EXHIBIT 10.1
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EXCHANGE AGREEMENT
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EXCHANGE AGREEMENT (the "Agreement"), dated as of October 24, 2000,
by and among Entrade Inc., a Pennsylvania corporation, with headquarters
located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Company"),
and the investors listed on the Schedule of Investors attached hereto
(individually, an "Investor" and collectively, the "Investors").
WHEREAS:
A. The Company and certain investors, including the Investors,
have entered into that certain Securities Purchase Agreement, dated as of
March 24, 2000, (the "Securities Purchase Agreement"), pursuant to which
certain investors, including the Investors, purchased from the Company
shares of the Company's Series A Convertible Preferred Stock and warrants
(the "Old Warrants") to purchase shares of the Company's common stock, no
par value per share (the "Common Stock");
B. The number of shares of Common Stock for which each Investor's
Old Warrant may be exercised is set forth opposite its name on the Schedule
of Investors;
C. The Company and each Investor wish to exchange, upon the terms
and conditions stated in this Agreement, the Old Warrants issued to such
Investor pursuant to the Securities Purchase Agreement for a new warrant,
in substantially the form attached hereto as Exhibit A (the "Exchange
Warrants"), to purchase the same number of shares of Common Stock (the
"Exchange Warrant Shares") as are currently covered by the Old Warrant held
by such Investor (the Exchange Warrants and the Exchange Warrant Shares,
collectively are referred to herein as the "Securities"); and
D. The exchange of the Old Warrants for the Exchange Warrants is
being made in reliance upon the exemption from registration provided by
Section 3(a)(9) of the Securities Act of 1933, as amended (the "1933 Act").
NOW THEREFORE, the Company and the Investor hereby agree as follows:
1. EXCHANGE AND ISSUANCE OF EXCHANGE WARRANTS.
a. Exchange of Old Warrants. Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7, the Company shall
issue to each Investor, and each Investor severally agrees to exchange its
Old Warrant for, an Exchange Warrant to purchase a number of Exchange
Warrant Shares equal to the number of shares of Common Stock covered by the
Old Warrant being exchanged by such Investor (the "Closing"). The date of
the Closing (the "Closing Date") shall be the date which is five (5)
Business Days after the date of this Agreement, or such earlier or later
date as the Company and each Investor may agree. "Business Day" means any
day other than Saturday, Sunday or other day on which commercial banks in
the city of New York are authorized or required by law to remain closed.
b. The Closing Date. The time of the Closing shall be 10:00
a.m., Eastern Time, on the Closing Date, subject to satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 (or
such later date as is mutually agreed to by the Company and each of the
Investors). The Closing shall occur on the Closing Date at the offices of
Xxxxxx Xxxxxx Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000.
2. INVESTOR'S REPRESENTATIONS AND WARRANTIES.
Each Investor represents and warrants with respect to only
itself that:
a. Reliance on Exemptions. Such Investor understands that
the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Investor's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of such Investor set forth herein in order to determine the availability of
such exemptions and the eligibility of such Investor to receive such
Securities.
b. No Governmental Review. Such Investor understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement
of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.
c. Transfer or Resale. Such Investor understands that: (i)
the Securities have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder, (B)
such Investor shall have delivered to the Company an opinion of counsel, in
a form reasonably satisfactory to the Company, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such
Investor provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144");
(ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register such Securities under the
1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin account or
other loan secured by the Securities.
d. Legends. Such Investor understands that the certificates
or other instruments representing the Exchange Warrants and, until such
time as the sale of the Exchange Warrant Shares have been registered under
the 1933 Act, the stock certificates representing the Exchange Warrant
Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is stamped, if (i) such Securities are registered for sale under the
1933 Act, (ii) in connection with a sale, assignment or transfer of such
Securities, such holder provides the Company with an opinion of counsel, in
a form reasonably satisfactory to the Company, to the effect that such
sale, assignment or transfer of such Securities may be made without
registration under the 1933 Act, or (iii) such Investor provides the
Company with reasonable assurances that such Securities can be sold
pursuant to Rule 144. Such Investor acknowledges, covenants and agrees to
sell Securities represented by a certificate(s) from which the legend has
been removed, only pursuant to (i) a registration statement effective under
the 1933 Act, or (ii) advice of counsel to such holder that such sale is
exempt from the registration requirements of Section 5 of the 1933 Act.
e. Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Investor
and is a valid and binding agreement of such Investor enforceable against
such Investor in accordance with its terms, subject as to enforceability to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors' rights and
remedies.
g. Residency. Such Investor is a resident of that
jurisdiction specified on the Schedule of Investors.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Investors
that:
a. Organization and Qualification. The Company is a
corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated, the Company is in good standing
under the laws of the jurisdiction in which it is incorporated, and the
Company has the requisite corporate power and authorization to own
properties and to carry on its business as now being conducted. The
Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be
in good standing would not have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on
the business, properties, assets, operations, results of operations or
financial condition of the Company and its subsidiaries taken as a whole,
or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents (as defined below).
b. Authorization; Enforcement; Compliance with Other
Instruments. The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the
Exchange Warrants and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof. The execution
and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Exchange Warrants and the
reservation for issuance and the issuance of the Exchange Warrant Shares
issuable upon exercise thereof, have been duly authorized by the Executive
Committee of the Company's Board of Directors which authority has been duly
delegated to the Executive Committee by the Company's Board of Directors
and no further consent or authorization is required by the Company, its
Board of Directors or its stockholders. The Transaction Documents have
been duly executed and delivered by the Company. This Agreement and, when
executed and delivered, the other Transaction Documents, constitute the
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may
be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights
and remedies.
c. Charter and Securities Documents. The Company has
furnished to the Buyer true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and the Company's By-laws, as in effect on
the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of
the holders thereof in respect thereto.
d. Issuance of Securities. At least 340,359 shares of
Common Stock (subject to adjustment pursuant to the Company's covenant set
forth in Section 4(f) below) have been duly authorized and reserved for
issuance upon exercise of the Exchange Warrants. Upon exercise in
accordance with the Exchange Warrants, the Exchange Warrant Shares will be
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. The issuance
by the Company of the Securities is exempt from registration under the 1933
Act. The offer and sale by the Company of the Exchange Warrants is being
made in reliance upon the exemption from registration set forth in Section
3(a)(9) of the 1933 Act and similar exemptions under state law.
e. No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including,
without limitation, the reservation for issuance and issuance of the
Exchange Warrant Shares) will not (i) result in a violation of the Articles
of Incorporation, any Statement with Respect to Shares of any outstanding
series of preferred stock of the Company or the By-laws; (ii) conflict
with, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is
a party; or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Neither the
Company nor its subsidiaries is in violation of any term of its Articles of
Incorporation, any Statement with Respect to Shares of any outstanding
series of preferred stock or its By-laws or their organizational charter or
by-laws, respectively. The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency, any regulatory or self-regulatory agency or
any other person or entity in order for it to execute, deliver or perform
any of its obligations under or contemplated by the Transaction Documents
in accordance with the terms hereof or thereof. Neither the Company nor
any of its subsidiaries nor any of their officers, directors, employees or
agents have provided any of the Investors with any material, nonpublic
information.
f. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this
offering of Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of NYSE, nor will the Company or any of its subsidiaries take any action
or steps that would require registration of the Securities under the 1933
Act or cause the offering of the Securities to be integrated with other
offerings.
g. Dilutive Effect. The Company acknowledges that its
obligation to issue the Exchange Warrant Shares in accordance with this
Agreement and the Exchange Warrants is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other stockholders of the Company.
h. Rights Agreement. The Company has not adopted a
shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change of control of the Company.
4. COVENANTS.
a. Best Efforts. Each party hereto shall use its best
efforts to satisfy timely each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Blue Sky. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the
Securities for, sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of
the United States, and shall provide evidence of any such action so taken
to the Investors on or prior to the Closing Date. The Company shall make
all filings and reports relating to the offer and sale of the Securities
required under applicable securities or "Blue Sky" laws of the states of
the United States following the Closing Date.
c. Reporting Status. Until the later of (i) the date which
is one year after the date on which each Investor may sell all of the
Exchange Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) and (ii) the date on
which (A) the Investors shall have sold all the Exchange Warrant Shares and
(B) none of the Exchange Warrants is outstanding (the "Reporting Period"),
the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act
or the rules and regulations thereunder would otherwise permit such
termination.
