UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 21, 1999
ENTRADE INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-15303 52-2153008
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 Central Avenue, Northfield, Illinois 60093
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 441-6650
Not applicable
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 5. OTHER EVENTS
Between December 21, 1999 and January 6, 2000, Entrade Inc. (the "Company")
completed the sale of an aggregate of 373,750 shares of its common stock, no par
value (the "Shares"), for an aggregate consideration of $11,960,000 to
unaffiliated institutional and individual accredited investors (each a
"Purchaser"). Net proceeds were $11,412,000. The Shares were sold pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"Act") pursuant to Regulation D promulgated thereunder. Entrade also issued
warrants to purchase an aggregate of 20,500 shares of Entrade common stock at
prices ranging from $32.00 per share to $55.65 per share as consideration to
finders in connection with the sale of its common stock. The warrants expire
January 5, 2003.
On December 31, 1999, a wholly owned subsidiary of the Company agreed
to merge into Positive Asset Remarketing, Inc., with the surviving corporation
becoming a wholly-owned subsidiary of the Company. Upon consummation of the
merger, the aggregate outstanding shares of common stock of Positive Asset
Remarketing, Inc. will be converted into 900,000 Shares, subject to increase
pursuant to the terms of the merger, and the Company will acquire Positive Asset
Remarketing, Inc.'s 17.47% interest in the Class A Common Stock of
asseTrade.com. After the merger, and assuming the full dilution of Entrade's
interest, Entrade will hold a 29.3% interest in the Class A Common Stock of
asseTrade.com. The merger was approved by Entrade's Board of Directors on
January 3, 2000 and is subject to various conditions, including Entrade
shareholder approval.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not Applicable.
(b) Not applicable.
(c) Exhibits:
Exhibit No. Exhibit Description
----------- -------------------
10.1 Subscription and Investment Representation
Agreement entered into by Flybridge &
Company - Sun America Growth Opportunities
Fund on December 20, 1999 and accepted by
the Company on December 21, 1999.
10.2 Subscription and Investment Representation
Agreement entered into by Parisa Company -
Style Select Series Aggressive Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.3 Subscription and Investment Representation
Agreement entered into by Fleetfooted &
Company - SunAmerica Small Company Growth
Fund on December 20, 1999 and accepted by
the Company on December 21, 1999.
10.4 Subscription and Investment Representation
Agreement entered into by Flagline & Company
- SunAmerica Series Trust Aggressive Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.5 Subscription and Investment Registration
Agreement entered into by Sisyphus & Company
- Style Select Series Mid-Cap Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.6 Subscription and Investment Registration
Agreement entered into by Stewart Greenebaum
on December 23, 1999 and accepted by the
Company on December 23, 1999.
<PAGE>
10.7 Subscription and Investment Registration
Agreement entered into by James Filler on
December 30, 1999 and accepted by the
Company on December 30, 1999.
10.8 Subscription and Investment Registration
Agreement entered into by Elliott
Associates, L.P. and Westgate International,
L.P. on December 30, 1999 and accepted by
the Company on December 30, 1999.
10.9 Subscription and Investment Registration
Agreement entered into by Lunn Partners
Multiple Opportunities Portfolio L.P. on
January 3, 2000 and accepted by the
Company on January 3, 2000.
10.10 Subscription and Investment Registration
Agreement entered into by Dr. Richard A.
Chafetz on January 3, 2000 and accepted by
the Company on January 5, 2000.
10.11 Form of Warrant to Purchase Common Stock.
10.12 Agreement and Plan of Merger dated as of
December 31, 1999 among Entrade, Inc.,
Positive Asset Remarketing, Inc., a Nevada
corporation, Positive Asset Remarketing,
Inc., a Massachusetts corporation, Robert D.
Kohn, Benjamin Kafka, Mark Quinn, and
Entrade Merger Subsidiary, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTRADE INC.
By:/s/Mark F. Santacrose
---------------------------------
Mark F. Santacrose, President
and Chief Executive Officer
Date: January 25, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description
10.1 Subscription and Investment Representation
Agreement entered into by Flybridge &
Company - Sun America Growth Opportunities
Fund on December 20, 1999 and accepted by
the Company on December 21, 1999.
10.2 Subscription and Investment Representation
Agreement entered into by Parisa Company -
Style Select Series Aggressive Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.3 Subscription and Investment Representation
Agreement entered into by Fleetfooted &
Company - SunAmerica Small Company Growth
Fund on December 20, 1999 and accepted by
the Company on December 21, 1999.
10.4 Subscription and Investment Representation
Agreement entered into by Flagline & Company
- SunAmerica Series Trust Aggressive Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.5 Subscription and Investment Registration
Agreement entered into by Sisyphus & Company
- Style Select Series Mid-Cap Growth
Portfolio on December 20, 1999 and accepted
by the Company on December 21, 1999.
10.6 Subscription and Investment Registration
Agreement entered into by Stewart Greenebaum
on December 23, 1999 and accepted by the
Company on December 23, 1999.
10.7 Subscription and Investment Registration
Agreement entered into by James Filler on
December 30, 1999 and accepted by the
Company on December 30, 1999.
10.8 Subscription and Investment Registration
Agreement entered into by Elliott
Associates, L.P. and Westgate International,
L.P. on December 30, 1999 and accepted by
the Company on December 30, 1999.
10.9 Subscription and Investment Registration
Agreement entered into by Lunn Partners
Multiple Opportunities Portfolio L.P. on
January 3, 2000 and accepted by the
Company on January 3, 2000.
10.10 Subscription and Investment Registration
Agreement entered into by Dr. Richard A.
Chafetz on January 3, 2000 and accepted by
the Company on January 5, 2000.
10.11 Form of Warrant to Purchase Common Stock.
10.12 Agreement and Plan of Merger dated as of
December 31, 1999 among Entrade, Inc.,
Positive Asset Remarketing, Inc., a Nevada
corporation, Positive Asset Remarketing,
Inc., a Massachusetts corporation, Robert D.
Kohn, Benjamin Kafka, Mark Quinn, and
Entrade Merger Subsidiary, Inc.
EXHIBIT 10.1
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 45,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $1,440,000.00.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
shareholders, or other persons necessary for the due authorization,
2
<PAGE>
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
3
<PAGE>
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
4
<PAGE>
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
5
<PAGE>
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
6
<PAGE>
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
7
<PAGE>
3.4 Governing Law. This Agreement is governed by and is to be
construed in accordance with the laws of the state of Illinois without regard to
conflicts of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
8
<PAGE>
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
3.14 Personal Liability. The obligations of this Subscription and
Investment Representation Agreement shall only be binding upon the assets and
property of the Subscriber and shall not be binding upon any Trustee, officer,
or shareholder of the Subscriber individually and no Trustee, officer or
shareholder of the Subscriber shall be individually liable for any of said
obligations.
3.15 Separate Series. The SunAmerica Growth Opportunities Fund (the
"Fund") is a separate series of SunAmerica Equity Funds (the "Trust"), and all
debts, liabilities, obligations and expenses of the Fund shall be enforceable
only against the assets of that Fund and not against the assets of any other
Fund or of the Trust as a whole.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
______________, 1999.
SUBSCRIBER:
Subscriber's Signature: ___________________________________
Name: Flybridge & Company (SunAmerica Growth Opportunities Fund)
Address: _______________________________________________
__________________________________________________________
Title: __________________________________________________
Business Telephone No.: _________________________________
Federal ID#: ____________________________________________
Number of Shares at $32.00 each: 45,000
Total Subscription Price: $1,440,000.00
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Flybridge & Company
(SunAmerica Growth
Opportunities Fund)
Subscription Price (Tendered): $1,440,000.00
Accepted Amount: $1,440,000.00
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 45,000
ENTRADE INC.,
a Pennsylvania corporation
By: _________________________
Title: _________________________
Date of Acceptance: ___________, 1999
EXHIBIT 10.2
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 14,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $448,000.00.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
shareholders, or other persons necessary for the due authorization,
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2
<PAGE>
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
3
<PAGE>
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon
the Company's execution of the acceptance to this Agreement, the Company makes
the following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
4
<PAGE>
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
5
<PAGE>
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
6
<PAGE>
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
7
<PAGE>
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
8
<PAGE>
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
3.14 Separate Series. The Aggressive Growth Portfolio (the "Portfolio")
is a separate series of Style Select Series, Inc. (the "Corporation"), and all
debts, liabilities, obligations and expenses of the Portfolio shall be
enforceable only against the assets of that Portfolio and not against the assets
of any other Portfolio or of the Corporation as a whole.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
______________, 1999.
SUBSCRIBER:
Subscriber's Signature: ________________________________
Name: Parisa & Company (Style Select Series Aggressive Growth Portfolio)
Address: _______________________________________________
_________________________________________________________
Title: _________________________________________________
Business Telephone No.: ________________________________
Federal ID#: ___________________________________________
Number of Shares at $32.00 each: 14,000
Total Subscription Price: $448,000
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Parisa & Company
(Style Select Series
Aggressive Growth Portfolio)
Subscription Price (Tendered): $448,000.00
Accepted Amount: $448,000.00
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 14,000
ENTRADE INC.,
a Pennsylvania corporation
By: ___________________
Title: ___________________
Date of Acceptance: ________, 1999
10
EXHIBIT 10.3
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 40,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $1,280,000.00.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
shareholders, or other persons necessary for the due authorization,
2
<PAGE>
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
3
<PAGE>
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
4
<PAGE>
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
5
<PAGE>
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
6
<PAGE>
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
7
<PAGE>
3.4 Governing Law. This Agreement is governed by and is to be
construed in accordance with the laws of the state of Illinois without regard to
conflicts of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
8
<PAGE>
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
3.14 Personal Liability. The obligations of this Subscription and
Investment Representation Agreement shall only be binding upon the assets and
property of the Subscriber and shall not be binding upon any Trustee, officer,
or shareholder of the Subscriber individually and no Trustee, officer or
shareholder of the Subscriber shall be individually liable for any of said
obligations.
3.15 Separate Series. The SunAmerica Small Company Growth Fund (the
"Fund") is a separate series of SunAmerica Equity Funds (the "Trust"), and all
debts, liabilities, obligations and expenses of the Fund shall be enforceable
only against the assets of that Fund and not against the assets of any other
Fund or of the Trust as a whole.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
______________, 1999.
SUBSCRIBER:
Subscriber's Signature: ___________________________________
Name: Fleetfooted & Company (SunAmerica Small Company Growth Fund)
Address: ______________________________________________
________________________________________________________
Title: ________________________________________________
Business Telephone No.: _______________________________
Federal ID#: __________________________________________
Number of Shares at $32.00 each: 40,000
Total Subscription Price: $1,280,000.00
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Fleetfooted & Company
(SunAmerica Small Company
Growth Fund)
Subscription Price (Tendered): $1,280,000.00
Accepted Amount: $1,280,000.00
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 40,000
ENTRADE INC.,
a Pennsylvania corporation
By: ___________________
Title: ___________________
Date of Acceptance: ________, 1999
10
EXHIBIT 10.4
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 46,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $1,472,000.00.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
2
<PAGE>
shareholders, or other persons necessary for the due authorization,
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
3
<PAGE>
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
4
<PAGE>
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
5
<PAGE>
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
6
<PAGE>
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
7
<PAGE>
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
8
<PAGE>
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
3.14 Personal Liability. The obligations of this Subscription and
Investment Representation Agreement shall only be binding upon the assets and
property of the Subscriber and shall not be binding upon any Trustee, officer,
or shareholder of the Subscriber individually and no Trustee, officer or
shareholder of the Subscriber shall be individually liable for any of said
obligations.
