SHAREHOLDERS AGREEMENT dated as of September 1, 2011 among LIQUIDITY SERVICES, INC., JACOBS TRADING, LLC, WGD, INC. and CERTAIN INDIVIDUALS AS SET FORTH HEREIN TABLE OF CONTENTS

 

 

dated as of

 

September 1, 2011

 

among

 

 

LIQUIDITY SERVICES, INC.,

 

JACOBS TRADING, LLC,

 

 

and

 

 

 

 

 

 

 

 

 

 

 

AGREEMENT dated as of September 1, 2011 among Liquidity Services, Inc., a Delaware corporation (“Parent”), Jacobs Trading, LLC, a Minnesota limited liability company (“Seller”), WGD, Inc., a Minnesota corporation (“WGD”), and Irwin L. Jacobs and Howard Grodnick, each an individual (each of Irwin L. Jacobs and Howard Grodnick, a “Principal Holder”) (Seller, WGD, each Principal Holder, and each other Person that becomes a party to this Agreement in accordance with ‎Article 3, collectively, the “Shareholder Parties” and, individually, a “Shareholder Party”).

 

 

WHEREAS, concurrently with the execution and delivery of this Agreement, Seller, Parent and Profar Acquisition Partners, LLC, a Delaware limited liability company and wholly owned subsidiary of Parent (“Buyer”), are entering into the Asset Purchase Agreement dated as of the date hereof (the “Asset Purchase Agreement”), pursuant to which Buyer has agreed to purchase from Seller, and Seller has agreed to sell to Buyer, the Business, upon the terms and subject to the conditions set forth therein;

 

WHEREAS, upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, Seller will acquire (i) 900,171 shares of Parent Common Stock (as such number of shares may be adjusted pursuant to Section 2.12 (Adjustments) of the Asset Purchase Agreement) at the consummation of the transactions contemplated by the Asset Purchase Agreement (the “Closing Shares”) and (ii) such additional shares of Parent Common Stock, if any, that may be issued to Seller as part of any Earn-Out Payments made pursuant to Section 2.11 (Earn-Out Payments) of the Asset Purchase Agreement (collectively, the “Earn-Out Shares” and, together with the Closing Shares, the “Acquired Shares”);

 

WHEREAS, WGD directly owns 74.85% of the outstanding equity interests of Seller;

 

WHEREAS, each Principal Holder, directly, and/or through one or more other Persons, indirectly owns the WGD Shares set forth on Exhibit A opposite such Principal Holder’s name, which WGD Shares collectively represent 66.7% of the total outstanding WGD Shares and, through which, the Principal Holders collectively indirectly control approximately 49.88% of the equity interests of Seller; and

 

WHEREAS, the parties hereto desire to enter into this Agreement to establish, among other things, certain arrangements with respect to the Acquired Shares as well as certain restrictions on activities in respect of the Acquired

 

 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereto agree as follows:

 

 

ARTICLE 1

Definitions

 

Section 1.01.  Definitions Generally.  For purposes of this Agreement, terms used in this Agreement that are defined in the Asset Purchase Agreement but not in this Agreement shall have the respective meanings ascribed to them in the Asset Purchase Agreement.

 

Section 1.02.  Certain Definitions.  (a) In addition, the following terms, as used herein, have the following meanings:

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person; provided that, for the avoidance of doubt, no Shareholder Party shall be considered an Affiliate of Parent or any of its Subsidiaries for purposes of this Agreement.  For the purpose of this definition, the term “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Registrable Securities” means, at any time, any Acquired Shares held by Seller and any securities that may be issued or distributed in respect thereof because of stock splits, stock dividends, reclassifications, recapitalizations, mergers, consolidations or similar events.  As to any particular Registrable Securities, such Acquired Shares shall cease to be Registrable Securities upon the earlier of (i) the date such Acquired Shares have been sold or otherwise transferred by Seller, (ii) the date such Acquired Shares are no longer outstanding or (iii) the date such Acquired Shares have become freely tradeable pursuant to Rule 144.