d. Rule 144. The Company shall not, directly or indirectly,
dispute or otherwise interfere with any claim by a holder of the Exchange
Warrants that such holder's holding period of any Exchange Warrants for
purposes of Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("Rule 144") relates back (i.e., tacks) to the holding period for
the Old Warrants. The Company agrees and acknowledges that under Rule 144
and no-action letters issued by the SEC, such tacking is permitted.
e. Financial Information. The Company agrees to send the
following to each Investor during the Reporting Period: (i) unless filed
and available through the SEC's XXXXX system, within two (2) Business Days
after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments
thereto filed pursuant to the 1933 Act; (ii) on the same day as the release
thereof, facsimile copies of all press releases issued by the Company or
any of its subsidiaries (or the day after, if released through a recognized
wire service) and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.
f. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock needed
to provide for the issuance of the Exchange Warrant Shares (without regard
to any limitations on exercise thereof).
g. Expenses. Subject to Section 9(l) below, at the Closing,
the Company shall pay to Xxxxxx Capital Ltd. and Xxxxxxx Capital Ltd. (each
an Investor) or their designee an aggregate expense allowance of $10,000.
h. Listing. The Company shall promptly secure the listing
of all of the Exchange Warrant Shares upon each national securities
exchange (including The New York Stock Exchange, Inc. ("NYSE")) and
automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such listing
of Exchange Warrant Shares from time to time issuable under the terms of
the Transaction Documents. The Company shall maintain the Common Stock's
authorization for listing on the Nasdaq National Market or the NYSE.
Neither the Company nor any of its subsidiaries shall take any action which
may result in the delisting or suspension of the Common Stock on the Nasdaq
National Market or the NYSE (other than to switch listings from the NYSE to
the Nasdaq National Market). The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(h).
i. Filing of Form 8-K. On or before the second (2nd)
Business Day following the Closing Date, the Company shall file a Form 8-K
with the SEC describing the terms of the transaction contemplated by the
Transaction Documents and consummated at the Closing, in the form required
by the 1934 Act, and attaching as exhibits to such Form 8-K copies of this
Agreement and the form of Exchange Warrant.
j. Corporate Existence. So long as any Investor
beneficially owns any Exchange Warrants, the Company shall maintain its
corporate existence and shall not sell all or substantially all of the
Company's assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company's assets, where the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose common
stock is listed for trading on the Nasdaq National Market or NYSE.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Investor or its respective nominee(s), for
the Exchange Warrant Shares in such amounts as specified from time to time
by each Investor to the Company upon exercise of the Exchange Warrants (in
the form attached hereto as Exhibit B, the "Irrevocable Transfer Agent
Instructions") unless such issuance is prohibited by Section 2(g) of the
Exchange Warrants. Prior to registration of the Exchange Warrant Shares
under the 1933 Act, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5, and stop transfer instructions to give effect to
Section 2(f) hereof will be given by the Company to its transfer agent with
respect to the Exchange Warrant Shares and that the Securities shall
otherwise be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement. If an Investor provides the
Company with an opinion of counsel, in a form reasonably satisfactory to
the Company, that registration of a resale by such Investor of any of such
Securities is not required under the 1933 Act or such Investor provides the
Company with reasonable assurances that the Securities can be sold pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the
Exchange Warrant Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by
such Investor and without any restrictive legends. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the affected Investor by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under
this Section 5 would be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5, that
the Investors shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligation of the Company hereunder to issue the Exchange Warrants to each
Investor at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Investor with
prior written notice thereof:
(i) Such Investor shall have executed this Agreement and
delivered the same to the Company.
(ii) Such Investor shall have delivered to the Company the
original Old Warrant issued to such Investor pursuant to the Securities
Purchase Agreement.
(iii) The representations and warranties of such Investor
contained herein shall be true and correct 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 specific date), and such Investor shall
have performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing Date.
7. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS AT CLOSING. The
obligation of each Investor hereunder to exchange its Old Warrant for the
Exchange Warrant at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for such Investor's sole benefit and may be waived by
such Investor at any time in its sole discretion by providing the Company
and each Investor with prior written notice thereof:
(i) The Company shall have executed this Agreement and
delivered the same to such Investor.
