EXHIBIT 10.7
ENTRADE INC.
SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT
Entrade Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ARTICLE 1
SUBSCRIPTION/JOINDER AND PURCHASE
1.1 Subscription. The undersigned "Subscriber" hereby irrevocably
subscribes for and agrees to purchase 10,000 Shares of the no par value common
stock of Entrade Inc., a Pennsylvania corporation ("Company"). The price per
Share will be $32.00. The "Subscription Price" set forth below the Subscriber's
signature on the signature page to this Subscription and Investment
Representation Agreement (this "Agreement") will establish the number of shares
the investor may purchase. Subscriber's subscription is subject to acceptance by
the Company, which acceptance shall only be evidenced by the Company's execution
of the Acceptance of Subscription attached to and forming a part of this
Agreement, and to the extent provided therein. The decision whether to accept or
reject Subscriber's subscription is within the sole discretion of the Company.
1.2 Acceptance. Subscriber's Subscription shall only be accepted if the
Company, in its sole discretion, executes the Acceptance of Subscription
attached to this Agreement.
1.3 Payment of Subscription Price. The Subscriber herewith tenders to
the Company: (i) a check payable to Entrade Inc., in the amount of the
Subscription Price; and (ii) a completed Internal Revenue Form W-9.
1.4 Brokerage Fee. First Union Securities ("FUS") is acting as the
broker for the Subscriber in arranging this Subscription and Investment
Agreement. FUS will receive a fee equal to 5% of the Subscription Price of
$320,000.00. The undersigned Subscriber understands that the information
provided to it with respect to the Company has not been independently verified
by FUS. Accordingly, there is no representation by FUS as to the completeness or
accuracy of such information. Each party hereto respectfully represents that no
other brokers or representatives were or are retained by them in this
Subscription and Investment Agreement. Each party further agrees to hold the
other party, its successors and assigns, harmless from the claims of any other
broker in connection with this Subscription and Investment Agreement for the
subscription and purchase of 10,000 shares of no par value common stock. The
provisions of this Section 1.4 shall survive the delivery of the Shares
contemplated herein.
ARTICLE 2
SUBSCRIBER REPRESENTATIONS AND
WARRANTIES AND INVESTOR AWARENESS
2.1 Subscriber Representations and Warranties. The Subscriber makes the
following representations and warranties with the intent that the same may be
relied upon in determining his suitability to purchase the Shares of the Company
and with the understanding that the availability of exemptions from registration
of the offering may depend upon the accuracy of such representations and
warranties.
2.1.1 Knowledge of Terms and Conditions. The Subscriber has
received and read, examined, analyzed and reviewed a copy of the S.E.C.
Form 10-Q filed November 12, 1999 with the Securities and Exchange
Commission for the quarter ended September 30, 1999, Artra Group
Incorporated Proxy Statement/Prospectus dated August 20, 1999 and Form
8-K's dated October 6, 1999 and October 28, 1999 and Form 8-KA dated
December 2, 1999 (the "SEC Documents"). The Subscriber acknowledges
that the Subscriber has been offered the opportunity to obtain
additional information, to verify the accuracy of the information
contained in the SEC Documents, to evaluate the merits and risks of
this investment with independent advisers and to ask questions of the
Company and Xxxxxxx X. Xxxxxxxxxx, General Counsel, covering the terms
and conditions of the agreements and transactions contemplated by the
Company, and all such questions were satisfactorily answered. The
Subscriber acknowledges that he has not been furnished any other
offering literature or prospectus.
2.1.2 Not a Registered Offering. The Subscriber understands
that the Shares have not been and are not being registered either with
the U.S. Securities and Exchange Commission ("SEC") or with the
secretary of state of the state of incorporation or place of business
of the Subscriber, and are being offered and sold pursuant to the
exemption from registration provided in Regulation D ("Regulation D")
promulgated under the Securities Act of 1933 by the SEC (the "1933
Act"), and limited offering exemptions provided in the "Blue Sky" laws
of the states of incorporation or place of business of the Subscriber,
and that no governmental agency has recommended or endorsed the Shares
or made any finding or determination relating to the adequacy or
accuracy of the SEC Documents or the fairness of an investment in the
Company. Any representation to the contrary is a criminal offense.