3.15 Separate Series. The Aggressive Growth Portfolio (the "Portfolio")
is a separate series of SunAmerica Series Trust (the "Trust"), and all debts,
liabilities, obligations and expenses of the Portfolio shall be enforceable only
against the assets of that Portfolio and not against the assets of any other
Portfolio or of the Trust as a whole.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
______________, 1999.
SUBSCRIBER:
Subscriber's Signature: ___________________________________
Name: Flagline & Company (SunAmerica Series Trust Aggressive Growth Portfolio)
Address: _______________________________________________
_________________________________________________________
Title: _________________________________________________
Business Telephone No.: ________________________________
Federal ID#: ___________________________________________
Number of Shares at $32.00 each: 46,000
Total Subscription Price: $1,472,000.00
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Flagline & Company
(SunAmerica Series Trust Aggressive
Growth Portfolio)
Subscription Price (Tendered): $1,472,000.00
Accepted Amount: $1,472,000.00
Portion of Subscription Price
Returned: $-0-
Number of Shares to be issued: 46,000
ENTRADE INC.,
a Pennsylvania corporation
By: ___________________
Title: ___________________
Date of Acceptance: ________, 1999
10
EXHIBIT 10.5
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 11,250 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $360,000.00.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
shareholders, or other persons necessary for the due authorization,
2
<PAGE>
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
3
<PAGE>
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
4
<PAGE>
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
5
<PAGE>
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
6
<PAGE>
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
7
<PAGE>
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
8
<PAGE>
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
3.14 Separate Series. The Style Select Series Mid-Cap Growth Portfolio
(the "Portfolio") is a separate series of Style Select Series, Inc. (the
"Corporation"), and all debts, liabilities, obligations and expenses of the
Portfolio shall be enforceable only against the assets of that Portfolio and not
against the assets of any other Portfolio or of the Corporation as a whole.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
______________, 1999.
SUBSCRIBER:
Subscriber's Signature: ________________________________
Name: Sisyphus & Company (Style Select Series Mid-Cap Growth Portfolio)
Address: _______________________________________________
_________________________________________________________
Title: _________________________________________________
Business Telephone No.: ________________________________
Federal ID#: ___________________________________________
Number of Shares at $32.00 each: 11,250
Total Subscription Price: $360,000.00
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Sisyphus & Company
(Style Select Series Mid-Cap
Growth Portfolio)
Subscription Price (Tendered): $360,000.00
Accepted Amount: $360,000.00
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 11,250
ENTRADE INC.,
a Pennsylvania corporation
By: ___________________
Title: ___________________
Date of Acceptance: ________, 1999
10
EXHIBIT 10.6
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 20,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company: (i) a check payable to Entrade Inc., in the amount of the
Subscription Price; and (ii) a completed Internal Revenue Form W-9.
1.4 Brokerage Fee. First Union Securities ("FUS") is acting as the
broker for the Subscriber in arranging this Subscription and Investment
Agreement. FUS will receive a fee equal to 5% of the Subscription Price of
$640,000.00. The undersigned Subscriber understands that the information
provided to it with respect to the Company has not been independently verified
by FUS. Accordingly, there is no representation by FUS as to the completeness or
accuracy of such information. Each party hereto respectfully represents that no
other brokers or representatives were or are retained by them in this
Subscription and Investment Agreement. Each party further agrees to hold the
other party, its successors and assigns, harmless from the claims of any other
broker in connection with this Subscription and Investment Agreement for the
subscription and purchase of 20,000 shares of no par value common stock. The
provisions of this Section 1.4 shall survive the delivery of the Shares
contemplated herein.
<PAGE>
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining his suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that he has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the SEC Documents or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of his entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2
<PAGE>
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
information provided by Subscriber to the Company, including the
information on Schedule 1 attached, is accurate, true, correct and
complete in all material respects. Subscriber will promptly report any
changes to the Company in writing. Schedule 1 attached to this
Agreement forms a part of this Subscription Agreement. The Subscriber
is subscribing for the Shares solely for his own account, for
investment purposes, and not with a view to, or with any intention of,
a distribution, sale, or subdivision of any Shares or for the account
of any other individual, corporation, firm, entity or person.
2.1.5 Independent Investigation. In making his decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by him. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. Unless the Subscriber has initiated
Section 4 on the Accredited Investor Questionnaire, attached to this
Agreement as Schedule 1, the Subscriber expressly represents and
warrants that he is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the 1933 Act on account of either: (i) the fact
that his net worth or joint net worth with his spouse exceeds One
Million Dollars ($1,000,000) or his individual income is in excess of
Two Hundred Thousand Dollars ($200,000) in each of the two most recent
years or joint income with his spouse is in excess of Three Hundred
Thousand Dollars ($300,000) in each of those years and he has a
reasonable expectation of reaching the same income level in the current
year, or (ii) he is an executive officer or director of the Company, or
(iii) for any other reasons indicated in Schedule 1 hereto.
3
<PAGE>
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the total Subscription Price does not exceed
ten percent (10%) of the greater of his net worth (exclusive
of home, furnishings, and automobile) as of the date hereof,
individually or his net worth collectively with his spouse,
and the Subscriber's financial condition is such that the
Subscriber has no need for liquidity with respect to the
Subscriber's investment in the Company to satisfy any existing
or contemplated undertaking or indebtedness.
2.1.8.3 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.4 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect his own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. The Subscriber is a bona fide
resident of the state set forth in his address on Page 9 herein. The
Subscriber agrees that if the Subscriber's principal residence changes
prior to the Company's acceptance of the Subscriber's subscription for
the Shares, the Subscriber will promptly notify the Company of such
changes and that, if the changes is to a state in which offers and/or
sales of the Shares are prohibited by applicable law, any offer to sell
any Shares to the Subscriber prior to notification of the change shall
be deemed retracted and the Subscriber shall no longer be entitled to
purchase the Shares pursuant to such offer.
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to his financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, he will immediately inform
the Company.
4
<PAGE>
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
5
<PAGE>
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
6
<PAGE>
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
7
<PAGE>
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
8
<PAGE>
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
December 23, 1999.
SUBSCRIBER:
Subscriber's Signature: _________________________
Name: Stuart Greenbaum
Address: ________________________________________
Telephone No.: __________________________________
Social Security Number: _________________________
Number of Shares at $32.00 each: 20,000
Total Subscription Price: $640,000
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Stewart Greenebaum
Subscription Price (Tendered): $640,000
Accepted Amount: $640,000
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 20,000
ENTRADE INC.,
a Pennsylvania corporation
By: ____________________
Title: ____________________
Date of Acceptance: December 23, 1999
10
EXHIBIT 10.7
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 10,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company: (i) a check payable to Entrade Inc., in the amount of the
Subscription Price; and (ii) a completed Internal Revenue Form W-9.
1.4 Brokerage Fee. First Union Securities ("FUS") is acting as the
broker for the Subscriber in arranging this Subscription and Investment
Agreement. FUS will receive a fee equal to 5% of the Subscription Price of
$320,000.00. The undersigned Subscriber understands that the information
provided to it with respect to the Company has not been independently verified
by FUS. Accordingly, there is no representation by FUS as to the completeness or
accuracy of such information. Each party hereto respectfully represents that no
other brokers or representatives were or are retained by them in this
Subscription and Investment Agreement. Each party further agrees to hold the
other party, its successors and assigns, harmless from the claims of any other
broker in connection with this Subscription and Investment Agreement for the
subscription and purchase of 10,000 shares of no par value common stock. The
provisions of this Section 1.4 shall survive the delivery of the Shares
contemplated herein.
<PAGE>
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining his suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that he has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the SEC Documents or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of his entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2
<PAGE>
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
information provided by Subscriber to the Company, including the
information on Schedule 1 attached, is accurate, true, correct and
complete in all material respects. Subscriber will promptly report any
changes to the Company in writing. Schedule 1 attached to this
Agreement forms a part of this Subscription Agreement. The Subscriber
is subscribing for the Shares solely for his own account, for
investment purposes, and not with a view to, or with any intention of,
a distribution, sale, or subdivision of any Shares or for the account
of any other individual, corporation, firm, entity or person.
2.1.5 Independent Investigation. In making his decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by him. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. Unless the Subscriber has initiated
Section 4 on the Accredited Investor Questionnaire, attached to this
Agreement as Schedule 1, the Subscriber expressly represents and
warrants that he is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the 1933 Act on account of either: (i) the fact
that his net worth or joint net worth with his spouse exceeds One
Million Dollars ($1,000,000) or his individual income is in excess of
Two Hundred Thousand Dollars ($200,000) in each of the two most recent
years or joint income with his spouse is in excess of Three Hundred
Thousand Dollars ($300,000) in each of those years and he has a
reasonable expectation of reaching the same income level in the current
year, or (ii) he is an executive officer or director of the Company, or
(iii) for any other reasons indicated in Schedule 1 hereto.
3
<PAGE>
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the total Subscription Price does not exceed
ten percent (10%) of the greater of his net worth (exclusive
of home, furnishings, and automobile) as of the date hereof,
individually or his net worth collectively with his spouse,
and the Subscriber's financial condition is such that the
Subscriber has no need for liquidity with respect to the
Subscriber's investment in the Company to satisfy any existing
or contemplated undertaking or indebtedness.
2.1.8.3 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.4 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect his own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. The Subscriber is a bona fide
resident of the state set forth in his address on Page 9 herein. The
Subscriber agrees that if the Subscriber's principal residence changes
prior to the Company's acceptance of the Subscriber's subscription for
the Shares, the Subscriber will promptly notify the Company of such
changes and that, if the changes is to a state in which offers and/or
sales of the Shares are prohibited by applicable law, any offer to sell
any Shares to the Subscriber prior to notification of the change shall
be deemed retracted and the Subscriber shall no longer be entitled to
purchase the Shares pursuant to such offer.
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to his financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, he will immediately inform
the Company.
4
<PAGE>
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
5
<PAGE>
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
6
<PAGE>
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
7
<PAGE>
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
8
<PAGE>
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
December 30, 1999.
SUBSCRIBER:
Subscriber's Signature: _____________________________
Name: James Filler
Address: ____________________________________________
Telephone No.: ______________________________________
Social Security Number: _____________________________
Number of Shares at $32.00 each: 10,000
Total Subscription Price: $320,000
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: James and Carol Filler
Subscription Price (Tendered): $320,000
Accepted Amount: $320,000
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 10,000
ENTRADE INC.,
a Pennsylvania corporation
By: _________________________
Title: _________________________
Date of Acceptance: December 30, 1999
10
EXHIBIT 10.8
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. Subject to the terms and conditions hereof, each of
the undersigned "Subscribers" hereby subscribes for and agrees to purchase a
number of shares ("Shares") of the no par value common stock ("Common Stock") of
Entrade Inc., a Pennsylvania corporation ("Company"), equal to $2,500,000
divided by the Subscription Price. The Subscription Price shall be equal to the
lesser of $32.00 or the closing price of the Company's Common Stock on the New
York Stock Exchange on the trading day immediately preceding the Closing Date.
Subscriber's subscription is subject to acceptance by the Company, which
acceptance shall only be evidenced by the Company's execution of the Acceptance
of Subscription attached to and forming a part of this Agreement, and to the
extent provided therein.
1.2 Acceptance. Subscriber's Subscription shall only be accepted upon
the Company, executing the Acceptance
of Subscription attached to this Agreement.
1.3 Payment of Subscription Price. The Subscribers shall tender to the
Company the aggregate sum of $5,000,000.00 on the Closing Date. The Closing Date
shall occur on January 6, 2000 or on such later date as the parties mutually
agree. On or as soon as reasonably possible after the Closing Date, the Company
will deliver certificates evidencing the Shares to Subcribers.
1.4 Brokerage Fee. Shoreline Pacific Institutional Finance ("SPIF") is
acting as the broker for the Subscribers in arranging this Subscription and
Investment Agreement ("Agreement"). SPIF will receive a fee equal to 5% of the
aggregate Subscription Price of $5,000,000.00 (out of the proceeds). The
undersigned Subscribers understand that the information provided to them with
respect to the Company has not been independently verified by SPIF. Accordingly,
there is no representation by SPIF as to the completeness or accuracy of such
information. Each party hereto respectfully represents that no other brokers or
representatives were or are retained by them in connection with this
Subscription and Investment Agreement. Each party further agrees to hold the
other parties, their successors and assigns, harmless from the claims of any
other broker in connection with this Subscription and Investment Agreement for
the subscription and purchase of Shares to be purchased hereunder. The
provisions of this Section 1.4 shall survive the delivery of the Shares
contemplated herein.
<PAGE>
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. Each Subscriber makes
the following representations and warranties with the intent that the same may
be relied upon in determining its suitability to purchase the Shares of the
Company and with the understanding that the availability of exemptions from
registration of the offering may depend upon the accuracy of such
representations and warranties.
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the offering of Shares to the Subscribers has not been and is not
being registered either with the U.S. Securities and Exchange
Commission ("SEC") or with the secretary of state of the state of
incorporation or place of business of the Subscriber, and are being
offered and sold pursuant to the exemption from registration provided
in Regulation D ("Regulation D") promulgated under the Securities Act
of 1933 by the SEC (the "1933 Act"), and limited offering exemptions
provided in the "Blue Sky" laws of the states of incorporation or place
of business of the Subscriber, and that no governmental agency has
recommended or endorsed the Shares or made any finding or determination
relating to the adequacy or accuracy of the Memorandum or the fairness
of an investment in the Company. Any representation to the contrary is
a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2
<PAGE>
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person,
except in accordance with the requirements of the 1933 Act. Subscriber
represents and warrants to the Company that: (a) such Subscriber is a
limited partnership, duly organized, validly existing, and in good
standing under the law of the jurisdiction of its incorporation and
duly qualified and in good standing as a foreign limited partnership in
the jurisdiction of its principal place of business (if not organized
therein); (b) the Subscriber has full power and authority to execute
and agree to this Agreement and to perform its obligations hereunder
and all necessary actions by its partners or other persons necessary
for the due authorization, execution, delivery, and performance of this
Agreement by that Subscriber have been duly taken; (c) the Subscriber
has duly executed and delivered this Agreement; and (d) the
Subscriber's authorization, execution, delivery, and performance of
this Agreement does not conflict with (i) any law, rule or court order
applicable to that Subscriber, (ii) such Subscriber's articles of
incorporation or bylaws, or (iii) any other agreement or arrangement to
which such Subscriber is a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. Except with
respect to the Company's representations in this Agreement, the
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1. Any resale legend will be removed upon
1933 Act registration. The legend will read as follows:
3
<PAGE>
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). The shares
have been acquired for investment and may not be sold, or otherwise
transferred, in the absence of an effective registration statement for
the shares under the Act or an opinion of counsel presented to the
Company prior to the proposed transaction that registration is not
required under the Act."
