EXHIBIT 10.36
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REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered as of this 15th day of May, 2000 by and between ENTRADE INC., a
corporation organized under the laws of Pennsylvania (the "Company"), and
the persons listed on the signature page hereto ("Initial Investors")
pursuant to the Note and Purchase Agreement of even date herewith by and
between the Company and the Initial Investors ("Purchase Agreement").
The parties hereby agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Common Stock" shall mean the Company's shares of Common Stock.
"Investor" shall mean the Initial Investors and any subsequent holder
of any Common Stock, Notes, Warrants or Registrable Securities.
"Prospectus" shall mean 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 and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration
made by preparing and filing a registration statement or similar document
in compliance with the 1933 Act (as defined below, and the declaration or
ordering of effectiveness of such registration statement or document.
"Registrable Securities" shall mean the shares of Common Stock issued
and issuable to the Investors pursuant to the Purchase Agreement and
issuable upon the exercise of the Warrants, and any securities issued with
respect to, or in exchange for, such securities.
"Registration Statement" shall mean any registration statement filed
under the 1933 Act of the Company that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement,
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"1993 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Warrants" mean the warrants to purchase shares of Common Stock
issued to the Investors pursuant to the Purchase Agreement.
Other capitalized terms used herein but not defined herein shall have
the meaning provided therefor in the Purchase Agreement.
2. REGISTRATION.
(a) REGISTRATION STATEMENT. Promptly following the closing
of the transactions contemplated by the Purchase Agreement (the "Closing
Date") (but no later than 135 days after the Closing Date), the Company
shall prepare and file with the SEC one Registration Statement on Form S-3
(or, if Form S-3 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for
resale of the Registrable Securities, subject to the Investors' consent)
covering the resale of the Registrable Securities. Such Registration
Statement shall cover, to the extent allowable under the 1933 Act and the
Rules promulgated thereunder (including Rule 416), such indeterminate
number of additional shares of Common Stock resulting from stock splits,
stock dividends or similar transactions with respect to the Registrable
Securities. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall
be provided in accordance with Section 3(c) to (and subject to the approval
of) the Investors and their counsel prior to its filing or other
submission, which approval shall not be unreasonably withheld or delayed.
(b) EXPENSES. The Company will pay all expenses associated
with the registration, excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities
industry professionals and excluding legal fees of the Investors.
(c) EFFECTIVENESS.
(i) The Company shall use its best efforts to have the
Registration Statement declared effective as soon as practicable.
(ii) The Company may terminate or suspend effectiveness
of any registration contemplated by this Section one time for a period of
not more than twenty (20) days if the Company shall deliver to the
Investors a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company,
it would (A) be seriously detrimental to the business of the Company for
such registration to be effected or remain effective at such time, (B)
interfere with any proposed or pending material corporate transaction
involving the Company or any of its subsidiaries, or (C) result in any
premature disclosure thereof.
3. COMPANY OBLIGATIONS. The Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with
the terms hereof, and pursuant thereto the Company will, as expeditiously
as possible:
(a) use its best efforts to cause such Registration Statement
to become effective and to remain continuously effective for a period that
will terminate upon the later of (i) thirty (30) months following the
effective date of the Registration Statement, and (ii) the date on which
all Registrable Securities covered by such Registration Statement, as
amended from time to time, have been sold or until such time as they become
eligible for distribution pursuant to Rule 144(k), or any successor
provision thereof, under the 1933 Act (the "Registration Period");
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement and the Prospectus as
may be necessary to keep the Registration Statement effective for the
period specified in Section 3(a) and to comply with the provisions of the
1933 Act and the 1934 Act with respect to the distribution of all
Registrable Securities; provided that, at a time reasonably prior to the
filing of a Registration Statement or Prospectus, or any amendments or
supplements thereto, the Company will furnish to the Investors copies of
all documents proposed to be filed, which documents will be subject to the
comments of the Investors, provided, that, the Investors provide such
comments within a reasonable period of time;
(c) permit a single firm of counsel designated by the consent
of a majority in interest of the Investors to review the Registration
Statement and all amendments and supplements thereto no fewer than ten (10)
days prior to their filing with the SEC, and not file any document in a
form to which such counsel reasonably objects.
