EXHIBIT 10.26

 

 

NATIONWIDE AUCTION SYSTEMS, INC., NATIONWIDE NEW HOLDINGS, LLC,

SOCAL AUTO CENTER ACQUISITION, LLC, AUTOMAX PACIFIC, LLC and

SOCAL AUTO CENTER, LLC

AXLE CAPITAL, LLC

LOAN AND SECURITY AGREEMENT

 

 

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LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
July 12, 2006, by and between AXLE CAPITAL, LLC, a Delaware limited liability
company (“Lender”), on the one hand, and NATIONWIDE AUCTION SYSTEMS, INC., a
Nevada corporation (“Nationwide Auction”), NATIONWIDE NEW HOLDINGS, LLC, a
Delaware limited liability (“Nationwide New”), SOCAL AUTO CENTER ACQUISITION,
LLC, a Delaware limited liability (“Socal Acquisition”), AUTOMAX PACIFIC, LLC, a
California limited liability company (“Automax”), and SOCAL AUTO CENTER, LLC, a
California limited liability company (“Socal Auto” and together with Nationwide
Auction, Nationwide Holdings, Socal Acquisition, and Automax, collectively and
individually, and jointly and severally, “Borrowers,” and each individually,
“Borrower”).

RECITALS

WHEREAS, Socal Acquisition, as buyer, has entered into that certain Membership
Interest Purchase Agreement, dated as of July 12, 2006 (the “Stock Purchase
Agreement” and together with all ancillary and related documents, the
“Acquisition Documents”), with David S. Wilson, as seller (“Seller”), pursuant
to which Socal Acquisition will acquire all of the issued and outstanding
membership interest (the “Socal Interests”) of Automax (the “Acquisition
Transaction”), and upon the consummation of the Acquisition Transaction, Automax
will be a wholly owned subsidiary of Socal Acquisition; and

WHEREAS, in order to (a) partially finance the Acquisition Transaction, (b) pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, the Acquisition Documents, and the
transactions contemplated hereby and thereby, and (c) finance ongoing working
capital, capital expenditures, and general corporate needs of Borrowers,
Borrowers have requested that Lender extend credit to Borrowers pursuant to, and
in accordance with this Agreement.

NOW THEREFORE, the parties hereto agree as follows:

AGREEMENT

 

  1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, all initially capitalized terms
shall have the definitions set forth on Exhibit A. Any term used in the Code and
not defined herein shall have the meaning given to such term in the Code.

1.2 Accounting Terms. All accounting terms not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance with GAAP.

 

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  2. LOAN AND TERMS OF PAYMENT.

2.1 Term Loan.

(a) Subject to the terms and conditions of this Agreement, on the Closing Date,
Lender agrees to make a term loan (the “Term Loan”) to Borrowers in an amount up
to the Credit Limit. The Term Loan shall be repaid on the following dates and in
the following amounts:

 

DATE

 

INSTALLMENT AMOUNT

On the Closing Date   500,000 shares of issued, outstanding, fully paid, and
non-assessable common stock of Entrade, Inc. which, notwithstanding the current
trading price of such stock on Closing Date, shall constitute a payment upon and
thereby shall reduce the outstanding principal balance of the Term Loan by
$3,150,000. Beginning on July 1, 2006, on the first day of each month thereafter
through and including June 1, 2007   No principal payment shall be due.
Beginning on July 1, 2007, on the first day of each month thereafter through and
including June 1, 2008   $74,480 On July 1, 2008   A payment equal to $173,785
plus the then outstanding Term Loan PIK Amount equal to $429,000 for a total
principal and Term Loan PIK Amounts installment payment of $602,785. Beginning
on August 1, 2008, on the first day of each month thereafter through and
including the Maturity Date or until paid in full.   $173,785

The outstanding unpaid principal balance and all accrued and unpaid interest
under the Term Loan shall be due and payable on the earlier of (y) the Maturity
Date and (z) the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
(inclusive of the Term Loan PIK Amount) shall constitute Obligations. Borrowers
may make voluntary prepayments of principal with respect to the Term Loan from
time to time so long as: (i) Administrative Borrower provides Lender not less
than 5 days prior written notice of such prepayment, and (ii) the amount of any
prepayment is in a minimum amount of $25,000 and integral multiples thereof, or
the remaining principal balance of the Term Loan, if less. Any such voluntary
prepayments shall be applied to installments due thereunder in the inverse order
of their maturity. Amounts repaid under the Term Loan may not be reborrowed. Any
voluntary prepayment of the Term Loan made pursuant to this Section 2.1 shall be
accompanied by any and all accrued and unpaid interest on the total amount of
principal as of the date of prepayment.

(b) Borrowers promise to pay to Lender, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Obligations in accordance
with the terms hereof.

(c) Immediately upon the receipt by any Borrower or Subsidiary of any
Extraordinary Receipts, Borrowers shall prepay the outstanding Obligations in an
amount equal to 100% of such Extraordinary Receipts.

(d) Immediately upon the issuance or incurrence by any Borrower or Subsidiary of
any Indebtedness (other than Indebtedness referred to in clauses (b), (c), and
(d), of the definition of Permitted Indebtedness), Borrowers shall prepay the
outstanding Obligations in an amount equal to 100% of the net cash proceeds
received by any Borrower or Subsidiary in connection with the issuance or
incurrence of such debt. Nothing contained in this Section 2.1(d) shall permit
any Borrower or Subsidiary to issue or incur any Indebtedness, other than in
accordance with the terms and conditions of this Agreement.

 

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(e) Within 5 days of each delivery to Lender of the audited annual financial
statements pursuant to Section 6.4, commencing with the delivery to Lender of
the financial statements for the fiscal year ended December 31, 2006 or, if such
financial statements are either (i) not delivered to Lender on the date such
statements are required to be delivered pursuant to Section 6.4, or (ii) not
audited as required pursuant to Section 6.4, within 5 days after the date such
statements are required to be delivered to Lender, Borrowers shall prepay the
outstanding Obligations in an amount equal to (a) 100% of the Excess Cash Flow
of each Borrower and Subsidiary for the fiscal year reflected in such
statements, minus (b) the sum of all voluntary prepayments on the Term Loan
during such fiscal year.

2.2 Interest Rates and Fees.

(a) Interest Rate. Except as set forth in Section 2.4(b), the Obligations shall
bear interest on the outstanding daily balance thereof: (i) at all times prior
to the date that is the first day of the 25th month after the Closing Date, at a
per annum rate equal to 12% paid in cash, plus interest paid-in-kind at a per
annum rate equal to 3.0% and (ii) commencing on the first day of the 25th month
after the Closing Date and at all time thereafter, at a per annum rate equal to
15% paid in cash; provided, however, Borrowers may elect to pay the Term Loan
PIK Amount in cash rather than by having it added to the principal balance of
the Term Loan (inclusive of any Term Loan PIK Amount theretofore so added) in
accordance with Section 2.6(d). All interest chargeable under this Agreement
shall be computed on the basis of a 360-day year for the actual number of days
elapsed.

(b) Default Rate. All Obligations shall bear interest, from and after the
occurrence and/or during the continuance of an Event of Default, at a rate equal
to 5 percentage points above the interest rate applicable pursuant to
Section 2.2(a).

(c) Payments. Interest (other than the Term Loan PIK Amount) and all fees
payable hereunder shall be due and payable, in arrears, on the first Business
Day of each month at any time that Obligations are outstanding. The Term Loan
PIK Amount shall be added to the principal balance of the Term Loan monthly, on
the first Business Day of each month, in accordance with Section 2.2(a) and
thereafter shall bear interest at the then applicable rate. Borrowers hereby
authorize Lender, from time to time, without prior notice to Borrowers, to
charge all interest and fees (when due and payable), all Lender Expenses, all
fees and costs provided for hereunder (as and when accrued or incurred), and all
other payments as and when due and payable under any Loan Document including the
Term Loan PIK Amount to the loan account maintained by Lender with respect to
the Obligations, which amounts thereafter shall constitute Obligations and shall
accrue interest at the rate then applicable to Obligations. Any interest not
paid when due in respect of the Obligations shall be compounded by being charged
to the loan account and shall thereafter constitute Obligations hereunder and
shall accrue interest at the rate then applicable to any portion of the
Obligations.

(d) [Intentionally omitted.]

2.3 Crediting Payments. Prior to the occurrence of an Event of Default, Lender
shall credit a wire transfer of funds, check, or other item of payment to the
then outstanding Obligations pursuant to the terms of this Agreement. After the
occurrence of an Event of Default, the receipt by Lender of any funds, check, or
other item of payment shall be immediately applied to conditionally reduce the
Obligations, but shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Lender after 12:00 noon Eastern time shall be deemed to have been received by
Lender as of the opening of business on the immediately following Business Day.
Whenever any payment to Lender under this Agreement would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

 

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2.4 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 12.7, shall continue in full force and effect for a term ending on
the Maturity Date. Notwithstanding the foregoing, Lender shall have the right to
terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default.