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it is an "accredited investor" as defined in Rule
501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties prior to the Closing Date,
it will immediately inform the Company.
2.2 Company Representations, Warranties and Covenants. Effective
upon the Company's execution of the acceptance to this Agreement, the Company
makes the following representations and warranties to the Subscriber as of the
date hereof and as of the Closing Date:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
5
<PAGE>
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization; No Conflicts. All action on the part of
the Company necessary for the issuance and sale of the Shares pursuant
hereto and for the execution, performance and delivery by the Company
of this Agreement has been taken. The execution, delivery and
performance by the Company of this Agreement and the issuance of the
Shares will not (i) violate (1) any provision of law applicable to the
Company, except that no representation or warranty is made with respect
to any so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
5
<PAGE>
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement.
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Registration Requirements. The Company shall:
(a) No later than forty-five (45) days
following the Closing Date, prepare and file a
registration statement with the Commission pursuant
to Rule 415 under the Securities Act on such
appropriate form as the Company is eligible to use
under the Securities Act) covering the resale of the
Shares("Registration Statement"). Thereafter, the
Company shall use its best efforts to cause such
Registration Statement and other filings to be
declared effective prior to the end of the period
terminating one hundred twenty (120) days following
the Closing Date.
6
<PAGE>
(b) Prepare and file with the Commission
such amendments and supplements to such Registration
Statement and the prospectus used in connection with
Registration Statement as may be necessary to comply
with the provisions of the Act with respect to the
disposition of all securities covered by such
Registration Statement and notify the holders of the
Shares of the filing and effectiveness of such
Registration Statement and any amendments or
supplements.
(c) Furnish to each holder of such Shares
such copies of a current prospectus conforming with
the requirements of the Act, copies of the
Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference
therein and such other documents as such holder of
such Shares may reasonably require in order to
facilitate the disposition of the Shares.
(d) Use its best efforts to register and
qualify the securities covered by such Registration
under such other securities or "Blue Sky" laws of
such jurisdictions as shall be reasonably requested
by each holder of such Shares; provided that the
Company shall not be required in connection therewith
or as a condition thereto to qualify to do business
or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify each holder of such Shares
immediately of the issuance by the Commission or any
state securities commission or agency of any stop
order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose. The Company shall use
its best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time.
(f) Use its best efforts to list the Shares
with all securities exchanges(s) and/or markets on
which the Shares are then listed and prepare and file
any required filings with any exchange or market
where the Shares are traded.
(g) Bear all expenses incurred in connection
with such registration, qualification or compliance
with registration pursuant to this paragraph except
the holder of the Shares shall bear all underwriting
discounts and selling commissions applicable to the
sale of such Shares and all fees and disbursements of
counsel for such holders.
(h) Use its best efforts to keep such
registration effective until the earliest (i) of
January 6, 2002; (ii) all of the holders of such
Shares having completed the sales or distribution
described in the Registration Statement relating
thereto; or (iii) such Shares being able to be sold
under Rule 144(k) or any equivalent successor rule.
7
<PAGE>
(i) Notify each holder of such Shares
immediately in the event that the Registration
Statement has become stale or contains a material
misstatement or material omission.
The parties hereto agree to execute appropriate and
customary mutual indemnity agreements prior to the
effectiveness of any registration statements as may
be reasonably requested by either party.
2.2.6.3 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement referred
to in Section 2.2.6.1, or to withdraw the same after the
filing but prior to the effective date thereof. In addition,
notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company may exclude from such registration statement all
or a portion of the Shares for which registration was
requested by Subscriber if, in the written opinion of the
Company's managing underwriter for any securities being sold
by the Company and registered on the same registration
statement as the Shares, if any, the inclusion of all or a
portion of such Shares, when added to the securities being
registered for sale by the Company, will exceed the maximum
amount of the Company's securities which can be marketed (i)
at a price reasonably related to their then current market
value, or (ii) without otherwise materially and adversely
affecting the entire offering. If less than all of the Shares
requested for inclusion in said registration statement are to
be excluded pursuant to the foregoing provision, the Shares
which are included shall be allocated among the selling
stockholders thereunder on a pro rata basis.
2.2.7 Qualifications. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in
which the failure so to qualify would not have a Material Adverse
Effect. "Material Adverse Effect" means any adverse effect on the
business, operations, properties, prospects, or financial condition of
the entity with respect to which such term is used and which is
material to such entity and other entities controlling or controlled by
such entity taken as a whole, or any material adverse effect on the
transactions contemplated under this Agreement, or any other agreement
or document contemplated hereby or thereby.
2.2.8 No Violations. The business of the Company is not being
conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations which either singly or in
the aggregate do not and will not have a Material Adverse Effect. The
Company is not required under Federal, state, local or foreign law,
8
<PAGE>
rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency
in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Shares except as may be
stated elsewhere in this Agreement.
2.2.9 SEC Documents; Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Securities
Act of 1934, as amended (the "Exchange Act"), and the Company has filed
all reports, schedules, forms, statements and other documents required
to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to
Section 13(a) and 15(d), in addition to one or more registration
statements and amendments thereto heretofore filed by the Company with
the Commission (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "SEC Documents"). The
Company has not provided to the Subscribers any material non-public
information or any information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company but
which has not been disclosed. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other Federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted
to state a material fact 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.
2.2.10 No General Solicitation. Neither the Company, nor any
of its affiliates, or, to its knowledge, any person acting on its or
their behalf (other than Subscribers, as to whom the Company makes no
representation) has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 1933
Act) in connection with the offer or sale of the Shares.
2.2.11 No Integrated Offering. Neither the Company, nor any of
its affiliates, nor to its knowledge any person acting on its or their
behalf (other than the Subscribers, as to whom the Company makes no
representation) has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Shares under the
1933 Act.
ARTICLE 3
CONDITIONS
3.1 Conditions Precedent to the Obligation of the Subscribers to
Purchase the Shares. The obligation hereunder of each Subscriber to acquire and
pay for the Shares is subject to the satisfaction, at or before the Closing, of
each of the conditions set forth below. These conditions are for the
Subscribers' sole benefit and may be waived by the Subscribers at any time in
their sole discretion.
9
<PAGE>
3.1.1 Accuracy of the Company's Representations. The
representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a particular date).
3.1.2 Performance of the Company. The Company shall have
performed all agreements and satisfied all conditions required to be
performed or satisfied by the Company at or prior to the Closing.
3.1.3 NYSE. From the date hereof to the Closing Date, trading
in the Company's Common Stock shall not have been suspended by the SEC
or the NYSE and Common Stock shall not have been delisted.
3.1.4 No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
ARTICLE 4
MISCELLANEOUS PROVISIONS
4.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
4.2 Indemnification.
4.2.1 By Subscriber. Each Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; or (ii)
the disposition of any Shares which the Subscriber will receive,
contrary to the Subscriber's declaration, representations and
warranties in this Agreement.
10
<PAGE>
4.2.2 By Company. The Company agrees to indemnify and hold
harmless each Subscriber, its partners, officers, employees, agents and
any other person who controls or is controlled by any of them, against
any and all, loss, liability, claim, damage and expense whatsoever
(including, but not limited to, the reasonable expenses of counsel)
arising out of or based upon any false representation or warranty or
breach or failure by the Company or its agents to comply with any
covenant or agreement made by the Company herein or in any other
document furnished by the Company to the Subscriber in connection with
this transaction, provided that in no event shall the Company's
indemnification obligations hereunder exceed the aggregate Subscription
Price plus interest at a rate equal to ten percent (10%) per annum.
Notwithstanding the foregoing, the Company acknowledges that in the
event of a willful and wanton breach of paragraph 2.2 by the Company,
Subscribers may not have an adequate remedy at law. Accordingly, the
parties agree that in any action or proceeding arising out of an
alleged willful and wanton breach by Company of paragraph 2.2,
Subscribers shall be entitled to seek equitable relief, including
specific performance, without the necessity of posting any bond.
4.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
a Subscriber. All notices to a Subscriber shall be mailed or delivered to the
address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company, with copies to
Kleinberg, Kaplan, Wolff & Cohen, P.C., 551 Fifth Avenue, New York, New York
10176, Attn: Martin D. Sklar, Esq. Notices shall be effective on the date three
(3) days after the date of mailing or, if hand delivered or delivered by next
day business courier, on the date of delivery.
4.4 Governing Law. This Agreement iS governed by and is to be
construed in accordance with the laws of the State of Illinois without regard to
conflicts of laws principles.
4.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscribers or the Company, other than to Subscribers' affiliates.
4.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
11
<PAGE>
4.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
4.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
4.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
4.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
4.11 Additional Documents. Each party shall promptly execute all such
additional documents as may be reasonably required by another party in
furtherance of this Agreement.
4.12 Jurisdiction. Each Subscriber and the Company irrevocably submits
to the exclusive personal jurisdiction of the courts of the state of Illinois
for the County of Cook and the United States District Court for the Northern
District of Illinois in any suit, action or proceeding brought to enforce this
Agreement. Each party hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may now have or hereafter may have to the venue
of any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in such court has been brought
in an inconvenient forum or any other forum. Nothing in this paragraph shall
limit the right of the Company to bring proceedings against the Subscriber in
the courts of any appropriate jurisdiction.
4.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
4.14 Expenses. Each party shall pay its own expenses in connection with
this Agreement.
4.15 Press Release. The Company will immediately upon Closing issue a
press release which has been reviewed by and is reasonably satisfactory to
Subscribers.
12
<PAGE>
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
December 30, 1999.
SUBSCRIBERS:
ELLIOTT ASSOCIATES, L.P.
By: ______________________
Name: ________________________
Title: _______________________
Address: 712 Fifth Avenue - 36th Floor, New York, New York 10019
Business Telephone No.: (212) 974-6000
Federal ID#:: 22-2140975
WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc., as Attorney-in-fact
By: _____________________________
Title: __________________________
Address: c/o HSBC Financial Services (Cayman) Limited
Mary Street
Grand Cayman, Cayman Islands
Business Telephone No.: (345) 949-7755
Federal ID# : N/A
Number of Shares at $32.00 each: to be completed at Closing
Total Subscription Price: $5,000,000.00
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Names: Elliott Associates, L.P. and
Westgate International, L.P.
Subscription Price (Tendered): $5,000,000.00 ($2,500,000 each)
Accepted Amount: $5,000,000.00
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: to be completed at Closing
ENTRADE INC.,
a Pennsylvania corporation
By: ________________________
Title: ________________________
Date of Acceptance:
December 30, 1999
14
EXHIBIT 10.9
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 15,625 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company the sum of $500,000.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining its suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
<PAGE>
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that it has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the Memorandum or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of its entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
Subscriber is subscribing for the Shares solely for its own account,
for investment purposes, and not with a view to, or with any intention
of, a distribution, sale, or subdivision of any Shares or for the
account of any other individual, corporation, firm, entity or person.
Subscriber represents and warrants to the Company that: (a) such
Subscriber is a corporation, duly organized, validly existing, and in
good standing under the law of the state of its incorporation and duly
qualified and in good standing as a foreign corporation in the
jurisdiction of its principal place of business (if not incorporated
therein); (b) the Subscriber has full corporate power and authority to
execute and agree to this Agreement and to perform its obligations
hereunder and all necessary actions by its board of directors,
shareholders, or other persons necessary for the due authorization,
execution, delivery, and performance of this Agreement by that
Subscriber have been duly taken; (c) the Subscriber has duly executed
and delivered this Agreement; and (d) the Subscriber's authorization,
execution, delivery, and performance of this Agreement does not
conflict with (i) any law, rule or court order applicable to that
2
<PAGE>
Subscriber, (ii) such Subscriber's articles of incorporation or bylaws,
or (iii) any other agreement or arrangement to which such Subscriber is
a party or by which it is bound.
2.1.5 Independent Investigation. In making its decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by it. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. The Subscriber expressly represents
and warrants that it and each of its limited partners is an "accredited
investor" as defined in Rule 501(a) of Regulation D under the 1933 Act.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
3
<PAGE>
2.1.8.3 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect its own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. (Intentionally Deleted)
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to its financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, it will immediately inform
the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
4
<PAGE>
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
5
<PAGE>
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
6
<PAGE>
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
7
<PAGE>
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Cook and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
8
<PAGE>
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
January 3, 2000.
