EXHIBIT 10.49
NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW. NEITHER
THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND REGISTRATION OR OTHER
QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR OTHER QUALIFICATION
IS NOT REQUIRED.
THIS NOTE AND ALL SECURITIES WHICH MAY BE ISSUED UPON CONVERSION HEREOF ARE
SUBJECT TO A MARKET STAND-OFF RESTRICTION AS SET FORTH IN AN ASSET PURCHASE
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THIS NOTE, A COPY OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH
AGREEMENT, THIS NOTE AND ALL SECURITIES WHICH MAY BE ISSUED UPON CONVERSION
HEREOF MAY NOT BE TRADED PRIOR TO THE EXPIRATION OF SUCH STAND-OFF PERIOD AFTER
THE EFFECTIVE DATE OF THE INITIAL PUBLIC OFFERING OF THE COMMON STOCK OF THE
ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF ANY SUCH
SECURITIES.
DOVEBID, INC.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
US$750,000 July 28, 2000
DoveBid, Inc., a Delaware corporation (the "Company"), with offices at 0000
Xxxx Xxxxxxxxx Xxxx., Xxxxxx Xxxx, XX 00000, for value received, promises to pay
to the order of MasonGreene Australasia Pty Ltd CAN 065 348 736, a Victorian
company ("Payee") at such address as Payee may designate, One Million U.S.
Dollars and No Cents ($1,000,000.00), plus interest thereon calculated from the
date hereof until paid at an annual rate equal to the minimum rate established
pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as amended, as
of the date hereof, compounded annually. Principal and accrued interest will be
due and payable in lawful money of the United States in full on the two-year
anniversary of the date of this Note (the "Maturity Date"), unless this Note
shall have been previously converted pursuant to Section 2 below, in which case
all outstanding principal under this Note and all accrued interest thereon shall
be satisfied in full by virtue of such conversion and the issuance and delivery
of fully paid and non-assessable shares of Conversion Stock to the holder of
this Note as set forth in Section 2 below. Payments by the Company shall be
applied first to any and all accrued interest through the payment date and
second to the principal remaining due hereunder.
The following is a statement of the rights of the holder of this Note and
the conditions to which this Note is subject, and to which the holder hereof, by
the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
-----------
context otherwise requires, have the following meanings:
1.1 "Company" includes any corporation or other entity which succeeds
to or assume the obligations of the Company under this Note.
1.2 "Conversion Stock" shall mean shares of Common Stock of the
Company of the same class of common stock that is registered by the Company
pursuant to an Initial Public Offering.
1.3 "Conversion Price" shall mean the price per share that is the
exact middle of the price range stated in the Company's final amended
registration statement on Form S-1, Form SB-1 or a similar successor form
pertaining to an Initial Public Offering that closes on before the Maturity
Date. No conversion shall occur and there is therefore no Conversion Price with
respect to an Initial Public Offering that closes after the Maturity Date.
1.4 "Noteholder," "holder," or similar terms, when the context refers
to a holder of this Note, shall mean any person who shall at the time be the
registered holder of this Note.
1.5 "Initial Public Offering" shall mean the closing of a sale of
Common Stock pursuant to a registration statement on Form S-1, Form SB-1 or SB-2
(or any similar or successor form) under the Securities Act of 1933, as amended
(the "Securities Act"), for an underwritten initial public offering.
1.6 "Subordination Agreement" shall mean the Subordination Agreement
attached hereto as Annex A and incorporated by reference herein.