(ii) The Common Stock shall have been listed on the NYSE since
August 20, 1999, shall not have been suspended from trading on or delisted
from such exchange nor shall delisting or suspension by such exchange have
been threatened either (A) in writing by such exchange or (B) by falling
below the minimum listing maintenance requirements of such exchange. The
Company shall have complied with the listing requirements of the NYSE for
the Exchange Warrant Shares issuable upon exercise of the Exchange
Warrants.
(iii) The representations and warranties of the Company
contained herein shall be true and correct 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 specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such
Investor shall have received a certificate, executed by the Chief Executive
Officer of the Company or Xxxxx Xxxxxx, Vice Chairman of the Company, dated
as of the Closing Date, to the foregoing effect and as to such other
matters as such Investor may reasonably request, including, without
limitation, an update as of the Closing Date regarding the representation
contained in Section 3(c) above.
(iv) Such Investor shall have received the opinion of Xxxxxx &
Xxxxx, Ltd. dated as of the Closing Date, in substantially the form of
Exhibit C, attached hereto.
(v) The Company shall have executed and delivered to such
Investor the Exchange Warrant to be issued to such Investor (as set forth
in Section 1(a)) at the Closing.
(vi) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b) above in a form reasonably
acceptable to such Investor (the "Resolutions").
(vii) As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the exercise of the Exchange Warrants, at least 340,359 shares of
Common Stock.
(viii) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit B attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(ix) The Company shall have delivered to such Investor a
secretary's certificate, dated as of the Closing Date, certifying as to (A)
the Resolutions, (B) the Articles of Incorporation and (C) the By-laws,
each as in effect at the Closing Date.
(x) The Company shall have delivered to the Investors such
other documents relating to the transactions contemplated by the
Transaction Documents as the Investors or their counsel may reasonably
request.
8. INDEMNIFICATION. In consideration of each Investor's execution
and delivery of the Transaction Documents and in addition to all of the
Company's other obligations under the Transaction Documents, the Company
shall defend, protect, indemnify and hold harmless each Investor and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the
foregoing persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated
by this Agreement) (collectively, the "Indemnitees") from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred
by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee (other than a cause of action, suit or claim which
is (x) brought or made by the Company and (y) is not a shareholder
derivative suit) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii)
solely from the status of such Investor or holder of the Securities as an
investor in the Company. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to
it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in
any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other parties; provided that a
facsimile signature shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between each Investor, the
Company, their affiliates and persons acting on their behalf with respect
to the matters discussed herein. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. Notwithstanding the foregoing, Section 8 of the
Securities Purchase Agreement shall remain in full force and effect with
respect to the securities and the transactions contemplated thereby. No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Investors which received Exchange
Warrants representing at least two-thirds (?) of the Exchange Warrant
Shares underlying the Exchange Warrants on the Closing Date, or their
assigns or, if prior to the Closing Date, the Investors listed on the
Schedule of Investors as holding at least two-thirds (?) of the shares of
Common Stock underlying the Old Warrants held by all the Investors. No such
amendment shall be effective to the extent that it applies to less than all
of the holders of the Exchange Warrants then outstanding. No provision
hereof may be waived other than by an instrument in writing signed by the
party against whom enforcement is sought. No consideration shall be
offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless
the same consideration also is offered to all of the parties to the
Transaction Documents.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
Entrade Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, President
With a copy to:
Xxxxxx & Xxxxx, Ltd.
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
If to the Transfer Agent:
Xxxxx Xxxxxx Shareholder Services, L.L.C.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxx Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx XxXxxxxx
If to an Investor, to it at the address and facsimile number set
forth on the Schedule of Investors, with copies to such Investor's
representatives as set forth on the Schedule of Investors, or at such other
address and/or facsimile number and/or to the attention of such other
person(s) as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communications, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date,
recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Exchange Warrants.
