SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 2
[ X ] Annual Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the fiscal year ended DECEMBER 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the transition period from ____________ to ___________
Commission file number 1-15303
ENTRADE INC.
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(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 52-2153008
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 Central Avenue, Northfield, IL 60093
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 441-6650
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
-------------------- ------------------------
Common stock,
without par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in the definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant at March 1, 2000: $539,028,000
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 1, 2000
----- ----------------------------
Common stock, without par value 16,427,022
Documents Incorporated by Reference: None.
THIS AMENDMENT NO. 2 IS FILED TO INCLUDE THE INFORMATION IN PART III
PREVIOUSLY INCORPORATED BY REFERENCE.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
INFORMATION REGARDING DIRECTORS
The following table lists the name and age of each director of Entrade, his
business experience, his positions with Entrade and other directorships
held by him.
Name Age Positions and Experience
- ---- --- ------------------------
John Harvey (1) 70 Chairman of the board of directors and
Director since September 1999; served
as Chairman of the board of directors
and Director of Artra from 1968 to
September 1999, and Chief Executive
Officer of Artra from 1968 to June
1999; Director from 1982 to December
1995 and the Chief Executive Officer
from 1990 to November 1995 of Comforce
Corporation (temporary professional
employment, formerly The Lori Corporation);
Director of Plastic Specialties and
Technologies, Inc. (textiles, hose and
tubing); Director of PureTec Corporation,
the successor by merger to Ozite, until
March 1998, when PureTec was merged into
Teckni-Plex, Inc.
Peter R. Harvey (1) 65 Vice Chairman, Chairman of the Executive
Committee and Director since September 1999;
served as Vice Chairman and Chairman of the
Executive Committee of Artra from June 1999
to September 1999; Director of Artra from
1968 to September 1999; President and Chief
Operating Officer of Artra from 1968 to June
1999; Director of Comforce Corporation
(temporary professional employment, formerly
The Lori Corporation) from 1985 to December
1995 and a Vice President through January
1996; Director of PureTec Corporation
(textiles, hose and tubing), the successor
by merger to Ozite, until March 1998, when
PureTec Corporation was merged into
Teckni-Plex, Inc.
Mark F. Santacrose
(1) 40 President, Chief Executive Officer and
Director since September 1999; served as
President and Chief Executive Officer of
Artra from June 1999 to September 1999;
Director of Artra from 1998 to September
1999; President of Bagcraft Corporation of
America (n/k/a Golden Corp.), flexible
packaging materials for food products,
from 1994 to November 20, 1998; following
the sale of substantially all of the
assets of Bagcraft in 1998, President of
Bagcraft Packaging LLC, a subsidiary of
Packaging Dynamics LLC from November 20,
1998 to June 18, 1999.
<PAGE>
Name Age Positions and Experience
- ---- --- ------------------------
Gerard M. Kenny
(3) (4) 51 Director since September 1999; served as
Director of Artra from 1988 to September
1999; Executive Vice President and Director
of Kenny Construction Company since 1982
(diversified heavy construction); General
Partner of Clinton Industries (investments),
a limited partnership, since 1972.
Edward A. Celano
(3)(4) 61 Director since September 1999; served as
Director of Artra from 1996 to September
1999; Executive Vice President of the
Atlantic Bank of New York since May 1, 1996;
Senior Vice President of National
Westminster Bank, USA from 1984 through
April 1996; serves as a Director of Life
Medical Services, Inc., Sterling Vision,
Inc. and Astra Funding, Inc.
Howard R. Conant (2) 75 Director since September 1999; served as
Director of Artra from 1996 to September
1999; Retired Chairman of the Board of
Interstate Steel Co., 1970 to 1990, and a
consultant to Interstate through 1992.
Maynard K. Louis
(2)(4) 70 Director since September 1999; served as
Director of Artra from 1993 to 1995 and from
1996 to September 1999; Retired Chairman of
the Board of Lord Label, a printing company
now known as Porter & Chadburn, from 1965 to
1989, and Vice President of Porter &
Chadburn from 1989 to 1993.
Robert L. Johnson (2) 64 Director since September 1999; served as
Director of Artra from 1996 to September
1999; Chairman and Chief Executive Officer
of Johnson Bryce, Inc., flexible packaging
materials for food products since 1991; and
previously, for many years, a Vice President
of Sears Roebuck & Co. (retailing company).
Corey P. Schlossmann 44 Director since October 1999; Chief Executive
Officer of Nationwide since October 1999 and
Chief Financial Officer of Nationwide since
January 1999; Partner of Gordon, Fishburn &
Schlossmann, certified public accountants,
since 1995; Partner of Hankin & Co., a
consulting firm focused on implementing
strategic solutions for owner managed
businesses and forensic consulting, from
1988 until 1995.
John K. Tull (2) 73 Director since September 1999; served as
Director of Artra from 1998 to September
1999; President of J.K. Tull Associates Ltd.,
a mergers and acquisitions firm, since 1986.
- --------------------
(1) Member of the executive committee. Entrade's executive
committee has the authority to take all action that can be taken by the
full board of directors, consistent with Pennsylvania law, between meetings
of the Entrade board of directors.
<PAGE>
(2) Member of the audit committee. Entrade's audit committee
reviews audit reports and management recommendations made by Entrade's
independent accountants.
(3) Member of the compensation committee. Entrade's compensation
committee has the authority to review and recommend compensation plans and
approve compensation changes.
(4) Member of the stock option committee. Entrade's stock option
committee has the authority to grant and review awards under the Entrade's
stock option plans. Mr. Louis is only a member of the stock option
committee for purposes of the Restated 1985 Stock Option Plan.
John Harvey and Peter R. Harvey are brothers.
Under the merger agreement pursuant to which Artra became a wholly owned
subsidiary of Entrade, for as long as WorldWide's percentage ownership of
Entrade's common stock, calculated on a fully diluted basis, is at least
five percent, Entrade must use its best efforts to cause a designee
nominated by WorldWide and acceptable to Entrade to be elected to the
Entrade board of directors. Robert D. Kohn was the initial designee of
WorldWide. Mr. Kohn resigned effective April 3, 2000, and WorldWide has
yet to designate a replacement.
