EXHIBIT 2.01
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of February 29, 2000
(the "Agreement"), is entered into by and among Greenwich Industrial Services,
LLC, a Connecticut limited liability company ("Greenwich"), DoveBid, Inc., a
Delaware corporation, its affiliates, subsidiaries and assigns ("DoveBid") and
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxxx XxXxxxxxxx, each
in his individual capacity (each, individually, a "Member" and, collectively,
the "Members").
WHEREAS, the Members own beneficially and of record all of the issued and
outstanding membership interests of Greenwich; and
WHEREAS, DoveBid desires to purchase from the Members, and each Member
desires to sell to DoveBid, all equity interests of Greenwich owned by the
Members on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Sell and Purchase Interests. At the Closing, each Member
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shall sell, transfer and deliver to DoveBid, and DoveBid shall purchase and
accept from each Member, all of the Interests (as defined below) owned by such
Member, 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 in accordance with Section 1.2 and allocated among the Members in
proportion to the Interest owned by such Member in proportion to the Interests
owned by all Members:
(i) a convertible subordinated promissory note substantially in the
in the form attached hereto as Exhibit A (each a "Convertible Subordinated
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Promissory Note") in the principal amount of $2,000,000;
(ii) a cash payment equal to $3,250,000; and
(iii) pursuant to the terms of the Escrow Agreement attached hereto
as Exhibit B (the Escrow Agreement") which agreement shall require that DoveBid
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deposit $1,000,000 with Chase Manhattan Bank and Trust Company, N.A. as the
escrow agent on the Closing (the "Escrow Funds"), in the event that Xxxxxxx X.
Xxxxxxx, Xx. remains employed by DoveBid on each annual distribution date set
forth below and either (A) generates leads for at least five (5) auctions per
year or (B) successfully manages at least three (3) full-time salespeople, a
cash payment equal to $500,000 on the first anniversary of the Closing, $250,000
on the second anniversary of the Closing and $250,000 on the third anniversary
of the Closing
(each, an "Earn-Out Payment" and collectively, the "Earn-Out Payments");
provided, however, that in the event that Xxxxxxx X. Xxxxxxx terminates his
employment for Good Reason or is terminated other than for Cause, as defined in
clause (ii) of the definition of Cause set forth below, the payments described
in the immediately preceding sentence shall be payable to the Members on the
dates set forth in this Section 1.1(iii). In the event that a Member other than
Xxxxxxx Xxxxxxx terminates his employment for Good Reason or is terminated other
than for Cause, the Member terminating his employment shall receive within
thirty (30) days of any such termination his pro rata portion of the aggregate
maximum future Earn-Out Payment payable. For purposes of this agreement, "Good
Reason" shall mean the occurrence of any of the following events without such
Member's consent: (i) being required by DoveBid to relocate more than twenty-
five (25) miles from Greenwich's current location in order to perform his
duties; (ii) a reduction in his base salary during from the Effective Time until
the second anniversary thereof; (iii) a material reduction in his employee
benefits other than a reduction which applies to all DoveBid employees of
comparable position and experience; (iv) a material reduction in
responsibilities; or (v) death or disability. "Cause" shall mean, in DoveBid's
reasonable and good faith determination, such Member's: (i) for Members other
than Xxxxxxx X. Xxxxxxx only, failure to meet specific written performance goals
set reasonably and in good faith and in writing by DoveBid; (ii) for Xxxxxxx X.
Xxxxxxx, Xx. only, any failure to generate at least five (5) auctions per year
or successfully manage at least three (3) full-time sales people; (iii) willful
or material breaches or habitual neglect of the duties he is required to perform
under the terms and conditions of his Employment Agreement and as may be
assigned from time to time by the Company; (iv) engaging in willful misconduct
materially and demonstrably injurious to DoveBid; or (v) committing any acts of
a criminal or illegal nature, fraud, dishonesty, misrepresentation,
insubordination, or any acts of moral turpitude in connection with DoveBid's
business. DoveBid shall provide the respective Member with a forty-five (45)
business day opportunity to cure any circumstances that it believes could
constitute "Cause" pursuant to clauses (i), (ii) or (iii) in the immediately
preceding sentence if, in DoveBid's reasonable and good faith determination, it
believes providing such an opportunity would not subject DoveBid to significant
further harm in the event such circumstances were not cured. In addition,
notwithstanding anything to the contrary in this Section 1.1, the Earn-Out
Payments will be immediately due and payable in the event the stock option
grants set forth in each Employment Agreement and the additional 30,000 options
for employees other than the Members (with the exact allocation to be agreed to
by the Members and DoveBid) are not issued pursuant to the terms contained in
each Employment Agreement within 30 days of the Closing.
1.2 Purchase Price Adjustments. The Purchase Price shall be subject to
adjustment prior to the Closing Date (as defined below) as follows:
1.2.1 As promptly as possible after the Closing (but in any event not
later than 45 days thereafter), the Members shall prepare and deliver to DoveBid
a consolidated balance sheet of Greenwich, including a statement of Net Book
Value (as defined below) (together, the "Closing Balance Sheet"), as of the
close of business on the Closing Date (without giving effect to the transactions
contemplated by this Agreement). For purposes of this Agreement, "Net Book
Value" means the excess of (i) the tangible assets (including without limitation
accounts receivable and prepaid expenses) of Greenwich less (ii) all liabilities
of Greenwich. Except as set forth below in this Section 1.2.1, the Members shall
prepare the Closing Balance Sheet in accordance with generally accepted
accounting principles. The inventory set forth in the Closing
Balance Sheet, net of the reserve for unusable inventory and valued at lower of
cost or market, shall not include any inventory that is obsolete, of below
standard quality, unusable or unsaleable or not saleable within the ordinary
course of business within six (6) months after the Closing Date. All property,
plant and equipment shown, directly or indirectly, on the Closing Balance Sheet
shall be net of all applicable depreciation and amortization.
1.2.2 DoveBid shall be given reasonable access during normal business
hours to all work papers, accounting records and personnel related to Greenwich
and such other materials as are reasonably necessary for DoveBid's independent
evaluation of the Closing Balance Sheet. DoveBid shall deliver to the Members
within 45 days after receiving the Closing Balance Sheet a detailed written
statement describing any objections thereto. Failure of DoveBid to so object to
the Closing Balance Sheet shall constitute acceptance thereof by DoveBid,
whereupon the Closing Balance Sheet shall be deemed to be the "Closing
Statement." The DoveBid and the Members shall use reasonable efforts to resolve
any such objections, but if they do not reach a final resolution within 15 days
after notice given of DoveBid's objections, a "Big 5" international accounting
firm shall be selected to serve as the Neutral Accountants by mutual agreement
of the parties or, if the parties are unable to so agree within 15 days after
the Members have received DoveBid's written statement of objections, then an
accounting firm shall be selected pursuant to the Commercial Arbitration Rules
of the American Arbitration Association ("AAA Rules"). The DoveBid and the
Members shall jointly instruct the Neutral Accountants to resolve any unresolved
objections of DoveBid and deliver the Closing Statement within 30 days after the
date of their appointment. The Neutral Accountants shall, in making their
determination, follow the definitions and provisions of Section 1.2.1 of this
Agreement. The Closing Balance Sheet shall be adjusted only as needed to conform
with the requirements of Section 1.2.1 and, as so adjusted, shall be the
"Closing Statement." The determination by the Neutral Accountants shall be
conclusive and binding upon DoveBid and the Members, absent fraud or manifest
error. Nothing herein shall be construed to authorize or permit the Neutral
Accountants to determine (i) any questions or matter whatever under or in
connection with this Agreement except the determination of what adjustments, if
any, must be made in one or more of the items reflected in the Closing Balance
Sheet or (ii) an adjustment to an item on the Closing Balance Sheet that is
outside of the range defined by amounts as finally proposed by the Members and
DoveBid, respectively.
