EXHIBIT 2.08
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of June 15, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), Fairfield Industries B.V., a Netherlands corporation, (the
"Company"), Robinc Holding B.V. (the "Shareholder") and Xxxxxx Xxxxxxx ("X.
Xxxxxxx").
Shareholder is the legal and beneficial owner of the issued and outstanding
capital stock of the Company. X. Xxxxxxx is an officer, director and controlling
shareholder of Shareholder and an officer and director of the Company.
DoveBid desires to purchase and accept from Shareholder, and Shareholder
desires to sell and transfer to DoveBid, all shares of the capital stock of the
Company owned by Shareholder (collectively, the "Shares") on the terms and
conditions set forth in this Agreement.
Now, therefore, the parties agree as follows:
ARTICLE I
STOCK SALE AND PURCHASE
1.1 Agreement to Sell and Purchase Stock. At the Closing (as defined in
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Section 1.3 below), Shareholder shall sell, transfer and deliver to DoveBid, and
DoveBid shall purchase and accept from Shareholder, all of the Shares owned by
Shareholder, free and clear of all security interests, liens, pledges, charges,
escrows, options, rights of first refusal, mortgages, indentures, security
agreements or other claims, encumbrances, agreements, arrangements or
commitments of any kind or character (collectively, "Liens") in exchange for the
following aggregate consideration (the "Purchase Price"):
(i) cash in the amount of $6,000,000 (the "Closing Payment"),
subject to reduction in accordance with Section 1.2;
(ii) a convertible subordinated promissory note payable to
Shareholder in the principal amount of $5,000,000 in the form attached hereto as
Exhibit A (the "Convertible Subordinated Promissory Note"); and
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(iii) the discharge of up to $2,000,000 of indebtedness of the
Company to the Shareholder as provided in Section 1.4 below, together with
simple interest on such indebtedness from the Closing Date (as defined in
Section 1.3 below) until repayment thereof, which interest shall accrue at an
annual rate equal to the lower of (a) London Interbank Offered Rate for a six
month deposit ("LIBOR") or (b) the minimum rate for a six-month obligation
established pursuant to Section 1274(d) of the United States Internal Revenue
Code of 1986, as amended, as in effect on the Closing Date ("AFR"). The
principal amount of indebtedness and accrued interest shall be hereinafter
referred to as the "Debt".
1.2 Purchase Price Adjustment. At the Closing, Shareholder shall deliver
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to DoveBid a balance sheet of the Company as of the latest possible date prior
to the Closing Date (the "Closing Balance Sheet") prepared in accordance with
United States generally accepted accounting principles ("GAAP"), together with a
detailed list of all accrued expenses and liabilities of the Company as of the
latest possible date prior to the Closing Date as determined in accordance with
GAAP (the "Closing Liabilities Schedule"). In the event that the aggregate book
value of equity of the Company, determined in accordance with GAAP, set forth on
the Closing Balance Sheet (such amount, the "Closing Stockholders' Equity") is
more negative than the negative amount of $725,000, the Closing Payment shall be
reduced by one dollar for each dollar that Closing Stockholders' Equity is more
negative than the negative amount of $725,000. In the event of any reduction in
the Closing Payment, the aggregate Purchase Price shall be appropriately
adjusted and such reduced aggregate consideration shall constitute the "Purchase
Price" for all purposes under this Agreement. Within seven days of the Closing,
Shareholder shall deliver to DoveBid a balance sheet as of the Closing Date,
together with a detailed list of all accrued expenses and liabilities of the
Company as of the Closing Date, in each case prepared in accordance with GAAP
(the "Post-Closing Financial Statements"). For the purposes of preparing the
Closing Balance Sheet, the Closing Liabilities Schedule and the Post-Closing
Financial Statements, all Euro amounts shall be converted to US Dollars using
the Euro-Dollar closing mid-point exchange rate published in the Wall Street
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Journal on the second business day prior to the Closing.
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1.3 Closing. The purchase and sale and acquisition and transfer of the
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Shares, and the consummation of the other transactions contemplated hereby (the
"Closing"), will take place at the offices of DoveBid's counsel, Freshfields,
located at Xxxxxxxxxx 000, 0000 XX Xxxxxxxxx, xxx Xxxxxxxxxxx at 8:00 a.m.
Pacific Standard Time, on June 15, 2000 or, if all conditions to closing have
not been satisfied or waived by said date, at such other time and place as
DoveBid and Shareholder shall mutually agree upon. At the Closing, (i)
Shareholder and DoveBid will execute a notarial deed of transfer substantially
in the form of Exhibit B attached hereto with respect to the transfer of the
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Shares from the Shareholder to DoveBid, (ii) DoveBid will wire transfer the
Closing Payment to a bank account designated by Shareholder prior to the Closing
Date, (iii) DoveBid will deliver to Shareholder the Convertible Subordinated
Promissory Note, and (iv) DoveBid will assume the Debt by execution of a deed
substantially in the form of Exhibit C attached hereto (the "Assumption Deed").
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The date on which the Closing occurs is referred to herein as the "Closing
Date."
1.4 Debt Payment.
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(i) Discharge of the Debt. DoveBid shall discharge the Debt to
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Shareholder upon or after the Closing, at the election of DoveBid, provided that
the Debt shall be discharged and shall become due and payable no later than the
first to occur of (a) the closing of the initial underwritten public offering of
DoveBid's common stock (the "IPO") registered pursuant to a registration
statement filed under the United States Securities Act of 1933, as amended (the
"Securities Act") or (b) the second anniversary of the Closing Date (the "Debt
Maturity Date"). Until repaid to Shareholder, the amount of the Debt shall
represent collateral for (A) the indemnification obligations of Shareholder
pursuant to Article VIII hereof and (B) any amounts owed by Shareholder to
DoveBid under Section 1.4(ii) below. If DoveBid elects to discharge the Debt
prior to the Debt Maturity Date, DoveBid shall have the option of withholding
$825,000 of
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the Debt (the "Deferred Debt Payment") as collateral for such obligations. Upon
the later to occur of (x) the expiration of six months following the Closing
Date, and (y) the final resolution of all issues arising out of the audit of the
Company by the Nederlandse Belastingdienst (the Netherlands tax authority),
DoveBid shall pay the balance of the Deferred Debt Payment, if any, together
with interest (at the lower of the rates described Section 1.1 (iii)) accrued
thereon, to Shareholder provided that, if on such date, there is outstanding an
unresolved Notice of Claim or Contested Claim (as defined in Article VIII
hereof), an amount equal to the amount of Damages (as defined in Article VIII
hereof), claimed in such Notice of Claim or Contested Claim shall be withheld
from such payment to Shareholder, pending resolution of the Notice of Claim or
Contested Claim pursuant to the Article VIII hereof.
(ii) Closing Stockholders' Equity. On or prior to the 90/th/ calendar
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day following the Closing Date, DoveBid shall provide Shareholder with a
certificate, signed by an officer of DoveBid, either setting forth DoveBid's
confirmation that the amount of Closing Stockholders' Equity used to determine
the Purchase Price pursuant to Section 1.2 hereof (the "Original CSE") was
correct or stating that the Original CSE was incorrect as of the Closing Date,
and if so stated to be incorrect, setting forth DoveBid's revised calculation of
Closing Stockholders' Equity ("Revised CSE"), together with detailed
calculations substantiating such revised calculation. In the event that such
certificate sets forth a Revised CSE, within fifteen business days of
Shareholder's receipt of such certificate, Shareholder shall either (a) agree
with such revised calculation by countersigning such certificate and delivering
a copy thereof to DoveBid, whereupon, if the Revised CSE is more negative than
the negative amount of $725,000, the amount by which the Revised CSE is more
negative than the Original CSE (such excess, the "CSE True-Up") shall be offset
against the Debt or the Deferred Debt Payment, as the case may be, or (b)
disagree with such revised calculation, whereupon DoveBid and Shareholder shall
submit such dispute to arbitration as if it were a Contested Claim, as defined
in Article VIII hereof, in accordance with Section 8.6 hereof. If Shareholder
shall not have responded within such fifteen business day period, Shareholder
shall be deemed to have agreed with such revised calculation and the offset of
the CSE True-Up.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDER AND THE COMPANY
Except as specifically set forth in the disclosure letter provided by
Shareholder and the Company to DoveBid simultaneously with the signing of this
Agreement, dated as of the date of this Agreement (the "Company Disclosure
Letter"), the parts of which are numbered to correspond to the sections of this
Agreement, Shareholder and the Company hereby jointly and severally make the
representations and warranties to DoveBid as set forth below. The term
"knowledge" means, with respect to any matter in question, that any of Xxxxxx
Xxxxxxx, F.G.M. van de Vliet or F. Vervat has knowledge of such matter, after
reasonable inquiry of such matter by each such person.