 

  3. CONDITIONS PRECEDENT.

3.1 Conditions Precedent to Initial Credit Extension. The obligation of Lender
to make the initial Credit Extension is subject to the condition precedent that
Lender shall have received, in form and substance satisfactory to Lender, the
following:

(a) this Agreement duly executed by Borrowers;

(b) an officer’s certificate of each Borrower set forth in Exhibit C hereof,
with respect to incumbency and resolutions authorizing the execution and
delivery of this Agreement;

(c) the IP Security Agreements;

(d) the Pledge Agreements;

(e) the Arway Intercreditor Agreement;

(f) the Rosedale Intercreditor Agreement;

(g) the Third Party Waivers;

(h) [intentionally omitted];

(i) the Guaranties and Guarantor Security Instruments, each duly executed by
Guarantor in favor of Lender;

(j) a certified copy of one or more financing statement(s) (Form UCC-1) with
respect to the security interest in favor of Lender in the Collateral filed with
the appropriate office(s) in the appropriate jurisdiction(s);

(k) evidence, satisfactory to Lender, that upon the funding of the Term Loan,
the Acquisition Transaction will be completed;

(l) copy of the fully executed Acquisition Documents certified by an officer of
Nationwide New;

(m) evidence, satisfactory to Lender, that the Arway Debt has been funded;

(n) copies of all documents representing the grant to Lender or its designee of
500,000 shares of common stock of Entrade, Inc. which shall become effective
immediately upon the closing of this Term Loan and evidence of delivery of all
such shares to Lender’s counsel to hold in escrow with instruction to deliver to
Lender upon the closing of the Term Loan;

(o) the Entrade Warrant;

 

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(p) copies of the Acquisition Documents certified by a Responsible Officer of
Socal Acquisition;

(q) payment of all the Lender Expenses incurred through the Closing Date,
including attorneys’ fees and filing fees;

(r) financial statements for each Borrower, together with company prepared
balance sheets and income statements, for the most recently ended fiscal quarter
and year in accordance with Section 6.4, and such other updated financial
information as Lender may request;

(s) NAF and Lender shall have entered into the NAF Loan Agreement;

(t) Nationwide Auction shall have entered into lease agreements with respect to
the real property identified on Schedule 6.10, which agreements shall be in form
and substance satisfactory to Lender;

(u) the Settlement Agreement and all related documents; and

(v) such other documents or certificates, and completion of such other matters,
as Lender may reasonably deem necessary or appropriate.

 

  4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Each Borrower grants and pledges to Lender a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral, to secure prompt repayment of any and all Obligations and to
secure prompt performance by each Borrower of its covenants and duties under
this Agreement. Such security interest constitutes a valid, perfected security
interest in all the Collateral. Notwithstanding any termination of this
Agreement or Lender’s commitments hereunder, Lender’s Lien on the Collateral
shall remain in effect for so long as any Obligations are outstanding.

4.2 Perfection of Security Interest. Borrowers authorize Lender to file at any
time financing statements, continuation statements, and amendments thereto that
(i) either specifically describe the Collateral or describe the Collateral as
all assets of each Borrower of the kind pledged hereunder, and (ii) contain any
other information required by the Code for the sufficiency of filing office
acceptance of any financing statement, continuation statement, or amendment,
including whether a Borrower is an organization, the type of organization, and
any organizational identification number issued to such Borrower, if applicable.
Any such financing statements may be filed at any time in any jurisdiction
whether or not Revised Article 9 of the Code is then in effect in that
jurisdiction. Borrowers shall from time to time endorse and deliver to Lender,
at the request of Lender, all Negotiable Collateral and other documents that
Lender may reasonably request, in form satisfactory to Lender, to perfect and
continue perfected Lender’s security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.
Borrowers shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where Lender chooses to perfect its
security interest by possession in addition to the filing of a financing
statement. Where Collateral is in possession of a third party bailee, each
Borrower shall take such acts and measures as Lender reasonably requests for
Lender to (i) obtain an acknowledgment, in form and substance satisfactory to
Lender, of the bailee that the bailee holds such Collateral for the benefit of
Lender, (ii) obtain “control” of any Collateral consisting of investment
property, deposit accounts, letter-of-credit rights, or electronic chattel paper
(as such items and the term “control” are defined in Revised Article 9 of the
Code) by causing the securities intermediary or depositary institution or
issuing bank to execute a control agreement in form and substance satisfactory
to Lender. Borrowers will not create any chattel paper without placing a legend
on the chattel paper acceptable to Lender indicating that Lender has a security
interest in the chattel paper. Borrowers from time to time may deposit with
Lender specific cash collateral to secure

 

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specific Obligations, and authorize Lender to hold such specific cash collateral
in pledge and to decline to honor any drafts thereon or any request by a
Borrower or any other Person to pay or otherwise transfer any part of such cash
collateral for so long as the specific Obligations are outstanding.

4.3 Right to Inspect. Lender (through any of its officers, employees, agents, or
designees) shall have the right, from time to time at Lender’s discretion during
a Borrower’s usual business hours, to inspect Borrower’s Books and to make
copies thereof and to inspect, check, test, and appraise the Collateral in order
to verify any Borrower’s financial condition and the Collateral, or the amount,
condition of, or any other matter relating thereto. Borrowers shall pay Lender
or its designee the reasonable cost for each inspection of the Collateral.

 

  5. REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants as follows:

5.1 Due Organization and Qualification. Each Borrower, Guarantor, and Subsidiary
is a corporation or limited liability company, as applicable, duly existing
under the laws of its state of formation and qualified and licensed to do
business in any state in which the conduct of its business or its ownership of
property requires that it be so qualified, except where the failure to do so
could not reasonably be expected to cause a Material Adverse Effect.

5.2 Due Authorization; No Conflict. The execution, delivery, and performance of
this Agreement, the Acquisition Documents, and the other Loan Documents are
within each Borrower’s powers, have been duly authorized, and neither are in
conflict with nor constitute a breach of any provision contained in such
Borrower’s Articles (or Certificate) of Incorporation or Organization, as the
case may be, or Bylaws or Operating Agreement, as the case may be, nor will they
constitute an event of default under any material agreement by which such
Borrower is bound. Borrowers are not in default under any agreement by which it
is bound, which default could have a Material Adverse Effect.

5.3 Collateral. Borrowers have good title to the Collateral, free and clear of
Liens, except for Permitted Liens. The Collateral is in all material respects of
good and marketable quality, free from all material defects.

5.4 Name; Location of Chief Executive Office. No Borrower has done business
under any name other than that specified on the signature page hereof. The chief
executive office of each Borrower is located at the address indicated in
Section 10 for notices to Borrowers.

5.5 Litigation. There are no actions or proceedings pending by or against any
Borrower, Subsidiary, or Guarantor before any court or administrative agency in
which a likely adverse decision could reasonably be expected to have a Material
Adverse Effect, or a Material Adverse Effect on any Borrower’s interest or
Lender’s security interest in the Collateral.

5.6 No Material Adverse Change in Financial Condition. No Borrower has
experienced a change or event that would result in a Material Adverse Effect in
the financial condition of any Borrower since the date of the most recent
financial statements submitted to Lender.

5.7 No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrowers and their Subsidiaries,
on an individual and a consolidated and consolidating basis, that are delivered
to Lender fairly present in all material respects Borrowers’ financial
condition, on an individual and a consolidated and consolidating basis, as of
the date thereof and Borrowers’ results of operations, on an individual and a
consolidated and consolidating basis, for the period then ended. There has not
been a change in the financial condition of Borrowers, on an individual and a
consolidated and consolidating basis, since the date of the most recent of such
financial statements submitted to Lender, that would result in or could have a
Material Adverse Effect.

 

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5.8 Solvency, Payment of Debts. Each Borrower is able to pay its debts
(including trade debts) as they mature; the fair saleable value of each
Borrower’s assets (including goodwill minus disposition costs) exceeds the fair
value of its liabilities; and each Borrower is not left with unreasonably small
capital after the transactions contemplated by this Agreement or the Arway Debt.

5.9 Compliance with Laws and Regulations. No Borrower, Guarantor, or Subsidiary
has violated any statutes, laws, ordinances, or rules applicable to it,
violation of which could have a Material Adverse Effect. Except as identified in
Schedule 5.9 attached hereto, each Borrower, Guarantor, and Subsidiary has filed
or caused to be filed all tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein except
those being contested in good faith with adequate reserves under GAAP.

5.10 Subsidiaries. Borrowers do not own any stock, partnership interest, or
other equity securities of any Person except for its Subsidiaries in existence
as of the Closing Date, including Socal Auto.

5.11 Government Consents. Each Borrower and Subsidiary has obtained all
consents, approvals, and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of such Borrower’s business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Effect.

5.12 Floor Plan Agreement. The Floor Plan Agreement attached hereto as Exhibit E
is a true and correct copy of the Floor Plan Agreement and represents the
complete agreement with respect to the subject matter thereof, there have been
no changes, modifications, alterations, or amendments to such Floor Plan
Agreement that would constitute or result in a Material Adverse Effect, no
default exists under such Floor Plan Agreement, and all parties are in full
compliance with the terms and provisions of such Floor Plan Agreement.

5.13 Full Disclosure. No representation, warranty, or other statement made by
any Borrower in any certificate or written statement furnished to Lender taken
together with all such certificates and written statements furnished to Lender
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.

 

  6. AFFIRMATIVE COVENANTS.

Each Borrower covenants, until payment in full of all outstanding Obligations,
and for so long as Lender may have any commitment to make a Credit Extension
hereunder, to do all of the following:

6.1 Good Standing and Government Compliance. Each Borrower, Guarantor, and
Subsidiary shall maintain its corporate existence in its jurisdiction of
incorporation as of the date of this Agreement and maintain qualification in
each jurisdiction in which the failure to so qualify could have a Material
Adverse Effect. Each Borrower, Guarantor and Subsidiary shall comply with all
statutes, laws, ordinances, and government rules and regulations to which it is
subject, and shall maintain in force all licenses, approvals, and agreements,
the loss of which or failure to comply with which could have a Material Adverse
Effect, or a material adverse effect on the Collateral or the priority of
Lender’s Lien on the Collateral.