1.2.3 If the Net Book Value as shown on the Closing Statement is less
than $1,027,500 the difference shall be deducted from the Escrow Funds (which
shall equal $3,250,000 less the amount by which the Net Book Value as shown on
the Closing Statement is less than $1,027,500 (the resulting deficiency being
hereinafter referred to as the "Post-Closing Adjustment")). The Members shall
pay to DoveBid an amount equal to the Post-Closing Adjustment. Such amount shall
be payable by each Member in proportion to the Interest owned by each such
Member in proportion to the Interests owned by all Members. Such amount shall be
due and payable no later than 30 days after Net Book Value is determined as
provided above. In the event of any reduction in Purchase Price, the cash
portion of the Purchase Price
shall be reduced and such reduced aggregate consideration shall constitute the
"Purchase Price" for all purposes under this Agreement.
1.3 THE CLOSING. Subject to termination of this Agreement as provided in
article vii below, the closing will take place at the offices of DoveBid at 0000
Xxxx Xxxxxxxxx Xxxx., Xxxxxx Xxxx, Xx 00000 at 10:00 a.m., Pacific Standard Time
on February 29, 2000 or, if all conditions to closing have not been satisfied or
waived by such date, such other place, time and date as Greenwich and DoveBid
may mutually select (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF GREENWICH AND THE MEMBERS
Except as specifically set forth in the disclosure schedule provided by
Greenwich to DoveBid simultaneously with the signing of this Agreement, dated as
of the date of this Agreement (the "Greenwich Disclosure Schedule"), the parts
of which are numbered to correspond to the Section numbers of this Agreement,
(i) Greenwich and Xxxxxxx Xxxxxxx hereby jointly and severally represent and
warrant to DoveBid and (ii) each Member other than Xxxxxxx Xxxxxxx hereby
severally and not jointly represents and warrants to DoveBid as follows.
2.1 Organization and Good Standing. Greenwich is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Connecticut, has the 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
it is required to do so, except where the failure to do so would have a material
adverse effect on Greenwich, its business, prospects or financial condition.
2.2 Power, Authorization and Validity.
2.2.1 Greenwich and each Member has the right, power, legal capacity
and authority to enter into and perform its obligations under this Agreement,
and all agreements to which Greenwich and each Member is or will be a party that
are required to be executed pursuant to this Agreement (the "Greenwich Ancillary
Agreements"). Any and all approvals required by the Operating Agreement or
other governing documents of Greenwich or applicable law with respect to the due
authorization and approval of this Agreement, the Greenwich Ancillary Agreements
or the transactions contemplated hereby or thereby have been obtained.
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable Greenwich to enter into, and to perform its
obligations under, this Agreement and the Greenwich Ancillary Agreements, except
for such filings as may be required to comply with federal and state securities
laws. 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 below.
2.2.3 This Agreement and the Greenwich Ancillary Agreements are, or
when executed by Greenwich and the Members will be, valid and binding
obligations of Greenwich and the Members enforceable against Greenwich and the
Members 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.
2.3 Capitalization. The outstanding equity interests of Greenwich consist
solely of 100% of percentage interests (the "Interests"). All such Interests
have been duly authorized and validly issued, are fully paid and nonassessable,
are not subject to any right of rescission, and have been offered, issued, sold
and delivered by Greenwich in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws. A list of all holders of such Interests is set forth in
Section 2.3 to the Greenwich Disclosure Schedule. Except as set forth in this
Section 2.3, there are no options, warrants, calls, commitments, conversion
privileges or preemptive or other rights or agreements outstanding to purchase
any of equity or voting interest in Greenwich or any securities convertible into
or exchangeable for equity or voting interests of Greenwich or obligating
Greenwich to grant, extend, or enter into any such option, warrant, call, right,
commitment, conversion privilege or other right or agreement. 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 Greenwich's outstanding securities. Greenwich is not under
any obligation to register under the Securities Act of 1933, as amended (the
"Securities Act") any of its presently outstanding securities or any securities
that may be subsequently issued. Each Member owns in the aggregate (including
Interests held both beneficially and of record and other equity instruments held
either beneficially or of record) the number of Interests set forth below
Member's name on the signature page of this Agreement, and does not directly or
indirectly own, either beneficially or of record, any other equity interests of
Greenwich. All Interests held by such Member are, and at all times until and
through the Closing will be, free and clear of any Liens. Interests held by
Members constitute collectively all of the outstanding equity and voting
interests of Greenwich. 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 any equity interest of Greenwich or any securities convertible into or
exchangeable for any equity interest of Greenwich or obligating Greenwich to
grant, extend, or enter into any such option, warrant, call, right, commitment,
conversion privilege or other right or agreement. 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 and as set forth in
the Operating Agreement) applicable to any of Greenwich's outstanding
securities.
2.4 Subsidiaries. Greenwich does not have any subsidiaries or any
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity.
2.5 No Conflict. Neither the execution and delivery of this Agreement nor
any Greenwich 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 Operating Agreement or other governance document, as
currently in effect, (b) any instrument or contract to which Greenwich or any
Member is a party or by which Greenwich or any Member is bound, or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to
Greenwich or any Member or their respective assets or properties. The
consummation of the transactions contemplated by this Agreement does not and
will not require the consent of any third party other than as specifically
provided for in this Agreement.
2.6 Litigation. There is no action, proceeding, claim or investigation
pending against Greenwich before any court or administrative agency, nor has any
such action, proceeding, claim or investigation been threatened. There is no
reasonable basis for any member or former member of Greenwich, or any other
person, firm, corporation, or entity, to assert a claim against Greenwich, or
any Member or DoveBid based upon: (a) ownership or rights to ownership of any
Interests or other ownership interest in Greenwich, (b) any rights as a
Greenwich Member, including any option or preemptive rights or rights to notice
or to vote, or (c) any rights under any agreement among Greenwich and its
members.
2.7 Taxes. Greenwich has filed all federal, state, local and foreign tax
returns required to be filed, has paid all taxes required to be paid in respect
of all periods for which returns have been filed, has 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, has made all necessary estimated tax payments, and has no liability for
taxes in excess of the amount so paid or accruals or reserves so established.
Greenwich 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. No tax return of Greenwich has ever been audited by the
Internal Revenue Service or any state taxing agency or authority. Greenwich has
never made a "check-the-box" election to be characterized as a corporation for
tax purposes. For the purposes of this Section, the terms "tax" and "taxes"
include all federal, state, local and foreign income, gains, franchise, excise,
property, sales, use, employment, 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 Greenwich Financial Statements. Greenwich has delivered to DoveBid,
hereto attached as Exhibit C, copies of: (a) Greenwich's audited consolidated
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balance sheet as of December 31, 1999 (the "Balance Sheet"); (b) Greenwich's
audited consolidated income statement and statement of cash flows for the twelve
months ended December 31, 1999; (c) Greenwich's unaudited consolidated balance
sheet as of January 31, 2000, and (d) Greenwich's unaudited consolidated income
statement and cash flows for the one month ended January 31, 2000 (collectively,
with the Balance Sheet, the "Financial Statements"). The Financial Statements
(a) are in accordance with the books and records of Greenwich, (b) fairly
present the financial condition of Greenwich at the date therein indicated and
the results of operations for the period therein specified and (c) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis. Greenwich 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 against in the Financial
Statements, except for those contained in agreements and arrangements listed in
the Greenwich Disclosure Schedule and for those that may have been incurred
after the date of the Financial Statements in the ordinary course of its
business, consistent with past practice in individual amounts less than $25,000.