2.1 Organization.
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2.1.1 The Company is a corporation duly organized and validly
existing under the laws of the Netherlands, has the corporate power and
authority to own, operate and lease its
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properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to conduct business in each jurisdiction in which
the character of the properties owned, leased or licensed by it or the nature of
such activities makes such qualification necessary.
2.1.2 There has been no proposal made or resolution adopted (by the
competent corporate body) for the dissolution or liquidation of the Company and
no proposal has been made or resolution adopted (by the competent corporate body
or bodies) for a statutory merger or de-merger of the Company.
2.1.3 The Company has not been declared bankrupt or been granted a
suspension of payments, nor has the Company applied for a declaration of
bankruptcy or a suspension of payments.
2.2 Power, Authorization and Validity.
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2.2.1 The Company and Shareholder each have the right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement, and all agreements to which each of the Company and Shareholder is or
will be a party that are required to be executed pursuant to this Agreement (the
"Ancillary Agreements"). The execution, delivery and performance of this
Agreement and the Ancillary Agreements have been duly and validly approved and
authorized by all necessary actions under applicable law. Shareholder is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable the Company or Shareholder to enter into, and
to perform their respective obligations under, this Agreement and the Ancillary
Agreements.
2.2.3 This Agreement and the Ancillary Agreements are, or when
executed by the Company and Shareholder will be, valid and binding obligations
of the Company and Shareholder enforceable against the Company and Shareholder
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 authorized capital stock of the Company consists
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entirely of 500 ordinary shares with a nominal value of NLG 1,000 each, of which
100 ordinary shares with a nominal value of NLG 1,000 each are issued and
outstanding and owned beneficially by Shareholder, and no other entity or
individual owns legally and beneficially any other equity interest of the
Company. On the date of this Agreement Shareholder has, and on the Closing Date
Shareholder will have, good and marketable title to that number of shares of
capital stock of the Company set forth in this Section 2.3, free and clear of
any and all Liens, which shares do and shall constitute collectively all of the
issued shares of the Company's capital stock. On the date of this Agreement,
there are no, and on the Closing Date, there will be no, options, warrants,
calls, commitments, profit sharing certificates, conversion privileges or
preemptive or other rights or agreements outstanding to purchase any of shares
of the Company's capital stock, or
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any securities convertible into or exchangeable for shares of the Company's
capital stock, or obligating the Company to grant, extend, or enter into any
such option, warrant, call, right, commitment, conversion privilege or other
right or agreement. There is no voting agreement, right of first refusal or
other restriction (other than the restrictions set out in the Company's Articles
of Association) applicable to any of the shares of capital stock or other
securities of the Company. Each share of the Company's capital stock has been
duly authorized and validly issued, is fully paid and nonassessable, is not
subject to any right of rescission, and has been offered, issued, sold and
delivered by the Company in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable securities laws,
other applicable laws and requirements set forth in applicable agreements or
instruments. The Company is not under any obligation to register any of its
presently outstanding securities, or any securities that may be subsequently
issued, under the securities laws of any jurisdiction.
2.4 Subsidiaries. The Company does not have any subsidiaries or any
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interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity, other than Amcorop B.V., a wholly-owned non-trading
Netherlands subsidiary (the "Dutch Sub") which is in the process of being
liquidated. The Dutch Sub has no assets other than an account receivable of
approximately NLG 82,354 owing to the Dutch Sub by Nederlandse Belastingdienst
and which will be paid to the Company upon receipt. The Company's partnership
interest in V.O.F. Eurotool (the "Partnership") has been terminated. The
Company is not currently, and will not become, subject to any liabilities of any
kind arising in connection with (a) the Dutch Sub or the liquidation thereof, or
(b) the Partnership or the termination thereof.
2.5 No Conflict. Neither the execution and delivery of this Agreement nor
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any Ancillary Agreement, nor the consummation of the transactions contemplated
hereby, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, default, impairment or violation of (a)
any provision of the Articles of Association or other governance document of the
Company or Shareholder, (b) any instrument or contract to which the Company or
Shareholder is a party or by which either the Company or Shareholder, or any of
the Company's or Shareholder's material assets or properties, are bound or
affected, or (c) any judgment, writ, decree, order, statute, rule or regulation
applicable to either the Company or Shareholder or their respective material
assets or properties. The consummation of the transactions contemplated by this
Agreement does not and will not require the consent, waiver, release or approval
of any third party.
2.6 Litigation. There is no action, proceeding, claim or investigation
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pending against the Company, nor any persons for whose acts or defaults the
Company may be liable, before any court or administrative agency, nor, to the
best of the Company's knowledge, has any such action, proceeding, claim or
investigation been threatened. There is no reasonable basis for any shareholder
or former shareholder of the Company, or any other person, firm, corporation, or
entity, to assert a claim against the Company, Shareholder or DoveBid based
upon: (a) ownership or rights to ownership of any shares or other ownership
interest in the Company, (b) any rights as a shareholder of the Company,
including any option or preemptive rights or rights to notice or to vote, or (c)
any rights under any agreement among the Company and its shareholders. There
are no outstanding orders, awards, judgments, injunctions, decrees or other
requirements of any court, arbitrator or governmental or regulatory body against
the Company or assets, properties or securities.
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2.7 Taxes. The Company (i) has duly, and within any appropriate time
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limits (including extensions for filings provided such extensions were properly
granted and all conditions of such extensions have been properly satisfied)
filed all tax returns required to be filed, (ii) has paid all taxes required to
be paid, (iii) has established an adequate accrual or reserve for the payment of
all taxes payable (a) in respect of all periods for which tax returns have been
filed but where the tax payable has not yet been paid and (b) in respect of the
periods directly following the periods referred to in subparagraph 2.7(iii)(a)
up to and including the Closing Date, (iv) has paid all estimated tax
assessments ("voorlopige aanslagen") insofar as any have been issued, and (v)
has no liability for taxes in excess of the amount so paid or accruals or
reserves so established. All accruals or reserves for taxes on the Closing
Balance Sheet will be established in the ordinary course of business. The
Company is not delinquent in the payment of any tax or in the filing of any tax
returns, and no deficiencies for any tax have been threatened, claimed, proposed
or assessed in writing. The Company has not received any written notification
from any taxing authority regarding any material issues that: (a) are currently
pending before any taxing authority regarding the Company or (b) have been
raised by any taxing authority and not yet finally resolved. The Company has
never been audited by any taxing agency or authority other than the audit(s)
described in Section 2.7 to the Company Disclosure Letter. The Company has
withheld with respect to each of its shareholders, current and former employees,
directors and supervisory directors and independent contractors all taxes
required to be withheld, and paid such withheld amounts to the appropriate tax
authority within the time prescribed by law.
For the purposes of this Agreement, the terms "tax" and "taxes" include all
income, gains, franchise, excise, property, sales, use, employment, license,
payroll, occupation, recording, value added or transfer taxes, governmental
charges, social security or national insurance contributions, fees, levies or
assessments (whether payable directly or by withholding), and, with respect to
such taxes, any estimated tax, interest and penalties or additions to tax and
interest on such penalties and additions to tax.
2.8 Financial Statements. The Company has delivered to DoveBid, attached
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hereto as Exhibit D, copies of: (i) the Company's audited balance sheet as of
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September 30, 1999 (the "Balance Sheet"), (ii) the Company's audited income
statement and statement of cash flows for the twelve months ended September 30,
1999, (iii) the Company's unaudited balance sheet as of April 30, 2000, and (iv)
the Company's unaudited income statement and statement of cash flows for the
seven months ended April 30, 2000 (all of such financial statements, together
with the Closing Balance Sheet, the Closing Liabilities Schedule, and the Post-
Closing Financial Statements, being hereinafter referred to as the "Financial
Statements"). The Financial Statements (a) are in accordance with the books and
records of the Company, (b) fairly present the financial condition of the
Company at the date therein indicated and the results of operations for the
period therein specified, and (c) except where otherwise specified in Section
1.2, have been prepared in accordance with generally accepted accounting
principles in the Netherlands applied on a consistent basis. The Company 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. Schedule 2.9 to the Company
Disclosure Letter sets forth a true and complete list of the Company's inventory
as of the latest possible date prior to the Closing Date
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2.9 Title to Assets and Properties. The Company has good and marketable
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title to all of its assets as shown on the Balance Sheet and the Closing Balance
Sheet, free and clear of all Liens (other than for taxes not yet due and
payable). All machinery and equipment, other than auction inventory held for
resale, included in such assets is in good condition and repair, normal wear and
tear excepted, and all leases of real or personal property to which the Company
is a party are fully effective and afford the Company peaceful and undisturbed
possession of the subject matter of the lease. The Company 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, and has not received any notice of violation with which it
has not complied. The Company's assets include all tangible and intangible
assets, rights and properties necessary for the conduct of the Company's Belgian
and Swiss operations.