Under the terms of the Stock Purchase Agreement pursuant to which Entrade
acquired Nationwide, for so long as Don Haidl owns at least five percent of
the issued and outstanding shares of Entrade's common stock, Entrade must
nominate Mr. Haidl or his designee reasonably acceptable to Entrade to
serve as a director of Entrade. Corey Schlossmann is Mr. Haidl's initial
designee.
Comforce Corporation was a 64.3% owned subsidiary of Artra until December
1995. Artra now owns approximately 9% of Comforce Corporation. PureTec
International, Inc. and Plastics Specialties and Technologies, Inc. were
affiliates of Artra. Bagcraft was a wholly owned subsidiary of BCA
Holdings, Inc., a wholly owned subsidiary of Artra. In November 1998,
substantially all of the assets of Bagcraft were sold to Packaging Dynamics
LLC, the parent entity of Bagcraft Packaging LLC.
INFORMATION REGARDING EXECUTIVE OFFICERS.
Set forth below is information concerning the executive officers and other
key employees of Entrade who were in office or employed as of the date of
this Prospectus.
Name Age Positions and Experience
- ---- --- ------------------------
John Harvey 70 Chairman of the Board
Mark F. Santacrose 40 President and Chief Executive Officer
Peter R. Harvey 65 Vice Chairman and Chairman of the
Executive Committee
Mark P. Miller 40 Chief Operating Officer
Norman Smagley 41 Executive Vice President and
Chief Financial Officer
Corey Schlossmann 44 Chief Executive Officer of Nationwide
John G. Hamm 61 Executive Vice President
Carrie L. Shea 35 Executive Vice President of
Business Development and Marketing
Anthony E.
Rothschild 42 General Counsel and Secretary
Robert S. Gruber 67 Vice President - Corporate Relations
<PAGE>
John Harvey is the Chairman of Entrade. See "Information Regarding
Directors" above for a description of Mr. Harvey's relevant business
experience.
Mark F. Santacrose is the President and Chief Executive Officer of Entrade.
See "Information Regarding Directors" above for a description of Mr.
Santacrose's relevant business experience.
Peter R. Harvey is the Vice Chairman of Entrade and Chairman of the
Executive Committee of the board of directors of Entrade. See "Information
Regarding Directors" above for a description of Mr. Harvey's relevant
business experience.
Corey Schlossmann is the Chief Executive Officer of Nationwide. See
"Information Regarding Directors" above for a description of Mr.
Schlossmann's relevant business experience.
John G. Hamm has been the Executive Vice President of Entrade since
September 1999 and Treasurer since November 1999. Mr. Hamm has served as
the Chief Financial Officer from November 1999 until April 2000, Secretary
of Entrade from September 1999 to November 1999 and as the Executive Vice
President of Artra from February 1988 to September 1999, as the Vice
President of Finance of Artra from 1975 to 1988 and as the Secretary of
Artra from August 1999 to September 1999. Mr. Hamm has also served as Vice
President of Finance from August 1990 to July 1995 and as a Director from
1984 until July 1995 of Ozite Corporation. Mr. Hamm has also served as a
Director of SoftNet Systems, Inc. from 1985 to February 1999 and a Director
of Plastic Specialties and Technologies, Inc. from 1985 to January 1996.
Mark P. Miller has been Chief Operating Officer since January 2000 and
Executive Vice President of Operations and Business Development from
November 1999 to January 2000. Mr. Miller served as Vice President of A.T.
Kearney, Inc., a global management consulting firm, from December 1995
until November 1999, and as a Principal of A.T. Kearney from August 1993
until November 1995. Mr. Miller is a graduate of both Southern Methodist
University and the Harvard Graduate School of Business.
Norman Smagley assumed his role as Executive Vice President and Chief
Financial Officer on April 3, 2000. Mr. Smagley served as Senior Vice
President and Chief Financial Officer of Donlen Corporation, a vehicle
fleet leasing company, from 1998 through March 2000, and held the same
offices at First Merchants Acceptance Corp., a national financial services
company, from 1997-1998. From 1994-1997, Mr. Smagley was the Vice
President of Finance and Chief Financial Officer of Trans Leasing
International, Inc., a national lessor of medical and office technology
equipment.
Carrie L. Shea has been Executive Vice President of Business Development
and Marketing since November 1999. Ms. Shea served as Vice President of
A.T. Kearney, Inc., a global management consulting firm, from August 1998
until November 1999, and as a Principal of A.T. Kearney from January 1994
until July 1998. Ms. Shea received both her Bachelor of Arts and Masters
of Business Administration from the University of Chicago.
Anthony E. Rothschild has been General Counsel and Secretary since November
1999. Mr. Rothschild was a partner in the Chicago, Illinois law firm of
Butler, Rubin, Saltarelli & Boyd from January 1990 until November 1999,
where he served as principal managing partner. Mr. Rothschild is a cum
laude graduate of both Harvard College and Northwestern University Law
School.
Robert S. Gruber has been the Vice President - Corporate Relations of
Entrade since September 1999. Mr. Gruber served as Vice President -
Corporate Relations of Artra from 1975 to September 1999 and as a
consultant to The Lori Corporation from 1982 to 1995. Mr. Gruber has also
served as a consultant to Comforce Corporation during 1996.
<PAGE>
Officers are appointed by the Entrade board of directors and its
subsidiaries and serve at the pleasure of each respective board. Except
for the relationship of Peter R. Harvey and John Harvey, who are brothers,
there are no family relationships among the executive officers and
directors, nor are there any arrangements or understandings between any
officer and another person under which an officer was appointed to office.
ITEM 11. EXECUTIVE COMPENSATION
Entrade assumed all employment agreements and stock options and plans of
Artra Group Incorporated upon the closing of the merger, in September 1999,
of a wholly owned subsidiary of Entrade and Artra. Because Entrade
commenced operations in 1999, no compensation information regarding its
directors and officers are available for prior years.
DIRECTORS' COMPENSATION
Directors who are not employees of Entrade are entitled to receive an
annual retainer of $10,000. Each outside director who sits on an
established committee of Entrade is entitled to receive $250 per committee
meeting attended and the chairman of a committee is entitled to receive
$500 for each meeting. Employees of Entrade who also serve as directors or
committee members receive no additional compensation for the service.
In 1999, each of Entrade's seven outside directors, as directors of Artra,
received options to purchase 2,500 shares of Artra common stock at an
exercise price of $5.375 per share. Also, Mark Santacrose and John Tull
each received an additional grant of options to purchase 10,000 shares of
Artra common stock at an exercise price of $4.75 per share. These options
have a term of ten years from the date of grant.
