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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
June 15, 2001 between U.S. PLASTIC LUMBER CORP., a Nevada corporation with
offices at 0000 Xxxxxx Xxxx, Xxxxx 000 Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the
"Company") and HALIFAX FUND, L.P., with offices at c/o The Palladin Group, L.P.,
Investment Manager, 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the
"Purchaser").
WITNESSETH:
WHEREAS, pursuant to that certain Debenture Purchase Agreement by and
between the Company and the Purchaser (the "Purchase Agreement"), the Company
has agreed to sell and issue to the Purchaser, and the Purchaser has agreed to
purchase from the Company, an aggregate of $4.0 million principal amount of the
Company's 18% Debentures Due May 31, 2002 (the "Debentures") on the terms and
conditions set forth therein;
WHEREAS, the Purchase Agreement contemplates that the Debentures may,
under certain circumstances be convertible into shares (the "Common Shares") of
common stock, par value $0.0001, of the Company ("Common Stock") pursuant to the
terms and conditions set forth in the Debentures; and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Purchaser's agreement to enter into the Purchase Agreement, the Company has
agreed (i) to issue warrants exercisable for 250,000 shares of Common Stock of
the Company (the "Initial Warrants") in connection with the issuance of the
Debentures (shares of Common Stock issuable under the Warrants are referred to
herein as the "Initial Warrant Shares"); and (ii) pursuant to the terms of the
Purchase Agreement, under certain circumstances to issue to the Purchaser
warrants (the "Additional Warrants" and together with the Initial Warrants, the
"Warrants") to purchase an additional 250,000 shares of Common Stock (the
"Additional Warrant Shares" and together with the Initial Warrant Shares, the
"Warrant Shares") and (iii) to provide the Purchaser with certain registration
rights with respect to the Common Shares and Warrant Shares and certain other
rights and remedies with respect to the Debentures as set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Purchaser agrees as follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement, the Warrants or the Debentures. As used in this Agreement, the
following terms shall have the following respective meanings:
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"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Company Reporting Event" shall mean a transaction (such as a merger or
an acquisition or disposition of a business) or other corporate event which,
under applicable securities laws or SEC regulations, requires the Company to
delay or restate its financial statements to comply with such laws or rules.
"Default Payment Rate" shall have the meaning set forth in Section
2(b)(ii).
"Holder" and "Holders" shall mean the Purchaser, and any transferee of
the Debentures, Warrants, Warrant Shares or Common Shares or Registrable
Securities which have not been sold to the public to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement.
"Outstanding Principal Amount" shall have the meaning ascribed to such
term in the Debentures.
"Registrable Securities" shall mean: (i) the Common Shares and Warrant
Shares issued to each Holder or its permitted transferee or designee upon
conversion of the Debentures or exercise of the Warrants, as applicable, or upon
any stock split, stock dividend, recapitalization or similar event with respect
to such Common Shares or Warrant Shares; (ii) any securities issued or issuable
to each Holder upon the conversion, exercise or exchange of any Debentures,
Warrants, Warrant Shares, or Common Shares; provided that such security is
traded on a public market in the United States; and (iii) any other security of
the Company issued as a dividend or other distribution with respect to,
conversion or exchange of, or in replacement of, Registrable Securities;
provided that such security is traded on a public market in the United States.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "Blue Sky"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company); provided that the Company shall not be obligated to pay fees and
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expenses of Purchaser and Purchaser's counsel in excess of $7,500 in connection
with the due diligence examination of the Company described above.