2.10 Absence of Certain Changes. Since September 30, 1999, there has not
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been with respect to the Company:
(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 membership
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;
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(i) any change with respect to the management, supervisory or other
key personnel thereof;
(j) any payment or discharge of a Lien or liability thereof which
Lien was not either shown on the Balance Sheet or incurred in the ordinary
course of business thereafter;
(k) any obligation or liability incurred thereby to any of its
officers, employees, directors or shareholders or any loans or advances made
thereby to any of its officers, employees, directors or shareholders except
normal compensation and expense allowances payable to officers and employees;
(l) any amendment or change in the Articles of Association or other
governance document of the Company; or
(m) any change in the accounting policies or procedures of the
Company.
2.11 Contracts and Commitments. Section 2.11 of the Company Disclosure
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Letter sets forth a list of each of the following oral or written contracts,
agreements, understandings and arrangements, a true and complete copy of each
(or, in the case of an oral agreement, a written summary of all of the material
terms of which) has been provided to DoveBid:
(a) Contract, agreement or other understanding or arrangement
providing for payments by or to the Company in an aggregate amount of $25,000 or
more in any year;
(b) Company IP Rights Agreement (as defined in Section 2.12), and
contract, license, agreement or other understanding or arrangement as licensor
or licensee;
(c) Contract, lease, license, agreement or other understanding or
arrangement for the lease of real or personal property;
(d) Joint venture contract or arrangement or any other agreement that
involves or could involve a sharing of profits, expenses or losses with any
other party;
(e) Instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business and for no more than
$25,000 in amount, and except as disclosed in the Financial Statements;
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit the Company's freedom to compete in any
line of business in any geographic area, or which grants any exclusive rights or
obligations;
(g) Contract, agreement or other understanding or arrangement for or
relating to the employment of any officer, employee, contractor, or consultant
of the Company;
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(h) Contract, agreement or other understanding or arrangement for or
relating to the acquisition or disposition of assets outside the ordinary course
of business, or pursuant to which the Company has any ownership or other
participation interest in any corporation, partnership or other business
enterprise;
(i) Surety or guarantee in favor of third parties, or any security
interest in favor of third parties, such third parties to include Shareholder,
the Employees (as defined in Section 2.15 below), the Company and the managing
director and other officers of the Company or the Shareholder;
(j) Guarantee or surety or statement of several liability of any
third party in respect of any borrowing of the Company; or
(k) Any other agreement not specified above which is material to
the business of the Company.
All agreements, contracts, plans, leases, instruments, arrangements,
licenses and commitments identified in this Section 2.11 are valid and in full
force and effect. The Company is not, nor, to the knowledge of the Company, is
any other party thereto, in material breach or default under the terms of any
such agreement, contract, plan, lease, instrument, arrangement, license or
commitment. The Company does not have any liability for renegotiation of
government contracts or subcontracts, if any.
2.12 Intellectual Property. The Company owns, or has a valid right to use,
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sell or license all Intellectual Property Rights (as defined below, including,
without limitation, the "Fairfield Industries" and "Fairfield Auctions" trade
names) necessary or required for the conduct of business as presently conducted
(such Intellectual Property Rights being hereinafter collectively referred to as
the "Company IP Rights") and such rights to use, sell or license are sufficient
for the conduct of the Company's businesses as presently conducted. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby do not and will not constitute a breach of
any instrument or agreement governing or affecting any Company IP Rights (the
"Company IP Rights Agreements"), do not and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Company
IP Right or impair the right of the Company to use, sell or license any Company
IP Right or portion thereof. There is no royalty, honoraria, fee or other
payment payable by the Company to any person by reason of the ownership, use,
license, sale or disposition of any Company IP Right (other than as set forth in
the Company IP Rights Agreements listed in Section 2.11 to the Company
Disclosure Letter). Neither the manufacture, marketing, license, sale or
intended use of any product currently licensed or sold by the Company or
currently under development by the Company or the provision of any service
currently provided by the Company or currently planned to be provided by the
Company violates any license or agreement between the Company and any third
party or infringes any Intellectual Property Right of any other person or
entity; and there is no pending or threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any Company IP
Right nor is there any basis for any such claim, nor has the Company received
any notice asserting that any Company IP Right or the proposed use, sale,
license or disposition thereof conflicts, or will conflict, with the rights of
any other person or entity, nor is there any basis for any such assertion. The
Company
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has taken reasonable and necessary steps designed to safeguard and maintain the
secrecy and confidentiality of, and their proprietary rights in, all Company IP
Rights. Each officer, employee, director and consultant of the Company has
executed and delivered to the Company an agreement in the form provided to
DoveBid regarding the protection of proprietary information and the assignment
to the Company of all Intellectual Property Rights arising from the services
performed for the Company by such person. Section 2.12 to the Company Disclosure
Letter contains a list of all applications, registrations, filings and other
formal actions made or taken by the Company to perfect or protect its interest
in Company IP Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications and service marks. As used
herein, the term "Intellectual Property Rights" shall mean all worldwide
industrial or intellectual property rights, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service xxxx applications, Internet domain names,
Internet or World Wide Web URLs or addresses, copyright, copyright applications,
franchises, licenses, inventories, know-how, trade secrets, customer lists,
proprietary processes and formulae, all source and object code, algorithms,
architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the
above, including, without limitation, manuals, memoranda and records.
2.13 Compliance with Laws. The Company has materially complied, or prior
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to the Closing Date will have materially complied, and is or will be at the
Closing in material compliance with, all laws, ordinances, regulations, rules
and statutory instruments and all orders, writs, injunctions, awards, judgments,
and decrees applicable to the Company, or to its assets, properties, and
business thereof, as a result of the nature of the Company's business, the
manner in which the Company conducts its business or the places where such
business is conducted, including, without limitation: (a) all applicable
securities laws and regulations, (b) all applicable laws, ordinances,
regulations, and all orders, writs, injunctions, awards, judgments, and decrees
pertaining to (i) the sale, licensing, leasing, ownership, or management of its
owned, leased or licensed real or personal property, products and technical
data, (ii) employment and employment practices, terms and conditions of
employment, and wages and hours and (iii) safety, health, fire prevention,
environmental protection, hazardous materials, toxic waste disposal, building
standards, zoning and other similar matters (c) the export or re-export of
controlled commodities or technical data and (d) immigration matters. The
Company has received all material permits and approvals from, and has made all
material 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 involving the
Company pending or, to the best of the Company's knowledge, threatened before
any governmental entity.
2.14 Certain Transactions and Agreements. None of the officers, directors,
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shareholders or employees of the Company, nor any of their spouses or children,
has any direct or indirect ownership interest in any firm or corporation that
competes with the Company (except with respect to any interest in less than one
percent of the stock of any corporation whose stock is publicly traded). None
of said officers, directors, shareholders or employees, nor any of their spouses
or children, is directly or indirectly interested in any contract or informal
arrangement with the Company, except for normal compensation for services as an
officer, director, shareholder or employee thereof. None of said officers,
directors, shareholders or employees, nor any of their spouses or children, has
any interest in any property, real or personal, tangible or
10
intangible, including any Intellectual Property Rights, used in or pertaining to
the business of the Company, except for the normal rights of a shareholder of
the Company.
2.15. Employee Matters.
----------------
2.15.1 The Company does not have any employees other than the
employees identified in Section 2.15.1 of the Company Disclosure Letter (the
"Employees"). The current compensation of each of the Employees is as set out
opposite such Employee's name in said section of the Company Disclosure Letter.
2.15.2 The Company (i) is not subject to any collective bargaining
agreement with respect to any of its employees, (ii) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization, (iii) has no current labor disputes, and (iv) to the
best of the Company's knowledge, has not ever been nor is now subject to a union
organizing effort. The Company 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 2.15.3 to the Company Disclosure Letter identifies
all plans or agreements involving direct or indirect compensation or benefits
(including any employment agreements entered into between the Company and any
Employee, but excluding workers' compensation, unemployment compensation and
other government-mandated programs) currently or previously maintained,
contributed to or entered into by the Company under which the Company has any
present or future obligation or liability (collectively, the "Company Employee
Plans"). Copies or written descriptions of all Company Employee Plans and all
amendments thereto and written interpretations thereof (including summary plan
descriptions) have been delivered to DoveBid. All contributions due from the
Company with respect to any of the Company Employee Plans have been made as
required or have been accrued on the Financial Statements. Each Company Employee
Plan has been maintained substantially in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, laws, orders, rules
and regulations.