2.9 Title to Properties. Greenwich has good and marketable title to all of
its assets as shown on the Balance Sheet, free and clear of all liens, charges,
restrictions or encumbrances (other than for taxes not yet due and payable). All
machinery and equipment included in such properties is in good condition and
repair, normal wear and tear excepted, and all leases of real or personal
property to which Greenwich is a party are fully effective and afford Greenwich
peaceful and undisturbed possession of the subject matter of the lease.
Greenwich is 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 notice of
violation with which it has not complied.
2.10 Absence of Certain Changes. Since January 31, 2000, there has not
been with respect to Greenwich:
(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, 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 in
individual amounts less than $25,000;
(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 in
individual amounts less than $25,000;
(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 percentage
interests thereof;
(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;
(i) any change with respect to the management, supervisory or other
key personnel thereof;
(j) any payment or discharge of a material lien or liability thereof
which lien was not either shown on the Balance Sheet or incurred in the ordinary
course of business thereafter; or
(k) any obligation or liability incurred thereby to any of its
officers, employees, managers or members or any loans or advances made thereby
to any of its officers, employees, managers or members except normal
compensation and expense allowances payable to officers and employees.
2.11 Contracts and Commitments. Except as set forth in Section 2.11 to the
Greenwich Disclosure Schedule, Greenwich has no contract, obligation or
commitment which involves a potential future commitment in excess of $25,000 or
any percentage interest redemption or purchase agreement, financing agreement,
license, lease or franchise. A true and complete copy of each agreement or
document listed in Section 2.11 to the Greenwich Disclosure Schedule has been
delivered to DoveBid. Greenwich is not in default under any contract, obligation
or commitment listed in Section 2.11 to the Greenwich Disclosure Schedule or
otherwise. Greenwich does not have any liability for renegotiation of government
contracts or subcontracts, if any.
2.12 Intellectual Property. Greenwich owns, or has the right to use, sell
or license all Intellectual Property Rights (as defined below) necessary or
required for the conduct of business as presently conducted, including but not
limited to all Intellectual Property Rights to the name Greenwich Industrial
Services (such Intellectual Property Rights being hereinafter collectively
referred to as the "Greenwich IP Rights") and such rights to use, sell or
license are reasonably sufficient for the conduct of its business. 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 any Greenwich IP Right (the "Greenwich 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 Greenwich IP Right or
impair the right of Greenwich to use, sell or license any Greenwich IP Right or
portion thereof. There is no royalty, honoraria, fee or other payment payable by
Greenwich to any person by reason of the ownership, use, license, sale or
disposition of any Greenwich IP Right (other than as set forth in the Greenwich
IP Rights Agreements listed in Section 2.12 to the Greenwich Disclosure
Schedule). Neither the manufacture, marketing, license, sale or intended use of
any product currently licensed or sold by Greenwich or currently under
development by Greenwich violates any license or agreement between Greenwich and
any third party or infringes any Intellectual Property Right of any other person
or entity; and there is no pending or threatened claim or litigation contesting
the validity, ownership or right to use, sell, license or dispose of any
Greenwich IP Right nor is there any basis for any such claim, nor has Greenwich
received any notice asserting that any Greenwich IP Right or the proposed use,
sale, license or disposition thereof conflicts, or will conflict, with the
rights of any other person or entity, nor is there any basis for any such
assertion. Greenwich has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Greenwich IP Rights. Each officer, employee and consultant of
Greenwich has executed and delivered to Greenwich an agreement regarding the
protection of proprietary information and the assignment to Greenwich of all
Intellectual Property Rights arising from the services performed for Greenwich
by such person. Section 2.12 to the Greenwich Disclosure Schedule contains a
list
of all applications, registrations, filings and other formal actions made or
taken pursuant to federal, state and foreign laws by Greenwich to perfect or
protect its interest in Greenwich 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, 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.
2.13 Compliance with Laws. Greenwich has complied, or prior to the Closing
Date will have complied, and is 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 it or to the
assets, properties, and business thereof, 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, 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. Greenwich 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. There are no legal or administrative proceedings or
investigations pending or threatened, that, could be expected to be enacted or
determined adversely to Greenwich.
2.14 Certain Transactions and Agreements. None of the officers, managers,
Members or employees of Greenwich, nor any member of their immediate families,
has any direct or indirect ownership interest in any firm or corporation that
competes with Greenwich (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 managers, Members or employees, or any member of their immediate
families, is directly or indirectly interested in any contract or informal
arrangement with Greenwich, except for normal compensation for services as an
officer, manager, Member or employee thereof. None of said officers, managers,
Members or employees or any member of their immediate families has any interest
in any property, real or personal, tangible or intangible, including inventions,
patents, copyrights, trademarks or trade names or trade secrets, used in or
pertaining to the business of Greenwich, except for the normal rights of a
holder of a percentage interest.
2.15. Employees, ERISA and Other Compliance.
2.15.1 Greenwich does not have 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). All officers, managers,
employees and consultants of Greenwich having access to proprietary information
have executed and delivered to Greenwich an agreement regarding the protection
of such proprietary information and the assignment of inventions to Greenwich;
true and complete copies of the form of all such agreements have been delivered
to DoveBid's counsel.
2.15.2 Greenwich (i) has not ever been nor is now subject to a union
organizing effort, (ii) is not subject to any collective bargaining agreement
with respect to any of its employees, (iii) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization, or (iv) has no current labor disputes. Greenwich has
good labor relations, and has no knowledge of any facts indicating that the
consummation of the transactions contemplated hereby will have a material
adverse effect on such labor relations, and has no knowledge that any of its key
employees intends to leave its employ.
2.15.3 Section 2.15.1 to the Greenwich Disclosure Schedule 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 any employment agreements entered into between Greenwich
and any employee of Greenwich, but excluding workers' compensation, unemployment
compensation and other government-mandated programs) currently or previously
maintained, contributed to or entered into by Greenwich under which Greenwich or
any ERISA Affiliate (as defined below) thereof has any present or future
obligation or liability (collectively, the "Greenwich Employee Plans"). For
purposes of this Section 2.8, "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 Internal Revenue Code of 1986, as amended (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 Greenwich. Copies of all Greenwich 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 or
its counsel, together with the three most recent annual reports (Form 5500,
including, if applicable, Schedule B thereto) prepared in connection with any
such Greenwich Employee Plan. All Greenwich Employee Plans which individually or
collectively would constitute an "employee pension benefit plan," as defined in
Section 3(2) of ERISA (collectively, the "Greenwich Pension Plans"), are
identified as such in Section 2.15.1 to the Greenwich Disclosure Schedule. All
contributions due from Greenwich with respect to any of the Greenwich Employee
Plans have been made as required under ERISA or have been accrued on the
Financial Statements. Each Greenwich Employee Plan has been maintained
substantially 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 Greenwich Employee
Plans.
2.15.4 No Greenwich Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in Section
3(37) of ERISA. No Greenwich 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 Greenwich Employee Plan which is
covered by Title I of ERISA which would result in a liability to Greenwich taken
as a whole, 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 Greenwich Employee Plan
has or will make Greenwich or any officer or director of Greenwich 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 Greenwich Pension Plan which is intended to be qualified
under Section 401(a) of the Code (a "Greenwich 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. Greenwich has delivered to DoveBid or its counsel a complete and correct
copy of the most recent Internal Revenue Service determination letter with
respect to each Greenwich 401(a) Plan.