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
2. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including
without limitation the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable "Blue Sky" or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as would permit or facilitate the sale or distribution
of all the Registrable Securities in the manner (including manner of sale) and
in all states reasonably requested by the Holder. Such best efforts by the
Company shall include the following:
(a) The Company shall, as expeditiously as reasonably
possible after the Closing Date:
(i) But in any event within 30 days thereafter,
prepare and file a registration statement with the Commission
pursuant to Rule 415 under the Securities Act on Form S-3
under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act) covering the
Registrable Securities (such registration statement, including
all of the documents incorporated or deemed to be incorporated
by reference therein, is referred to herein as the
"Registration Statement"), which Registration Statement, to
the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), shall state that
such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become
issuable upon conversion of the Debentures or exercise of the
Warrants; provided, however, that the Holders shall not be
identified as "underwriters" in the Registration Statement,
with respect to the sale of Registrable Securities. The number
of shares of Common Stock initially included in such
Registration Statement shall be no less than the sum of (A)
two times the sum of the number of Common Shares that would
then be issuable upon conversion of the Debentures if the
Debentures were then convertible plus (B) one and one-half
times the number of Warrant Shares issuable upon exercise of
the Warrants (assuming all Warrants were issued) in each case
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without regard to any limitation on the Purchaser's ability to
convert the Debentures or Warrants. Thereafter, the Company
shall use its best efforts to cause such Registration
Statement and other filings to be declared effective as soon
as possible, and in any event prior to 90 days following the
Closing Date. The Company shall provide Holders and their
legal counsel reasonable opportunity to review any such
Registration Statement or amendment or supplement thereto
prior to filing. The Company shall provide Holders and their
legal counsel reasonable opportunity to review any such
Registration Statement or amendment or supplement thereto
prior to filing. Without limiting the foregoing, the Company
will promptly respond to all SEC comments, inquiries and
requests, and shall request acceleration of effectiveness at
the earliest possible date. If the Company is not initially
eligible to use Form S-3, it will, at the request of a
majority-in-interest of the holders of Registrable Securities,
amend its Form S-1 to a Form S-3 at such time that it becomes
eligible to do so. The Company shall notify the Holders in
writing (A) within one day following each of the SEC's
clearance to request acceleration of effectiveness of the
Registration Statement and the Company's request for such
acceleration of effectiveness and (B) immediately upon the
SEC's declaration of such effectiveness.
(ii) Prepare and file with the SEC such
amendments and supplements to such Registration Statement and
the prospectus used in connection with such Registration
Statement as may be necessary to comply with the provisions of
the Act with respect to the disposition of all securities
covered by such Registration Statement and notify the Holders
of the filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iii) After the Registration Statement is declared
effective, furnish to each Holder such numbers of copies of a
current prospectus conforming with the requirements of the
Act, copies of the Registration Statement, any amendment or
supplement thereto and any documents incorporated by reference
therein and such other documents as such Holder may reasonably
require in order to facilitate the disposition of Registrable
Securities owned by such Holder.
(iv) Use its best efforts to register and qualify
the securities covered by such Registration Statement under
such other securities or "Blue Sky" laws of such jurisdictions
as shall be reasonably requested by each Holder; provided that
the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions.
(v) Notify each Holder immediately of the
happening of any event as a result of which the prospectus
(including any supplements
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thereto or thereof and any information incorporated or deemed
to be incorporated by reference therein) included in such
Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and use its best efforts to
promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the
issuance by the Commission or any state securities commission
or agency of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any
proceedings for that purpose. The Company shall use its best
efforts to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit a single firm of counsel, designated
as Holders' counsel by the Holders of a majority in interest
of the Registrable Securities included in the Registration
Statement, to review the Registration Statement and all
amendments and supplements thereto within a reasonable period
of time prior to each filing, and shall not file any document
in a form to which such counsel reasonably objects.
(viii) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common
Stock is then listed and prepare and file any required filings
with the National Association of Securities Dealers, Inc. or
any exchange or market where the Common Stock is then traded.
(ix) Take all steps necessary to enable Holders
to avail themselves of the prospectus delivery mechanism set
forth in Rule 153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events
that may arise that the Purchaser considers will interfere with the full
enjoyment of its rights under the Debentures, the Purchase Agreement and this
Agreement (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Purchaser if an Interfering Event
occurs and provide that the Purchaser may require that the Company redeem
outstanding Debentures at a specified price if certain Interfering Events are
not timely cured.
Paragraph (vi) provides, inter alia, that if cash payments
required as the remedy in the case of certain of the Interfering Events are not
paid when due, the Company may be required by the Purchaser to redeem
outstanding Debentures at a specified price.
