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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 Suite 312,
7 Reid Street, Hamilton Bermuda HM11 (the "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.
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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.
------------------------------
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) 0.000667 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.
-----------------------
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
<PAGE>
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 th
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