 

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6.2 Taxes. Each Borrower shall make, and cause each Guarantor and Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, including, but
not limited to, those laws concerning income taxes, and will execute and deliver
to Lender, on demand, proof satisfactory to Lender indicating that each
Borrower, Guarantor, and Subsidiary has made such payments or deposits and any
appropriate certificates attesting to the payment or deposit thereof; provided,
that no Borrower, Guarantor, or Subsidiary need make any payment if the amount
or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the satisfaction of Lender) by such
Borrower, Guarantor, or Subsidiary.

6.3 Insurance. Each Borrower, at its expense, shall obtain and maintain for the
entire term of this Agreement, from an insurance company satisfactory to Lender,
insurance for fire, theft, explosion, and all other hazards and risks in an
amount equal to or greater than the maximum amount of all Obligations including
the Term Loan, with Lender named as loss payee and additional insured. Each
Borrower shall also maintain liability and other insurance in amounts and of a
type that are customary to businesses similar to such Borrower’s. Each such
policy of insurance shall contain a clause requiring the insurance carrier to
give at least 30 days written notice of any alteration to the policy, or the
cancellation, termination, or non-renewal thereof. Lender is authorized, but
under no duty, to obtain such insurance upon the failure of any Borrower to do
so, pursuant to Section 9.2.

6.4 Financial Statements, Reports, Verifications. Each Borrower shall deliver to
Lender: (i) as soon as available, but in any event within 30 days of the last
day of each month, a company prepared balance sheet and income statement
covering such Borrower’s operations during such period, in a form reasonably
acceptable to Lender and certified by a Responsible Officer; (ii) within 180
days the close of each fiscal year, a copy of the annual audited or compiled
report of each Borrower, on an individual and a consolidated and consolidating
basis, consisting of at least a balance sheet, statement of operating results
and retained earnings, statement of cash flows, notes to financial statements,
profit and loss statement, and statement of changes in financial position
prepared on an individual and a consolidating and consolidated basis and in
conformity with GAAP, duly prepared by certified public accountants of
recognized standing selected by such Borrower and approved by Lender, together
with a certificate from such accountants to the effect that, in making the
examination necessary for the signing of such annual report by such accountants,
they have not become aware of any Event of Default that has occurred and is
continuing, or if they have become aware of any such event, describing it and
the steps, if any taken or being taken to cure it, (iii) promptly upon receipt
of notice thereof, a report of any legal actions pending or threatened against
any Borrower that could result in damages or costs to any Borrower or any
Subsidiary of $10,000 or more; (iv) within 15 days after the end of each month,
(1) a statement showing age and reconciliation of its accounts receivable and
accounts payable for the preceding month and a status of its Inventory showing
location, components and value, in such form and detail as Lender may reasonably
request; and (2) a certificate signed by the Responsible Officer providing that
the financial statements being provided to Lender pursuant to clause (iv)(1)
above are true and correct; (vi) copies of all federal and state tax returns of
it and of Guarantor, including, but not limited to, requests for extensions of
such tax returns, when and as filed; (vii) copies of any and all reports,
examinations, notices, warnings, and citations issued by any governmental or
quasi-governmental (whether federal, state, or local), unit, agency, body, or
entity with respect to any Borrower, Guarantor, or Subsidiary; and (viii) such
budgets, sales projections, operating plans, or other financial information
generally prepared by any Borrower in the ordinary course of business or upon
Lender’s request, as Lender may request from time to time. Each Borrower shall
also deliver the following:

(a) As soon as possible and in any event within 3 calendar days after becoming
aware of the occurrence or existence of an Event of Default hereunder, a written
statement of a Responsible Officer setting forth details of the Event of
Default, and the action which such Borrower has taken or proposes to take with
respect thereto.

 

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6.5 Further Assurances. At any time and from time to time Borrowers shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Lender to effect the purposes of this Agreement.

6.6 Tax Payment Warrant. Borrowers shall deliver, or cause Entrade, Inc. to
deliver, to Lender a Tax Payment Warrant promptly after any Tax Share Payments
(as defined in the Tax Sharing Agreement) in excess of 50% of the tax relief
realized by the applicable Borrower in connection with the application of a net
operating loss of Entrade, Inc.

6.7 Stock Warrant. As additional security for the payment and performance of the
Obligations, Borrowers shall cause Entrade, Inc. to issue the Entrade Warrant.

6.8 Third Party Waivers. Borrowers shall deliver to Lender Third Party Waivers
all in form and manner satisfactory to Lender.

6.9 Separate Accounting Systems. On or before             , 2006, each Borrower
shall establish separate accounting systems, including inventory, accounts
receivable, and accounts payable tracking and reporting systems, cash management
and business operations, including without limitation deposit account
relationships and human resources departments, in each case separate and apart
from each other.

6.10 New Locations and Assets. Any new location other than Existing Locations at
which any Borrower or Subsidiary conducts any business operations or any assets
of any Borrower may be located, other than Existing Locations, shall be owned
and administered by Nationwide New. Nationwide New Assets shall be owned solely
by Nationwide New.

6.11 Employee Benefit Plans. Each Borrower shall (i) maintain each employee
benefit plan as to which it may have any liability in substantial compliance
with all applicable requirements of law and regulations; (ii) make all payments
and contributions required to be made pursuant to such plans in a timely manner;
and (iii) neither establish any new employee benefit plan, agree or contribute
to any multi-employer plan, nor amend any existing employee pension benefit plan
in a manner which would increase its obligation to contribute to such plan.

6.12 Officers and Stock Ownership. At all times, each Person listed in
Schedule 6.12 shall (i) hold the respective office or offices set forth next to
such Person’s name as of the Closing Date, and (ii) own, directly or indirectly,
the percentage of each and every class of issued and outstanding capital stock
of a Borrower, and the voting power over said stock set forth next to such
Person’s name.

6.13 [Intentionally Omitted.]

6.14 Legal Opinion. Within 10 days of the Closing Date, Borrower shall deliver
to Lender an opinion of counsel in form and substance acceptable to Lender.

 

  7. NEGATIVE COVENANTS.

Each Borrower covenants and agrees, until payment in full of the outstanding
Obligations or for so long as Lender may have any commitment to make any Credit
Extension hereunder, not to do, or permit any Subsidiary or Guarantor to do, any
of the following without Lender’s prior written consent:

7.1 Dispositions. Convey, sell, lease, transfer, abandon, remove, conceal, or
otherwise dispose, including any intercompany transfers, or transfers or
commingling of Nationwide New Assets with any other Person or assets held by any
other Person, or grant any further security interest in all or any part of the
Collateral, except for Permitted Liens.

 

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7.2 Change in Business; Change in Control, Executive Office, Jurisdiction of
Organization; New Retail Locations. Engage in any business other than or
reasonably related or incidental to the businesses currently engaged in by such
Borrower. No Borrower will have a Change in Control or will, without 30 days
prior written notification to Lender, relocate its chief executive office or
jurisdiction of organization. No Borrower shall open any new retail locations
without the prior written consent of Lender.

7.3 Mergers or Acquisitions. Merge or consolidate, with or into any other
business organization or entity, including without any other Borrower or
Guarantor, or, other than the Acquisition Transaction, acquire all or
substantially all of the capital stock or property of another Person.

7.4 Indebtedness. Create, incur, guarantee, assume, or become liable with
respect to any Indebtedness, or permit any Subsidiary to do so, other than
Permitted Indebtedness, or prepay any Indebtedness, or take any actions which
impose on any Borrower an obligation to prepay any Indebtedness other than the
Obligations.

7.5 Encumbrances. Create, incur, assume, or allow any Lien with respect to the
Collateral, or assign or otherwise convey any right to receive income except for
Permitted Liens, or covenant to any other Person that such Borrower in the
future will refrain from creating, incurring, assuming, or allowing any Lien
with respect to the Collateral.

7.6 Distributions. Pay any dividends or make any other distribution or payment
on account of or in redemption, retirement, or purchase of any capital stock or
membership interest, except that (a) each Borrower may repurchase the stock or
membership interests of its former employees pursuant to stock repurchase
agreements as long as an Event of Default does not exist prior to such
repurchase or would not exist after giving effect to such repurchase, and
(b) each Borrower may pay such dividends or make any other distribution or
payment in connection with Tax Sharing Agreements.

7.7 Investments. Directly or indirectly acquire or own, or make any Investment
in or to any Person other than the Acquisition Transaction.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of any Borrower except for:
(i) transactions that are in the ordinary course of such Borrower’s business,
upon fair and reasonable terms that are no less favorable to such Borrower than
would be obtained in an arm’s length transaction with a non-affiliated Person
and (ii) transactions made pursuant to the term of the Tax Sharing Agreement,
which Tax Sharing Agreement may not be modified, amended, or changed in any way
without the prior written consent of Lender.

7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt.

7.10 Location of Collateral. Store the Inventory or the Equipment with a bailee,
warehouseman, or similar third party unless the third party has been notified of
Lender’s security interest and Lender (a) has received an acknowledgment from
the third party that it is holding or will hold the Inventory or Equipment for
Lender’s benefit or (b) is in possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment. Except for Inventory sold in
the ordinary course of business and except for such other locations as Lender
may approve in writing, each Borrower shall keep the Inventory and Equipment
only at the locations set forth in Section 10 and such other locations of which
a Borrower gives Lender prior written notice and as to which Lender files a
financing statement where needed to perfect its security interest.