EXECUTIVE OFFICER COMPENSATION
The following table contains information with respect to all compensation
paid by us during 1999 to our chief executive officer and the only other
executive officer who received combined salary and bonus from Entrade in
excess of $100,000 for 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
-------------------- -----------------------------------
Other
Annual
Name and Compen- Securities All Other
Principal Salary Bonus sation Underlying Compensa-
Position ($) (1) ($) ($) Options (#) tion ($)
- --------- ------- ---------- ------- ----------- ----------
Mark F.
Santacrose,
President and
Chief Executive
Officer 62,500 150,000(2) 1,800 (4) 833 (6)
Robert D. Kohn,
President of
entrade.com 29,058 125,000(3) (5) 508(6)
- --------------------
(1) Represents salaries paid by Entrade or its subsidiaries from and
after September 23, 1999.
<PAGE>
(2) Artra had agreed to pay Mr. Santacrose a bonus of $100,000 for 1999
to compensate him for forfeiture of compensation to which he would have
been entitled from his previous employer. This bonus was paid in January
2000. A bonus of $50,000 was paid by Entrade to Mr. Santacrose with
respect to his performance in 1999. This bonus was paid in March 2000.
(3) In March 2000, entrade.com paid Mr. Kohn a bonus of $125,000 with
respect to his performance in 1999.
(4) Under the terms of an Artra employment agreement effective June 28,
1999 that Entrade has assumed, Mr. Santacrose was granted options to
acquire 200,000 shares of Artra common stock at $10.00 per share, which
options vested immediately on that date, and options to acquire 100,000
shares of Artra common stock at $12.875 per share, which options will vest
on June 28, 2000. All options granted expire June 28, 2009. The closing
price of Artra common stock on the New York Stock Exchange on June 28,
1999, the date of the grant, was $12.875.
(5) Robert D. Kohn had an employment agreement with Artra for a term that
commenced February 23, 1999 and ended February 17, 2002. Entrade assumed
this employment agreement. The employment agreement provided for an option
to purchase 1,000,000 shares of Artra common stock at an exercise price of
$2.75 per share. The options vested in equal one-third installments on
December 1, 1999, February 18, 2000, and February 18, 2001. Mr. Kohn's
employment terminated April 3, 2000, which termination accelerated the
vesting of the final installment of his stock options.
(6) The amounts represent contributions by the Company to the Company's
401(k) plan.
1999 OPTION VALUES
The following table shows information regarding the unexercised options
held as of December 31, 1999 by our chief executive officer and the only
other executive officer who received combined salary and bonus from Entrade
in excess of $100,000 for 1999. Neither officer exercised any options
during 1999.
Number of Shares Value of Unexercised
Underlying Unexercised in-the-Money
Options as of Options as of
December 31, 1999 (#) December 31, 1999 ($)(1)
----------------------- ------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
Mark F.
Santacrose 200,000/100,000 6,175,000/2,800,000
Robert D.
Kohn 333,333/666,667 12,708,321/25,416,679
(1) The value per option is calculated by subtracting the exercise price
of the option from the fair market value of our common stock of $40-7/8 per
share on December 31, 1999.
The following discussion provides information regarding executive officer
employment agreements and compensation arrangements.
<PAGE>
MARK F. SANTACROSE EMPLOYMENT AGREEMENT
On June 28, 1999, the Artra board of directors entered into an agreement
with Mark F. Santacrose. Under the agreement, Mr. Santacrose agreed to
become the President and Chief Executive Officer of Artra. In September
1999, Mr. Santacrose became the President and Chief Executive Officer of
Entrade, and Entrade assumed this agreement. The following is a summary of
the terms of the employment agreement.
TERM: The initial term is for three years. Commencing
June 28, 2002 and each anniversary after this date, the term is
automatically extended for one additional year unless either party gives
written notice to the other within 90 days preceding the anniversary date
that he or it does not desire to extend the term for the additional one-
year period.
CASH COMPENSATION: Base salary of $250,000 per year, subject to increase
at the discretion of the Entrade board of directors.
STOCK OPTIONS: Option to purchase 200,000 shares of Entrade common
stock at $10 per share, exercisable for ten years commencing June 28, 1999.
Option to purchase 100,000 shares of Entrade common
stock at $12.875 per share, exercisable commencing June 28, 2000 until June
28, 2009.
COMPENSATION
REIMBURSEMENT: Entrade has agreed to pay Mr. Santacrose a bonus of
$100,000 for 1999 to compensate him for forfeiture of compensation to which
he would have been entitled from his previous employer.
TERMINATION: If Entrade terminates his employment during the
initial term other than for cause or he terminates the agreement during the
initial term for good reason, Mr. Santacrose is entitled to the payment of
his base salary through the later of the end of the initial term or 18
months from the date of termination. If the termination occurs during a
renewal term, Entrade will pay him a lump sum equal to the sum of his base
salary for a period of 18 months at the effective date of termination.
CHANGE OF CONTROL: In the event of a change of control of Entrade as
defined in the agreement, Mr. Santacrose is entitled to receive a lump-sum
payment equal to his base salary at its then current rate for a period of
35 months.
COREY SCHLOSSMANN EMPLOYMENT AGREEMENT
On October 15, 1999, Entrade and its subsidiaries comprising Nationwide
entered into an agreement with Corey Schlossmann. Under the agreement, Mr.
Schlossmann agreed to become an executive officer of Nationwide. Entrade
agreed to guarantee Nationwide's performance under the employment
agreement. The following is a summary of the terms of the employment
agreement
TERM: The initial term is for three years ending October 18,
2002. Commencing October 19, 2002 and each anniversary after this date,
the term is automatically extended for one additional year unless either
Mr. Schlossmann or Nationwide gives written notice to the other within 90
days preceding the anniversary date that he or it does not desire to extend
the term for the additional one-year period.
<PAGE>
CASH COMPENSATION: Base salary of $162,000 per year, subject to increase
at the discretion of the Nationwide board of directors.
STOCK OPTIONS: Option to purchase 200,000 shares of Entrade common
stock at $9 per share, all fully vested and exercisable for ten years
commencing October 15, 1999.