2.1.3 Risk Factors. The Subscriber understands and has
evaluated the risks involved in an investment in the Company. The
Subscriber recognizes that an investment in the Company involves a
substantial risk of loss by the Subscriber of his entire investment and
represents and warrants that the Subscriber is able to bear the risk of
this investment, including the loss of the Subscriber's entire
investment, and has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of this investment.
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2.1.4 Legal Ability; Purchase for Investment. Subscriber has
the legal ability to enter into this Subscription Agreement. The
information provided by Subscriber to the Company, including the
information on Schedule 1 attached, is accurate, true, correct and
complete in all material respects. Subscriber will promptly report any
changes to the Company in writing. Schedule 1 attached to this
Agreement forms a part of this Subscription Agreement. The Subscriber
is subscribing for the Shares solely for his own account, for
investment purposes, and not with a view to, or with any intention of,
a distribution, sale, or subdivision of any Shares or for the account
of any other individual, corporation, firm, entity or person.
2.1.5 Independent Investigation. In making his decision to
purchase the Shares that are herein subscribed for, the Subscriber has
relied solely upon independent investigations made by him. The
Subscriber is not relying on the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives with respect to
any risk of making an investment in the Company, or any tax or other
economic considerations involved in this investment. Except as set
forth herein, no representations or warranties or other statements have
been made to the Subscriber by the Company or any of its respective
shareholders, members, managers, directors, officers, employees,
affiliates, legal counsel, agents or representatives. In making the
decision whether to invest in the Shares described herein, the
Subscriber has relied solely on the information contained in this
Agreement.
2.1.6 Restrictions of Transfer. The Subscriber understands
that the Securities are characterized as "restricted securities" under
the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the
1933 Act only in certain limited circumstances. In this connection,
such Subscriber represents that such Subscriber is familiar with Rule
144 of the 1933 Act, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Subscriber
understands that the Company is under no obligation to register any of
the securities sold hereunder except as may be described in this
Agreement under Section 2.2.6.1 or 2.2.6.2.
2.1.7 Accredited Investor. Unless the Subscriber has initiated
Section 4 on the Accredited Investor Questionnaire, attached to this
Agreement as Schedule 1, the Subscriber expressly represents and
warrants that he is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the 1933 Act on account of either: (i) the fact
that his net worth or joint net worth with his spouse exceeds One
Million Dollars ($1,000,000) or his individual income is in excess of
Two Hundred Thousand Dollars ($200,000) in each of the two most recent
years or joint income with his spouse is in excess of Three Hundred
Thousand Dollars ($300,000) in each of those years and he has a
reasonable expectation of reaching the same income level in the current
year, or (ii) he is an executive officer or director of the Company, or
(iii) for any other reasons indicated in Schedule 1 hereto.
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2.1.8 Investment Representations. The Subscriber expressly
represents and warrants that:
2.1.8.1 the Subscriber has such knowledge and
experience in financial and business matters, in general, and
in investments similar to an investment in the Company, in
particular, that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares described
herein; and the Subscriber has obtained, in the Subscriber's
discretion, sufficient information from the Company to
evaluate the merits and risks of such investment;
2.1.8.2 the total Subscription Price does not exceed
ten percent (10%) of the greater of his net worth (exclusive
of home, furnishings, and automobile) as of the date hereof,
individually or his net worth collectively with his spouse,
and the Subscriber's financial condition is such that the
Subscriber has no need for liquidity with respect to the
Subscriber's investment in the Company to satisfy any existing
or contemplated undertaking or indebtedness.
