EXHIBIT 2.05
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of March 24, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), Xxxxxx Xxxx Associates, Inc., a Michigan corporation, (the
"Company"), Xxxxxx Xxxx ("X.Xxxx"), Xxxxx Xxxx ("X.Xxxx") (each of X.Xxxx and
X.Xxxx hereinafter individually referred to as a "Principal Shareholder" and
collectively referred to herein as the "Principal Shareholders"), and the Xxxxxx
Xxxx Qualified Terminable Interest Marital Trust, a trust formed under the laws
of Michigan (the "Levy Trust"). (The Principal Shareholders and the Levy Trust
are collectively referred herein to as the "Shareholders")
The Shareholders own beneficially and of record all of the issued and
outstanding capital stock of the Company, and X.Xxxx and X.Xxxx own all of the
outstanding and issued capital stock of Xxxxxx Xxxx Corporation, a Michigan
corporation ("Xxxxxx Xxxx").
DoveBid desires to purchase from the Shareholders, and each Shareholder
desires to sell to DoveBid, all shares of the capital stock of the Company owned
by the Shareholders (collectively, the "Shares") on the terms and conditions set
forth in this Agreement.
Now, therefore, the parties agree as follows:
ARTICLE I
STOCK SALE AND PURCHASE
1.1 Agreement to Sell and Purchase Stock. At the Closing, each
-------------------------------------
Shareholder shall sell, transfer and deliver to DoveBid, and DoveBid shall
purchase and accept from each Shareholder, all of the Shares owned by such
Shareholder, free and clear of all security interests, liens, pledges, charges,
escrows, options, rights of first refusal, mortgages, indentures, security
agreements or other claims, encumbrances, agreements, arrangements or
commitments of any kind or character (collectively, "Liens") in exchange for the
following aggregate consideration (the "Purchase Price"), which shall be subject
to reduction or increase in accordance with Section 1.2:
(i) cash in the amount of $17,550,207.85 (the "Closing Payment"), of
which (i) $8,336,348.73 shall be paid to X.Xxxx, (ii) $8,336,348.73 shall be
paid to X.Xxxx, and (iii) $877,510.39 shall be paid to the Levy Trust in each
case, subject to reduction or increase in accordance with Sections 1.2
(ii) three convertible subordinated promissory notes, made payable to
(i) X.Xxxx in the principal amount of $4,329,800.39, in the form attached hereto
as Exhibit A-1, (ii) X.Xxxx in the principal amount of $4,329,800.39, in the
-----------
form attached hereto as Exhibit A-2, and (iii) the Levy Trust in the principal
-----------
amount of $455,768.51, in the form attached hereto as Exhibit A-3 (each, a
-----------
"Convertible Subordinated Promissory Note").
(iii) cash in an aggregate amount of $250,000, to be paid to the
Shareholders or retained by DoveBid as provided in Section 1.2 below (the
"Deferred Payment"), which amount
shall be held in an interest bearing account with a national bank or financial
institution reasonably approved by DoveBid and the Representatives, and
interest earned on such amount shall be added to and considered a part of the
Deferred Payment.
1.2 Purchase Price Adjustment.
-------------------------
(a) Original CWT. Within the earlier of (i) twenty (20) days after
------------
the closing of the Xxxxxx Xxxx Transaction (as defined in Section 9.11) or (ii)
thirty (30) days of the Closing, the Representatives of the Shareholders (as
defined in Section 8.6) shall deliver a balance sheet of the Company as of the
Closing Date and a balance sheet of Xxxxxx Xxxx as of the date of the closing of
the Xxxxxx Xxxx Transaction (the "Closing Balance Sheet"), in each case,
prepared in accordance with United States generally accepted accounting
principles ("GAAP"), consistently applied with prior periods, together with a
detailed list of all accrued expenses and liabilities of the Company as of the
Closing Date, and of all accrued expenses and liabilities of Xxxxxx Xxxx as of
the date of the closing of the Xxxxxx Xxxx Transaction (the "Closing Liabilities
Schedule"), which shall set forth (1) the aggregate book value of stockholders'
equity of the Company (excluding for the purpose of such calculation
$2,653,543.14 owed to Xxxxxxx Xxxxxx pursuant to the terms of the Nucian
Employment Release (defined in Section 4.13 below)) and Xxxxxx Xxxx (as of the
closing of the Xxxxxx Xxxx Transaction), determined in accordance with GAAP,
consistently applied with prior periods, set forth on the Closing Balance Sheet
(such amount, the "Closing Stockholders' Equity"), (2) the cash determined in
accordance with GAAP, consistently applied with prior periods, set forth on the
Closing Balance Sheet (such amount, the "Cash"), (3) all loans to the
Shareholders and related entities and persons, determined in accordance with
GAAP, consistently applied with prior periods, set forth on the Closing Balance
Sheet (such amount, the "Shareholder Loans"), and/or (4) debt owned to banks,
and other third party lending institutions (excluding from such calculation of
Third Party Debt (i) debt in an amount of up to $200,000 incurred as a result of
the Company's currently pending "Condor" transaction, and (ii) debt in an amount
of up to $580,000 incurred as a result of the Company's currently pending
"Custom" transaction (collectively, the "Pending Transactions"), determined in
accordance with GAAP, consistently applied with prior periods, set forth on the
Closing Balance Sheet (such amount, the "Third Party Debt") (collectively, the
"Original CWT"). All Cash in an amount greater than $800,000 held by the Company
during the period of time from the Closing up until the date of the Purchase
Price Adjustment (as defined in Section 1.2(c) below) shall be held during such
period of time in an interest bearing account with a national bank or lending
institution reasonably approved by DoveBid and the Representatives, and interest
earned on such amount shall be added to and considered a part of Cash. For
purposes of calculating Closing Stockholders' Equity, Cash, Shareholder Loans,
and Third Party Debt, figures reflected in the Original CWT and Revised CWT (as
defined below) shall assume the completion of the Xxxxxx Xxxx Transaction (based
on (i) the balance sheet of Xxxxxx Xxxx dated as of the date of the closing of
the Xxxxxx Xxxx Transaction which fairly reflects the financial condition of
Xxxxxx Xxxx, if the Xxxxxx Xxxx Transaction has closed, or (ii) the balance
sheet of Xxxxxx Xxxx dated as of the date of the closing of the Xxxxxx Xxxx
Transaction which fairly reflects the financial condition of Xxxxxx Xxxx
attached hereto as Schedule 1.2(a) (the "Preliminary Xxxxxx Xxxx Balance Sheet")
if the closing of the Xxxxxx Xxxx Transaction has not occurred).
(b) Revised CWT. On or prior to the thirtieth (30th) day following
-----------
receipt by DoveBid of the Original CWT, DoveBid shall provide the
Representatives with a certificate,
2
signed by an authorized representative of DoveBid, stating whether Dove Bid
believes that the amount of Closing Stockholders' Equity, Cash, Shareholder
Loans and/or Third Party Debt set forth in the Original CWT was correct or
incorrect, and if incorrect, DoveBid's revised calculation of Closing
Stockholders' Equity, Cash, Shareholder Loans and/or Third Party Debt,
together with detailed calculations substantiating such revised calculation
("Revised CWT"). In the event that either (i) the calculations in the Revised
CWT and the Original CWT agree, or (ii) Dovebid fails to timely provide the
Representatives with the Revised CWT within the above thirty (30) day period
(in which case Dovebid shall be deemed to have agreed with the calculations in
the Original CWT), then DoveBid shall promptly (but no later than ten (10)
days after the expiration of the above thirty (30) day period in this Section
1.2(b)) remit to each of the Shareholders that portion of the Deferred Payment
(in proportion to their respective pro rata ownership of Company capital stock
as of immediately prior to the Closing) which has not been retained by DoveBid
as a Purchase Price Adjustment and any additional amounts required under
Section 1.2(c) as a Purchase Price Adjustment. In the event that the
calculation of Closing Stockholders' Equity, Cash, Shareholder Loans and/or
Third Party Debt set forth in the Revised CWT differs from such calculations
in the Original CWT, then within thirty (30) days of the Representatives'
receipt of the Revised CWT, Representatives shall either:
(i) agree with such revised calculations of Closing Stockholders'
Equity, Cash, Shareholder Loans and/or Third Party Debt set forth in the
Revised CWT by countersigning such Revised CWT and delivering a copy
thereof to DoveBid within such thirty (30) day period, whereupon DoveBid
shall (a) in the event of a reduction in the Purchase Price pursuant to
Section 1.2(c) below, retain an amount equal to the total Purchase Price
Adjustment based on the calculations set forth in the Revised CWT, as
follows (1) by retaining an appropriate amount of the Deferred Payment, and
(ii) if the Purchase Price Adjustment exceeds the Deferred Payment, then
within ten (10) days of notice by DoveBid to the Representatives of such
excess, then each Shareholder shall pay DoveBid cash in an aggregate amount
equal to such excess in proportion to their respective pro rata ownership
of Company capital stock as of immediately prior to the Closing (provided
that in the event that any Principal Shareholder fails to timely make such
payment DoveBid will have the right to retain Escrow Shares (valued for
such purpose at $10.50 per share) in an amount equal to such Principal
Shareholder's pro rata share of such excess), or (b) in the event of an
increase in the Purchase Price pursuant to Section 2.1 (c) below, make
payment to each Shareholder based on the calculations set forth in the
Revised CWT, by (1) first returning an appropriate amount of the Deferred
Payment to the Shareholders, and (2) if such increase in the Purchase Price
exceeds the Deferred Payment, by making payment directly to the
Shareholders in proportion to each Shareholder's respective pro rata
ownership of Company capital stock as of immediately prior to the
Closing; or
(ii) reject such revised calculations of Closing Stockholders' Equity,
Cash, Shareholder Loans and/or Third Party Debt set forth in the Revised
CWT by sending a notice of rejection setting forth basis for the
Representatives' rejection of some or all of the calculations in the
Revised CWT to DoveBid within such thirty (30) day period, whereupon
DoveBid and the Representatives shall confer in good faith for a period of
ten (10) days after DoveBid's receipt of the notice of rejection in an
effort to reach agreement on the calculations and the Purchase Price
Adjustment, and if after such ten (10) day period the parties have not
reached an agreement, then either party may submit such dispute to
arbitration as if it were a Contested Claim, as defined in Article VIII
hereof, in accordance with Section 8.9 hereof; provided that the
limitations set forth Section 8.3(a) and (b) shall be deemed not to apply
to such Claim. If the Representatives shall not have responded within the
thirty (30) day period after receipt of the Revised CWT, then the
Representatives shall be deemed to have agreed with calculations of Closing
Stockholders' Equity, Cash, Shareholder Loans and/or Third Party Debt set
forth
3
in the Revised CWT and the payments set forth in Section 1.2(b)(i) above,
and each Shareholder hereby agrees to be bound by the Representatives'
failure to timely respond. DoveBid shall pay the balance of the Deferred
Payment (not distributed to DoveBid under Section 1.2(b)(i) above or
subject to arbitration under Section 1.2(b)(ii) above) to the
Representatives (for distribution by them to the Shareholders) or, in the
event that the Purchase Price is increased pursuant to Section 1.2(c)
below, any additional amounts as may be required.
(c) Purchase Price Adjustment. In the event and to the extent that
-------------------------
(i) the Closing Stockholders' Equity is less than $1,000,000, (ii) Cash is less
than $800,000, (iii) Shareholder Loans is greater than $0.00, and/or (iv) Third
Party Debt, is greater than $1,200,000, then at the Closing the initial
aggregate cash portion of the Purchase Price shall be reduced by one dollar for
each dollar that (i) the Closing Stockholders' Equity is less than $1,000,000;
(ii) Cash is less than $800,000; (iii) the Shareholder Loans are greater than
$0.00; and (iv) the Third Party Debt is greater than $1,200,000; provided that
if Cash is greater than $800,000, then the initial aggregate cash portion of the
Purchase Price shall be increased by one dollar for each dollar that Cash is
greater than $800,000 (the "Purchase Price Adjustment"). In the event of any
reduction or increase in the Purchase Price pursuant to this Section 1.2, the
respective Closing Payments to the Shareholders shall be proportionately reduced
or increased, and such reduced or increased aggregate consideration shall
constitute the "Purchase Price" for all purposes under this Agreement.
1.3 Closing. The purchase and sale of the Shares, and the consummation of
-------
the other transactions contemplated hereby (the "Closing"), will take place at
the offices of DoveBid at 0000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxxxxxx
at 10:00 a.m. Pacific Time, on March 24, 2000 or, if all conditions to closing
have not been satisfied or waived by said date, at such other time and place as
DoveBid and Shareholders shall mutually agree upon. At the Closing, the
Shareholders will deliver to DoveBid certificates representing all of the
Shares, duly endorsed for transfer to DoveBid, against delivery to the
Shareholders by DoveBid of the Purchase Price. The date on which the Closing
occurs is referred to herein as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND THE COMPANIES
Except as specifically set forth in the disclosure letter provided by the
Shareholders and the Company to DoveBid simultaneously with the signing of this
Agreement, dated as of the date of this Agreement (the "Company Disclosure
Letter"), the parts of which are numbered to correspond to the sections of this
Agreement, each of the Shareholders hereby jointly and severally represent and
warrant to DoveBid as follows:
2.1 Organization and Good Standing. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Michigan. The Company and each of its subsidiaries has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted, and is qualified to conduct
business in each jurisdiction in which the character of the properties owned,
leased or licensed by it or the nature of such activities makes such
qualification necessary.
4
Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation, Bylaws or other charter documents.