TERMINATION: If Nationwide terminates his employment during the
initial term other than for cause or he terminates the agreement during the
initial term for good reason, Mr. Schlossmann is entitled to the payment of
his base salary through the later of the end of the initial term or six
months from the date of termination. If Nationwide elects not to extend
his employment for any additional one-year period other than for cause or
the termination occurs during a renewal term, Mr. Schlossmann is entitled
to payment of his base salary then in effect through the later of the
current extended term or six months from the effective date of the
termination.
MARK P. MILLER EMPLOYMENT AGREEMENT
On November 11, 1999, Entrade entered into an agreement with Mark P.
Miller. Under the agreement, Mr. Miller agreed to become Executive Vice
President - Operations and Business Development of Entrade. The following
is a summary of the terms of the employment agreement.
TERM: The initial term ends December 31, 2002. Commencing
January 1, 2003 and each anniversary after this date, the term is
automatically extended for one additional year unless either party gives 90
days' advanced written notice that he or it does not desire to extend the
term for the additional one-year period.
CASH COMPENSATION: Base salary of $250,000 per year, subject to increase
at the discretion of the Entrade board of directors.
STOCK OPTIONS: Option to purchase 200,000 shares of Entrade common
stock at $22.3125, exercisable as to 66,666 shares commencing November 11,
2000, 66,667 additional shares commencing November 11, 2001, and 66,667
shares commencing November 11, 2002, all exercisable until November 7,
2009.
TERMINATION: If Entrade terminates his employment during the
initial term other than for cause or he terminates the agreement during the
initial term for good reason, Mr. Miller is entitled to the payment of his
base salary through the later of the end of the initial term or six months
from the date of termination. If the termination occurs during a renewal
term, Entrade will pay him a lump sum equal to the sum of his base salary
for a period of six months at the effective date of termination.
CHANGE OF CONTROL: In the event of a change of control of Entrade as
defined in the agreement, Mr. Miller would be entitled to receive a lump-
sum payment equal to his base salary at its then current rate for a period
of 24 months.
<PAGE>
NORMAN SMAGLEY EMPLOYMENT AGREEMENT
On March 9, 2000, Entrade entered into an agreement with Norman Smagley.
Under the agreement, Mr. Smagley agreed to become Executive Vice President
and Chief Financial Officer of Entrade. The following is a summary of the
terms of the employment agreement.
TERM: The initial term ends April 3, 2003. Commencing
April 3, 2003 and each anniversary after this date, the term is
automatically extended for one additional year unless either party gives 90
days' advanced written notice that he or it does not desire to extend the
term for the additional one-year period.
CASH COMPENSATION: Base salary of $200,000 per year, subject to increase
at the discretion of the Entrade board of directors.
STOCK OPTIONS: Option to purchase 150,000 shares of Entrade common
stock at $25.375, exercisable as to 50,000 shares commencing April 3, 2001,
50,000 additional shares commencing April 3, 2002, and 50,000 shares
commencing April 3, 2003, all exercisable until April 3, 2010.
TERMINATION: If Entrade terminates his employment during the
initial term other than for cause or he terminates the agreement during the
initial term for good reason, Mr. Smagley is entitled to the payment of his
base salary through the later of the end of the initial term or six months
from the date of termination. If the termination occurs during a renewal
term, Entrade will pay him a lump sum equal to the sum of his base salary
for a period of six months at the effective date of termination.
CHANGE OF CONTROL: In the event of a change of control of Entrade as
defined in the agreement, Mr. Smagley would be entitled to receive a lump-
sum payment equal to his base salary at its then current rate for a period
of 24 months.
CARRIE L. SHEA EMPLOYMENT AGREEMENT
On March 9, 2000, Entrade entered into a letter agreement with Carrie L.
Shea. Under the agreement, Ms. Shea agreed to become Executive Vice
President of Business Development and Marketing of Entrade. The following
is a summary of the terms of the employment agreement.
TERM: The initial term ends December 31, 2002. Commencing
January 1, 2003 and each anniversary after this date, the term is
automatically extended for one additional year unless either party gives 90
days' advanced written notice that she or it does not desire to extend the
term for the additional one-year period.
CASH COMPENSATION: Base salary of $200,000 per year.
STOCK OPTIONS: Option to purchase 150,000 shares of Entrade common
stock at $22.3125, exercisable as to 50,000 shares commencing November 11,
2000, 50,000 additional shares commencing November 11, 2001, and 50,000
additional shares commencing November 11, 2002, all exercisable until
November 10, 2009.
<PAGE>
COMPENSATION
REIMBURSEMENT: Entrade has agreed to pay Ms. Shea a bonus of $25,000
during the first quarter of 2000 to compensate her for forfeiture of
compensation to which she would have been entitled from her previous
employer.
TERMINATION: If Entrade terminates her employment during the
initial term other than for cause or she terminates the agreement during
the initial term for good reason, Ms. Shea is entitled to the payment of
her base salary through the later of the end of the initial term or six
months from the date of termination. If the termination occurs during a
renewal term, Entrade will pay her a lump sum equal to the sum of her base
salary for a period of six months at the effective date of termination.
CHANGE OF CONTROL: In the event of a change of control of Entrade as
defined in the agreement, Ms. Shea would be entitled to receive a lump-sum
payment equal to his base salary at its then current rate for a period of
24 months.
ANTHONY E. ROTHSCHILD EMPLOYMENT AGREEMENT
On October 22, 1999, Entrade entered into an agreement with Anthony E.
Rothschild. Under the agreement, Mr. Rothschild agreed to become General
Counsel of Entrade. The following is a summary of the terms of the
employment agreement.
TERM: The initial term ends December 31, 2002. Commencing
January 1, 2003 and each anniversary after this date, the term is
automatically extended for one additional year unless either party gives 90
days' advanced written notice that he or it does not desire to extend the
term for the additional one-year period.
CASH COMPENSATION: Base salary of $150,000 per year, subject to increase
at the discretion of the Entrade board of directors. In addition, Mr.
Rothschild received a cash bonus of $12,500 for 1999 and will receive a
cash bonus of no less than $25,000 for calendar year 2000.
STOCK OPTIONS: Option to purchase 100,000 shares of Entrade common
stock at $19.1875, exercisable as to 33,333 shares commencing November 8,
2000, 33,333 additional shares commencing November 8, 2001, and 33,334
shares commencing November 8, 2002, all exercisable until November 7, 2009.
