EXHIBIT 2.03
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of March 2, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), Haltek Electronics d/b/a Test Lab Company, a California corporation
(the "Company"), the Manford and Xxxxxx Trees Living Trust Dated March 3, 1980
(the "Trees Trust"), Xxxxxxx X. Trees, Xxxxxx Trees, the Xxxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxx Trust Dated November 7, 1995 (the "Xxxxxx Trust"), Xxxxxxx
Xxxxxx and Xxxxx Xxxxxx (each of the Trees Trust and the Xxxxxx Trust
hereinafter individually referred to as a "Shareholder" and collectively
referred to as the "Shareholders", and each of Xxxxxxx X. Trees, Xxxxxx Trees,
Xxxxxxx Xxxxxx and Xxxxx Xxxxxx hereinafter individually referred to as a
"Beneficiary" and collectively referred to as the "Beneficiaries").
The Trees Trust and the Xxxxxx Trust own beneficially and of record all of
the issued and outstanding capital stock of the Company.
DoveBid desires to purchase from the Shareholders, and each Shareholder
desires to sell to DoveBid, all shares of the capital stock of the Company owned
by the Shareholders (collectively, the "Shares") on the terms and conditions set
forth in this Agreement.
Now, therefore, the parties agree as follows:
ARTICLE I
STOCK SALE AND PURCHASE
1.1 Agreement to Sell and Purchase Stock. At the Closing, each
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Shareholder shall sell, transfer and deliver to DoveBid, and DoveBid shall
purchase and accept from each Shareholder, all of the Shares owned by such
Shareholder, free and clear of all security interests, liens, pledges, charges,
escrows, options, rights of first refusal, mortgages, indentures, security
agreements or other claims, encumbrances, agreements, arrangements or
commitments of any kind or character (collectively, "Liens") in exchange for the
following aggregate consideration (the "Purchase Price"):
(i) cash in the amount of $6,750,000, payable at the Closing, of which
$5,084,542 shall be payable to the Trees Trust and $1,665,458 shall be payable
to the Xxxxxx Trust, which payments shall be subject to reduction in accordance
with Section 1.2 (the "Closing Payment"); and
(ii) cash in the amount of $250,000, payable 120 days following the
Closing Date, of which $188,316 shall be payable to the Trees Trust and $61,684
shall be payable to the Xxxxxx Trust (the "Deferred Payment"), which payments
shall be subject to offset pursuant to Section 1.4 and Article VIII.
1.2 Purchase Price Adjustment. At the Closing, the Shareholders shall
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deliver a balance sheet of the Company as of the business day immediately
preceding the date of the Closing (the "Closing Balance Sheet"), prepared in
accordance with United States Other Comprehensive Basis of Accounting ("OCBOA"),
consistently applied with prior periods, together with a detailed list of all
accrued expenses and liabilities of the Company as of the Closing Date (the
"Closing Liabilities Schedule"). In the event that the sum of (a) the aggregate
book value of stockholders' equity of the Company, determined in accordance with
OCBOA, consistently applied with prior periods, set forth on the Closing Balance
Sheet (such amount, the "Closing Stockholders' Equity") plus (b) an amount equal
to one-half of the total amount of state and federal income taxes in respect of
the Stub Period (as defined in Section 2.7) payable as calculated on the Income
Tax Schedule to the Closing Balance Sheet (the "Shareholders' Tax Deposit"), is
less than $3,017,632, the Closing Payment shall be reduced by one dollar for
each dollar that the sum of Closing Stockholders' Equity plus the Shareholders'
Tax Deposit is less than $3,017,632. In the event that the aggregate book value
of the inventory of the Company, determined in accordance with OCBOA,
consistently applied with prior periods, set forth on the Closing Balance Sheet
(such amount, the "Closing Inventory") is less than $2,724,658, the Closing
Payment shall be reduced by one dollar for each dollar that Closing Inventory is
less than the $2,724,658. In the event of any reduction in the Purchase Price,
the respective portions of the Closing Payment payable to the Shareholders shall
be proportionately reduced between them, and such reduced aggregate
consideration shall constitute the "Purchase Price" for all purposes under this
Agreement.
1.3 Closing. The purchase and sale of the Shares, and the consummation of
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the other transactions contemplated hereby (the "Closing"), will take place at
the offices of DoveBid at 0000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxxxxxx
at 10:00 a.m. Pacific Time, on March 2, 2000 or, if all conditions to closing
have not been satisfied or waived by said date, at such other time and place as
DoveBid and Shareholders shall mutually agree upon. At the Closing, the
Shareholders will deliver to DoveBid certificates representing all of the
Shares, duly endorsed for transfer to DoveBid, against delivery to the
Shareholders by DoveBid of the Closing Payment. The date on which the Closing
occurs is referred to herein as the "Closing Date."
1.4 Taxes True-Up. If, upon preparation of the Company's federal and
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state income tax returns for the Stub Period, DoveBid determines that the
Shareholders' Tax Deposit exceeded an amount equal to one-half of the total
amount of federal and state income taxes in respect of the Stub Period, DoveBid
shall promptly refund such difference to the Shareholders. If, upon preparation
of the Company's federal and state income tax returns for the Stub Period,
DoveBid determines that the Shareholders' Tax Deposit was less than an amount
equal to one-half of the total amount of state and federal income taxes in
respect of the Stub Period, DoveBid shall send a letter to the Shareholders'
requesting such difference, and the Shareholders agree to promptly pay in cash
such difference to DoveBid, or, in the event that the Deferred Payment has not
yet been made, to the offset of such difference against the Deferred Payment.