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Paragraph (ix) provides, inter alia, that the Purchaser has
the right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration
Statement. The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as possible
and in any event within 90 days from the Closing Date. In the
event that such Registration Statement has not been declared
effective within 90 days from the Closing Date, then the
Company shall pay in cash to each Holder a default payment at
a rate (the "Default Payment Rate") equal to two and one half
percent (2.5%) of the sum of (x) the Outstanding Principal
Amount of, (y) the accrued but unpaid interest on, plus (z)
the accrued but unpaid or unrecognized default payments on the
Debentures (the "Debenture Amount") held by such Holder for
each 30-day period (or portion thereof) during the period from
and after such failure, refusal or inability to so register
the Registrable Securities until the Registrable Securities
are so registered. If the Registration Statement has not been
declared effective within 180 days after the Closing Date,
then each Holder shall have the right in its sole discretion
to sell to the Company its Debentures, Common Shares and/or
Warrant Shares to the Company (in whole or in part) at a price
in immediately available funds (the "Premium Redemption
Price") equal to (A) as to the Debentures, 1.3 times (i.e.,
130% of) the Outstanding Principal Amount of the Debentures
plus any accrued but unpaid or unrecognized interest or
default payments and (B) as to the Common Shares and/or
Warrant Shares, 1.3 times the dollar amount which is the
product of (x) the number of shares so to be redeemed pursuant
to this paragraph, and (y) the Market Price for Shares of
Common Stock (as defined in the Debentures) at the time such
shares were received pursuant to conversion of Debentures or
exercise of Warrants; provided that, upon the occurrence of a
Company Reporting Event at any time during or prior to such
180-day period, such rights to compel the Company to purchase
securities of the Purchaser shall only take effect 225 days
from the Closing Date. Payment of such amount shall be due and
payable within 3 business days of demand therefor, which
demand shall be revocable by the Holder at any time prior to
its actual receipt of the Premium Redemption Price.
(ii) No Listing; Premium Price Redemption for
Delisting of Class of Shares.
(A) In the event that the Company fails,
refuses or is unable to cause the Registrable Securities
covered by the Registration Statement to be listed with the
Approved Market and each other securities exchange and market
on which the Common Stock is then traded at all
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times during the period ("Listing Period") commencing the
earlier of the effective date of the Registration Statement or
the 90th day following the Closing Date, and continuing
thereafter for so long as the Debentures are outstanding, then
the Company shall pay in cash to each Holder a default payment
at the Default Payment Rate of the sum of (x) the Outstanding
Principal Amount of, (y) the accrued but unpaid interest on,
plus (z) the accrued but unpaid or unrecognized default
payments on the Debentures (the "Debenture Amount") held by
such Holder for each 30-day period (or portion thereof) during
the Listing Period from and after such failure, refusal or
inability to so list the Registrable Securities until the
Registrable Securities are so listed.
(B) In the event that shares of Common Stock
of the Company are delisted from the Approved Market at any
time following the Closing Date and remain delisted for 5
consecutive days, then at the option of each Holder and to the
extent such Holder so elects, the Company shall on 2 business
days notice redeem the Debentures and/or Common Shares and/or
Warrant Shares held by such Holder, in whole or in part, at a
redemption price equal to the Premium Redemption Price (as
defined above); provided, however, that such Holder may revoke
such request at any time prior to receipt of such payment of
such redemption price. Default payments shall no longer accrue
on Debentures after such shares have been redeemed by the
Company pursuant to the foregoing provision.
(iii) Blackout Periods. In the event any Holder is
unable to sell Registrable Securities under the Registration
Statement for more than (i) five (5) consecutive days or (ii)
ten (10) days in any calendar year ("Suspension Grace
Period"), including without limitation by reason of a
suspension of trading of the Common Stock on the Approved
Market, any suspension or stop order with respect to the
Registration Statement or the fact that an event has occurred
as a result of which the prospectus (including any supplements
thereto) included in such Registration Statement then in
effect includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, or the number of
shares of Common Stock covered by the Registration Statement
is insufficient at such time to make such sales, but excluding
any general suspension of trading of all securities on the
market where the Common Stock is traded, then the Company
shall pay in cash to each Holder a default payment at the
Default Payment Rate of the Debenture Amount for the
Debentures held by such Holder for each 30-day period (or
portion thereof) from and after the expiration of the
Suspension Grace Period. Alternatively, a Holder shall have
the right but not the obligation to have the Company redeem
its Debentures and Common Shares and Warrant Shares at the
price and on the terms (and subject to the right to revoke)
set forth in Section 2(b)(i) above.