TERMINATION: If Entrade terminates his employment during the
initial term other than for cause or he terminates the agreement during the
initial term for good reason, Mr. Rothschild is entitled to the payment of
his base salary through the later of the end of the initial term or six
months from the date of termination. If the termination occurs during a
renewal term, Entrade will pay him a lump sum equal to the sum of his base
salary for a period of six months at the effective date of termination.
CHANGE OF CONTROL: In the event of a change of control of Entrade as
defined in the agreement, Mr. Rothschild would be entitled to receive a
lump-sum payment equal to his base salary at its then current rate for a
period of 24 months.
<PAGE>
STOCK OPTION PLANS
THE 1985 AND 1996 OPTION PLANS
The Restated 1985 Stock Option Plan and 1996 Stock Option Plan provide for
the grant of options to purchase Entrade common stock that are intended to
qualify as incentive stock options under Section 422 of the Internal
Revenue Code and non-qualified options to key employees and non-employee
directors of Entrade, its subsidiaries and affiliated entities.
As of December 31, 1999, Entrade had outstanding options to purchase an
aggregate of 252,403 shares of Entrade common stock granted to Entrade's
employees under the 1985 Plan at exercise prices of $3.65 and $3.75. All
of the options granted under the 1985 Plan are fully vested and expire on
either December 19, 2000, September 19, 2001 or January 8, 2003. The 1985
Plan will remain in effect until all options granted under the 1985 Plan
have been satisfied by the issuance of shares or the expiration of the
outstanding options, but no new options may be granted under the 1985 Plan.
As of December 31, 1999, Entrade had outstanding options to purchase an
aggregate of 1,855,351 shares of Entrade common stock under the 1996 Plan
at exercise prices ranging from $4.75 to $22.3125.
An aggregate of 39,000 shares of Entrade common stock remain available for
grant under the 1996 Plan as of December 31, 1999.
THE 1996 DISINTERESTED DIRECTORS STOCK OPTION PLAN
As of December 31, 1999, Entrade had outstanding nonqualified options to
purchase an aggregate of 85,000 shares of Entrade common stock granted to
directors under the 1996 Disinterested Directors Plan at an exercise price
of $3.125.
An aggregate of 100,000 shares of Entrade common stock remain available for
grant under the 1996 Disinterested Director Plan as of December 31, 1999.
THE 1999 NON-QUALIFIED STOCK OPTION PLAN
As of December 31, 1999, Entrade had outstanding options to purchase an
aggregate of 1,600,000 shares of Entrade common stock to Robert D. Kohn,
and three current employees of entrade.com under the 1999 Non-Qualified
Plan at an exercise price of $2.75 per share. The options become
exercisable in three equal installments on December 1, 1999, February 18,
2000 and February 18, 2001. The options will expire on the earlier to
occur of:
. February 23, 2009;
. the date of the employee's termination of employment for cause;
. the expiration of three months from the date of the employee's
termination other than for cause or from the date of the employee's
voluntary resignation unless the termination results from the employee's
retirement, death or disability; or
. the expiration of one year from the date of the employee's
termination by reason of his retirement, death or disability.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Entrade board of directors reviewed and approved the compensation of
Mark F. Santacrose, the President and Chief Executive Officer of Entrade.
None of our executive officers serves as a member of the board of directors
or compensation committee of any entity that has one or more executive
officers serving on our board of directors. See "Related Party
Transactions" for a description of various transactions and relationships
between Entrade and certain directors.
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Entrade's executive compensation program is administered by the
compensation committee of Entrade's board of directors, which has
responsibility for all aspects of the compensation program for the
executive officers of Entrade. Currently, the committee is comprised of
two directors listed at the end of this report, none of whom is an employee
of Entrade.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The committee's primary objective is to establish and administer programs
to attract, retain, and motivate skilled and talented executives, and align
their compensation with Entrade, Entrade's e-commerce marketplaces,
achievement of results from business strategies and growth in shareholder
value. The committee has established, and the board of directors has
endorsed, an executive compensation philosophy for Entrade which includes
the following elements:
. An emphasis on stock incentives to closely align the interests
of executives with the long-term interests of shareholders;
. A "pay-for-performance" orientation under which a portion of
total compensation reflects corporate, business unit and individual
performance;
. An emphasis on total compensation under which base salaries and
cash incentives are generally targeted at or near median competitive levels
in the B2B e-commerce industry, but which provides opportunities, including
stock incentives, to achieve greater than median compensation if corporate
and individual performance are both superior;
. An appropriate balance of annual and long-term compensation
which facilitates retention of talented executives and rewards long-term
strategic results; and
. An emphasis on increasing the proportion of an executive's
total compensation at risk through the use of stock and other performance
incentives, and decreasing the proportion of compensation based on salary
and their benefits.
COMPENSATION POLICIES AND PROCEDURES
Annual compensation for Entrade's executive officers consists of three
elements: a cash salary, cash bonuses and stock option grants. The salary
range for an executive will be market-based and commensurate with the
responsibilities of his/her position. Salary ranges generally will be
established at or near the median of salaries paid for comparable positions
based upon compensation data the committee extracts from surveys of
comparable companies. The committee will review base salaries for
executives annually and will make adjustments based on individual and
corporate performance, the competitive market and internal fairness
considerations.
Annual cash incentive opportunities will be provided to executives. Awards
will be based on corporate, e-commerce marketplace and individual
performance.
Stock option grants for executive officers consist of an initial grant when
the executive commences employment but does not include annual grants at
the end of each calendar year.
<PAGE>
In selecting new executive officers, the committee considers the specific
needs of Entrade and the expertise and special skills offered by a
candidate. The committee then determines starting compensation based on
its assessment of the compensation package needed to attract executive
officers to a development stage company. Compensation of continuing
executive officers is also reviewed periodically against this assessment.
As a result, the committee may deviate from its standard philosophy and
recommend compensation packages in the upper range of cash and equity
compensation paid to executive officers by companies of comparable size in
similar industries.