 

“Registration Expenses” means all expenses incident to Parent’s performance of or compliance with ‎Article 4, including (i) all registration, listing, qualification and filing fees (including FINRA filing fees), (ii) fees and disbursements of counsel for Parent, (iii) accounting fees, (iv) blue sky fees and expenses (including counsel fees in connection with the preparation of a blue sky

 

 

 

“Rule 144” means Rule 144 (or any successor provisions) under the 1933 Act.

 

“Seller Equity Interests” means (i) the membership or other equity interests of Seller and (ii) any securities convertible into or exchangeable or exercisable for membership or other equity interests of Seller.

 

 “Transfer” means, with respect to any Acquired Share, any transfer, sale, conveyance, assignment, gift, hypothecation, pledge or other disposition, whether voluntary or by operation of law, of such Acquired Share.   The term “Transfer” used as a verb shall have a corresponding meaning.

 

“WGD Shares” means the shares, par value $0.01, of common stock of WGD.

 

 

Term	Section
Acquired Shares	Recitals
Asset Purchase Agreement	Recitals
Backstop Cap	‎5.03(b)
Backstop Percentage	‎5.03(b)
Buyer	Recitals
Closing Shares	Recitals
Confidential Information	‎5.01(b)
Demand Registration	‎4.01(a)
Earn-Out Shares	Recitals
Hedging Arrangement	‎3.02(b)
Indemnified Party	‎4.06
Indemnifying Party	‎4.06
Inspectors	‎4.03(g)
Losses	‎4.04
Maximum Offering Size	‎4.01(c)

 

 

Section 1.03.  Other Definitional and Interpretative Provisions.  The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified.  All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import.  “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  References to “law”, “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law.

 

 

ARTICLE 2

Representations And Warranties

 

Section 2.01.  Representations and Warranties of each Shareholder Party.  Each Shareholder Party (other than Seller whose representations and warranties to Parent are included in the Asset Purchase Agreement) represents and warrants, severally as to itself but not jointly with any other Shareholder Party, to Parent that:

 

 

 

 

 

 

 

 

 

 

Section 2.02.  Representations and Warranties of Parent.  Parent represents and warrants to each Shareholder Party that:

 

 

 

 

 

 

 

 

ARTICLE 3

Restrictions on Transfer; Legends

 

Section 3.01.  General Restrictions on Transfer.  Notwithstanding anything herein to the contrary, each Shareholder Party agrees that it shall not Transfer any Acquired Shares, except in compliance with the 1933 Act, any other applicable non-U.S. or state securities or “blue sky” laws, and the terms and conditions of this Agreement.

 

 

Section 3.02.  Restrictions on Transfers Prior to the Restriction Termination Date.  (a) From and after the Closing until the date that is six months following the Closing Date (the “Restriction Termination Date”), Seller shall not Transfer any Acquired Shares (or solicit any offers in respect of any Transfer thereof).

 

 

 

 

Section 3.03.  Transfers of Acquired Shares Following the Restriction Termination Date.  Following the Restriction Termination Date, no Shareholder Party shall effect a Transfer of any Acquired Shares, other than:

 

 

 

 

Section 3.04.  Policy on Insider Trading and Reporting.  Each Shareholder Party who is an employee or consultant of Parent or any of its Subsidiaries, shall be subject to the applicable provisions of Parent’s policies on insider trading and reporting compliance as in effect at such time (a copy of which will be provided by Parent to any such Shareholder Party promptly upon written request) with respect to the Acquired Shares owned beneficially or of record by such Shareholder Party.

 

Section 3.05.  Legends on Acquired Shares.  (a) In addition to any other legend that may be required, each certificate or book-entry representing Acquired Shares shall bear a legend in substantially the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY NON-U.S. OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.  THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS’ AGREEMENT DATED AS OF SEPTEMBER 1, 2011, AS AMENDED FROM TIME TO TIME, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM LIQUIDITY SERVICES, INC. OR ANY SUCCESSOR THERETO, AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.