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(iv) Conversion Deficiency; Premium Price
Redemption for Conversion Deficiency. In the event that the
Company does not have a sufficient number of Common Shares
available to satisfy the Company's obligations to any Holder
upon receipt of a Conversion Notice (as defined in the
Debenture) or is otherwise unable or unwilling to issue such
Common Shares (except by reason of the limit described in
Section 10 below) in accordance with the terms of the
Debenture for any reason after receipt of a Conversion Notice,
then:
(A) The Company shall pay in cash to
each Holder a default payment at the Default Payment Rate on
the Debenture Amount for the Debentures held by such Holder
for each 30-day period (or portion thereof) that the Company
fails or refuses to issue Common Shares in accordance with the
Debenture terms; and
(B) At any time five days after the
commencement of the running of the first 30-day period
described above in clause (A) of this paragraph (iv), at the
request of any Holder pursuant to a redemption notice, the
Company promptly (1) shall purchase from such Holder, at a
purchase price equal to the Premium Redemption Price, the
Debenture Amount of Debentures equal to such Holder's pro rata
share of the "Deficiency" (as such term is defined below), if
the failure to issue Common Shares results from the lack of a
sufficient number thereof and (2) shall purchase all (or such
portion as such Holder may elect) of such Holder's Debentures
at such Premium Redemption Price if the failure to issue
Common Shares results from any other cause. The "Deficiency"
shall be equal to the Debenture Amount of Debentures that
would not be able to be converted for Common Shares, due to an
insufficient number of Common Shares available, if all the
outstanding Debentures were submitted for conversion at the
Conversion Price set forth in the Debentures as of the date
such Deficiency is determined. Any request by a Holder
pursuant to this paragraph (iv)(B) shall be revocable by that
Holder at any time prior to its receipt of the Premium
Redemption Price.
(v) Default Payment Terms; Status of Unpaid
Default Payments.
All default payments (which payments shall
be pro rata on a per diem basis for any period of less than 30
days) required to be made in connection with the above
provisions shall be paid in cash at any time upon demand, and
whether or not a demand is made, by the tenth (10th) day of
each calendar month for each partial or full 30-day period
occurring prior to that date. Until paid as required in this
Agreement, default payments shall be deemed added to, and a
part of, the Outstanding Principal Amount of a Holder's
Debentures.
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(vi) Premium Price Redemption for Cash Payment
Defaults.
In the event that the Company fails or
refuses to pay any default payment or honor any discount
provided for in the foregoing paragraphs (i) through (iv) when
due, at any Holder's request and option the Company shall
purchase all or a portion of the Debentures, Common Shares
and/or Warrant Shares held by such Holder (with default
payments accruing through the date of such purchase), within
five (5) days of such request, at a purchase price equal to
the Premium Redemption Price (as defined above); provided that
such Holder may revoke such request at any time prior to
receipt of such payment of such purchase price. Until such
time as the Company purchases such Debentures at the request
of such Holder pursuant to the preceding sentence, at any
Holder's request and option the Company shall as to such
Holder pay such amount by adding and including the amount of
such default payment to the Outstanding Principal Amount of a
Holder's Debentures.
(vii) Cumulative Remedies. Each default payment
triggered by an Interfering Event provided for in the
foregoing paragraphs (ii) through (iv) shall be in addition to
each other default payment triggered by another Interfering
Event; provided, however, that in no event shall the Company
be obligated to pay to any Holder default payments in an
aggregate amount greater than the Default Payment Rate of the
Outstanding Principal Amount of the Debentures held by such
Holder for any 30-day period (or portion thereof). The default
payments and mandatory redemptions provided for above are in
addition to and not in lieu or limitation of any other rights
the Holders may have at law, in equity or under the terms of
the Debentures, the Purchase Agreement, the Warrants or this
Agreement, including without limitation the right to specific
performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in
connection with the registration rights of the Holders
hereunder.
(viii) Certain Acknowledgments. The Company
acknowledges that any failure, refusal or inability by the
Company described in the foregoing paragraphs (i) through (iv)
and paragraph (vi) will cause the Holders to suffer damages in
an amount that will be difficult to ascertain, including
without limitation damages resulting from the loss of
liquidity in the Registrable Securities and the additional
investment risk in holding the Registrable Securities.