(d) furnish to the Investors and their legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with
the SEC, or received by the Company, one copy of the Registration Statement
and any amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating
to such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(e) make reasonable effort to prevent the issuance of any
stop order or other suspension of effectiveness and, if such order is
issued, obtain the withdrawal of any such order at the earliest possible
moment;
(f) furnish to the Investors at least five copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules by courier pursuant to the notice
requirements of Section 10.4 of the Purchase Agreement;
(g) prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the Investors
and their counsel in connection with the registration or qualification of
such Registrable Securities, for offer and sale under the securities or
blue sky laws of all U.S. jurisdictions and do any and all other reasonable
acts or things necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities covered by the Registration
Statement;
(h) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar securities
issued by the Company are then listed;
(i) immediately notify the Investors, at any time when a
Prospectus relating to the Registrable Securities is required to be
delivered under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the Prospectus included in
such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
request of any such holder, promptly prepare and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, take such other actions as may be reasonably necessary to, facilitate
the registration of the Registrable Securities and Additional Registrable
Securities hereunder.
4. OBLIGATIONS OF THE INVESTORS.
(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities that each Investor shall furnish in
writing to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall
notify the Investors of the information the Company requires from each
Investor if such Investor elects to have any of the Registrable Securities
included in the Registration Statement.
(b) Each Investor, by its acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the
Company in writing of its election to exclude all of its Registrable
Securities from the Registration Statement.
(c) In the event the Investors determine to engage the
services of an underwriter, the Investors agree to enter into and perform
their obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering
and take such other actions as are reasonably required in order to expedite
or facilitate the dispositions of the Registrable Securities.
(d) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event rendering the Registration
Statement no longer effective, the Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until the Investor's receipt
of the copies of the supplemented or amended prospectus filed with the SEC
and declared effective and, if so directed by the Company, the Investor
shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all copies in the
Investor's possession of the prospectus covering the Registrable Securities
current at the time of receipt of such notice.
(e) An Investor may not participate in any underwritten
registration hereunder unless it (i) agrees to sell the Registrable
Securities on the basis provided in any underwriting arrangements in usual
and customary form entered into by the Company, (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions and any expenses in excess of
those payable by the Company pursuant to the terms of this Agreement.
5. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law each
Investor, its officers, directors, partners, members, managers and
employees and each person who controls such Investor (within the meaning of
the ▇▇▇▇ ▇▇▇) against all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorney's fees) and expenses
caused by (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or any preliminary
prospectus or any amendment or supplement thereto or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are based upon any information furnished in writing to
the Company by such Investor, expressly for use therein, or (ii) any
violation by the Company of any federal, state or common law, rule or
regulation applicable to the Company in connection with any Registration
Statement, Prospectus or any preliminary prospectus, or any amendment or
supplement thereto, and shall reimburse in accordance with subparagraph (c)
below, each of the foregoing persons for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claims. The foregoing is subject to the condition that, insofar as the
foregoing indemnities relate to any untrue statement, alleged untrue
statement, omission or alleged omission made in any preliminary prospectus
or Prospectus that is eliminated or remedied in any Prospectus or amendment
or supplement thereto, the above indemnity obligations of the Company shall
not inure to the benefit of any indemnified party if a copy of such
corrected Prospectus or amendment or supplement thereto had been made
available to such indemnified party and was not sent or given by such
indemnified party at or prior to the time such action was required of such
indemnified party by the 1933 Act and if delivery of such Prospectus or
amendment or supplement thereto would have eliminated (or been a sufficient
defense to) any liability of such indemnified party with respect to such
statement or omission. Indemnity under this Section 5(a) shall remain in
full force and effect regardless of any investigation made by or on behalf
of any indemnified party and shall survive the permitted transfer of the
Registrable Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with any registration pursuant to the terms of this Agreement,
