LQDT » Topics » Item 1.01. Entry into a Material Definitive Agreement.

This excerpt taken from the LQDT 8-K filed Feb 6, 2009.

Item 1.01.  Entry into a Material Definitive Agreement.

 

At the Annual Meeting of Stockholders of Liquidity Services, Inc. (the “Company”) held on February 2, 2009, stockholders approved an increase of 5,000,000 shares of the Company’s common stock available for issuance under the Company’s 2006 Omnibus Long-Term Incentive Plan (the “Plan”) to a total of 10,0000,000 shares, and an increase in the number of shares that may be issued as Incentive Stock Options under the Plan to 10,000,000 shares (subject to the overall limit of 10,000,000 awards under the Plan).

 

The Plan was originally filed as Exhibit 10.10 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the “SEC”) on February 1, 2006.  The Plan, as amended and restated, will be filed as an exhibit to the Company’s next periodic report or registration statement filed with the SEC.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

LIQUIDITY SERVICES, INC.

 

 

(Registrant)

 

 

 

 

Date: February 6, 2009

By:

/s/James E. Williams

 

Name:

James E. Williams

 

Title:

Vice President, General Counsel and Corporate Secretary

 

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This excerpt taken from the LQDT 8-K filed Feb 5, 2009.

Item 1.01.  Entry into a Material Definitive Agreement.

 

On February 4, 2009, Liquidity Services, Inc. (the “Company”) and the Defense Reutilization and Marketing Service of the U.S. Department of Defense (the “DRMS”) entered into Supplemental Agreement 1 (the “Supplemental Agreement”) to the Surplus Usable Property Sales Contract (Sales Contract Number 08-0001-0001) (the “New Surplus Contract”).   The New Surplus Contract requires that the Company acquire all usable surplus property offered to it by the DRMS. The Supplemental Agreement reduces the price at which the Company will acquire this usable surplus property to a fixed percentage of approximately 1.8% of the DRMS’ original acquisition value.  The New Surplus Contract originally set this price at 3.26% of the DRMS’ original acquisition value.  The Company expects to commence operations under the New Surplus Contract immediately.

 

The New Surplus Contract, originally awarded to the Company on July 31, 2008, was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on August 6, 2008 (the “August 8-K”).  The other provisions of the New Surplus Contract described in Item 1.01 of the August 8-K remain unchanged.  The Supplemental Agreement, attached hereto as Exhibit 10.1, contains certain other modifications to the New Surplus Contract which are not material to the Company.

 

The Company and the DRMS are also parties to a contract under which the Company has the exclusive right to manage and sell substantially all DRMS scrap property (the “Scrap Contract”).  The Scrap Contract was filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-129656), filed with the SEC on November 14, 2005.  As described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, filed with the SEC on December 8, 2008, the Company depends on its contracts with the DRMS for a significant portion of its revenue.

 

This excerpt taken from the LQDT 8-K filed Aug 6, 2008.

Item 1.01.  Entry into a Material Definitive Agreement.

 

On July 31, 2008, Liquidity Services, Inc. (the “Company”), was awarded the Surplus Usable Property Sales Contract (Sales Contract Number 08-0001-0001) (the “New Surplus Contract”) by the Defense Reutilization and Marketing Service (the “DRMS”) of the U.S. Department of Defense (the “DoD”).  A copy of the New Surplus Contract is attached hereto as Exhibit 10.1 and is incorporated herein by reference.  A press release, issued on August 4, 2008, announcing the award of the New Surplus Contract by the DRMS to LSI is attached hereto as Exhibit 99.1.

 

The New Surplus Contract requires that LSI acquire all usable surplus property offered to it by the DRMS under the New Surplus Contract at a fixed percentage of approximately 3.26% of the DRMS’ original acquisition value.  LSI will retain 100% of the profit from the resale of the property and bear all of its costs for the merchandising and sale of the property. The DRMS has broad discretion to determine what property will be made available for sale to LSI under the New Surplus Contract and may retrieve or restrict property previously sold to LSI under the New Surplus Contract for national security reasons or if the property is otherwise needed to support the mission of the DoD. The New Surplus Contract has a 36 month term (with two 12 month renewal options exercisable by the DRMS) and contains a provision allowing either the Company or the DRMS to terminate the contract for convenience. The New Surplus Contract is effective as of July 31, 2008; LSI expects to commence operations under the New Surplus Contract during the first half of its fiscal year 2009.