-------
2. Conversion.
----------
2.1 Mandatory Conversion. This Note and all of the outstanding
--------------------
principal and accrued and unpaid interest on and under this Note shall be
converted into Conversion Stock at the Conversion Price immediately prior to the
first closing of an Initial Public Offering before the Maturity Date. For
informational purposes, the Company shall provide the Noteholder with written
notice (at the most recent address for the Noteholder provided to the Company by
the Noteholder in writing) (i) within seven days after it files with the
Securities and Exchange Commission ("SEC") any registration statement on Form S-
1, Form SB-1 or Form SB-2 (or any similar or successor form) for an Initial
Public Offering, and (ii) reasonably promptly following the first closing of an
Initial Public Offering. Conversion as described in this Section 2.1 shall occur
only upon the closing of an Initial Public Offering, provided that (i) upon the
first closing of an Initial Public Offering, the conversion shall be deemed to
have occurred immediately prior to such first closing of such Initial Public
Offering, and (ii) as a condition precedent or condition subsequent to
conversion (the election between which type of condition shall be the Company's
sole election in the Company's sole discretion), the Noteholder must surrender
this Note for conversion at the principal office of the Company. Incident to any
conversion, the Conversion Stock will have those rights and privileges, and be
subject to those restrictions, of the shares of Common Stock as set forth in the
Company's Certificate of Incorporation, as amended from time to time, and the
Noteholder will receive the rights and be subject to the obligations applicable
to the purchasers of Common Stock, provided that the sale restriction referred
to in Section 5 below shall apply to the Conversion Stock. This Note shall not
be convertible and shall not be
2
converted into Conversion Stock if there is not an Initial Public Offering on or
before the Maturity Date.
2.2 No Fractional Shares. No fractional shares will be issued on
--------------------
conversion of this Note. If on any conversion of this Note a fraction of a share
results, the Company will pay the cash value of that fractional share,
calculated on the basis of the applicable Conversion Price.
2.3 Reservation of Stock. Prior to any conversion of this Note
--------------------
pursuant to Section 2.1 above, the Company will take such corporate action and
obtain such government consents and approvals as may, in the reasonable opinion
of its counsel, be necessary to authorize the issuance of a sufficient number of
shares of Conversion Stock into which this Note is to convert pursuant to
Section 2.1 above.
2.4 Fully Paid Shares; Certificates. All shares of Conversion Stock
-------------------------------
issued upon the conversion of this Note shall be validly issued, fully paid and
non-assessable. The certificates representing the shares of Conversion Stock
issued upon conversion hereof shall be delivered to the holder against surrender
of this Note. The holder, by accepting this Note, undertakes and agrees to
accept such shares of Conversion Stock in full satisfaction of the outstanding
principal and accrued interest thereon in accordance with the terms of this
Note. Anything to the contrary in this Note notwithstanding, the Company's
obligation to issue shares of Conversion Stock to any holder of this Note is
expressly conditioned upon compliance of such issuance with applicable federal
and state securities laws without registration or other qualification
thereunder.
2.5 No Rights or Liabilities as Shareholder. This Note does not by
---------------------------------------
itself entitle the Noteholder to any voting rights or other rights as a
shareholder of the Company. In the absence of conversion of this Note, no
provisions of this Note, and no enumeration herein of the rights or privileges
of the holder shall cause such holder to be a shareholder of the Company for any
purpose by virtue hereof.
2.6 No Other Conversion. The conversion described in this Section 2
-------------------
shall constitute the sole methods by which this Note will convert.
3. Subordination. This Note and the indebtedness evidence by this Note
-------------
are subordinated to the prior payment in full of all or substantially all other
indebtedness of the Company pursuant to the terms of a Subordination Agreement
in the form attached hereto as Annex A and incorporated herein by reference.
-------
4. Prepayment. This Note may be prepaid, in its entirety (including the
----------
principal sum and interest accrued to the date of payment) without penalty or
premium at any time subject to the limitations on payment in the Subordination
Agreement.
5. Securities Matters; Restrictions on Transfers. The Noteholder
---------------------------------------------
acknowledges that this Note has been issued pursuant to that certain Asset
Purchase Agreement, dated as of [July __, 2000], by and among DoveBid, DoveBid
Australasia Pty Ltd ACN #, a Victorian company and wholly owned subsidiary of
DoveBid, Payee, C. N. Xxxxx & Associates Pty Ltd ACN 007 145 191, a Victorian
company and Xxxxxxxxxxx X. Xxxxx (the "Purchase Agreement") in reliance on,
among other things, the representations, warranties and covenants of the Payee
therein, and that this Note is and the Conversion Stock upon their issuance will
be subject to restrictions on transfer in the Securities Act and state
securities
3
laws, and under the Purchase Agreement, including without limitation, market-
standback restrictions therein. Such restrictions will be binding on any
permitted transferee of this Note and/or the Conversion Stock, and the Company
may place legends on any certificates representing this Note or the Conversion
Stock, and may impose stop-transfer instructions with respect to such
securities.