2.1.8.3 the Subscriber is able to bear the economic
risk of the Subscriber's investment in the Company for an
indefinite period of time, including the risk of losing all of
the Subscriber's investment; and
2.1.8.4 by reason of the Subscriber's knowledge and
experience in business and financial matters, the Subscriber
has acquired the capacity to protect his own interest in
investments of this nature and is capable of evaluating the
risks, merits and other facets of this investment.
2.1.9 State of Residence. The Subscriber is a bona fide
resident of the state set forth in his address on Page 9 herein. The
Subscriber agrees that if the Subscriber's principal residence changes
prior to the Company's acceptance of the Subscriber's subscription for
the Shares, the Subscriber will promptly notify the Company of such
changes and that, if the changes is to a state in which offers and/or
sales of the Shares are prohibited by applicable law, any offer to sell
any Shares to the Subscriber prior to notification of the change shall
be deemed retracted and the Subscriber shall no longer be entitled to
purchase the Shares pursuant to such offer.
2.1.10 No Misrepresentations. Any information, representations
or warranties which the Subscriber has heretofore furnished or herein
furnishes to the Company with respect to his financial position and
business experience are correct and complete as of the date of this
Agreement, and if there should be any material change in such
information, representations or warranties, he will immediately inform
the Company.
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2.1.11 Acceptance on Discretion of Company. The Subscriber
understands and acknowledges that the Company may, in its sole
discretion, accept or reject the Subscriber's offer contained herein to
purchase the Shares, and that the Company, in its sole discretion, may
accept or reject Subscriber's offer, in whole or in part, and that the
exercise of the Company's discretion in those matters is within the
sole discretion of its management and its Board of Directors.
2.2 Company Representations and Warranties. Effective upon the
Company's execution of the acceptance to this Agreement, the Company makes the
following representations and warranties to the Subscriber:
2.2.1 Organization and Good Standing. The Company is duly
organized and existing under, and by virtue of, the laws of the State
of Pennsylvania and is in good standing under such laws. The Company
has the requisite power as a corporation to own and operate its
properties and assets, and to carry on its business as presently
conducted.
2.2.2 Legal Power. The Company has all requisite power and
authority of a corporation to enter into this Agreement, and to carry
out and perform its obligations under this Agreement.
2.2.3 Authorization. All action on the part of the Company
necessary for the issuance and sale of the Shares pursuant hereto and
for the execution, performance and delivery by the Company of this
Agreement has been taken. The execution, delivery and performance by
the Company of this Agreement and the issuance of the Shares will not
(i) violate (1) any provision of law applicable to the Company, except
that no representation or warranty is made with respect to any
so-called "blue sky laws" of any state, (2) its articles of
incorporation or other organizational documents, (3) any applicable
order of any court, agency or governmental authority specifically
naming the Company or (4) any material indenture, agreement or other
instrument to which it is a party or by which it or any of its material
assets or property is bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of its property or assets. This
Agreement is a valid and binding obligation of the Company enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
2.2.4 Changes. Since the date of the last filing with the SEC,
to the best knowledge of the Company, after reasonable inquiry, there
has not been any (i) material adverse change in the business of the
Company, and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the business,
taken as a whole.
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2.2.5 Valid Issuance. The Shares, when delivered pursuant to
this Agreement against receipt of the Subscription Price by the
Company, as provided herein, shall be validly issued and fully paid
Shares of the Company, and will be free of any liens and encumbrances
other than as a result of any actions by the Subscriber. The issuance
of the Shares is not subject to preemptive or other similar rights
which have not been waived.
2.2.6 "Piggyback" Registration.