each Investor severally will furnish to the Company in writing such
information as the Company reasonably requests concerning the holders of
Registrable Securities or the proposed manner of distribution for use in
connection with any Registration Statement or Prospectus and severally (and
not jointly) agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors, officers, employees,
stockholders and each person who controls the Company (within the meaning
of the ▇▇▇▇ ▇▇▇) against any losses, claims, damages, liabilities and
expense (including reasonable attorney's fees) resulting from any untrue
statement of a material fact or any omission of a material fact required to
be stated in the Registration Statement or Prospectus or preliminary
prospectus or amendment or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent
that such untrue statement or omission is contained in any information
furnished in writing by such holder of Registrable Securities to the
Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto and that such information was
substantially relied upon by the Company in preparation of the Registration
Statement or Prospectus or any amendment or supplement thereto. In no event
shall the liability of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expense paid by
such holder and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue statement or omission) received by
such holder upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder shal (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided that any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the indemnifying
party shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such claim on behalf of
such person); and provided, further, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the extent that such failure
to give notice shall materially adversely affect the indemnifying party in
the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm
of attorneys at any time for all such indemnified parties. No indemnifying
party will, except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement that 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.
(d) CONTRIBUTION. If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as
expressly specified therein, then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying
party, as well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation within the meaning of Section 11 (f)
of the 1933 Act shall be entitled to contribution from any person not
guilty of such fraudulent misrepresentation. In no event shall the
contribution obligation of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses paid by
such holder and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission) received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation.
6. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. This Agreement may be amended
only by a writing signed by the parties hereto intended to be bound. The
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act,
of the Investor(s) affected by such amendment, action or omission to act.
(b) NOTICES. All notices and other communications provided
for or permitted hereunder shall be made as set forth in Section 10.4 of
the Purchase Agreement.
(c) ASSIGNMENTS AND TRANSFERS BY INVESTORS. This Agreement
and all the rights and obligations of the Investors hereunder may not be
assigned or transferred to any transferee or assignee except as set forth
herein. An Investor may make such assignment or transfer to any transferee
or assignee of any Common Stock, Note, Warrant, or Registrable Securities,
provided, that (i) such transfer is made expressly subject to this
Agreement and the transferee agrees in writing to be bound by the terms and
conditions hereof, and (ii) the Company is provided with written notice of
such assignment.
(d) ASSIGNMENTS AND TRANSFERS BY THE COMPANY. This Agreement
may not be assigned by the Company without the prior written consent of the
Investors, except that without the prior written consent of the Investors,
but after notice duly given, the Company shall assign its rights and
delegate its duties hereunder to any successor-in-interest corporation, and
such successor-in-interest shall assume such rights and duties, in the
event of a merger or consolidation of the Company with or into another
corporation or the sale of all or substantially all of the Company's
assets.
(e) BENEFITS OF THE AGREEMENT. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. 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.
(f) 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.
(g) 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.
(h) 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 this Agreement
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms to the fullest extent permitted by
law.
(i) FURTHER ASSURANCES. The parties shall execute and
deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements
herein contained.
(j) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(k) APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois without
regard to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
COMPANY:
ENTRADE INC.
By:
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Name:
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Title:
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INVESTORS:
THE ▇▇▇▇▇▇ FAMILY TRUST
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, TTEE
THE ▇▇▇▇ FAMILY TRUST
By:
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▇▇▇▇▇ ▇. ▇▇▇▇, TTEE
FIRST FRUIT, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇, President
GENESEE MUTUAL INVESTMENTS, LLC
By:
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▇▇▇▇ ▇. ▇▇▇▇, Manager
FOR HIS ADOPTED CHILDREN, INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇, President
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