2.2 Power, Authorization and Validity.
---------------------------------
2.2.1 The Company and each Shareholder has the right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement, and all agreements to which the Company and each Shareholder is or
will be a party that are required to be executed pursuant to this Agreement (the
"Ancillary Agreements"). The execution, delivery and performance of this
Agreement and the Ancillary Agreements have been duly and validly approved and
authorized by the Company's Board of Directors. The execution, delivery and
performance of this Agreement and the Ancillary Agreements by the Levy Trust has
been duly and validly approved and authorized as required by law and its
governing trust instrument. No vote of the shareholders of the Company is
required by the Articles of Incorporation, bylaws, other governing documents of
the Company or applicable law with respect to the due authorization and approval
of this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby. Each Shareholder is an "accredited investor" as such term is
defined in Rule 501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable the Company or the Shareholders to enter into,
and to perform their respective obligations under, this Agreement and the
Ancillary Agreements, except for such qualifications and filings as may be
required to comply with federal and state securities laws as may be required in
connection with the transactions contemplated by this Agreement. All such
qualifications and filings will, in the case of qualifications, be effective on
the Closing, and will, in the case of filings, be made within the time
prescribed by applicable law.
2.2.3 This Agreement and the Ancillary Agreements are, or when
executed by the Company and the Shareholders will be, valid and binding
obligations of the Company and the Shareholders enforceable against the Company
and the Shareholders in accordance with their respective terms, except as to the
effect, if any, of (a) applicable bankruptcy and other similar laws affecting
the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities.
2.2.4 Trust Arrangements.
------------------
(a) Trust Instruments. The copy of that certain Declaration
-----------------
of Trust dated September 27, 1977 by Xxxxxx Xxxx, and that certain First
Amendment to Declaration of Trust Dated February 25, 1992, as amended through
the date hereof (the "Levy Trust Agreement") provided by the Company to
DoveBid is a true and complete copy of the currently effective operative trust
agreement for the Levy Trust and remains in full force and effect.
(b) Trustees. The authorized and acting trustee of the Levy
--------
Trust as of the date hereof are, and on the Closing Date will be Xxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx Xxxx (the "Xxxx Trustees"). The Levy
Trustees are competent to act as trustees of the
5
Levy Trust and the Levy Trustees are authorized to sign and deliver to DoveBid
this Agreement and all Ancillary Agreements.
(c) Trust Property. The Levy Trust has the power and authority to own
--------------
the Shares described in Section 2.3 as being owned by the Levy Trust. The
Shares constitute an asset of the Levy Trust (free and clear of any Liens) as of
the date hereof and will constitute an asset of the Levy Trust on the Closing
Date.
(d) No Default. The terms of the Levy Trust have not and will not
----------
change or be amended by virtue of execution of this Agreement, and the
consummation of the transactions contemplated hereby will not cause any change
in, modification to or acceleration of any of the terms of the Levy Trust
Agreement.
2.3 Capitalization. The authorized capital stock of the Company consists
--------------
entirely of 5,000 shares of Common Stock, $10.00 par value per share, of which a
total of 100 shares are issued and outstanding, and of which: (i) 47.5 shares
are owned beneficially and of record by X.Xxxx, (ii) 47.5 shares are owned
beneficially and of record by X.Xxxx, (iii) 5 shares are owned beneficially and
of record by the Levy Trust, and no other entity or individual owns either
beneficially or of record, any other equity interest of the Company or has any
right to purchase or otherwise receive any equity interest in the Company. On
the date of this Agreement each Shareholder has, and on the Closing Date each
Shareholder will have, good and marketable title to that number of shares of
capital stock of the Company set forth in this Section 2.3, free and clear of
any and all Liens, which shares do and shall constitute collectively all of the
outstanding shares of the Company's capital stock. On the date of this
Agreement, there are no, and on the Closing Date, there will be no, options,
warrants, calls, commitments, conversion privileges or preemptive or other
rights or agreements outstanding to purchase or otherwise acquire any of shares
of the Company's capital stock or any securities convertible into or
exchangeable for shares of the Company's capital stock or obligating the Company
to grant, extend, or enter into any such option, warrant, call, right,
commitment, conversion privilege or other right or agreement. Each share of the
Company's capital stock has been duly authorized and validly issued, is fully
paid and nonassessable, is not subject to any right of rescission, and has been
offered, issued, sold and delivered by the Company in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of applicable federal and state securities laws, other laws and requirements set
forth in applicable agreements or instruments. There is no voting agreement,
right of first refusal or other restriction (other than normal restrictions on
transfer under applicable federal and state securities laws) applicable to any
of the Company's outstanding securities. The Company is not under any
obligation to register under the Securities Act, any of its presently
outstanding securities or any securities that may be subsequently issued.
2.4 Subsidiaries. Except as disclosed on the Company Disclosure Letter,
-------------
the Company does not have any subsidiaries or any equity or other ownership
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity. The Company owns all the issued and outstanding capital
stock of its subsidiaries, free and clear of all Liens. The Company is not
obligated to make and is not bound by any agreement or obligation to make any
investment in or capital contribution in or on behalf of any other entity.
6
2.5 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any Ancillary Agreement, nor the consummation of the transactions contemplated
hereby, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, default, impairment or violation of (a)
any provision of the Articles of Incorporation, bylaws or other governance
document of either of the Company or any of its subsidiaries, (b) any instrument
or contract to which the Company, any of its subsidiaries or any Shareholder is
a party or by which any of their respective assets or properties are bound or
affected, or (c) any federal, state, local or foreign judgment, writ, decree,
order, statute, rule or regulation applicable to either of the Company, any of
its subsidiaries or either Shareholder or their respective assets or properties,
except any termination, breach, default, impairment or violation which would not
individually or in the aggregate result in a Material Adverse Effect (as defined
in Section 10.7(c) below) on the Company. The consummation of the transactions
contemplated by this Agreement does not and will not require the consent,
waiver, release or approval of or notice to any third party.
2.6 Litigation. There is no action, proceeding, claim or investigation
-----------
pending against the Company or any of its subsidiaries before any court or
administrative agency, nor to the Knowledge (as defined in Section 10.7(b)) of
the Company or any Shareholder has any such action, proceeding, claim or
investigation been threatened. There is no reasonable basis for any shareholder
or former shareholder of the Company, or to the Knowledge of the Company or any
Shareholder, any other person, firm, corporation, or entity, to assert a claim
against the Company, any of its subsidiaries, any Shareholder or DoveBid based
upon: (a) ownership or rights to ownership of any shares or other ownership
interest in the Company, (b) any rights as a shareholder of the Company,
including any option or preemptive rights or rights to notice or to vote, or (c)
any rights under any agreement among the Company and its shareholders. There
are no outstanding orders, awards, judgments, injunctions, decrees or other
requirements of any court, arbitrator or governmental or regulatory body against
the Company or any of its subsidiaries, or their assets, properties or
securities.
2.7 Taxes. The Company has timely filed all federal, state, local and
-----
foreign tax returns required to be filed, have paid all taxes required to be
paid in respect of all periods for which returns have been filed, have
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the periods subsequent to the periods covered by the most recent
applicable tax returns, have made all necessary estimated tax payments, and have
no liability for taxes in excess of the amount so paid or accruals or reserves
so established. All accruals or reserves for taxes on the Closing Balance
Sheets will be established in the ordinary course of business and will be
consistent with the Company's prior practices. The Company is not delinquent in
the payment of any tax or in the filing of any tax returns, and no deficiencies
for any tax have been threatened, claimed, proposed or assessed. The Company
has not received any written notification from the Internal Revenue Service or
any other taxing authority regarding any material issues or audit that: (a) are
currently pending before the Internal Revenue Service or any other taxing
authority (including but not limited to any sales or use tax authority)
regarding the Company or (b) have been raised by the Internal Revenue Service or
other taxing authority and not yet finally resolved. For any period covering
the last five fiscal years, no tax return of the Company has ever been audited
by the Internal Revenue Service or any state or other taxing agency or
authority. There is not in effect any waiver by the Company of any statute of
limitations with respect to any taxes; and the Company has not consented to
extend to a
7
date later than the date hereof the period in which any tax may be assessed or
collected by any taxing authority. The Company is not a "personal holding
company" within the meaning of the Internal Revenue Code of 1986, as amended
(the "Code"). The Company has not filed any election under Section 341(f) of
the Code. The Company has withheld with respect to each of its employees and
independent contractors all taxes, including but not limited to federal and
state income taxes, FICA, Medicare, FUTA and other taxes, required to be
withheld, and has paid such withheld amounts to the appropriate tax authority
within the time prescribed by law.
Effective as of September 22, 1986, the Company made a valid election under
Section 1362 of the Code to be an S corporation within the meaning of Sections
1361 and 1362 of the Code effective for all taxable periods beginning on or
subsequent to May 1, 1987. Part 2.7 of the Company Disclosure Letter sets forth
each state and locality where the Company has made a valid election under the
applicable law of such jurisdiction to be an S corporation effective for all
taxable periods beginning on or subsequent to the date of such election, and the
date of such election. None of the Company nor Shareholders have taken any
action inconsistent with the requirements of Company' S corporation status, nor
has the Company nor any Shareholder failed to take any action required in order
to maintain the Company's S Corporation status, and the Company's S corporation
election has not been terminated (whether inadvertently or otherwise) since each
such effective date and is currently valid and in effect in each such
jurisdiction in which an election was made.
For the purposes of this Agreement, the terms "tax" and "taxes" include all
federal, state, local and foreign income, gains, franchise, excise, property,
sales, use, employment, withholding, license, payroll, occupation, recording,
value added or transfer taxes, governmental charges, fees, levies or assessments
(whether payable directly or by withholding), and, with respect to such taxes,
any estimated tax, interest and penalties or additions to tax and interest on
such penalties and additions to tax.
2.8 Financial Statements. The Company has delivered to DoveBid, attached
--------------------
hereto as Exhibit B, copies of: (a) the Company's compiled balance sheet as of
---------
April 30, 1999, and the Company's compiled balance sheets as of December 31,
1999 and February 29, 2000, respectively (the "Balance Sheets") and (b) the
Company's compiled income statement and statement of cash flows for the twelve
months ended April 30, 1999, and the Company's unaudited income statements and
statement of cash flows for the eight month period ended December 31, 1999 and
the ten month period ended February 29, 2000, respectively (together, with the
Balance Sheets and the Closing Balance Sheet, the "Financial Statements"). The
Financial Statements (a) are in accordance with the books and records of the
Company, (b) fairly present the financial condition of the Company and its
subsidiaries at the date therein indicated and the results of operations for the
period therein specified (except for the unaudited balance sheets dated as of
February 29, 2000, and December 31, 1999, and the unaudited income statements
and statement of cash flows for the eight month period ended December 31, 1999
and the ten month period ended February 29, 2000, which fairly present in all
material respects the financial condition of the Company and its subsidiaries at
the date therein indicated and the results of operations for the period therein
specified) and (c) have been prepared in accordance with GAAP, applied on a
consistent basis with prior periods. The Company (including its subsidiaries)
has no debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not reflected
or reserved
8
against in the Financial Statements and the Closing Liabilities Schedule,
other than such liabilities and obligations which (i) are not required to be
reflected on the Balance Sheet in accordance with this Section 2.8, (ii) were
incurred in the ordinary course of the Company's business consistent with past
practice, and (iii) are not material in amount to the Company or its financial
condition, assets or business.
2.9 Title to Assets and Properties. The Company has good and marketable
-------------------------------
title to all of its assets as shown on the Balance Sheets and Closing Balance
Sheet, free and clear of all Liens (other than for taxes not yet due and
payable). The Company owns or has the right to hold and use all assets which
are necessary to operate its business as presently conducted. All leases of real
or personal property to which the Company or any subsidiary of the Company is a
party are fully effective and afford the Company peaceful and undisturbed
possession of the subject matter of the lease. To the Knowledge of the Company
and the Shareholders, the Company and its subsidiaries are not in violation of
any zoning, building, safety or environmental ordinance, regulation or
requirement or other law or regulation applicable to the operation of owned or
leased properties, or has received any written notice of violation with which it
has not complied.
2.10 Absence of Certain Changes. Since February 29, 2000, there has not
--------------------------
been with respect to the Company (including its subsidiaries):
(a) any change in the financial condition, properties, assets,
liabilities, business or operations thereof which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business consistent with past practice, has had or will have a
Material Adverse Effect thereon;
(b) any contingent liability incurred thereby as guarantor or
otherwise with respect to the obligations of others;
(c) any mortgage, encumbrance or Lien placed on any of the properties
thereof;
(d) any material obligation or liability incurred thereby other than
obligations and liabilities incurred in the ordinary course of business
consistent with past practice in individual amounts less than $100,000;
(e) any purchase or sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets thereof other than in the ordinary course of business
consistent with past practice in individual amounts less than $100,000;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
thereof;
(g) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock thereof,
any split, combination or recapitalization of the capital stock thereof or any
direct or indirect redemption, purchase or other acquisition of the ownership
interests thereof (except for the Permitted Asset Transfers and
9
the X.Xxxx Share Transfer and the X.Xxxx Share Transfer (as such terms are
defined in Section 4.14 below));
(h) any labor dispute or claim of unfair labor practices, any change
in the compensation payable or to become payable to any of its officers,
managers, employees or agents, or any bonus payment or arrangement made to or
with any of such officers, managers, employees or agents (other than pursuant to
the Employment Agreements, as defined below);
(i) any change with respect to the management, supervisory or other
key personnel thereof;
(j) any payment or discharge of a Lien or liability thereof which Lien
was not either shown on the Balance Sheets or incurred in the ordinary course of
business consistent with past practice thereafter;
(k) any obligation or liability incurred thereby to any of its
officers, employees, directors or shareholders or any loans or advances made
thereby to any of its officers, employees, directors or shareholders except
normal compensation and expense allowances payable to officers and employees;
(l) any amendment or change in the Articles of Incorporation, bylaws
or other governing documents of the Company; or
(m) any change in the accounting policies or procedures of the
Company.