SUBSCRIBER:
Subscriber's Signature: ___________________________________
Name: Lunn Partners Multiple Opportunities Portfolio L.P.
Address: 209 South LaSalle Street, Suite 810
Chicago, Illinois 60604
By: Lunn Partners, LLC
Title: General Partner
By: ____________________________
Title: ____________________________
Business Telephone No.: 312-629-1973
Federal ID#: 36-4100168
Number of Shares at $32.00 each: 15,625
Total Subscription Price: $500,000
9
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Lunn Partners Multiple
Opportunities Portfolio L.P.
Subscription Price (Tendered): $500,000
Accepted Amount: $500,000
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 15,625
ENTRADE INC.,
a Pennsylvania corporation
By: _________________________
Title: _________________________
Date of Acceptance: January 3, 2000
10
EXHIBIT 10.10
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
500 Central Avenue
Northfield, Illinois 60093
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 15,625 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the Company,
in its sole discretion, executes the Acceptance of Subscription attached to this
Agreement. The date on which the Company executes such Acceptance of
Subscription is hereinafter referred to as the "Closing Date."
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company: (i) a check payable to Entrade Inc., in the amount of the
Subscription Price, which check shall be promptly returned to Subscriber if the
Company elects not to accept Subscriber's subscription for the Shares; and (ii)
a completed Internal Revenue Form W-9.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining his suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
<PAGE>
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Anthony E. Rothschild, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that he has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the SEC Documents or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of his entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
information provided by Subscriber to the Company, including the
information on Schedule 1 attached, is accurate, true, correct and
complete in all material respects. Subscriber will promptly report any
material changes to the Company in writing. Schedule 1 attached to this
Agreement forms a part of this Subscription Agreement. The Subscriber
is subscribing for the Shares solely for his own account, for
investment purposes, and not with a view to, or with any intention of,
a distribution, sale, or subdivision of any Shares or for the account
of any other individual, corporation, firm, entity or person.
2
<PAGE>
2.1.5 Independent Investigation. Subject to Section 2.1.1
above, in making his decision to purchase the Shares that are herein
subscribed for, the Subscriber has relied solely upon independent
investigations made by him. The Subscriber is not relying on the
Company or any of its respective shareholders, members, managers,
directors, officers, employees, affiliates, legal counsel, agents or
representatives with respect to any risk of making an investment in the
Company, or any tax or other economic considerations involved in this
investment. Except as contemplated in Section 2.1.1 above or as
otherwise set forth herein, no representations or warranties or other
statements have been made to the Subscriber by the Company or any of
its respective shareholders, members, managers, directors, officers,
employees, affiliates, legal counsel, agents or representatives. In
making the decision whether to invest in the Shares described herein,
the Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. Unless the Subscriber has initiated
Section 4 on the Accredited Investor Questionnaire, attached to this
Agreement as Schedule 1, the Subscriber expressly represents and
warrants that he is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the 1933 Act on account of either: (i) the fact
that his net worth or joint net worth with his spouse exceeds One
Million Dollars ($1,000,000) or his individual income is in excess of
Two Hundred Thousand Dollars ($200,000) in each of the two most recent
years or joint income with his spouse is in excess of Three Hundred
Thousand Dollars ($300,000) in each of those years and he has a
reasonable expectation of reaching the same income level in the current
year, or (ii) he is an executive officer or director of the Company, or
(iii) for any other reasons indicated in Schedule 1 hereto.
2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
3
<PAGE>
2.1.8.2 the total Subscription Price does not exceed
ten percent (10%) of the greater of his net worth (exclusive
of home, furnishings, and automobile) as of the date hereof,
individually or his net worth collectively with his spouse,
and the Subscriber's financial condition is such that the
Subscriber has no need for liquidity with respect to the
Subscriber's investment in the Company to satisfy any existing
or contemplated undertaking or indebtedness.
2.1.8.3 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.4 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect his own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. The Subscriber is a bona fide
resident of the state set forth in his address on Page 9 herein. The
Subscriber agrees that if the Subscriber's principal residence changes
prior to the Company's acceptance of the Subscriber's subscription for
the Shares, the Subscriber will promptly notify the Company of such
changes and that, if the change is to a state in which offers and/or
sales of the Shares are prohibited by applicable law, any offer to sell
any Shares to the Subscriber prior to notification of the change shall
be deemed retracted and the Subscriber shall no longer be entitled to
purchase the Shares pursuant to such offer.
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to his financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties prior to the Company's
acceptance of the Subscriber's subscription for the Shares, he will
immediately inform the Company.
2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
4
<PAGE>
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company and
its shareholders necessary for the issuance and sale of the Shares
pursuant hereto and for the execution, performance and delivery by the
Company of this Agreement has been taken. The execution, delivery and
performance by the Company of this Agreement and the issuance of the
Shares will not (i) violate (1) any provision of law applicable to the
Company, (2) its articles of incorporation, by-laws or other
organizational documents, (3) any applicable order of any court, agency
or governmental authority specifically naming the Company or (4) any
material indenture, agreement or other instrument to which it is a
party or by which it or any of its material assets or property is
bound, (ii) be in conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument or (iii) result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of its property or assets. This Agreement is a
valid and binding obligation of the Company enforceable against it in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
5
<PAGE>
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective .
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
(c) The Subscriber shal be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Registration Requirements. The Company shall:
(a) No later than forty-five (45) days
following the Closing Date, prepare and file a
6
<PAGE>
registration statement with the Commission pursuant
to Rule 415 under the Securities Act on such
appropriate for as the Company is eligible to use
under the Securities Act) covering the resale of the
Shares ("Registration Statement"). Thereafter, the
Company shall use its best efforts to cause such
Registration Statement and other filings to be
declared effective prior to the end of the period
termination one hundred twenty (120) days following
the Closing Date.
(b) Prepare and file with the Commission
such amendments and supplements to such Registration
Statement and the prospectus used in connection with
Registration Statement as may be necessary to comply
with the provisions of the Act with respect to the
disposition of all securities covered by such
Registration Statement and notify the holders of the
Shares of the filing and effectiveness of such
Registration Statement and any amendments or
supplements.
(c) Furnish to each holder of such Shares
such copies of a current prospectus conforming with
the requirements of the Act, copies of the
Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference
therein and such other documents as such holder of
such Shares may reasonably require in order to
facilitate the disposition of the Shares.
(d) Use its best efforts to register and
qualify the securities covered by such Registration
under such other securities of "Blue Sky" laws of
such jurisdictions as shall be reasonably requested
by each holder of such Shares; provided that the
Company shall not be required in connection therewith
or as a condition thereto to qualify to do business
or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify each holder of such Shares
immediately of the issuance by the Commission or any
state securities commission or agency of any stop
order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose. The Company shall use
its best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time.
(f) Use its best efforts to list the Shares
with all securities exchanges(s) and/or markets on
which the Shares are then listed and prepare and file
any required filings with any exchange or market
where the Shares are traded.
(g) Bear all expenses incurred in connection
with such registration, qualification or compliance
with registration pursuant this paragraph except the
7
<PAGE>
holder of the Shares shall bear all underwriting
discounts and selling commissions applicable to the
sale of such Shares and all fees and disbursements of
counsel for such holders.
(h) Use its best efforts to keep such
registration effective until the earliest (i)of
December 31, 2001;(ii) all of the holders of such
Shares having completed the sales or distribution
described in the Registration Statement relating
thereto; or (iii) such Shares being able to be sold
under Rule 144(k) or any equivalent successor rule.
The parties hereto agree to execute appropriate and
customary mutual indemnity agreements prior to the
effectiveness of any registration statements as may
be reasonably requested by either party.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
2.2.7 Qualifications. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in
which the failure so to qualify would not have a Material Adverse
Effect. "Material Adverse Effect" means any adverse effect on the
business, operations, properties, prospects, or financial condition of
the entity with respect to which such term is used and which is
material to such entity and other entities controlling or controlled by
such entity taken as a whole, or any material adverse effect on the
transactions contemplated under this Agreement, or any other agreement
or document contemplated hereby or thereby.
2.2.8 No Violations. The business of the Company is not being
conducted in violation of any law, ordinance or regulations of any
8
<PAGE>
governmental entity, except for violations which either singly or in
the aggregate do not and will not have a Material Adverse Effect. The
Company is not required under Federal, state, local or foreign law,
rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency
in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Shares except as may be
stated elsewhere in this Agreement.
2.2.9 SEC Documents; Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Securities
Act of 1934, as amended, (the "Exchange Act") and the Company has filed
all reports, schedule, forms, statements and other documents required
to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to
Section 13(a) and 15(d), in addition to one or more registration
statements and amendments thereto heretofore filed by the Company with
the Commission (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "SEC Documents"). The
Company has not provided to the Subscribers any material non-public
information or any information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company but
which has not been disclosed. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other Federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted
to state a material fact 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.
2.2.10 No General Solicitation. Neither the Company, nor any
of its affiliates, or, to its knowledge, any person acting on its or
their behalf (other than Investors, as to whom the Company makes no
representation) has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 1933
Act) in connection with the offer or sale of the Shares.
2.2.11 No Integrated Offering. Neither the Company, nor any of
its affiliates, nor to its knowledge any person acting on its or their
behalf (other than the Investors, as to whom the Company makes no
representation) has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Shares under the
Act.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
9
<PAGE>
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
10
<PAGE>
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. Each of the Company and the Subscriber shall
promptly execute all such additional documents as may be required by the other
party relating to the sale of the Shares or any other obligation of a party
hereunder.
3.12 Jurisdiction. Each of the Subscriber and the Company irrevocably
submit to the exclusive personal jurisdiction of the courts of the state of
Illinois for the County of Cook and the United States District Court for the
Northern District of Illinois in any suit, action or proceeding brought to
enforce this Agreement. Each of the Subscriber and the Company hereby
irrevocably waive, to the fullest extent permitted by law, any objection which
either of them may now have or hereafter may have to the venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding brought in such court has been brought in an inconvenient
forum or any other forum. Each of the Company and the Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber and the Company.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
11
<PAGE>
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
Janury 3, 2000.
SUBSCRIBER:
Subscriber's Signature: _________________________
Name: Dr. Richard A. Chafetz
Address: ________________________________________
Telephone No.: __________________________________
SS#: ____________________________________________
Number of Shares at $32.00 each: 15,625
Total Subscription Price: $500,000
12
<PAGE>
(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Dr. Richard A. Chafetz
Subscription Price (Tendered): $500,000
Accepted Amount: $500,000
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 15,625
ENTRADE INC.,
a Pennsylvania corporation
By: _________________________
Title: _________________________
Date of Acceptance: January 5, 2000
13
EXHIBIT 10.11
WARRANT NO. 2000-
ENTRADE, INC.
WARRANT TO PURCHASE COMMON STOCK
(No Par Value)
January ___, 2000
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER
APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL TO ENTRADE, INC., AN
EXEMPTION THEREFROM IS AVAILABLE.
FOR VALUE RECEIVED, (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from ENTRADE, INC., a Pennsylvania corporation
("ENTRADE" or the "Company"), at a price of $ per share (the "Exercise Price")
of no par common stock of the Company, ("Common Stock"), at any time from
January __, 2000 to the time of expiration of this Warrant at 5:00 p.m.,
Chicago, Illinois time, on January __, 2003 (the "Expiration Date"), shares of
Common Stock, and the Holder shall be governed and bound by all of the
covenants, terms and conditions contained herein. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise and as adjusted
from time to time are hereinafter sometimes referred to as "Warrant Shares", and
the exercise price of a share of Common Stock in effect at any time and as
adjusted from time to time is hereinafter sometimes referred to as the "Exercise
Price".
1. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part at any
time after the First Exercise Date and on or before the Expiration Date of this
Warrant, or if such day is a day on which banking institutions are authorized by
law to close in Chicago, Illinois, then on the next succeeding business day, by
presentation and surrender hereof to the Company at its office at 500 Central
Avenue, Northfield, Illinois, with the purchase form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares of Common Stock specified in such form. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder to purchase the balance of the Warrant Shares purchasable hereunder. Upon
receipt by the Company of this Warrant at its office in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.
<PAGE>
(b) Notwithstanding the foregoing provision regarding payment
of the Exercise Price, the Holder may elect to receive a reduced number of
shares in lieu of tendering the Exercise price in cash ("Cashless Exercise"). In
such case, the number of shares to be issued to the Holder shall be computed
using the following formula:
X = Y(A-B)
------
A
where: X = the number of shares to be issued to the Holder; Y= the number of
shares to be exercised under this Warrant; A= the Market Value (defined below)
of one share of Common Stock on the trading day immediately prior to the date
that the purchase form annexed hereto is duly surrendered to the Company for
full or partial exercise; and B = the Exercise Price.