 

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7.11 Compliance. Fail to observe or perform, or violate any law or regulation,
which violation could reasonably be expected to have a Material Adverse Effect,
or a material adverse effect on the Collateral or the relative priority of
Lender’s Lien on the Collateral.

7.12 No Investment Company; Margin Regulation. Become or be controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose.

 

  8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an “Event of Default”
by each and all Borrowers under this Agreement:

8.1 Payment Default. If any Borrower fails to pay any of the Obligations and
such failure continues for 3 days or more after the due date;

8.2 Covenant Default. If any Borrower fails to perform any obligation under
Article 6 of this Agreement or violates any of the covenants contained in
Article 7 of this Agreement, or fails or neglects to perform or observe any
other term, provision, condition, or covenant contained in this Agreement or in
any other present or future agreement between any Borrower, Guarantor, or
Subsidiary and Lender, and as to any default under such other term, provision,
condition, or covenant that can be cured, has failed to cure such default within
10 days after such Borrower receives notice thereof or any officer of such
Borrower becomes aware thereof;

8.3 Material Adverse Change. If there occurs an event or change in Borrower’s
business or financial condition that is a Material Adverse Effect, or if there
is a material impairment of the prospect of repayment of any portion of the
Obligations or a material impairment of the value or priority of Lender’s
security interests in the Collateral;

8.4 Defective Perfection. If Lender shall receive at any time following the
Closing Date a UCC search report indicating that except for Permitted Liens,
Lender’s security interest in the Collateral is not prior to all other security
interests or Liens of record reflected in such report;

8.5 Attachment. If any material portion of any Borrower’s assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver, or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant, or levy has not
been removed, discharged, or rescinded within 10 days, or if any Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of any
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within 10 days after
such Borrower receives notice thereof, provided that none of the foregoing shall
constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by such Borrower;

8.6 Insolvency. If any Borrower or Guarantor becomes insolvent, or if an
Insolvency Proceeding is commenced by any Borrower or Guarantor, or if an
Insolvency Proceeding is commenced against any Borrower or Guarantor and is not
dismissed or stayed within 30 days; provided, that no Credit Extension will be
made prior to the dismissal of such Insolvency Proceedings;

 

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8.7 Subordinated Debt. If any Borrower makes any payment on account of
Subordinated Debt, except to the extent the payment is allowed under any
subordination agreement entered into with Lender, in form and substance
satisfactory to Lender;

8.8 Judgments. If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, that could have a Material Adverse Effect
shall be rendered against any Borrower and shall remain unsatisfied and unstayed
for a period of 10 days; provided, that no Credit Extensions will be made prior
to the satisfaction or stay of the judgment;

8.9 Other Agreements. If there is a default or other failure to perform in:
(i) any agreement by and between NAF, any Borrower, any Guarantor, any
Subsidiary, or any Affiliate, on the one hand, and Lender, on the other hand,
including without limitation, the NAF Loan Agreement or any Loan Document, or
(ii) any agreement to which either any Borrower, NAF, any Guarantor, any
Subsidiary, or any Affiliate is a party with a third party or parties resulting
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in excess of $100,000
or that could cause a Material Adverse Change.

8.10 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Lender by any Responsible Officer
pursuant to this Agreement or to induce Lender to enter into this Agreement or
any other related documents or agreement; or

8.11 Guaranty. If a Guaranty ceases for any reason to be in full force and
effect, or Guarantor fails to perform any obligation under its Guaranty of all
or a portion of the Obligations, or Guarantor revokes or purports to revoke its
Guaranty of the Obligations, or any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
in a Guaranty or in any certificate delivered to Lender in connection with a
Guaranty.

 

  9. LENDER’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Lender may, at its election, without notice of its election
and without demand, do any one or more of the following, all of which are
authorized by Borrowers:

(a) Declare all Obligations, whether evidenced by this Agreement or otherwise,
immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.5, all Obligations shall become immediately due
and payable without any action by Lender);

(b) Cease advancing money or extending credit to or for the benefit of Borrowers
under this Agreement or under any other agreement between any Borrower and
Lender;

(c) Settle or adjust disputes and claims directly with account debtors for
amounts, upon terms and in whatever order that Lender determines in its sole
discretion;

(d) Make such payments and do such acts as Lender considers necessary or
reasonable to protect its security interest in the Collateral. Borrowers agree
to assemble the Collateral if Lender so requires, and to make the Collateral
available to Lender as Lender may designate. Borrowers authorize Lender to enter
any premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Lender’s determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith, without the direct or implied obligation to do so. With
respect to any premises owned by a Borrower, Borrowers hereby grant Lender a
license to enter into possession of such premises and to occupy the same,
without charge, in order to exercise any of Lender’s rights or remedies provided
herein, at law, in equity or otherwise;

 

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(e) Set off and apply to the Obligations any and all (i) balances and deposits
of Borrowers held by Lender, or (ii) indebtedness at any time owing to or for
the credit or the account of any Borrower held by Lender;

(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Lender is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, Borrowers’ labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with
Lender’s exercise of its rights under this Section 9.1, Borrowers’ rights under
all licenses and all franchise agreements shall inure to Lender’s benefit;

(g) Sell the Collateral at either a public or private sale, or both, by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Borrowers’ premises) as Lender determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Lender deems appropriate. Lender may sell the Collateral without
giving any warranties as to the Collateral. Lender may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. If Lender
sells any of the Collateral upon credit, Borrowers will be credited only with
payments actually made by the purchaser, received by Lender, and applied to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral,
Lender may resell the Collateral and Borrowers shall be credited with the
proceeds of the sale;

(h) Apply for the appointment of a receiver, trustee, liquidator, or conservator
of the Collateral, without notice and without regard to the adequacy of the
security for the Obligations and without regard to the solvency of any Borrower,
Guarantor, or any other Person liable for any of the Obligations;

(i) Lender may credit bid and purchase at any public sale; and

(j) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrowers.

Lender may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

9.2 Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrowers hereby irrevocably appoint Lender
(and any of Lender’s designated officers, employees, or agents) as Borrowers’
true and lawful attorney to: (a) send requests for verification of Accounts or
notify account debtors of Lender’s security interest in the Accounts;
(b) endorse any Borrower’s name on any checks or other forms of payment or
security that may come into Lender’s possession; (c) sign any Borrower’s name on
any invoice or bill of lading relating to any Account, drafts against account
debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and
adjust all claims under and decisions with respect to Borrowers’ policies of
insurance; (f) settle and adjust disputes and claims respecting the accounts
directly with the account debtors of Borrowers, for amounts and upon terms that
Lender shall determine in its sole discretion; (g) modify, in its sole
discretion, any intellectual property security agreement entered into between
Borrowers and Lender without first obtaining Borrowers’ approval of or signature
to such modification by amending Exhibits A, B, and C, thereof, as appropriate,
to include reference to any right, title, or interest in any Copyrights,
Patents, or Trademarks acquired by Borrowers

 

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after the execution hereof or to delete any reference to any right, title or
interest in any Copyrights, Patents, or Trademarks in which Borrowers no longer
have or claim to have any right, title, or interest; (h) file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrowers
where permitted by law; provided Lender may exercise such power of attorney to
sign the name of Borrowers on any of the documents described in Section 4.2
regardless of whether an Event of Default has occurred. The appointment of
Lender as Borrowers’ attorney in fact, and each and every one of Lender’s rights
and powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Lender’s obligation to
provide Credit Extensions hereunder is terminated.

9.3 Collections. Borrowers shall have the right to collect all Accounts, unless
and until a Default or an Event of Default has occurred and is continuing.
Whether or not an Event of Default has occurred and is continuing, Borrowers
shall hold all payments on, and proceeds of, Accounts in trust for Lender, and
Borrowers shall immediately deliver all such payments and proceeds to Lender in
their original form, duly endorsed, to be applied to the Obligations in such
order as Lender shall determine in its sole discretion. Lender may, in its good
faith business judgment, require that all proceeds of Collateral be deposited by
Borrowers into a lockbox account, or such other “blocked account” as Lender may
specify, pursuant to a blocked account agreement in such form as Lender may
specify in its good faith business judgment.

9.4 Lender Expenses. If any Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then Lender may do any or all of the following,
without the direct or implied obligation to do so: (a) make payment of the same
or any part thereof; (b) set up such reserves as Lender deems necessary to
protect Lender from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.3 of this
Agreement, and take any action with respect to such policies as Lender deems
prudent. Any amounts so paid or deposited by Lender shall constitute Lender
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Lender shall not constitute an agreement by
Lender to make similar payments in the future or a waiver by Lender of any Event
of Default under this Agreement.

9.5 Lender’s Representation and Liability for Collateral. Lender shall not in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. All risk of loss, damage, or destruction of the Collateral
shall be borne by Borrowers. Lender makes no representations or warranties of
any kind or nature directly or indirectly, express or implied, with respect to
any matter whatsoever. Lender shall not be liable for any loss, damage, injury,
or expense caused directly or indirectly by any item of Collateral, the use,
maintenance, repair, defect, or servicing thereof, by any delay or failure to
provide same, by any interruption of service or loss of service or loss of use,
or failure to provide same, or for any loss of business however caused.

