EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of the ____ day of February, 1996, by and among ARTRA GROUP
Incorporated, a Pennsylvania corporation (the "Company") and Xxxxxx Xxxxxxx
("Purchaser").
RECITALS
A. The Company and the Purchaser are entering into the Securities
Purchase Agreement dated the same date as this Agreement (the "Purchase
Agreement") concurrently with entering into this Agreement pursuant to which the
Purchaser has agreed to purchase from the Company a Secured Convertible
Promissory Note in the principal amount of $1,200,000 (the "Convertible Note")
on the terms and subject to the conditions set forth in the Purchase Agreement.
B. The parties now desire to provide for the registration under the
Securities Act of 1933 of the shares of Common Stock of the Company issuable
upon conversion of the Convertible Note or any other securities of the Company
which became issuable upon such conversion in accordance with the terms of the
Convertible Note.
AGREEMENT
NOW, THEREFORE, based on the preceding Recitals, and in consideration
of the mutual covenants set forth below, the parties to this Agreement agree as
follows:
1. Definitions. For the purposes of this Agreement, the following words
shall have the meanings set forth below:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the Company's Common Stock, Par Value $.01 Per
Share.
"Conversion Securities" means (i) any Common Stock issued or issuable
upon conversion of the Convertible Note, and (ii) any securities of the Company
issued or issuable with respect to the shares referred in clauses (i) of this
paragraph by reason of a stock dividend or stock split or in connection with a
combination of securities, recapitalization, merger, consolidation or other
reorganization.
"Convertible Note" shall have the meaning set forth in Paragraph B of
the Recitals.
"Purchase Agreement" shall have the meaning set forth in Paragraph A of
the Recitals.
The terms "register," "registered" and "registration" 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.
"Securities Act" means the Securities Act of 1933, as amended.
2. Required Registrations.
(a) Initial Registration. The Company agrees to include the
Conversion Securities in a registration statement to be filed with the
Commission on or before June 1, 1996 and to use its best efforts to cause said
registration statement to become effective.
(b) Piggyback Registration. The Company agrees that if the
Conversion Securities are not registered under the registration statement
referred to in (a) above and the Company proposes to file a new or different
registration statement under the Securities Act at any time prior to the
expiration of two years after the date of this Agreement, then the Company shall
give notice to the then holders of record of the Conversion Securities (the
"Prospective Sellers") at least 20 days before the filing of such proposed
registration statement. The notice shall offer to include in such filing, to the
extent then permissible under the Securities Act, all of the Conversion
Securities. The Prospective Sellers shall then have a period of up to ten (10)
days after the date of the mailing of such notice to advise the Company of its
election to include all or part of the Conversion Securities in such
registration statement. The Company shall thereupon include such Conversion
Securities in the registration statement and shall use its best efforts to cause
such registration statement to become effective except that the Company shall
have no such obligation if aggregate amount of Conversion Securities to be
included in the registration statement is less than 25% of all outstanding
conversion Securities.
3. Registration Procedures.
(a) If and when the company is required by the provisions of
this Agreement to use its best efforts to cause a registration statement with
respect to Conversion Securities to become effective, the Company shall:
(i) use its best efforts to cause such registration
statement to become and remain effective until such time when Purchaser
is able to sell the Convertible securities without registration either
pursuant to Rule 144 or;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
covered by such registration statement, including such amendments and
supplements as may be necessary to reflect the intended method of disposition
from time to time of the Prospective Sellers who have requested that any of
their securities be sold or otherwise disposed of in connection with the
registration;
(iii) furnish to each Prospective Seller such number of copies of each
prospectus, including preliminary prospectuses, in conformity with the
requirements of the Securities Act, and such other documents, as the
Prospective Seller may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by it;
(iv) use its best efforts to register or qualify the securities covered
by such registration statement under such other securities or blue sky
or other applicable laws of such jurisdictions as each Prospective
Seller shall reasonably request to enable such seller to consummate the
public sale or other disposition of the securities owned by such
seller; provided that, the Company shall not be required in connection
therewith to qualify to do business or to file a general consent to
service of process in any such jurisdiction;
(v) cause all such securities to be listed on each securities exchange
on which similar securities issued by the Company are then listed;
(vi) maintain a transfer agent and registrar for all such securities;
(vii) enter into such customary agreements and take all such other
customary actions as the holders of a majority of the securities being
sold reasonably request in order to expedite or facilitate the
disposition of such securities; and
(viii) make available for inspection by any Prospective Seller, 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 and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with the preparation of
such registration statement.