The term "Market Value" means, for any security as of any date, the five-day
average closing bid price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg Financial Markets or a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to the Holder if
Bloomberg Financial Markets is not then reporting closing bid prices of such
security (collectively, "Bloomberg"), or if the foregoing does not apply, the
last reported sale price of such security in the over-the-counter market or the
electronic bulletin board of such security as reported by Bloomberg, or, if no
sale price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security that are reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Market Value cannot be
calculated for such security on such date on any of the foregoing bases, the
Market Value of such security on such date shall be the fair market value as
reasonably determined by an investment banking firm selected by the Company and
reasonably acceptable to the Holder with the costs of such appraisal to be borne
by the Company.
The Company represents to the Holder that the Shares, when delivered pursuant to
this Warrant against receipt of the Subscription Price by the Company, as
provided herein, shall be validly issued and fully paid Shares of the Company,
and will be free of any liens and encumbrances other than as a result of any
actions by the Subscriber.
Upon valid exercise of this Warrant and delivery of payment therefor in
accordance with the terms hereof, the Company shall, within three (3) days of
exercise, cause to be issued to Holder certificates evidencing the Shares
issuable upon such exercise.
2. Reservation of Shares, Fractional Shares.
(a) ENTRADE hereby agrees that at all times it shall reserve
for issue and delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issue and delivery upon exercise of
this Warrant.
2
<PAGE>
(b) No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon exercise hereof, ENTRADE shall pay to the
Holder an amount in cash equal to such fraction multiplied by the then current
Market Value calculated as set forth in Paragraph 1(b)
3. Exchange, Assignment, or Loss of Warrant. This Warrant is
exchangeable, without expense to the Holder, at the option of the Holder, upon
presentation and surrender hereof to the ENTRADE for other Warrants of different
denominations entitling the Holder hereof to purchase in the aggregate the same
number of shares of Common Stock purchasable hereunder. Any such exchange shall
be made by surrender of this Warrant to ENTRADE or at the office of its agent,
if any, with the assignment form annexed duly executed. Subject to compliance
with the provisions of applicable law, ENTRADE, without charge to the Holder,
shall execute and deliver a new Warrant in the name of any assignee named in
such instrument or assignment, and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of ENTRADE or at the office of its
agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or exchanged. Upon receipt by ENTRADE of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, ENTRADE will execute and deliver a new Warrant of like
tenor and date.
4. Rights of the Holder. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of ENTRADE. No
provision of this Warrant, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
warrant purchase price or as a stockholder of ENTRADE, whether such liability is
asserted by ENTRADE or by creditors of ENTRADE. The rights of the Holder are
limited to those expressed in this Warrant and are not enforceable against
ENTRADE except to the extent set forth herein.
5. Stock Dividends; Reclassification, Reorganization, Anti-Dilution
Provisions. This Warrant is subject to the following further provisions:
(a) In case, prior to the expiration of this Warrant by
exercise or by its terms, ENTRADE shall issue any shares of Common Stock as a
stock dividend or subdivide the number of outstanding shares of Common Stock
into a greater number of shares, then in either of such cases, the Exercise
Price per share of the Warrant Shares purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately reduced, and the
number of Warrant Shares at that time purchasable pursuant to this Warrant shall
be proportionately increased; and conversely, in the event ENTRADE shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the Exercise Price
per share of the Warrant Shares purchasable pursuant to this Warrant in effect
at the time of such action shall be proportionately increased, and the number of
Warrant Shares at the time purchasable pursuant to this Warrant shall be
proportionally decreased. Any dividend paid or distributed upon the Common Stock
in stock of any other class or securities convertible into shares of Common
Stock shall be treated as a dividend paid in Common Stock to the extent that
shares of Common Stock are issuable upon the conversion thereof.
3
<PAGE>
(b) In case, prior to the expiration of this Warrant by
exercise or by its terms, ENTRADE shall be recapitalized by reclassifying its
Common Stock into stock with par value, or the Company or a successor
corporation shall consolidate or merge with or convey all or substantially all
of its or of any successor corporation's property and assets to any other
corporation or corporations (any such corporation being included within the
meaning of the term "successor corporation" in the event of any consolidation or
merger of any such corporation with, or the sale of all or substantially all of
the property of any such corporation to another corporation or corporations), in
exchange for stock or securities of a successor corporation, the Holder of this
Warrant shall thereafter have the right to purchase, upon the terms and
conditions and during the time specified in this Warrant, in lieu of the Warrant
Shares theretofore purchasable upon the exercise of this Warrant, the kind and
number of shares of stock and other securities receivable upon such
recapitalization or consolidation, merger or conveyance by a holder of the
number of shares of Common Stock which the Holder of this Warrant might have
purchased immediately prior to such recapitalization or consolidation, merger or
conveyance.
(c) Upon the occurrence of each event requiring an adjustment
of the Exercise Price and of the number of Warrant Shares purchasable pursuant
to this Warrant in accordance with and as required by, the terms of subdivision
(a) of this Section 5, ENTRADE shall compute the adjusted Exercise Price and the
adjusted number of Warrant Shares purchasable at such adjusted Exercise Price by
reason of such event in accordance with the provisions of subdivision (a) and
shall prepare an officer's certificate setting forth such adjusted Exercise
Price and the adjusted number of Warrant Shares and showing in detail the facts
upon which such conclusions are based. ENTRADE shall forthwith mail a copy of
such certificate to each Holder of this Warrant at the Holder's address shown in
the Company's Warrant Registry, and thereafter such certificate shall be
conclusive and binding upon such Holder unless contested by such Holder by
written notice to ENTRADE ten (10) days after receipt of the certificate.
(d) In case:
(i) ENTRADE shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or any
other distribution in respect of the Common Stock (including cash) pursuant to,
without limitation, any spin-off, split-off or distribution of ENTRADE's assets;
or
(ii) ENTRADE shall take a record of the holders of
its Common Stock for the purpose of entitling them to subscribe for or purchase
any shares of stock of any class or to receive any other rights; or
4
<PAGE>
(iii) of a classification, reclassification or other
reorganization of the capital stock of ENTRADE, consolidation or merger of
ENTRADE with or into another corporation or conveyance of all or substantially
all of the assets of ENTRADE; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of
ENTRADE,
then, and in any such case, ENTRADE shall mail to the Holder of this Warrant at
the Holder's address shown in ENTRADE's Warrant Registry a notice stating the
date or expected date (the "Record Date") on which a record is to be taken for
the purpose of such dividend, distribution or rights, on which such
classification, reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place, as the case
may be. Such notice shall then specify the date or expected date, if any is to
be fixed, as of which holders of Common Stock of record shall be entitled to
participate in said dividend, distribution or rights, or shall be entitled to
exchange shares of Common Stock for securities or other property deliverable
upon such liquidation or winding up, as the case may be. Such notice shall be
provided at least fifteen (15) days prior to the Record Date.
(e) In case ENTRADE at any time while this Warrant shall
remain unexpired and unexercised shall dissolve, liquidate or wind up its
affairs, the Holder of this Warrant may receive, upon exercise hereof prior to
the Record Date, in lieu of each share of Common Stock of ENTRADE which it would
have been entitled to receive, the same number of any securities or assets as
may be issuable, distributable or payable upon any such dissolution, liquidation
or winding up with respect to each share of Common Stock of ENTRADE.
6. Restriction on Transferability. (a) This Warrant and the
shares of ENTRADE issuable upon the exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended (the "Act"). By
acceptance hereof, the Holder covenants, agrees and represents that:
(i) This Warrant has been acquired for, and such
shares, if acquired upon the exercise of this Warrant, shall be acquired for,
investment and may not be sold, offered for sale, pledged, hypothecated or
otherwise transferred, in the absence of an effective registration statement for
such securities under the Act or an opinion of counsel reasonably satisfactory
to ENTRADE to the effect that registration is not required under the Act, and
the Holder has the capacity to protect his interests in connection with the
purchase of this Warrant.
(ii) The Holder has had the opportunity to ask
questions and receive answers from ENTRADE about ENTRADE's business and the
purchase by him of these securities, and he has been given the opportunity to
make any inquiries that he may desire of any personnel of ENTRADE concerning the
proposed operation of ENTRADE and has been furnished with all of the information
he has requested. No advertisement has been used in connection with the offer or
sale of this Warrant to the Holder.
5
<PAGE>
(iii) The Holder will not offer, sell, transfer,
mortgage, assign or otherwise dispose of this Warrant or the shares of Common
Stock issuable upon the exercise of this Warrant except pursuant to a
registration statement under the Act and qualification under applicable state
securities laws or pursuant to an opinion of counsel reasonably satisfactory to
ENTRADE that such registration and qualification are not required, and that the
transaction (if it involves a sale in the over-the-counter market or on a
securities exchange) does not violate any provision of the Act. The Holder
understands that a stop-transfer order will be placed on the books of ENTRADE
respecting this Warrant and any certificates representing the shares of Common
Stock issuable upon the exercise of this Warrant and that this Warrant and any
such certificates shall bear a restrictive legend and a stop transfer order
shall be placed with the transfer agent prohibiting any such transfer until such
time as the securities represented by such certificates shall have been
registered under the Act or shall have been transferred in accordance with an
opinion of counsel reasonably satisfactory to ENTRADE that such registration is
not required; and
(iv) The Holder understands that he must hold the
shares issuable upon the exercise of this Warrant indefinitely unless they are
registered under the Act or an exemption from registration becomes available.
Although ENTRADE files reports pursuant to the Securities Act of 1934 and
accordingly makes available to the public the information required by Rule 144,
nothing contained in this Warrant shall require ENTRADE to continue to make
available to the public such information.
(b) Each certificate for the shares issued upon the exercise
of the Warrant shall bear a legend in substantially the following form:
"The shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act") and may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred except pursuant to a
registration statement under the Act or an exemption from
registration under the Act or the rules and regulations
thereunder."
7. Registration Rights. The initial Holder is entitled to the benefit
of such registration rights in respect of the Shares as are set forth in Section
2.2.6 of that certain Subscription and Investment Representation Agreement,
dated December 20, 1999 and accepted December 21, 1999, by and among Fleetfooted
& Company (SunAmerica Small Company Growth Fund) and the Company, which Section
is incorporated herein and made a part hereof by this reference.
8. Registration on the Books of ENTRADE. ENTRADE shall keep, or cause
to be kept, at its office at 500 Central Avenue, Northfield, Illinois, a
register in which ENTRADE shall register this Warrant. No transfer of this
Warrant shall be valid unless made at such office and noted on the Warrant
register upon satisfaction of all conditions for transfer. When presented for
transfer or payment, this Warrant shall be accompanied by a written instrument
or instruments of transfer or surrender, in form satisfactory to ENTRADE, duly
executed by the registered Holder or by his duly authorized attorney. ENTRADE
may deem and treat the registered Holder hereof as the absolute owner of this
Warrant for all purposes, and ENTRADE shall not be affected by any notice to the
contrary.
6
<PAGE>
9. Governing Law. This Warrant has been executed and delivered in the
State of Illinois and shall be construed in accordance with the internal laws of
the State of Illinois, and not its conflict of laws provisions.
IN WITNESS WHEREOF, ENTRADE has caused this Warrant to be executed by
its duly authorized officer.
ENTRADE, INC.
By: __________________________
Title: __________________________
Agreed to and accepted:
HOLDER:
_________________________
Date:_____________
7
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED _____________________________________________ hereby
sells, assigns and transfers unto
Name_____________________________________________________________
(Please typewrite or print in block letters)
Address__________________________________________________________ the right to
purchase Common Stock, represented by this Warrant, to the extent of
______________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _____________________________ attorney, to
transfer the same on the books of ENTRADE with full power of substitution in the
premises.
Signature__________________________
Date: __________________ , ____
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR, AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT, PROVIDED THAT IN THE EVENT THAT ANY RESALE OF THIS SECURITY IS MADE
PURSUANT TO SUCH AN EXEMPTION AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY
AND ITS LEGAL COUNSEL, WILL BE PROVIDED TO THE EFFECT THAT SUCH TRANSFER IS MADE
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933.
8
<PAGE>
PURCHASE FORM
Dated _________________ , ____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Common Stock and hereby
makes payment of $__________ in payment of the exercise price thereof.
-----------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_____________________________________________________________
(Please typewrite or print in block letters)
Address__________________________________________________________
Social Security or other Taxpayer Identification Number__________
Signature_______________________________
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR, AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT, PROVIDED THAT IN THE EVENT THAT ANY RESALE OF THIS SECURITY IS MADE
PURSUANT TO SUCH AN EXEMPTION AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY
AND ITS LEGAL COUNSEL, WILL BE PROVIDED TO THE EFFECT THAT SUCH TRANSFER IS MADE
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933.
9
<PAGE>
SCHEDULE TO FORM OF WARRANT
Entrade issued warrants to purchase 12,500 shares of its common stock at a price
of $32.00 per share and warrants to purchase 8,000 shares of its common stock at
a price of $55.65 per share, all exerciseable January 6, 2000, expiring January
5, 2003.
