Registration Rights Agreement - American Pulp Exchange inc., PH Capital Holdings LLC, Vector Partners LLC and General Media International Inc.
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of November 9, 2002 (the
"Agreement"), by American Pulp Exchange, Inc., a Florida corporation (the
"Company"), for the benefit of certain persons listed on the signature page
hereto (the "Holders").
W I T N E S S E T H :
WHEREAS, the Holders are the holders of shares of the Company's common
stock, par value $.0025 per share (the "Common Stock");
WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the registration rights of the Holders;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS.
Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings given to them in the plan. Each reference
herein to an agreement, document or instrument shall mean that agreement,
document or instrument as from time to time amended, modified or supplemented in
accordance with its terms, including in each case all exhibits, annexes and
schedules to such agreement, document or instrument, all of which are
incorporated by reference to such agreement, document or instrument.
As used in this Agreement, the following capitalized terms shall have
the meanings ascribed to them below:
"Business Day" means any day, other than a Saturday, Sunday, or a day
on which commercial banks are required or permitted to be closed for business in
the City of New York.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement or any other amendments and supplements
to such prospectus, including without limitation any preliminary prospectus, any
pre-effective or post-effective amendment and all material incorporated by
reference in any prospectus.
"Registrable Securities" means shares of Common Stock which are held by
any Holder as of the date hereof and any securities issued or issuable upon
exercise of the Warrants or in respect of or in exchange for any of such shares
of Common Stock by way of a stock dividend or other distribution, stock split,
reverse stock split or other combination of shares, recapitalization,
reclassification, merger, consolidation or exchange offer. As to any particular
Registrable
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Securities, once issued such securities shall cease to be Registrable Securities
when (i) a Registration Statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such Registration Statement, (ii) such
securities shall have been sold to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) such securities shall have
been otherwise transferred or exchanged and new certificates for such securities
not bearing a legend restricting further transfer shall have been delivered by
the Company or (iv) such securities shall have ceased to be outstanding.
"Registration Expenses" has the meaning set forth in Section 4.
"Registration Statement" means any registration statement of the
Company which covers Registrable Securities pursuant to the provisions of this
Agreement, all amendments and supplements to such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement.
"SEC" means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute then in effect, and a reference to a particular section
thereof shall be deemed to include a reference to the comparable section, if
any, of any such similar federal statute.
"Warrants" shall mean the Warrant to purchase Common Stock held by
Vector Partners, LLC, a Nevada limited liability company ("VP"), under the
Warrant Agreement dated November 8, 2002 between VP and the Company, and the
Warrant to purchase Common Stock held by PH Capital Holdings, LLC, a California
limited liability company, under the Warrant Agreement dated November 8, 2002
between PH Capital Holdings, LLC and the Company.
2. PIGGY-BACK REGISTRATIONS.
A. Right to Include Registrable Securities. If at any time the Company
proposes to register any of its equity securities under the Securities Act,
whether or not for sale for its own account (other than a registration on Form
S-4 or Form S-8, or any successor or similar forms), in a manner that would
permit registration of Registrable Securities for sale to the public under the
Securities Act, it will each such time promptly give written notice to all
Holders: (i) of its intention to do so, (ii) of the registration form of the SEC
that has been selected by the Company and (iii) of rights of Holders under this
Section 2 (the "Section 2 Notice"). The Company will include in the proposed
registration all Registrable Securities that the Company is requested in
writing, within 15 days after the Section 2 Notice is given, to register by the
Holders thereof; provided, however, that (i) if, at any time after giving
written notice of its intention to register any equity securities and prior to
the effective date of the Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register all
such equity securities, the Company may, at its election, give written notice of
such determination to all Holders who so requested registration and, thereupon,
shall be relieved of its obligation to register any Registrable Securities in
connection with such abandoned registration, and (ii) in case of a determination
by the Company to delay registration of its equity securities,
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the Company shall be permitted to delay the registration of such Registrable
Securities for the same period as the delay in registering such other equity
securities by the Company.