DoveBid agrees to make available to the Shareholders the federal and state
income tax returns of the Company in respect of the Stub Period, and to discuss
in good faith the calculations thereon, provided, that each party hereto agrees
that the preparation of such returns and final determination of all amounts
thereon shall be the sole right and responsibility of DoveBid.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND THE COMPANY
Except as specifically set forth in the disclosure letter provided by the
Shareholders and the Company to DoveBid simultaneously with the signing of this
Agreement, dated as of the date of this Agreement (the "Company Disclosure
Letter"), the parts of which are numbered to correspond to the sections of this
Agreement, each of the Shareholders and the Company hereby jointly and severally
represent and warrant to DoveBid as follows:
2.1 Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California, 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.
2.2 Power, Authorization and Validity.
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2.2.1 The Company, each Shareholder and each Beneficiary has the
right, power, legal capacity and authority (corporate or trust) to enter into
and perform its obligations under this Agreement, and all agreements to which
the Company, such Shareholder or such Beneficiary is or will be a party that are
required to be executed pursuant to this Agreement (the "Ancillary Agreements").
The execution, delivery and performance of this Agreement and the Ancillary
Agreements have been duly and validly approved and authorized by the Company's
Board of Directors. No vote of the shareholders of the Company is required by
the Articles of Incorporation, bylaws, other governing documents of the Company
or applicable law with respect to the due authorization and approval of this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby.
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable the Company, the Shareholders or the
Beneficiaries to enter into, and to perform their respective obligations under,
this Agreement and the Ancillary Agreements, except for such qualifications and
filings as may be required to comply with federal and state securities laws as
may be required in connection with the transactions contemplated by this
Agreement. All such qualifications and filings will, in the case of
qualifications, be effective on the Closing, and will, in the case of filings,
be made within the time prescribed below.
2.2.3 This Agreement and the Ancillary Agreements are, or when
executed by the Company, the Shareholders and the Beneficiaries will be, valid
and binding obligations of the Company, the Shareholders and the Beneficiaries
enforceable against the Company, the Shareholders and the Beneficiaries in
accordance with their respective terms, except as to the effect, if any, of (a)
applicable bankruptcy and other similar laws affecting the rights of creditors
generally, (b) rules of law governing specific performance, injunctive relief
and other equitable remedies and (c) the enforceability of provisions requiring
indemnification in connection with the offering, issuance or sale of securities.
2.2.4 Trust Arrangements.
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(a) Trust Instruments. The Trees Trust is a revocable trust duly
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created and validly existing under the laws of the State of California. The copy
of the Manford and Xxxxxx Trees Declaration of Trust Dated March 3, 1980 (the
"Trees Trust Agreement") provided to DoveBid is a true and complete copy of the
currently effective operative trust agreement for the Trees Trust and remains in
full force and effect. No amendment, modification, restatement, termination or
revocation of the Trees Trust Agreement, in whole or in part, has been entered
into or has become effective since March 3, 1980. The name of the Trees Trust as
it appears on the signature page of this Agreement is the correct name of the
Trees Trust. The Xxxxxx Trust is a revocable trust duly created and validly
existing under the laws of the State of California. The copy of the Xxxxxxx X.
Xxxxxx and Xxxxx X. Xxxxxx Declaration of Trust Dated November 7, 1995 (the
"Xxxxxx Trust Agreement") provided to DoveBid is a true and complete copy of the
currently effective operative trust agreement for the Xxxxxx Trust and remains
in full force and effect. No amendment, modification, restatement, termination
or revocation of the Xxxxxx Trust Agreement, in whole or in part, has been
entered into or has become effective since November 7, 1995. The name of the
Xxxxxx Trust as it appears on the signature page of this Agreement is the
correct name of the Xxxxxx Trust.
(b) Trustees. The authorized and acting co-trustees of the Trees Trust
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as of the date hereof are, and on the Closing Date will be, Xxxxxxx X. Trees and
Xxxxxx Trees (together, the "Trees Co-Trustees"). Neither Trees Co- Trustee has
resigned or become incapacitated. Each such Trees Co-Trustee is competent to act
as co-trustee of the Trees Trust and each such Trees Co-Trustee is authorized to
sign and deliver to DoveBid this Agreement and all Ancillary Agreements. The
authorized and acting co-trustees of the Xxxxxx Trust as of the date hereof are,
and on the Closing Date will be, Xxxxxxx Xxxxxx and Xxxxx Xxxxxx (together, the
"Xxxxxx Co-Trustees"). Neither Xxxxxx Co-Trustee has resigned or become
incapacitated. Each such Xxxxxx Co-Trustee is competent to act as co-trustee of
the Xxxxxx Trust and each such Xxxxxx Co-Trustee is authorized to sign and
deliver to DoveBid this Agreement and all Ancillary Agreements.