2.15.4 Section 2.15.4 to the Company Disclosure Letter identifies
all pension arrangements with all Employees, former employees, current or former
managing directors, and current or former other officers of the Company
(collectively the "Company Pension Plans"). The Company has no obligations with
respect to any Company Pension Plans, except as disclosed in the Financial
Statements. All premiums that have become due prior to or upon the Closing Date
under any insured Company Pension Plan have been fully and timely paid by the
Company either to the relevant insurance company or the relevant employee.
2.15.5 Section 2.15.5 to the Company Disclosure Letter 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,
11
consultants or directors which (A) is not a Company Employee Plan or a Company
Pension Plan, (B) is entered into, maintained or contributed to, as the case may
be, by the Company and (C) covers any Employee or former employee of the
Company. Such contracts, plans and arrangements as are described in this Section
2.15.5 are herein referred to collectively as the "Company Benefit
Arrangements." Each Company Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, laws, rules and regulations which are applicable
to such Company Benefit Arrangement. The Company has delivered to DoveBid a
complete and correct copy or written description of each Company Benefit
Arrangement.
2.15.6 There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or coverage under, any Company Employee Plan, Company
Pension Plan or Company Benefit Arrangement that would increase the expense of
maintaining such Company Employee Plan, Company Pension Plan or Company Benefit
Arrangement above the level of the expense incurred in respect thereof since the
date of the Balance Sheet.
2.15.7 The Company is in material compliance with all applicable
laws, agreements and contracts relating to employment, employment practices,
wages, hours, labor circumstances, hygiene, work place protection, health and
safety protection and terms and conditions of employment, including, but not
limited to, employee compensation matters.
2.15.8 No Employee is in violation of any term of any employment
contract, invention assignment agreement, confidentiality agreement,
noncompetition agreement, or any other contract or agreement, or, to the best of
the Company's knowledge, any restrictive covenant contained in an agreement to
which the Company is not a party relating to the right of any such employee to
be employed thereby, or to use trade secrets or proprietary information of
others, and the employment of such Employees does not subject the Company to any
liability.
2.15.9 The Company is not a party to any (a) agreement with any
officer, director, shareholder or other employee thereof (i) the benefits of
which are contingent, or the terms of which are altered, upon the occurrence of
a transaction involving the Company in the nature of any of the transactions
contemplated by this Agreement, (ii) providing any term of employment or
compensation guarantee, or (iii) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the reason
for such termination of employment, or (b) agreement or plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
2.16 Company Documents. The Company has made available to DoveBid for
-----------------
examination true and complete copies of all documents and information listed in
the Company Disclosure Letter or which have been requested in the due diligence
request list furnished to the Company by DoveBid, including, without limitation,
the following: (a) copies of the Company's past and current Articles of
Association and other past and current governance documents; (b) all records of
all proceedings, consents, actions, and meetings of the shareholders, the board
of directors and any committees thereof; (c) its journal and shareholder
registers reflecting all
12
equity issuances and transfers; (d) an extract from the Commercial Register of
the relevant Chamber of Commerce; and (e) all permits, orders, and consents
issued by any regulatory agency with respect to the Company, or any securities
of the Company, and all applications for such permits, orders, and consents.
2.17 No Brokers. Neither the Company nor Shareholder is or will be
----------
obligated for the payment of fees or expenses of any investment banker, broker
or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
2.18 Accounts Receivable. Subject to the reserves set forth on the Closing
-------------------
Balance Sheet, if any, all accounts receivable of the Company set forth on the
Closing Balance Sheet have arisen in the ordinary course of the Company's
businesses, represent valid, enforceable and fully collectible obligations due
to the Company, and have been and are not subject to any set-off, counterclaim
or future performance obligation on the part of the Company. Schedule 2.18 of
the Company Disclosure Letter is a true and complete list of the accounts
receivable of the Company as of the latest possible date prior to the Closing
Date.
2.19 Books and Records.
-----------------
2.19.1 The books, records and accounts of the Company (a) are 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 the Company, and (d) accurately and fairly reflect the basis for
the Financial Statements.
2.19.2 The Company 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 the Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
2.20 Insurance. The Company maintains and at all times during the three
---------
years prior to Closing has maintained policies of insurance and bonds of the
type and in amounts customarily carried by persons conducting businesses or
owning assets similar in type and size to those of Company, including all
legally required workers' compensation insurance and errors and omissions,
casualty, fire and general liability insurance. There is no claim pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been timely paid and the Company
is otherwise in compliance with the terms of such policies and bonds. The
Company has no knowledge of any threatened termination of, or premium increase
with respect to, any of such policies. All policies of insurance now held by
the Company are listed in Section 2.20 of the Company Disclosure Letter,
together with the name of
13
the insurer under each policy, the type of policy, the policy coverage amount
and any applicable deductible.
2.21 Environmental Liabilities. The real property at any period of time
-------------------------
owned, leased or used by the Company (other than real property owned by third
parties and occupied by the Company for a limited period of time solely for the
purpose of selling plant and equipment of the Company's client(s) located on
such property), or such property's surroundings and environment, is neither
polluted with any Hazardous Material (as defined below) nor is such Hazardous
Material present on or under such real property. There are no civil, criminal,
administrative or any other type of claims or proceedings or investigation
pending against or involving or affecting the Company, its business or its
officers or employees and there are no past or present events which may form the
basis of any such claim, proceeding or investigation, based on or related to the
use, presence, possession, storage, handling or disposal or the release into the
environment of any Hazardous Material or otherwise related to or based on the
Environmental Laws (as defined below). The Company has not entered into any
commitment (binding or otherwise) with any authority or any third party for (i)
the removal of Hazardous Material present at any of the real properties at any
period of time owned, leased or used by the Company; (ii) the voluntary
investion of the soil and ground water (including deep ground water) forming
part of such real properties; or (iii) the remediation or containment of
pollution of the soil and ground water (including deep ground water) forming
part of such real properties. All waste generated by the Company has been and
will continue to be transported, stored, treated or disposed in such way that
the Company is not, and shall not become, liable for damages, fines, penalties
or any environmental response costs (including but not limited to costs of
environmental investigation and/or clean up or other mitigation by or through
any authority) or any other costs or expenses under or pursuant to any
Environmental Law. All waste generated by the business operations of the Company
are exclusively delivered to a holder of a valid license under the Environmental
Control Act ("Wet Milieubeheer") or any provincial regulation promulgated
thereunder, and the Company has complied with any other similar requirements of
jurisdictions other than the Netherlands which are applicable to the Company in
this regard. The Company has implemented adequate precautions to avoid the
release into the environment of any Hazardous Material and the Company has taken
such other precautions as are prescribed by the Environmental Laws. During the
two-year period immediately preceding the Closing Date, the Company has not
received any complaints or notification from neighboring companies or private
persons relating to noise, smell, dust, vibrations or traffic. The Company has
over the five-year period immediately preceding the Closing Date complied in
full with all provisions contained in the Environmental Laws. The Company has
not incurred and will not incur any liability or costs vis-a-vis any third party
as a result of or in connection with any non-compliance with the Environmental
Laws or as a result of or in connection with any other matter which is not as
warranted hereunder.
For the purposes of this Agreement, "Hazardous Material" shall mean any
material such as chemicals, radio active materials, paints, ink, pollutants or
other material, the presence or release of which into the environment is or may
be considered hazardous or damaging for the public health and/or the
environment; and such other material as is or may from time to time be qualified
as hazardous materials under the Environmental Laws.
14
For the purpose of this Agreement, "Environmental Laws" shall mean all
state, national, European Community, provincial, municipal or local laws,
regulations, statutory instruments and orders, whether administrative, criminal
or otherwise, and all guidelines relating thereto and/or rules and practices
promulgated thereunder in respect of environmental matters including without
limitation any such laws, regulations, statutory instruments and orders relating
to emission or discharge of substances into the environment or to the
production, processing, distribution, management, use, treatment, storage,
burial, disposal, remediation, transport or handling of any Hazardous Material,
as are or have been in force or applicable to the Company from time to time.
2.22 Disclosure. Neither the Company Disclosure Letter, this Agreement, its
----------
exhibits and schedules, nor any of the certificates or documents to be delivered
by the Company or Shareholder to DoveBid pursuant to this Agreement, taken
together, contains any untrue statement of a fact or omits 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
Except as specifically set forth in the disclosure letter provided by
DoveBid to the Company simultaneously with the signing of this Agreement, dated
as of the date of this Agreement (the "DoveBid Disclosure Letter"), the parts of
which are numbered to correspond to the sections of this Agreement, DoveBid
hereby represents and warrants to the Company as follows:
3.1 Organization and Good Standing. DoveBid is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted and as proposed to
be conducted, and is qualified to conduct business in each jurisdiction in which
the character of the properties owned, leased or licensed by it or the nature of
such activities makes such qualification necessary except where the failure to
be qualified will not have a material adverse effect on the business, operations
or financial condition of DoveBid.