The Company shall not assign this Agreement or any rights or obligations
hereunder, including by merger or consolidation, without the prior written
consent of the Investors which received Exchange Warrants representing at
least two-thirds (?) of the Exchange Warrant Shares underlying the Exchange
Warrants on the Closing Date, or their assigns. The rights under this
Agreement are assignable by an Investor without the consent of the Company;
provided, however, that any such assignment shall not release such Investor
from its obligations hereunder unless such obligations are assumed by such
assignee and the Company has consented to such assignment and assumption,
which consent shall not be unreasonably withheld. Notwithstanding anything
to the contrary contained in the Transaction Documents, Investors shall be
entitled to pledge the Securities in connection with a bona fide margin
account or other loan secured by the Securities.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and each
Investor contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, and the indemnification provisions set forth
in Section 8, shall survive the Closing. Each Investor shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
j. Publicity. The Company and each Investor shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of
any Investor, to make any press release or other public disclosure with
respect to such transactions as the Company reasonably believes, after
consulting with its counsel, to be required by applicable law and
regulations (although each Investor shall be consulted by the Company in
connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments
and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. Termination. In the event that the Closing shall not
have occurred with respect to an Investor on or before the date which is
six (6) Business Days after the date hereof due to the Company's or the
Investor's failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party's failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate
this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this
Section 9(l), the Company shall be obligated to make the payment described
in Section 4(g) on the date of such termination provided that neither
Xxxxxx Capital Ltd. nor Xxxxxxx Capital Ltd. shall have breached this
Agreement.
m. Placement Agent. The Company acknowledges that it has
not engaged any placement agent in connection with the issuance of the
Exchange Warrants. The Company shall be responsible for the payment of any
placement agent's fees or brokers' commissions relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold
each Investor harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out of pocket expenses) arising in
connection with any such claim.
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.
o. Remedies. Each Investor and each holder of the
Securities shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages
by reason of any breach of any provision of this Agreement and to exercise
all other rights granted by law.
p. Payment Set Aside. To the extent that the Company makes
a payment or payments to any Investor hereunder or pursuant to the Exchange
Warrants or such Investor enforces or exercises its rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored
to the Company or to a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then, to the extent of any such
restoration, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not
occurred.
q. Mutual General Release.
(i) In consideration of the release set forth in
Section 9(q)(ii), effective at the time of the Closing (the "Effective
Time") each Investor, severally and not jointly, on behalf of itself and
its heirs, executors, administrators, devisees, trustees, partners,
directors, officers, shareholders, employees, consultants, representatives,
predecessors, principals, agents, parents, associates, affiliates,
subsidiaries, attorneys, accountants, successors, successors-in-interest
and assignees (collectively, the "Investor Releasing Persons"), hereby
waives and releases, to the fullest extent permitted by law, but subject to
Section 9(q)(iii) below, any and all claims, rights and causes of action,
whether known or unknown (collectively, the "Investor Claims"), that any of
the Investor Releasing Persons had or currently has against (i) the
Company, (ii) any of the Company's current or former parents, shareholders,
affiliates, subsidiaries, predecessors or assigns, or (iii) any of the
Company's or such other persons' or entities' current or former officers,
directors, employees, agents, principals, investors, signatories, advisors,
consultants, spouses, heirs, estates, executors, attorneys, auditors and
associates and members of their immediate families (collectively, the
"Company Released Persons"), including, without limitation, Investor Claims
arising out of or relating to the Securities Purchase Agreement, the
Registration Rights Agreement (as defined in the Securities Purchase
Agreement), the Certificate of Designations (as defined in the Securities
Purchase Agreement), the Old Warrants (collectively, the "Released
Documents") (other than arising out of or relating to Section 8 of the
Securities Purchase Agreement or the Transaction Documents).
(ii) In further consideration of the consummation
of the transactions contemplated hereby, effective at the Effective Time
the Company on behalf of itself and its heirs, executors, administrators,
devisees, trustees, partners, directors, officers, shareholders, employees,
consultants, representatives, predecessors, principals, agents, parents,
associates, affiliates, subsidiaries, attorneys, accountants, successors,
successors-in-interest and assignees (collectively, the "Company Releasing
Persons"), hereby waives and releases, to the fullest extent permitted by
law, but subject to Section 9(q)(iii) below, any and all claims, rights and
causes of action, whether known or unknown (collectively, the "Company
Claims"), that any of the Company Releasing Persons had or currently has
against (i) the Investors, (ii) any of the Investors' respective current or
former parents, shareholders, affiliates, subsidiaries, predecessors or
assigns, or (iii) any of the Investors' or such other persons' or entities'
current or former officers, directors, employees, agents, principals,
investors, signatories, advisors, consultants, spouses, heirs, estates,
executors, attorneys, auditors and associates and members of their
immediate families (collectively, the "Investor Released Persons"),
including, without limitation, any Company Claims arising out of or
relating to the Released Documents (other than arising out of or relating
to the Transaction Documents).