B. Priority; Registration Form.
(1) If the managing underwriter for a registration in which
Registrable Securities are proposed to be included pursuant to this Section 2
that involves an underwritten offering shall advise the Company that, in its
opinion, the inclusion of the amount of Registrable Securities to be sold for
the account of Holders would adversely affect the success of the offering, then
the number of Registrable Securities to be sold for the account of such Holders
shall be reduced (and may be reduced to zero) in accordance with the managing
underwriter's recommendation. In the event that the number of Registrable
Securities to be included in any registration is reduced (but not to zero), the
number of such Registrable Securities included in such registration shall be all
allocated pro rata among all requesting Holders and all other holders of Common
Stock having the right to include their shares of Common Stock in such
registration, on the basis of the relative number of shares of such Common Stock
each such Holder or other holder has requested to be included in such
registration. If, as a result of the proration provisions of this Section 2(B),
any Holder shall not be entitled to include all Registrable Securities in a
registration pursuant to this Section 2 that such Holder has requested be
included, such Holder may elect to withdraw its Registrable Securities from the
registration; provided, however, that such withdrawal election shall be
irrevocable and, after making a withdrawal election, a Holder shall no longer
have any right to include Registrable Securities in the registration as to which
such withdrawal election was made.
(2) If the Company is using a Form S-3 to effectuate a registration
pursuant to this Section 2, but it would not be eligible to use such form for
the number of Registrable Securities to be included at the request of other
Holders, the Company may elect to not include such Registrable Securities in
such registration.
C. Merger, Consolidation, etc. Notwithstanding anything in this Section 2
to the contrary, Holders shall not have any right to include their Registrable
Securities in any distribution or registration of equity securities by the
Company, which is a result of a merger, consolidation, acquisition, exchange
offer, recapitalization, other reorganization, dividend reinvestment plan, stock
option plan or other employee benefit plan, or any similar transaction having
the same effect.
3. REGISTRATION PROCEDURES.
A. The Company to Use Best Efforts. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company shall use its
best efforts to effect such registrations to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(1) prepare and file with the SEC a Registration Statement or
Registration Statements relating to the registration on any appropriate form
under the Securities Act, and to cause such Registration Statements to become
effective as soon as practicable and to remain
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continuously effective for the time period required by this Agreement to the
extent permitted under the Securities Act; provided, however, that as soon as
practicable but in no event later than three Business Days before filing such
Registration Statement, any related Prospectus or any amendment or supplement
thereto, other than any amendment or supplement made solely as a result of
incorporation by reference of documents filed with the SEC subsequent to the
filing of such Registration Statement, the Company shall furnish to the Holders
of the Registrable Securities covered by such Registration Statement, their
counsel selected as provided in Section 4(vi) hereof and the underwriters, if
any, copies of all such documents proposed to be filed, which Holders, counsel
and underwriters shall be afforded a reasonable opportunity to review such
documents and comment thereon;
(2) cause the Registration Statement and the related Prospectus to
be supplemented by any required Prospectus supplement, and as so supplemented to
be filed in accordance with the Securities Act and any rules and regulations
promulgated thereunder; and otherwise to comply with the provisions of the
Securities Act as may be necessary to facilitate the disposition of all
Registrable Securities covered by such Registration Statement in accordance with
the intended method or methods of disposition by the selling Holders thereof set
forth in such Registration Statement or such Prospectus or Prospectus
supplement;
(3) notify the selling Holders and the managing underwriters, if
any, promptly if at any time (A) any Prospectus, Registration Statement or
amendment or supplement thereto is filed, (B) any Registration Statement, or any
post-effective amendment thereto, becomes effective, (C) the SEC requests any
amendment or supplement to, or any additional information in respect of, any
Registration Statement or Prospectus, (D) the SEC issues any stop order
suspending the effectiveness of a Registration Statement or initiates any
proceedings for that purpose, (E) the Company receives any notice that the
qualification of any Registrable Securities for sale in any jurisdiction has
been suspended or that any proceeding has been initiated for the purpose of
suspending such qualification, or (F) any event occurs which requires that any
changes be made in such Registration Statement or any related Prospectus so that
such Registration Statement or Prospectus will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that in the case of this subclause (F), such notice need only state
that an event of such nature has occurred, without describing such event. The
Company hereby agrees to promptly reimburse any selling Holders for any
out-of-pocket losses and expenses incurred in connection with any uncompleted
sale of any Registrable Securities in the event that the Company fails to timely
notify such Holder that the Registration Statement then on file with the SEC is