2.11 Contracts and Commitments. Section 2.11 of the Company Disclosure
-------------------------
Letter sets forth a list of each of the following oral or written contracts,
agreements, understandings and arrangements of the Company and its subsidiaries,
a true and complete copy of each (or, in the case of an oral agreement, a
written summary of all of the material terms of which) has been provided to
DoveBid:
(a) Contract, agreement or other understanding or arrangement
providing for payments by or to the Company or any of its subsidiaries in an
aggregate amount of $100,000 or more in any year;
(b) Company IP Rights Agreement (as defined in Section 2.12), and
contract, license, agreement or other understanding or arrangement as licensor
or licensee;
(c) Contract, lease, license, agreement or other understanding or
arrangement for the lease of real or personal property;
(d) Joint venture contract or arrangement or any other agreement that
involves or could involve a sharing of profits, expenses or losses with any
other party;
(e) Instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary
10
course of business consistent with past practice and for no more than $100,000
in amount, and except as disclosed in the Financial Statements and the Closing
Balance Sheet;
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit the Company's or any of its
subsidiaries' freedom to compete in any line of business in any geographic area,
or which grants any exclusive rights or obligations;
(g) Contract, agreement or other understanding or arrangement for or
relating to the employment of any officer, employee, contractor, or consultant
of the Company or any subsidiary of the Company; or
(h) Any other agreement not specified above which is material to the
business, financial condition or prospects of the Company.
All agreements, contracts, plans, leases, instruments, arrangements,
licenses and commitments identified in this Section 2.11 are valid and in full
force and effect. The Company is not, nor, to the Knowledge of the Company, is
any other party thereto, in material breach or default under the terms of any
such agreement, contract, plan, lease, instrument, arrangement, license or
commitment.
2.12 Intellectual Property. The Company owns, or has a valid right to
---------------------
use, sell or license all Intellectual Property Rights (as defined below)
necessary or required for the conduct of business as presently conducted (such
Intellectual Property Rights being hereinafter collectively referred to as the
"Company IP Rights") and such rights to use, sell or license are sufficient for
the conduct of the Company's businesses as presently conducted. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not constitute a breach of any
instrument or agreement governing or affecting any Company IP Rights (the
"Company IP Rights Agreements"), do not and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Company
IP Right or impair the right of the Company to use, sell or license any Company
IP Right or portion thereof. There is no royalty, honoraria, fee or other
payment payable by the Company to any person by reason of the ownership, use,
license, sale or disposition of any Company IP Right (other than as set forth in
the Company IP Rights Agreements listed in Section 2.11 to the Company
Disclosure Letter). The provision of any service currently provided by the
Company or currently planned to be provided by the Company does not violate any
license or agreement between the Company and any third party or infringes any
Intellectual Property Right of any other person or entity; and there is no
pending or, to the Knowledge of the Company or any of the Shareholders,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Company IP Right, nor to the Knowledge of
the Company or any of the Shareholders, is there any basis for any such claim,
nor has the Company received any notice asserting that any Company IP Right or
the proposed use, sale, license or disposition thereof conflicts, or will
conflict, with the rights of any other person or entity. Each officer, employee
and consultant of the Company has executed and delivered to the Company an
agreement in the form provided to DoveBid regarding the protection of
proprietary information and the assignment to the Company of all Intellectual
Property Rights arising from the services performed for the Company by such
person. Section 2.12 to the
11
Company Disclosure Letter contains a list of all applications, registrations,
filings and other formal actions made or taken pursuant to federal, state and
foreign laws by the Company to perfect or protect its interest in Company IP
Rights, including, without limitation, all patents, patent applications,
trademarks, trademark applications and service marks. As used herein, the term
"Intellectual Property Rights" shall mean all worldwide industrial or
intellectual property rights, including, without limitation, patents, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service xxxx applications, Internet domain names, Internet or
World Wide Web URLs or addresses, copyright, copyright applications,
franchises, licenses, inventories, know-how, trade secrets, customer lists,
proprietary processes and formulae, all source and object code, algorithms,
architecture, structure, display screens, layouts, inventions, development
tools and all documentation and media constituting, describing or relating to
the above, including, without limitation, manuals, memoranda and records (in
whatever media or format).
2.13 Compliance with Laws. The Company and its subsidiaries have
--------------------
complied, or prior to the Closing Date will have complied, and are or will be at
the Closing in full compliance with, all applicable laws, ordinances,
regulations, and rules, and all orders, writs, injunctions, awards, judgments,
and decrees applicable to them or to the assets, properties, and business
thereof (except for such non-compliance that would not result in a Company
Material Adverse Effect), including, without limitation: (a) all applicable
federal and state securities laws and regulations, (b) all applicable federal,
state, and local laws, ordinances, regulations, and all orders, writs,
injunctions, awards, judgments, and decrees pertaining to (i) the sale,
licensing, leasing, ownership, or management of its owned, leased or licensed
real or personal property, products and technical data, (ii) employment and
employment practices, terms and conditions of employment, and wages and hours
and (iii) safety, health, fire prevention, environmental protection, hazardous
materials, toxic waste disposal, building standards, zoning and other similar
matters (c) the Export Administration Act and regulations promulgated thereunder
and all other laws, regulations, rules, orders, writs, injunctions, judgments
and decrees applicable to the export or re-export of controlled commodities or
technical data and (d) the Immigration Reform and Control Act. The Company has
received all permits and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are necessary in
connection with its present business (except for such permits, approvals or
filings that would not result in a Company Material Adverse Effect). There are
no legal or administrative proceedings or investigations involving the Company
or any of its subsidiaries pending or threatened before any governmental entity.
2.14 Certain Transactions and Agreements. To the Knowledge of the Company
-----------------------------------
and the Shareholders, none of the directors or shareholders of the Company, nor
any member of their immediate families, has any direct or indirect ownership
interest in any firm or corporation that competes with the Company (except with
respect to any interest in less than one percent of the stock of any corporation
whose stock is publicly traded). None of said officers directors, shareholders
or employees, nor any member of their immediate families, is directly or
indirectly interested in any contract or informal arrangement with the Company,
except for normal compensation for services as an officer, director or
shareholder thereof. None of said officers, directors, shareholders or
employees nor any member of their immediate families has any interest in any
property, real or personal, tangible or intangible, including any Intellectual
12
Property Rights, used in or pertaining to the business of the Company, except
for the normal rights of a shareholder of the Company.
2.15. Employees, ERISA and Other Compliance.
-------------------------------------
2.15.1 Neither the Company nor any subsidiary of the Company has any
employment contract or consulting agreement currently in effect that is not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions)
without liability to the Company or such subsidiary. All officers, directors,
employees and consultants of the Company having access to proprietary
information have executed and delivered to the Company an agreement regarding
the protection of such proprietary information and the assignment of inventions
to the Company; true and complete copies of the form of all such agreements have
been delivered to DoveBid.
2.15.2 Neither the Company nor any subsidiary of the Company (i) has
ever been or is now subject to a union organizing effort, (ii) is subject to any
collective bargaining agreement with respect to any of its employees, (iii) is
subject to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization, or (iv) has any current labor
disputes. To the Knowledge of the Company or any Shareholder, there are no
facts indicating that the consummation of the transactions contemplated hereby
will have a Company Material Adverse Effect on such labor relations, and neither
the Company nor any Shareholder has any Knowledge that any of the Company's key
employees intends to leave its employ.
2.15.3 Section 2.15.1 to the Company Disclosure Letter identifies (i)
each "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) all other
written or formal plans or agreements involving direct or indirect compensation
or benefits (including, but not limited to any employment, severance or other
similar contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' benefits, vacation benefits, severance benefits,
disability benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses and all forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors, but excluding workers' compensation,
unemployment compensation and other government-mandated programs) currently or
previously maintained, contributed to or entered into by the Company under which
the Company or any ERISA Affiliate (as defined below) thereof has any present or
future obligation or liability (collectively, the "Company Employee Plans").
For purposes of this Section 2.15, "ERISA Affiliate" shall mean any entity which
is a member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as defined
in Section 414(c) of the Code, or (C) an "affiliated service group," as defined
in Section 414(m) of the Code, or treasury regulations promulgated under Section
414(o) of the Code, any of which includes the Company. Copies of all Company
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof (including summary plan
descriptions) have been delivered to DoveBid, together with the three most
recent annual reports (Form 5500, including, if applicable, Schedule B thereto)
prepared in connection with any such Company Employee Plan. All Company
Employee Plans
13
which individually or collectively would constitute an "employee pension
benefit plan," as defined in Section 3(2) of ERISA (collectively, the "Company
Pension Plans"), are identified as such in Section 2.15.3 to the Company
Disclosure Letter. All contributions due from the Company with respect to any
of the Company Employee Plans have been made as required under ERISA or have
been accrued on the Financial Statements. To the Knowledge of the Company and
the Shareholders, each Company Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including, without limitation, ERISA and the
Code, which are applicable to such Company Employee Plans.
2.15.4 No Company Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in Section
3(37) of ERISA. No Company Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any Company Employee Plan which is
covered by Title I of ERISA which would result in a liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Company Employee Plan has or will make
the Company or any officer or director of the Company subject to any liability
under Title I of ERISA or liable for any tax (as defined in Section 2.7 hereof)
or penalty pursuant to Sections 4972, 4975, 4976 or 4979 of the Code or Section
502 of ERISA.
2.15.5 Any Company Pension Plan which is intended to be qualified
under Section 401(a) of the Code (a "Company 401(a) Plan") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. The Company has delivered to DoveBid a complete and correct copy of the
most recent Internal Revenue Service determination letter with respect to each
Company 401(a) Plan.
2.15.6 [Section Intentionally Omitted]
2.15.7 There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any subsidiary of the
Company relating to, or change in employee participation or coverage under, any
Company Employee Plan or Company Benefit Arrangement that would increase the
expense of maintaining such Company Employee Plan or Company Benefit Arrangement
above the level of the expense incurred in respect thereof since the date of the
February 29, 2000 Balance Sheet.
2.15.8 The Company has provided, or will have provided prior to the
Closing, to individuals entitled thereto all required notices and coverage
pursuant to Section 4980B of the Code and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any
"qualifying event" (as defined in Section 4980B(f)(3) of the Code) occurring
prior to and including the Closing Date, and no tax payable on account of
Section 4980B of the Code has been incurred with respect to any current or
former employees (or their beneficiaries) of the Company.
14
2.15.9 No benefit payable or which may become payable by the Company
or any subsidiary of the Company pursuant to any Company Employee Plan or any
Company Benefit Arrangement or as a result of or arising under this Agreement
shall constitute an "excess parachute payment" (as defined in Section 280G(b)(1)
of the Code) which is subject to the imposition of an excise tax under Section
4999 of the Code or which would not be deductible by reason of Section 280G of
the Code.
2.15.10 The Company and each of its subsidiaries are in compliance
with all applicable laws, agreements and contracts relating to employment,
employment practices, wages, hours, and terms and conditions of employment,
including, but not limited to, employee compensation matters, but not including
ERISA.
2.15.11 To the Knowledge of the Company and each Shareholder, no
employee of the Company or any of its subsidiaries is in violation of any term
of any employment contract, patent disclosure agreement, noncompetition
agreement, or any other contract or agreement, or any restrictive covenant
relating to the right of any such employee to be employed thereby, or to use
trade secrets or proprietary information of others, and the employment of such
employees does not subject the Company or such subsidiaries to any liability.
2.15.12 A list of all employees, officers, directors and consultants
of the Company and each subsidiary of the Company and their current compensation
is set forth on Section 2.15.12 to the Company Disclosure Letter.
2.15.13 Neither the Company nor any subsidiary of the Company is a
party to any (a) agreement with any officer, director, shareholder or other
employee thereof (i) the benefits of which are contingent, or the terms of which
are altered, upon the occurrence of a transaction involving the Company or such
subsidiary in the nature of any of the transactions contemplated by this
Agreement, (ii) providing any term of employment or compensation guarantee, or
(iii) providing severance benefits or other benefits after the termination of
employment of such employee regardless of the reason for such termination of
employment, or (b) agreement or plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
2.16 Company Documents. The Company has made available to DoveBid for
-----------------
examination true and complete copies of all documents and information listed in
the Company Disclosure Letter or other exhibits called for by this Agreement
which has been requested by DoveBid and/or its legal counsel, including, without
limitation, the following: (a) copies of the Articles of Incorporation, bylaws
and other governance documents as currently in effect of the Company and each of
its subsidiaries; (b) all records of all proceedings, consents, actions, and
meetings of the shareholders, the board of directors and any committees thereof;
(c) its journal reflecting all equity issuances and transfers; and (d) all
permits, orders, and consents issued by any regulatory agency with respect to
the Company or its subsidiaries, or any securities of the Company, and all
applications for such permits, orders, and consents.
15
2.17 Environmental Matters. To the Knowledge of the Company and the
---------------------
Shareholders, the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below), which compliance includes the
possession by the Company and its subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Neither the Company nor any
of its subsidiaries has received any written notice or other communication (in
writing or otherwise), whether from a governmental body, citizens-group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is not in compliance with any Environmental Law, and, to the Company's and each
Shareholder's Knowledge, there are no circumstances that may prevent or
interfere with the compliance by the Company or any of its subsidiaries with any
current Environmental Law in the future. All governmental authorizations
currently held by the Company or any of its subsidiaries pursuant to any
Environmental Law (if any) are identified in Section 2.17 to the Company
Disclosure Letter. For purposes of this Section 2.17: (i) "Environmental Law"
means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law.
