EXHIBIT 10.20(b)
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of November 19, 1996, by and among EPI
Technologies, Inc., j Delaware corporation (formerly named Environmental
Purification Industries, Inc.") (the "Company"), the persons named as Investors
in the Company's Common Stock pursuant to the Stock Purchase Agreement of even
date (the "Purchase Agreement") and Meridian National Corporation, a Delaware
corporation ("Meridian").
PREAMBLE
The Company desires to extend registration rights to the Investors in
the Company's Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, the Company and the Holders agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall he in effect at the time.
(c) "Holder" shall mean any holder of outstanding Registrable
Securities or anyone who holds outstanding Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with this Agreement.
(d) "Initiating Holders" shall mean any Holder or Holders of at
least fifty-one percent (51%) of the Registrable Securities then outstanding.
(e) "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws of such states in which Holders notify the Company of
their intention to offer Registrable Securities.
(f) "Registrable Securities" shall mean all of the following to
the extent the same have not been sold to the public (i) any and all shares of
Common[ Stock of the Company issued to Investors or to Meridian; or (ii) stock
issued in respect of stock referred to in (i) above in any reorganization; or
(iii) stock issued in respect of the stock referred to in (i) or (ii) as a
result of a stock
split, stock dividend. recapitalization or combination. Notwithstanding the
foregoing, Registrable Securities shall not include otherwise Registrable
Securities (i) sold by a person in a transaction in which his rights under this
Agreement are not properly assigned; or (ii) (A) sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale or (C) the
registration rights associated with such securities have been terminated
pursuant to Section 16 of this Agreement.
(g) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
Section 2. PIGGYBACK REGISTRATION.
(a) If at any time or from time to time, the Company shall
determine to register any of its securities, for its own account or the account
of any of its shareholders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to an SEC Rule 145
transaction, a transaction relating solely to the sale of debt or convertible
debt instruments or a registration on any form (other than Form S-i, S-2 or S-3,
or their successor forms) which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable-able Securities, the Company will:
(i) give to each Holder written notice thereof as soon as
practicable prior to filing the registration statement; and
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made within fifteen (15) days after
receipt of such written notice from the Company, by any Holder or
Holders, except as set forth in subsection (b) below.
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to subsection 2(a)(i). In such event, the
right of any Holder to registration pursuant to Section 2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this Section
2, if the managing underwriter(s) determines that marketing factors require a
limitation of the number of shares to be underwritten, the managing
underwriter(s) may limit the number of Registrable Securities to be included in
the registration and underwriting, or may exclude Registrable Securities
entirely from such registration if the registration is the first registered
offering for the sale of the Company's securities to the general public
(provided that no shares held by officers and directors of the Company, other
than Registrable Securities that may be owned by officers and directors,
are included in the registration and underwriting). The Company shall so advise
all Holders and the other holders distributing their securities through such
underwriting pursuant to piggyback registration rights similar to this Section
2, and the number of shares of Registrable Securities and other securities that
may be included in the registration and underwriting shall be allocated among
all Holders and other holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders and other
securities held by other holders at the time of filing the registration
statement. If any Holder disapproves of the terms of any such underwriting, he
may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. If, by the withdrawal of such Registrable Securities, a
greater number of Registrable Securities held by other Holders may he included
in such registration (up to the limit imposed by the underwriters), the Company
shall offer t(;all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities on a
pro-rata basis. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
Section 3. EXPENSES OF REGISTRATION. In addition to the fees and
expenses contemplated by Section 5 hereof, all expenses incurred in connection
with registrations pursuant to Section 2 hereof, including without limitation
all registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits of
the Company's financial statements incidental to or required by such
registration, shall be borne by the Company, except that the Company shall not
be required to pay underwriters' fees, discounts or commissions relating to
Registrable Securities or fees of a separate legal counsel of a Holder.
