Exhibit 10.31
SECURED FULL RECOURSE PROMISSORY NOTE
Foster City, California
$ 538,300.00 January 14, 2000
Reference is made to that certain Notice of Exercise of Stock Option (the
"PURCHASE AGREEMENT") of even date herewith, by and between the undersigned (the
"PURCHASER") and Dovebid, Inc., a Delaware corporation (the "Company"), issued
to Purchaser under the Company's 1999 Stock Option Plan. This Secured Full
Recourse Promissory Note (the "Note") is being tendered by Purchaser to the
Company as part of the total purchase price of the Shares (as defined below)
pursuant to the Purchase Agreement.
1. OBLIGATION. In exchange for the issuance to the Purchaser pursuant to
the Purchase Agreement of 700,000 shares of the Company's Common Stock (the
"SHARES"), receipt of which is hereby acknowledged, Purchaser hereby promises to
pay to the order of the Company on or before the fifth anniversary of the date
set forth above at the Company's principal place of business located at 0000 X.
Xxxxxxxxx Xxxx., Xxxxxx Xxxx, Xxxxxxxxxx 00000, or at such other place as the
Company may direct, the principal sum of five hundred and thirty-eight, thousand
three hundred dollars ($538,300) together with interest compounded monthly on
the unpaid principal at the rate of 6.04%, which rate is not less than the
minimum rate established pursuant to Section 1274(d) of the Internal Revenue
Code of 1986. as amended, on the earliest date on which there was a binding
contract in writing for the purchase of the Shares; provided, however, that the
rate at which interest will accrue on unpaid principal under this Note will not
exceed the highest rate permitted by applicable law. All payments hereunder
shall be made in lawful tender of the United States.
2. SECURITY. Performance of Purchaser's obligations under this Note is
secured by a security interest in the Shares granted to the Company by
Purchaser under a Stock Pledge Agreement dated of even date herewith between the
Company and Purchaser (the "PLEDGE AGREEMENT")
3. EVENTS OF DEFAULT. Purchaser will be deemed to be in default under this
Note upon the occurrence of any of the following events (each an "EVENT OF
DEFAULT"): (i) upon Purchaser's failure to make any payment when due under this
Note; (iii) the failure of any representation or warranty in the Pledge
Agreement to have been true, the failure of Purchaser to perform any obligation
under the Pledge, or upon any other breach by the Purchaser of the Pledge
Agreement; (iv) any voluntary or involuntary transfer of any of the Shares or
any interest therein (except a transfer to the Company) without the Company's
consent; (v) upon the filing regarding the Purchaser of any voluntary or
involuntary petition for relief under the United States Bankruptcy Code or the
initiation of any proceeding under federal law or law of any other jurisdiction
for the general relief of debtors; or (vi) upon the execution by Purchaser of an
assignment for the benefit of creditors or the appointment of a receiver,
custodian, trustee or similar party to take possession of Purchaser's assets or
property.
4. ACCELERATION: REMEDIES ON DEFAULT. Upon the occurrence of any Event of
Default, at the option of the Company, all principal and other amounts owed
under this Note shall become immediately due and payable without notice or
demand on the part of the Company, and the Company will have, in addition to its
rights and remedies under this Note, the Pledge Agreement, full recourse against
any real, personal, tangible or intangible assets of Purchaser, and may pursue
any legal or equitable remedies that are available to it.
5. RULE 144 HOLDING PERIOD. PURCHASER UNDERSTANDS THAT THE HOLDING PERIOD
SPECIFIED UNDER RULE 144(d) OF THE SECURITIES AND EXCHANGE COMMISSION WILL NOT
BEGIN TO RUN WITH RESPECT TO SHARES PURCHASED WITH THIS NOTE UNTIL EITHER (i)
THE EXERCISE PRICE OF SUCH SHARES IS PAID IN FULL IN CASH OR BY OTHER PROPERTY
ACCEPTED BY THE COMPANY, OR (ii) THIS NOTE IS SECURED BY COLLATERAL, OTHER THAN
THE SHARES THAT HAVE NOT BEEN FULLY PAID FOR IN CASH, HAVING A FAIR MARKET VALUE
AT LEAST EQUAL TO THE AMOUNT OF PURCHASERS THEN OUTSTANDING OBLIGATION UNDER
THIS NOTE (INCLUDING ACCRUED INTEREST).
6. PREPAYMENT. Prepayment of principal and/or other amounts owed under this
Note may be made at any time without penalty. Unless otherwise agreed in writing
by the Company, each payment will be applied to the extent of available funds
from such payment in the following order: (i) first to the accrued and unpaid
costs and expenses under the Note or the Pledge Agreement; (ii) then to the
accrued but unpaid interest, and (iii) lastly to the outstanding principal.
7. GOVERNING LAW; WAIVER. The validity, construction and performance of
this Note will be governed by the internal laws of the State of California,
excluding that body of law pertaining to conflicts of law. Purchaser hereby
waives presentment, notice of non-payment, notice of dishonor, protest, demand
and diligence.
8. ATTORNEYS' FEES. If suit is brought for collection of this Note,
Xxxxxxxxx agrees to pay all reasonable expenses, including attorneys' fees,
incurred by the holder in connection therewith whether or not such suit is
prosecuted to judgment.
IN WITNESS WHEREOF, Xxxxxxxxx has executed this Note as of the date and
year first above written.
By: Xxxxx Xxxx By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx Xxxxxxxxx's Signature