Based on the foregoing policies, the committee makes its recommendations to
the board of directors, which ultimately determines each executive
officer's compensation package.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mark F. Santacrose became President and Chief Executive Officer of Entrade
in September 1999. Under the leadership of Mr. Santacrose, Entrade
achieved specific milestones during 1999 including, among other things:
(i) the successful merger of Artra Group Incorporated with a wholly-owned
subsidiary of Entrade; (ii) the acquisition of a majority equity interest
in printeralliance.com, Inc.; (iii) the acquisition of a minority interest
in pricecontainer.com, Inc.; (iv) the acquisition of Public Liquidation
Systems, Inc. and Asset Liquidation Group, Inc., Entrade's Nationwide
subsidiaries; and (v) the negotiation and execution of an agreement to
increase Entrade's equity position in assetrade.com, Inc. Also during
1999, Mr. Santacrose was instrumental in Entrade's progress towards the
achievement in the first quarter of 2000 of the following results: (a) the
reaching of an agreement to acquire 15% of the issued and outstanding
shares of ATM Service, Ltd.; (b) the development and launch of
TruckCenter.com, Inc.; (c) the acquisition of a minority interest in
TradeTextile.com, Inc.; (d) the organization and creation of
AssetControl.com, L.L.C.; (e) the reaching of an agreement to create
Entrade Asia Pacific Pty Ltd. and (f) the completion of Entrade's private
placement of its common stock.
Mr. Santacrose's 1999 compensation package consisted of a salary of
$250,000 which was assumed by Entrade as of September, 1999, and a bonus of
$150,000, $100,000 of which was paid to compensate him for forfeiture of
compensation for which he would have been entitled from his previous
employer and $50,000 of which was paid with respect to his performance in
1999. Entrade assumed all of Artra's obligations under an option granted
to Mr. Santacrose to purchase 200,000 shares of Entrade common stock at $10
per share, exercisable for ten years commencing June 28, 1999 an option to
purchase 100,000 shares at $12.875 exercisable commencing June 28, 2000
until June 28, 2009.
POLICIES WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION
Recognizing that competitive compensation levels for senior executive
officers at a corporations such as Entrade may exceed the $1,000,000
deduction limit of Section 162(m) of the Code, it is Entrade's policy,
subject to exceptions in the discretion of the committee, to structure
executive compensation plans to maximize the deductibility of executive
compensation by minimizing the compensation subject to this limit.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
shares of Entrade common stock with the cumulative return on the Dow Jones
Equity Market Index and the Dow Jones Other Industrial and Commercial
Services Index for the period beginning September 23, 1999, which is the
date of the merger of Artra and a wholly owned subsidiary of Entrade, and
ended December 31, 1999, assuming dividend reinvestment.
Dow Jones Other
Dow Jones Industrial &
Equity Commercial
Entrade Market Index Services Index
---------- ------------- -----------------
9/24/99 $100 $100 $100
12/31/99 $240.44 $115.94 $131.58
Source: Dow Jones, Inc. (609) 520-4000.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that officers and directors of
Entrade, as well as persons who own more than 10% of a class of equity
securities of Entrade, file reports of their ownership of those securities,
as well as monthly statements of changes in the person's ownership, with
Entrade and the Commission. Based upon reports filed with Entrade since
September 1999, Entrade believes that these persons filed all reports
required under Section 16(a) during 1999 on a timely basis, except for
Messrs. Miller, Rothschild and Smagley, Ms. Shea and WorldWide, who made
late filings of initial reports on Form 3, and John Harvey, who made a late
filing of a report on Form 4.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 21, 2000, the amount and
percentage of Entrade common stock owned by (a) each person who is known by
Entrade to own beneficially more than 5% of the outstanding shares of
Entrade common stock, (b) each director, (c) each executive officer named
in the Summary Compensation Table, and (d) all executive officers and
directors of Entrade as a group.
Name of Number of Shares Percent of
Beneficial Owner Beneficially Owned Class
- ---------------- ------------------ ----------
5% HOLDERS:
WorldWide(1) 1,800,000 10.83%
Don Haidl(2) 1,477,523 8.89%
DIRECTORS AND EXECUTIVE OFFICERS:
John Harvey(3) 793,034 4.70%
Peter R. Harvey(4) 654,804 3.90%
Gerard M. Kenny(5) 109,580 *
Maynard K. Louis(6) 79,560 *
Edward A. Celano(7) 39,372 *
Howard R. Conant(8) 326,500 1.96%
Robert L. Johnson(9) 23,639 *
Mark F. Santacrose(10) 222,500 1.32%
Corey Schlossmann(11) 385,731 2.29%
John K. Tull(12) 43,087 *
All directors and officers
as a group (16 persons) (13) 3,033,245 16.19%
* Less than 1% of the outstanding shares.
(1) WorldWide's business address is 521 Fellowship Road, Suite 130, Mount
Laurel, New Jersey 08054.
(2) Mr. Haidl's business address is 13005 East Temple Avenue, City of
Industries, California 91746. The shares of Entrade common stock owned by
Mr. Haidl consist of 477,523 shares held directly by him and 1,000,000
shares held for the benefit of Mr. Haidl by Capital Direct Trust.
(3) The shares of Entrade common stock beneficially owned by Mr. Harvey
consist of 518,122 shares held directly by him or in the Harvey family
trust (with respect to which he holds voting and investment power), 5,632
shares held by Mr. Harvey's wife, 7,452 shares held in his 401(k) plan,
47,500 shares issuable under an option which expires December 19, 2000 at
an exercise price of $3.65 per share, 131,000 shares issuable under an
option which expires October 4, 2006 at an exercise price of $5.25 per
share, 35,000 shares issuable under an option which expires January 6, 2009
at an exercise price of $4.75 per share and an aggregate of 48,378 shares
issuable under warrants
<PAGE>
expiring at various dates in 2000 and 2001 at exercise prices of
$4.25 per share to $6.25 per share received in 1995 and 1996 as additional
compensation for 1995 and 1996 short-term loans.
(4) The shares of Entrade common stock beneficially owned by Mr. Harvey
consist of 461,377 shares held directly by him, 600 shares owned by his
wife, 634 shares held in his 401(k) plan, 7,193 shares held in his
individual retirement account, 20,000 shares issuable under an option which
expires September 19, 2001 at an exercise price of $3.65 per share, 15,000
shares issuable under an option which expires January 8, 2003 at an
exercise price of $3.75 per share and 150,000 shares issuable under an
option which expires January 6, 2009 at an exercise price of $4.75 per
share.