(c) Trust Property. Each of the Trees Trust and the Xxxxxx Trust has
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the power and authority to own the Shares described in Section 2.3 as being
owned by the Trees Trust and the Xxxxxx Trust, respectively. The Shares have
been duly contributed to the Trees Trust and the Xxxxxx Trust, respectively, and
constitute an asset of the Trees Trust and the Xxxxxx Trust, respectively, as of
the date hereof and will constitute an asset of the Trees Trust and the Xxxxxx
Trust, respectively, on the Closing Date.
(d) No Default. The Trees Co-Trustees are not in violation or default
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of any of the provisions of the Trees Trust Agreement, except for such
violations or defaults which would not prevent or delay the consummation of the
transactions contemplated by this Agreement and the performance and
enforceability of the obligations of the Company and the Trees Trust hereunder.
The terms of the Trees Trust have not and will not change or be amended by
virtue of execution of this Agreement, and the consummation of the transactions
contemplated hereby will not cause any change in, modification to or
acceleration of any of the terms of the Trees Trust Agreement. The Xxxxxx Co-
Trustees are not in violation or default of any of the provisions of the Xxxxxx
Trust Agreement, except for such violations or defaults
which would not prevent or delay the consummation of the transactions
contemplated by this Agreement and the performance and enforceability of the
obligations of the Company and the Xxxxxx Trust hereunder. The terms of the
Xxxxxx Trust have not and will not change or be amended by virtue of execution
of this Agreement, and the consummation of the transactions contemplated hereby
will not cause any change in, modification to or acceleration of any of the
terms of the Xxxxxx Trust Agreement.
2.3 Capitalization. The authorized capital stock of the Company consists
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entirely of 1,000,000 shares of common stock, of which a total of 267,494 are
issued and outstanding, and of which 201,494 are owned beneficially and of
record by the Trees Trust and 66,000 are owned beneficially and of record by the
Xxxxxx Trust, and no other entity or individual owns either beneficially or of
record, any other equity interest of the Company. On the date of this Agreement
each Shareholder has, and on the Closing Date each Shareholder will have, good
and marketable title to that number of shares of capital stock of the Company
set forth in this Section 2.3, free and clear of any and all Liens, which shares
do and shall constitute collectively all of the outstanding shares of the
Company's capital stock. On the date of this Agreement, there are no, and on
the Closing Date, there will be no, options, warrants, calls, commitments,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase any of shares of the Company's capital stock or any securities
convertible into or exchangeable for shares of the Company's capital stock or
obligating the Company to grant, extend, or enter into any such option, warrant,
call, right, commitment, conversion privilege or other right or agreement.
There is no voting agreement, right of first refusal or other restriction (other
than normal restrictions on transfer under applicable federal and state
securities laws) applicable to any of the Company's outstanding securities.
Each share of each of the Company's capital stock has been duly authorized and
validly issued, is fully paid and nonassessable, is not subject to any right of
rescission, and has been offered, issued, sold and delivered by the Company in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state securities laws, other
laws, and requirements set forth in applicable agreements or instruments. The
Company is not under any obligation to register under the Securities Act, any of
its presently outstanding securities or any securities that may be subsequently
issued.
2.4 Subsidiaries. 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.
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 Incorporation, bylaws or other governance
document of the Company, (b) any instrument or contract to which the Company,
any Shareholder or any Beneficiary is a party or by which the Company, the
Shareholder or a Beneficiary is a party, or any of the Company's, the
Shareholders' or the Beneficiaries' 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 the Company, a Shareholder or a
Beneficiary or their respective 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 before any court or administrative agency, nor 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, any Shareholder or DoveBid based upon: (a) ownership or rights to
ownership of any shares or other ownership interest in the Company, (b) any
rights as a shareholder of the Company, including any option or preemptive
rights or rights to notice or to vote, or (c) any rights under any agreement
among the Company and its shareholders. There are no outstanding orders,
awards, judgments, injunctions, decrees or other requirements of any court,
arbitrator or governmental or regulatory body against the Company or its assets,
properties or securities.
2.7 Taxes. The Company has timely filed all federal, state, local and
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foreign tax returns required to be filed, has paid all taxes required to be paid
in respect of all periods for which returns have been filed, has established an
adequate accrual or reserve for the payment of all taxes, except taxes on income
payable in respect of the periods subsequent to the periods covered by the most
recent applicable tax returns through the Closing Date (the "Stub Period"), has
made all necessary estimated tax payments, and has no liability for taxes in
excess of the amount so paid or accruals or reserves so established, other than
taxes on income in respect of the Stub Period. All accruals or reserves for
taxes on the Closing Balance Sheet will be established in the ordinary course of
business and will be consistent with the Company's prior practices. The Company
is not delinquent in the payment of any tax or in the filing of any tax returns,
and no deficiencies for any tax have been threatened, claimed, proposed or
assessed. The Company has not received any notification from the Internal
Revenue Service or any other taxing authority regarding any material issues
that: (a) are currently pending before the Internal Revenue Service or any
other taxing authority (including but not limited to any sales or use tax
authority) regarding the Company or (b) have been raised by the Internal Revenue
Service or other taxing authority and not yet finally resolved. No tax return
of the Company has ever been audited by the Internal Revenue Service or any
state taxing agency or authority. There is not in effect any waiver by the
Company of any statute of limitations with respect to any taxes; and the Company
has not consented to extend to a date later than the date hereof the period in
which any tax may be assessed or collected by any taxing authority. The Company
is not a "personal holding company" within the meaning of the Internal Revenue
Code of 1986, as amended (the "Code"). The Company has not filed any election
under Section 341(f) of the Code. The Company has withheld with respect to each
of its employees and independent contractors all taxes, including but not
limited to federal and state income taxes, FICA, Medicare, FUTA and other taxes,
required to be withheld, and paid such withheld amounts to the appropriate tax
authority within the time prescribed by law. The Company has never made an
election under Section 1362 of the Code to be an S corporation within the
meaning of Sections 1361 and 1362 of the Code. For the purposes of this
Agreement, the terms "tax" and "taxes" include all federal, state, local and
foreign income, gains, franchise, excise, property, sales, use, employment,
license, payroll, occupation, recording, value added or transfer taxes,
governmental charges, fees, levies or assessments (whether payable directly or
by withholding), and, with respect to such taxes, any estimated tax, interest
and penalties or additions to tax and interest on such penalties and additions
to tax.