3.2 Power, Authorization and Validity.
---------------------------------
3.2.1 DoveBid has the corporate right, power and authority to enter
into and perform its obligations under this Agreement, and all agreements to
which DoveBid is or will be a party that are required to be executed pursuant to
this Agreement (the "DoveBid Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Agreements have been
duly and validly approved and authorized by DoveBid's Board of Directors. No
vote of the stockholders of DoveBid is required by the Certificate of
Incorporation, bylaws, other governing documents of DoveBid or applicable law
with respect to
15
the due authorization and approval of this Agreement, the DoveBid Ancillary
Documents or the transactions contemplated hereby and thereby.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable DoveBid to enter into, and to perform its
obligations under, this Agreement and the DoveBid Ancillary Agreements, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such qualifications and filings as may be required to
comply with United States federal and state securities laws and the securities
laws of any other jurisdiction as may be required in connection with the
transactions contemplated by this Agreement. All such qualifications and
filings will, in the case of qualifications, be effective on the Closing, and
will, in the case of filings be made within the time prescribed by applicable
law.
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's assets or properties are bound or affected, or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to DoveBid or its assets or properties. DoveBid has
received all necessary consents, waivers, approvals or releases of third parties
in connection with the consummation of the transactions contemplated hereunder.
3.4 Financial Condition. DoveBid has made available to the Company copies
-------------------
of: (a) DoveBid's unaudited consolidated balance sheet as of December 31, 1999
(the "DoveBid Balance Sheet") and (b) DoveBid's unaudited consolidated income
statement and statement of cash flows for the twelve months ended December 31,
1999 (together, with the DoveBid Balance Sheet, the "DoveBid Financial
Statements"). The DoveBid Financial Statements (a) are in accordance with the
books and records of the Company at the date therein indicated and the results
of operations for the period therein specified. Since December 31, 1999, there
has not been any change in the financial condition, properties, assets,
liabilities, business or operations of DoveBid 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 on the
business, operations or financial condition of DoveBid.
16
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Advice of Changes. During the period from the date of this Agreement
-----------------
until the earlier of the Closing or the termination of this Agreement, the
Company 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 the Company contained in this Agreement, if made on or as of the
date of such event or at the Closing, untrue or inaccurate in any material
respect and (b) of any material adverse change in the Company's business,
prospects, results of operations or financial condition. The Company agrees to
cooperate with DoveBid's auditors in order to book financial entries in
accordance with GAAP and in a manner acceptable to DoveBid and its auditors.
4.2 Maintenance of Business. During the period from the date of this
-----------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will use its best efforts to carry on and preserve its business and
its relationships with customers, suppliers, employees and others in
substantially the same manner as it has prior to the date hereof. If the
Company becomes aware of a material deterioration in the relationship with any
customer, supplier or key employee, it will promptly bring such information to
the attention of DoveBid in writing and, if requested by DoveBid, will use its
best efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will continue to conduct its business and maintain its business
relationships in the ordinary and usual course and will not, without the prior
written consent of DoveBid:
(a) borrow any money, or otherwise incur any indebtedness;
(b) enter into any transaction not in the ordinary course of
business;
(c) 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;
(d) 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;
(e) dispose of any of its assets except in the ordinary course of
business consistent with past practice;
(f) 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;
(g) 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;
17
(h) fail to use its best efforts to maintain and preserve its
business organization intact, retain its Employees and maintain its
relationships and present agreements with suppliers, customers and others having
business relations with the Company, or fail to maintain its current debt and
lease instruments, or fail to perform all its material obligations under debt
and lease instruments or any other agreements relating to or affecting the
Company's assets, properties, equipment and rights;
(i) pay any bonus, extraordinary fees, commissions or other unusual
distributions or increase the salary, commission level or other remuneration
payable to any officer, director, Employee, consultant or agent, or Shareholder,
or enter into any new employment or consulting agreement with any such person;
(j) change accounting methods, policies or procedures;
(k) introduce any material new method of management or operations;
(l) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any equity interest, or redeem or otherwise acquire
any of its equity interests;
(m) 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;
(n) lend any amount to any person or entity, other than advances for
travel and expenses which are incurred in the ordinary course of business
consistent with past practice, are not material in amount and are documented by
receipts for the claimed amounts;
(o) 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;
(p) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(q) issue or sell any shares of its capital stock or any other
securities, or issue or create any warrants, obligations, subscriptions,
options, calls, convertible securities, or other commitments to issue any
securities, or accelerate the vesting of any outstanding option or other
security;
(r) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(s) merge, de-merge, consolidate or reorganize with, or acquire, any
entity;
(t) amend its Articles of Association, or any other governance
documents;
(u) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
18
(v) agree to any audit assessment by any tax authority or file any
income or franchise tax return;
(w) change any insurance coverage or issue any certificates of
insurance;
(x) enter into any debt or lease instruments, or into amendments of
any existing debt or lease instruments;
(y) fail to comply with all permits, laws, rules or regulations
applicable to the Company or its business; or
(z) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(y).
4.4 Satisfaction of Conditions Precedent. From the date of this Agreement
------------------------------------
until the earlier of termination of this Agreement or the Closing, each of the
Shareholder and the Company will use its best efforts to satisfy or cause to be
satisfied all the conditions precedent that are set forth in Article VI, and
each of the Shareholder and the Company will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.
4.5 Regulatory Approvals. DoveBid, the Company and Shareholder will
--------------------
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, that may be reasonably required,
or that DoveBid may reasonably request, in connection with the consummation of
the transactions contemplated by this Agreement. The Company and Shareholder
will use their best efforts to obtain all such authorizations, approvals and
consents.
4.6 Necessary Consents. The Company and Shareholder will use their best
------------------
efforts to obtain such written consents and take such other actions as may be
necessary or appropriate in DoveBid's judgment to allow the consummation of the
transactions contemplated hereby and to allow DoveBid to carry on the Company's
business after the Closing.
4.7 Litigation. The Company will notify DoveBid in writing promptly after
----------
learning of any material actions, suits, proceedings or investigations by or
before any court, board or governmental agency, initiated by or against it, or
known by it to be threatened against it.
4.8 No Other Negotiations. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company and
Shareholder will not, and will not authorize or permit any officer, shareholder,
director, Employee, investment banker, attorney, agent, representative or
affiliate of the Company or Shareholder, or any other person or entity, on
either of their behalves to, directly or indirectly, solicit, initiate or
encourage any offer from any person or entity or consider any inquiries or
proposals received from any other person or entity, participate in any
negotiations or discussions regarding, furnish to any person or entity any
information with respect to, or enter into any agreement, commitment, letter of
intent or understanding concerning, the possible disposition of all or any
substantial portion of the
19
Company's business, assets or equity interests by merger, de-merger, sale or any
other means (other than the transactions contemplated hereby with DoveBid). The
Company or Shareholder will promptly and in any event within 24 hours notify
DoveBid orally and in writing of any such inquiry or proposal, including the
name of the persons making such proposal and all of the terms thereof. Any
violation of the restrictions set forth in this section by any officer, director
or Employee or Shareholder or any investment banker, attorney or other advisor
or representative of the Company or Shareholder shall be deemed to be a breach
of this Section 4.8 by the Company and Shareholder.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company will allow
DoveBid and its agents reasonable access to the files, books, records and
offices of the Company, including, without limitation, any and all information
relating to the Company's taxes, commitments, contracts, leases, licenses, and
real, personal and intangible property and financial condition. The Company
will cause its accountants, employees and agents to cooperate with DoveBid and
its agents in making available all financial information reasonably requested,
including without limitation the right to examine all working papers pertaining
to all financial statements prepared or audited by such accountants.
4.10 Securities Laws. From the date of this Agreement until the earlier of
---------------
termination of this Agreement or the Closing, the Company shall use its best
efforts to assist DoveBid to the extent necessary to comply with all applicable
securities laws in connection with the transactions contemplated herein.
4.11 Certain Ancillary Agreements. X. Xxxxxxx agrees to execute (i) the
----------------------------
Employment Agreement in substantially the form of Exhibit E attached hereto (the
---------
"Employment Agreement"), (ii) the Release of Claims in substantially the form of
Exhibit F-2 attached hereto (the "Xxxxxxx Release"), and (iii) the Guaranty
-----------
agreement in substantially the form of Exhibit G attached hereto (the
---------
"Guaranty").