2.15.6 Section 2.15.6 to the Greenwich Disclosure Schedule lists each
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 managers which (A) is not
a Greenwich Employee Plan, (B) is entered into, maintained or contributed to, as
the case may be, by Greenwich and (C) covers any employee or former employee of
Greenwich. Such contracts, plans and arrangements as are described in this
Section 2.15.6 are herein referred to collectively as the "Greenwich Benefit
Arrangements." Each Greenwich Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Greenwich Benefit Arrangement. Greenwich has delivered to DoveBid or its counsel
a complete and correct copy or description of each Greenwich Benefit
Arrangement.
2.15.7 There has been no amendment to, written interpretation or
announcement (whether or not written) by Greenwich relating to, or change in
employee participation or coverage under, any Greenwich Employee Plan or
Greenwich Benefit Arrangement that would increase the expense of maintaining
such Greenwich Employee Plan or Greenwich Benefit Arrangement above the level of
the expense incurred in respect thereof since the date of the Balance Sheet.
2.15.8 Greenwich 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 Greenwich.
2.15.9 No benefit payable or which may become payable by Greenwich
pursuant to any Greenwich Employee Plan or any Greenwich 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 Greenwich is 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 No employee of Greenwich 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 Greenwich to any liability.
2.15.12 A list of all employees, officers, managers and consultants
of Greenwich and their current compensation has been delivered by Greenwich to
DoveBid and such writing shall be deemed to be part of the Greenwich Disclosure
Schedule.
2.15.13 Greenwich is not a party to any (a) agreement with any
officer, manager, Member 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 Greenwich 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. Greenwich has made available to DoveBid for
examination true and complete copies of all documents and information listed in
the Greenwich Disclosure Schedule or other Exhibits called for by this Agreement
which has been requested by DoveBid's legal counsel, including, without
limitation, the following: (a) copies of Greenwich's Operating Agreement and
other governance documents as currently in effect; (b) all records of all
proceedings, consents, actions, and meetings of the Members, the board of
managers 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 Greenwich, or any securities of Greenwich, and
all applications for such permits, orders, and consents.
2.17 No Brokers. Greenwich is not 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.
2.18 Certain Material Agreements. Greenwich is not a party or subject to
any oral or written contracts, agreements or other understanding or arrangement,
including, but not limited to any:
(a) Contract, agreement or other understanding or arrangement
providing for payments by or to Greenwich in an aggregate amount of $25,000 or
more;
(b) Contract, agreement or other understanding or arrangement as
licensor or licensee (except for standard non-exclusive hardware and software
licenses granted to end-user customers in the ordinary course of business the
form of which has been provided to DoveBid's counsel);
(c) Contract, 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 a sharing of profits with other persons;
(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 course of business and for no more than
$25,000 in amount, and except as disclosed in the Financial Statements; or
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit Greenwich's freedom to compete in any
line of business in any geographic area.
All agreements, contracts, plans, leases, instruments, arrangements, licenses
and commitments listed in the Greenwich Disclosure Schedule identified to this
Section 2.18 are valid and in full force and effect. Greenwich is not, nor, to
the knowledge of Greenwich, is any other party thereto, in breach or default
under the terms of any such agreement, contract, plan, lease, instrument,
arrangement, license or commitment.
2.19 Books and Records.
2.19.1 The books, records and accounts of Greenwich (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) are stated in reasonable
detail and accurately and fairly reflect the transactions and dispositions of
the assets of Greenwich, and (d) accurately and fairly reflect the basis for the
Financial Statements.
2.19.2 Greenwich has devised and maintains 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 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 Greenwich is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
2.20 Insurance. Greenwich maintain and at all times during the prior three
years have maintained fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance which
it believes to be reasonably prudent for similarly sized and similarly situated
businesses.
2.21 Securities Law Representations of Members. Each Member hereby
represents and warrants to, and agrees with, DoveBid as follows:
(i) The Convertible Subordinated Promissory Notes to be issued to
such Member hereunder and any securities issuable upon conversion thereof
(collectively, with the Convertible Subordinated Promissory Note, the "DoveBid
Securities") will be acquired for investment for such Member's own account, not
as a nominee or agent, and not with a view to the public resale or distribution
thereof within the meaning of the Securities Act, and such Member has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
(ii) Such Member has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment
decision with respect to the DoveBid Securities. Such Member further has had an
opportunity to ask questions and receive answers from DoveBid regarding the
terms and conditions of the offering of the DoveBid Securities and to obtain
additional information (to the extent DoveBid possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to such Member or to which such Member had access.
(iii) Such Member understands that the purchase of the DoveBid
Securities involves substantial risk. Such Member: (i) has experience as an
investor in securities of companies in the development stage and acknowledges
that such Member is able to fend for itself, can bear the economic risk of such
Member's investment in the DoveBid Securities and has such knowledge and
experience in financial or business matters that such Member is capable of
evaluating the merits and risks of this investment in the DoveBid Securities and
protecting its own interests in connection with this investment and/or (ii) has
a preexisting personal or business relationship with DoveBid and certain of its
officers, directors or controlling persons of a nature and duration that enables
such Member to be aware of the character, business acumen and financial
circumstances of such persons.
(iv) Such Member is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
(v) Such Member understands that the DoveBid Securities are
characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from
DoveBid in a transaction not involving a public offering and that under the
Securities Act and applicable regulations thereunder such securities may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection, such Member represents that such Member is
familiar with Rule 144 of the U.S. Securities and Exchange Commission, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act. Such Member understands that DoveBid is under no
obligation to register any of the securities sold hereunder. Such Member
understands that no public market now exists for any of the DoveBid Securities
and that it is uncertain whether a public market will ever exist for the DoveBid
Securities.
2.22 Truth and Completeness of Disclosure. Neither the Greenwich
Disclosure Schedule, this Agreement, its exhibits and schedules, nor any of the
certificates or documents to be delivered by Greenwich to DoveBid pursuant to
this Agreement, taken together, contains or will contain any untrue statement of
a fact or omits or will omit to state any 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF DOVEBID
DoveBid hereby represents and warrants to Greenwich 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 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, legal capacity 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 such filings as may be required to comply with federal and state securities
laws.
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 Certificate 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 is bound, or (c) any federal, state, local or foreign
judgment, writ, decree, order, statute, rule or regulation applicable to DoveBid
or its assets or properties.
3.4 No Brokers. DoveBid is not 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 or thereby.
ARTICLE IV
ADDITIONAL AGREEMENTS
During the period from the date of this Agreement until the Effective Time
(except for Section 4.11, which shall survive until the earlier of the
termination of this Agreement or the termination of Greenwich's 401(k) Plan),
Greenwich covenants and agrees as follows:
4.1 Advice of Changes. Greenwich will promptly advise DoveBid in writing
(a) of any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of Greenwich 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
Greenwich's business, prospects, results of operations or financial condition.
To ensure compliance with this Section 4.1, Greenwich shall deliver to DoveBid
within twenty (20) days after the end of each monthly accounting period ending
after the date of this Agreement and before the Closing Date, an unaudited
balance sheet and statement of operations, which financial statements shall be
prepared in the ordinary course of business, in accordance with Greenwich's
books and records and generally accepted accounting principles and shall fairly
present the financial position of Greenwich as of their respective dates and the
results of Greenwich's operations for the periods then ended.