2.8 Financial Statements. The Company has delivered to DoveBid, attached
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hereto as Exhibit A, copies of: (a) the Company's unaudited balance sheet as of
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December 31, 1999 (the "Balance Sheet") and (b) the Company's unaudited income
statements for the twelve months ended December 31, 1999 (together, with the
Balance Sheet and the Closing Balance Sheet, the "Financial Statements"). The
Financial Statements (a) are in accordance with the books and records of the
Company, (b) fairly present the financial condition of the Company at the dates
therein indicated, in the case of the Balance Sheet and Closing Balance Sheet,
and the results of operations for the period therein specified, in the case of
the income statements included in the Financial Statements, and (c) have been
prepared in accordance with OCBOA, applied on a consistent basis with prior
periods. Other than in respect of income taxes, 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 and the Closing Liabilities Schedule. As of
the date of this Agreement and as of the Closing Date, the Company's aggregate
indebtedness to Xxxxxxx X. Trees, Xxxxxx Trees and the Trees Trust ("Trees
Indebtedness") does not and will not exceed $792,203.84, and the Company has
provided to DoveBid each agreement and instrument evidencing any Trees
Indebtedness.
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 Closing Balance
Sheet, free and clear of all Liens (other than for taxes not yet due and
payable). All machinery and equipment 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, or has received any
notice of violation with which it has not complied. Section 2.9 of the Company
Disclosure Letter sets forth a true and complete list of all property owned by
third parties and held by the Company for sale on consignment, none of which
appears on the Financial Statements as an asset of the Company.
2.10 Absence of Certain Changes. Since December 31, 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,
other than the payment of bonuses to officers;
(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 non-officer
employees or agents, or any bonus payment or arrangement made to or with any of
such non-officer employees or agents;
(i) any change with respect to the management, supervisory or other key
personnel thereof;
(j) any payment or discharge of a material lien or liability thereof
which lien was not either shown on the Balance Sheet or incurred in the ordinary
course of business thereafter;
(k) any obligation or liability incurred thereby to any of its
officers, employees, shareholders, directors or agents or any loans or advances
made thereby to any of its officers, employees, shareholders, directors or
agents except normal compensation and expense allowances payable to officers and
employees, and obligations to the Company's attorneys and accountants incurred
in connection with transactions contemplated hereby;
(l) any amendment or change in the Articles of Incorporation, bylaws or
other governing documents of the Company; or
(m) any change in the accounting policies or procedures of the Company.
2.11 Contracts and Commitments. Section 2.11 of the Company Disclosure
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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; or
(h) 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 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
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use, sell or license all Intellectual Property Rights (as defined below)
necessary or required for the conduct of business as presently conducted (such
Intellectual Property Rights being hereinafter collectively referred to as the
"Company IP Rights") and such rights to use, sell or license are sufficient for
the conduct of the Company's businesses as presently conducted. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not constitute a breach of any
instrument or agreement governing or affecting any Company IP Rights (the
"Company IP Rights Agreements"), do not and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Company
IP Right or impair the right of the Company to use, sell or license any Company
IP Right or portion thereof. There is no royalty, honoraria, fee or other
payment payable by the Company to any person by reason of the ownership, use,
license, sale or disposition of any Company IP Right (other than as set forth in
the Company IP Rights Agreements listed in Section 2.11 to the Company
Disclosure Schedule). 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. Section 2.12 to the Company
Disclosure Schedule contains a list of all applications, registrations, filings
and other formal actions made or taken pursuant to federal, state and foreign
laws by the Company to perfect or protect its interest in Company IP Rights,
including, without limitation, all patents, patent applications, trademarks,
trademark applications, service marks, Internet domain names, Internet or World
Wide Web URLs or addresses. 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 complied, or prior to the
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Closing Date will have complied, and is or will be at the Closing in full
compliance with, all applicable laws, ordinances, regulations, and rules, and
all orders, writs, injunctions, awards, judgments, and decrees applicable to it
or to the assets, properties, and business thereof, including, without
limitation: (a) all applicable federal and state securities laws and
regulations, (b) all applicable federal, state, and local laws, ordinances,
regulations, and all orders, writs, injunctions, awards, judgments, and decrees
pertaining to (i) the sale, licensing, leasing, ownership, or management of its
owned, leased or licensed real or personal property, products and technical
data, (ii) employment and employment practices, terms and conditions of
employment, and wages and hours and (iii) safety, health, fire prevention,
environmental protection, hazardous materials, toxic waste disposal, building
standards, zoning and other similar matters, (c) the Export Administration Act
and regulations promulgated thereunder and all other laws, regulations, rules,
orders, writs, injunctions, judgments and decrees applicable to the export or
re-export of controlled commodities or technical data, and (d) the Immigration
Reform and Control Act. The Company has received all permits and approvals
from, and has made all filings with, third parties, including government
agencies and authorities, that are necessary in connection with its present
business. There are no legal or administrative proceedings or investigations
involving the Company pending or threatened before any governmental entity.