4.12 Mondiale N.V. Shareholder shall use its best efforts, as the holder
-------------
of fifty percent of the ownership interests in Mondiale N.V., a Belgian
corporation ("Mondiale"), to cause Mondiale, with respect to online sales of the
major machine tools traded by Mondiale, to list such products for sale on
DoveBid's website exclusively subject to DoveBid's standard terms and conditions
for such type of transaction.
4.13 Insurance. Prior to the Closing, Shareholder shall have obtained, and
---------
fully prepaid all premiums associated with, "claims made" insurance for the
Company for activities of the Company prior to the Closing, which insurance
shall be assignable to DoveBid at the Closing, shall expire no earlier than the
third anniversary of the Closing and shall contain coverage that is customary
for the Company's industry in the Netherlands and be reasonably acceptable to
DoveBid.
4.14 Termination of Credit Facility. Shareholder and the Company shall
------------------------------
cause the loan and credit facility (the "Credit Facility") between Shareholder
and Fortis Bank (formerly Mees Pierson N.V.) (the "Bank"), the joint and several
liability agreement entered into between Shareholder, the Bank, the Company and
other affiliates of Shareholder, and any other
20
agreements entered into by the Company in connection with the Credit Facility to
be terminated prior to or upon the Closing, and shall cause any Liens held by
the Bank or any other party on the Company's assets to be released prior to or
upon the Closing. In the event that the Company has insufficient funds to
discharge its outstanding indebtedness under the Credit Facility upon Closing,
DoveBid shall discharge such indebtedness up to an amount of 225,000 Euros.
Shareholder shall discharge any indebtedness under such Credit Facility in
excess of 225,000 Euros from the proceeds of the Closing Payment.
4.15 Tradenames. X. Xxxxxxx and Shareholder each agree that the Company
----------
has the right to use and license the tradenames of "Fairfield Industries" and
"Fairfield Auctions" in the conduct of its business, as presently conducted and
as proposed to be conducted, and Shareholder shall ensure that no other company
in which Shareholder holds an ownership interest of 50% or more shall challenge
such right of the Company.
4.16 Car Lease. The Company shall assign the lease relating to R.
---------
Xxxxxxx'x car to X. Xxxxxxx following the Closing and X. Xxxxxxx hereby agrees
to accept such assignment and further agrees that the Company and DoveBid shall
be released from all further obligations with respect to such lease upon such
assignment.
4.17 Further Assurances. The Company, Shareholder and DoveBid shall each
------------------
deliver or cause to be delivered to the other, at such other times and places as
shall be reasonably agreed, such additional instruments, and take such
additional actions as can be taken without unreasonable expense, as any other
may reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. Shareholder and the Company will cooperate
and use their reasonable efforts to have the present officers, directors and
Employees of the Company cooperate with DoveBid on and after Closing in
furnishing information, evidence, testimony and other assistance in connection
with any tax return filing obligations, actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all periods prior
to Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND SHAREHOLDER
The obligations of the Company and Shareholder with respect to actions to
be taken at Closing are subject to the satisfaction, or waiver by Shareholder,
at or prior to Closing of all of the following conditions.
5.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of DoveBid set forth in this Agreement shall be true and correct at
the Closing with the same effect as though such representations and warranties
had been made as of that time. The covenants set forth in this Agreement to be
performed by DoveBid at or before the Closing shall have been duly performed.
DoveBid shall have delivered to the Company a certificate to such effect dated
the Closing Date signed by an authorized officer of DoveBid.
21
5.2 Documents. All actions, proceedings, instruments and documents
---------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by DoveBid and shall be acceptable to Shareholder.
5.3 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of the Company or
Shareholder as a result of which the management of the Company or Shareholder
deems it materially detrimental to the Company or Shareholder 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 Convertible Subordinated Promissory Note and Subordination Agreement.
--------------------------------------------------------------------
DoveBid shall have executed and delivered to Shareholder the Convertible
Subordinated Promissory Note and the Subordination Agreement attached as Annex A
thereto.
5.6 Employment Agreement. DoveBid shall have executed the Employment
--------------------
Agreement.
5.7 Assumption of Debt. DoveBid shall have executed the Assumption Deed.
------------------
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DOVEBID
The obligations of DoveBid with respect to actions to be taken at the
Closing are subject to the satisfaction, or waiver by DoveBid, at or prior to
the Closing of all of the following conditions.
6.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of the Company and Shareholder set forth in this Agreement shall be
true and correct at the Closing with the same effect as though such
representations and warranties had been made as of that time. The covenants set
forth in this Agreement to be performed by the Company and Shareholder on or
before the Closing shall have been duly performed. Shareholder and the Company
shall have delivered to DoveBid a certificate to such effect dated the Closing
Date signed by a duly authorized officer or director of Shareholder and of the
Company.
6.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of DoveBid as a
result of which the management of DoveBid deems it materially detrimental to
DoveBid to proceed with the transactions hereunder.
22
6.3 No Material Adverse Effect. No event or circumstance shall have
--------------------------
occurred between the execution of this Agreement and the Closing which would
constitute a material adverse effect on the Company's business, prospects,
financial condition or operating results; and DoveBid shall have received a
certificate to such effect dated the Closing Date signed by a duly authorized
officer or director of Shareholder and of the Company.
6.4 Documents. All actions, proceedings, instruments and documents
---------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by the Company and/or Shareholder and shall be acceptable to DoveBid.
6.5 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; the Company
shall have obtained and delivered to DoveBid such additional consents to the
transactions contemplated herein as DoveBid may reasonably request including,
without limitation, DoveBid's receipt on or prior to Closing of consents of
third parties listed in Section 2.5 of the Company Disclosure Letter; and no
action or proceeding shall have been instituted or threatened to restrain or
prohibit the transactions contemplated herein.
6.6 Convertible Subordinated Promissory Note and Subordination Agreement.
--------------------------------------------------------------------
Shareholder shall have executed and delivered to DoveBid the Convertible
Subordinated Promissory Note and the Subordination Agreement attached as Annex A
thereto.
6.7 Employment Agreement. X. Xxxxxxx shall have executed and delivered to
--------------------
DoveBid his Employment Agreement.
6.8 Release of Claims. Shareholder shall have executed and delivered the
-----------------
Release of Claims in substantially the form of Exhibit F-1 attached hereto.
-----------
6.9 Xxxxxxx Release. X. Xxxxxxx shall have executed the Xxxxxxx Release.
---------------
6.10 Assumption of Debt. Shareholder and the Company shall have executed
------------------
the Assumption Deed.
6.11 Insurance Matters. Shareholder shall have obtained, and fully prepaid
-----------------
all premiums associated with, "claims made" insurance for the Company for
activities of the Company prior of the Closing that will be assigned to DoveBid
at the Closing, that expires no earlier than the third anniversary of the
Closing and that contains coverage that is customary for the Company' industry
in the Netherlands and is reasonably acceptable to DoveBid.
6.12 Termination of the Credit Facility. The Credit Facility, and all
----------------------------------
ancillary agreements entered into thereunder, shall have been terminated, and
all Liens on the Company's assets in favor of the Bank or any other party shall
have been released.
6.13 Board Approval. This Agreement and the Ancillary Agreements shall
--------------
have been approved by DoveBid's Board of Directors.
23
6.14 Guaranty X. Xxxxxxx shall have executed and delivered to DoveBid the
--------
Guaranty.
6.15 Xxxxxxxxxx Agreement. Shareholder shall have entered into a letter
--------------------
agreement with Xxxx Xxxxxxxxxx & Sons Ltd in substantially the form attached
hereto as Exhibit H.
----------
ARTICLE VII
NONCOMPETITION
7.1 Prohibited Activities. Each of (i) Shareholder, on behalf of itself
---------------------
and its directors, officers, shareholders, owners, employees, successors and
assigns, and (ii) X. Xxxxxxx agrees that they 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:
(i) 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 then in competition with DoveBid
(including its subsidiaries);
(ii) 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);
(iii) call upon any person or entity which is, at that time, or that
has been, within one 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;
(iv) call upon any prospective acquisition candidate, on
Shareholder's or Xxxxxxx'x own behalf or on behalf of any competitor of DoveBid,
which candidate was either called upon by DoveBid or the Company (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
--------
Shareholder and/or X. Xxxxxxx shall not be charged with a violation of this
Section 7.1(iv) unless and until X. Xxxxxxx 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
(v) except in furtherance of DoveBid's business, disclose customers,
whether in existence or proposed, of DoveBid or the Company 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 (A) apply to the
business operations, as currently conducted, of Dubied S.A., a Swiss corporation
owned by Shareholder, or the business operations, as currently conducted, of
Mondiale, or to X. Xxxxxxx'x position as a director and/or officer of such
entities, or (B) prohibit Shareholder or Xxxxxxx from acquiring, as an
investment, not more than one percent of the capital stock of any business to
which the
24
foregoing prohibition would apply and whose stock is traded on a national
securities exchange or over-the-counter market.