no longer effective;
(4) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the
qualification of any Registrable Securities for sale in any jurisdiction, at the
earliest possible moment;
(5) if requested by the managing underwriters or any Holder of
Registrable Securities being sold in connection with an underwritten offering,
incorporate into a Prospectus supplement or a post-effective amendment to the
Registration Statement any information which the managing underwriters and such
Holder reasonably agree is required to be included therein relating to such sale
of Registrable Securities; and to file such supplement or post-effective
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amendment as soon as practicable in accordance with the Securities Act and the
rules and regulations promulgated thereunder;
(6) furnish to each selling Holder and each managing underwriter, if
any, one signed copy of the Registration Statement or Registration Statements
and any post-effective amendment thereto, including all financial statements and
schedules thereto, all documents incorporated therein by reference and all
exhibits thereto (including exhibits incorporated by reference) as promptly as
practicable after filing such documents with the SEC;
(7) deliver to each selling Holder and each underwriter, if any, as
many copies of the Prospectus or Prospectuses (including each preliminary
Prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; and to consent to the use of such Prospectus or any
amendment or supplement thereto by each such selling Holder and underwriter, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus, amendment or supplement;
(8) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify, or to cooperate with the selling Holders,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as may be requested
by the Holders of a majority of the Registrable Securities included in such
Registration Statement; and to do any and all other acts or things necessary to
enable the disposition in such jurisdictions of the Registrable Securities
covered by such Registration Statement; provided, however, that the Company will
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service in any jurisdiction where it is not then so subject;
(9) to cooperate with the selling Holders and the underwriters, if
any, in the preparation and delivery of certificates representing the
Registrable Securities to be sold, such certificates to be in such denominations
and registered in such names as such selling Holders or managing underwriters
may request at least two Business Days prior to any sale of Registrable
Securities represented by such certificates;
(10) upon the occurrence of any event described in subclause (F) of
clause (3) above, promptly to prepare and file a supplement or post-effective
amendment to the applicable Registration Statement or Prospectus or any document
incorporated therein by reference, and any other required documents, so that
such Registration Statement and Prospectus will not thereafter contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading, and to cause such supplement or
post-effective amendment to become effective as soon as practicable;
(11) to take all other actions in connection therewith as are
reasonably necessary or desirable in order to expedite or facilitate the
disposition of the Registrable Securities included in such Registration
Statement and, in the case of an underwritten offering: (A) to enter into an
underwriting agreement in customary form with the managing underwriter (such
agreement to contain standard and customary indemnities, representations,
warranties and other agreements of or from the Company); (B) to obtain opinions
of counsel to the Company
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(which (if reasonably acceptable to the underwriters) may be the Company's
inside counsel) addressed to the underwriters, such opinions to be in customary
form; and (C) to obtain "comfort" letters from the Company's independent
certified public accountants addressed to the underwriters, such letters to be
in customary form;
(12) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees, attorneys and independent accountants to supply
all information reasonably requested by any such sellers, underwriters,
attorneys, accountants or agents in connection with such Registration Statement;
provided, however, that information which the Company determines, in good faith,
to be confidential shall not be disclosed by such persons unless (x) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in such Registration Statement, or (y) the release of such
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each seller of Registrable Securities agrees, on its own
behalf and on behalf of all its underwriters, accountants, attorneys and agents,
that the information obtained by it as a result of such inspections shall be
kept confidential by it and not disclosed by it, and shall not be used by it as
the basis for any market transactions in the securities of the Company, in each
case unless and until such information is made generally available to the public
other than by such seller. Each seller of Registrable Securities further agrees,
on its own behalf and on behalf of all its underwriters, accountants, attorneys
and agents, that it will, upon learning that disclosure of such information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the information deemed confidential;
(13) permit any selling Holder which, in its judgment, might be
deemed to be an underwriter or controlling person of the Company, to participate
in the preparation of such Registration Statement and to require the insertion
therein of material, furnished to the Company in writing, which in the
reasonable judgment of such Holder and such Holder's counsel should be included;
and
(14) take all such other actions as the Holders of a majority of the
Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities.