4.2 Maintenance of Business. Greenwich will use its commercially
reasonable efforts to carry on and preserve its business and its relationships
with customers, suppliers, employees and others in substantially the same manner
as it has prior to the date hereof. If Greenwich becomes aware of a material
deterioration in the relationship with any customer, supplier or key employee,
it will promptly bring such information to the attention of DoveBid in writing
and, if requested by DoveBid, will exert its commercially reasonable efforts to
restore the relationship.
4.3 Conduct of Business. Greenwich will continue to conduct its business
and maintain its business relationships in the ordinary and usual course and
will not, without the prior written consent of the President of DoveBid:
(a) borrow any money, except if such borrowing is permitted under
Section 4.3(c) below;
(b) enter into any transaction not in the ordinary course of
business;
(c) take positions in assets greater than $1,000,000 without
DoveBid's prior written consent, not to be unreasonably withheld; provided,
however, that Greenwich may proceed with any completed proposals that are
pending as of the date of this Agreement and set forth in Section 4.3(c) of the
Greenwich Disclosure Schedule hereto;
(d) make any expenditure or sale of fixed or other non-current assets
in excess of $25,000 in the aggregate, outside the normal course of business,
without the prior approval of DoveBid;
(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;
(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 Greenwich;
(j) pay any bonus, increased salary or special remuneration to any
officer, manager, member employee or consultant or enter into any new employment
or consulting agreement with any such person, except as has been described in
writing by Greenwich to DoveBid and such writing shall be deemed to be part of
the Greenwich Disclosure Schedule.;
(k) change accounting methods;
(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 percentage interest, or redeem or otherwise
acquire any of its percentage interests; provided, however, that Greenwich shall
be permitted to make normal distributions to Members in the ordinary course of
business in an amount equal to the Members' income tax liabilities on their
respective shares of Greenwich's taxable income for 1999, to the extent (and
only to the extent) that such amount has not been previously distributed to
them;
(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 Greenwich 401(k) Plan;
(p) guarantee or act as a surety for any obligation, except for the
endorsement of checks and other negotiable instruments in the ordinary course of
business, consistent with past practice, which are not material in amount;
(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 percentage interest (except upon the exercise
of an option or warrant currently outstanding), or any other of its securities,
or issue or create any warrants, obligations, subscriptions, options,
convertible securities, or other commitments to issue any percentage interest,
or accelerate the vesting of any outstanding option or other security;
(s) split or combine the outstanding percentage interest of any class
or enter into any recapitalization affecting the number of Interests or
affecting any other of its securities;
(t) merge, consolidate or reorganize with, or acquire any entity;
(u) amend its Operating Agreement or any other governance document;
(v) license any of its technology or intellectual property 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 unless copies of such returns
have been delivered to DoveBid for its review and approval prior to filing;
(x) change any insurance coverage or issue any certificates of
insurance; or
(y) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(x).
4.4 Regulatory Approvals. Greenwich and each Member 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, or that DoveBid may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Greenwich and
each Member will use their respective commercially reasonable efforts to obtain
all such authorizations, approvals and consents.
4.5 Necessary Consents. Greenwich and each Member will use their
respective commercially reasonable 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 Greenwich's business after the Closing.
4.6 Litigation. Greenwich 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.
4.7 No Other Negotiations. From the date hereof until the earlier of
termination of this Agreement or consummation of the transactions contemplated
by this Agreement, Greenwich will not, and will not authorize or permit any
officer, Member, manager, director, employee or affiliate of Greenwich, or any
other person or entity, on its behalf to, directly or indirectly, solicit 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 regarding, or furnish to any person or entity any information with
respect to, or otherwise cooperate with, facilitate or encourage any effort or
attempt by any person or entity (other than DoveBid), concerning the possible
disposition of all or any substantial portion of Greenwich's business, assets or
percentage interests by merger, sale or any other means. Greenwich will promptly
notify DoveBid orally and in writing of any such inquiry or proposal.
4.8 Access to Information. Until the Closing, Greenwich will allow DoveBid
and its agents reasonable access the files, books, records and offices of
Greenwich, including, without limitation, any and all information relating to
Greenwich's taxes, commitments, contracts, leases, licenses, and real, personal
and intangible property and financial condition. Greenwich 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.
4.9 Satisfaction of Conditions Precedent. Greenwich will use its
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent that are set forth in Article VI, and Greenwich will use
its commercially reasonable 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.
4.10 Blue Sky Laws. Greenwich shall use its commercially reasonable
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 hereby.
4.11 401(k) Plan. Greenwich and the Members shall use their respective
commercially reasonable efforts to terminate Greenwich's 401(k) plan as promptly
as practicable in amanner mutually acceptable to DoveBid and Members
representing a majority of the Interests.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE MEMBERS AND GREENWICH
The obligations of the Members and Greenwich with respect to actions to be
taken at Closing are subject to the satisfaction or waiver by Greenwich at or
prior to Closing of all of the following conditions.
5.1 Representations and Warranties; Performance of Obligations. All
representations and warranties of DoveBid contained in this Agreement shall be
true and complete in all material respects at the Closing with the same effect
as though such representations and warranties had been made as of that time;
each and all of the terms, covenants and conditions of this Agreement to be
complied with and performed by DoveBid at or before the Closing shall have been
duly complied with and performed in all material respects.
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 approved by Greenwich.
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 Greenwich as a
result of which the management of Greenwich deems it materially detrimental to
Greenwich 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 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 Promissory Note, Convertible Subordinated Promissory Note and
Subordination Agreement. DoveBid shall have executed and delivered to each
Member a Convertible Subordinated Promissory Note in substantially the form of
Exhibit A attached hereto and Subordination Agreement attached as Annex A
---------
thereto.
5.6 Escrow Agreements. DoveBid and the Escrow Agent shall have executed
and delivered to each Member an Escrow Agreement in substantially the form of
Exhibit B attached hereto.
---------
5.7 Employment Agreements. DoveBid shall have executed and delivered to
each Member an Employment Agreement in substantially the forms of Exhibits E-1
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through E-4 attached hereto.
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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; Performance of Obligations. All the
representations and warranties of Greenwich contained in this Agreement shall be
true and complete in all material respects at the Closing; each and all of the
terms, covenants and conditions of this Agreement to be complied with or
performed by the Members and Greenwich on or before the Closing, as the case may
be, shall have been duly performed or complied with in all material respects;
and the Members and Greenwich shall have delivered to DoveBid a certificate
dated the date of the Closing signed by each of the Members and the [President
and Chief Financial Officer] of Greenwich.
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 Greenwich's business, prospects,
financial condition or operating results; and DoveBid shall have received a
certificate signed by the Members and certified by the Secretary or Assistant
Secretary of Greenwich dated the date of Closing to such effect.
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 Greenwich and approved by 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 shall have been obtained and made; Greenwich
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 (a) consents of
third parties listed in Section 2.5 to, or elsewhere in, the Greenwich
Disclosure Schedule and (b) those licenses, franchises, permits or governmental
authorizations set forth on Schedule 2.13 to, or elsewhere in, the Greenwich
Disclosure Schedule; and no action or proceeding shall have been instituted or
threatened to restrain or prohibit the transactions contemplated herein.
6.6 Good Standing Certificate or Equivalent. At it sole discretion,
DoveBid shall have received evidence satisfactory to it that Greenwich is
validly existing, in good standing and authorized to do business and that all
state franchise and/or income tax returns and taxes due by
Greenwich 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 Greenwich's or the Members' representations and warranties regarding
such matters and DoveBid's reliance on such representations or warranties.
6.7 Convertible Subordinated Promissory Note Subordination Agreement.
Greenwich shall have executed the Convertible Subordinated Promissory Note
Subordination Agreement attached thereto as Annex A.