 

 

 

Section 3.06.  Notice of Transfers.  Each Shareholder Party shall give Parent written notice as soon as possible of any Transfers of Acquired Shares by such Shareholder Party (i) made in accordance with ‎Section 3.03(a) or (ii) made in accordance with ‎Section 3.03(c) to the extent no Joinder Agreement is required to be delivered pursuant to such Section because the transferee is a Shareholder Party already party to this Agreement, which notice shall set forth, in each case, the number of Acquired Shares Transferred, and in the case of clause (ii), the identity of the transferee.

 

Section 3.07.  Rule 144 Reporting.  For a period of one year after the date hereof, Parent agrees to use its reasonable best efforts to:

 

 

 

 

Section 3.08.  Invalidity of Prohibited Transfers.  Any attempt to Transfer any Acquired Shares not in compliance with this Agreement shall be null and void, and Parent shall not, and shall cause any transfer agent for the Parent Common Stock not to, give any effect in Parent’s stock records to such attempted Transfer.

 

 

ARTICLE 4

Registration Rights

 

Section 4.01.  Demand Registration.  (a) If at any time following the Restriction Termination Date, Parent shall receive a request from Seller that Parent effect the registration under the 1933 Act of all or any portion of the Registrable Securities, and specifying the intended method of disposition thereof and the number of Registrable Securities requested to be registered (such request, a “Demand Registration”), then Parent shall use its reasonable efforts to effect, as promptly as practicable, the registration under the 1933 Act of all such Registrable Securities for which Seller has requested registration in accordance with the registration procedures set forth in ‎Section 4.03.  Parent shall not be obligated to effect more than one Demand Registration; provided, however, that (i) if at the time any Earn-Out Shares are issued to Seller as part of the 2012 Earn-Out Payment, Seller shall have previously exercised its Demand Registration, Seller shall have the right to request one additional Demand Registration and (ii) if at the time any Earn-Out Shares are issued to Seller as part of the 2013 Earn-Out Payment, Seller shall have previously exhausted all Demand Registrations available to Seller hereunder, Seller shall have the right to request one additional Demand Registration.  Seller may, at any time prior to the effective date of the registration statement relating to such Demand Registration, revoke such request by providing a written notice to Parent revoking such request.  Any Demand Registration so revoked prior to the effective date of the applicable registration statement shall not count as a Demand Registration so long as Seller promptly reimburses Parent for all Registration Expenses incurred in respect of such revoked Demand Registration.

 

 

 

 

 

 

 

 

Section 4.02.  Piggyback Registration.  (a) If at any time following the Restriction Termination Date, Parent proposes to register any Parent securities under the 1933 Act (other than a registration on Form S-8, S-4 or F-4, or any successor forms, relating to Parent securities issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of Parent or in connection with a direct or indirect acquisition by Parent of another Person, and other than a “shelf” registration pursuant to a registration statement filed with the SEC in accordance with and pursuant to Rule 415 promulgated under the 1933 Act), whether or not for sale for its own account, to the extent that Seller owns Registrable Securities and remains entitled to request Demand Registration pursuant to ‎Section 4.01, Parent shall each such time give prompt notice to Seller at least 5 Business Days prior to the anticipated filing date of the registration statement relating to such registration, which notice shall set forth Seller’s rights under this ‎Section 4.02 and shall offer Seller the opportunity to include in such registration statement the number of Registrable Securities of the same class or

 

 

 

 

 

Section 4.03.  Registration Procedures.  Whenever Seller requests that any Registrable Securities be registered pursuant to Sections ‎4.01 or ‎4.02, subject to the provisions of such Sections, Parent shall use its reasonable efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as promptly as practicable, and, in connection with any such request:

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 4.04.  Indemnification by Parent.  Parent agrees to indemnify and hold harmless Seller, its officers, directors, employees, partners and agents, and each Person, if any, who controls Seller within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any and all losses, claims, damages, liabilities and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses) (“Losses”) caused by or relating to any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if Parent shall have furnished any amendments or supplements thereto) or any preliminary prospectus or free writing prospectus (as defined in Rule 405 under the 1933 Act), or caused by or relating to any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses are caused by or related to any such untrue statement or omission or alleged untrue statement or omission so made based upon information furnished to Parent by Seller or on Seller’s behalf expressly for use therein.  Parent also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act on substantially the same basis as that of the indemnification of Seller provided in this ‎Section 4.04.  As a condition to including Registrable Securities in any registration statement filed in accordance with ‎Article 4, Parent may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities.

 

Section 4.05.  Indemnification by Seller.  Seller agrees to indemnify and hold harmless Parent, its officers, directors and agents and each Person, if any, who controls Parent within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from Parent to Seller, but only with respect to information furnished by Seller or on Seller’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or

 

 

Section 4.06.  Conduct of Indemnification Proceedings.  If any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this ‎Article 4, such Person (an “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood that, in connection with any proceeding or related proceedings in the same jurisdiction, the Indemnifying Party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

 

 

Section 4.07.  Contribution.  (a) If the indemnification provided for in this ‎Article 4 is unavailable to the Indemnified Parties in respect of any Losses, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses (i) as between Parent and Seller on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by Parent and Seller on the one hand and the underwriters on the other, from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of Parent and Seller on the one hand and of such underwriters on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations and (ii) as between Parent on the one hand and Seller on the other, in such proportion as is appropriate to reflect the relative fault of Parent and Seller in connection with such statements or omissions, as well as any other relevant equitable considerations.  The relative benefits received by Parent and Seller on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by Parent and Seller bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the prospectus.  The relative fault of Parent and Seller on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Parent and Seller or by such underwriters.  The relative fault of Parent on the one hand and of Seller on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

 

 

Section 4.08.  Participation in Public Offering.  If Registrable Securities are to be sold pursuant to a registration under this ‎Article 4 in an underwritten offering, in order to exercise its right to registration hereunder Seller must (a) agree to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements (including the entry into an underwriting agreement in customary form with the underwriter or underwriters so approved) and (b) complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement in respect of registration rights.

 

Section 4.09.  Other Indemnification.  Indemnification similar to that specified herein (with appropriate modifications) shall be given by Parent and Seller with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the 1933 Act.

 

Section 4.10.  Termination of Registration Rights.  This ‎Article 4 shall terminate on the date on which all Acquired Shares subject to this Agreement cease to be Registrable Securities.

 

Section 4.11.  No Transfer of Registration Rights.  None of the rights of Seller under this ‎Article 4 shall be assignable by Seller to any Person.

 

 

ARTICLE 5

Certain Covenants and Agreements Applicable to Restricted Parties

 

Section 5.01. Confidentiality.  (a) After the date hereof, each of Seller, WGD and each Principal Holder (collectively, the “Restricted Parties” and, individually, a “Restricted Party”) agrees to hold, and will cause its Affiliates and their respective Representatives to hold, in confidence, unless compelled to disclose by Applicable Law (so long as, to the extent legally permissible, such Restricted Party provides Parent with reasonable prior notice of such disclosure and a reasonable opportunity to contest such disclosure), the Confidential Information, except to the extent that the Confidential Information can be shown to have been in the public domain through no fault of any Restricted Party or any of their respective Affiliates or Representatives. The obligation of each Restricted Party, its Affiliates and their respective Representatives to hold any such information in confidence shall be satisfied if they exercise the same care with respect to such information as they would take to preserve the confidentiality of their own similar information.  Between the date hereof and the Closing, each Restricted Party shall maintain the confidentiality of the information referred to in clause ‎(iii) of the definition of Confidential Information in the same manner and

 

 

 