EXHIBIT 10.12
AGREEMENT AND PLAN OF MERGER
AMONG
ENTRADE INC.,
POSITIVE ASSET REMARKETING, INC.,
ENTRADE MERGER SUBSIDIARY, INC.
and
CERTAIN INDIVIDUALS
DATED AS OF DECEMBER 31, 1999
<PAGE>
iii
TABLE OF CONTENTS
Page
ARTICLE 1 - THE MERGER...................................................1
1.1 The Merger...................................................1
1.2 Effective Time...............................................2
1.3 The Closing..................................................2
1.4 Directors....................................................2
1.5 Officers.....................................................3
1.6 Post Closing Rights..........................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF PAR, OLD PAR
AND THE STOCKHOLDERS.......................................3
2.1 Existence; Good Standing; Corporate Authority................3
2.2 Authorization, Validity and Effect of Agreements.............4
2.3 Capitalization of PAR........................................4
2.4 AsseTrade Stock..............................................4
2.5 Other Interests..............................................4
2.6 Other Assets or Liabilities..................................5
2.7 Contracts....................................................5
2.8 No Conflict; Required Filings and Consents...................5
2.9 Litigation...................................................5
2.10 Financial Statements.........................................6
2.11 Taxes........................................................6
2.12 Employee Benefit Plans.......................................6
2.13 No Brokers...................................................6
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF ENTRADE....................7
3.1 Existence; Good Standing; Corporate Authority................7
3.2 Authorization, Validity and Effect of Agreements.............7
3.3 Capitalization...............................................7
3.4 No Conflict; Required Filings and Consents...................8
3.5 SEC Documents................................................9
3.6 No Brokers...................................................9
ARTICLE 4 - COVENANTS....................................................9
4.1 Alternative Proposals........................................9
4.2 Interim Operations..........................................10
4.3 Meeting of Entrade Stockholders.............................10
4.4 Filings, Other Action.......................................11
4.5 Inspection of Records.......................................11
4.6 Publicity...................................................11
4.7 Registration Statement......................................11
4.8 Listing Application. .......................................12
4.9 Further Action..............................................13
4.10 Expenses....................................................13
4.11 Restrictions on Transfers of the Entrade Shares.............13
i
<PAGE>
ARTICLE 5 - CONDITIONS..................................................13
5.1 Conditions to Each Party's Obligation to Effect the Merger..13
5.2 Conditions to Obligation of PAR and the Stockholders
to Effect the Merger........................................14
5.3 Conditions to Obligation of Entrade and Merger Sub
to Effect the Merger........................................15
ARTICLE 6 - TERMINATION.................................................15
6.1 Termination by Mutual Consent...............................15
6.2 Termination by Entrade or PAR...............................15
6.3 Termination by Entrade......................................16
6.4 Termination by PAR..........................................16
6.5 Effect of Termination and Abandonment.......................16
6.6 Extension, Waiver...........................................17
ARTICLE 7 - SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, INDEMNIFICATION...............................17
7.1 Survival of Representations and Warranties..................17
7.2 Indemnification.............................................17
7.3 Procedure for Claims........................................17
7.4 Third Party Claims..........................................18
ARTICLE 8 - GENERAL PROVISIONS..........................................18
8.1 Notices.....................................................18
8.2 Assignment; Binding Effect..................................19
8.3 Entire Agreement............................................19
8.4 Amendment...................................................19
8.5 Governing Law...............................................19
8.6 Counterparts................................................20
8.7 Headings....................................................20
8.8 Interpretation..............................................20
8.9 Waivers.....................................................20
8.10 Incorporation...............................................20
8.11 Severability................................................20
8.12 Enforcement of Agreement....................................20
8.13 Subsidiaries................................................20
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of December
31, 1999 among Entrade Inc. ("Entrade"), a Pennsylvania corporation; Positive
Asset Remarketing, Inc. ("PAR"), a Nevada corporation; Positive Asset
Remarketing, Inc. ("Old PAR"), a Massachusetts corporation; Robert D. Kohn,
Benjamin Kafka, and Mark Quinn, the individual stockholders of PAR (each a
"Stockholder" and, together, the "Stockholders"); and Entrade Merger Subsidiary,
Inc. (the "Merger Sub"), a Nevada corporation and a wholly owned subsidiary of
Entrade.
Recitals:
PAR owns 7,350 shares (the "AsseTrade Stock") of Class A Voting Common
Stock of asseTrade.com, Inc. ("AsseTrade"), a Delaware corporation. PAR acquired
the AsseTrade Stock from Old PAR on or about September 20, 1999.
The Boards of Directors of PAR and Entrade have approved and deem it
advisable and in the best interests of their respective companies and
shareholders to consummate the merger (the "Merger") described in this
Agreement. Pursuant to the Merger, the Merger Sub will merge with and into PAR,
which will result in PAR becoming a wholly owned subsidiary of Entrade, and the
outstanding shares of Common Stock of PAR will be converted into an aggregate of
900,000 shares of Common Stock of Entrade (subject to adjustment as hereinafter
provided).
For federal income tax purposes, it is intended that the Merger qualify
as a reorganization under the provisions of Section 368(a)(1) of the United
States Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Pursuant to the Plan of Merger in the form of Exhibit A
hereto (the "Plan of Merger"), at the Effective Time (hereinafter defined), the
Merger Sub shall be merged with and into PAR in accordance with the applicable
provisions of the laws of the State of Nevada. PAR shall be the surviving
corporation in the Merger and shall continue its corporate existence under the
laws of the State of Nevada. As a result of the Merger, PAR shall become a
wholly owned subsidiary of Entrade. At the Effective Time: (a) each outstanding
share of Common Stock of PAR ("PAR Common Stock") shall be converted into 1,125
<PAGE>
shares of Common Stock, no par value, of Entrade ("Entrade Common Stock"); (b)
each share of PAR Common Stock held as treasury stock shall be canceled; and (c)
each outstanding share of Common Stock, $.01 par value, of the Merger Sub shall
be canceled and converted into one share of common stock of the surviving
corporation, PAR, which shall be then owned by Entrade. Notwithstanding the
foregoing, if the Form S-4 (as hereinafter defined) has not become effective on
or before that date which is four (4) months following the date of this
Agreement, the Plan of Merger shall be amended without further action of the
parties to provide that each outstanding share of PAR Common Stock shall be
converted in the Merger into 1,250 shares of Entrade Common Stock, so that the
aggregate number of shares of Entrade Common Stock issued to the Stockholders in
the Merger shall be increased from 900,000 shares to 1,000,000 shares. The
shares of Entrade Common Stock issued to the Stockholders in the Merger are
sometimes hereinafter referred to as the "Entrade Shares." Upon conversion as
aforesaid, all outstanding shares of PAR Common Stock shall be canceled and
cease to exist, and each certificate theretofore representing any shares of PAR
Common Stock shall be exchanged for certificates representing Entrade Common
Stock as herein provided. No fractional shares of Entrade Common Stock and no
scrip or certificates therefor will be issued in connection with the Merger. Any
former holder of PAR Common Stock who would otherwise be entitled to receive a
fraction of a share of Entrade Common Stock shall receive, in lieu thereof, a
check for cash in an amount equal to such fraction of a share multiplied by the
closing price of Entrade Common Stock on the New York Stock Exchange ("NYSE")
(or other applicable exchange as hereinafter provided) on the first day Entrade
Common Stock is traded after the Effective Time.
1.2 Effective Time. The term "Effective Time" shall mean the time and
date which is (a) the date and time of the filing of the articles of merger
relating to the Merger with the Secretary of the State of Nevada (or such other
date and time as may be specified in such certificate as may be permitted by
law) or (b) such other time and date as PAR and Entrade may agree.
1.3 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions described in this Agreement (the "Closing")
shall take place (a) at the offices of Duane, Morris & Heckscher LLP, One
Liberty Place, 1650 Market Street, Philadelphia, Pennsylvania 19103-7396, at
10:00 a.m., local time, on the first business day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 5 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as PAR and Entrade may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.4 Directors. The directors of PAR immediately prior to the Effective
Time shall resign as directors of PAR as of the Effective Time, and the
directors of the Merger Sub immediately prior to the Effective Time shall become
the directors of PAR, until their successors are duly appointed in accordance
with applicable law.
2
<PAGE>
1.5 Officers. The officers of PAR immediately prior to the Effective
Time shall resign as officers of PAR as of the Effective Time, and the officers
of the Merger Sub immediately prior to the Effective Time shall become the
officers of PAR, until their successors are duly appointed in accordance with
applicable law.
1.6 Post-Closing Rights. If at any time during the twelve (12) month
period following the Closing Date GE Equity ("GE"), either in conjunction with
Internet Capital Group ("ICG") or otherwise, makes an investment in AsseTrade,
and if the then shareholders of AsseTrade are granted rights or options of any
kind as a part of that transaction (including, by way of example, rights to
purchase additional AsseTrade shares in an initial public offering), then the
Stockholders shall together be entitled to receive fifty percent (50%) of such
rights and options (shared pro rata in accordance with their respective
interests in PAR at the Effective Time) attributable to the AsseTrade Stock.
Entrade shall notify each of the Stockholders if and when there is an agreement
with GE (either in conjunction with ICG or otherwise) granting any such rights
or options, which notification shall include the applicable terms and conditions
of such agreement. Within thirty (30) days following their receipt of such
notice, but in any event prior to any exercise date specified in any such
agreement with GE (and, if applicable, ICG), the Stockholders shall notify
Entrade whether they intend to exercise such rights or options. Any Stockholder
electing to exercise any such right or option shall assume and hold Entrade
harmless with respect to all corresponding obligations, and shall enter into
such agreements with Entrade, AsseTrade, and GE (and, if applicable, ICG) as may
be reasonably required to confirm such election and assumption of obligations.
If a Stockholder elects not to exercise such rights or options, or fails to
notify Entrade of its intent within the aforesaid notice period, then such
rights and options shall revert to Entrade.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PAR, OLD PAR AND THE STOCKHOLDERS
Except as set forth in the disclosure letter delivered to Entrade at or
prior to the execution hereof (the "PAR Disclosure Letter"), each of PAR, Old
PAR and the Stockholders jointly and severally represent and warrant to Entrade
as of the date of this Agreement as follows:
2.1 Existence; Good Standing; Corporate Authority. Each of PAR and Old
PAR is a corporation duly incorporated, validly existing and in good standing
under, respectively, the laws of the State of Nevada and the laws of the
Commonwealth of Massachusetts, is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws of any other state of
the United States in which the character of the properties owned or leased by it
3
<PAGE>
or in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing would not
have a material adverse effect on the business, results of operations or
financial condition of PAR or Old PAR (a "PAR Material Adverse Effect"). Each of
PAR and Old PAR has all requisite corporate power and authority to own, operate
and lease its properties and carry on its business as now conducted. The copies
of the Articles of Incorporation and Bylaws of PAR and Old PAR previously made
available to Entrade are true and correct and have not been modified or amended
except as set forth therein.
2.2 Authorization, Validity and Effect of Agreements. Each of PAR and
Old PAR has the requisite corporate power and authority to execute and deliver
this Agreement and all agreements and documents to be executed by it as
described herein. The consummation by PAR and Old PAR of the transactions
described herein has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents described herein
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and binding obligations of PAR, Old PAR and the
Stockholders enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
2.3 Capitalization of PAR. The authorized capital stock of PAR consists
of 25,000 shares of Common Stock, $.01 par value, of which 800 shares are issued
and outstanding. PAR has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the Stockholders on any matter. All issued and outstanding shares of PAR Common
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned of record and beneficially by the Stockholders.
There are not at the date of this Agreement any existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate PAR to issue, transfer or sell any shares of its
capital stock.
2.4 AsseTrade Stock. PAR owns the AsseTrade Stock free and clear of all
liens, pledges, security interests, claims or other encumbrances ("Liens"),
except as set forth in the PAR Disclosure Letter. The AsseTrade Stock
constitutes 17.47% of the issued and outstanding Class A Voting Common Stock of
AsseTrade. Each of the shares of AsseTrade Stock owned by PAR is duly
authorized, validly issued, fully paid and nonassessable. There are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate AsseTrade to issue, transfer or sell any shares of its capital stock.
2.5 Other Interests. Except for its interest in AsseTrade, PAR owns no
interest or investment (whether equity or debt) in any corporation, partnership,
joint venture, business, trust or entity.
4
<PAGE>
2.6 Other Assets or Liabilities. As of the date hereof and at the
Effective Time, PAR has and will have no properties or assets of any kind other
than the AsseTrade Stock. As of the date hereof, at the time of the transfer of
the AsseTrade Stock from Old PAR to PAR, and at the Effective Time, neither PAR
nor Old PAR has, had or will have any liabilities, obligations or guaranties
accrued, absolute, contingent or otherwise.