2.18 No Brokers. Neither the Company nor the Shareholders are or will be
----------
obligated for the payment of fees or expenses of any investment banker, broker
or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
2.19 Accounts Receivable. Subject to the reserves set forth on the
-------------------
Balance Sheets, if any, all accounts receivable of the Company set forth on the
Balance Sheets have arisen in the ordinary course of the Company's businesses
consistent with past practice, represent valid, enforceable and fully
collectible obligations due to the Company, and have been and are not subject to
any set-off, counterclaim or, to the Knowledge of the Company or each
Shareholder, future performance obligation on the part of the Company.
2.20 Books and Records.
-----------------
2.20.1 The books, records and accounts of the Company and each
subsidiary (a) are in true, complete and correct, (b) have been maintained in
accordance with good business practices on a basis consistent with prior years,
(c) accurately and fairly reflect the transactions and dispositions of the
assets of the Company and its subsidiaries, and (d) accurately and fairly
reflect the basis for the Financial Statements.
2.20.2 The Company has devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or specific
authorization, (b) transactions are recorded as
16
necessary (i) to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements, and (ii) to maintain accountability for assets, and (c) the
amount recorded for assets on the books and records of the Company is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
2.21 Insurance. The Company maintains and at all times during the prior
----------
three years has maintained all legally required workers' compensation insurance
and errors and omissions, casualty, fire and general liability insurance. There
is no claim pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
timely paid and the Company are otherwise in compliance with the terms of such
policies and bonds. The Company has no Knowledge of any threatened termination
of, or premium increase with respect to, any of such policies. Prior to the
Closing, the Company shall have obtained, and fully prepaid all premiums
associated with, "claims made" insurance for the Company for activities of the
Company prior to the Closing and effective immediately after the Closing, which
shall include directors and officers insurance, errors and omission insurance
and employment practices liability insurance, and which insurance shall be
assignable to DoveBid at the Closing, shall expire no earlier than the third
anniversary of the Closing and shall contain coverage that is customary for the
Company's industry and be reasonably acceptable to DoveBid. All policies of
insurance now held by the Company and each of its subsidiaries are set forth in
Section 2.21 of the Company Disclosure Letter, together with the name of the
insurer under each policy, the type of policy, the policy coverage amount and
any applicable deductible.
2.22 Disclosure. Neither the Company Disclosure Letter, this Agreement,
----------
its exhibits and schedules, nor any of the certificates or documents to be
delivered by the Company to DoveBid pursuant to this Agreement, taken together,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading in any material respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOVEBID
Except as specifically set forth in the disclosure letter provided by
DoveBid to the Company simultaneously with the signing of this Agreement, dated
as of the date of this Agreement (the "DoveBid Disclosure Letter"), the parts of
which are numbered to correspond to the sections of this Agreement, DoveBid
hereby represents and warrants to the Company as follows:
3.1 Organization and Good Standing. DoveBid is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the
17
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted and as proposed to be conducted.
3.2 Power, Authorization and Validity.
---------------------------------
3.2.1 DoveBid has the corporate right, power and authority to enter
into and perform its obligations under this Agreement, and all agreements to
which DoveBid is or will be a party that are required to be executed pursuant to
this Agreement (the "DoveBid Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Agreements have been
duly and validly approved and authorized by DoveBid's Board of Directors.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable DoveBid to enter into, and to perform its
obligations under, this Agreement and the DoveBid Ancillary Agreements, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such filings as may be required to comply with federal
and state securities laws (which filings will be accomplished within the time
required by law).
3.2.3 This Agreement and the DoveBid Ancillary Agreements are, or
when executed by DoveBid will be, valid and binding obligations of DoveBid
enforceable against DoveBid in accordance with their respective terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities.
3.3 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any DoveBid Ancillary Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of (a)
any provision of the Articles of Incorporation or bylaws of DoveBid, as
currently in effect, (b) any instrument or contract to which DoveBid is a party
or by which DoveBid's assets or properties are bound or affected, or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to DoveBid or its assets or properties, except any
termination, breach, default, impairment or violation which would not
individually or in the aggregate result in a Material Adverse Effect on DoveBid.
The consummation of the transactions contemplated by this Agreement does not and
will not require the consent, waiver, release or approval of or notice to any
third party.
3.4 Registration Statement. DoveBid has made available to the Shareholder
----------------------
its Registration Statement on Form S-1 as filed with the Securities and Exchange
Commission (the "SEC") on March 10, 2000 (the "Registration Statement"). To the
Knowledge of DoveBid at the time the Registration Statement was filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) and subject to portions and sections of the
Registration Statement which remain to be completed, the Registration Statement
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances
18
under which they were made, not misleading in any material respect, except to
the extent corrected prior to the date of this Agreement by a subsequent
filing made by DoveBid. Since the filing of the Registration Statement with
the SEC on March 10, 2000, to the Knowledge of DoveBid there has not been a
Material Adverse Effect on DoveBid.
3.5 Xxxx-Xxxxx-Xxxxxx Compliance. The execution and delivery of this
----------------------------
Agreement and the consummation of the transactions contemplated thereby will not
require any consent, approval or filing pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act (the "HSR Act").
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Advice of Changes. During the period from the date of this Agreement
-----------------
until the earlier of the Closing or the termination of this Agreement, each
party will promptly advise the other party in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of such party contained in this Agreement, if made on or as of the date
of such event or at the Closing untrue or inaccurate in any material respect and
(b) of any material adverse change in the such party's business, prospects,
customers, results of operations or financial condition. The Company on the one
hand and DoveBid on the other hand each agrees to cooperate with the other and
each of their respective auditors in order to book financial entries in
accordance with GAAP and in a manner acceptable to each such party and its
auditors.
4.2 Maintenance of Business. During the period from the date of this
-----------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will use its best efforts to carry on and preserve its business and
its relationships with customers, suppliers, employees, business partners and
others in substantially the same manner as it has prior to the date hereof. If
the Company becomes aware of a material deterioration in the relationship with
any customer, supplier, business partner or key employee, it will promptly bring
such information to the attention of DoveBid in writing and, if requested by
DoveBid, will exert its best efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will continue to conduct its business and maintain its business
relationships in the ordinary and usual course (consistent with past practice)
and will not, without the prior written consent of an officer of DoveBid:
(a) borrow any money, or otherwise incur any indebtedness in excess of
$100,000;
(b) enter into any transaction not in the ordinary course of business
consistent with past practice;
19
(c) acquire or be obligated to acquire or take positions in assets
greater than $100,000 without DoveBid's prior written consent, not to be
unreasonably withheld;
(d) make any expenditure or sale of fixed or other non-current assets
in excess of $100,000 in the aggregate, outside the normal course of business;
(e) encumber or permit to be encumbered any of its assets except in
the ordinary course of its business consistent with past practice and to an
extent that is not material to its business;
(f) dispose of any of its assets except in the ordinary course of
business consistent with past practice (except for the Permitted Asset Transfers
(defined below));
(g) enter into any material lease or contract for the purchase or sale
of any property, real or personal, except in the ordinary course of business
consistent with past practice;
(h) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to the date of
this Agreement, subject only to ordinary wear and tear;
(i) fail to use its commercially reasonable efforts to maintain and
preserve its business organization intact, retain its present employees and
maintain its relationships and present agreements with suppliers, customers and
others having business relations with the Company, or fail to maintain its
current debt and lease instruments;
(j) pay any bonus, increased salary or special remuneration to any
officer, director, employee or consultant or enter into any new employment or
consulting agreement with any such person, except as set forth in Section 4.3(j)
of the Company Disclosure Letter;
(k) change accounting methods, policies or procedures;
(l) introduce any material new method of management or operations;
(m) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any equity interest, or redeem or otherwise acquire
any of its equity interests (except for the Permitted Asset Transfers);
(n) amend or terminate any contract, agreement or license to which it
is a party, except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(o) lend any amount to any person or entity, other than (i) advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount and documented by receipts
for the claimed amounts or (ii) any loans pursuant to the Company 401(k) Plan;
20
(p) guarantee or act as a surety for any obligation, except in the
ordinary course of business, consistent with past practice, which are not
material in amount and except as required under the Pending Transactions;
(q) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(r) issue or sell any shares of its capital stock or any other of its
securities, or issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments to issue any securities,
or accelerate the vesting of any outstanding option or other security;
(s) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(t) merge, consolidate or reorganize with, or acquire any entity;
(u) amend its Articles of Incorporation, bylaws or any other
governance document;
(v) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
(w) agree to any audit assessment by any tax authority or file any
federal or state income or franchise tax return;
(x) change any insurance coverage; or
(y) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(x).
4.4 Satisfaction of Conditions Precedent. From the date of this Agreement
------------------------------------
until the earlier of termination of this Agreement or the Closing, the Company
will use its best efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article VI, and the Company will use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions contemplated hereby.
From the date of this Agreement until the earlier of termination of this
Agreement or the Closing, DoveBid will use its best efforts to satisfy or cause
to be satisfied all the conditions precedent that are set forth in Article V.
4.5 Regulatory Approvals. DoveBid, the Company and each Shareholder will
--------------------
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or foreign
that may be reasonably required (including, without limitation, any consent,
approval, order, authorization, registration, declaration or filing pursuant to
the HSR Act), or that DoveBid may reasonably request, in connection with the
consummation
21
of the transactions contemplated by this Agreement. The Company, each
Principal Shareholder and DoveBid will use their respective best efforts to
obtain all such authorizations, approvals and consents.
4.6 Necessary Consents. The Company and each Shareholder will use their
------------------
best efforts to obtain such written consents and take such other actions as may
be necessary or appropriate in DoveBid's judgment to allow the consummation of
the transactions contemplated hereby and to allow DoveBid to carry on the
Company' business after the Closing.
4.7 Litigation. The Company will notify DoveBid in writing promptly after
----------
learning of any material actions, suits, proceedings or investigations by or
before any court, board or governmental agency, initiated by or against it, or
known by it to be threatened against it.
4.8 No Other Negotiations. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company and the
Shareholders will not, and will not authorize or permit any officer,
shareholder, director, employee, investment banker, attorney, agent,
representative or affiliate of the Company, or any other person or entity, on
its behalf to, directly or indirectly, solicit, initiate or encourage any offer
from any person or entity or consider any inquiries or proposals received from
any other person or entity, participate in any negotiations or discussions
regarding, furnish to any person or entity any information with respect to, or
enter into any agreement, commitment, letter of intent or understanding
concerning, the possible disposition of all or any portion of the Company's
business, assets or equity interests by merger, sale or any other means (other
than the transactions contemplated hereby with DoveBid); provided that X.Xxxx
and/or X.Xxxx may transfer equity to their family members and related entities
for tax and/or estate planning purposes. The Company will promptly and in any
event within 24 hours notify DoveBid orally and in writing of any such inquiry
or proposal, including the name of the persons making such proposal and all of
the terms thereof. Any violation of the restrictions set forth in this section
by any officer, director or employee of the Company or any investment banker,
attorney or other advisor or representative of the Company shall be deemed to be
a material breach of this Section 4.8 by the Company.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company will allow
DoveBid and its agents reasonable access to the files, books, records and
offices of the Company, including, without limitation, any and all information
relating to the Company's taxes, commitments, contracts, customer lists, leases,
licenses, and real, personal and intangible property and financial condition.
The Company will cause its accountants to cooperate with DoveBid and its agents
in making available all financial information reasonably requested, including
without limitation the right to examine all working papers pertaining to all
financial statements prepared or audited by such accountants.
4.10 Blue Sky Laws. From the date of this Agreement until the earlier of
-------------
termination of this Agreement or the Closing, the Company shall use its best
efforts to assist DoveBid to the extent necessary to comply with the securities
and Blue Sky laws of all jurisdictions that are applicable in connection with
the transactions contemplated herein.
22
4.11 Permitted Asset Transfers. Prior to the Closing the Company shall
-------------------------
have transferred to the Principal Shareholders or all of the Shareholders the
personal property and other assets listed on Schedule 4.11 (collectively, the
"Permitted Asset Transfers").
4.12 Termination of 401(k) Plan. Conditioned on and effective immediately
--------------------------
prior to the Closing the Company shall have validly terminated the Xxxxxx Xxxx
Associates, Inc. Salaried Employees Retirement Profit Sharing Plan.
4.13 Termination of Employment Agreement and Term Sheet; Release of
--------------------------------------------------------------
Claims. Conditioned on and effective immediately prior to the Closing the
Company, the Shareholders, Xxxxxx Xxxx and Xxxxxxx Xxxxxx shall have validly
terminated that certain Agreement of Employment dated as of April 15, 1991, by
and among the Company, Xxxxxx Xxxx and Xxxxxxx Xxxxxx, as amended (the "Nucian
Employment Agreement") and shall have obtained a full release from Xxxxxxx
Xxxxxx of any and all claims and liability against the Company and Xxxxxx Xxxx,
and their successors, in a form and substance of the Termination of Employment
Agreement and Release attached hereto as Schedule 4.13 (the "Nucian Employment
Release"); and (ii) the Company and Xxxxx Xxxxx shall have validly terminated
that certain Employment Relationship and Term Sheet executed as of February 28,
2000, by and between the Company and Xxxxx Xxxxx, as amended (the "Xxxxx
Employment Term Sheet") and shall have obtained a full release from Xxxxx Xxxxx
of any and all claims and liability against the Company and its successor
relating to the Xxxxx Employment Term Sheet and his role as an employee of the
Company in a form and substance reasonably acceptable to DoveBid (the "Xxxxx
Employment Release").