(5) The shares of Entrade common stock beneficially owned by Mr. Kenny
consist of 2,668 shares held by Kenny Construction Company, 89,412 shares
held by Clinton Industries, 12,500 shares issuable under an option which
expires May 28, 2008 at an exercise price of $3.125 per share, 2,500 shares
issuable under an option which expires February 1, 2009 at an exercise
price of $5.375 per share and 2,500 shares issuable under an option which
expires February 1, 2010 at an exercise price $40.00 per share. Mr. Kenny
is Executive Vice President, Director and beneficial owner of 16.66% of the
issued and outstanding stock of Kenny Construction Company. He is also the
General Partner and a 14.28% beneficial owner of Clinton Industries, a
limited partnership.
(6) The shares of Entrade common stock beneficially owned by Mr. Louis
consist of 43,160 shares held directly by him, 12,500 shares issuable under
an option which expires May 28, 2008 at an exercise price of $3.125 per
share, 2,500 shares issuable under an option which expires February 1, 2009
at an exercise price of $5.375 per share, a warrant to purchase 22,000
shares of Entrade common stock at a price of $8.00 per share which warrant
expires on June 13, 2001 and 2,500 shares issuable under an option which
expires February 1, 2010 at an exercise price $40.00 per share.
(7) The shares of Entrade common stock beneficially owned by Mr. Celano
consist of 21,872 shares held directly by him, 12,500 shares issuable under
an option which expires May 28, 2008 at an exercise price of $3.125 per
share, 2,500 shares issuable under an option which expires February 1, 2009
at an exercise price of $5.375 per share and 2,500 shares issuable under an
option which expires February 1, 2010 at an exercise price $40.00 per
share.
(8) The shares of Entrade common stock beneficially owned by Mr. Conant
consist of 295,000 shares held directly by him, 20,000 shares in his
individual retirement account and 2,500 shares issuable under an option
which expires February 1, 2010 at an exercise price $40.00 per share. Mr.
Conant's wife holds 9,000 shares of Entrade common stock.
(9) The shares of Entrade common stock beneficially owned by Mr. Johnson
consist of 6,139 shares held directly by him, 12,500 shares issuable under
an option which expires May 28, 2008 at an exercise price of $3.125 per
share, 2,500 shares issuable under an option which expires February 1, 2009
at an exercise price of $5.375 per share and 2,500 shares issuable under an
option which expires February 1, 2010 at an exercise price $40.00 per
share.
(10) The shares of Entrade common stock beneficially owned by Mr.
Santacrose consist of 10,000 shares owned by him directly, 10,000 shares
issuable under an option which expires January 6, 2009 at an exercise price
of $4.75 per share, 2,500 shares issuable under an option which expires
February 1, 2009 at an exercise price of $5.375 per share and 200,000
issuable under an option which expires June 28, 2009 at an exercise price
of $10 per share.
<PAGE>
(11) The shares of Entrade common stock beneficially owned by Mr.
Schlossmann consist of 128,731 shares held directly by him and 57,000
shares held for the benefit of Mr. Schlossmann by Core Capital IV Trust and
200,000 shares issuable under an option which expires October 15, 2009 at
an exercise price of $9.00 per share.
(12) The shares of Entrade common stock beneficially owned by Mr. Tull
consist of 28,087 shares held directly by him, 10,000 shares issuable under
an option which expires January 6, 2009 at an exercise price of $4.75 per
share, 2,500 shares issuable under an option which expires February 1, 2009
at an exercise price of $5.375 per share and 2,500 shares issuable under an
option which expires February 1, 2010 at an exercise price $40.00 per
share.
(13) The shares of Entrade common stock held by this group include an
aggregate of 1,156,279 shares that these persons have the right to purchase
under currently exercisable stock options and warrants.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ROBERT D. KOHN AND WORLDWIDE
Mr. Kohn served as Chief Executive Officer, President and Chairman of
WorldWide until September 1999 and as president of entrade.com and a
director of Entrade and entrade.com until April 2000. As of July 20, 1999,
Mr. Kohn owned 4,800,000 shares, or approximately 10% of the outstanding
shares of common stock of WorldWide. Prior to the merger of a subsidiary
of Entrade into Artra in September 1999, WorldWide owned 90% of the
outstanding shares of Entrade common stock and currently owns approximately
10.83% of the outstanding shares of Entrade common stock. The shares of
WorldWide owned by Mr. Kohn include 475,000 shares issued in 1999 in
connection with the assignment to Energy Trading Company in 1998 of his
4.5% ownership interest in BarterOne LLC and other accrued, unpaid
compensation and benefits relative to his employment by PECO Energy, the
parent company of Energy Trading Company.
Under the merger agreement, for as long as WorldWide's percentage ownership
of Entrade's common stock calculated on a fully diluted basis is at least
5%, Entrade must use its best efforts to cause WorldWide's designee who is
mutually acceptable to WorldWide and Entrade's board of directors to be
elected to the Entrade board of directors.
Concurrently with the execution of the merger agreement, Entrade acquired
intellectual property necessary for the conduct of entrade.com's e-commerce
business and 25% of the shares of the voting common stock of asseTrade.com
from WorldWide in exchange for 1,800,000 shares of Entrade common stock,
$800,000 in cash and a note for $500,000, which note was paid upon the
closing of the merger.
On February 16, 1999, Entrade issued to Energy Trading Company 200,000
shares of Entrade common stock, and paid Energy Trading Company $100,000 in
cash upon closing of the merger in September 1999, in exchange for retained
rights Energy Trading Company held in entrade.com's e-commerce business.
Artra also agreed with both WorldWide and Energy Trading Company that it
would provide a minimum of $4,000,000 in funding for entrade.com. Under
separate loan agreements, Artra agreed to loan Entrade up to $2,000,000 to
fund the $800,000 cash payment to WorldWide and provided funding for
entrade.com until the closing of the merger.
The total consideration for the purchased assets, therefore, was 2,000,000
shares of Entrade common stock and an aggregate of $5,400,000 in cash and
committed funding.
<PAGE>
In August 1999, WorldWide agreed to loan to Entrade up to $500,000 to fund
Entrade's operations from the date of the loan to the closing date under
the merger agreement. The principal amount of approximately $405,000 was
repaid to WorldWide on the closing date of the merger.
In December 1998, entrade.com licensed its Mars And Orbit Software to
asseTrade.com. Mr. Kohn is Chief Executive Officer of asseTrade.com.