6.8 Escrow Agreement. DoveBid shall have received copies of Escrow
Agreement executed by the Escrow Agent and each Member in substantially the form
of Exhibit B attached hereto.
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6.9 Employment Agreements. DoveBid shall have received copies of
Employment Agreements executed by DoveBid and each Member in substantially the
form of Exhibits E-1 through E-4 attached hereto.
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6.10 Release of Claims. DoveBid shall have received copies of a Release of
Claims executed by DoveBid and each Member in substantially the form of Exhibit
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F attached hereto.
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6.11 Lease Matters. Greenwich shall have terminated its existing real
estate lease at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx and DoveBid shall have
executed a lease at the location pursuant to terms deemed acceptable to DoveBid.
6.12 Insurance Matters. The Members shall have obtained, and fully prepaid
all premiums associated with, a "claims made" insurance policy for Greenwich for
activities of Greenwich prior of the Closing that will be assigned to DoveBid at
the Closing, that expires no earlier than the first anniversary of the Closing
and that contains coverage that is customary for Greenwich's industry and is
reasonably acceptable to DoveBid.
6.13 Due Diligence. The completion of a due diligence review by DoveBid
and/or its designated representatives of Greenwich's businesses, finances,
practices and procedures including, but not limited to (i) ensuring that the
Financial Statements and all subsequent financial statements disclose no
material adverse changes in Greenwich's business or financial condition since
December 31, 1999, (ii) a review of Greenwich's books, records, contracts,
operations and affairs to ensure compliance with federal, state and local laws
and regulations governing Greenwich's operations, the absence of any material
actual or probable violations, environmental or other compliance problems or
issues, and the absence of any required material capital expenditures or any
other substantive concerns, any or all of which shall be satisfactory to DoveBid
in its sole discretion. The results of DoveBid's due diligence review in no way
vitiates or affects Greenwich's or the Members' representations and warranties
regarding such matters and DoveBid's reliance on such representations or
warranties.
6.14 Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be acceptable to
DoveBid and its counsel.
6.15 Termination of Fleet National Bank Agreements. Each agreement
between Greenwich and Fleet National Bank shall have been terminated.
ARTICLE VII
TERMINATION
7.1 Right to Terminate. This Agreement may be terminated by DoveBid and/or
Greenwich and the transactions contemplated hereby abandoned at any time prior
to the Closing, whether before or after approval by the Members: (i) by the
mutual written consent of both parties; (ii) by either party, if such party is
not in material breach of any representation, warranty, covenant or agreement
contained in this Agreement, and such 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 any of the conditions precedent to such party's obligations
set forth in Article V (if Greenwich) or Article VI (if DoveBid) have not been
fulfilled or waived at and as of the Closing; (iv) by either party, if there is
a final nonappealable Order of a federal or state court in effect preventing
consummation of the transactions contemplated hereby, or if any statute, rule,
regulation or Order is enacted, promulgated or issued or deemed applicable to
the transactions contemplated hereby by any governmental body that would make
consummation of the transactions contemplated hereby illegal; or (v) by a party
that is not then in breach of this Agreement if the Closing has not occurred by
March 10, 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 and any representation, warranty or
covenant set forth herein prior to such termination and will continue to perform
their respective obligations under Section 8.2 and Article X. Except for the
continuing obligations set forth in the preceding sentence, the parties to this
Agreement will be without any further obligation or liability upon any party in
favor of the other party. However, nothing in this Section 7.3 will limit the
obligations of Greenwich to use its commercially reasonable efforts to cause the
transactions contemplated hereby to be consummated, as set forth in Section
10.1.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. All representations, warranties,
covenants and agreements contained in this Agreement will remain operative and
in full force and effect from the date of this Agreement until the earlier of
the termination of this Agreement or the first
anniversary of the Closing (except for covenants and other provisions that by
their terms survive for a longer period).
8.2 Agreements to Indemnify.
(a) The following terms shall have the following definitions:
(i) "Damages" shall mean any and all claims, demands, actions,
causes of actions, losses, costs, damages, liabilities and expenses including,
without limitation, reasonable legal fees and expenses.
(ii) "Indemnified Person" shall mean any person that is
entitled to indemnification or being held harmless under this Article VIII.
(b) Subject to the limitations set forth in this Article VIII,
Xxxxxxx Xxxxxxx, jointly and severally, and each Member other than Xxxxxxx
Xxxxxxx, severally and not jointly, hereby agree to indemnify and hold harmless
DoveBid and its officers, directors, agents and employees, and each person, if
any, who controls or may control DoveBid within the meaning of the Securities
Act (each a "DoveBid Indemnitee") from and against Damages:
(i) arising out of any misrepresentation, or breach of, or
default in connection with, any of the representations, warranties, covenants
and agreements given or made by Greenwich or any Member in this Agreement or any
certificate, document or instrument delivered by or on behalf of Greenwich
pursuant to this Agreement;
(ii) resulting from any failure of any Member: (i) to have
good, valid and marketable title to the issued and outstanding Interests held by
such Member, free and clear of Encumbrances, or (ii) to have full right,
capacity and authority to transfer such Interests to DoveBid as contemplated by
this Agreement;
(iii) any claim by a current or former Member, or any other
person, firm, corporation or entity, seeking to assert or based upon: ownership
or rights to ownership of percentage interest of Greenwich (or the Cash Purchase
Price and/or Convertible Subordinated Promissory Notes and/or any Earn-Out
Payments), any rights of a Member, including any options, dissenter's or
preemptive rights or rights to notice or to vote, any rights under Greenwich's
Operating Agreement or other charter documents, any right under any agreement
among Greenwich and the Members or any claim that his or her percentage
interests or other securities were wrongfully repurchased by Greenwich;
(iv) any claim by any investment banker, broker, finder or
other agent in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby or thereby
resulting from any action or omission of Greenwich or any Member.
(c) Subject to the limitations set forth in this Article VIII,
DoveBid hereby agrees to indemnify and hold harmless each Member from and
against Damages arising out of any misrepresentation, or breach of, or default
in connection with, any of the representations, warranties, covenants and
agreements given or made by DoveBid in this Agreement or any
certificate, document or instrument delivered by or on behalf of DoveBid
pursuant to this Agreement.
8.3 Limitations on Liability; Exceptions.
8.3.1 Limitations on Liability. Notwithstanding any other term of
this Agreement, in no event shall the Members on one hand or DoveBid on the
other hand be liable under this Agreement, including this Article VIII, for an
amount which exceeds the sum of (a) the Cash Purchase Price, (b) the aggregate
amount of principal and accrued interest related to the Convertible Subordinated
Promissory Notes and (c) the aggregate amount of all Earn-Out Payments that
actually become payable hereunder. In addition, in no event shall any Member
other than Xxxxxxx Xxxxxxx be liable under this Agreement, including this
Article VIII, for an amount which exceeds the sum of (a) the Cash Purchase
Price, (b) the aggregate amount of principal and accrued interest related to the
Convertible Subordinated Promissory Notes and (c) the aggregate amount of all
Earn-Out Payments that would otherwise be payable to such Member pursuant to the
terms of this Agreement. In addition, in no event shall any Member other than
Xxxxxxx Xxxxxxx be liable under this Agreement, including this Article VIII, for
an amount which exceeds the Damages multiplied by such Member's Interest as a
percentage of all Members' Interests.
8.3.2 Exceptions to Limitations on Liability. None of the limitations
set forth in Section 8.3.1 shall in any manner limit the liability or
indemnification obligations of the Members with respect to: (i) intentional
fraud or willful misconduct or (ii) any breach of the representations and
warranties made in Sections 2.3, 2.7 and 2.17 hereof.