4.14. Transfer of Trust Shares. Conditioned on and effective immediately
------------------------
prior to the Closing, X.Xxxx, X.Xxxx and the Company agree to use their best
efforts to cause (i) all Company capital stock held in the name of the Xxxxxxx
Xxxx Irrevocable Trust F/B/O Xxxxxx Xxxx U/A/D December 24, 1997 to be
transferred free and clear of all Liens to Xxxxxx Xxxx (the "X.Xxxx Share
Transfer"); and (ii) all Company capital stock held in the name of the Xxxxxxx
Xxxx Irrevocable Trust F/B/O Xxxxx Xxxx U/A/D December 24, 1997 to be
transferred free and clear of all Liens to Xxxxx Xxxx (the "X.Xxxx Share
Transfer").
4.15 Termination of Buy-Sell Agreement. Conditioned on and effective
---------------------------------
immediately prior to the Closing and the effectiveness of X.Xxxx Share Transfer
and the X.Xxxx Share Transfer, X.Xxxx, X.Xxxx and the Company agree to terminate
in its entirety that certain Buy-Sell Agreement for Corporate Stock of Xxxxxx
Xxxx Associates, Inc. executed as of December 23, 1997 by and among X.Xxxx,
X.Xxxx, Xxxxxx Xxxxxxx and the Company (the "Buy-Sell Agreement").
4.16 Further Assurances. The Company, the Shareholders and DoveBid shall
------------------
each deliver or cause to be delivered to the other, at such other times and
places as shall be reasonably agreed, such additional instruments, and take such
additional actions as can be taken without unreasonable expense, as any other
may reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. The Shareholders and the Company will
cooperate and use their reasonable efforts to have the present officers,
directors and employees of the Company cooperate with DoveBid on and after
Closing in furnishing information, evidence, testimony and other assistance in
connection with any tax return filing obligations,
23
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE SHAREHOLDERS AND THE COMPANIES
The obligations of the Shareholders and the Company with respect to actions
to be taken at Closing are subject to the satisfaction or waiver by the
Shareholders at or prior to Closing of all of the following conditions.
5.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of DoveBid set forth in this Agreement shall be true and correct in
all material respects at the Closing with the same effect as though such
representations and warranties had been made as of that time. The covenants set
forth in this Agreement to be performed by DoveBid at or before the Closing
shall have been duly performed. DoveBid shall have delivered to the Company a
certificate to such effect dated the Closing Date signed by an authorized
officer of DoveBid.
5.2 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by DoveBid and shall be acceptable to the Shareholders.
5.3 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of the Company as a
result of which the management of the Company deems it materially detrimental to
the Company or its Shareholders to proceed with the transactions hereunder.
5.4 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transaction contemplated herein (including any consent or filing required under
the HSR Act) shall have been obtained and made and no action or proceeding shall
have been instituted or threatened to restrain or prohibit the transactions
contemplated herein.
5.5 Convertible Subordinated Promissory Note and Subordination Agreement.
---------------------------------------------------------------------
DoveBid shall have executed and delivered to each Shareholder their respective
Convertible Subordinated Promissory Note and the Subordination Agreement
attached as Annex A thereto.
5.6 No DoveBid Material Adverse Effect. No event or circumstance shall
----------------------------------
have occurred between the execution of this Agreement and the Closing which
would constitute DoveBid Material Adverse Effect.
5.7 Employment Agreements. DoveBid (or its subsidiary) shall have
---------------------
executed and delivered to X.Xxxx, X.Xxxx, X.Xxxxxx, and Xxxxx Xxxxx
respectively, the Employment
24
Agreements in substantially the forms of Exhibit C-1, Exhibit C-2, Exhibit C-
----------- ----------- ----------
3 and Exhibit C-4, attached hereto ("Employment Agreements").
- -----------
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DOVEBID
The obligations of DoveBid with respect to actions to be taken at the
Closing are subject to the satisfaction or waiver by DoveBid at or prior to the
Closing of all of the following conditions.
6.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of the Shareholders and the Company set forth in this Agreement shall
be true and correct in all material respects at the Closing with the same effect
as though such representations and warranties had been made as of that time.
The covenants set forth in this Agreement to be performed by the Shareholders
and the Company on or before the Closing shall have been duly performed. The
Shareholders and the Company shall have delivered to DoveBid a certificate to
such effect dated the Closing Date signed by each of the Shareholders and the
President of the Company.
6.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of DoveBid as a
result of which the management of DoveBid deems it inadvisable to proceed with
the transactions hereunder.
6.3 No Material Adverse Effect. No event or circumstance shall have
--------------------------
occurred between the execution of this Agreement and the Closing which would
constitute a Material Adverse Effect on the Company.
6.4 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by the Company and shall be acceptable to DoveBid.
6.5 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated herein (including any consent or filing required under
the HSR Act) shall have been obtained and made; the Company shall have obtained
and delivered to DoveBid such additional consents to the transactions
contemplated herein as DoveBid may reasonably request including, without
limitation, DoveBid's receipt on or prior to Closing of consents of third
parties listed in Section 2.5 of the Company Disclosure Letter; and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein.
6.6 Good Standing Certificate. DoveBid shall have received evidence
-------------------------
reasonably satisfactory to it that the Company and each of its subsidiaries are
each validly existing, in good standing and authorized to do business and that
all state franchise and/or income tax returns and
25
taxes due by the Company and such subsidiaries for all periods prior to the
Closing have been filed and paid. DoveBid's failure to require or receive such
evidence in no way vitiates or affects the Company's or the Shareholders'
representations and warranties regarding such matters and DoveBid's reliance
on such representations or warranties.
6.7 Convertible Subordinated Promissory Note and Subordination Agreement.
---------------------------------------------------------------------
Each Shareholder shall have executed and delivered to DoveBid their respective
Convertible Subordinated Promissory Note and Subordination Agreement attached as
Annex A thereto.
6.8 Employment Agreements. X.Xxxx, X.Xxxx, Xxxxxxx Xxxxxx and Xxxxx
---------------------
Xxxxx, respectively, shall have executed and delivered to DoveBid their
respective Employment Agreement.
6.9 Release of Claims. DoveBid shall have received copies of a Release of
-----------------
Claims executed by X.Xxxx and X.Xxxx in substantially the forms of Exhibit D
---------
attached hereto.
6.10 Insurance Matters. The Company shall have obtained, and fully
-----------------
prepaid all premiums associated with, "claims made" insurance for the Company
for activities of the Company prior of the Closing that will be assigned to
DoveBid at the Closing, that expire no earlier than the third anniversary of the
Closing and that contain coverage that is customary for the Company' industry
and is reasonably acceptable to DoveBid.
6.11 Due Diligence. The results of DoveBid's due diligence review of the
-------------
Company's businesses, finances, practices and procedures shall be satisfactory
to DoveBid in its sole discretion.
6.12 Permitted Asset Transfers. The Shareholders and the Company have
--------------------------
completed to the satisfaction of DoveBid the Permitted Asset Transfers.
6.13 Termination of 401(k) Plan. The Company shall have validly
--------------------------
terminated the Xxxxxx Xxxx Associates, Inc. Salaried Employees Retirement Profit
Sharing Plan.
6.14 Termination of Employment Agreement and Term Sheet. The Nucian
--------------------------------------------------
Employment Agreement and the Xxxxx Employment Term Sheet shall have each been
validly terminated, and DoveBid shall have obtained the Nucian Employment
Release executed by the Company, Xxxxxx Xxxx and Xxxxxxx Xxxxxx and the Xxxxx
Employment Release executed by the Company and Xxxxx Xxxxx.
6.15 Transfer of Trust Shares; Termination of the Buy-Sell Agreement. The
---------------------------------------------------------------
Buy-Sell Agreement shall have been validly terminated (prior to the X.Xxxx Share
Transfer and the X.Xxxx Share Transfer), and the X.Xxxx Share Transfer and the
X.Xxxx Share Transfer shall have been completed.
26
ARTICLE VII
TERMINATION
7.1 Right to Terminate. This Agreement may be terminated and the
------------------
transactions contemplated herein abandoned at any time prior to the Closing: (i)
by the mutual written consent of the parties hereto (which, for purposes of this
Article, DoveBid shall be considered one party and both Company and the
Shareholders collectively shall be considered one party); (ii) by either party,
if such party is not in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, and the other party is in
material breach of any representation, warranty, covenant or agreement contained
in this Agreement and such breaching party fails to cure such material breach
within fifteen (15) days after written notice of such material breach from the
non-breaching party; (iii) by either party, if there is a final nonappealable
order of a federal or state court in effect preventing consummation of the
transactions contemplated herein, or if any statute, rule, regulation or order
is enacted, promulgated or issued or deemed applicable to the transactions
contemplated herein by any governmental body that would make consummation of the
transactions contemplated herein illegal; or (iv) by either party if the
transactions contemplated herein have not occurred by March 24, 2000; provided
that DoveBid shall have the right in its discretion to extend this date to no
later than April 15, 2000.
7.2 Termination Procedures. If either party wishes to terminate this
----------------------
Agreement pursuant to Section 7.1, such party shall deliver to the other party a
written notice stating that such party is terminating this Agreement and setting
forth a brief description of the basis of such termination. Termination of this
Agreement will be effective upon the receipt of such notice.
7.3 Continuing Obligations. Following any termination of this Agreement
----------------------
pursuant to this Article VII, the parties to this Agreement will continue to be
liable for breaches of this Agreement prior to such termination and will
continue to perform their respective obligations under Article X. Except for
the continuing obligations set forth in the preceding sentence, upon termination
of this Agreement pursuant to this Article VII the parties to this Agreement
will be without any further obligation or liability upon any party in favor of
the other party.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. The representations, warranties,
---------------------------
covenants and agreements of DoveBid contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, from the date of this Agreement
until the earlier of the termination of this Agreement or the one (1) year
anniversary of the Closing, (except for covenants that by their terms survive
for a longer period). All representations, warranties, covenants and agreements
of the Company and the Shareholders contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, from the date of this Agreement
until the earlier of the termination of this Agreement or the one (1) year
anniversary of the Closing, (except for covenants that by their terms survive
for a longer period, and for the representations and warranties set forth in
first four sentences of Section 2.3 and Section 2.7, which shall survive for the
statute of limitations period applicable to any claim which would constitute a
breach thereof).
27
8.2 Agreement to Indemnify.
----------------------
(a) Indemnification by the Shareholders. Subject to the limitations
-----------------------------------
set forth in this Article VIII, each of the Principal Shareholders, jointly and
severally, hereby indemnify and hold harmless DoveBid and its subsidiaries,
affiliates, officers, directors, agents, representatives and employees, and each
person, if any, who controls or may control DoveBid within the meaning of the
Securities Act (individually, a "DoveBid Indemnitee" and collectively, "DoveBid
Indemnitees") from and against any and all claims, demands, actions, causes of
actions, losses, costs, damages, liabilities and expenses including, without
limitation, reasonable legal fees and expenses (reduced by any reduction in tax
payable by such party as a result thereof, such tax benefit being determined
after taking into account the effect of recovery under this Article VIII and
calculated at such party's incremental effective rate of tax) ("Damages"):
(i) arising out of any misrepresentation, or breach of, or
default in connection with, any of the representations or warranties,
covenants and agreements given or made by the Company or any Shareholder in
this Agreement or any certificate, document or instrument delivered by or
on behalf of the Company or the Shareholders pursuant to this Agreement;
(ii) resulting from any failure of any Shareholder to have good,
valid and marketable title to the issued and outstanding shares held by
such Shareholder, free and clear of Liens, or any claim by a current or
former shareholder, or any other person, firm, corporation or entity,
seeking to assert or based upon ownership or rights to ownership of equity
interest of the Company (or the Purchase Price), any rights of a
shareholder of the Company, including any options, or preemptive rights or
rights to notice or to vote, any rights under the Company' Articles of
Incorporation, bylaws or other charter documents, any right under any
agreement among the Company and the Shareholders or any claim that his or
her equity interests or other securities were wrongfully repurchased by the
Company;
(iii) in connection with a liability of the Company arising out
of any acts, events, omissions or transactions occurring prior to the
Closing Date, which liabilities were not disclosed to DoveBid in this
Agreement, the Financial Statements, the Company Disclosure Letter or the
Closing Balance Sheet and which the Shareholders had Knowledge of at the
time of the Closing; or
(iv) resulting from any claim by any investment banker, broker,
finder or other agent engaged by the Company or any Shareholder in
connection with the origin, negotiation or execution of this Agreement or
in connection with any transaction contemplated hereby.
(b) Indemnification by DoveBid. Subject to the limitations set forth
--------------------------
in this Article VIII, DoveBid hereby indemnifies and holds harmless the
Shareholders (individually, a "Shareholder Indemnitee" and collectively,
"Shareholder Indemnitees") from and against any and all Damages: (i) arising out
of any misrepresentation, or breach of, or default in connection with, any of
the representations or warranties, covenants and agreements given or made by the
DoveBid in this Agreement or any certificate, document or instrument delivered
by
28
or on behalf of the DoveBid pursuant to this Agreement; or (ii) resulting from
any claim by any investment banker, broker, finder or other agent engaged by
DoveBid in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
8.3 Limitations and Threshold; Escrow.
---------------------------------
(a) Except for fraud or intentional misrepresentation, the
indemnification provided for under Section 8.2(a) shall not apply unless and
until aggregate Damages for which the DoveBid Indemnitees would be otherwise
entitled to receive indemnification exceed $175,000 (the "Shareholder
Threshold"); provided, however, that once such aggregate Damages exceed the
Threshold, such DoveBid Indemnitees shall be entitled to indemnification for the
aggregate amount of all Damages without regard to the Threshold. Except for
fraud or intentional misrepresentation, the indemnification provided for under
Section 8.2(b) shall not apply unless and until aggregate Damages for which the
Shareholder Indemnitees would be otherwise entitled to receive indemnification
exceed $175,000 (the "DoveBid Threshold"); provided, however, that once such
aggregate Damages exceed the Threshold, such Shareholder Indemnitees shall be
entitled to indemnification for the aggregate amount of all Damages without
regard to the Threshold.