9.6 No Obligation to Pursue Others. Lender has no obligation to attempt to
satisfy the Obligations by collecting them from any other Person liable for them
and Lender may release, modify, or waive any Collateral provided by any other
Person to secure any of the Obligations, all without affecting Lender’s rights
against Borrowers. Each Borrower waives any right it may have to require Lender
to pursue any other Person for any of the Obligations.

9.7 Remedies Cumulative. Lender’s rights and remedies under this Agreement and
all other agreements shall be cumulative. Lender shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by Lender of one right or remedy shall be deemed an
election, and no waiver by Lender of any Event of Default on any Borrower’s part
shall be deemed a continuing waiver. No delay by Lender shall constitute a
waiver, election, or acquiescence by it. No waiver by Lender shall be effective
unless made in a written document signed on behalf of Lender and then shall be
effective only in the specific instance and for the specific purpose for which
it was given.

 

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9.8 Demand; Protest. Each Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which any Borrower may in any way be liable.

 

  10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrowers or to Lender, as the case may be, at its addresses
set forth below:

 

If to Borrowers:    Nationwide Auction Systems, Inc.    6 Venture, Suite 295   
Irvine, CA 92618    Attn: Mr. Greg O’Neil    Phone: (949) 727-9450    Fax No.:
(949) 727-9971 With copies to:    Entrade, Inc.    500 Central Avenue   
Northfield, IL 60093    Attn: Ron Rosenfeld, Esq.    Phone: (847) 784-3340   
Fax No. (847) 441-6959    Levenfeld Pearlstein, LLC    211 Waukegan Road, Suite
300    Northfield, IL 60093    Attn: Philip E. Ruben, Esq.    Phone: (847)
441-7676    Fax: (847) 441-9976 If to the Lender:    Axle Capital, LLC    3
Pickwick Plaza    Greenwich, CT 06830    Attn: Mr. Nicholas Prouty    Phone:
(213) 618-1600    Fax: (203) 618-1680 With copies to:    Buchalter Nemer    1000
Wilshire Blvd., Suite 1500    Los Angeles, CA 90077    Attn: William Brody, Esq.
   Phone: (213) 891-0700    Fax: (213) 896-0400

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

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  11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without regard to principles of
conflicts of law. Borrowers and Lender each hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the Borough of
Manhattan, city of New York, State of New York. BORROWERS AND LENDER EACH HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT RELATED
THERETO OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

  12. GENERAL PROVISIONS.

12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by any Borrower without Lender’s prior written consent, which consent
may be granted or withheld in Lender’s sole discretion. Lender shall have the
right without the consent of or notice to Borrowers to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Lender’s obligations, rights, and benefits hereunder.

12.2 Indemnification. Borrowers shall defend, indemnify, and hold harmless
Lender and its officers, employees, agents, attorneys, and representatives
against: (a) all obligations, demands, claims, and liabilities claimed or
asserted by any other party in connection with the transactions contemplated by
this Agreement, the other Loan Documents, or the Acquisition Documents; and
(b) all losses or Lender Expenses in any way suffered, incurred, or paid by
Lender as a result of or in any way arising out of, following, or consequential
to transactions between Lender and any Borrower whether under this Agreement,
the other Loan Documents, the Acquisition Documents, or otherwise (including
without limitation reasonable attorneys fees and expenses), except for losses
caused by Lender’s gross negligence or willful misconduct. Notwithstanding the
foregoing, Borrowers shall, at their own expense, defend any and all actions
arising out of the selection, modification, purchase, ownership, acceptance, or
rejection of any item of Collateral, and the delivery, possession, maintenance,
use, condition (including without limitation latent or other defects, whether or
not discoverable by Lender or any Borrower, and any claim for patent, trademark,
or copyright infringement), or operation of any item of Collateral by whomsoever
used or operated or arising out of or resulting from the condition of any item
of Collateral, sold or disposed of after use by any Borrower, an employee of any
Borrower, or any agent, designee, or lessee of any Borrower. The indemnities and
assumptions of liability herein shall continue in full force and effect,
notwithstanding the termination of this Agreement, whether by expiration of
time, operation of law, or otherwise. BORROWERS AGREE THAT LENDER SHALL NOT BE
LIABLE TO BORROWERS FOR ANY CLAIM CAUSED DIRECTLY OR INDIRECTLY BY THE
INADEQUACY OF ANY ITEM OF COLLATERAL FOR ANY PURPOSE OR ANY DEFICIENCY OR DEFECT
THEREIN OR THE USE OR MAINTENANCE THEREOF OR ANY REPAIRS, SERVICING, OR
ADJUSTMENTS THERETO, OR ANY DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY SUCH
MAINTENANCE, SERVICE, OR REPAIRS OR ANY INTERRUPTION OR LOSS OF SERVICE OR USE
THEREOF, OR ANY LOSS OF BUSINESS, ALL OF WHICH SHALL BE THE SOLE RISK AND
RESPONSIBILITY OF BORROWER.

12.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

 

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12.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

12.5 Amendments in Writing, Integration. All amendments to or terminations of
this Agreement must be in writing. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are superseded by and
merged into this Agreement.

12.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.

12.7 Survival. All covenants, representations, and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding. The obligations of Borrowers to indemnify Lender with
respect to the expenses, damages, losses, costs, and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Lender have expired.

12.8 Confidentiality. In handling any confidential information Lender and all
employees and agents of Lender shall exercise the same degree of care that
Lender exercises with respect to its own proprietary information of the same
types to maintain the confidentiality of any non-public information thereby
received or received pursuant to this Agreement except that disclosure of such
information may be made (i) to the subsidiaries or Affiliates of Lender in
connection with their present or prospective business relations with Borrowers,
(ii) to prospective transferees or purchasers of any interest in the
Obligations, provided that they have entered into a comparable confidentiality
agreement in favor of Borrowers and have delivered a copy to Borrowers, (iii) as
required by law, regulations, rule or order, subpoena, judicial order, or
similar order, (iv) as may be required in connection with the examination,
audit, or similar investigation of Lender, and (v) as Lender may determine in
connection with the enforcement of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the
public domain or in the knowledge or possession of Lender when disclosed to
Lender, or becomes part of the public domain after disclosure to Lender through
no fault of Lender; or (b) is disclosed to Lender by a third party, provided
Lender does not have actual knowledge that such third party is prohibited from
disclosing such information.

12.9 Customer Identification – USA Patriot Act Notice; OFAC And Bank Secrecy
Act. Lender hereby notifies Borrowers that pursuant to the requirements of the
Patriot Act, and Lender’s policies and practices, Lender is required to obtain,
verify, and record certain information and documentation that identifies
Borrowers, which information includes the name and addresses of Borrowers and
such other information that will allow Lender to identify Borrowers in
accordance with the Patriot Act. In addition, Borrowers shall (a) ensure that no
person who owns a controlling interest in or otherwise controls any Borrower or
Subsidiary is or shall be listed on the Specially Designated Nationals and
Blocked Person List or other similar lists maintained by the OFAC, the
Department of the Treasury or included in any Executive Orders, (b) not use or
permit the use of the proceeds of the Credit Extensions to violate any of the
foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto, and (c) comply, and cause any of its Subsidiaries to
comply, with all applicable Bank Secrecy Act laws and regulations, as amended.

[Remainder of page intentionally blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

NATIONWIDE AUCTION SYSTEMS, INC.,

a Nevada corporation

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

NATIONWIDE NEW HOLDINGS, LLC,

a Delaware limited liability company

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

SOCAL AUTO CENTER ACQUISITION, LLC,

a Delaware limited liability company

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

AUTOMAX PACIFIC, LLC,

a California limited liability company

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

SOCAL AUTO CENTER, LLC,

a California limited liability company

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

AXLE CAPITAL, LLC

a Delaware limited liability company

By:  

 

Title:  

 

 

Nationwide Term Loan and Security Agreement – Signature Page

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EXHIBIT A

DEFINITIONS

“Accounts” means all presently existing and hereafter arising accounts, contract
rights, payment intangibles, and all other forms of obligations owing to
Borrowers arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrowers, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrowers, and Borrower’s Books relating to any of the foregoing.

“Acquisition Documents” has the meaning ascribed to such term in the Recitals of
this Agreement.

“Administrative Borrower” means Nationwide Auction.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

“Agreement” shall have the meaning set forth in the preamble hereof, together
with all renewals, extensions, amendments, modifications, supplements, and
restatements thereof.

“Arway Debt” means Indebtedness owing to Arway, LLC, a Delaware limited
liability company, in an amount not to exceed $6,500,000 pursuant to that
certain Loan and Security Agreement, dated as of May 26, 2006.

“Arway Intercreditor Agreement” means that certain Intercreditor Agreement, of
even date herewith, between Lender and Arway, LLC, in form and substance
acceptable to Lender.

“Automax” shall have the meaning ascribed to such term in the preamble of this
Agreement.

“Borrower” and “Borrowers” shall have the meaning ascribed to such term in the
preamble of this Agreement.

“Borrower’s Books” means all of Borrowers’ books and records including without
limitation: ledgers; records concerning Borrowers’ assets or liabilities, the
Collateral, business operations, or financial condition; and all computer
programs, storage, memory, or tape files, and the equipment containing such
information.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which national banks are authorized or required to close.

“Change in Control” means a transaction in which any “person” or “group” (within
the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient number
of shares of all classes of stock then outstanding of any Borrower ordinarily
entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Boards of Directors of each Borrower, who did
not have such power before such transaction.

