Exhibit 10.5
BUY-SELL AGREEMENT
THIS BUY-SELL AGREEMENT, dated as of January 1, 1997 (the "Agreement"), is
entered into among Big Dog Holdings, Inc. (the "Corporation"), Xxxx Xxxxx
("Majority Shareholder") and Xxxxxx X. Xxxxxxxx ("Minority Shareholder").
IN CONSIDERATION of the mutual covenants provided herein and other good and
valuable consideration, the parties hereby agree as follows:
1. PUT OPTION
1.1 Upon the death of Minority Shareholder, the estate or other
successor of Minority Shareholder (the "Representative") shall have the
right to sell to the Corporation (the "Put Option") the shares of common
stock of the Corporation owned by Minority Shareholder at that time (the
"Shares"). The purchase price shall be Five Dollars ($5.00) par share.
Upon the death of Minority Shareholder, the Corporation shall notify the
Representative that the Put Option has become effective. The
Representative shall have 90 days after the date of such notice to
exercise the Put Option. The Representative may exercise the Put Option
in whole or in part by delivering notice to the Corporation of the
election to exercise and the number of Shares which it elects to tender
(the "Tendered Shares"). The Corporation shall have 90 days from the
date of such election notice to close the purchase. On the closing date
of such purchase, the Representative shall execute and deliver to the
Corporation duly endorsed certificates for the Tendered Shares and any
other appropriate documents and shall take such other actions as may be
reasonably necessary or desirable to complete such sale. Subject to
Section 1.2 below, the Corporation shall pay cash for the Tendered
Shares.
1.2 The Corporation has procured an insurance policy on the
life of the Minority Shareholder in the amount of $5 million payable to
the Corporation (the "Policy"). The Corporation agrees to use
commercially reasonable efforts to maintain the Policy during the term
of this Agreement. In the event of Minority Shareholder's death, $1
million of the proceeds of the Policy shall be retained by the
Corporation and the balance shall be applied in the following order; (i)
first, to the payment of any indebtedness then owed by Minority
Shareholder to Majority Shareholder or the Corporation, (ii) second, to
the purchase of the Tendered Shares and (iii) lastly, any balance shall
be retained by the Corporation. To the extent the foregoing application
of proceeds does not result in full payment of the purchase price for
the Tendered Shares, or to the extent applicable corporate law or any
loan or other agreement with creditors prevents the Corporation's full
payment for the Tendered Shares (and a waiver cannot reasonably be
obtained from the other party to such agreement), the Corporation may
pay the balance of the purchase price by delivery of an unsecured
promissory note bearing interest at 7% per annum with principal payable
in equal quarterly installments, together with accrued interest, over a
period of 18 months (or over such longer period as is required to comply
with applicable corporate law or such agreements).
1.3 During the term of this Agreement: (i) the Policy shall belong
solely to the Corporation and Minority Shareholder shall not have the
right to designate the beneficiaries or exercise any other power over
it, (ii) the Corporation will not amend or
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take any other action in regard to the Policy without the consent of its
Board Of Directors and (ii) the Corporation shall pay all premiums on
the Policy. Any dividends paid on the Policy before maturity or the
insured's death shall be paid to the Corporation and shall not be
subject to this Agreement.
2. INVALID PROVISIONS
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof.
3. AMENDMENT GOVERNING LAW
3.1 This Agreement may be amended in whole or in part only by the
written consent of the parties hereto.
3.2 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California
4. TERMINATION
This Agreement shall terminate on January 1, 1998, provided that the
parties agree to in good faith renegotiate a one-year extension at that time
and on an annual basis thereafter. Provided, however, that this Agreement
shall terminate earlier upon the occurrence of either of the following: (i)
the Corporation shall consummate a registered public offering of its common
stock or (ii) the employment of Minority Shareholder by the Corporation shall
terminate other than due to the death of Minority Shareholder.
5. COMPLETE AGREEMENT
This Agreement reflects the complete agreement of the parties with
respect to the subject matter contemplated herein.
6. NOTICE
Any notice given under this Agreement shall be in writing and shall be
deemed to have been given: (i) if personally delivered, when received, (ii)
if sent by telecopy, when transmission is confirmed and (iii) if mailed, 3
days after deposit in the U.S. mail, certified mail, return receipt
requested. Any notice to the Corporation shall be addressed to its principal
executive offices, attention General Counsel, and any notice to the other
parties shall be sent to their home address as shown on the books and record
of the Corporation
7. ASSIGNMENT
The Corporation may assign any or all of his rights and obligations
under this Agreement (and the Policy) to the Majority Shareholder. Minority
Shareholder may not assign any of his rights or obligations under this
Agreement without the consent of the Board of Directors of the Company.
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