(b) Except for liability based on a claim of fraud or intentional
misrepresentation, the maximum liability of a party for Damages under this
Article VIII shall not exceed $10,000,000 (the "Liability Cap"). Following the
Closing, except for liability based on a claim of fraud or intentional
misrepresentation or any claim under Article IX of this Agreement, the remedies
provided in this Article VIII shall be the sole and exclusive remedy of a party
with respect to any breach, default or failure or perform by a party under this
Agreement. The Shareholder Threshold, the DoveBid Threshold and the Liability
Cap set forth in this Agreement shall apply in the aggregate to the
indemnification obligations of X.Xxxx, X.Xxxx and DoveBid set forth in the
proposed stock purchase agreement executed by the parties in connection with the
Xxxxxx Xxxx Transaction.
(c) DoveBid will withhold from the Conversion Stock (as defined in
each Convertible Subordinated Promissory Note) to be issued to Principal
Shareholders upon conversion of each such Convertible Subordinated Promissory
Note ten percent (10%) of such Conversion Stock and any shares of DoveBid
capital stock or other securities into which such Conversion Stock are converted
or exchanged (the "Escrow Shares"), and will hold the certificates representing
such Escrow Shares in escrow as security for the Principal Shareholders'
indemnification obligations for Damages under Article VIII hereof. The Escrow
Shares will be held by DoveBid pursuant to this Agreement, subject to the terms
and conditions of this Sections 8.3 and 8.4, and this Article VII, until the day
after the one year anniversary of the Closing Date (the "Survival Period"). To
the extent that any dividend or distribution made with respect to the Escrow
Shares prior to the end of the Survival Period or, in the case of Escrow Shares
in escrow after the end of the Survival Period pursuant to Section 8.4(b), the
date on which such Escrow Shares are released from escrow, results in a
liability for tax (as defined in Section 2.7 hereof), such tax liability shall
be solely that of the Principal Shareholders (in proportion to each such
shareholder's interest in the Escrow Shares). The escrow provided for in this
Section 8.3 shall be in addition to any escrow required under the terms of the
Convertible Subordinated Promissory
29
Notes. To the extent that any dividend or distribution is made with respect to
Escrow Shares prior to the release to the Principal Shareholders or retention
by DoveBid of such shares under this Agreement, DoveBid agrees to distribute
the same as promptly as practicable to the Shareholders in accordance with
their pro rata ownership of Escrow Shares.
8.4 Satisfaction of Claims.
----------------------
(a) The Principal Shareholders and DoveBid agree that any Claim for
indemnification under Section 8.2(a) may at the election of DoveBid be satisfied
by either: (i) retaining Escrow Shares, subject to the right of the Principal
Shareholders to promptly satisfy such Claims by paying cash to DoveBid in the
full amount of such Claim within twenty (20) days of resolution of such Claim;
or (ii) through the payment of cash or other property or assets to DoveBid by
such Principal Shareholder. To the extent that DoveBid elects to satisfy any
Claim for indemnification under this Article VIII by retaining Escrow Shares and
the Principal Shareholders do not timely fully pay such Claim in cash, then such
shares shall be valued at a price of $10.50 per share (subject to proportional
adjustment for any stock splits, stock combinations, recapitalizations or like
events) for purposes of satisfying such Claim regardless of whether the actual
market price of DoveBid common stock is higher or lower, and in such event
DoveBid shall not have the right to recover any deficiency and the Principal
Shareholders will not have the right to recover any excess. Claims for
indemnification under Section 8.2(b) shall be satisfied by DoveBid by payment of
cash.
(b) Claims for indemnification by a party under this Article VIII must
be made in writing prior to the expiration of the Survival Period; provided that
if a Notice of Claim is asserted in writing before the expiration of the
Survival Period, then (notwithstanding the subsequent expiration of the Survival
Period) the obligation of the Principal Shareholders to indemnify the DoveBid
Indemnitees (on the one hand) and the obligation of DoveBid to Indemnify the
Shareholder Indemnitees (on the other hand) with respect to such Claim shall
continue until such Claim is finally resolved and satisfied in full in
accordance with this Agreement.
8.5 Third Person Claims.
-------------------
8.5.1 Promptly after either a DoveBid Indemnitee or the
Representatives (as the case may be) have received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person (such claim or
commencement of such action or proceeding being a "Third Person Claim") that
could give rise to a right of indemnification under this Article VIII, such
party shall, as a condition precedent to a claim with respect thereto, give to
the Principal Shareholders or DoveBid (as the case may be) written notice of
such Third Person Claim describing in reasonable detail the nature of such Third
Person Claim, a copy of all papers served with respect to that Third Person
Claim (if any), an estimate of the amount of Damages attributable to the Third
Person Claim to the extent feasible (which estimate shall not be conclusive of
the final amount of such claim) and the basis for the DoveBid Indemnitee's or
the Representatives' request for indemnification under this Article VIII;
provided, however, that the failure of a party to give timely notice hereunder
shall relieve the Principal Shareholders or DoveBid (as the case
30
may be) of their indemnification obligations under this Article VIII to the
extent, but only to the extent that, such failure materially prejudices such
party's ability to defend such claim.
8.5.2 DoveBid shall defend any Third Person Claim, and the costs and
expenses incurred by DoveBid in connection with such defense (including but not
limited to reasonable attorneys' fees, other professionals' and experts' fees
and court or arbitration costs) shall be included in the Damages for which
DoveBid may seek indemnity pursuant to a Claim made by any DoveBid Indemnitee
hereunder; provided that the Representatives (on behalf of the Shareholders)
will have the right to participate in such defense at their sole cost and
expense. The Representatives shall have the right to receive copies of all
pleadings, notices and communications with respect to the Third Person Claim to
the extent that receipt of such documents by the Representatives does not affect
any privilege relating to the DoveBid Indemnitee, and may participate in
settlement negotiations with respect to the Third Person Claim. No DoveBid
Indemnitee shall enter into any settlement of a Third Person Claim without the
prior written consent of the Representatives (which consent shall not be
unreasonably withheld or delayed), provided, that if the Representatives shall
have consented in writing to any such settlement, then the Representatives shall
have no power or authority to object to any Claim by any DoveBid Indemnitee for
indemnity under Article VIII for the amount of such settlement and the Principal
Shareholders will remain responsible to indemnify the DoveBid Indemnitee for all
Damages they may incur arising out of, resulting from or caused by the Third-
Party Claim to the fullest extent provided in Article VIII (except if and only
to the extent that the Representatives shall have expressly reserved the
Principal Shareholders' right to object to such Third Person Claim as a
Contested Claim).
8.6 Representatives. Each of the Shareholders approves the designation of
---------------
and designates Xxxxxx Xxxx and Xxxxx Xxxx, as the representatives of the
Principal Shareholders (the "Representatives") and as the attorney-in-fact and
agent for and on behalf of each Shareholder with respect to the delivery of the
Closing Balance Sheet and the Closing Liabilities Schedule under Section 1.2,
the resolution of Deferred Payment under Section 1.4 hereof and claims for
indemnification under this Article VIII and the taking by the Representatives of
any and all actions and the making of any decisions required or permitted to be
taken by the Representatives under this Agreement, including, without
limitation, the exercise of the power to: (a) agree to, negotiate, enter into
settlements and compromises of, demand arbitration of, and comply with orders of
courts and awards of arbitrators with respect to, such claims; (b) arbitrate,
resolve, settle or compromise any claim for indemnity made pursuant to Article
VIII; and (c) take all actions necessary in the judgment of the Representatives
for the accomplishment of the foregoing. The Representatives will have
authority and power to act on behalf of each Principal Shareholder with respect
to the disposition, settlement or other handling of all claims under Article
VIII and all rights or obligations arising under Article VIII. The Shareholders
will be bound by all actions taken and documents executed by the Representatives
in connection with Article VIII, and DoveBid will be entitled to rely on any
action or decision of either Representative. In performing the functions
specified in this Agreement, the Representatives will not be liable to any
Shareholder in the absence of gross negligence or willful misconduct on the part
of the Representatives. The Principal Shareholders shall severally indemnify
the Representatives and hold them harmless against any loss, liability or
expense incurred without gross negligence or willful misconduct on the part of
the Representatives and arising out of or in connection with the acceptance or
administration of his duties hereunder. Any out-of-pocket
31
costs and expenses reasonably incurred by the Representatives in connection
with actions taken by the Representatives pursuant to the terms of Article
VIII (including without limitation the hiring of legal counsel and the
incurring of legal fees and costs) will be paid by the Principal Shareholders
to the Representatives pro rata in proportion to their respective percentage
equity interests in the Company immediately prior to the Closing.
8.7 Notice of Claim. As used herein, the term "Claim" means a claim for
---------------
indemnification for Damages under Article VIII. DoveBid or the Representatives
may give notice of a Claim under this Agreement prior to the end of the Survival
Period whether for its own Damages or for Damages incurred by any other DoveBid
Indemnitee or the Shareholder Indemnitees (as the case may be). DoveBid may
give written notice of a Claim under Section 8.2(a) executed by an authorized
representative of DoveBid to the Representatives, and the Shareholders may give
written notice of a Claim under Section 8.2(b) executed by the Representatives
(a "Notice of Claim") to DoveBid promptly after such notifying party becomes
aware of the existence of any potential claim for indemnity for Damages under
Article VIII, including in connection with any Third Person Claim.
8.8 Contents of Notice of Claim. Each Notice of Claim by DoveBid or the
---------------------------
Shareholders (acting through the Representatives) will contain the following
information:
(a) that DoveBid or the Shareholders (as the case may be) has
incurred, paid or properly accrued (in accordance with GAAP) or, in good faith,
believes it will have to incur, pay or accrue (in accordance with GAAP), Damages
in an aggregate stated amount arising from such Claim (which in the case of
DoveBid may be the amount of damages claimed by a third party in an action
brought against any DoveBid Indemnitee based on alleged facts, which if true,
would give rise to liability for Damages to such DoveBid Indemnitee under
Article VIII); and
(b) a brief description, in reasonable detail (to the extent
reasonably available to the party providing the Notice of Claim), of the facts,
circumstances or events giving rise to the alleged Damages based on such party's
good faith belief thereof, including, without limitation, the identity and
address of any third-party claimant (to the extent reasonably available) and
copies of any formal demand or complaint, the amount of Damages, the date each
such item was incurred, paid or properly accrued, or the basis for such
anticipated liability, and the specific nature of the breach to which such item
is related.
8.9 Resolution of Notice of Claim. Any Notice of Claim received by either
-----------------------------
the Representatives or DoveBid will be resolved as follows:
(a) Uncontested Claims. In the event that, within twenty (20) calendar
------------------
days after a Notice of Claim is received by either the Representatives or
DoveBid, such party does not contest such Notice of Claim in writing to the
other party sending the Notice of Claim (an "Uncontested Claim"), then such
party will be conclusively deemed to have consented (in the case of the
Representatives, on behalf of all Shareholders) to the recovery by the DoveBid
Indemnitees or the Shareholder Indemnitees (as the case may be) of the full
amount of Damages specified in the Notice of Claim in accordance with this
Article VIII.
32
(b) Contested Claims. In the event that the either the
----------------
Representatives or DoveBid (as the case may be) gives the other party written
notice contesting all or any portion of a Notice of Claim (a "Contested Claim")
within the above twenty (20) day period, then: (i) such Contested Claim will be
resolved by either (A) a written settlement agreement executed by DoveBid and
the Representatives or (B) in the absence of such a written settlement
agreement, by binding arbitration between DoveBid and the Representatives in
accordance with the terms and provisions of Section 8.9(c).
(c) Arbitration of Contested Claims. Each of DoveBid, and the
-------------------------------
Shareholders agree that any Contested Claim will be submitted to mandatory,
final and binding arbitration pursuant to the United States Arbitration Act, 9
U.S.C., Section 1 et seq. Either DoveBid or the Representatives may commence
the arbitration process called for by this Agreement by sending a written demand
for arbitration to each of the other parties to this Agreement. The arbitration
will be conducted in accordance with United States Arbitration Act, 9 U.S.C.,
Section 1 et seq, subject to the provisions of this Section 8.9(c). The parties
will cooperate with each other in promptly selecting a single qualified
arbitrator with relevant experience in the commercial disputes and California
contract law, and in scheduling the arbitration proceedings in order to fulfill
the provisions, purposes and intent of this Agreement. The parties covenant
that they will participate in the arbitration in good faith, and that they will
share in its costs in accordance with subparagraph (i) below. A Contested Claim
finally resolved in favor of a party may be satisfied as if such Claim were an
Uncontested Claim pursuant to Section 8.9(a). The provisions of this Section
8.9(c) may be enforced by any court of competent jurisdiction, and the party
seeking enforcement will be entitled to an award of all costs, fees and
expenses, including attorneys' fees, to be paid by the party against whom
enforcement is ordered. Judgment upon the award rendered by the arbitrator may
be entered in any court having competent jurisdiction.