7.2 Term. The obligations set forth in this Article VII shall not
----
terminate until (i) two (2) years after the date X. Xxxxxxx is no longer
employed by DoveBid and/or the Company for any reason if X. Xxxxxxx'x employment
with DoveBid and/or the Company terminates on or prior to the second anniversary
of the Closing Date, or (ii) one year after the date X. Xxxxxxx is no longer
employed by DoveBid and/or the Company for any reason if X. Xxxxxxx'x employment
with DoveBid and/or the Company terminates after the second anniversary of the
Closing Date.
7.3 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, Shareholder and X. Xxxxxxx agree that, in
the event of breach by either Shareholder or X. Xxxxxxx of any of the foregoing
non competition covenants, the breaching party shall forfeit an immediately
claimable penalty of $ 250,000, for each breach or (at the sole discretion of
DoveBid) $ 100,000 for each (part of a) day such party shall continue to be in
breach of any such non competition covenants, provided that DoveBid shall at all
times have the right, in addition to or in lieu of a penalty, to specifically
enforce the non competition covenants set forth in Section 7.1 above by
injunctions and restraining orders or any other measures permitted by any
applicable law or to claim compensation of actual damages in addition to or in
lieu of a penalty.
7.4 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants in this Article VII impose reasonable restraints on
Shareholder and X. Xxxxxxx 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, Shareholder and X. Xxxxxxx 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.
7.5 Independent Covenant. All of the covenants in this Article VII 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 Shareholder or
X. Xxxxxxx 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 time stated in Section 7.2, during which the agreements and covenants
of Shareholder made in this Article VII shall be effective, shall be computed by
excluding from such computation any time during which X. Xxxxxxx or Shareholder
is in violation of any provision of this Article VII. The covenants contained in
this Article VII 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.
7.6 Materiality. Shareholder, X. Xxxxxxx and the Company hereby agree that
-----------
the covenants in this Article VII are a material and substantial part of this
transaction.
25
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. The covenants and agreements of DoveBid
---------------------------
contained in this Agreement will remain operative and in full force and effect
following the Closing. The representations and warranties of DoveBid will
expire upon the Closing Date. All representations, warranties, covenants and
agreements of the Company and Shareholder contained in this Agreement will
remain operative and in full force and effect from the date of this Agreement
until the third anniversary of the Closing (except for covenants that by their
terms survive for a longer period, and for the representations and warranties
set forth in 2.7 which shall survive for six years from the Closing Date).
8.2 Agreement to Indemnify. Subject to the limitations set forth in this
----------------------
Article VIII, Shareholder hereby indemnifies and holds 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 (individually, a
"DoveBid Indemnitee" and collectively, "DoveBid Indemnitees") from and against
any and all claims, demands, actions, causes of actions, losses, costs, damages,
liabilities and expenses including, without limitation, reasonable legal fees
and expenses ("Damages"):
(a) 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 the Company or Shareholder in this Agreement or any
certificate, document or instrument delivered by or on behalf of the Company or
Shareholder pursuant to this Agreement;
(b) resulting from any failure of Shareholder to have good, valid and
marketable title to the issued shares of the Company held by Shareholder, free
and clear of Liens, or any claim by a current or former shareholder, or any
other person, firm, corporation or entity, seeking to assert or based upon
ownership or rights to ownership of equity interest of the Company (or the
Purchase Price), any rights of a shareholder of the Company, including any
options, or preemptive rights or rights to notice or to vote, any rights under
the Company's Articles of Association or other charter documents, any right
under any agreement among the Company and Shareholder or any claim that any
shareholder's equity interests or other securities were wrongfully repurchased
by the Company;
(c) in connection with a liability of the Company arising out of any
acts, events, omissions or transactions occurring prior to or contemporaneously
with the Closing Date, which liabilities were not disclosed to DoveBid in this
Agreement or the Company Disclosure Letter and were either known or should have
been known by Shareholder at the time of the Closing, or any breach of any
agreement entered into by the Company or Shareholder prior to the Closing;
(d) resulting from 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
26
(e) in connection with any of the Company's or Shareholder's expenses
incurred with respect to the transactions contemplated by this Agreement and the
Ancillary Agreements and any Transfer Taxes (as defined in Section 9.5 below).
A DoveBid Indemnitee shall not be entitled to indemnification
hereunder until the aggregate amount of Damages with respect to such Claim (as
defined in Section 8.4 below) or Claims, together with all prior Claims by any
DoveBid Indemnitee, exceeds $50,000 (the "Threshold Amount"), provided that once
the aggregate of all Claims exceeds the Threshold Amount, all such Claims may be
made without deducting the Threshold Amount. The maximum aggregate liability of
Shareholder for Claims for indemnification under this Agreement shall not exceed
$5,000,000. If, on or prior to the date on which a representation, warranty or
covenant set forth herein would expire pursuant to Section 8.1 above, written
notice of the occurrence of a matter giving rise to a Claim is given by a
DoveBid Indemnitee or a suit or action is commenced against Shareholder by a
DoveBid Indemnitee, the relevant DoveBid Indemnitee shall not be precluded from
pursuing such Claim or suit or action or from recovering from Shareholder on the
Claim, suit or action by reason of the expiration otherwise provided for in
Section 8.1.
8.3 Third Person Claims.
-------------------
8.3.1 Promptly after a DoveBid Indemnitee 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 DoveBid Indemnitee shall, as a condition precedent to a claim with respect
thereto being made against Shareholder, give Shareholder written notice of such
Third Person Claim describing in reasonable detail the nature of such Third
Person Claim, a copy of all papers served with respect to that Third Person
Claim (if any), an estimate of the amount of Damages attributable to the Third
Person Claim to the extent feasible (which estimate shall not be conclusive of
the final amount of such claim) and the basis for the DoveBid Indemnitee's
request for indemnification under this Agreement; provided, however, that the
failure of the DoveBid Indemnitee to give timely notice hereunder shall relieve
the Shareholder of its indemnification obligations under this Agreement only to
the extent that such failure materially prejudices Shareholder's ability to
defend such claim.
8.3.2 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. If DoveBid fails to defend such Third Person Claim, Shareholder and
X. Xxxxxxx shall have the right to assume the defense thereof. Shareholder and
X. Xxxxxxx 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 Shareholder and X. Xxxxxxx does not affect any privilege
relating to the DoveBid Indemnitee, and may participate in settlement
negotiations with respect to the Third Person Claim. No DoveBid Indemnitee
shall enter into any settlement of a Third Person Claim without the prior
written consent of Shareholder (which consent shall not be unreasonably
withheld), provided, that if Shareholder and X. Xxxxxxx shall have consented in
writing to any such settlement, then
27
Shareholder shall have no right to object to any Claim by any DoveBid Indemnitee
for indemnity under Article VIII for the amount of such settlement; and
Shareholder will remain responsible to indemnify the DoveBid Indemnitee for all
Damages that may be incurred arising out of, resulting from or caused by the
Third-Party Claim to the fullest extent provided in Article VIII.
8.4 Notice of Claim. As used herein, the term "Claim" means a claim for
---------------
indemnification of a DoveBid Indemnitee for Damages under Article VIII. DoveBid
may give notice of a Claim under this Agreement whether for its own Damages or
for Damages incurred by any other DoveBid Indemnitee, and DoveBid will give
written notice of a Claim executed by an officer of DoveBid (a "Notice of
Claim") to Shareholder after DoveBid becomes aware of the existence of any
potential claim by a DoveBid Indemnitee Person for indemnity for Damages under
Article VIII, including in connection with any Third Person Claim.
8.5 Contents of Notice of Claim. Each Notice of Claim by DoveBid will
---------------------------
contain the following information:
(a) that DoveBid 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 in an action brought against any DoveBid Indemnitee based on alleged
facts, which if true, would give rise to liability for Damages to such DoveBid
Indemnitee under Article VIII); and
(b) a brief description, in reasonable detail (to the extent
reasonably available to DoveBid), of the facts, circumstances or events giving
rise to the alleged Damages based on DoveBid's good faith belief thereof,
including, without limitation, the identity and address of any third-party
claimant (to the extent reasonably available to DoveBid) 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.