B. Holders' Obligation to Furnish Information. The Company may require
each Holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding the distribution
of such Registrable Securities as the Company may from time to time reasonably
request.
C. Suspension of Sales Pending Amendment of Prospectus. Each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in subclauses (C)-(F) of subsection A(3) above, such
Holder will suspend the disposition of any Registrable Securities covered by
such Registration Statement or Prospectus until such Holder's receipt of the
copies of a supplemented or amended Prospectus or until it is
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advised in writing by the Company that the use of the applicable Prospectus may
be resumed, and, if so directed by the Company, such Holder will deliver to the
Company all copies, other than permanent file copies, then in such Holder's
possession of any Prospectus covering such Registrable Securities.
4. REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance
with its obligations under this Agreement, including without limitation all (i)
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws, (iii) printing expenses, (iv) fees and
disbursements of its counsel and its independent certified public accountants
(including the expenses of any special audit or "comfort" letters required by or
incident to such performance or compliance), (v) securities acts liability
insurance (if the Company elects to obtain such insurance), (vi) reasonable fees
and expenses of one counsel for the Holders of Registrable Securities covered by
each Registration Statement, with such counsel to be selected by Holders of a
majority of such Registrable Securities (all such expenses being herein referred
to as "Registration Expenses"), and (vii) the expenses and fees for listing
securities to be registered on each securities exchange on which shares of
Common Stock are then listed shall be borne by the Company; provided, however,
that Registration Expenses shall not include any underwriting discounts,
commissions or fees attributable to the sale of the Registrable Securities.
5. INDEMNIFICATION.
A. Indemnification by the Company. In the event of any registration of any
securities of the Company under the Securities Act pursuant to Section 3 hereof,
the Company will, and hereby does, indemnify and hold harmless the seller of any
Registrable Securities covered by such Registration Statement, its affiliates,
general and limited partners, members and shareholders and each of its and their
directors, officers, managers, employees, attorneys, investment advisors and
agents, each other Person who participates as an underwriter, if any, in the
offering or sale of such securities and each other Person, if any, who controls
such seller or any such underwriter within the meaning of the Securities Act,
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including any amounts paid in any settlement effected with the
Company's consent, which consent shall not be unreasonably withheld) to which
such seller or other indemnified Person may become subject under the Securities
Act, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such securities were
registered under the Securities Act or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary Prospectus, together with the
documents incorporated by reference therein (as amended or supplemented if the
Company shall have filed with the SEC any amendment thereof or supplement
thereto), if used prior to the effective date of such Registration Statement, or
contained in the Prospectus, together with the documents incorporated by
reference therein (as amended or supplemented if the Company shall have filed
with the SEC any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact
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required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (iii) any violation by the Company of any federal, state or common
law rule or regulation applicable to the Company and relating to action required
of or inaction by the Company in connection with any such registration, and the
Company will reimburse such seller and each other indemnified Person for any
legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the Company shall not be liable to any such
seller or other indemnified Person in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
amendment thereof or supplement thereto or in any such preliminary, final or
summary Prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such seller or other indemnified
Person, specifically for use in the preparation thereof; and provided, further,
that the Company will not be liable to any Person who participates as an
underwriter in any underwritten offering or sale of Registrable Securities, or
to any Person who is a seller in any non-underwritten offering or sale of
Registrable Securities, or any other Person, if any, who controls such
underwriter or seller within the meaning of the Securities Act, under the
indemnity agreement in this Section 5(A) with respect to any preliminary
Prospectus or the final Prospectus (including any amended or supplemented
preliminary or final Prospectus), as the case may be, to the extent that any
such loss, claim, damage or liability of such underwriter, seller or controlling
Person results from the act that such underwriter or seller sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final Prospectus as then
amended or supplemented, whichever is most recent, if the Company has previously
furnished copies thereof to such underwriter or seller and such final
Prospectus, as then amended or supplemented, has corrected any such misstatement
or omission. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such seller or other indemnified
Person.