(i) Payment of Costs. DoveBid on the one hand, and the Principal
----------------
Shareholders (through the Representatives), on the other hand, will bear the
expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator shall determine the party
who is the Prevailing Party and the party who is the Non-Prevailing Party. The
Non-Prevailing Party shall pay all reasonable costs, fees and expenses related
to the arbitration, including reasonable fees and expenses of attorneys,
accountants and other professionals incurred by the prevailing party, the fees
of each arbitrator and the administrative fee of the arbitration proceedings.
If such an award would result in manifest injustice, however, the arbitrator may
apportion such costs, fees and expenses between the parties in such a manner as
the arbitrator deems just and equitable.
(ii) Burden of Proof. Except as may be otherwise expressly provided
---------------
herein, for any Contested Claim submitted to arbitration, the burden of proof
will be as it would be if the claim were litigated in a judicial proceeding
governed by California law exclusively.
(iii) Award. Upon the conclusion of any arbitration proceedings
-----
hereunder, the arbitrator will render findings of fact and conclusions of law
and a final written arbitration award setting forth the basis and reasons for
any decision reached (the "Final Award") and will deliver such documents to the
Representatives and DoveBid, together with a signed copy of the Final Award.
The Final Award will constitute a conclusive determination of
33
all issues in question, binding upon the Shareholders, the Representatives and
DoveBid, and will include an affirmative statement to such effect.
(iv) Timing. The Representatives, DoveBid and the arbitrator will
------
conclude each arbitration pursuant to this Section 8.9 as promptly as possible
for the Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator chosen in accordance with
--------------------
these provisions will not have the power to alter, amend or otherwise affect the
terms of these arbitration provisions or the provisions of this Agreement.
ARTICLE IX
POST-CLOSING COVENANTS
9.1 Employee Matters. A reasonable period of time after the Closing
----------------
DoveBid will reserve an aggregate of 200,000 shares of its Common Stock (unless
the Principal Shareholders and DoveBid mutually agree to reserve a larger number
of shares) for issuance upon exercise of stock options granted under DoveBid's
1999 Stock Option Plan to certain employees of the Company who continue
employment with the Company or DoveBid after the Closing (not including shares
allocated to X.Xxxx, X.Xxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxx) selected by the
mutual agreement of DoveBid (on the one hand) and X.Xxxx and X.Xxxx (on the
other hand). Continuous employment with the Company will be credited to
employees of the Company who continue employment with the Company or DoveBid
after the Closing for purposes of determining employee benefits such as accrued
vacation, sick leave, and eligibility and vesting under the Internal Revenue
Code Section 401(k) Plan sponsored by DoveBid, but not for purposes of
determining the vesting of stock options and other compensation benefits. As
soon as practicable after the execution of this Agreement, DoveBid and the
Principal Shareholders shall confer and work together in good faith to agree
upon mutually acceptable employee benefit and compensation arrangements for the
employees of Company following the Closing.
9.2 Xxxxxx Xxxx Associates Name. The Shareholders acknowledge and agree
---------------------------
that at the Closing the Company will own and have all right, title and interest
in and to names "Xxxxxx Xxxx" and "Xxxxxx Xxxx Associates" (the "Levy Marks")
and all related names and trademarks, service marks and all associated goodwill.
DoveBid agrees that in the event that it ceases to operate as a going concern in
the businesses of valuation services and asset sales and conducts a liquidation
of all of its assets related to such businesses, DoveBid will use its best
efforts to transfer to the Principal Shareholders (jointly) all of DoveBid's
right, title and interest to the Levy Marks.
9.3 Covenant Not to Compete. As a material inducement and consideration
-----------------------
for the Company, DoveBid and for each of X.Xxxx and X.Xxxx, respectively, to
enter into this Agreement and for the sale of X.Xxxx'x and X.Xxxx'x Shares to
DoveBid under the Agreement, each of X.Xxxx and X.Xxxx separately agree that for
the earlier of: (a) DoveBid failure to make payment when due of amounts due
under X.Xxxx'x or X.Xxxx'x respective Convertible Subordinated Promissory Note
after written notice of such failure and period of thirty days to
34
make such payment; or (b) the later of (i) four (4) years from and after the
Closing Date, or (ii) one (1) year following the date of that X.Xxxx'x or
X.Xxxx'x respective employment with DoveBid is terminated for any reason (such
period of time being hereinafter called the "Restricted Period"), X.Xxxx and
X.Xxxx, respectively, will not, within the Restricted Area (as defined below)
carry on any business or activity, or own (in whole or in part), operate,
advise, assist or lend funds to or invest funds in, or license or perform
services for, any person, firm, partnership, business, corporation or other
entity in any manner that would aid or assist any person, firm, partnership,
business, corporation or other entity which competes or otherwise engage in any
activity which competes, directly or indirectly, with business of DoveBid or the
Company as currently conducted or any substantially similar business or activity
(the "Restricted Business"); provided that X.Xxxx and X.Xxxx may each (i) own
less than one percent (1%) of the public traded securities of a public company,
(ii) hold an ownership interest in Levy/Xxxxxx, LLC, a Delaware limited
liability company ("Levy Xxxxxx") and may have high level executive management
responsibilities to Levy Xxxxxx and attend high level executive management
meetings (so long as such responsibilities and activities do not interfere or
conflict with their respective duties as employees of DoveBid (or any subsidiary
of DoveBid) or compete with the current business of DoveBid; provided that if
DoveBid determines in its reasonable discretion that the business of Levy Xxxxxx
competes with DoveBid or the Company, then X.Xxxx and X.Xxxx each agrees to
divest their respective ownership interest in Levy Xxxxxx within a reasonable
time of such determination, and each further agrees that if such divestiture has
not been completed within 90 days of the determination then such party will
cease all management participation in Levy Xxxxxx, and (iii) hold that certain
Warrant to Purchase Common Stock originally issued to Xxxxxx Xxxx Associates,
Inc. under that certain Strategic Alliance Agreement dated as of February 28,
2000 by and between the Company and XxxxxXxx.xxx, Inc. or any shares issued
thereunder. As used herein, the term "Restricted Area" means any city, country
or state of the United States of America or any geographic area within any other
country in which the Company or DoveBid or their respective subsidiaries,
affiliates, directly or indirectly carries on or engages in the Restricted
Business. During the Restricted Period, each of X.Xxxx and X.Xxxx separately
agree not to interfere with, disrupt or attempt to disrupt the relationship
between DoveBid and any third party, including without limitation any customer,
vendor, supplier, distributor, consultant or employee of DoveBid or any of its
subsidiaries, with respect to the Restricted Business and not to solicit any
employee or contractors of DoveBid or any of its subsidiaries. In the event of a
breach of any of the covenants set forth in this Section, DoveBid will be
entitled to an injunction against the breaching party restraining such breach in
addition to any other remedies provided by law or equity. In the event that any
covenant in this Section is held to be invalid, illegal or unenforceable by any
court of competent jurisdiction or any other governmental authority, it is
agreed and understood that such covenant will not be voided but rather will be
construed to impose limitations upon X.Xxxx'x and/or X.Xxxx'x activities (as the
case may be) no greater than allowable under then applicable law. The respective
agreements of X.Xxxx and X.Xxxx in this Section 9.3 are separate agreements of
each such party, and X.Xxxx or X.Xxxx shall have no liability with respect to a
breach by the other of his obligations under this Section 9.3.
9.4 TradeOut Termination; Indemnification.
-------------------------------------
(a) Termination and Indemnification. After the Closing, DoveBid
-------------------------------
agrees to immediately provide XxxxxXxx.xxx, Inc. ("TradeOut") with written
notice to terminate that certain Strategic Alliance Agreement dated as of
February 28, 2000 by and between the Company and TradeOut (the "TradeOut
Agreement"). Each of the X.Xxxx and X.Xxxx, jointly and severally, hereby
indemnify, defend and hold harmless DoveBid and its subsidiaries,
35
affiliates, officers, directors, agents, representatives and employees, and
each person, if any, who controls or may control DoveBid within the meaning of
the Securities Act ("DoveBid Persons"), from and against any and all claims,
demands, actions, causes of actions, losses, costs, damages, liabilities and
expenses including, without limitation, reasonable legal fees and expenses
("Losses") that arise out of or are in anyway related to the TradeOut
Agreement, that certain Warrant to Purchase Common Stock issued to the Company
covering up to 525,000 shares of the common stock of TradeOut (the "Warrant"),
the Right of First Refusal and Co-Sale Agreement dated as of October 18, 1999
referred to in the Warrant, and all agreements, exhibits and other instruments
referred therein or related thereto (the "TradeOut Agreements") and any
actions taken by or omissions of X.Xxxx, X.Xxxx or the Company under the
TradeOut Agreements and any violation, breach or conflict of the TradeOut
Agreements or for any breach or violation of a representation, warranty or
covenant of the Company or the Shareholders in this Agreement arising from or
related to the TradeOut Agreement or the termination of the TradeOut Agreement
(excluding liabilities of the Company owing to TradeOut in the amount of
$425,000 that is reflected on the Balance Sheet and claims resulting from acts
of DoveBid or employees of DoveBid other than X.Xxxx and X.Xxxx including in
their capacities as DoveBid officers). The obligations of X.Xxxx and X.Xxxx
under this Section 9.4 shall survive the termination or expiration of this
Agreement and the Closing.
(b) TradeOut Claim. Promptly after a DoveBid Person has received
--------------
notice of or has knowledge of any claim or the commencement of any action or
proceeding that could give rise to a right of indemnification under this
Section 9.4 (a "TradeOut Claim"), such DoveBid Person shall, as a condition
precedent to a claim with respect thereto, give to the Principal Shareholders
written notice of such TradeOut Claim describing in reasonable detail the
nature of such TradeOut Claim, a copy of all papers served with respect to
that TradeOut Claim (if any), an estimate of the amount of Losses attributable
to such TradeOut Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis for the DoveBid
Persons' request for indemnification under this Section 9.4; provided,
however, that the failure of such DoveBid Person to give timely notice
hereunder shall relieve the Principal Shareholders of their indemnification
obligations under this Section 9.4 to the extent, but only to the extent that,
such failure materially prejudices such party's ability to defend such
TradeOut Claims. If such TradeOut Claim involves a claim by a third party
(including TradeOut), DoveBid and the Principal Shareholders shall jointly
defend such TradeOut Claim at their joint cost and expense (provided that any
costs and expenses incurred by DoveBid in connection with such defense
(including but not limited to reasonable attorneys' fees, other professionals'
and experts' fees and court or arbitration costs) shall be included in the
Loss for which a DoveBid Person may seek indemnity pursuant to a TradeOut
Claim made hereunder. Both DoveBid and the Principal Shareholders shall have
the right to receive copies of all pleadings, notices and communications with
respect to the TradeOut Claim, and each may participate in settlement
negotiations with respect to the TradeOut Claim. The Principal Shareholders
shall control the settlement of any TradeOut Claim involving a third party
(including TradeOut), but shall not enter into any settlement of a TradeOut
Claim which involves a future obligation of or prohibition or limitation on
DoveBid, or is reasonably likely to have an adverse impact on the reputation
or business of DoveBid, without the prior written consent of DoveBid (which
consent shall not be unreasonably withheld or delayed).
36
(c) Any notice of a TradeOut Claim received by the Principal
Shareholders will be resolved as follows:
(i) Uncontested TradeOut Claims. If, within twenty (20) calendar days
---------------------------
after a notice of the TradeOut Claim is received by the Principal Shareholders,
the Principal Shareholders do not contest such TradeOut Claim in writing to the
DoveBid Persons giving such notice (an "Uncontested TradeOut Claim"), then such
the Principal Shareholders will be conclusively deemed to have consented to the
recovery by the DoveBid Persons of the full amount of Losses specified in the
notice of the TradeOut Claim in accordance with this Section 9.4.
(ii) Contested TradeOut Claims. In the event that the Principal
-------------------------
Shareholders give the DoveBid Persons written notice contesting all or any
portion of a notice of TradeOut Claim (a "Contested TradeOut Claim") within the
above twenty (20) day period, then: (i) such Contested TradeOut Claim will be
resolved by either (A) a written settlement agreement executed by such DoveBid
Persons and the Principal Shareholders, or (B) in the absence of such a written
settlement agreement, by binding arbitration between the DoveBid Persons and the
Principal Shareholders in accordance with the terms and provisions of Section
9.4(d).
(d) Arbitration of Contested TradeOut Claims. Each of DoveBid, and the
----------------------------------------
Principal Shareholders agree that any Contested TradeOut Claim will be
submitted to mandatory, final and binding arbitration pursuant to the United
States Arbitration Act, 9 U.S.C., Section 1 et seq. Either DoveBid or the
Principal Shareholders may commence the arbitration process called for by this
Section by sending a written demand for arbitration to the other party. The
arbitration will be conducted in accordance with United States Arbitration
Act, 9 U.S.C., Section 1 et seq, subject to the provisions of this 9.4(c). The
parties will cooperate with each other in promptly selecting a single
qualified arbitrator with relevant experience in the commercial disputes and
California contract law, and in scheduling the arbitration proceedings in
order to fulfill the provisions, purposes and intent of this Section 9.4. The
parties covenant that they will participate in the arbitration in good faith,
and that they will share in its costs in accordance with this Section 9.4(d).
