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EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
February 2, 2000 between U.S. PLASTIC LUMBER CORPORATION, a Nevada corporation
with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company") and HALIFAX FUND, L.P., with offices at c/o The Palladin Group, L.P.,
Investment Manager, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Investor").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Convertible Debenture Purchase
Agreement by and between the Company and the Investor (the "Purchase
Agreement"), the Company has agreed to sell and issue to the Investor, and the
Investor has agreed to purchase from the Company, an aggregate of $7.5 million
principal amount of the Company's 5% Convertible Debentures Due February 2, 2005
(the "Debentures") on the terms and conditions set forth therein;
WHEREAS, the Purchase Agreement contemplates that the Debentures will
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 Investor's agreement to enter into the Purchase Agreement, the Company has
agreed (i) to issue warrants exercisable for 200,000 shares of Common Stock of
the Company (the "Warrants") in connection with the issuance of the Debentures
(shares of Common Stock issuable under the Warrants are referred to herein as
the "Warrant Shares") and (ii) to provide the Investor 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 Investor 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:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in the Purchase Agreement.
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"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 Investor, 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; 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.
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
expenses of Investor and Investor'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.
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"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 60 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. 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 are then issuable upon conversion of the
Debentures plus (B) one and one-half times the number of
Warrant Shares issuable upon exercise of the Warrants in each
case without regard to any limitation on the Investor'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.
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(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) 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 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 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.
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(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 Investor 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 Investor if an Interfering Event
occurs and provide that the Investor 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 Investor to redeem outstanding
Debentures at a specified price.
Paragraph (ix) provides, INTER ALIA, that the Investor 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 (x) the
percentage (initially 100%) employed to determine the
"Conversion Price" pursuant to Section 5(c)(ii) of the
Debentures and all Conversion Price resets pursuant to Section
5(d) of the Debentures (the "Agreed Percentage") shall be
reduced and (y) the Minimum Floating Conversion Price shall be
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reduced, by 1% during and after the 30-day period ("Default
Period") from and after the 90th day following the Closing
Date during any part of which such Registration Statement is
not effective, and such Agreed Percentage and the Minimum
Floating Conversion Price shall be further reduced by an
additional 1.5% during and after each Default Period
thereafter; PROVIDED that, upon the occurrence of a
Company Reporting Event at any time during or prior to such
90-day period, such penalties shall only take effect 150 days
from the Closing Date. For example (assuming no Company
Reporting Event has occurred), if the Registration Statement
does not become effective until 120 days from the Closing
Date, the Agreed Percentage from and after day 91 shall be
equal to 99% and the Minimum Floating Conversion Price shall
be equal to $8.1675. If the Registration Statement is not
effective until the 150th day after the Closing Date (assuming
no Company Reporting Event has occurred), the Agreed
Percentage from and after day 121 from the Closing Date shall
be 97.5% and the Minimum Floating Conversion Price shall be
equal to $8.04375. In each case, (x) the Agreed Percentage and
the Conversion Price, and the Minimum Floating Conversion
Price, shall be subject to further adjustment as set forth in
the Debenture and the Purchase Agreement and (y) if a Company
Reporting Event has occurred, the examples in the preceding
two sentences will be adjusted by adding 60 days thereto. 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 Investor 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 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
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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 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, 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
(including without limitation 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) DEFERRAL OF FORCED CONVERSION DATE. In the
event of a failure of Effective Registration, including
without limitation by reason of any of the circumstances
described in the foregoing clauses (i) through (iv) above,
then the Forced Conversion Date (as defined in the Debentures)
shall be deferred by 1.5 days for each day that any of the
circumstances in clauses (i), (ii), (iii) (without regard to
the applicability of the Suspension Grace Period), or (iv)
exist.
(ix) 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.
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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 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
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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 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 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.
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(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
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.
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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).
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
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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, 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
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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 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
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disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor 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 Investor (or then Holder) may be
exchanged by the Investor (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 Investor (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 Investor 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
Investor 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 Investor 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 Investor 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 Investor (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,
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action or proceeding is improper. The Company and the Investor 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 be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
U.S. Plastic Lumber Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
to the Investor:
Halifax Fund, L.P.
c/o The Palladin Group, L.P.
Investment Manager
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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)
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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 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 Investor 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 Investor
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 Investor and any public announcement including the
name of an Investor to such Investor, 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 CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and General Counsel
INVESTOR:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.,
Attorney-in-Fact
By:
------------------------------------------
Name:
Title:
SIGNATURE PAGE TO U.S. PLASTIC LUMBER CORPORATION
REGISTRATION RIGHTS AGREEMENT
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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 CORPORATION
By:
-------------------------------------------
Name:
Title:
INVESTOR:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.,
Attorney-in-Fact
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
SIGNATURE PAGE TO U.S. PLASTIC LUMBER CORPORATION
REGISTRATION RIGHTS AGREEMENT
19