6. Usury Savings Clause. The Company and the Noteholder intend to comply
--------------------
at all times with applicable usury laws. If at any time such laws would render
usurious any amounts due under this Note under applicable law, then it is the
Company's and the Noteholder's express intention that the Company not be
required to pay interest on this Note at a rate in excess of the maximum lawful
rate, that the provisions of this Section 6 shall control over all other
provisions of this Note which may be in apparent conflict hereunder, that such
excess amount shall be immediately credited to the principal balance of this
Note (or, if this Note has been fully paid, refunded by the Noteholder to the
Company), and the provisions hereof shall immediately be reformed and the
amounts thereafter decreased, so as to comply with the then applicable usury
law, but so as to permit the recovery of the fullest amount otherwise due under
this Note.
7. General Provisions.
------------------
7.1 Notices. All notices and other communications required or
-------
permitted hereunder shall be effective upon receipt (or refusal of receipt) and
shall be in writing and delivered by depositing the same in United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, by delivering the same in person to
such party or to an officer or agent of such party, as follows:
(i) If mailed or delivered to the Company, to each of the
following, using two separate mailings or deliveries:
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Foster City, California 94404
Attn: Xxxx Xxxxx, Chief Financial Officer
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Foster City, California 94404
Attn: Xxxxxxx Xxxxxxxxxx, General Counsel
(ii) If mailed or delivered to the Payee, addressed to it at the
following address number:
______________________________
______________________________
______________________________
with a copy to:
4
or to such other address as any party hereto shall specify in writing to the
other parties hereto pursuant to this Section 7.1 from time to time. Such notice
shall be effective only upon actual receipt.
7.2 Severability; Headings. In case any provision of this Note shall
----------------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby, unless to do so would deprive the Noteholder or the Company of a
substantial part of its bargain. All headings used herein are used only for
convenience and shall not be used to construe or interpret this Note.
7.3 Assignment. Neither this Note nor any right or obligation
----------
hereunder may be assigned or delegated by Xxxxx without the prior written
consent of Company. Neither this Note nor any right or obligation hereunder may
be assigned or delegated by Company without the prior written consent of Payee,
except pursuant to a merger in which Company is a party, or pursuant to a sale
or other transfer of substantially all of the assets of Company. Any purported
assignment in violation of this paragraph shall be void.
7.4 Amendment; Waiver. Any provision of this Note may be amended or
-----------------
modified only by a writing signed by both Company and Payee. Compliance with any
provision of this Note may be waived only by a writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
7.5 Governing Law. This Note shall be construed and enforced in
-------------
accordance with, and governed by, the internal laws of the State of California,
excluding that body of law applicable to conflicts of laws.
7.6 United States Dollars. All dollar amounts set forth in this Note
---------------------
are United States Dollars.
[The rest of this page is intentionally left blank]
5
IN WITNESS WHEREOF, each party has caused this Note to be executed as of
the date first set forth above.
DOVEBID, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
Acknowledged and Agreed to:
MASONGREENE AUSTRALASIA PTY LTD
By: /s/ Xxxxx Xxxx
-----------------------------
President
Annex A to
Convertible Subordinated Promissory Note
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Subordination Agreement") is made as of
July __, 2000 by and between DoveBid, Inc. (the "Company") and Masongreene
Australasia Pty Ltd ACN 065 348 736, a Victorian company ("Creditor"), for the
benefit of all holders of Senior Debt (as defined below).