(b) Each Prospective Seller of such securities shall furnish
to the Company such information as the Company may reasonably require from the
Prospective Seller for inclusion in the registration statement (and the
prospectus included therein).
(c) The Prospective Sellers shall not (until further notice)
effect sales of the conversion Securities covered by the registration statement
after receipt of written notice from the Company to suspend sales to permit the
company to correct or update a registration statement or prospectus.
4. Expenses of Registration. All registration and filing fees, printing
expenses, expenses of compliance with blue sky laws, fees and disbursements of
counsel for the Company and expenses of any audits incidental to or required by
any such registration pursuant to Section 2 hereof ("Registration Expenses")
shall be borne by the Company.
5. Indemnification.
(a) In the event of any registration of any of its securities
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless each holder of Conversion Securities included in a
registration of such securities, each underwriter (as defined in the Securities
Act) and each controlling person of any holder or underwriter, if any, (within
the meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which such
holder, underwriter or controlling person may be subject under the Securities
Act, under any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any summary prospectus issued in connection
with any securities being registered, or any amendment or supplement thereto, or
any other document, or (ii) 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 (iii) any violation by the Company of the
Securities Act or any Blue Sky law, or any rule or regulation promulgated under
the Securities Act or any Blue Sky law, or any other law, applicable to the
Company in connection with any such registration, qualification or compliance
((i), (ii) and (iii) are each referred to hereafter as a "Violation"), and shall
reimburse each such holder of Conversion Securities, underwriter or controlling
person for any legal or other expenses reasonably incurred by such holder,
underwriter or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable to any holder of Conversion Securities, underwriter
or controlling person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
omission made in such registration statement, preliminary prospectus, summary
prospectus, prospectus, or amendment or supplement thereto, or any other
document, in reliance upon and in conformity with written information furnished
to the Company by such holder, underwriter or controlling person, respectively,
specifically for use therein.
(b) In the event of any registration of any of its securities
under the Securities Act pursuant to this Agreement, each holder of Conversion
Securities requesting or joining in a registration of such securities shall
indemnify and hold harmless the Company, each underwriter (as defined in the
Securities Act) and each controlling person of the Company or underwriter, if
any, (within the meaning of the Securities Act) against any losses, claims,
damages or liabilities, joint or several (or actions in respect thereof), to
which the Company, underwriter or controlling person may be subject under the
Securities Act, under any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such violation occurs in reliance upon written information
furnished by the holder of the Conversion Securities expressly for use in
connection with such registration, and shall reimburse the Company, underwriter
or controlling person for any legal or other expenses reasonably incurred by the
Company, underwriter or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the holder of the Conversion Securities shall not be liable to the Company,
underwriter or controlling person in any such case to the extent that any such
loss, claim, damage or liability exceeds the gross proceeds from the offering
received by such holder. The indemnity provided for herein shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company, underwriter or controlling person.
(c) If the indemnification provided for in Section 5(a) or
5(b) above is unavailable to an indemnified party in respect of any losses,
claims, damages or liabilities referred to therein, then the indemnifying party
in lieu of indemnifying such indemnified party thereunder shall contribute to
the amount paid or payable by such indemnified party as a result of such to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses (in which
case the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties). Upon the permitted
assumption by the indemnifying party of the defense of such action, and approval
by the indemnified party of counsel, the indemnifying party shall not be liable
to such indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time, (iii) the indemnifying party and its
counsel do not actively and vigorously pursue the defense of such action or (iv)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5(c) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities or actions in respect thereof referred to in the
immediately preceding paragraph 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 5(c), no holder
of Conversion Securities shall be required to contribute any amount in excess of
the amount by which the total price at which the Conversion Securities sold by
it exceeds the amount of any damages which such holder 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 misrepresentations (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.