 

LSI and the DRMS are also parties to a contract under which LSI has the exclusive right to manage and sell substantially all DoD scrap property (the “Scrap Contract”).  As described in LSI’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, LSI depends on its contracts with the DRMS for a significant portion of its revenue.

 

This excerpt taken from the LQDT 8-K filed May 15, 2008.

Item 1.01.  Entry into a Material Definitive Agreement.

 

On May 13, 2008, Liquidity Services, Inc. (the “Company”), through its wholly-owned subsidiary Surplus Acquisition Venture, LLC (“SAV”), and the Defense Reutilization and Marketing Service (the “DRMS”) of the U.S. Department of Defense entered into a Supplemental Agreement (the “Amendment”) relating to Commercial Venture II (CV-II) (Sales Contract Number 99-0001-0002), entered into as of June 13, 2001, between SAV and the DRMS (the “Surplus Contract”), which was previously filed by the Company as Exhibit 10.1 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on November 14, 2005. The Surplus Contract was previously amended pursuant to an amendment filed by the Company as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 13, 2006.  A copy of the associated press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The Amendment, which is effective as of May 13, 2008, (1) extends the performance period for the Surplus Contract by 180 days to December 19, 2008 (the “Extension Period”), (2) enables the Government to include or exclude items from a delivery order under the Surplus Contract based on national security concerns at its sole discretion during the Extension Period, (3) allows either party to terminate the Surplus Contract (without cost to the Government) upon 60 days written notice to the other party and (4) increases the profit-sharing distribution payable to the Company under the Surplus Contract to 39.5% for the Extension Period.

 

This excerpt taken from the LQDT 8-K filed Apr 10, 2008.

Item 1.01.  Entry into a Material Definitive Agreement.

 

Liquidity Services, Inc., a Delaware corporation (“LSI”), and Liquidity Services Limited, a wholly-owned subsidiary of LSI   incorporated under the laws of England (“LSL”), have entered into share purchase agreements (each, a “Share Purchase Agreement”) with David M. Jacobs, Simon Jacobs, Darren M. Dorrington and Darren L. Innocent (collectively, the “Sellers”) under which LSL will acquire (the “Acquisition”) all of the issued share capital of each of Geneva Industries Ltd. (“GIL”), Willen Trading Ltd. (“WTL”) and Geneva Auctions Ltd. (“GAL”, and together with GIL and WTL, the “Geneva Group”).  The Share Purchase Agreements with respect to the share capital of GIL and WTL are dated April 5, 2008, and the Share Purchase Agreement with respect to the share capital of GAL is dated April 6, 2008.

 

The aggregate consideration to be paid to the Sellers at Closing will consist of a cash payment of approximately $17.0 million, subject to post-closing purchase price adjustments.  In addition, the Sellers will be eligible to receive contingent earn-out payments of up to approximately $2.9 million, payable over the three years following the Closing, based on the operating results of the Geneva Group.  Ten percent of the amount payable to each Seller upon Closing will be held in escrow for a period of 12 months following the Closing and will be used to fund any downward adjustment in the purchase price and to fund any indemnification obligation owed by such Seller under the Share Purchase Agreements.  The Closing of the Acquisition is subject to satisfaction of customary closing conditions.  The Share Purchase Agreements may be terminated under various circumstances, including, among others, in the event of a material breach of any warranty or covenant.

 

Prior to the Acquisition, there were no material relationships between LSI or its affiliates, on the one hand, and the Geneva Group, or the Sellers, on the other hand.

 

A press release, issued on April 10, 2008, announcing the Share Purchase Agreements is attached as Exhibit 99.1 hereto.

 

This excerpt taken from the LQDT 8-K filed Oct 23, 2007.

Item 1.01.  Entry into a Material Definitive Agreement.