2.14 Certain Transactions and Agreements. None of the officers,
-----------------------------------
directors, shareholders or employees of the Company, nor any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with the Company (except with respect to any interest
in less than one percent of the stock of any corporation whose stock is publicly
traded). None of said officers, directors, shareholders or employees, nor any
member of their immediate families, is directly or indirectly interested in any
contract or informal arrangement with the Company, except for (i) normal
compensation for services as an officer, director, shareholder or employee
thereof, and (ii) the Trees Indebtedness. None of said officers, directors,
shareholders or employees nor any member of their immediate families has any
interest in any property, real or personal, tangible or intangible, including
any Intellectual Property Rights, used in or pertaining to the business of the
Company, except for (i)
the normal rights of a shareholder of the Company, and (ii) the Trees Trust owns
the real property, which it leases to the Company, in which the Company conducts
its business.
2.15. Employees, ERISA and Other Compliance.
-------------------------------------
2.15.1 The Company does not have any employment contract or
consulting agreement currently in effect that is not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
2.15.2 The Company (i) has not ever been nor are now subject to a
union organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization, or (iv) has no current labor disputes. 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 their key employees intends to leave its employ.
2.15.3 Section 2.15.1 to the Company Disclosure Schedule identifies
(i) each "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) all other
written or formal plans or agreements involving direct or indirect compensation
or benefits (including any employment agreements entered into between the
Company and any employee of the Company, but excluding workers' compensation,
unemployment compensation and other government-mandated programs) currently or
previously maintained, contributed to or entered into by the Company under which
the Company or any ERISA Affiliate (as defined below) thereof has any present or
future obligation or liability (collectively, the "Company Employee Plans").
For purposes of this Section 2.15, "ERISA Affiliate" shall mean any entity which
is a member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as defined
in Section 414(c) of the Code, or (C) an "affiliated service group," as defined
in Section 414(m) of the Code, or treasury regulations promulgated under Section
414(o) of the Code, any of which includes the Company. Copies of all Company
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof (including summary plan
descriptions) have been delivered to DoveBid, together with the three most
recent annual reports (Form 5500, including, if applicable, Schedule B thereto)
prepared in connection with any such Company Employee Plan. All Company
Employee Plans which individually or collectively would constitute an "employee
pension benefit plan," as defined in Section 3(2) of ERISA (collectively, the
"Company Pension Plans"), are identified as such in Section 2.15.3 to the
Company Disclosure Schedule. All contributions due from the Company with
respect to any of the Company Employee Plans have been made as required under
ERISA or have been accrued on the Financial Statements. Each Company Employee
Plan has been maintained substantially in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including, without limitation, ERISA and the Code, which are applicable to such
Company Employee Plans.
2.15.4 No Company Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in Section
3(37) of ERISA. No Company Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any Company Employee Plan which is
covered by Title I of ERISA which would result in a liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Company Employee Plan has or will make
the Company or any officer or director of the Company subject to any liability
under Title I of ERISA or liable for any tax (as defined in Section 2.7 hereof)
or penalty pursuant to Sections 4972, 4975, 4976 or 4979 of the Code or Section
502 of ERISA.
2.15.5 Any Company Pension Plan which is intended to be qualified
under Section 401(a) of the Code (a "Company 401(a) Plan") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. The Company has delivered to DoveBid a complete and correct copy of the
most recent Internal Revenue Service determination letter with respect to each
Company 401(a) Plan.
2.15.6 Section 2.15.6 to the Company Disclosure Schedule lists each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' benefits, vacation benefits,
severance benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses
and all forms of incentive compensation or post-retirement insurance,
compensation or benefits for employees, consultants or directors which (A) is
not a Company Employee 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 2.15.6 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, rules and regulations which are
applicable to such Company Benefit Arrangement. The Company has delivered to
DoveBid a complete and correct copy or description of each Company Benefit
Arrangement.
2.15.7 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 or Company
Benefit Arrangement that would increase the expense of maintaining such Company
Employee Plan or Company Benefit Arrangement above the level of the expense
incurred in respect thereof since the date of the Balance Sheet.
2.15.8 The Company has provided, or will have provided prior to the
Closing, to individuals entitled thereto all required notices and coverage
pursuant to Section 4980B of the Code and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any
"qualifying event" (as defined in Section 4980B(f)(3) of the Code) occurring
prior to and including the Closing Date, and no tax payable on account of
Section 4980B of the Code has been incurred with respect to any current or
former employees (or their beneficiaries) of the Company.