Section 5.02.  Non-Competition; No-Hire.  (a) In order that Parent and Buyer may have and enjoy the full benefit of the Business and the Purchased Assets and as an inducement to Parent and Buyer to enter into the Asset Purchase Agreement and the other Transaction Documents (without which inducement Parent and Buyer would not have entered into such agreements), from the Closing Date until the fifth anniversary thereof (the “Restricted Period”), each Restricted Party agrees not to, and agrees to cause each of its Affiliates not to, directly or indirectly, in the United States or elsewhere, on such Person’s own behalf or on the behalf of another (including as a shareholder, member, partner, joint venturer or investor of another Person):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section 5.03.  Seller Failure to Pay Specified Payment Obligations.  (a) If Seller fails to pay to any Buyer Indemnified Party any Damages for which such Buyer Indemnified Party is entitled to indemnification directly from Seller pursuant to Article 11 (Survival; Indemnification) of the Asset Purchase Agreement, excluding Damages arising out of Warranty Breaches of representations and warranties that are not Fundamental Seller Representations, but solely to the extent such Warranty Breaches do not involve fraud (a “Specified Payment Obligation”) (in each case, including as a result of Seller ceasing to exist following the liquidation, dissolution or other similar proceeding involving Seller), then each Principal Holder shall pay such Principal Holder’s Backstop Percentage of such Specified Payment Obligation to Parent (or its designee) promptly (but no later than 10 Business Days) after receipt of written notice thereof from Parent (a “Specified Payment Backstop Notice”); provided that Parent shall not deliver a Specified Payment Backstop Notice pursuant to this ‎Section 5.03 if Seller has timely and in good faith disagreed with Buyer’s determination of the Specified Payment Obligation, in each case, in accordance with the applicable provisions of the Asset Purchase Agreement, and such dispute has not been resolved either through a negotiated resolution or by arbitration in accordance with the Asset Purchase Agreement and the other Transaction Documents; and provided, further, each Principal Holder’s maximum aggregate liability pursuant to this ‎Section 5.03 as of any date, except with respect to any

 

 

 

 

 

 

Section 5.04.  Cooperation.  (a) Each Restricted Party agrees to cooperate with the other parties hereto and to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable to consummate the transactions contemplated by this Agreement and the other Transaction Documents. Each Restricted Party agrees to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or

 

 

 

Section 5.05.  Public Announcements.  From and after the date hereof (and including following the Closing), no Restricted Party shall issue any press release or make any public statement with respect to this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby without Parent’s prior written consent.  The provisions of this ‎Section 5.05 shall not apply to Seller, and in lieu thereof, the provisions of Section 7.03 (Public Announcements) of the Asset Purchase Agreement shall apply to Seller.

 

Section 5.06.  Conflicting Documents.  Each Restricted Party that is a corporation, partnership, limited liability company, trust or other entity agrees to take all actions necessary to ensure that its organizational or constituent documents do not at any time conflict with or violate any provision of this Agreement.

 

Section 5.07.  Transfer of WGD Domain Names.  At the Closing, WGD shall (a) sell, convey, transfer, assign and deliver to Buyer, and Buyer shall acquire and accept, all of WGD’s right, title and interest in, to and under the internet domain names set forth opposite WGD’s name in Section 3.17(a) of the Seller Disclosure Schedule and the websites located at such domain names, in each case free and clear of all Liens, and (b) deliver to Buyer such endorsements, consents, assignments and other good and sufficient instruments of transfer, conveyance and assignment as Buyer, WGD and their respective counsel shall deem reasonably necessary or appropriate to vest in Buyer all right, title and interest in, to and under such internet domain names and websites in accordance with the terms of this ‎Section 5.07, in each case duly executed by WGD.

 

 

ARTICLE 6

Termination

 

Section 6.01.  Termination.  This Agreement and all obligations of the parties hereunder shall automatically terminate upon the termination of the Asset Purchase Agreement prior to the Closing in accordance with its terms.  Upon the termination of this Agreement, neither Parent nor any Shareholder Party shall have any rights or obligations hereunder and this Agreement shall become null and void and have no effect; provided that Sections ‎5.01, ‎7.02 and ‎7.04 through

 

 

 

ARTICLE 7

Miscellaneous

 

Section 7.01.  Binding Effect; Assignability; Benefit. (a)  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns.