 

      On October 17, 2007, Liquidity Services, Inc. (the “Company”), Surplus Acquisition Venture, LLC, a wholly-owned subsidiary of the Company (“Surplus”), and United Bank (the “Lender”) entered into a Fifth Modification of Loan Agreement (the “Modification”) that amended the loan agreement among them dated June 7, 2005, as amended (the “Base Loan Agreement”).

 

      The Base Loan Agreement as modified by the Modification (the “Loan Agreement”) establishes a credit facility that the Company may draw upon in an aggregate principal amount of up to $30,000,000, provided that the maximum amount available is determined quarterly and shall not exceed 1.5x the amount of the Company’s aggregate adjusted EBITDA for the previous four quarters. Borrowings under the Loan Agreement bear interest at LIBOR plus a spread of 1.5% and may be used to finance acquisitions and for working capital.

 

      The Company’s obligations under the Loan Agreement are secured by substantially all of the Company’s and Surplus’ assets pursuant to security agreements between each of the Company and Surplus and the Lender dated June 7, 2005 (the “Security Agreements”).

 

      The Loan Agreement contains customary representations and warranties, affirmative and negative covenants and events of default.  The Loan Agreement matures on March 31, 2008.  As of October 18, 2007, no amounts were outstanding under the Loan Agreement.

 

      The foregoing descriptions of the Loan Agreement and the Security Agreements do not purport to be complete and are qualified in their entirety by reference to the copies of the Loan Agreement and the Security Agreements, each of which will be filed as an exhibit to the Company’s next periodic report or registration statement filed with the Securities and Exchange Commission.

 

 

This excerpt taken from the LQDT 8-K filed May 29, 2007.

Item 1.01.  Entry into a Material Definitive Agreement.

On May 21, 2007, Liquidity Services, Inc. (the “Company”), through its wholly-owned subsidiary DOD Surplus, LLC (“DODS”), and the Defense Reutilization and Marketing Service (the “DRMS”) of the U.S. Department of Defense (“DoD”) entered into two Supplemental Agreements (the “Amendments”), relating to Sales Contract Number 99-4001-0004, dated as of June 9, 2005, between DODS and the DRMS (the “Scrap Contract”), under which the Company acquires, manages and sells substantially all scrap property of the DoD turned in to the DRMS.  The Scrap Contract was previously filed by the Company as Exhibit 10.2 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on November 14, 2005.

The Amendments are effective as of June 1, 2007.  Amendment No. 1 (i) obligates the Company to provide additional services with respect to the handling and mutilation of the scrap property and (ii) increases the profit-sharing distribution payable to the Company under the Scrap Contract from 20.0% to 23.0%.  Amendment No. 2 expands the geographic area covered by the Scrap Contract to include Hawaii and Guam.

A copy of Amendment No. 1, Amendment No. 2 and an associated press release are attached hereto as Exhibits 10.1, 10.2 and 99.1, respectively.  The description of the terms of the Amendments in this Item 1.01 is qualified in its entirety by reference to Exhibits 10.1 and 10.2.

This excerpt taken from the LQDT 8-K filed Jan 16, 2007.

Item 1.01.  Entry into a Material Definitive Agreement.

On January 9, 2007, with the required approvals of the Board of Directors (the “Board”) of Liquidity Services, Inc. (the “Company”) and the Board’s Compensation Committee, as applicable, the Company entered into an amendment to the executive employment agreement dated September 2, 2004, and as amended January 26, 2006 (the “Angrick Agreement”), with Chairman and Chief Executive Officer William P. Angrick, III (the “Angrick Amendment”), an amendment to the executive employment agreement dated September 2, 2004, and as amended January 25, 2006 (the “Mateus-Tique Agreement”), with President and Chief Operating Officer Jaime Mateus-Tique (the “Mateus-Tique Amendment”), and an amendment to the executive employment agreement dated November 11, 2005, and as amended January 26, 2006 (the “Williams Agreement”), with  Vice President, General Counsel and Corporate Secretary James E. Williams (the “Williams Amendment,” and together with the Angrick Amendment and the Mateus-Tique Amendment, the “Amendments”).  The Amendments are effective as of January 9, 2007 (the “Effective Date”).