2.7 Contracts. Except as set forth in the PAR Disclosure Letter,
neither PAR nor Old PAR is a party to any contract, agreement, commitment or
obligation of any kind.
2.8 No Conflict; Required Filings and Consents.
(1) The execution and delivery of this Agreement by PAR, Old
PAR and the Stockholders, and the consummation by PAR, Old PAR and the
Stockholders of the transactions described herein will not, (i) conflict with or
violate the articles of incorporation or by-laws of PAR or Old PAR, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to PAR, Old PAR or the Stockholders or by which any property or asset
of PAR, Old PAR or the Stockholders is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under, or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of PAR, Old PAR or the Stockholders pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which PAR, Old PAR or any Stockholder is a party or
by which PAR, Old PAR or any Stockholder or any property or asset of PAR, Old
PAR or any Stockholder is bound or affected.
(2) The execution and delivery of this Agreement by PAR, Old
PAR and the Stockholders do not, and the performance of this Agreement and the
consummation by PAR, Old PAR or the Stockholders of the transactions described
herein will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign (each a "Governmental Entity"), except for (i) applicable
requirements, if any, of the Securities Act of 1933 (the "Securities Act"), the
Exchange Act of 1934 (the "Exchange Act"), state securities laws and state
takeover laws, (ii) filing of appropriate merger documentation as Nevada law
shall require, and (iii) applicable requirements of the Code and state and local
tax laws.
2.9 Litigation. There are no actions, suits, audits or proceedings
pending against PAR or Old PAR or, to the knowledge of PAR or the Stockholders,
threatened against PAR or Old PAR, at law or in equity, or before or by any
federal or state commission, board, bureau, agency or instrumentality.
5
<PAGE>
2.10 Financial Statements. Neither PAR nor Old PAR has had financial
statements prepared for it, by management or otherwise, for any period during
the last three (3) years.
2.11 Taxes.
(1) Each of PAR and Old PAR have filed all tax returns and
reports required to be filed by it (if any), or requests for extensions to file
such returns or reports have been timely filed and granted and have not expired,
and all tax returns and reports are complete and accurate in all respects. Each
of PAR and Old PAR has paid all Taxes due and owing and no deficiencies for any
Taxes have been proposed, asserted or assessed against PAR or Old PAR that are
not adequately reserved for. No requests for waivers of the time to assess any
taxes against PAR or Old PAR have been granted or are pending.
(2) Each of PAR and Old PAR has satisfied all federal, state,
local and foreign tax requirements, including but not limited to income, social
security and employment tax.
(3) There are no Liens for Taxes on any of PAR's or Old PAR's
assets.
(4) As used in this Section 2.11, "Taxes" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other person or entity and any interest, penalties
or additions to tax.
2.12 Employee Benefit Plans. Neither PAR nor Old PAR has any employee
benefit plans or programs of any kind maintained for the benefit of current or
former employees or directors of PAR or Old PAR. Neither PAR nor Old PAR has
ever had any employees.
2.13 No Brokers. Neither PAR, Old PAR nor any of the Stockholders has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of PAR, Old PAR, the Stockholders, Entrade or
the Merger Sub to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions described herein. Neither PAR
nor any of the Stockholders is aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions described herein.
6
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ENTRADE
Except as set forth in the Entrade Reports (as defined below) or
otherwise disclosed in writing to the Stockholders, Entrade represents and
warrants to PAR, Old PAR and the Stockholders as of the date of this Agreement
as follows:
3.1 Existence; Good Standing; Corporate Authority. Each of Entrade and
the Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Entrade is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified or to be in good standing would not have a material adverse effect
on the business, results of operations or financial condition of Entrade and its
subsidiaries taken as a whole (an "Entrade Material Adverse Effect"). Entrade
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted. The copies of the
Articles of Incorporation and Bylaws of Entrade and the Merger Sub previously
made available to PAR and the Stockholders are true and correct, and have not
been modified or amended except as set forth therein.
3.2 Authorization, Validity and Effect of Agreements. Each of Entrade
and the Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and all agreements and documents described herein.
Subject only to the approval of this Agreement and the transactions described
herein by the holders of Entrade Common Stock, the consummation by Entrade and
the Merger Sub of the transactions described herein has been duly authorized by
all requisite corporate action. This Agreement constitutes, and all agreements
and documents described herein (when executed and delivered pursuant hereto for
value received) will constitute, the valid and legally binding obligations of
Entrade and the Merger Sub, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity.
3.3 Capitalization. The authorized capital stock of Entrade consists of
40,000,000 shares of Entrade Common Stock and 4,000,000 shares of Entrade
Preferred Stock. As of December 30, 1999 there were 15,066,561 shares of Entrade
7
<PAGE>
Common Stock and no shares of Entrade Preferred Stock issued and outstanding.
Since such date, no additional shares of capital stock of Entrade have been
issued, except pursuant to Entrade's Restated 1985 Stock Option Plan, 1996 stock
option and 1996 disinterested director stock option plan (the "Entrade Stock
Option Plans"). The authorized capital stock of the Merger Sub consists of 1000
shares of Common Stock, of which 100 shares are issued and outstanding. Except
as set forth in the Entrade Reports or the Entrade Stock Option Plans, or as
otherwise disclosed in writing to the Stockholders, neither Entrade nor the
Merger Sub has any outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
Entrade or the Merger Sub on any matter. All such issued and outstanding shares
of Entrade and the Merger Sub are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as described in this
Agreement or the Entrade Reports or as otherwise disclosed in writing to the
Stockholders, there are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments that obligate Entrade or the Merger Sub to issue,
transfer or sell any shares of capital stock.
3.4 No Conflict; Required Filings and Consents.
(1) The execution and delivery of this Agreement by Entrade
and the Merger Sub does not, and the consummation by Entrade or the Merger Sub
of the transactions described herein will not, (i) conflict with or violate
their respective articles of incorporation or by-laws, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Entrade or the Merger Sub or by which any property or asset of Entrade or the
Merger Sub is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a Lien on any property or asset of Entrade or the Merger Sub pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Entrade or the Merger Sub
is a party or by which Entrade or the Merger Sub or any property or asset of
Entrade or the Merger Sub is bound or affected, in each case except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have an Entrade Material Adverse Effect.
(2) The execution and delivery of this Agreement by Entrade
and the Merger Sub do not, and the performance of this Agreement and the
consummation by Entrade and the Merger Sub of the transactions described herein
will not require any consent, approval, authorization or permit of, or filing
with or notification to any Governmental Entity, except for (i) applicable
requirements, if any, of the Securities Act, the Exchange Act, state securities
laws and state takeover laws, and the NYSE, (ii) filing of appropriate merger
documentation as Nevada law shall require, and (iii) applicable requirements of
the Code and state and local tax laws and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
8
<PAGE>
3.5 SEC Documents. Entrade has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since August 19, 1999 (collectively, the "Entrade Reports"). As of their
respective dates, the Entrade Reports, and any such reports, forms and other
documents filed by Entrade with the SEC after the date of this Agreement (a)
complied, or will comply, as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder and (b) did not, or will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. The representation
in clause (b) of the preceding sentence shall not apply to any misstatement or
omission in any Entrade Report filed prior to the date of this Agreement that
was superseded by a subsequent Entrade Report filed prior to the date of this
Agreement that specifically corrected such misstatement or omission in the
applicable Entrade Report, or to any misstatement or omission in any Entrade
Report that was based on information provided to Entrade by PAR or any of the
Stockholders.
3.6 No Brokers. Entrade has not entered into any contract, arrangement
or understanding with any person or firm that may result in the obligation of
Entrade, the Merger Sub, Par or the Stockholders to pay any finder's fee,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
described herein. Entrade is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions described herein.
ARTICLE 4
COVENANTS
4.1 Alternative Proposals. Prior to the Effective Time, each of PAR and
the Stockholders agrees (a) that it shall not and shall not permit PAR's
officers, directors, employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by PAR) to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, any purchase of (i)
any of the outstanding shares of PAR Common Stock or (ii) any of the AsseTrade
Stock (any such proposal or offer being hereinafter referred to as an
"Alternative Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Alternative Proposal (excluding the Merger described in this
Agreement), or otherwise facilitate any effort or attempt to make or implement
an Alternative Proposal; and (b) that it will notify Entrade immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with it.
9
<PAGE>
4.2 Interim Operations.
(1) Prior to the Effective Time, except as may be described in
any other provision of this Agreement, unless Entrade has consented in writing
thereto, each of the Stockholders and PAR: (i) shall cause PAR to conduct its
operations according to their usual, regular and ordinary course; (ii) shall not
amend the articles of incorporation or bylaws of PAR; (iii) shall promptly
notify Entrade of any material breach of any representation or warranty
contained herein or any PAR Material Adverse Effect; (iv) shall not permit PAR
to (x) issue any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it existed on the date hereof, or (y)
grant, confer or award any option, warrant, conversion right or other right to
acquire any shares of its capital stock; (v) shall not permit PAR to (x)
declare, set aside or pay any dividend or make any other distribution or payment
with respect to any shares of PAR's capital stock or other ownership interests
or (y) directly or indirectly redeem, purchase or otherwise acquire any shares
of its capital stock or make any commitment for any such action; (vi) shall not
permit PAR to sell, lease or otherwise dispose of any of its assets, or to
acquire any business or assets; (vii) shall not, and shall not permit PAR to (x)
enter into any contract or agreement of any kind or (y) incur any amount of
indebtedness for borrowed money or any other obligation or liability of any
kind, make any loans, advances or capital contributions to, or investments in,
any other person, or issue or sell any debt securities; and (viii) shall not
permit PAR to mortgage or otherwise encumber or subject to any lien any of its
properties.
(2) Prior to the Effective Time, except as otherwise described
in this Agreement, unless PAR has consented in writing thereto, Entrade: (i)
shall not effect any stock split of its capital stock; (ii) shall not effect any
stock dividend of its capital stock; (iii) shall promptly notify PAR of any
breach of any representation or warranty contained herein or any Entrade
Material Adverse Effect; and (iv) shall promptly deliver to PAR and the
Stockholders true and correct copies of any report, statement or schedule filed
with the SEC subsequent to the date of this Agreement.
4.3 Meeting of Entrade Stockholders. Entrade shall take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its shareholders as promptly as practicable
to consider and vote upon the approval of this Agreement, the Plan of Merger and
the Merger. The Board of Directors of Entrade shall recommend such approval, and
Entrade shall take all lawful action to solicit such approval, including,
without limitation, timely mailing the Proxy Statement/Prospectus (hereinafter
defined); provided, however, that such recommendation or solicitation is subject
to any action (including any withdrawal or change of its recommendation) taken
by, or upon authority of, the Board of Directors of Entrade in the exercise of
its good faith judgment as to its fiduciary duties to its shareholders imposed
by law.
10
<PAGE>
4.4 Filings, Other Action. Subject to the terms and conditions herein
provided, Entrade and PAR shall: (a) use all reasonable efforts to cooperate
with one another in (i) determining which filings are required to be made prior
to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions described herein and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations, including but not limited to all filings required
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the expiration
of any applicable waiting period(s) thereunder; and (b) use all reasonable
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and make
effective the transactions described in this Agreement. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purpose of this Agreement, the proper officers and directors of PAR, Old PAR
and Entrade shall take all such necessary action.
4.5 Inspection of Records. From the date hereof to the Effective Time,
each of PAR and Entrade shall: (i) allow all designated officers, attorneys,
accountants and other representatives of the other reasonable access at all
reasonable times to the offices, records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of PAR, Old PAR and Entrade and its Subsidiaries, as the case may be,
(ii) furnish to the other, the other's counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct their
respective employees, counsel and financial advisors to cooperate with the
investigation of the respective businesses of each.
4.6 Publicity. The initial press release relating to this Agreement
shall be a joint press release approved by both parties and thereafter Entrade
and PAR shall, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions described herein.
4.7 Registration Statement. Entrade and PAR shall cooperate and
promptly prepare and Entrade shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to Entrade Common Stock issuable in the Merger, which shall also
11
<PAGE>
serve as the proxy statement with respect to the meeting of the shareholders of
Entrade in connection with the Merger (the "Proxy Statement/Prospectus"). The
respective parties will cause the Proxy Statement/Prospectus and the Form S-4 to
comply as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder.