Pursuant to the terms of the software license agreements, entrade.com and
asseTrade.com agreed to pay the other 20% of the gross profits derived from
any business referred by the other party. Additionally, asseTrade.com,
Henry Butcher International and Michael Fox International agreed to use
entrade.com exclusively for all of their on-line business applications and
entrade.com and Positive Asset Remarketing agreed to use asseTrade.com,
Henry Butcher International and Michael Fox International exclusively for
their disposition of corporate assets made in connection with any auctions
and private treaty sales.
In March 2000, entrade.com licensed its Entrade Transaction Software to
asseTrade.com. Pursuant to a separate letter agreement, entrade.com and
asseTrade.com terminated their obligation to share 20% of the gross profits
derived from any business referred by the other party. Additionally,
pursuant to the letter agreement, asseTrade.com, Henry Butcher
International and Michael Fox International terminated their obligation to
use entrade.com exclusively for all of their on-line business applications
and entrade.com and Positive Asset Remarketing terminated their obligation
to use asseTrade.com, Henry Butcher International and Michael Fox
International exclusively for their disposition of corporate assets made in
connection with any auctions and private treaty sales.
In September 1999, entrade.com licensed its transaction software to ATM
Service, Ltd., (d/b/a ATMCenter.com), of which WorldWide owns approximately
52%. In exchange for the license of entrade.com's transaction software,
entrade.com is to receive $1,500,000, payable in the form of trade credits
and monthly royalties computed upon the number of transactions generated
using the licensed software.
On December 31, 1999, pursuant to the terms of a merger agreement, a wholly
owned subsidiary of Entrade agreed to merge into Positive Asset
Remarketing, with the surviving corporation becoming a wholly owned
subsidiary of Entrade. The primary asset of Positive Asset Remarketing is
its ownership interest of 14.04%, on a fully diluted basis, of
asseTrade.com. Upon consummation of the merger, the aggregate outstanding
common stock of Positive Asset Remarketing was to be converted into 900,000
shares of common stock of Entrade. If the merger was consummated, Mr.
Kohn, a former director of Entrade, former President of entrade.com and
Chief Executive Officer of asseTrade.com, would have received 450,000
shares of Entrade common stock (or 500,000 based on timing), in exchange
for his 50% ownership interest in Positive Asset Remarketing.
On April 12, 2000, after Mr. Kohn had resigned as a director of Entrade
and President of entrade.com, Entrade entered into a stock purchase
agreement with Positive Asset Remarketing, Mr. Kohn and certain other
parties, pursuant to which Entrade terminated the prior merger agreement
with Positive Asset Remarketing and agreed to acquire from Positive Asset
Remarketing 7,350,000 shares of the class A common stock of asseTrade.com
in exchange for a cash payment of $3,488,000 and 964,000 shares of
Entrade's common stock, subject to adjustment in certain cases. Upon
consummation of the transaction, and taking into account the sale of
6,000,000 shares of class A common stock of asseTrade.com by Entrade to
Internet Capital Group, Inc. on April 20, 2000, Entrade's equity interest
in asseTrade.com, computed on a fully diluted basis, will be approximately
16.62%.
<PAGE>
JOHN HARVEY
The John Harvey Family Trust is the owner of the real estate at 500 Central
Avenue, Northfield, Illinois, the corporate offices of Entrade. The trust
acquired the real estate in September 1996. Pursuant to a lease agreement
dated as of January 1, 2000 between the trust and Entrade, Entrade leases
approximately 12,700 square feet at the location at an annual rental of
$279,246, subject to annual increases based upon the consumer price index,
for a period of 5 years. In the opinion of Entrade's management, the
rental obligations of Entrade to the trust under its lease do not exceed
the fair market value for similar rentals. John Harvey is the grantor and
beneficiary of the trust.
Pursuant to a lease agreement dated as of January 1, 2000 between the John
Harvey Family Trust and Artra, Artra leases approximately 800 square feet
at 500 Central Avenue, Northfield, Illinois, at an annual rental of
$17,600, subject to annual increases based upon the consumer price index,
for a period of 5 years.
DON G. HAIDL AND COREY P. SCHLOSSMAN
In September 1990, Mr. Haidl, the beneficial owner of 8.89% of the
outstanding shares of Entrade common stock, and two unaffiliated persons
agreed to lease a portion of the premises located at 13005 East Temple
Avenue, City of Industry, California, to Asset Liquidation Group, one of
the constituent companies of Nationwide. Pursuant to the lease agreement,
Nationwide is obligated to, among other things, pay the mortgagee of the
premises $11,715.44 per month until the end of the original term of the
lease agreement and pay Mr. Haidl and each of the other two property owners
$4,497.14 per month for the first five years of the original term of the
lease agreement, $5,500 per month for the remaining two years of the
original term of the lease agreement, and $7,000 per month for each year of
any option period.
In October 1999, Entrade acquired its Nationwide subsidiaries from Don G.
Haidl, Corey P. Schlossmann and their affiliates for an aggregate of
1,570,000 shares of Entrade common stock, unsecured promissory notes in the
aggregate principal amount of $18,800,000, and an aggregate of $6,000,000
in cash. In January 2000, in accordance with the stock purchase agreement
pursuant to which Entrade acquired its Nationwide subsidiaries, notes with
a principal balance of approximately $4,800,000 plus accrued interest were
converted into 278,985 shares of Entrade common stock. Under the remaining
notes, with principal amounts of $12,600,000 and $1,400,000, Entrade is to
pay to Mr. Haidl and Mr. Schlossmann $3,150,000 and $350,000, respectively,
on April 1, 2000, $3,150,000 and $350,000, respectively, on October 1,
2000, and $6,300,00 plus accrued but unpaid interest and $700,000 plus
accrued but unpaid interest, respectively, on October 1, 2001.
Entrade has entered into promissory note satisfaction agreements with Mr.
Haidl and Mr. Schlossmann pursuant to which the remaining notes will be
satisfied through the acceleration of certain payments due under the notes
and, subject to shareholder approval, the conversion of the notes into
265,621 shares of Entrade common stock, of which an aggregate of 239,059
shares will be issued to Mr. Haidl and his agent and an aggregate of 26,562
shares will be issued to Mr. Schlossmann.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, registrant has duly caused this Amendment No. 2 to
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ENTRADE INC.
By: /s/ MARK F. SANTACROSE
------------------------------
Mark F. Santacrose
President, Director and
Chief Executive Officer
Dated: April 28, 2000