The Angrick Amendment extends the term of the Angrick Agreement from December 31, 2006 to December 31, 2009.

The Mateus-Tique Amendment extends the term of the Mateus-Tique Agreement from December 31, 2006 to December 31, 2009.

The Williams Amendment increases the amounts Mr. Williams would be entitled to receive in the event of termination by the Company other than for good cause, disability or death, or upon termination of the Williams Agreement by Mr. Williams for good reason.  As of the Effective Date, the Williams Agreement provides that Mr. Williams is entitled to receive, in addition to his base salary through the termination date and all other unpaid amounts, a lump-sum severance package equal to six months of his base salary plus an amount equal to six months of the average annual bonus earned by him for the previous two fiscal years.

This excerpt taken from the LQDT 8-K filed Sep 29, 2006.

Item 1.01.  Entry into a Material Definitive Agreement.

On September 21, 2006, the Compensation Committee of the Board of Directors of Liquidity Services, Inc. (“LSI”) established the base salary levels for LSI’s executive officers for the fiscal year ending September 30, 2007.  The base salary levels for the Chairman and Chief Executive Officer and the other four most highly compensated executive officers of LSI are set forth below.

 

Name and Principal Position

 

Annual Base Salary for
Fiscal Year 2007

 

William P. Angrick, III
Chairman and Chief Executive Officer

 

$

275,000

 

Jaime Mateus-Tique
President, Chief Operating Officer

 

$

245,000

 

Benjamin Brown
Chairman, LSI’s Technology Advisory Committee, and Chief Technology Officer, Government Liquidation.com, LLC

 

$

215,000

 

James M. Rallo
Chief Financial Officer and Treasurer

 

$

240,000

 

Thomas B. Burton
President and Chief Operating Officer, Government Liquidation.com, LLC

 

$

240,000

 

 

This excerpt taken from the LQDT 8-K filed Sep 13, 2006.
Item 1.01.  Entry into a Material Definitive Agreement.

On September 12, 2006, Liquidity Services, Inc. (the “Company”), through its wholly-owned subsidiary Surplus Acquisition Venture, LLC (“SAV”), and the Defense Reutilization and Marketing Service (the “DRMS”) of the U.S. Department of Defense entered into a Supplemental Agreement (the “Amendment”) relating to Commercial Venture II (CV-II) (Sales Contract Number 99-0001-0002), entered into as of June 13, 2001, between SAV and the DRMS (the “Surplus Contract”), which was previously filed by the Company as Exhibit 10.1 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on November 14, 2005.  A copy of the Amendment and an associated press release are attached hereto as Exhibits 10.1 and 99.1, respectively, and are incorporated herein by reference.

The Amendment, which is effective as of September 12, 2006, (i) obligates the Company to implement additional physical inventory controls and (ii) increases the profit-sharing distribution payable to the Company under the Surplus Agreement (the “Profit-Sharing Distribution”) to 27.5% for the period between August 1, 2006 and November 30, 2006. From December 1, 2006 until the expiration of the Surplus Contract in July 2008, the Profit-Sharing Distribution will range from a minimum of 25.0% to a maximum of 30.5% and will be based on the results of an audit to be conducted on a calendar-year basis by (A) the U.S. Government Accountability Office, (B) another entity presenting its findings to committee or subcommittee of the United States Congress or (C) an independent third party to be selected by the Company and DRMS.  GAAP requires that the Company recognize the base profit-sharing amount on a quarterly basis, which amount will be subject to adjustment based on the results of the annual audit mentioned above.  For the period from August 1, 2006 to December 1, 2006, the base profit-sharing percentage will be 27.5%; thereafter, the base percentage will be 25.0%.

This excerpt taken from the LQDT 8-K filed Aug 30, 2006.

Item 1.01.  Entry into a Material Definitive Agreement.