2.2.6.1 Basic Right. At any time during the period
commencing on the issuance date of the Shares under this
Agreement ("Issue Date") and ending two years after the Issue
Date, the Company proposes to register any of its equity
securities under the Securities Act, other than in an offering
on Form S-8 or Form S-4 or any successor form, it shall at
least 10 days prior to the filing of such registration
statement with the Securities and Exchange Commission (the
"Commission") give notice of its intention to do so to
Subscriber. If Subscriber notifies the Company within 5 days
of the date of the Company notice of filing a registration
statement of Subscriber's desire to include any Shares in such
proposed registration statement, the Company shall, subject to
the provisions of 2.2.6.2 below, include the Shares designated
by Subscriber in such registration statement. Anything in this
subparagraph 2.2.6.1 to the contrary notwithstanding, the
"piggyback" registration rights described herein shall be
available for exercise by Subscriber on one occasion only and,
after the exercise thereof in accordance with the provisions
set forth herein, the Company shall be under no further
obligation to give Subscriber the notice described in this
subparagraph 2.2.6.1 to include any of the Shares in any
subsequent registration statement. The Company hereby informs
Subscriber that it has a present intention to file an S-1
Registration within 45 days after acceptance hereof and shall
use its best efforts to cause such registration statement to
become effective as soon as possible.
(a) In connection with the registration
described in this Section, the Company agrees to take
all action necessary to facilitate the sale by the
Subscriber of the Shares, including furnishing to the
Subscriber such number of prospectuses reasonably
required by the Subscriber to dispose of its Shares,
using its best efforts to register or qualify the
Shares under the 1933 Act and applicable blue sky
laws and delivering underwriting agreements and other
documents customarily delivered by issuers in
connection with public offerings.
(b) With respect to the inclusion of Shares
in a registration statement pursuant to this Section,
all fees, costs and expenses of and incidental to
such inclusion shall be borne by the Company;
provided, however, that the Subscriber shall bear any
fees and disbursements of counsel retained by the
Subscriber (other than counsel also retained by the
Company).
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(c) The Subscriber shall be entitled to
customary indemnification and rights of contribution
relating to the registration of the Shares.
2.2.6.2 Withdrawal of Registration Statement.
Notwithstanding the provisions of subparagraph 2.2.6.1 above,
the Company shall at all times have the absolute right to
elect not to file any proposed registration statement, or to
withdraw the same after the filing but prior to the effective
date thereof. In addition, notwithstanding the provisions of
subparagraph 2.2.6.1 above, the Company may exclude from such
registration statement all or a portion of the Shares for
which registration was requested by Subscriber if, in the
written opinion of the Company's managing underwriter for any
securities being sold by the Company and registered on the
same registration statement as the Shares, if any, the
inclusion of all or a portion of such Shares, when added to
the securities being registered for sale by the Company, will
exceed the maximum amount of the Company's securities which
can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering. If
less than all of the Shares requested for inclusion in said
registration statement are to be excluded pursuant to the
foregoing provision, the Shares which are included shall be
allocated among the selling stockholders thereunder on a pro
rata basis.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 Survival of Representations and Warranties. The representations and
warranties contained herein are intended to and shall survive delivery of this
Agreement and the completion of the transactions contemplated hereby, provided,
however, that the representations and warranties set forth in paragraph 2.2.4
shall survive only until the expiration of the period of limitations and period
of repose imposed by statute and/or case law for interpreting the securities
laws, as in effect from time-to-time ("Limitations and Repose Period"), and no
cause of action for breach of any representation or warranty contained in
paragraph 2.2.4 may be brought after the expiration of the Limitations and
Repose Period.
3.2 Indemnification.
3.2.1 By Subscriber. The Subscriber agrees to indemnify and
hold harmless the Company, its officers and directors and each other
person, if any, who controls or is controlled by any of them, within
the meaning of Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but not
limited to, the reasonable expenses of counsel) arising out of or based
upon (i) any false representation or warranty or breach or failure by
the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction; (ii) any
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action for securities law violations instituted by the Subscriber which
is resolved by judgment against the Subscriber; or (iii) the
disposition of any Shares which the Subscriber will receive, contrary
to the Subscriber's declaration, representations and warranties in this
Agreement.