A. The Company concurrently herewith is issuing to Creditor its
Convertible Subordinated Promissory Note dated as of the same date as this
Subordination Agreement (collectively, the "Notes");
B. It is a term of the Notes that any and all amounts owing to
Creditor (or any subsequent holder of the Notes) under or pursuant to the Notes
be subordinated in right of payment to the prior payment in full of any and all
Senior Debt of the Company (as defined below); and
C. This Subordination Agreement sets forth the particular terms of
such subordination, and this Agreement is incorporated into and constitutes a
part of the Notes.
Now, therefore, the parties agree as follows:
1. Subordination; Note Subordinated to Senior Debt. Notwithstanding
-----------------------------------------------
anything to the contrary contained in either of the Notes or in this Annex A,
the Company covenants and agrees and each holder of a Note, by such holder's
acceptance thereof likewise covenants and agrees, that such Note shall be and is
issued subject to the provisions of this Subordination Agreement; and each
person holding such Note, whether upon original issue or upon transfer,
assignment or exchange thereof accepts and agrees that all payments of
Subordinated Obligations (all capitalized terms used in this Subordination
Agreement that are not defined above are used as defined in Section 9 below) by
the Company shall, to the extent and in the manner set forth in this
Subordination Agreement, be subordinated and junior in right of payment, to the
prior payment in full in cash or cash equivalents of all amounts payable on or
under any and all Senior Debt (including principal, interest, fees, commissions,
expenses and indemnities in respect thereof and any interest accruing subsequent
to the commencement or filing of any petition in any bankruptcy or insolvency
proceeding at the rate provided for in the documents governing such Senior Debt,
whether or not such interest is an allowed claim enforceable against the debtor
in a bankruptcy case under Title 11 of the United States Code).
To the extent any payment of Senior Debt (whether by or on behalf of
the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such
payment is recovered by, or paid over to, such trustee, receiver or other
similar party, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior Debt is
declared to be fraudulent, invalid or otherwise set aside under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law,
then the obligations so declared fraudulent, invalid or otherwise set aside (and
all other amounts which would come due with respect thereto had such obligations
not been so affected) shall be deemed to be reinstated and outstanding as Senior
Debt for all purposes hereof as if such declaration, invalidity or setting aside
had not occurred.
2. No Payment on Securities in Certain Circumstances.
-------------------------------------------------
(a) No direct or indirect payment by or on behalf of the Company of
Subordinated Obligations, whether pursuant to the terms of the Notes or upon
acceleration or otherwise shall be made if, at the time of such payment there
exists a default in the payment of all or any portion of the obligations on any
Senior Debt and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holder of such Senior Debt.
(b) In the event of any other default with respect to any Senior Debt
pursuant to which the maturity thereof may be accelerated, upon the receipt by
the holder of the Notes of written notice from a Designated Senior Creditor or
the Company, no payment of Subordinated Obligations may be made by or on behalf
of the Company for a period (a "Payment Blockage Period") commencing on the date
of receipt of such notice and ending 270 days thereafter (unless such Payment
Blockage Period shall be terminated by written notice to the holder from a
Designated Senior Creditor or all defaults with respect to Senior Debt shall
have been cured or waived). For purposes of this Section 2(b), after the
commencement of a Payment Blockage Period, no subsequent Payment Blockage Period
may be commenced unless a period of 30 consecutive days has passed since the
termination of the immediately preceding Payment Blockage Period. Subject to the
preceding sentence, successive Payment Blockage Periods may be commenced
hereunder.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 2, any payment shall be received by any holder of a Note when such
payment is prohibited by Section 2(a) or 2(b) of this Subordination Agreement,
such payment shall be held for the benefit of, and shall be paid over or
delivered to, the holders of Senior Debt or their respective representatives, or
to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may appear.