2.15.9 No benefit payable or which may become payable by the Company
pursuant to any Company Employee Plan or any Company Benefit Arrangement or as a
result of or arising under this Agreement shall constitute an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code) which is subject to the
imposition of an excise tax under Section 4999 of the Code or which would not be
deductible by reason of Section 280G of the Code.
2.15.10 The Company is in compliance with all applicable laws,
agreements and contracts relating to employment, employment practices, wages,
hours, and terms and conditions of employment, including, but not limited to,
employee compensation matters, but not including ERISA.
2.15.11 No employee of the Company is in violation of any term of any
employment contract, patent disclosure agreement, noncompetition agreement, or
any other contract or agreement, or any restrictive covenant relating to the
right of any such employee to be employed thereby, or to use trade secrets or
proprietary information of others, and the employment of such employees does not
subject the Company to any liability.
2.15.12 A list of all employees, officers, directors and consultants
(other than the Company's attorneys and accountants) of the Company and their
current compensation is set forth on Section 2.15.12 to the Company Disclosure
Schedule.
2.15.13 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 Schedule or other exhibits called for by this Agreement
which has been requested by DoveBid and/or its legal counsel, including, without
limitation, the following: (a) copies of the Company's Articles of
Incorporation, bylaws and other governance documents as currently in effect; (b)
all records of all proceedings, consents, actions, and meetings of the
shareholders, the board of directors and any committees thereof; (c) its journal
reflecting all equity issuances and transfers; and (d) all permits, orders, and
consents issued by any regulatory agency with respect to the Company, or any
securities of the Company, and all applications for such permits, orders, and
consents.
2.17 No Brokers. None of the Company, the Shareholders nor the
----------
Beneficiaries are or will be obligated for the payment of fees or expenses of
any investment banker, broker or finder in connection with the origin,
negotiation or execution of this Agreement or in connection with any transaction
contemplated hereby.
2.18 Accounts Receivable. Subject to the reserves set forth on the
-------------------
Balance Sheets, if any, all accounts receivable of the Company set forth on the
Balance Sheets have arisen in the ordinary course of the Company's businesses,
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.
2.19 Books and Records.
-----------------
2.19.1 The books, records and accounts of the Company (a) are in
true, complete and correct, (b) have been maintained in accordance with good
business practices on a basis consistent with prior years, (c) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of the Company, and (d) accurately and fairly reflect
the basis for the Financial Statements on the basis of OCBOA.
2.19.2 The Company has devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or specific
authorization, and (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with OCBOA, and (ii) to
maintain accountability for assets.
2.20 Insurance. The Company maintains and at all times during the prior
----------
three years has maintained policies of insurance of the type and in amounts
appropriate for the Company, including all legally required workers'
compensation insurance, casualty, fire and general liability insurance. There
is no claim pending under any of such policies 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. Prior to the Closing,
the Shareholders 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 name DoveBid as an additional
insured, which shall expire no earlier than the third anniversary of the Closing
and which shall contain coverage that is reasonably acceptable to DoveBid. All
policies of insurance now held by the Company are set forth in Section 2.20 of
the Company Disclosure Letter, together with the name of the insurer under each
policy, the type of policy, the policy coverage amount and any applicable
deductible. Any and all life insurance on any of the Shareholders shall be
cancelled as of the Closing Date.
2.21 Disclosure. Neither the Company Disclosure Schedule, this Agreement,
----------
its exhibits and schedules, nor any of the certificates or documents to be
delivered by the Company to DoveBid pursuant to this Agreement, taken together,
contains or will contain any untrue statement of a fact or omits or will omit to
state any fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOVEBID
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.
3.2 Power, Authorization and Validity.
---------------------------------
3.2.1 DoveBid has the corporate right, power and authority to enter
into and perform its obligations under this Agreement, and all agreements to
which DoveBid is or will be a party that are required to be executed pursuant to
this Agreement (the "DoveBid Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Agreements have been
duly and validly approved and authorized by DoveBid's Board of Directors.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable DoveBid to enter into, and to perform its
obligations under, this Agreement and the DoveBid Ancillary Agreements, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such filings as may be required to comply with federal
and state securities laws.
3.2.3 This Agreement and the DoveBid Ancillary Agreements are, or
when executed by DoveBid will be, valid and binding obligations of DoveBid
enforceable against DoveBid in accordance with their respective terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities.
3.3 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any DoveBid Ancillary Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination,
breach, impairment or violation of (a) any provision of the Articles of
Incorporation or bylaws of DoveBid, as currently in effect, (b) any instrument
or contract to which DoveBid is a party or by which DoveBid's assets or
properties are bound or affected, or (c) any federal, state, local or foreign
judgment, writ, decree, order, statute, rule or regulation applicable to DoveBid
or its assets or properties.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Advice of Changes; Accounting Matters. 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. Promptly
following the execution of this Agreement and prior to the Closing, the Company
agrees to provide DoveBid and its auditors with detailed adjustments of the
Company's accounts to convert the financial entries therein from OCBOA basis to
United States generally accepted accounting principles ("GAAP") basis, together
with detailed written explanations of each such adjustment (such adjustments and
explanations, the "GAAP Adjustments").