A Contested TradeOut Claim finally resolved in favor of a party may be
satisfied as if such TradeOut Claim were an Uncontested TradeOut Claim
pursuant to Section 9.4(d)(i) above. The provisions of this Section 9.4 may be
enforced by any court of competent jurisdiction, and the party seeking
enforcement will be entitled to an award of all costs, fees and expenses,
including attorneys' fees, to be paid by the party against whom enforcement is
ordered. Judgment upon the award rendered by the arbitrator may be entered in
any court having competent jurisdiction. The non-prevailing party shall pay
all reasonable costs, fees and expenses related to the arbitration, including
reasonable fees and expenses of attorneys, accountants and other professionals
incurred by the prevailing party, the fees of each arbitrator and the
administrative fee of the arbitration proceedings. If such an award would
result in manifest injustice, however, the arbitrator may apportion such
costs, fees and expenses between the parties in such a manner as the
arbitrator deems just and equitable. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a final written arbitration award setting forth the
basis and reasons for any decision reached and will deliver such documents to
the Principal Shareholders and the DoveBid Persons, together with a signed
copy of the final award. The final award will constitute a conclusive
determination of all issues in question, binding upon the Principal
Shareholders and the DoveBid
37
Persons, and will include an affirmative statement to such effect. The
Principal Shareholders and the DoveBid Persons will conclude each arbitration
pursuant to this Section 9.4(d) as promptly as possible for the Contested
TradeOut Claim being arbitrated. The arbitrator chosen in accordance with
these provisions will not have the power to alter, amend or otherwise affect
the terms of these arbitration provisions or the provisions of this Section.
9.5 Nucian Payment. Promptly following the Closing, DoveBid will pay
--------------
Xxxxxxx Xxxxxx the cash consideration and issue the Convertible Subordinated
Promissory Note required under Section 2 of the Nucian Employment Release.
9.6 Termination or Transfer of Vehicle Leases. Promptly following the
-----------------------------------------
Closing, X.Xxxx, X.Xxxx and DoveBid agree to use their commercially reasonable
efforts to cause each of the vehicle leases set forth on Schedule 9.6 attached
hereto (the "Vehicle Leases") to either be terminated or transferred in their
entirety (without liability to the Company or DoveBid) by the employee using the
leased vehicle.
9.7 IRC Election. As soon as practicable after requested by DoveBid, if
------------
instructed by DoveBid the Shareholders shall deliver to DoveBid a properly
executed election under Section 338(h)(10) of the Internal Revenue Code (the
"IRC") and any corresponding state tax election reasonably requested by DoveBid
to treat the transaction contemplated by this Agreement as an asset sale (the
"IRC Election"); provided that DoveBid has agreed to reimburse the Shareholders
for taxes above the amount of tax liability which they would have incurred
without making the IRC Election ("Additional Tax"), including any taxes payable
as a result of such reimbursement. The amount of the Additional Taxes shall be
mutually agreed to by the parties at such time.
9.8 Transfer of Sub Shares. Promptly after the Closing, X.Xxxx and X.Xxxx
----------------------
agree to transfer all of the capital stock of Xxxxxx Xxxx Associates Mexico,
S.A. de C.V. held by X.Xxxx and X.Xxxx to DoveBid in the manner instructed by
DoveBid (the "Sub Share Transfer").
9.9 Termination of Oral Retainer Agreement. Promptly after the Closing,
--------------------------------------
the Company and the Shareholders agree to use their best efforts to cause that
certain Oral Retainer Agreement by and among the Company and Xxxxxx X. Xxxxxxx
to be terminated without liability to the Company or DoveBid (except as
reflected on the Closing Balance Sheet).
9.10 Third Party Debt. As soon as practicable after the Closing, DoveBid
----------------
will pay in full all amounts (including principal and interest) constituting
Third Party Debt (as reflected on the Closing Balance Sheet).
9.11 Xxxxxx Xxxx Transaction. It is the intention of the parties as soon
-----------------------
as practicable after the Closing to negotiate and enter into a stock purchase
agreement in form and substance substantially similar to this Agreement (except
as to purchase price, purchase price adjustments, and indemnification
limitations) providing for the sale to DoveBid of all of the outstanding capital
stock of Xxxxxx Xxxx (held by X. Xxxx and X.Xxxx) for a cash purchase price to
be $430,874 based on the Preliminary Xxxxxx Xxxx Balance Sheet (the "Xxxxxx Xxxx
Transaction"). In the event that the Xxxxxx Xxxx Transaction has not been
consummated within a reasonable time following the Closing, then X.Xxxx and
X.Xxxx shall have the joint right to require that DoveBid purchase from them all
of the outstanding shares of Xxxxxx Xxxx capital stock for cash in an
38
aggregate amount of $430,874 pursuant to a stock purchase agreement that
contains terms and provisions which are reasonable and customary for such
transactions (the "Put Right"); provided, that (i) X.Xxxx and X.Xxxx have in
good faith and through reasonable diligent efforts attempted to consummate the
Xxxxxx Xxxx Transaction, and (ii) X.Xxxx and X.Xxxx jointly continue to hold
all of the outstanding shares of Xxxxxx Xxxx capital stock on the date of the
closing of such sale of the shares. The Put Right shall terminate on the
earlier of: (i) on the mutual agreement of DoveBid, X.Xxxx and X.Xxxx, (ii)
the consummation of the Xxxxxx Xxxx Transaction, or (iii) the merger or
consolidation of Xxxxxx Xxxx, or the sale of all or substantially all of its
assets to a third party.
9.12 ERISA Fiduciary Insurance. From and after the Closing through the
-------------------------
date on which the assets of the Xxxxxx Xxxx Associates, Inc. Salaried Employees
Retirement Profit Sharing Plan are distributed to the participants and
beneficiaries thereof, DoveBid shall, or shall cause the Company to, maintain in
effect either the ERISA fiduciary insurance coverage in effect immediately prior
to the Closing or such other ERISA fiduciary insurance coverage that is
substantially similar to the coverage in effect immediately prior to the
Closing.
9.13 Further Assurances. The Company, the Shareholders and DoveBid shall
------------------
each deliver or cause to be delivered to the other, at such other times and
places as shall be reasonably agreed, such additional instruments, and take such
additional actions as can be taken without unreasonable expense, as any other
may reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. The Shareholders agree to cooperate and
assist DoveBid in seeking or obtaining all consents, approvals, authorizations,
notices, terminations or amendments relating to any agreement or other
obligation of the Company which may be necessary or desirable in DoveBid's sole
judgment.
ARTICLE X
GENERAL
10.1 Confidentiality. The Company, the Shareholders and DoveBid each
---------------
recognize that they have received and will receive confidential information
concerning the other during the course of the negotiations and preparations of
this Agreement and the transactions contemplated herein. Accordingly, the
Company, the Shareholders and DoveBid each agree (a) to use their respective
best efforts to prevent the unauthorized disclosure of any confidential
information concerning the other that was or is disclosed during the course of
such negotiations and preparations, and is clearly designated in writing as
confidential at the time of disclosure, and (b) to not make use of or permit to
be used any such confidential information other than for the purpose of
effectuating the Closing and related transactions. The obligations of this
Section 10.1 will not apply to information that is required, in the opinion of
counsel to a party hereto, to be disclosed by statute, or governmental rule or
regulation, or, following the Closing, to the disclosure of information
regarding the Company by DoveBid. If this Agreement is terminated, all copies
of documents containing confidential information shall be returned by the
receiving party to the disclosing party. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants in Section
10.1 and because of the immediate and irreparable damage that would be caused
for which they would have no other adequate remedy,
39
the parties hereto agree that, in the event of a breach by any of them of the
foregoing covenants, the covenant may be enforced against the other parties by
injunctions and restraining orders.
10.2 Successors and Assigns. Neither the Company nor any Shareholder may
----------------------
assign any of its rights or obligations hereunder without the prior written
consent of DoveBid. DoveBid may not assign any of its rights or obligations
hereunder without the prior written consent of Shareholders holding not less
than a majority of the voting power in the Company, except that DoveBid may
assign its rights and obligations hereunder without the prior written consent of
any Shareholder in connection with a merger, consolidation or sale of all or
substantially all of DoveBid's assets or in connection with a reincorporation,
reorganization or other corporate recapitalization or reorganization, provided
that the acquiring or surviving corporation or entity agrees to assume all of
DoveBid's obligations under this Agreement. This provision does not govern the
assignment of the Convertible Subordinated Promissory Notes or stock issued
pursuant thereto, which shall be governed solely by the provisions thereof.
Except as provided in this Section, this Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.3 Entire Agreement; Amendments. This Agreement (including the
----------------------------
schedules and exhibits attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Shareholders,
the Company and DoveBid and supersede any prior agreement, understanding or
discussions relating to DoveBid or the transactions contemplated by this
Agreement. Except as otherwise stated herein, this Agreement and the exhibits
hereto may be modified or amended only by a written instrument executed by the
Shareholders, the Company and DoveBid, acting through their respective officers,
and duly authorized by each of their Board of Directors.
10.4 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same agreement.
10.5 Expenses; Taxes. DoveBid will pay the fees, expenses and
---------------
disbursements of DoveBid and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by DoveBid under this
Agreement. The Shareholders will pay their and the Company's respective fees,
expenses and disbursements of counsel and accountants incurred in connection
with the subject matter of this Agreement and any amendments thereto incurred
prior to the Closing (except as otherwise expressly provided in this Agreement
with respect to the costs and fees of the Representatives), including all costs
and expenses incurred in the performance and compliance with all conditions to
be performed by them under this Agreement. Any expenses of the Shareholders and
the Company not paid by the Shareholders at or prior to the Closing shall be
treated as Damages under Article VIII. The Shareholders and DoveBid shall
jointly pay all transfer, recording, stock transfer and other similar taxes and
fees ("Transfer Taxes") incurred in connection with the transactions
contemplated by this Agreement, it being acknowledged by the parties that the
Shareholders are solely responsible for all income, gains and other similar
taxes and fees incurred in connection with the transactions contemplated by this
Agreement. The Company shall file, and the Shareholders shall cause the Company
to file, all necessary
40
documentation and tax returns with respect to such Transfer Taxes. In
addition, the Shareholders acknowledge that they, and not DoveBid or the
Company, will be solely responsible for and will pay all taxes due upon the
receipt by the Shareholders of each element of the Purchase Price pursuant to
this Agreement.
10.6 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 or a
nationally recognized overnight courier service, 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 DoveBid, to each of the following,
using two separate mailings or deliveries:
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Chief Financial Officer
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxx, Vice President and General
Counsel
(ii) If mailed or delivered to the Representatives, the Company
or the Shareholders, to:
Xxxxxx Xxxx
Xxxxx Xxxx
c/o Xxxxxx Xxxx Associates, Inc.
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxx Xxxxx Heuer & Xxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
or to such other address as any party hereto shall specify in writing to the
other parties hereto pursuant to this Section 10.7 from time to time. Such
notice shall be effective only upon actual receipt.
41
10.7 Interpretation, Defined Terms.
-----------------------------
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(b) For purposes of this Agreement, the term ""Knowledge," when used
with reference to (i) an individual means the actual knowledge of such
individual, after due inquiry of Xxxxxxx Xxxxxx, Xxxxx Xxxxx, X.Xxxx, X.Xxxx and
Xxxx Xxxxxxxxx, with respect to a representation or warranty of such individual
contained in this Agreement, or any other certificate or agreement required to
be entered into or delivered at the Closing by such individual in connection
with the Agreement, or (ii) a person that is not an individual, means (x) in the
case of the Company the collective actual knowledge, after due inquiry, of
Xxxxxxx Xxxxxx, Xxxxx Xxxxx, X.Xxxx, X.Xxxx and Xxxx Xxxxxxxxx, and (y) in the
case of DoveBid means the collective actual knowledge, after due inquiry, of the
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxx Xxxxxxxxxx, Xxxx X. Xxxxx and Xxxxxxx X. Xxxxx.
(c) For purposes of this Agreement, the term "Material Adverse Effect"
when used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect that is or is reasonably likely to be
materially adverse to the business, assets, capitalization, financial condition,
operations or results of operations of such entity taken as a whole with its
subsidiaries.
(d) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
governmental agency, office, branch or entity.
(e) For purposes of this Agreement, "subsidiary" of a specified entity
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more of
the stock or other equity or partnership interests the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
(f) Disclosure made with regard to a representation or warranty of a
party in a part of either the Company Disclosure Letter or DoveBid Disclosure
Letter shall also be deemed to be included within all other Sections of such
Disclosure Letter.
10.8 Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of California, without giving
effect to laws concerning choice of law or conflicts of law.
42
10.9 Exercise of Rights and Remedies. Except as otherwise provided
-------------------------------
herein, no delay of, or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
10.10 Time. Time is of the essence with respect to this Agreement.
----
10.11 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
10.12 Remedies Cumulative. Except as provided in the second sentence of
-------------------
Section 8.3(b), no right, remedy or election given by any term of this Agreement
shall be deemed exclusive but each shall be cumulative with all other rights,
remedies and elections available at law, or in equity or by contract.
10.13 Construction. This Agreement has been negotiated among DoveBid, the
------------
Company, the Shareholders and their respective legal counsel, and legal or
equitable principles that might require the construction of this Agreement or
any provision of this Agreement against the party drafting this Agreement will
not apply in any construction or interpretation of this Agreement.
10.14 Absence of Third Party Beneficiary Rights. No provisions of this
-----------------------------------------
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other person
or entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
[The Remainder Of This Page Intentionally Left Blank]
43
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid and the Company and by each Shareholder as of the day and year first
above written.
DOVEBID, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
XXXXXX XXXX ASSOCIATES, INC.
By: /s/ Xxxxxx Xxxx
---------------------------------------
Name: Xxxxxx Xxxx
Title: President
/s/ Xxxxx Xxxx
-------------------------------------------
Xxxxx Xxxx
/s/ Xxxxxx Xxxx
-------------------------------------------
Xxxxxx Xxxx
THE XXXXXX XXXX QUALIFIED TERMINABLE INTEREST
MARTIAL TRUST
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Trustee
[Execution Page to Stock Purchase Agreement]
44