“Closing Date” means the date of this Agreement.

“Code” means the New York Uniform Commercial Code.

 

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“Collateral” means the property described on Exhibit B attached hereto and all
documents, chattel paper, and certificates of title relating thereto, except to
the extent that the granting of a security interest in any such property is
contrary to applicable law, provided that upon the cessation of any such
restriction or prohibition, such property shall automatically become part of the
Collateral.

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations, and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired, or held.

“Credit Extension” means the Term Loan and each other extension of credit by
Lender to or for the benefit of Borrowers hereunder.

“Credit Limit” means $10,300,000 plus Lender Expenses.

“Entrade Warrant” means that certain warrant dated as of even date herewith for
the issuance of 429,000 shares of common stock of Entrade, Inc. for an issue
price equal to the average closing price for the 5 trading days immediately
prior to the Closing Date.

“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, tools, parts, and attachments in which any
Borrower has any interest.

“Event of Default” shall have the meaning ascribed to such term in Article 8 to
this Agreement.

“Excess Cash Flow” means with respect to any Borrower and/or Subsidiary for any
period, (a) Net Income of such Borrower and/or any of its Subsidiaries for such
period, plus (b) all non-cash items of such Borrower and/or any of its
Subsidiaries deducted in determining Net Income for such period, less (c) the
sum of (i) all non-cash items of such Borrower and/or any of its Subsidiaries
included in determining Net Income for such period, (ii) all scheduled and
mandatory cash interest and principal payments on the Term Loan made during such
period, and all regularly scheduled cash interest and principal payments on
other Indebtedness of such Borrower and/or any of its Subsidiaries during such
period to the extent such other Indebtedness is permitted to be incurred, and
such payments are permitted to be made, under this Agreement, and (iii) accrued
and payable taxes paid in cash during such period.

“Existing Locations” means those locations identified on Schedule 6.10 attached
hereto.

“Extraordinary Receipts” means any collections received by any Borrower or
Subsidiary not in the ordinary course of business, including, (a) pension plan
reversions, (b) proceeds of insurance, including proceeds of key man life
insurance policies, (c) proceeds of judgments, settlements, or other
consideration of any kind in connection with any cause of action, (d) proceeds
of condemnation awards (and payments in lieu thereof), (e) proceeds of indemnity
payments, and (f) any purchase price adjustment received in connection with any
purchase agreement.

“Floor Plan Agreement” means the agreement in form and manner satisfactory to
Lender by and between Rosedale and Borrowers pursuant to which Rosedale has made
an unqualified agreement to provide floor plan financing of Inventory to
Borrowers, a copy of which is attached hereto as Exhibit E, which may only be
modified, amended, or changed in compliance with the Rosedale Intercreditor
Agreement.

“GAAP” means generally accepted accounting principles as in effect from time to
time.

“Guarantor Security Instrument” means any agreement, instrument, or document by
a Guarantor granting a security interest in certain assets in favor of Lender.

 

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“Guarantor” means, individually and collectively, Entrade, Inc., a Delaware
corporation, and Nationwide Auction Finance, LLC, a Delaware limited liability
company.

“Guaranty” means that certain Continuing Guaranty, in form and substance
satisfactory to Lender, executed by Guarantor in favor of Lender.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures, or similar
instruments, and (c) all capital lease obligations.

“Insolvency Proceeding” means any proceeding commenced by or against any person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property Collateral” means all of Borrowers’ right, title, and
interest in and to the following:

 

(a) Copyrights, Trademarks, and Patents;

 

(b) Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired, or held;

 

(c) Any and all design rights which may be available to a Borrower now or
hereafter existing, created, acquired, or held;

 

(d) Any and all claims for damages by way of past, present, and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;

 

(e) All licenses or other rights to use any of the Copyrights, Patents, or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights;

 

(f) All amendments, renewals, and extensions of any of the Copyrights,
Trademarks, or Patents; and

 

(g) All proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.

“Investment” means any beneficial ownership of (including stock, partnership
interest, or other securities) any Person, or any loan, advance, or capital
contribution to any Person.

“IP Security Agreements” means the Intellectual Property Security Agreements,
dated of even date herewith, executed by Borrowers and Lender.

“Lender” has the meaning ascribed to such term in the preamble of this
Agreement.

“Lender Expenses” means all reasonable costs or expenses (including attorneys’
fees and expenses) incurred in connection with the preparation and negotiation
this Agreement, the NAF Loan Agreement, reasonable Collateral audit fees, and
Lender’s reasonable attorneys’ fees and expenses incurred in amending,
enforcing, or defending the Loan Documents (including fees and expenses of
appeal), incurred before, during, and after an Insolvency Proceeding, whether or
not suit is brought.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest, or other encumbrance.

 

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“Loan Documents” means, collectively, this Agreement, any note or notes executed
by Borrowers, the NAF Loan Agreement, and any other document, instrument, or
agreement entered into in connection with this Agreement or the NAF Loan
Agreement, all as modified, amended, extended, supplemented, or restated from
time to time.

“Material Adverse Effect” means a material adverse effect on (i) the business
operations or condition (financial or otherwise) of (a) Nationwide New, or
(b) Borrowers and their Subsidiaries taken as a whole, or (ii) the ability of
any Borrower to repay the Obligations or otherwise perform its obligations
hereunder or any other existing or hereafter created documents or agreement
between Borrowers and Lender.

“Maturity Date” means July 12, 2011.

“NAF” means Nationwide Auction Finance, LLC, an Delaware limited liability
company.

“NAF Loan Agreement” means that certain Loan and Security Agreement, dated as of
July 12, 2006, by and between Lender and NAF.

“Nationwide Auction” has the meaning ascribed to such term in the preamble of
this Agreement.

“Nationwide New” has the meaning ascribed to such term in the preamble of this
Agreement.

“Nationwide New Assets” means all Collateral or other assets acquired by
Nationwide New or located or maintained at a location that is not an Existing
Location (such as inventory and equipment) or with respect to a location that is
not an Existing Location (such as accounts receivable, deposit accounts, and
investment accounts).

“Negotiable Collateral” means, with respect to any Borrower, all of such
Borrower’s now owned and hereafter acquired right, title, and interest with
respect to letters of credit, letter of credit rights, instruments, promissory
notes, drafts, documents, and chattel paper (including electronic chattel paper
and tangible chattel paper), and any and all supporting obligations in respect
thereof.

“Net Income” means, with respect to any Borrower or Subsidiary for any period,
the net income (loss) of such Borrower or Subsidiary for such period, determined
on an individual basis and in accordance with GAAP, but excluding from the
determination of Net Income (without duplication) (a) any non-cash extraordinary
or non-recurring gains or non-cash gains from dispositions, (b) interest that is
paid-in-kind, and (c) interest income.

“Obligations” means all debt, principal, interest, Lender Expenses, and other
amounts owed to Lender by any Borrower, NAF, any Guarantor, or any Subsidiary
pursuant to this Agreement, the NAF Loan Agreement, the Loan Documents, any
guaranty by any Borrower or Guarantors, any other agreement, or otherwise,
whether absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest and Lender Expenses that accrue after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from any Borrower, Guarantor, or Subsidiary to others that
Lender may have obtained by assignment or otherwise.

“OFAC” means the Office of Foreign Assets Control of the United States
government.

“Patents” means all patents, patent applications, and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions, and continuations-in-part of the same.

“Patriot Act” means USA Patriot Act (Title III of Pub. L. 107-56, signed into
law October 26, 2001).

“Permitted Indebtedness” means:

 

(h) Indebtedness of Borrowers in favor of Lender arising under this Agreement or
any other document, instrument, or agreement between Borrowers and Lender;

 

A-4

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(i) Indebtedness existing on the Closing Date;

 

(j) Indebtedness secured by a lien described in clause (c) of the defined term
Permitted Liens;

 

(k) the Arway Debt;

 

(l) the Rosedale Debt;

 

(m) Subordinated Debt; and

 

(n) Indebtedness incurred in the ordinary course of business of Borrowers other
than that permitted under clauses (a) – (l) of the defined term Permitted Liens
in an aggregate amount outstanding at anytime not greater than $3,500,000.

“Permitted Liens” means the following:

 

(a) Any Liens in favor of Lender existing on the Closing Date or arising under
this Agreement or any other document, instrument, or agreement between Borrowers
and Lender;

 

(b) Liens for taxes, fees, assessments, or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which any Borrower maintains adequate reserves, provided the
same have no priority over any of Lender’s security interests;

 

(c) Liens, not to exceed $250,000 in the aggregate, (i) upon any Equipment
acquired or held by any Borrower to secure the purchase price of such Equipment
or indebtedness incurred solely for the purpose of financing the acquisition of
such Equipment, or (ii) existing on such Equipment at the time of its
acquisition, provided that the Lien is confined solely to the property so
acquired and the proceeds of such Equipment;

 

(d) Liens incurred in connection with the extension, renewal, or refinancing of
the Indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal, or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed, or refinanced does not increase;

 

(e) Liens arising from judgments, decrees, or attachments in circumstances not
constituting an Event of Default under Sections 8.4 or 8.7 hereof;

 

(f) Liens in favor of other financial institutions arising in connection with
Borrowers’ deposit accounts held at such institutions to secure standard fees
for deposit services charged by, but not financing made available by such
institutions, provided that Lender has a perfected security interest in the
amounts held in such deposit accounts;

 

(g) Liens on the assets of Borrowers, excluding the assets of NAF, securing the
Arway Debt, so long as such Indebtedness’ balance never exceeds the amount of
$6,500,000, and provided further that there shall be no Liens on the assets of
NAF, other than Liens securing debt owing to Lender;

 

(h) Other Liens not described above arising in the ordinary course of business
and not having or not reasonably likely to have a Material Adverse Effect on any
Borrower.