Accordingly, the parties agree that it is appropriate to
include in this Agreement the foregoing provisions for default
payments, discounts and mandatory redemptions in order to
compensate the Holders for such damages. The parties
acknowledge and agree that the default payments, discounts and
mandatory redemptions set forth above represent the parties'
good faith effort to quantify such damages and, as such, agree
that the form and amount of such default payments, discounts
and mandatory redemptions are reasonable and will not
constitute a
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penalty. The parties agree that the provisions of this clause
(ix) consist of certain acknowledgments and agreements
concerning the remedies of the Holders set forth in clauses
(i) through (iv) and paragraph (vi) of this paragraph; nothing
in this clause (ix) imposes any additional default payments,
discounts and mandatory redemptions for violations under this
Agreement.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by investment bankers
reasonably satisfactory to the Company. The Company shall only be obligated to
permit one underwritten offering, which offering shall be determined by a
majority-in-interest of the Holders.
(d) The Company shall enter into such customary
agreements for secondary offerings (including a customary underwriting agreement
with the underwriter or underwriters, if any) and take all such other reasonable
actions reasonably requested by the Holders in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities. Whether
or not an underwriting agreement is entered into and whether or not the
Registrable Securities are to be sold in an underwritten offering the Company
shall:
(i) make such representations and warranties to
the Holders and the underwriter or underwriters, if any, in
form, substance and scope as are customarily made by issuers
to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if
any, opinions of independent counsel to the Company, on and
dated as of the effective day (or in the case of an
underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following
the end of each fiscal year thereafter, which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s), if any,
and their counsel and covering, without limitation, such
matters as the due authorization and issuance of the
securities being registered and compliance with securities
laws by the Company in connection with the authorization,
issuance and registration thereof and other matters that are
customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter, if any.
(iii) cause to be delivered, immediately prior to
the effectiveness of the Registration Statement (and, in the
case of an underwritten offering, at the time of delivery of
any Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which
the Company's independent certified public accountants
shall have reviewed any of the Company's books or records, a
"comfort" letter from the Company's independent certified
public accountants
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addressed to the Holders and each underwriter, if any, stating
that such accountants are independent public accountants
within the meaning of the Securities Act and the applicable
published rules and regulations thereunder, and otherwise in
customary form and covering such financial and accounting
matters as are customarily covered by letters of the
independent certified public accountants delivered in
connection with secondary offerings; such accountants shall
have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being
reviewed so that each such letter shall remain current,
correct and complete throughout such fiscal year; and each
such letter and update thereof, if any, shall be reasonably
satisfactory to the Holders.
(iv) if an underwriting agreement is entered
into, the same shall include customary indemnification and
contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings;
(v) deliver such documents and certificates as
may be reasonably requested by the Holders of the Registrable
Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any; and
(vi) deliver to the Holders on the effective day
(or in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto)
of the Registration Statement, and in, the event that the SEC
determines any Holder to be an underwriter, at the beginning
of each fiscal quarter thereafter, a certificate in form and
substance as shall be reasonably satisfactory to the Holders,
executed by an executive officer of the Company and to the
effect that all the representations and warranties of the
Company contained in the Purchase Agreement are still true and
correct except as disclosed in such certificate; the Company
shall, as to each such certificate delivered at the beginning
of each fiscal quarter, update or cause to be updated each
such certificate during such quarter so that it shall remain
current, complete and correct throughout such quarter; and
such updates received by the Holders during such quarter, if
any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection by
the Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
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with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may
suspend the use of any prospectus used in connection with the Registration
Statement only in the event, and for such period of time as, such a suspension
is required by the rules and regulations of the Commission. The Company will use
its best efforts to cause such suspension to terminate at the earliest possible
date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved shares within five (5) business
days of any shareholders meeting authorizing same and shall use its best efforts
to cause such Registration Statement to become effective within sixty (60) days
of such shareholders meeting. If the Holders become entitled, pursuant to an
event described in clause (iii) of the definition of Registrable Securities, to
receive any securities in respect of Registrable Securities that were already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below. All of the registration rights
and remedies under this Agreement shall apply to the registration of such newly
reserved shares and such new Registrable Securities, including without
limitation the provisions providing for default payments contained herein.
3. Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3; Other Forms. The Company shall use
its best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected
by the Company pursuant to this Agreement, the Company will use its best efforts
to keep such registration effective until all the Holders have completed the
sales or distribution described in the Registration Statement relating thereto
or, if earlier, until such Registrable Securities may be sold under Rule 144(k)
(provided that the Company's transfer agent has accepted an instruction from the
Company to such effect).
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6. Indemnification.
(a) The Company Indemnity. The Company will indemnify
each Holder, each of its officers, directors and partners, and each person
controlling each Holder, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, 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 prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on 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, or any violation by the Company of the Securities Act or
any state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each 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 legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to a Holder to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by such
Holder or the underwriter (if any) therefor and stated to be specifically for
use therein. The indemnity agreement contained in this Section 6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s), against all
claims, losses, 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
statement therein not misleading, and will reimburse the Company and such other
Holder(s) and their directors, officers and partners, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending 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,
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prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein, and provided that the maximum amount
for which such Holder shall be liable under this indemnity shall not exceed the
net proceeds received by such Holder from the sale of the Registrable
Securities. The indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any such claims, losses, damages or
liabilities if such settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification
under this Section 6 (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 claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim in any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, 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 under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. 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 to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been
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obligated to pay by way of indemnification if the indemnification provided for
under Section 6(a) or 6(b) hereof had been available under the circumstances.
The Company and the Holders agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Holders or the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of any Holder, the net proceeds received by such Holder
from the sale of Registrable Securities or (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that such Holder or underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Survival. The indemnity and contribution agreements contained
in Sections 6 and 7 and the representations and warranties of the Company
referred to in Section 2(d)(i) shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement or the Purchase
Agreement or any underwriting agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the
Company such information regarding such Holder and the distribution and/or sale
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Purchaser shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. NASDAQ Limit on Stock Issuances. Section 3.14 of the Purchase
Agreement shall govern limits imposed by NASDAQ rules on the conversion of
Debentures or the exercise of Warrants.
11. Replacement Certificates. The certificate(s) representing the
Common Shares or Warrant Shares held by the Purchaser (or then Holder) may be
exchanged by
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the Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares or Warrant Shares, as reasonably requested by the Purchaser (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchaser by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Debentures or Warrants, and all other rights granted to the
Purchaser by the Company hereunder may be transferred or assigned to any
transferee or assignee of any Debentures or Warrants; provided in each case that
the Company must be given written notice by the such Purchaser at the time of or
within a reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned; and
provided further that the transferee or assignee of such rights agrees in
writing to be bound by the registration provisions of this Agreement.
13. Miscellaneous.
(a) Remedies. The Company and the Purchaser acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) Jurisdiction. The Company and the Purchaser (i)
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court, the New York State courts and other courts of the United States
sitting in New York County, New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company and the Purchaser
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law.
(c) Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall
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be effective upon actual receipt of such notice. The addresses for such
communications shall be:
to the Company:
U.S. Plastic Lumber Corp.
0000 Xxxxxx Xxxx
Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
Blank Rome Xxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
to the Purchaser:
Halifax Fund, L.P.
c/o The Palladin Group, L.P.
Investment Manager
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxx, Esq.
Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.
(d) Indemnity. Each party shall indemnify each other
party against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a
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continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and the Purchaser contained herein shall survive the
Closing.
(f) Execution. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement,
it being understood that all parties need not sign the same counterpart.
(g) Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of any
Purchaser without its express written approval, unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement. The Company agrees to deliver a copy of any public announcement
regarding the matters covered by this Agreement or any agreement or document
executed herewith to each Purchaser and any public announcement including the
name of an Purchaser to such Purchaser, prior to the publication of such
announcements.
(h) Entire Agreement. This Agreement, together with the
Purchase Agreement, the Debentures, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be modified or terminated except by a
written agreement signed by both parties.
(i) Governing Law. This Agreement and the validity and
performance of the terms hereof shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York applicable to
contracts executed and to be performed entirely in such State.
(j) Severability. INTENTIONALLY OMITTED.
(k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A
TRIAL BY JURY.
(l) Titles. The titles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
U.S. PLASTIC LUMBER CORP.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President and General Counsel
PURCHASER:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.,
Attorney-in-Fact
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
SIGNATURE PAGE TO U.S. PLASTIC LUMBER CORP. REGISTRATION RIGHTS AGREEMENT
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