(d) Promptly after receipt by an indemnified party under
Section 5(a) or 5(b) above of notice of the commencement of any action, such
indemnified party shall notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such Sections or to the extent that it has not been
prejudiced as a proximate result of such failure. In case any such action shall
be brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties). Upon the permitted assumption by
the indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time, (iii) the indemnifying party and its
counsel do not actively and vigorously pursue the defense of such action or (iv)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
6. Rights Which May Be Granted to Other Persons. The Company shall not
grant any person registration rights which shall in any way whatsoever impair
the priority of the registration rights granted to the Purchaser in this
Agreement.
7. Rule 144 Requirements. Immediately after the date on which a
registration statement filed by the Company under the Securities Act becomes
effective, the Company shall undertake to make and keep publicly available, and
available to the holders of conversion Securities, such information as is
necessary to enable the holders of Conversion securities to make sales of such
securities pursuant to Rule 144 of the Commission under the Securities Act. The
Company shall furnish to any such holder, upon request, a written statement
executed by the Company as to the steps it has taken to comply with the current
public information requirements of Rule 144.
8. Assignment of Registration Rights. The rights to cause the Company
to register Conversion Securities pursuant to this Agreement may be assigned
(but only with all related obligations) by the Purchasers to one or more
transferees or assignees of the Convertible Note or Conversion Securities,
provided the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of each such transferee or assignee
and the securities with respect to which such registration rights are being
assigned.
9. Miscellaneous.
(a) Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors of the parties, but
(except as otherwise specifically provided for herein) neither party will have
the right to assign its rights under this Agreement to any other person or
entity without the prior written consent of the other party, which consent can
be withheld for any reason or without reason. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement except as expressly provided in
this Agreement.
(b) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Illinois as applied to agreements among
Illinois residents entered into and to be performed entirely within Illinois.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. Unless otherwise provided herein, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
or three (3) days after deposit in the United States mail, by registered or
certified mail,' postage prepaid and addressed to the party to be notified at
the address indicated for such party in the Convertible Note, or at such other
address as such party may designate by written notice to the other parties.
(f) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(g) Entire Agreement. This Agreement the Convertible Note, the
Purchase Agreement and the Pledge Agreement referred to in the Convertible Note
and the Secured Promissory Note referred to in the Recitals to this Agreement
constitute the entire understanding and agreement between the parties with
regard to the specific subject matter hereof and no party shall be liable or
bound by any representation, warranty, covenant or agreement except as
specifically set forth herein. Any previous agreement (whether written, oral or
implied) among the parties relative to the specific subject matter hereof is
superseded by this Agreement and the other documents specifically referred to in
the preceding sentence.
(h) Amendments and Waivers. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated orally or in
writing, except that any term of this Agreement may be amended and the
observance of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the holders of the Conversion Securities then in
existence; provided, however, that no such amendment or waiver shall affect the
provisions of this Section, no such waiver shall extend to or affect any other
obligation not expressly waived.
(i) Specific Performance. The parties hereto agree that
because of the restrictions of the Securities Act the Conversion Securities
cannot be purchased or sold in the open market and that, for these reasons,
among others, the parties will be irreparably damaged in the event that this
Agreement is not specifically enforceable. Accordingly, in the event of any
controversy concerning the Conversion Securities which are the subject of this
Agreement, or any right or obligation to register such securities, such right or
obligation shall be enforceable in a court of equity by specific performance.
The rights granted in this Section shall be cumulative and not exclusive and
shall be in addition to any and all other rights which the parties hereto may
have hereunder, at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above-written.
"COMPANY" ARTRA GROUP Incorporated,
a Pennsylvania corporation
By: ______________________________
Name: ______________________________
Its: ______________________________
"PURCHASER"
______________________________
XXXXXX XXXXXXX