(iii) The Company and each of the Investors
acknowledges that the release set forth in Sections 9(q)(i) and 9(q)(ii)
above does not affect any claim which any Company Releasing Person or
Investor Releasing Person may have under this Agreement, any of the other
Transaction Documents or Section 8 of the Securities Purchase Agreement.
* * * * * *
IN WITNESS WHEREOF, the Investors and the Company have caused this
Exchange Agreement to be duly executed as of the date first written above.
COMPANY: INVESTORS:
ENTRADE INC. XXXXXX CAPITAL LTD.
By: _________________________ By: _________________________
Name:_________________________ Name:Xxxxxx X. Xxxxxxx
Title: ___________________ Its: Authorized Signatory
XXXXXXX CAPITAL LTD.
By: _________________________
Name:Xxxxxx X. Xxxxxxx
Its: Authorized Signatory
HFTP INVESTMENT L.L.C.
By: _________________________
Promethean Asset Management,
L.L.C.
Its: Investment Manager
By: _________________________
Name:Xxxxx X. X'Xxxxx, Xx.
Its: Managing Member
XXXXXXXX, L.P.
Xxxxxx, Xxxxxx & Co., L.P.
Its: General Partner
By: _________________________
Name:Xxxx X. Xxxxxx
Its: Chief Executive Officer
SCHEDULE OF INVESTORS
Number
of Old Investor's Representatives'
Investor Investor Address Warrant Address
Name and Facsimile Number Shares and Facsimile Number
-------- -------------------- ------- --------------------------
Xxxxxx
Capital
Ltd. Citadel Investment 221,232 Xxxxxx Xxxxxx Zavis
Group, L.L.C. 000 X. Xxxxxx Xxxxxx
000 Xxxx Xxxxxxxxxx Xxxxx 0000
Xxxxxx Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx, Xxxxxxxx 00000 Attn: Xxxxxx X. Xxxxxxxx,
Attn: Xxxxxx Xxxxxxx Esq.
Facsimile: (000)000-0000 Facsimile: (000)000-0000
Telephone: (000)000-0000 Telephone (000)000-0000
Residence: Illinois
Xxxxxxx
Capital
Ltd. Citadel Investment Group, 119,127 Xxxxxx Xxxxxx Xxxxx
L.L.C. 000 X. Xxxxxx Xxxxxx
000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx Attn: Xxxxxx X. Xxxxxxxx,
Facsimile: (000)000-0000 Esq.
Telephone: (000)000-0000 Facsimile: (000)000-0000
Residence: Illinois Telephone: (000) 000-0000
HFTP
Invest-
ment Promethean Asset 340,362 Promethean Asset
L.L.C. Management, L.L.C. Management, L.L.C.
000 Xxxxxxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
00xx Xxxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. X'Xxxxx, Xx. Attn: Xxxxx X. X'Xxxxx, Xx.
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
Residence: New York
Xxxxxx Xxxxxx Xxxxx
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx,
Esq.
Facsimile: (000)000-0000
Telephone: (000) 000-0000
Xxxxxxxx,
L.P. Xxxxxx, Xxxxxx 340,359 Xxxxxx, Xxxxxx & Co., L.P.
& Co., L.P. 000 Xxxx Xxxxxx
245 Park Avenue 00xx Xxxxx
00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
New York, New York Attn: Xxxx Xxxx
10167 or Xxx Xxxxxx
Attn: Xxxx Xxxx Telephone: 000-000-0000
or Xxx Xxxxxx Facsimile: 000-000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Residence: Cayman Islands
SCHEDULES
Schedule of Investors
EXHIBITS
Exhibit A - Form of Exchange Warrant
Exhibit B - Form of Irrevocable Transfer Agent Instructions
Exhibit C - Form of Company Counsel Opinion