Section 4. REGISTRATION PROCEDURES. In the case of each
registration effected by the Company pursuant to this Agreement, the Company
will keep each Holder participating therein advised in writing as to the
initiation of each registration and as to the completion thereof. At its expense
the Company will:
(a) keep such registration continuously effective for a period
of ninety (90) days or such reasonable period necessary to permit the
Holder or Holders to complete the distribution described in the
registration statement relating thereto, whichever first occurs;
(b) promptly prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to comply with
the provisions of the Securities Act, and to keep such registration
statement effective for that period of time specified in Section 4(a)
above;
(c) furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(d) use reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible moment;
(e) register or qualify such Registrable Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
underwriter(s) reasonably requires, and keep such registration or
qualification effective during the period set forth in Section 4(a) above;
(f) cause all Registrable Securities covered by such
registrations to be listed on each securities exchange, including NASDAQ,
on which similar securities issued by the Company are then listed or, if no
such listing exists, use reasonable best efforts to list all Registrable
Securities on one of the New York Stock Exchange, the American Stock
Exchange or NASDAQ; and
(g) use reasonable efforts to cause its accountants to issue to
the underwriter, if any, or the Holders, if there is no underwriter,
comfort letters and updates thereof, in customary form and covering matters
of the type customarily covered in such letters with respect to
underwritten offerings;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
Holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably, request in order to expedite or
facilitate the disposition of such Registrable Securities (including,
without limitation, effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) if the offering is underwritten, at the request of any
Holder of Registrable Securities to use its reasonable efforts to furnish
on the date that Registrable Securities are delivered to the underwriters
for sale pursuant to such registration an opinion in the customary form of
counsel representing the Company for the purposes of such registration;
(k) notify each Holder, at any time a prospectus covered by such
registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
Section 5. INDEMNIFICATION.
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 2, the Company will
indemnify and hold harmless each Holder of such Registrable Securities
thereunder, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such holder, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Securities
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company by an instrument duly executed by such Holder or underwriter
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration is being effected, indemnify and hold harmless the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company and each underwriter within the meaning of the Securities Act, and
each other such Holder, each of its officers, directors and partners and each
person controlling such Holder, against all claims, losses, expenses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, such directors,
officers, partners, persons or underwriters for any reasonable legal or any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder specifically for use therein; provided, however,
the total amount for which any Holder, its officers, directors and partners, and
any person controlling such Holder, shall be liable under this Section 5(b)
shall not in any event exceed the aggregate proceeds received by such Holder
from the sale of Registrable Securities sold by such Holder in such
registration.
(c) Each party entitled to indemnification under this Section 5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claims as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that the
provisions on indemnification contained in the underwriting agreements entered
into among the selling Holders, the Company and the underwriters in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall be controlling as
to the Registrable Securities included in the public offering; provided,
however, that if; as a result of this Section 5(d), any Holder, its officers,
directors, and partners and any person controlling such Holder is held liable
for an amount which exceeds the aggregate proceeds received by such Holder from
the sale of Registrable Securities included in a registration, as provided in
Section 5(b) above, pursuant to such underwriting agreement (the Excess
Liability"), the Company shall reimburse any such Holder for such Excess
Liability.
(e) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to this Section 5(e) shall be limited to an amount equal to
the proceeds to such Holder of the Registrable Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Registrable Securities).
(f) The indemnification provided by this Section 5 shall be a
continuing right to indemnification and shall survive the registration and sale
of any securities by any Person entitled to indemnification hereunder and the
expiration or termination of this Agreement.
Section 6. LOCKUP AGREEMENT. In consideration for the Company
agreeing to its obligations under this Agreement, each Holder agrees in
connection with any registration of the Company's securities (whether or not
such Holder is participating in such registration) upon the request of the
Company and the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Registrable Securities (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the
case may be, for such period of time (not to exceed 120 days in the case of the
Company's initial public offering) from the effective date of such registration
as the Company and the underwriters may specify, so long as all Holders or
stockholders holding more than one percent (1%) of the outstanding common stock
and all officers and directors of the Company are bound by a comparable
obligation provided, however, that nothing herein shall prevent any Holder that
is a partnership or corporation from making a distribution of Registrable
Securities to the partners or shareholders thereof that is otherwise in
compliance with applicable securities laws, so long as such distributees agree
to be so bound.
Section 7. INFORMATION BY HOLDER. The Holder or Holders of
Registrable Securities included in any registration shall promptly furnish to
the Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing and as shall be required in connection with any registration referred to
herein.