 

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“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity, or governmental agency.

“Pledge Agreements” means the Stock Pledge Agreement or Membership Pledge
Agreement, in each case dated of even date herewith, executed by each Guarantor
and Borrower, with respect to such Borrower’s or Guarantor’s equity interest (if
any) in any Borrower or Subsidiary.

“Responsible Officer” means each of the President, Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, and the Controller of
Borrower.

“Rosedale” means Rosedale Leasing, LLC, a Minnesota limited liability company.

“Rosedale Debt” means Indebtedness in an aggregate amount not to exceed
$4,000,000 pursuant to that certain Loan and Security Agreement, dated as of
October 31, 2005, and such additional amounts on such terms and conditions and
in such amounts acceptable to Lender, and any refinance of such Indebtedness on
terms and conditions and in such amounts acceptable to Lender.

“Rosedale Intercreditor Agreement” means that certain Intercreditor Agreement,
of even date herewith, by and between Rosedale and Lender, in form and substance
satisfactory to Lender.

“Schedule” means the schedule of exceptions attached hereto, if any.

“Sellers” shall mean, collectively, Don Haidl, Public Auction Systems Inc.,
Corey P. Schlossman, Capital Direct 1999 Trust, Core Capital IV Trust, and
Hearthstone Properties, LLC.

“Settlement Agreement” shall mean that certain Settlement Agreement dated as of
            , 2006, among Sellers and Borrower, a copy of which in existence as
of the date of this Agreement is attached hereto as Exhibit      and made a part
hereof.

“Socal Acquisition” has the meaning ascribed to such term in the preamble of
this Agreement.

“Socal Auto” has the meaning ascribed to such term in the preamble of this
Agreement.

“Socal Interests” has the meaning ascribed to such term in the preamble of this
Agreement.

“Subordinated Debt” means any debt incurred by any Borrower that is subordinated
to the debt owing by Borrowers to Lender on terms reasonably acceptable to
Lender (and identified as being such by Borrowers and Lender).

“Subsidiary” means a corporation, partnership, limited liability company, or
other entity in which any Borrower or Guarantor directly or indirectly owns or
controls the shares of stock or interests having ordinary voting power to elect
a majority of the board of directors or appoint other comparable managers of
such corporation, partnership, limited liability company, or other entity.

“Tax Payment Warrant” means each of the warrants for the issuance of shares of
common stock of Entrade, Inc. issued in connection with the Tax Sharing
Agreement, for an issue price equal to the average closing price for the 5
trading days immediately prior to the date of issuance of such shares, for an
amount of shares equal to the quotient of: (i) the product of: (y) 0.10
multiplied by (z) the amount paid to Entrade, Inc. with respect to Tax Share
Payments (as defined in the Tax Sharing Agreement) in excess of 50% of the tax
relief realized by the applicable Borrower in connection with the net operating
loss of Entrade, Inc., divided by (ii) $            .

 

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“Tax Sharing Agreement” means that certain Tax Sharing Agreement, dated as of
July     , 2006, by and between Entrade, Inc. and Nationwide Auction, in form
and substance acceptable to Lender, a copy of which is attached hereto as
Exhibit D, which Tax Sharing Agreement may not be modified, amended, or changed
in any way without the prior written consent of Lender.

“Term Loan” has the meaning ascribed to such term in Section 2.1 of this
Agreement.

“Term Loan PIK Amount” means, as of any date of determination, the amount (if
any) of all interest accrued with respect to the Term Loan that has been
paid-in-kind by being added to the balance thereof in accordance with
Section 2.4(a) of this Agreement.

“Third Party Waivers” means landlord waivers, bailee waivers, warehouse waivers,
or other third party waivers or consents required by Lender (the “Third Party
Waivers”) executed by the lessors, mortgagors, bailors, warehouse owners and/or
operators and consignors of or at the Borrower’s locations, all in form and
manner satisfactory to Lender.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of any Borrower or
Subsidiary connected with and symbolized by such trademarks.

 

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DEBTOR

   EACH BORROWER

SECURED PARTY:

   AXLE CAPITAL, LLC

EXHIBIT B

COLLATERAL DESCRIPTION ATTACHMENT TO

LOAN AND SECURITY AGREEMENT

All personal property of Borrower(s) (herein referred to as “Borrower” or
“Debtor”) whether presently existing or hereafter created or acquired, and
wherever located, including, but not limited to:

 

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper and including all Chattel Paper
and all rights of payment and obligations owing to Borrower thereunder together
with all guaranties and security therefor), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), all of Borrower’s rights to any and all Motor Vehicles, goods
(including fixtures), instruments (including promissory notes), inventory
(including all goods held for sale or lease or to be furnished under a contract
of service, and including returns and repossessions), investment property
(including securities and securities entitlements), letter of credit rights,
money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

 

(b) all common law and statutory copyrights and copyright registrations,
applications for registration, now existing or hereafter arising, in the United
States of America or in any foreign jurisdiction, obtained or to be obtained on
or in connection with any of the foregoing, or any parts thereof or any
underlying or component elements of any of the foregoing, together with the
right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to sue in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;

 

(c) all trademarks, service marks, trade names and service names and the
goodwill associated therewith, together with the right to trademark and all
rights to renew or extend such trademarks and the right (but not the obligation)
of Secured Party to sue in its own name and/or in the name of the Debtor for
past, present and future infringements of trademark;

 

(d) all (i) patents and patent applications filed in the United States Patent
and Trademark Office or any similar office of any foreign jurisdiction, and
interests under patent license agreements, including, without limitation, the
inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and

 

(e) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time, including revised Division 9 of
the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991
(S.B. 45), Section 35, operative July 1, 2001.

 

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EXHIBIT C

CORPORATE RESOLUTIONS TO BORROW

NATIONWIDE AUCTION SYSTEMS, INC.

I, the undersigned officer of NATIONWIDE AUCTION SYSTEMS, INC. (the “Company”),
HEREBY CERTIFY that the Corporation is organized and existing under and by
virtue of the laws of the State of Nevada.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Articles of Incorporation and the Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

 

NAMES

  

POSITION

      

ACTUAL SIGNATURES

 

  

 

   X  

 

 

  

 

   X  

 

acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:

Borrow Money. To borrow from Axle Capital, LLC, a Delaware limited liability
company (“Lender”), on such terms as may be agreed upon between the officers,
employees, or agents of the Corporation and Lender, such sum or sums of money as
in their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of July 12,
2006 (the “Loan Agreement”).

Execute Loan Documents. To execute and deliver to Lender the Loan Agreement and
any other agreement entered into between Corporation and Lender in connection
with the Loan Agreement, all as amended or extended from time to time
(collectively, with the Loan Agreement, the “Loan Documents”), and also to
execute and deliver to Lender one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Documents, or any
portion thereof.

Grant Security. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation’s Obligations, as described in the Loan Documents.

Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these resolutions.

 

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BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation’s agreements or commitments in effect at
the time notice is given.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set forth opposite their respective names; that the
foregoing resolutions now stand of record on the books of the Corporation; and
that the resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on July 12, 2006 and attest that
the signatures set opposite the names listed above are their genuine signatures.

 

CERTIFIED AND ATTESTED BY: X  

 

 

C-2

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RESOLUTIONS TO BORROW

NATIONWIDE NEW HOLDINGS, LLC

I, the undersigned officer of NATIONWIDE NEW HOLDINGS, LLC (the “Company”),
HEREBY CERTIFY that the Company is organized and existing under and by virtue of
the laws of the State of Delaware.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Formation and the Operating Agreement of
the Company, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Members of the Company, duly called
and held, at which a quorum was present and voting (or by other duly authorized
corporate action in lieu of a meeting), the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Company, whose actual signatures are shown below:

 

NAMES

  

POSITION

      

ACTUAL SIGNATURES

 

  

 

   X  

 

 

  

 

   X  

 

acting for and on behalf of this Company and as its act and deed be, and they
hereby are, authorized and empowered:

Borrow Money. To borrow from Axle Capital, LLC, a Delaware limited liability
company (“Lender”), on such terms as may be agreed upon between the officers,
employees, or agents of the Company and Lender, such sum or sums of money as in
their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of July 12,
2006 (the “Loan Agreement”).

Execute Loan Documents. To execute and deliver to Lender the Loan Agreement and
any other agreement entered into between Company and Lender in connection with
the Loan Agreement, all as amended or extended from time to time (collectively,
with the Loan Agreement, the “Loan Documents”), and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for the Loan Documents, or any portion thereof.

Grant Security. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Company’s Obligations, as described in the Loan Documents.

Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Company’s agreements or commitments in effect at the
time notice is given.

--------------------------------------------------------------------------------

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Company, as the case may be, and
occupy the positions set forth opposite their respective names; that the
foregoing resolutions now stand of record on the books of the Company; and that
the resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

[signature page to follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have hereunto set my hand on July 12, 2006 and attest that
the signatures set opposite the names listed above are their genuine signatures.