B. Indemnification by the Sellers. In consideration of the Company's
including any Registrable Securities in any Registration Statement filed in
accordance with Section 3 hereof, each prospective seller (each, a "Holder
Indemnitor") of such Registrable Securities and any underwriter shall be deemed
to have agreed to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 5(A) hereof) the Company and its directors
and officers and each person controlling the Company within the meaning of the
Securities Act (each, a "Company Indemnitee") against any and all losses,
claims, damages or liabilities, joint or several, and expenses (including any
amounts paid in any settlement effected with such Holder Indemnitor's consent,
which consent shall not be unreasonably withheld) to which the Company
Indemnitees may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise solely out of or are based solely upon any
statement or alleged statement in or omission or alleged omission from such
Registration Statement, any preliminary, final or summary Prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or its representatives by or on
behalf of such seller or underwriter specifically for use in the preparation of
such Registration Statement, preliminary, final or summary Prospectus or
amendment or supplement. Such indemnity shall remain in full
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force and effect regardless of any investigation made by or on behalf of the
Company or any of its directors, officers or controlling Persons. The Company
may require as a condition to its including Registrable Securities in any
Registration Statement filed hereunder that the holder thereof acknowledge its
agreement to be bound by the provisions of this Agreement (including Section 5)
applicable to it.
C. Notices of Claims. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 5, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 5, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party; provided, further, that if, in the indemnified party's reasonable
judgment, a conflict of interest between the indemnified party and the
indemnifying party exists in respect of such claim, then such indemnified party
shall have the right to participate in the defense of such claim and to employ
one firm of attorneys at the indemnifying party's expense to represent such
indemnified party. No indemnified party will consent to entry of any judgment or
enter into any settlement without the indemnifying party's consent to such
judgment or settlement, which shall not be unreasonably withheld.
D. Contribution. If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under this
Section 5, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in this Section 5 in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other hand in connection with statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements or
omission. The Company agrees, and the Holders (in consideration of the Company's
including any Registrable Securities in any Registration Statement filed in
accordance with Section 3 hereof) shall be deemed to have agreed, that it would
not be just and equitable if contributions pursuant to this Section 5(D) were to
be determined by pro rata allocation or by any other method or allocation which
does not take account of the equitable considerations referred to in the first
sentence of this Section 5(D). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 5(D) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim (which shall be limited as
provided in Section 5(C) if the indemnifying party has assumed the defense of
any such action accordance with the provisions thereof) which is the subject of
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this Section 5(D). 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. Promptly after receipt by an indemnified party under this
Section 5(D) of notice of the commencement of any action against such party in
respect of which a claim for contribution made against an indemnifying party
under this Section 5(D), such indemnified party shall notify the indemnifying
party in writing of the commencement thereof if the notice specified in Section
5(C) has not been given with respect to such action; provided, however, that the
omission so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
under this Section 5(D), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. Notwithstanding anything in
this Section 5(D) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 5(D) to contribute any
amount in excess of the proceeds received such by such indemnifying party from
the sale of Registrable Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate.
6. RULE 144.
The Company shall file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, so long as it is subject to such reporting requirements, all to the
extent required from time to time to enable the Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by Rule 144. Upon the request of any Holder, the
Company shall deliver to such Holder a written statement stating whether it has
complied with such requirements.
7. UNDERWRITTEN REGISTRATIONS.
No Holder shall sell any of its Registrable Securities in any
underwritten offering pursuant to a registration hereunder unless such Holder
(i) agrees to sell such Registrable Securities on a basis provided in any
underwriting agreement in customary form and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting agreements or as
reasonably requested by the Company (whether or not such offering is
underwritten).