3. Payment Over of Proceeds Upon Dissolution, Etc.
----------------------------------------------
(a) Upon any payment or distribution of assets or securities of the
Company, as the case may be, of any kind or character, whether in cash, property
or securities, upon any dissolution or winding-up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceeding, all amounts due
or to become due upon all Senior Debt (including interest accruing subsequent to
the commencement or filing of any petition in any bankruptcy or insolvency
proceeding at the rate provided for in the documents governing such Senior Debt,
whether or not such interest is an allowed claim enforceable against the debtor
in a bankruptcy case under Title 11 of the United States Code) shall first be
indefeasibly paid in full in cash or cash equivalents, before the holder of any
Note shall be entitled to receive any payment on account of the Subordinated
Obligations, or any payment to acquire a Note for cash, property or securities
or any distribution with respect to a Note of any cash, property or securities.
Before any payment may be made by or on behalf of the Company of the
Subordinated Obligations, upon any such dissolution, winding-up, liquidation or
2
reorganization, any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities, to
which the holder of a Note would be entitled, except for the provisions of this
Subordination Agreement, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the holder of such Note if received by it,
directly to the holders of Senior Debt (pro rata to such holders on the basis of
the respective amounts of Senior Debt held by such holders) or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Senior Debt
indefeasibly in full in cash or cash equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Debt.
(b) In the event that, notwithstanding the foregoing provision of
this Section 3 prohibiting such payment or distribution, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, shall be received by the holder of a
Note at a time when such payment or distribution is prohibited by Section 3(a)
of this Subordination Agreement and before all obligations in respect of Senior
Debt are indefeasibly paid in full in cash or cash equivalents, such payment or
distribution shall be received and held for the benefit of, and shall be paid
over or delivered to, the holders of Senior Debt (pro rata to such holders on
the basis of the respective amount of Senior Debt held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been indefeasibly paid in full
in cash or cash equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior Debt.
(c) For purposes of this Subordination Agreement, the words "cash,
property or securities" shall not be deemed to include, so long as the effect of
this Section 3(c) is not to cause any Note to be treated in any case or
proceeding or similar event described in this Subordination Agreement as part of
the same class of claims as the Senior Debt or any class of claims on a parity
with or senior to the Senior Debt for any payment or distribution, securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment which are subordinated, to at least the same extent as such Note to
the payment of all Senior Debt then outstanding; provided that (i) if a new
corporation or entity results from such reorganization or readjustment, such
corporation or entity assumes the Senior Debt and (ii) the rights of the holders
of the Senior Debt are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company with or into, a corporation (or other entity) or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation or entity upon the terms and conditions, if any, allowed by the
Senior Debt shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in the Senior Debt.
4. Subrogation. Upon the indefeasible payment in full of all Senior Debt
-----------
in cash or cash equivalents, the holder of the Notes shall be subrogated to the
rights of the holders of Senior Debt to receive payments or distributions of
cash, property or securities of the Company made on such Senior Debt pro rata
based on the aggregate outstanding balances of
3
the Notes at such time until the principal of, premium, if any, and interest on
the Notes shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the holder of any Note would be entitled except
for the provisions of this Subordination Agreement and no payment over pursuant
to the provisions of this Subordination Agreement to the holders of Senior Debt
by the holder of any Note shall, as between the Company, its creditors other
than holders of Senior Debt, and the holder of such Note, be deemed to be a
payment by the Company to or on account of the Senior Debt. It is understood
that the provisions of this Subordination Agreement are and are intended solely
for the purpose of defining the relative rights of the holders of Notes, on the
one hand, and the holders of the Senior Debt, on the other hand.
5. Obligations of Company Unconditional. Nothing contained in this
------------------------------------
Subordination Agreement is intended to or shall impair, as among the Company and
holders of Notes, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of the Notes the principal of, premium, if
any, and interest on the Notes as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holder of the Notes and creditors of the Company other than the
holders of the Senior Debt.
6. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon
--------------------------------------------------------------
any payment or distribution of assets or securities referred to in this
Subordination Agreement, each holder of a Note shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to such holder of such Note for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Subordination Agreement.