3.2.2 By Company. The Company agrees to indemnify and hold
harmless the Subscriber against any and all, loss, liability, claim,
damage and expense whatsoever (including, but not limited to, the
reasonable expenses of counsel) arising out of or based upon any false
representation or warranty or breach or failure by the Company or its
agents to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the
Subscriber in connection with this transaction, provided that in no
event shall the Company's indemnification obligations hereunder exceed
the Subscription Price plus interest at a rate equal to ten percent
(10%) per annum.
3.3 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, hand delivered or delivered by next business day courier. Any notice to be
sent to the Company shall be mailed to the principal place of business of the
Company or to such other address as the Company may specify in a notice sent to
the Subscriber. All notices to the Subscriber shall be mailed or delivered to
the address of the Subscriber set forth below or to such other address as the
Subscriber may hereafter specify in a notice to the Company. Notices shall be
effective on the date three (3) days after the date of mailing or, if hand
delivered or delivered by next day business courier, on the date of delivery.
3.4 Governing Law. This Agreement is governed by and is to be construed
in accordance with the laws of the state of Illinois without regard to conflicts
of laws principles.
3.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the parties hereto, and each of their respective legal representatives
and successors. This Agreement is not transferable or assignable by the
Subscriber or the Company.
3.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
3.7 Modifications To Be In Writing. This Agreement constitutes the
entire understanding of the parties hereto and no amendment, restatement,
modification or alteration will be binding unless the same is in writing signed
by the party against whom any such amendment, restatement, modification or
alteration is sought to be enforced.
3.8 Interpretation. All pronouns contained herein shall be deemed to
include the feminine, masculine and neuter, singular or plural, as the identity
of the parties hereto may require. The captions of the various paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the construction of any paragraph of this Agreement. All capitalized
words or expressions not defined in this Agreement shall have the respective
meanings ascribed to them in the Memorandum, unless the context otherwise
requires.
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3.9 Validity and Severability. If any provision of this Agreement is
held invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law, and all other provisions shall remain.
3.10 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
3.11 Additional Documents. The Subscriber shall promptly execute all
such additional documents as may be required by the Company relating to the sale
of the Shares hereunder.
3.12 Jurisdiction. The Subscriber irrevocably submits to the exclusive
personal jurisdiction of the courts of the state of Illinois for the County of
Xxxx and the United States District Court for the Northern District of Illinois
in any suit, action or proceeding brought to enforce this Agreement. The
Subscriber hereby irrevocably waives, to the fullest extent permitted by law,
any objection which the Subscriber may now have or hereafter may have to the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum or any other forum. Subscriber further agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Subscriber. Nothing in this
paragraph shall limit the right of the Company to bring proceedings against the
Subscriber in the courts of any appropriate jurisdiction.
3.13 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or of which the business
or property of the Company is or may be subject, which has not been disclosed to
the investor or in the SEC Documents.
IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
December 30, 1999.
SUBSCRIBER:
Subscriber's Signature: _____________________________
Name: Xxxxx Xxxxxx
Address: ____________________________________________
Telephone No.: ______________________________________
Social Security Number: _____________________________
Number of Shares at $32.00 each: 10,000
Total Subscription Price: $320,000
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(FOR COMPLETION ONLY BY THE COMPANY)
ENTRADE INC.
ACCEPTANCE OF SUBSCRIPTION
The undersigned Company hereby accepts the foregoing Subscription and
Investment Representation Agreement on behalf of Entrade Inc., subject to the
terms and conditions thereof for the "Accepted Amount" set forth below.
Subscriber Name: Xxxxx and Xxxxx Xxxxxx
Subscription Price (Tendered): $320,000
Accepted Amount: $320,000
Portion of Subscription Price Returned: $-0-
Number of Shares to be issued: 10,000
ENTRADE INC.,
a Pennsylvania corporation
By: _________________________
Title: _________________________
Date of Acceptance: December 30, 1999
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