8.6 Resolution of Notice of Claim. Any Notice of Claim received by
-----------------------------
Shareholder will be resolved as follows:
(a) Uncontested Claims. In the event that, within fifteen calendar
------------------
days after a Notice of Claim is received by Shareholder, Shareholder does not
contest such Notice of Claim in writing to DoveBid (an "Uncontested Claim"),
Shareholder will be conclusively deemed to have consented to the recovery by the
DoveBid Indemnitee of the full amount of Damages specified in the Notice of
Claim in accordance with this Article VIII, including the offset of any such
Damages against the Debt, the Deferred Debt Payment or against amounts owed by
DoveBid to Shareholder pursuant to the Convertible Promissory Notes or
otherwise, and, without further notice, to have stipulated to the entry of a
final judgment for damages against Shareholder for such amount in any court
having jurisdiction over the matter where venue is proper.
(b) Contested Claims. In the event that Shareholder gives DoveBid
----------------
written notice 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
28
agreement executed by DoveBid and Shareholder, or (B) in the absence of such a
written settlement agreement, by binding arbitration between DoveBid and
Shareholder in accordance with the terms and provisions of Section 8.6(c).
(c) Arbitration of Contested Claims. Each of DoveBid and Shareholder
-------------------------------
agree that any Contested Claim will be submitted to mandatory, final and binding
arbitration in San Mateo County, California in accordance with the Commercial
Arbitration Rules of the American Arbitration Association from time to time in
effect (the "Rules"). There will be three arbitrators, which will be selected
in accordance with the Rules, in the absence of agreement of the parties on such
selection. A decision reached by at least two of the three arbitrators will be
the decision of the arbitration panel; provided, however, that in the case of
monetary damages, if there is no agreement of two arbitrators as to the amount
of the award, then the highest and lowest amounts will be disregarded, and the
remaining amount will be the final award of the arbitration panel. The parties
covenant that they will participate in the arbitration in good faith, and that
they will share in its costs in accordance with subparagraph (i) below. A
Contested Claim finally resolved in favor of DoveBid may be satisfied as if such
Claim were an Uncontested Claim pursuant to Section 8.6(a). The provisions of
this Section 8.6(c) may be enforced by any court of competent jurisdiction, and
the party seeking enforcement will be entitled to an award of all costs, fees
and expenses, including attorneys' fees, to be paid by the party against whom
enforcement is ordered. Judgment upon the award rendered by the arbitrators may
be entered in any court having competent jurisdiction.
(i) Payment of Costs. DoveBid on the one hand, and Shareholder, on
----------------
the other hand, will bear the expense of deposits and advances required by the
arbitrators in equal proportions, but either party may advance such amounts,
subject to recovery as an addition or offset to any award. The arbitrators
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 arbitrators may apportion such costs, fees and expenses between the
parties in such a manner as the arbitrators 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 arbitrators 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
Shareholder 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 Shareholder. Shareholder and DoveBid, and will include
an affirmative statement to such effect.
29
(iv) Timing. Shareholder, DoveBid and the arbitrators will conclude
------
each arbitration pursuant to this Section 8.6 as promptly as possible for the
Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrators 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
GENERAL
9.1 Confidentiality. The Company, Shareholder and DoveBid each recognize
---------------
that they have received and will receive confidential information concerning the
other during the course of the negotiations and preparations of this Agreement
and the transactions contemplated herein. Accordingly, the Company, Shareholder
and DoveBid each agree (a) to use their respective best efforts to prevent the
unauthorized disclosure of any confidential information concerning the other
that was or is disclosed during the course of such negotiations and
preparations, and (b) to not make use of or permit to be used any such
confidential information other than for the purpose of effectuating the Closing
and related transactions. The obligations of this Section 9.1 will not apply to
information that is required, in the opinion of counsel to a party hereto, to be
disclosed by statute, governmental rule or regulation, or securities exchange
listing agreement or, following the Closing, to the disclosure of information
regarding the Company by DoveBid. If this Agreement is terminated, all copies
of documents containing confidential information shall be returned by the
receiving party to the disclosing party. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants in Section
9.1 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.
9.2 Successors and Assigns. Neither the Company nor Shareholder may
----------------------
assign any of its rights or obligations hereunder without the prior written
consent of DoveBid. DoveBid may not assign any of its rights or obligations
hereunder without the prior written consent of Shareholder, except that DoveBid
may assign its rights and obligations hereunder without the prior written
consent of Shareholder in connection with a merger, consolidation or sale of all
or substantially all of DoveBid's assets or in connection with a
reincorporation, reorganization or other corporate recapitalization, provided
that the acquiring or surviving corporation or entity agrees to assume all of
DoveBid's obligations under this Agreement. This provision does not govern the
assignment of the Convertible Subordinated Promissory Notes, which shall be
governed solely by the provisions thereof. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
9.3 Entire Agreement; Amendments. This Agreement (including the schedules
----------------------------
and exhibits attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among Shareholder, the Company
and DoveBid and supersede any
30
prior agreement, understanding or discussions relating to DoveBid or the
transactions contemplated by this Agreement including but not limited to that
certain letter of intent agreement dated May 17, 2000. Except as otherwise
stated herein, this Agreement and the exhibits hereto may be modified or amended
only by a written instrument executed by Shareholder, the Company and DoveBid,
acting through their respective officer or directors, and duly authorized by
each of their Board of Directors.
9.4 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same agreement.
9.5 Expenses; Taxes. DoveBid will pay the fees, expenses and
---------------
disbursements of DoveBid and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by DoveBid under this
Agreement. Shareholder will pay its and the Company's respective fees, expenses
and disbursements of counsel and accountants incurred in connection with the
subject matter of this Agreement and any amendments thereto, including all costs
and expenses incurred in the performance and compliance with all conditions to
be performed by them under this Agreement. Any expenses of Shareholder and the
Company not paid by Shareholder at or prior to the Closing shall be treated as
Damages under Article VIII. Shareholder shall pay all Dutch sales, use,
transfer, income, registration, real property transfer, recording, gains, stock
transfer, capital and other similar taxes and fees ("Transfer Taxes") incurred
in connection with the transactions contemplated by this Agreement. The Company
shall file, and Shareholder shall cause the Company to file, all necessary
documentation and tax returns with respect to such Transfer Taxes. In addition,
Shareholder acknowledges that it, and not DoveBid or the Company, will pay all
taxes due upon the receipt by Shareholder of each element of the Purchase Price
pursuant to this Agreement.
9.6 Notices. All notices and other communications required or permitted
-------
hereunder shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered by depositing the same in the mail or with an
internationally recognized overnight courier service, addressed to the party to
be notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person to such party or to an officer or
agent of such party (or in the case of Shareholder or X. Xxxxxxx by facsimile),
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
31
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxx, General Counsel
(ii) If mailed, delivered or faxed to the Company, Shareholder or
X. Xxxxxxx, to:
Robinc Holding B.V.
1411 DD Naarden, Gooimeer 6
The Netherlands
Attn: Xxxxxx Xxxxxxx
Fax No.: ______________________________
with a copy to:
Stibbe Simont Xxxxxxx Duhot
Stibbetoren
2001 Strawinskylaan
1077 ZZ Amsterdam
The Netherlands
Attn: Xxxxxx xx Xxxxx
Fax No.: x00 (00) 000 0000
or to such other address (or in the case of Shareholder or X. Xxxxxxx, the fax
number) as any party hereto shall specify in writing to the other parties hereto
pursuant to this Section 9.6 from time to time. Such notice shall be effective
only upon actual receipt.
9.7 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
following the Closing hereof will be submitted to binding arbitration in
accordance with Section 8.6(c) above. The enforcement of any arbitration award
under Section 8.6(c) hereof 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. EACH PARTY AGREES
THAT ANY JUDGMENT OF ANY SUCH COURT AND/OR ANY ARBITRATION AWARD UNDER ARTICLE
VIII WILL BE ENFORCEABLE BY THE COURTS OF THE NETHERLANDS. The non-prevailing
party in any such dispute shall pay all reasonable costs, fees and expenses
related to the dispute,
32
including reasonable fees and expenses of attorneys, accountants and other
professionals incurred by the prevailing party in such dispute.
9.8 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.
9.9 Time. Time is of the essence with respect to this Agreement.
----
9.10 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.
9.11 Remedies Cumulative. Except as otherwise provided herein, 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. The exercise of any one remedy
will not preclude the exercise of other. The parties agree that specific
performance is an appropriate remedy for a breach of their respective
obligations under this Agreement.
9.12 Construction. This Agreement has been negotiated among DoveBid, the
------------
Company, Shareholder 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.
9.13 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid, the Company and Shareholder and by X. Xxxxxxx as of the day and year
first above written.
DOVEBID, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
FAIRFIELD INDUSTRIES B.V.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
ROBINC HOLDING B.V.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
/s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx
34