8.3.3 Basket. The indemnification provided for in this Article VIII
shall not apply unless the aggregate Damages for which one or more Indemnified
Persons seeks indemnification exceeds $25,000. In the event that Damages do
exceed $25,000, the Indemnifying Person will indemnify the Indemnified Persons
for the entire amount of Damages (including the initially excluded $25,000 of
Damages). This Section 8.3.3 shall not apply to any liability described in
Section 8.3.2 above.
8.4 Third Person Claims.
8.4.1 Promptly after any party hereto an Indemnified Person has
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 Agreement, the Indemnified Person shall, as a condition precedent to a
claim with respect thereto being made against an Indemnifying Person, give the
Indemnifying Person 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 Indemnified Person's request for indemnification under this
Agreement; provided, however, that the failure of the Indemnified Person to give
timely notice hereunder shall relieve the Indemnifying Person of its
indemnification obligations under this Agreement to the extent,
but only to the extent that, such failure materially prejudices the Indemnifying
Person's ability to defend such claim. Within fifteen (15) days after receipt of
such notice (the "Election Period"), the Indemnifying Person shall notify the
Indemnified Person whether the Indemnifying Person disputes its potential
liability to the Indemnified Person under this Article VIII with respect to that
Third Person Claim.
8.4.2 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. The Representative 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 Representative does not affect
any attorney-client or work-product 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 Representative
(which consent shall not be unreasonably withheld), provided, that if the
Representative shall have consented in writing to any such settlement, then the
Representative 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 Members 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.
8.5 Representative. Each of the Members approves the designation of and
designates the Representative as the representative of the Members and as the
attorney-in-fact and agent for and on behalf of each Members with respect to
claims for indemnification under this Article VIII and the taking by the
Representative of any and all actions and the making of any decisions required
or permitted to be taken by the Representative 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 (d) take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing. The Representative will
have authority and power to act on behalf of each Member 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 Members will be bound
by all actions taken and documents executed by the Representative in connection
with Article VIII, and DoveBid will be entitled to rely on any action or
decision of the Representative. In performing the functions specified in this
Agreement, the Representative will not be liable to any Member in the absence of
gross negligence or willful misconduct on the part of the Representative. The
Members shall severally indemnify the Representative and hold him harmless
against any loss, liability or expense incurred without gross negligence or
willful misconduct on the part of the Representative and arising out of or in
connection with the acceptance or administration of his duties hereunder. Any
out-of-pocket costs and expenses reasonably incurred by the Representative in
connection with actions taken by the Representative 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 Members to
the Representative pro rata in proportion to their respective percentage equity
interests in the Companies.
8.6 Notice of Claim. As used herein, the term "Claim" means a claim for
indemnification for Damages under Article VIII. A party may give notice of a
Claim under this Agreement whether for its own Damages or for Damages incurred
by any other indemnitee, and such party will give written notice of a Claim (a
"Notice of Claim") promptly such 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.
8.7 Contents of Notice of Claim. Each Notice of Claim a party will contain
the following information:
(a) that such party 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 amount may be the amount of damages claimed by a third
party, which if true, would give rise to liability for Damages under Article
VIII); and
a brief description, in reasonable detail (to the extent reasonably
available to such party), 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 to such party) 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.
8.8 Resolution of Notice of Claim. Any Notice of Claim will be resolved as
follows:
(a) Contested Claims. In the event that written notice is given
contesting all or any portion of a Notice of Claim (a "Contested Claim") within
the fifteen day period, then: (i) such Contested Claim will be resolved by
either (A) a written settlement agreement executed by DoveBid and the
Representative or (B) in the absence of such a written settlement agreement, by
binding arbitration between DoveBid and the Representative in accordance with
the terms and provisions of Section 8.8(c).
(b) Arbitration of Contested Claims. Each of DoveBid and the Members
agree that any Contested Claim will be submitted to mandatory, final and binding
arbitration in accordance with the AAA Rules and that any such arbitration will
be conducted in San Mateo County, California. Either DoveBid or the
Representative may commence the arbitration process called for by this Agreement
by filing a written demand for arbitration with the American Arbitration
Association. and giving a copy of such demand to each of the other parties to
this Agreement. The arbitration will be conducted in accordance with the
provisions of the AAA Rules in effect at the time of filing of the demand for
arbitration, subject to the provisions of Section 8.8(b) of this Agreement. In
the absence of agreement by the parties, the American Arbitration Association
will have the authority to select an arbitrator from a list of arbitrators who
are lawyers familiar with contract law; provided, however, that such lawyers
cannot have
provided or be providing services for, or working for a firm then performing
services for, any party hereto. The parties will cooperate with the American
Arbitration Association and with each other 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. The provisions of this Section 8.8(b) 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 Members
(through the Representative), 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 Representative and DoveBid, 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 Members, the Representative and
DoveBid, and will include an affirmative statement to such effect.
(iv) Timing. The Representative, DoveBid and the arbitrator will
conclude each arbitration pursuant to this Section 8.8 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
NONCOMPETITION
9.1 Prohibited Activities. The Members will not, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature other than DoveBid:
(a) engage directly or as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative, in
any business selling any products or services in competition with DoveBid
(including its subsidiaries);
(b) call upon any person who is, at that time, an employee of DoveBid
(including the subsidiaries thereof) for the purpose or with the intent of
enticing such employee away from or out of the employ of DoveBid (including the
subsidiaries thereof), provided that the Members shall be permitted to call upon
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and hire any member of his or her immediate family;
(c) call upon any person or entity which is, at that time, or that
has been, within one (1) year prior to that time, a customer of DoveBid
(including the subsidiaries thereof) for the purpose of soliciting or selling
products or services in competition with DoveBid;
(d) call upon any prospective acquisition candidate, on the Members'
own behalf or on behalf of any competitor of DoveBid, which candidate was either
called upon by DoveBid or Greenwich (including the subsidiaries thereof) or for
which DoveBid (or any subsidiary thereof) made an acquisition analysis, for the
purpose of acquiring such entity, provided that the Members shall not be charged
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with a violation of this Section unless and until a Member shall have knowledge
or notice that such prospective acquisition candidate was called upon, or that
an acquisition analysis was made, for the purpose of acquiring such entity; or
(e) except in furtherance of DoveBid's business, disclose customers,
whether in existence or proposed, of DoveBid or Greenwich to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever
excluding disclosure to DoveBid.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Members from acquiring as an investment not more than one percent
(1%) of the capital stock of any business whose stock is traded on a national
securities exchange or over-the-counter market.
9.2 Term.
(a) For Xxxxxxx X. Xxxxxxx, Xx. the obligations set forth in this
Article IX shall not terminate until the third (3rd) anniversary of the Closing
Date, except that such obligations shall terminate on the first (1st)
anniversary of the Closing Date in the event that DoveBid has received written
notice from Xxxxxxx X. Xxxxxxx, Xx. that it has breached its payment obligations
under the Earn-Out Payments as set forth in Section 1.1(iii) hereof, under
Xxxxxxx X. Xxxxxxx, Xx.'s Employment Agreement with DoveBid or under Xxxxxxx X.
Xxxxxxx, Xx.'s Convertible Subordinated Promissory Note and, in each case, such
breach has not been remedied within
thirty (30) days of receiving written notice of such breach from Xxxxxxx X.
Xxxxxxx, Xx.