On August 29, 2006, Liquidity Services, Inc., a Delaware corporation (“LSI”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Southern Textile Recycling, Inc., a Tennessee corporation (“STR”), and Carl C. Jones, Eddie Fischer and Bradley Fischer, each of whom is a shareholder of STR.  Pursuant to the Asset Purchase Agreement, LSI will acquire all of the assets used by STR in conducting its wholesale business (the “Acquisition”).  The closing of the Acquisition (the “Closing”) is expected to occur on October 16, 2006 or at such other date as the parties agree, subject to the satisfaction of various closing conditions.

The aggregate consideration to be paid to STR at Closing will consist of a cash payment of $8.5 million, subject to certain post-closing adjustments.  The Asset Purchase Agreement may be terminated under various circumstances, including, among others, by STR or LSI if the transaction fails to close by December 31, 2006.

Prior to the Acquisition, there were no material relationships between LSI or its affiliates, on the one hand, and STR, or the shareholders of STR, on the other hand.  In connection with the Closing of the Acquisition, LSI expects to enter into employment agreements with a shareholder party to the Asset Purchase Agreement and certain of the employees of STR.

A press release, issued on August 30, 2006, announcing the Asset Purchase Agreement is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

This excerpt taken from the LQDT 8-K filed Aug 9, 2006.

Item 1.01.  Entry into a Material Definitive Agreement.

On July 25, 2006, the Compensation Committee of the Board of Directors of Liquidity Services, Inc. (the “Company”) recommended to the Company’s Board of Directors that the Board of Directors approve revisions to the Company’s compensation plan for non-employee directors (the “Revised Plan”), which revisions would allow non-employee directors to elect, pursuant to procedures set forth under the Revised Plan, to receive annual cash payments payable to them under such plan in the form of stock option grants.  These stock options will have a one-year vesting period, such that 100% of the options will vest on the one-year anniversary of the grant date.  The exercise price shall be, in accordance with the terms of the Company’s 2006 Long Term Omnibus Incentive Plan, the closing price of the Company’s common stock on the first day of the fiscal year for which the election is made (or if the Nasdaq National Market is closed for trading on such day, then the closing price on the next day on which the Nasdaq National Market is open for trading).

On August 1, 2006, the Company’s Board of Directors approved the Revised Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

This excerpt taken from the LQDT 8-K filed Apr 4, 2006.

Item 1.01. Entry into a Material Definitive Agreement

 

On March 29, 2006, the Compensation Committee of the Board of Directors of Liquidity Services, Inc. (the “Company”) approved stock option grants under the 2006 Omnibus Long-Term Incentive Plan (the “2006 Plan”) to certain executives of the Company. Specifically, the Compensation Committee awarded stock options for 75,000 shares each to Mr. Benjamin R. Brown and Mr. Thomas B. Burton, and stock options for 30,000 shares each to Mr. James M. Rallo and Mr. James E. Williams. The exercise price of these options is $12.89, which was the closing price of the Company's common stock on The NASDAQ National Market on March 30, 2006. In each case, one quarter of these options vest on March 30, 2007 with the remaining options vesting in monthly installments through March 30, 2010. The options are exercisable for a ten-year period under the 2006 Plan.

 

In addition, on March 29, 2006, the Compensation Committee recommended to the Company’s Board of Directors that the Board of Directors approve the Company’s revised compensation plan for non-employee directors (the “Revised Plan”), which provides that non-employee directors will be eligible to receive an annual option grant valued at $34,000 per annum (as determined pursuant to the Black-Scholes option pricing model). Under the revised plans, the options granted to non-employee directors will have a two-year vesting period and will be exercisable for a ten-year period under the 2006 Plan. On March 29, 2006, the Compensation Committee also recommended to the Company’s Board of Directors that the Board of Directors approve the award of stock options of 20,000 shares to each non-employee director. On April 3, 2006, the Company’s Board of Directors approved the Revised Plan and the grant of stock options to the non-employee directors. The exercise price of these options is $12.89, which was the closing price of the Company's common stock on The NASDAQ National Market on March 30, 2006.

 

The grants described above were made pursuant to the Form of Award Agreement, which sets forth the terms and conditions of stock options granted under the 2006 Plan to the Company’s employees, directors, and other eligible persons, including the Company’s executive officers. A copy of the Form of Award Agreement is attached as Exhibit 99.1 and is incorporated herein by reference.

 

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