, XX, 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
If to Buyer:
The Longview Fund, L.P.
c/o Viking Asset Management, LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
With a copy to:
c/o Viking Asset Management, LLC
00 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
And with a copy to:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx, Esq.
Facsimile: 312-902-1061
If to Legal Counsel, to Xxxxxx Xxxxxx Rosenman LLP as set forth above.
23
Or, in the case of a Buyer or other party named above, to such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party at
least five (5) days prior to the effectiveness of such change.
If to an Investor (other than the Buyer), to such Investor at the
address and/or facsimile number reflected in the records or the Company.
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or deposit with a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively. Notwithstanding the foregoing, the Company or
its counsel may transmit versions of any Registration Statement (or any
amendments or supplements thereto) to Legal Counsel in satisfaction of its
obligations under Section 5(c) to permit Legal Counsel to review such
Registration Statement prior to filing (and solely for such purpose) by email to
xxxx.xxxx@xxxxxxxxx.xxx (or such other e-mail address as has been provided for
such purpose by Legal Counsel) and provided that delivery and receipt of such
transmission shall be confirmed by electronic, telephonic or other means.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
the City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof by registered or certified mail, return
receipt requested, or by deposit with a nationally recognized overnight delivery
service, to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
24
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement and the other Transaction Documents
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the other Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement and any amendments hereto may be
executed and delivered in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed shall be deemed to
be an original, but all of which taken together shall constitute one and the
same agreement, and shall become effective when counterparts have been signed by
each party hereto and delivered to the other parties hereto, it being understood
that all parties need not sign the same counterpart. In the event that any
signature to this Agreement or any amendment hereto is delivered by facsimile
transmission or by e-mail delivery of a ".pdf" format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or ".pdf" signature page were an original thereof. No party hereto
shall raise the use of a facsimile machine or e-mail delivery of a ".pdf" format
data file to deliver a signature to this Agreement or any amendment hereto or
the fact that such signature was transmitted or communicated through the use of
a facsimile machine or e-mail delivery of a ".pdf" format data file as a defense
to the formation or enforceability of a contract and each party hereto forever
waives any such defense.
i. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents and other determinations to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by Investors holding at least two-thirds (2/3) of
the Registrable Securities, determined as if the Warrant (any other securities
exercisable or exchangeable for, or convertible into Registrable Securities)
then outstanding have been converted into or exercised or exchanged for
Registrable Securities, without regard to any limitations on the exercise of the
Warrants (or any such other securities). Any consent or other determination
25
approved by Investors as provided in the immediately preceding sentence shall be
binding on all Investors.
k. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.
l. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies that such Buyers and holders have been granted at any time
under any other agreement or contract and all of the rights that such Buyers and
holders have under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security or proving actual damages), to recover damages
by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law or in equity.
m. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns and, to the
extent provided in Sections 8(a) and 8(b) hereof, each Investor, any
underwriter, and the directors, officers, partners, members, managers,
employees, agents, representatives of, and each Person, if any, who controls any
Investor or underwriter within the meaning of the 1933 Act or the 1934 Act and
each of the Company's directors, each of the Company's officers who signs the
Registration Statement, and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.
n. The Company shall not grant any Person any
registration rights with respect to shares of Common Stock or any other
securities of the Company other than registration rights that will not adversely
affect the rights of the Investors hereunder (including by limiting in any way
the number of Registrable Securities that could be included in any Registration
Statement pursuant to Rule 415) and shall not otherwise enter into any agreement
that is inconsistent with the rights granted to the Investors hereunder.
o. The obligations of each Investor hereunder are
several and not joint with the obligations of any other Investor, and no
provision of this Agreement is intended to confer any obligations on any
Investor vis-a-vis any other Investor. Nothing contained herein, and no action
taken by any Investor pursuant hereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated herein.
p. Unless the context otherwise requires, (a) all
references to Sections, Schedules or Exhibits are to Sections, Schedules or
Exhibits contained in or attached to this Agreement, (b) words in the singular
or plural include the singular and plural and pronouns stated in either the
masculine, the feminine or neuter gender shall include the masculine, feminine
and neuter and (c) the use of the word "including" in this Agreement shall be by
way of example rather than limitation.
26
* * * * * *
27
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYER:
-------- ------
SONTERRA RESOURCES, INC. THE LONGVIEW FUND, L.P.
By: Viking Asset Management, LLC
Its: Investment Adviser
By: ___________________________ By: ___________________________
Name: ___________________________ Name: Xxxxx X. Xxxxxxx
Title: ___________________________ Title: Chief Investment Officer
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn:
Re: Sonterra Resources, Inc.
------------------------
Ladies and Gentlemen:
We are counsel to Sonterra Resources, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Exchange Agreement (the "Purchase Agreement") entered into by and
among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders shares of Common Stock of
the Company (the "Common Stock") and warrants (the "Warrants") to purchase
shares of Common Stock. Pursuant to the Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement"), pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form [S-__] (File No. 333-_____________) (the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities, which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC, and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:_____________________________________
cc: [LIST NAMES OF HOLDERS]