(b) For every Member other than Xxxxxxx X. Xxxxxxx, Xx. the
obligations set forth in this Article IX shall not terminate until the earlier
of (i) the third (3rd) anniversary of the Closing Date or (ii) in the event that
DoveBid has received written notice from such Member that it has breached its
payment obligations under the Earn-Out Payments as set forth in Section 1.1(iii)
hereof, under such Member's Employment Agreement with DoveBid or under such
Member's Convertible Subordinated Promissory Note and such breach has not been
remedied within thirty (30) days of receiving written notice of such breach from
such Member, the end of such thirty (30) day period or (iii) the date on which
such Member terminates his employment for Good Reason or is terminated other
than for Cause.
9.3 Damages. Because of the difficulty of measuring economic losses to
DoveBid as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to DoveBid for which it
would have no other adequate remedy, the Members agree that the foregoing
covenants may be enforced by DoveBid, in the event of breach by the Members by
injunctions and restraining orders.
9.4 Reasonable Restraint. It is agreed by the parties hereto that the
foregoing covenants in this Article IX impose a reasonable restraint on the
Members in light of the activities and business of DoveBid (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of DoveBid; but it is also the intent of DoveBid and the Members
that such covenants be construed and enforced in accordance with the changing
activities and business of DoveBid (including the subsidiaries thereof)
throughout the term of this covenant.
9.5 Independent Covenant. All of the covenants in this Article IX shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Members against DoveBid
(including the subsidiaries thereof), whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by DoveBid of such
covenants. It is specifically agreed that the period of three (3) years stated
at the beginning of this Article IX, during which the agreements and covenants
of the Members made in this Article IX shall be effective, shall be computed by
excluding from such computation any time during which any Member or Greenwich is
in violation of any provision of this Article IX. The covenants contained in
this Article IX shall not be affected by any breach of any other provision
hereof by any party hereto and shall have no effect if the transactions
contemplated by this Agreement are not consummated.
9.6 Materiality. Greenwich and the Members hereby agree that the covenants
in this Article IX are a material and substantial part of this transaction.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Obligations of the Parties. Greenwich, the Members 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 hereby. Accordingly, Greenwich, the Members and
DoveBid each agrees (a) to use their respective commercially reasonable 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 (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. Greenwich and DoveBid each also agree to use
their respective commercially reasonable efforts to have their respective
representatives or agents take any action that would be inconsistent with the
obligations set forth in the second sentence of this Section 10.1. The
obligations of this Article X will not apply to information that (i) is or
becomes part of the public domain, (ii) is disclosed by the disclosing party to
third parties without restrictions on its further disclosure, (iii) is received
by the receiving party from a third party without breach of a nondisclosure
obligation to the other party or (iv) is required to be disclosed by statute, or
governmental rule or regulation; provided, however, that if disclosure is
required in connection with any litigation or arbitration with any third party,
the disclosing party shall use reasonable efforts to obtain a protective or
other order to avoid or minimize the extent of the disclosure. If this Agreement
is terminated, all copies of documents containing confidential information shall
be returned by the receiving party to the disclosing party.
10.2 Damages. 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, 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.
10.3 Survival and Termination. The obligations of the parties under this
Article X shall survive the termination of this Agreement.
ARTICLE XI
GENERAL
11.1 Cooperation. Greenwich, the Members 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. The Members and
Greenwich will cooperate and use their reasonable efforts to have the present
officers, managers and employees of Greenwich cooperate with DoveBid on and
after Closing in furnishing information, evidence, testimony and other
assistance in connection with any tax return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to Closing.
11.2 Successors and Assigns. Neither Greenwich nor any Member may assign
any of its rights or obligations hereunder without the prior written consent of
DoveBid, except that a Member may assign its rights and obligations hereunder to
any trust, corporation, partnership or other entity in which such Member holds
all of the voting power and equity or due to death in accordance with the laws
of xxxxx, succession and intestacy (provided that such transferee
executes an agreement pursuant to which such transferee agrees to be bound by
the terms of this Agreement, such agreement to be in form and substance
reasonably satisfactory to the Company). DoveBid may not assign any of its
rights or obligations hereunder without the prior written consent of Members
holding not less than a majority of the voting power in Greenwich, except that
DoveBid may assign its rights and obligations hereunder without the prior
written consent of any Member 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, provided
that the acquiring or surviving corporation or entity agrees to assume all of
DoveBid's obligations under this Agreement and that such acquiring or surviving
corporation or entity has a market capitalization or net assets in excess of
$75.0 million at the time of such assignment. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This provision does not govern the assignment
of the Convertible Subordinated Promissory Notes, which shall be governed solely
by the provisions thereof.
11.3 Entire Agreement. This Agreement (including the schedules and
exhibits attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding among the Members, Greenwich 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 Annexes hereto may be modified or amended
only by a written instrument executed by the Members, Greenwich and DoveBid,
acting through their respective officers, duly authorized by their Board of
Directors and Board of Managers, respectively.
11.4 Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same agreement.
11.5 Expenses. 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 Members will
pay their and Greenwich's respective fees, expenses and disbursements of counsel
and accountants incurred in connection with the subject matter of this
Agreement. The Members shall pay all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") incurred in connection with the transactions contemplated by
this Agreement. Greenwich shall file, and the Members shall cause Greenwich to
file, all necessary documentation and tax returns with respect to such Transfer
Taxes. In addition, the Members acknowledge that they, and not DoveBid or
Greenwich, will pay all taxes due upon the receipt of the Converted Subordinated
Promissory Note and cash consideration payable to the Members pursuant to this
Agreement.
11.6 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 a nationally recognized overnight courier service or
by depositing the same in United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return
receipt requested, by delivering the same in person to such party or to an
officer or agent of such party, as follows:
(i) If mailed or delivered to 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, General Counsel
(ii) If mailed or delivered to the Members, addressed to them
at their respective addresses set forth on Exhibit G hereto,
---------
(iii) If mailed or delivered to Greenwich, addressed to it at
its address set forth on Exhibit G hereto,
---------
or to such other address as any party hereto shall specify in writing to the
other parties hereto pursuant to this Section 11.6 from time to time. Such
notice shall be effective only upon actual receipt.
11.7 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. All disputes
arising out of this Agreement or the obligations of the parties hereunder,
including disputes that may arise following termination of this Agreement, shall
be subject to the exclusive jurisdiction and venue of the California State
courts of San Mateo County, California (or, if there is federal jurisdiction,
then the exclusive jurisdiction and venue of the United States District Court
having jurisdiction over San Mateo County). Each party hereby irrevocably and
unconditionally consents to the personal and exclusive jurisdiction and venue of
said courts and waives trial by jury and any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same.
11.8 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.
11.9 Time. Time is of the essence with respect to this Agreement.
11.10 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.
11.11 Remedies Cumulative. 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.
11.12 Construction. This Agreement has been negotiated among DoveBid,
Greenwich, the Members 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.
11.13 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by the respective authorized representatives of DoveBid and
Greenwich and by each Member as of the day and year first above written.
GREENWICH INDUSTRIAL SERVICES LLC,
a Connecticut limited liability company
By: /s/ XXXXXXX X. XXXXXXX
____________________________________
a Member
/S/ XXXXXXX X. XXXXXXX
_________________________________________
Xxxxxxx X. Xxxxxxx, Xx.
/S/ XXXXX X. XXXXXXX
_________________________________________
Xxxxx X. Xxxxxxx
/S/ XXXXX XXXXXXX
_________________________________________
Xxxxx Xxxxxxx
/S/ XXXXXXX XXXXXXXXXX
_________________________________________
Xxxxxxx XxXxxxxxxx
DOVEBID, INC.,
a Delaware corporation
By /S/ XXXXXXX XXXXXXXXXX
____________________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President & General Counsel