Entrade shall use all reasonable efforts, and PAR shall cooperate with Entrade,
to have the Form S-4 declared effective by the SEC as promptly as practicable,
and to keep the Form S-4 effective as long as is necessary to consummate the
Merger. Entrade shall, as promptly as practicable, provide copies of any written
comments received from the SEC with respect to the Form S-4 to PAR and the
Stockholders and advise PAR and the Stockholders of any verbal comments with
respect to the Form S-4 received from the SEC. Entrade shall use its best
efforts to obtain, prior to the effective date of the Form S-4, all necessary
state securities law or "blue sky" permits or approvals required to carry out
the transactions described in this Agreement. Entrade agrees that the Proxy
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof and at the time of the meetings of shareholders of Entrade, or,
in the case of the Form S-4 and each amendment or supplement thereto, at the
time it is filed or becomes effective, will 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, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by Entrade in reliance upon and in
conformity with written information concerning PAR, Old PAR or the Stockholders
furnished to Entrade by PAR, Old PAR or the Stockholders specifically for use in
the Proxy Statement/Prospectus or any amendment or supplement thereto. PAR, Old
PAR and the Stockholders agree that the written information concerning PAR
provided by it or them for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the meeting of shareholders of Entrade, or, in the case of written
information concerning PAR, Old PAR or the Stockholders provided for inclusion
in the Form S-4 or any amendment or supplement thereto, at the time it is filed
or becomes effective, will 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, in light of the circumstances under which they were
made, not misleading. Entrade will advise PAR and the Stockholders promptly of
the time when the Form S-4 has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of Entrade Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement/Prospectus or the Form S-4 or comments thereon and responses
thereto or requests by the SEC for additional information.
4.8 Listing Application. Entrade shall promptly prepare and submit to
the NYSE a listing application covering the shares of Entrade Common Stock
issuable in the Merger, and shall use reasonable efforts to obtain, prior to the
Effective Time, approval for such listing of such Entrade Common Stock, subject
to official notice of issuance.
12
<PAGE>
4.9 Further Action. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
4.10 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
described herein shall be paid by the party incurring such expenses except as
expressly provided herein and except that (a) the filing fee in connection with
the filing of the Form S-4 or Proxy Statement/Prospectus with the SEC and (b)
the expenses incurred in connection with printing and mailing the Form S-4 and
the Proxy Statement/Prospectus, shall be borne by Entrade.
4.11 Restrictions on Transfers of the Entrade Shares. Prior to that
date which is six (6) months following the date of this Agreement, the
Stockholders shall not sell, transfer or otherwise dispose of, in the aggregate,
more than that number of Entrade Shares determined as provided hereinafter (the
"Saleable Entrade Shares"). The number of Saleable Entrade Shares shall be as
follows: (a) 200,000 Entrade Shares shall be saleable, i.e., free of transfer
restrictions under this Agreement ("saleable"), as of the Effective Time; (b) an
additional 350,000 Entrade Shares shall be saleable from and after the later to
occur of (i) that date which is three (3) months following the date of this
Agreement, and (ii) the Effective Time; and (c) all remaining Entrade Shares
shall be saleable from and after the later to occur of (i) that date which is
six (6) months following the date of this Agreement, and (ii) the Effective
Time. The Stockholders acknowledge and agree that any certificate evidencing the
Entrade Shares shall bear a legend setting forth the aforesaid restrictions on
transfers. The restrictions provided for herein shall terminate and have no
further effect on that date which is described under (c) of this Section 4.11.
The Stockholders further acknowledge that the restrictions provided for herein
are in addition to any and all other restrictions on transfers that may be
applicable to the Entrade Shares or the Stockholders under federal and state
securities laws or regulations or under the rules of the NYSE.
ARTICLE 5
CONDITIONS
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
13
<PAGE>
(1) This Agreement and the transactions described herein shall
have been approved in the manner required by applicable law or by the applicable
regulations of any stock exchange or other regulatory body, as the case may be,
and by the holders of the issued and outstanding shares of capital stock of
Entrade.
(2) None of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions described in this Agreement. In the event any
such order or injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
(3) The Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Form S-4 shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, or, to the knowledge of Entrade, threatened, and
all necessary approvals under state securities laws relating to the issuance or
trading of Entrade Common Stock to be issued to the Stockholders in connection
with the Merger shall have been received.
(4) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where, in the opinion of PAR or
Entrade, as the case may be, the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration would not have a
material adverse effect on the business, results of operations or financial
condition of PAR and Entrade, taken as a whole, following the Effective Time.
(5) Entrade Common Stock to be issued to the Stockholders in
connection with the Merger shall have been approved for listing on the NYSE,
subject only to official notice of issuance.
5.2 Conditions to Obligation of PAR and the Stockholders to Effect the
Merger. The obligation of PAR and the Stockholders to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
14
<PAGE>
(1) Entrade shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, the representations and warranties of Entrade contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and warranties
that address matters only as of a particular date shall remain true and correct
as of such date, and PAR and the Stockholders shall have received a certificate
of the President or a Vice President of Entrade, dated the Closing Date,
certifying to such effect.
(2) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of Entrade and its subsidiaries, taken as a whole, that
would have or would be reasonably likely to have an Entrade Material Adverse
Effect.
5.3 Conditions to Obligation of Entrade and the Merger Sub to Effect
the Merger. The obligation of Entrade and the Merger Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(1) Each of PAR, Old PAR and the Stockholders shall have
performed in all material respects its respective agreements contained in this
Agreement required to be performed on or prior to the Closing Date, the
representations and warranties of PAR and the Stockholders contained in this
Agreement and in any document delivered in connection herewith shall be true and
correct as of the Closing Date, except (i) for changes specifically permitted by
this Agreement and (ii) that those representations and warranties that address
matters only as of a particular date shall remain true and correct as of such
date, and Entrade shall have received a certificate of each of the Stockholders
and of the President or a Vice President of PAR and Old PAR, dated the Closing
Date, certifying to such effect.
(2) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of PAR, Old PAR or AsseTrade that would have or would be
reasonably likely to have a PAR Material Adverse Effect.
(3) There shall have been delivered to Entrade an opinion,
dated the Closing Date and addressed to Entrade, of counsel to PAR, Old PAR and
the Stockholders as to such matters and in such form as Entrade may reasonably
request.
ARTICLE 6
TERMINATION
6.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the shareholders of Entrade, by the
mutual consent of PAR and Entrade.
6.2 Termination by Entrade or PAR. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of either
Entrade or PAR if (a) the approval of Entrade's shareholders as required by
Section 4.3 shall not have been obtained at a meeting duly convened therefor or
15
<PAGE>
at any adjournment thereof, or (b) a United States federal or state court of
competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions described in this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause (b) shall have used all reasonable efforts to remove
such injunction, order or decree.
6.3 Termination by Entrade. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of Entrade referred to in Section 4.3, by
action of the Board of Directors of Entrade, if (a) in the exercise of its good
faith judgment as to fiduciary duties to its shareholders imposed by law, the
Board of Directors of Entrade determines that such termination is required;
provided that Entrade shall notify PAR and the Stockholders promptly of
Entrade's intention to terminate this Agreement, but in no event shall such
notice be given less than 48 hours prior to the public announcement of Entrade's
termination of this Agreement, or (b) there has been a breach by PAR or any of
the Stockholders of any representation or warranty contained in this Agreement
that would have or would be reasonably likely to have an PAR Material Adverse
Effect, or (c) there has been a material breach of any of the material covenants
or agreements set forth in this Agreement on the part of PAR, Old PAR or any of
the Stockholders, which breach is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by Entrade to PAR,
Old PAR and the Stockholders.
6.4 Termination by PAR. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, before or after the
approval by the shareholders of Entrade referred to in Section 4.3, by action of
the Board of Directors of PAR, if (a) the Board of Directors of Entrade shall
have withdrawn or modified in a manner materially adverse to PAR its approval or
recommendation of this Agreement or the Merger, or (b) there has been a breach
by Entrade of any representation or warranty contained in this Agreement that
would have or would be reasonably likely to have an Entrade Material Adverse
Effect, or (c) there has been a material breach of any of the material covenants
or agreements set forth in this Agreement on the part of Entrade or the Merger
Sub, which breach is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by PAR to Entrade.
6.5 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article 6,
all obligations of the parties hereto shall terminate, except for the provisions
16
<PAGE>
of Sections 8.2, 8.3, 8.5, 8.7, 8.8, 8.11, 8.12 and 8.13. In the event of
termination of this Agreement pursuant to Section 6.3 or 6.4, nothing herein
shall prejudice the ability of the non-breaching party from seeking damages from
any other party for any willful breach of this Agreement, including without
limitation, reasonable attorneys' fees and the right to pursue any remedy at law
or in equity.
6.6 Extension, Waiver. At any time prior to the Effective Time, any
party hereto, by action taken itself or by its Board of Directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, INDEMNIFICATION
7.1 Survival of Representations and Warranties. All representations,
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions described in this Agreement.
7.2 Indemnification.
(1) Each of PAR, Old PAR and the Stockholders shall jointly
and severally defend, indemnify and hold Entrade and the Merger Sub harmless
from and against any and all claims, liabilities, damages, losses, deficiencies
and expenses, including reasonable attorneys' fees and expenses and costs of
suit (individually a "Loss" and collectively "Losses") arising out of any and
all inaccurate representations and warranties and out of any and all breaches of
covenants, agreements and certifications made by or on behalf of PAR, Old PAR or
the Stockholders in this Agreement or in any document delivered by any of them
hereunder.
(2) Entrade shall defend, indemnify and hold PAR, Old PAR and
the Stockholders harmless from and against any and all claims, liabilities,
damages, losses, deficiencies and expenses, including reasonable attorneys' fees
and expenses and costs of suit (individually a "Loss" and collectively "Losses")
arising out of any and all inaccurate representations and warranties and out of
any and all breaches of covenants and agreements and certifications made by or
on behalf of Entrade in this Agreement or in any document delivered by Entrade
hereunder.
7.3 Procedure for Claims. A party seeking indemnification under this
Article 7 (an "Indemnified Party") shall give notice of the claim for losses and
a brief explanation of the basis thereof to the party alleged to be responsible
for indemnification hereunder (an "Indemnitor"). The Indemnitor shall promptly
pay the Indemnified Party any amount due under this Article 7. The Indemnified
Party may pursue whatever legal remedies may be available for recovery of the
losses claimed from any Indemnitor.
17
<PAGE>
7.4 Third Party Claims. An Indemnified Party shall give any Indemnitor
prompt notice of the institution by a third party of any actions, suits or other
administrative or judicial proceedings if the Indemnified Party would be
entitled to claim indemnification under this Article 7 in connection with any
such action, suit or other proceeding. After such notice, any Indemnitor may, or
if so requested by the Indemnified Party, any Indemnitor shall, participate in
any such action, suit or other proceeding or assume the defense thereof, with
counsel satisfactory to the Indemnified Party; provided, however, that the
Indemnified Party shall have the right to participate at its own expense in the
defense of any such action, suit or other proceeding; and provided, further,
that the Indemnitor shall not consent to the entry of any judgment or enter into
any settlement, except with the written consent of the Indemnified Party, that
(a) fails to include as an unconditional term thereof the giving by the claimant
or plaintiff to the Indemnified Party of a release from all liability in respect
of any such action, suit or other proceeding or (b) grants the claimant or
plaintiff any injunctive relief against the Indemnified Party. Any failure to
give prompt notice under this Section 7.4 shall not bar an Indemnified Party's
right to claim indemnification under this Article 7, except to the extent that
an Indemnified Party shall have been harmed by such failure.
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Entrade: If to PAR, Old PAR or the Stockholders:
Entrade Inc. Positive Asset Remarketing, Inc.
500 Central Avenue 521 Fellowship Road, Suite 130
Northfield, IL 60093 Mt. Laurel, NJ 08054
Attention: Mark Santacrose, ttention: Robert Kohn
President and CEO (856) 914-1546
(847) 441-6959
With copies to: With copies to:
Duane, Morris & Heckscher LLP Benjamin Kafka
One Liberty Place Cordage Park
Philadelphia, PA 19103-7396 Bldg. 3, Suite 307
Attention: Sheldon M. Bonovitz, Plymouth, MA 02360
Esquire (508) 732-7268
(215) 979-1020
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
18
<PAGE>
8.2 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties or as contemplated by the Plan of Merger.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.3 Entire Agreement. This Agreement, the Plan of Merger and the PAR
Disclosure Letter constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
8.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken by themselves or their respective Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the shareholders of Entrade, but after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
its rules of conflict of laws.
19
<PAGE>
8.6 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto. A
facsimile copy of an executed original of this Agreement shall have the same
force and effect as an executed original.
8.7 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.9 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.10 Incorporation. The PAR Disclosure Letter and the Plan of Merger
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
8.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court located in the
Commonwealth of Pennsylvania, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.13 Subsidiaries. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least one-half of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner or manager.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
ENTRADE INC.
By:_________________________________
Title:
POSITIVE ASSET REMARKETING, INC.
(a Nevada corporation)
By:_________________________________
Title:
POSITIVE ASSET REMARKETING, INC.
(a Massachusetts corporation)
By:_________________________________
Title:
STOCKHOLDERS:
____________________________________
ROBERT D. KOHN
____________________________________
BENJAMIN KAFKA
____________________________________
MARK QUINN
ENTRADE MERGER SUBSIDIARY, INC.
By:_________________________________
Title:
21