7. Subordination Rights Not Impaired by Acts or Omissions of the Company
---------------------------------------------------------------------
or Holders of Senior Debt. No right of any present or future holders of any
-------------------------
Senior Debt to enforce subordination as provided herein will at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holder, or by any
noncompliance by the Company with the terms of any Notes, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The provisions of this Subordination Agreement are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Senior Debt.
8. No Waiver of Subordination Provisions. Without in any way limiting
-------------------------------------
the generality of Section 7, the holders of Senior Debt may, at any time and
from time to time, without the consent of or notice to any holder of any Note,
without incurring responsibility to the holder of any Note and without impairing
or releasing the subordination provided in this Subordination Agreement or the
obligations hereunder of the holder(s) of the Notes to the holders of Senior
Debt, do any one or more of the following: (a) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, Senior Debt or
any instrument evidencing the same or any agreement under which Senior Debt is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (c) release any
Person liable in any manner for the collection of Senior Debt and (d) exercise
or refrain from exercising any rights against the Company and any other Person.
4
9. Definitions. As used in this Subordination Agreement, the terms set
-----------
forth below shall have the respective meanings set forth opposite such terms
below:
"Designated Senior" means any holder of Senior Debt or any agent, trustee
or other similar representative for such a holder.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Senior Debt" means all debt and other monetary obligations of the Company
(including, without limitation, under any note, credit agreement, mortgage,
indenture, instrument or contract of any type or nature), and the Company's
guarantee of any debt or monetary obligation of any subsidiary of the Company,
in each case whether now existing or hereafter arising, and in each case
including all principal, interest, fees and expenses owing on or in connection
with such debt or other monetary obligations, as the same may be modified,
amended, restated or supplemented from to time; provided that the term "Senior
Debt" shall not include (a) any debt or other monetary obligation that expressly
provides in writing that it is subordinate to or pari passu with the Notes, (b)
---- -----
any debt of the Company which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, was without recourse to
the Company, (c) any debt of the Company to a subsidiary of the Company, (d) any
debt for borrowed money to any employee or director of the Company, and (e) any
accounts payable to trade creditors created or assumed by the Company or any
subsidiary of the Company in the ordinary course of business in connection with
the obtaining of materials or services.
"Subordinated Obligations" means principal and interest payable under or in
respect of the Notes, any fees, expenses or rights of reimbursement under or in
respect of the Notes, and all other claims, rights of rescission or other rights
of action under or in respect of the Notes.
10. Suspension of Certain Remedies. Notwithstanding anything to the
------------------------------
contrary contained elsewhere in the Notes, until all Senior Debt has been
indefeasibly repaid in full, no holder of any Note may commence or join with any
creditor in commencing, any bankruptcy, insolvency or similar proceeding with
respect to the Company or any of its subsidiaries.
11. Amendment, Supplement and Waiver. This Subordination Agreement may be
--------------------------------
amended, modified or supplemented only by a written instrument executed by the
Company, the holder of each Note, and each holder of Senior Debt affected
thereby.
12. Successors and Assigns. This Subordination Agreement shall be binding
----------------------
upon and inure to the benefit of the successors and assigns of the parties
hereto.
13. Attorney's Fees. If the holder of any Note files any claim to enforce
---------------
its rights under such Note, the holder shall be entitled to recover its
reasonable attorneys' fees from the Company; provided that the Company shall not
be required to reimburse the holder for any attorney's fees incurred or actions
taken at a time when payments are not permitted to be made on such Note pursuant
to this Subordination Agreement or for any assertion of rights by the holder
under such Note to the extent the rights being asserted are not permitted to be
exercised by virtue of the provisions of this Subordination Agreement.
5
14. Governing Law. This Subordination Agreement shall be construed and
-------------
enforced in accordance with, and governed by, the internal laws of the State of
California, excluding that body of law applicable to conflicts of laws.
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6
IN WITNESS WHEREOF, each party has caused this Subordination Agreement to
be executed as of the date first set forth above.
DOVEBID, INC.
By: ______________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
CREDITOR:
MASONGREENE AUSTRALASIA PTY
LTD
By: _______________________________
________
1