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 exert its
best efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will continue to conduct its business and maintain its business
relationships in the ordinary and usual course and will not, without the prior
written consent of an authorized officer of DoveBid:
(a) borrow any money or otherwise incur any indebtedness, other than
trade debt incurred in the ordinary course of business;
(b) except as otherwise contemplated hereby, enter into any
transaction not in the ordinary course of business;
(c) purchase or sell assets greater than $25,000 in aggregate value;
(d) [Intentionally omitted]
(e) encumber or permit to be encumbered any of its assets except in
the ordinary course of its business consistent with past practice and to an
extent that is not material to its business;
(f) dispose of any of its assets except in the ordinary course of
business consistent with past practice;
(g) enter into any lease or contract for the purchase, sale or rental
of any property, real or personal, except in the ordinary course of business
consistent with past practice;
(h) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to the date of
this Agreement, subject only to ordinary wear and tear;
(i) fail to use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its relationships
and present agreements with suppliers, customers and others having business
relations with the Company, or fail to maintain its current debt and lease
instruments;
(j) pay any bonus, increased salary or special remuneration to any
non-officer employee or consultant or enter into any new employment or
consulting agreement with any such person, except as set forth in Section 4.3(j)
of the Company Disclosure Schedule (which disclosure may be updated by the
Company, but not within five business days prior to the Closing Date);
(k) change accounting methods, policies or procedures;
(l) introduce any material new method of management or operations;
(m) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any equity interest, or redeem or otherwise acquire
any of its equity interests; provided, however, that the Company shall be
permitted to make distributions to the Shareholders which do not (i) cause a
reduction in the Closing Payment pursuant to Section 1.2, and (ii) reduce the
Company's Working Capital (as defined in Section 6.11) immediately prior to the
Closing below $850,000;
(n) amend or terminate any contract, agreement or license to which it
is a party, except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(o) lend any amount to any person or entity, other than (i) advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount and documented by receipts
for the claimed amounts or (ii) any loans pursuant to the Company 401(k) Plan;
(p) guarantee or act as a surety for any obligation, except for the
endorsement of checks and other negotiable instruments in the ordinary course of
business, consistent with past practice, which are not material in amount;
(q) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(r) issue or sell any shares of its capital stock or any other of its
securities, or issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments to issue any securities,
or accelerate the vesting of any outstanding option or other security;
(s) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(t) merge, consolidate or reorganize with, or acquire any entity;
(u) amend its Articles of Incorporation, bylaws or any other
governance document;
(v) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
(w) agree to any audit assessment by any tax authority or file any
federal or state income or franchise tax return;
(x) change any insurance coverage or issue any certificates of
insurance; provided, that the Company may redeem the current cash value of life
insurance policies in respect of Xxxxxxx X. Trees, and pay the proceeds thereof
to the Shareholders or officers; or
(y) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(x), or take or fail to take any action which would cause a
representation or warranty of the Company to become untrue or inaccurate in any
material respect.
4.4 Payment of Accounts Receivable. Following the Closing, DoveBid agrees
------------------------------
to use its commercially reasonable efforts to collect outstanding accounts
receivable of the Company as of the Closing Date (such amounts, "Closing Company
Receivables"). On each successive two week anniversary of the Closing Date,
DoveBid agrees to pay to the Trees Trust in cash, all amounts received by
DoveBid or the Company during the prior two weeks in payment of Closing Company
Receivables until the aggregate amount of all such payments by DoveBid to the
Trees Trust equals the amount of Trees Indebtedness as of the Closing Date, plus
interest accrued under the notes evidencing the Trees Indebtedness. If, on the
one year anniversary of the Closing Date, the payments of Closing Company
Receivables have not satisfied the amount of Trees Indebtedness as of the
Closing Date, DoveBid shall promptly pay in full the remaining unpaid principal
and accrued interest of the Trees Indebtedness. Each of the Company, the Trees
Trust, Xxxxxxx X. Trees and Xxxxxx X. Trees hereby agree that (i) the provisions
of this Agreement regarding the satisfaction of the Trees Indebtedness supersede
and amend in all respects each and every instrument evidencing or regarding the
Trees Indebtedness, including, without limitation, the Secured Promissory Note
dated March 11, 1998 and the Promissory Note dated December 2, 1998, and that
the provisions thereof regarding the schedule of payments due thereunder and the
acceleration thereof are of no further force or effect, and (ii) the Security
Agreement executed by the Company and the Trees Trust on March 18, 1998 (the
"Trees Security Agreement") is hereby terminated.
4.5 Regulatory Approvals. DoveBid, the Company and each Shareholder will
--------------------
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or foreign
that may be reasonably required, or that DoveBid may reasonably request, in
connection with the consummation of the transactions contemplated by this
Agreement. The Company and each Shareholder will use their best efforts to
obtain all such authorizations, approvals and consents.