8. HOLDBACK AGREEMENTS.
A. Restrictions on Public Sales by Holders. To the extent not inconsistent
with applicable law, each Holder that is timely notified in writing by the
managing underwriter or underwriters shall not effect any public sale or
distribution (including a sale pursuant to Rule 144) of any issue being
registered in an underwritten offering (other than pursuant to an employee stock
option, stock purchase, stock bonus or similar plan, pursuant to a merger, an
exchange offer or a transaction of the type specified in Rule 145(a) under the
Securities Act), any securities of the Company similar to any such issue or any
securities of the Company convertible into or exchangeable or exercisable for
any such issue or any similar issue, during the 7 day period prior to the
effective date of the applicable Registration Statement, if such date is known,
or during the period beginning on such effective date and ending on the later of
(i) the
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completion of the distribution of such securities by the Company pursuant to
such offering and (ii) 90 days after such effective date, except as part of such
registration; provided that such restrictions shall apply not more than once
during any nine-month period.
B. Restrictions on Public Sales by the Company. The Company shall not
effect any public sale or distribution of any issue of the same class or series
as Registrable Securities being registered in an underwritten offering (other
than pursuant to an employee stock option, stock purchase, stock bonus or
similar plan, pursuant to a merger, exchange offer or a transaction of the type
specified in Rule 145(a) under the Securities Act), if so requested by the
managing underwriter or underwriters, any securities of the Company similar to
any such issue or any securities of the Company convertible into or exchangeable
or exercisable for any such issue, during the 7 day period prior to the
effective date of the applicable registration statement, if such date is known,
or during the period beginning on such effective date and ending on the later of
(i) the completion of the distribution of such securities pursuant to such
offering and (ii) 180 days after such effective date, except as part of such
registration.
9. MISCELLANEOUS.
A. Amendments and Waivers. This Agreement may be amended, and waivers or
consents to departures from the provisions hereof may be given, only by a
written instrument duly executed, in the case of an amendment, by all of the
parties hereto, or in the case of a waiver or consent, by the party against whom
the waiver or consent, as the case may be, is to be effective.
B. Successors, Assigns and Transferees. This Agreement shall be binding
upon and shall inure to the benefit of the Company, the Holders and their
respective successors, assigns and transferees.
C. Integration. This Agreement and the documents referred to herein or
delivered pursuant hereto that form a part hereof contain the entire
understanding of the Company and the Initial Holders with respect to its subject
matter. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein. This Agreement supersedes all prior
agreements and understandings between the Company and the Initial Holders with
respect to its subject matter.
D. Legend. Certificates evidencing Registrable Securities held by Initial
Holders may bear a legend substantially in the form below:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR
QUALIFIED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS
THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
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E. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be sent by first class mail, telecopier or hand
delivery:
If to the Company, to:
American Pulp Exchange, Inc.
11 Penn Plaza
New York City, New York 10001
Attention:
Telecopy No.:
with a copy to:
Pachulski, Stang, Ziehl, Young & Jones P.C.
461 Fifth Avenue, 25th Floor
New York, NY 10017
Attention: Robert Feinstein, Esq.
Telecopy No.: (310) 201-0760
If to any of the Holders, to the address of such Holders as shown in
the stock record books of the Company. All such notices and communications shall
be deemed to have been given or made (i) when delivered by hand, (ii) five
Business Days after being deposited in the mail, postage prepaid or (iii) when
telecopied, receipt acknowledged. The Company may change its address for receipt
of notices by notice of such change given in the manner contemplated hereby to
the Holders.
F. Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit, expand or otherwise affect
the meaning of the terms contained herein.
G. Severability. In the event that any one or more of the provisions
hereof is held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision, in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the Company and the
Holders shall be enforceable to the fullest extent permitted by law.
H. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
the principles thereof relating to conflict of laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date set forth above.
AMERICAN PULP EXCHANGE, INC.,
A FLORIDA CORPORATION
By: s/s Charles Samel
------------------------------------------------
Charles Samel, Executive Vice President
PH CAPITAL HOLDINGS, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By: s/s Charles Samel
------------------------------------------------
Charles Samel, Manager
VECTOR PARTNERS, LLC,
A NEVADA LIMITED LIABILITY COMPANY
By s/s Jason Galanis
------------------------------------------------
Title: Managing Member
GENERAL MEDIA INTERNATIONAL, INC.,
A NEW YORK CORPORATION
By s/s R. Guccione
------------------------------------------------
Robert Guccione, Chairman and President
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]