Section 8. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities of a Holder and keep information
available granted to a Holder by the Company under Section 2 may be assigned by
a Holder to any partner or shareholder of such Holder, to any other Holder, or
to a transferee or assignee who receives at least five (5) shares of Registrable
Securities (as adjusted for stock splits and the like); provided, that the
Company is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
Section 9. TERMINATION OF RIGHTS.
(a) The rights of any particular Holder to cause the Company to
register securities under Section 2 shall terminate with respect to such Holder
at such time, following a bona fide, firmly underwritten public offering of
shares of the Company's Common Stock registered under the Securities Act
(provided that the aggregate gross offering price equals or exceeds $3,000,000),
as such Holder is able to dispose of all of his Registrable Securities in one
three-month period pursuant to the provisions of Rule 144.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 9, all rights of any particular Holder under this Agreement shall
terminate at 5:00 P.M. Eastern time on the date live (5) years after the closing
date of the Company's first firmly underwritten public offering.
Section 10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Holders as follows:
(a) The execution, delivery and performance of this Agreement by
the Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or Bylaws of the Company or any
provision of any indenture, agreement or other
instrument to which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or lapse of time me
or both) a default under any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to (I) applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and moratorium laws and other
laws of general application affecting enforcement of creditors' rights generally
and (ii) the availability of equitable remedies as such remedies may be limited
by equitable principles of general applicability (regardless of whether
enforcement is sought in a proceeding in equity or at law).
Section 11. MISCELLANEOUS.
(a) This Agreement may be amended only by a writing signed by
the Holders (other than Meridian) of at least seventy-five percent (75%) of
the Registrable Securities held by such Holders, as constituted from time
to time. The Holders hereby consent to future amendments to this Agreement
that permit future investors, other than employees, officers or directors
of the Company, to be made parties hereto and to become Holders of
Registrable Securities; PROVIDED, HOWEVER, that no such future amendment
may materially impair the rights of the Holders hereunder without obtaining
the requisite consent of the Holders, as set forth above. For purposes of
this Section, Registrable Securities held by the Company or beneficially
owned by any officer or employee of the Company shall be disregarded and
deemed not to be outstanding.
(b) This Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.
(c) All notices to be given to any party shall be in writing and
delivered by hand in person, or by express overnight courier service, or by
electronic facsimile transmission (with a copy sent by first-class mail,
postage prepaid), or by registered or certified mail, return receipt
requested, postage prepaid, addressed (a) if to a Holder, at such Holder's
address set forth on the books of the Company, or at such other address as
such Holder shall have furnished to the Company in writing, or (b) if to
any other holder of any Registrable Securities, at such address as such
holder shall have furnished the Company in writing, or, until any such
holder so furnishes an address to the Company, then to and at the address
of the last holder of such securities who has so furnished an address to
the Company, or (c) if to the Company, at the Company's current address
(Attention: President) or at such other address as the Company shall have
furnished to the Holders.
(d) Any other provisions of this Agreement to the contrary
notwithstanding, the Company's obligation to file a registration statement,
or cause such registration statement to become and remain effective, shall be
suspended for a period not to exceed 30 days (and for periods not exceeding,
in the a('aggregate, 60 days in any 24 month period) if there exists at
the time material nonpublic information relating to the Company which, in
the reasonable opinion of the Company, should not be disclosed.
(e) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.
(f) If, and as often as, there is any change in the Common Stock
by way of a stock split, stock dividend, combination or reclassification,
or through a merger, consolidation, reorganization or recapitalization, or
by any other means, appropriate adjustment shall be made in the provisions
hereof so that the rights and privileges granted hereby shall continue with
respect to the Common Stock as so changed.
(g) The Company's principal place of business is in Toledo,
Ohio. This Agreement shall be governed by and construed in accordance with
the procedural and substantive laws of the State of Ohio without regard to
principles of conflicts of law.
IN WITNESS WHEREOF, the Company, the Investors and Meridian have executed
this Agreement in counterparts as of the date first above specified.
EPI TECHNOLOGIES, INC. INVESTORS:
By: /s/ Xxxxx X. Maison By: /s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX
Its: President
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MNP CORPORATION
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, President
MERIDIAN NATIONAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxx
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XXXXXX XXXXX
Its: Chief Executive Officer
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