 

CERTIFIED AND ATTESTED BY: X  

 

Name:  

 

Title:  

 

Corporate Resolutions (Nationwide New Holdings, LLC) - 1

--------------------------------------------------------------------------------

RESOLUTIONS TO BORROW

SOCAL AUTO CENTER ACQUISITION, LLC

I, the undersigned officer of SOCAL AUTO CENTER ACQUISITION, LLC (the
“Company”), HEREBY CERTIFY that the Company is organized and existing under and
by virtue of the laws of the State of Delaware.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Formation and the Operation Agreement of
the Company, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Members of the Company, duly called
and held, at which a quorum was present and voting (or by other duly authorized
corporate action in lieu of a meeting), the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Company, whose actual signatures are shown below:

 

NAMES

  

POSITION

      

ACTUAL SIGNATURES

 

  

 

   X  

 

 

  

 

   X  

 

acting for and on behalf of this Company and as its act and deed be, and they
hereby are, authorized and empowered:

Borrow Money. To borrow from Axle Capital, LLC, a Delaware limited liability
company (“Lender”), on such terms as may be agreed upon between the officers,
employees, or agents of the Company and Lender, such sum or sums of money as in
their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of July 12,
2006 (the “Loan Agreement”).

Execute Loan Documents. To execute and deliver to Lender the Loan Agreement and
any other agreement entered into between Company and Lender in connection with
the Loan Agreement, all as amended or extended from time to time (collectively,
with the Loan Agreement, the “Loan Documents”), and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for the Loan Documents, or any portion thereof.

Grant Security. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Company’s Obligations, as described in the Loan Documents.

Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Company’s agreements or commitments in effect at the
time notice is given.

 

1

--------------------------------------------------------------------------------

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Company, as the case may be, and
occupy the positions set forth opposite their respective names; that the
foregoing resolutions now stand of record on the books of the Company; and that
the resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

[signature page to follow]

 

2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have hereunto set my hand on July 12, 2006 and attest that
the signatures set opposite the names listed above are their genuine signatures.

 

CERTIFIED AND ATTESTED BY: X  

 

Name:  

 

Title:  

 

Corporate Resolutions (Socal Auto Center Acquisition) - 1

--------------------------------------------------------------------------------

RESOLUTIONS TO BORROW

SOCAL AUTO CENTER, LLC

I, the undersigned officer of SOCAL AUTO CENTER, LLC (the “Company”), HEREBY
CERTIFY that the Company is organized and existing under and by virtue of the
laws of the State of California.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Articles of Organization and the Operating Agreement of
the Company, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Members of the Company, duly called
and held, at which a quorum was present and voting (or by other duly authorized
corporate action in lieu of a meeting), the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Company, whose actual signatures are shown below:

 

NAMES

  

POSITION

      

ACTUAL SIGNATURES

 

  

 

   X  

 

 

  

 

   X  

 

acting for and on behalf of this Company and as its act and deed be, and they
hereby are, authorized and empowered:

Borrow Money. To borrow from Axle Capital, LLC, a Delaware limited liability
company (“Lender”), on such terms as may be agreed upon between the officers,
employees, or agents of the Company and Lender, such sum or sums of money as in
their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of July 12,
2006 (the “Loan Agreement”).

Execute Loan Documents. To execute and deliver to Lender the Loan Agreement and
any other agreement entered into between Company and Lender in connection with
the Loan Agreement, all as amended or extended from time to time (collectively,
with the Loan Agreement, the “Loan Documents”), and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for the Loan Documents, or any portion thereof.

Grant Security. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Company’s Obligations, as described in the Loan Documents.

Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Company’s agreements or commitments in effect at the
time notice is given.

--------------------------------------------------------------------------------

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Company, as the case may be, and
occupy the positions set forth opposite their respective names; that the
foregoing resolutions now stand of record on the books of the Company; and that
the resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

[signature page to follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have hereunto set my hand on July 12, 2006 and attest that
the signatures set opposite the names listed above are their genuine signatures.

 

CERTIFIED AND ATTESTED BY: X  

 

Name:  

 

Title:  

 

Corporate Resolutions (Socal Auto Center) - 1

--------------------------------------------------------------------------------

CORPORATE RESOLUTIONS TO BORROW

AUTOMAX PACIFIC, LLC

I, the undersigned officer of AUTOMAX PACIFIC, LLC (the “Company”), HEREBY
CERTIFY that the Company is organized and existing under and by virtue of the
laws of the State of Pennsylvania.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Articles of Incorporation and the Bylaws of the Company,
each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Directors of the Company, duly called
and held, at which a quorum was present and voting (or by other duly authorized
corporate action in lieu of a meeting), the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Company, whose actual signatures are shown below:

 

NAMES

  

POSITION

      

ACTUAL SIGNATURES

 

  

 

   X  

 

 

  

 

   X  

 

acting for and on behalf of this Company and as its act and deed be, and they
hereby are, authorized and empowered:

Borrow Money. To borrow from Axle Capital, LLC, a Delaware limited liability
company (“Lender”), on such terms as may be agreed upon between the officers,
employees, or agents of the Company and Lender, such sum or sums of money as in
their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of July 12,
2006 (the “Loan Agreement”).

Execute Loan Documents. To execute and deliver to Lender the Loan Agreement and
any other agreement entered into between Company and Lender in connection with
the Loan Agreement, all as amended or extended from time to time (collectively,
with the Loan Agreement, the “Loan Documents”), and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for the Loan Documents, or any portion thereof.

Grant Security. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Company’s Obligations, as described in the Loan Documents.

Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Company’s agreements or commitments in effect at the
time notice is given.

--------------------------------------------------------------------------------

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Company, as the case may be, and
occupy the positions set forth opposite their respective names; that the
foregoing resolutions now stand of record on the books of the Company; and that
the resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

[signature page to follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have hereunto set my hand on July 12, 2006 and attest that
the signatures set opposite the names listed above are their genuine signatures.

 

CERTIFIED AND ATTESTED BY: X  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT D

TAX SHARING AGREEMENT

 

D-1

--------------------------------------------------------------------------------

EXHIBIT E

FLOOR PLAN AGREEMENT

 

E-1

--------------------------------------------------------------------------------

SCHEDULE 5.9

Solely with respect to Nationwide Auction Systems, Inc. the current tax
negotiations with respect to employment taxes, sales taxes, and Form 8300
reporting and solely with respect to Entrade Inc. the current SEC formal
investigation commenced in December 2005.

 

SCHEDULE 5.9

--------------------------------------------------------------------------------

SCHEDULE 6.10

Existing Locations

NORTHERN CALIFORNIA

1 OAK ROAD

Benicia, Ca 94510

Tel: 707-745-0119

Fax: 707-745-0240

 

ATLANTA

2161 MORELAND AVE, S.E.

Atlanta, Ga 30315

Tel: 404-627-5346

Fax: 404-627-5361

 

NORTHERN CALIFORNIA

1 OAK ROAD

Benicia, Ca 94510

Tel: 707-745-0119

Fax: 707-745-0240

 

BLUE MOUND

1121 CANTRELL SANSOM RD

Blue Mound, Tx 76131

Tel: 817-306-1880

Fax: 817-230-0100

CITY OF INDUSTRY

13005 E. TEMPLE AVE

Industry, Ca 91746

Tel: 626-968-3110

Fax: 626-968-7703

 

PERRIS

800 S. REDLANDS AVE

Perris, Ca 92570

Tel: 626-968-3110

Fax: 626-968-7703

 

PICO RIVERA

9536 BRASHER STREET

Pico Rivera, Ca 90660

Tel: 562-463-6348

Fax: 626-968-7703

SAN DIEGO

9050 SIEMPRE VIVA RD

San Diego, Ca 92154

Tel: 619-671-1010

Fax: 619-671-3727

 

ST. LOUIS

3601 GOODFELLOW

St. Louis, Mo 63120

Tel: 314-389-3733

Fax: 314-389-3713

 

DELAWARE

35 DAVIDSON LANE

New Castle, De 19720

Tel: 302-573-5005

Fax: 302-573-6898

 

SCHEDULE 6.10

--------------------------------------------------------------------------------

SCHEDULE 6.12

Officers and Stock Ownership

Nationwide Auction System, Inc.

 

Name

  

Office

  

Stock Ownership

  Entrade Inc.    N/A    100 % Corey P. Schlossmann    Chief Executive Officer
   0 % Greg O’Neill    President    0 % Will Righeimer    Chief Financial
Officer    0 % Nationwide New Holdings, LLC  

Name

  

Office

  

Stock Ownership

  Nationwide Auction Systems, Inc.    N/A    100 % Corey P. Schlossmann    Chief
Executive Officer    0 % Greg O’Neill    President    0 % Will Righeimer   
Chief Financial Officer    0 % Socal Auto Center Acquisition, LLC  

Name

  

Office

  

Stock Ownership

  Nationwide Auction Systems, Inc.    Manager    100 % Greg O’ Neill   
President    0 % Will Righeimer    Chief Financial Officer    0 % Automax
Pacific, LLC  

Name

  

Office

  

Stock Ownership

                     

 

SCHEDULE 6.12

--------------------------------------------------------------------------------

Socal Auto Center, LLC  

Name

  

Office

  

Stock Ownership

  Socal Auto Center Acquisition, LLC    TBD    100 %   

Officers TBD (based

on resolution to license transfer issue)

   Nationwide Auction Finance, LLC  

Name

  

Office

  

Stock Ownership

  Entrade Inc.    Manager    80 % Axle Capital, LLC    Member    20 %   
Officers TBD   

 

SCHEDULE 6.12