 

 

Section 7.02.  Notices.  All notices, requests and other communications to any party shall be in writing and shall be delivered in person, mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission:

 

if to Parent, to:

 

Liquidity Services, Inc.

1920 L Street NW, 6th Floor

Washington DC 20036

Attention: James E. Williams

Facsimile No.: (202) 558-6246

 

with a copy to:

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York  10017

Attention:  Phillip R. Mills

William J. Chudd

Facsimile No.: (212) 701-5800

 

 

if to Seller, to:

 

Jacobs Trading, LLC

8096 Excelsior Boulevard

Hopkins, MN 55343

Attention: Irwin L. Jacobs

Facsimile No.: (612) 338-8118

 

with a copy to:

 

Maslon Edelman Borman & Brand, LLP

90 South 7th Street, Suite 3300

Minneapolis, MN 55402

Attention: Barry A. Gersick

Facsimile No.: (612) 642-8384

 

 

Section 7.03.  Waiver; Amendment.  (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

 

 

Section 7.04.  Fees and Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with the preparation of this Agreement, or any amendment or waiver hereof, and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.

 

 

Section 7.05.  Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state.

 

Section 7.06.  Jurisdiction.  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Northern District of Illinois, so long as such court shall have subject matter jurisdiction over such action, and solely to the extent that the parties seek, but such court denies, subject matter jurisdiction, such action shall be brought in any state court sitting in New York City (in which case, the applicable action shall be deemed to have arisen from a transaction of business in the State of New York), and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in ‎Section 7.02 shall be deemed effective service of process on such party.

 

Section 7.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.08.  Specific Enforcement.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court having jurisdiction pursuant to ‎Section 7.06, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 7.09.  Third Party Enforcement Rights.  Buyer is hereby made an express third-party beneficiary of the rights granted to Parent under ‎Article 5 of this Agreement and shall be entitled to enforce Parent’s rights under ‎Article 5 of this Agreement pursuant to this ‎Section 7.09 to the same extent as though Buyer were Parent hereunder.

 

Section 7.10. Counterparts; Effectiveness.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an

 

 

Section 7.11.  Entire Agreement.  This Agreement, the other Transaction Documents and the Confidentiality Agreement constitute the entire agreement among the parties hereto (including any subset thereof) and supersede all prior and contemporaneous agreements and understandings, both oral and written, among the parties hereto (including any subset thereof) with respect to the subject matter hereof and thereof.

 

Section 7.12. Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	LIQUIDITY SERVICES, INC.
	By:	/s/ William P. Angrick, III
		Name:	William P. Angrick, III
		Title:	Chairman and CEO

	JACOBS TRADING, LLC
	By:	/s/ Howard Grodnick
		Name:	Howard Grodnick
		Title:	President

 

	WGD, INC.
	By:	/s/ David A. Mahler
		Name:	David A. Mahler
		Title:	Secretary

 

 

 

 

 

 

 

 

	/s/ Howard Grodnick
	Name:  Howard Grodnick
	Address for Notice: 8096 Excelsior Boulevard Hopkins, MN 55343 (612) 338-8118   With a copy to: Maslon Edelman Borman & Brand, LLP 90 South 7th Street, Suite 3300 Minneapolis, MN 55402 Attention: Barry A. Gersick Facsimile No.: (612) 642-8384

 

[Signature page to Shareholders’ Agreement]

 

 

 

	/s/ Irwin L. Jacobs
	Name:  Irwin L. Jacobs
	Address for Notice: 8096 Excelsior Boulevard Hopkins, MN 55343 (612) 338-8118   With a copy to: Maslon Edelman Borman & Brand, LLP 90 South 7th Street, Suite 3300 Minneapolis, MN 55402 Attention: Barry A. Gersick Facsimile No.: (612) 642-8384

 

[Signature page to Shareholders’ Agreement]