4.6 Necessary Consents. The Company and each Shareholder will use their
------------------
best efforts to obtain such written consents and take such other actions as may
be necessary or appropriate in DoveBid's judgment to allow the consummation of
the transactions contemplated hereby and to allow DoveBid to carry on the
Company'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, none of the Company,
the Shareholders nor the Beneficiaries will, nor will they authorize or permit
any officer, shareholder, director, employee, investment banker, attorney,
agent, representative or affiliate of the Company, or any other person or
entity, on its behalf to, directly or indirectly, solicit, initiate or encourage
any offer from any person or entity or consider any inquiries or proposals
received from any other person or entity, participate in any negotiations or
discussions regarding, furnish to any person or entity any information with
respect to, or enter into any agreement, commitment, letter of intent or
understanding concerning, the possible disposition of all or any substantial
portion of the Company's business, assets or equity interests by merger, sale or
any other means (other than the transactions contemplated hereby with DoveBid).
The Company will promptly and in any event within 24 hours notify DoveBid orally
and in writing of any such inquiry or proposal, including the name of the
persons making such proposal and all of the terms thereof. Any violation of the
restrictions set forth in this section by any officer, director or employee of
the Company or any investment banker, attorney or other advisor or
representative of the Company shall be deemed to be a breach of this Section 4.8
by the Company.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company will allow
DoveBid and its agents reasonable access the files, books, records and offices
of the Company, including, without limitation, any and all information relating
to the Company' taxes, commitments, contracts, leases, licenses, and real,
personal and intangible property and financial condition. The Company will
cause its accountants to cooperate with DoveBid and its agents in making
available all financial information reasonably requested, including without
limitation the right to examine all working papers pertaining to all financial
statements prepared or audited by such accountants.
4.10 Satisfaction of Conditions Precedent. From the date of this
------------------------------------
Agreement until the earlier of termination of this Agreement or the Closing, the
Company will use its best efforts to satisfy or cause to be satisfied all the
conditions precedent that are set forth in Article VI, and the Company will use
its best efforts to cause the transactions contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions contemplated hereby.
4.11 Further Assurances. The Company, the Shareholders, the Beneficiaries
------------------
and DoveBid shall each deliver or cause to be delivered to the other, at such
other times and places as shall be reasonably agreed, such additional
instruments, and take such additional actions as can be taken without
unreasonable expense, as any other may reasonably request for the purpose of
carrying out this Agreement and the transactions contemplated hereby. The
Shareholders, the Beneficiaries 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.
4.12 Employee Vacation Accrual. Following the Closing, DoveBid agrees
-------------------------
that continuous service as an employee of the Company will be "tacked" to such
employees' service as employees of DoveBid in determining the vacation benefits
applicable to such employees under DoveBid's employee vacation policies.
4.13 Filing of UCC Termination Statement. Each of the Company and the
------------------------------------
Trees Trust shall execute all required termination statements of the UCC-1 filed
pursuant to the Trees Security Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE SHAREHOLDERS, BENEFICIARIES AND THE COMPANY
The obligations of the Shareholders, Beneficiaries and the Company with
respect to actions to be taken at Closing are subject to the satisfaction or
waiver by DoveBid 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.
5.2 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other
related legal matters shall have been executed by DoveBid and shall be
acceptable to the Shareholders.
5.3 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated hereby.
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 Employment Agreements. DoveBid shall have executed and delivered to
---------------------
Xxxxxxx Xxxxxx an Employment Agreement in substantially the form of Exhibit B
---------
attached hereto (the "Employment Agreement").
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DOVEBID
The obligations of DoveBid with respect to actions to be taken at the
Closing are subject to the satisfaction or waiver by DoveBid at or prior to the
Closing of all of the following conditions.
6.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of the Shareholders and the Company set forth in this Agreement shall
be true and correct at the Closing with the same effect as though such
representations and warranties had been made as of that time. The covenants set
forth in this Agreement to be performed by the Shareholders and the Company on
or before the Closing shall have been duly performed. The Shareholders and the
Company shall have delivered to DoveBid a certificate to such effect dated the
Closing Date signed by the Shareholders and the President of the Company.
6.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated hereby.
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 the Shareholders and
the President of the Company.
6.4 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by the Shareholders, the Beneficiaries and the Company and shall be acceptable
to DoveBid.
6.5 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated herein 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 Schedule; and no
action or proceeding shall have been instituted or threatened to restrain or
prohibit the transactions contemplated herein.
6.6 Good Standing Certificate or Equivalent. DoveBid shall have received
---------------------------------------
evidence satisfactory to it that the Company is validly existing, in good
standing and authorized to do business in California. DoveBid shall have
received a certificate dated the Closing Date signed by the Shareholders and the
President of the Company that all state franchise and/or income tax returns and
taxes due by the Company for all fiscal year periods prior to the Closing have
been filed and paid. DoveBid's failure to require or receive such evidence in
no way vitiates or affects the Company's or the Shareholders' representations
and warranties regarding such matters and DoveBid's reliance on such
representations or warranties.
6.7 Employment Agreements. Xxxxxxx Xxxxxx shall have executed and
---------------------
delivered to DoveBid the Employment Agreement and the Confidentiality and
Employee Invention Assignment Agreement attached thereto.
6.8 Release of Claims. DoveBid shall have received copies of a Release of
-----------------
Claims executed by each Shareholder and each Beneficiary in substantially the
form of Exhibit C attached hereto.
---------
6.9 Lease Matters. DoveBid shall have executed a triple net lease of the
-------------
Company's facilities at 1066 and 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx having a term of two years at a fair market monthly rent not to
exceed $15,000 and $2812.50, respectively, and upon such other terms deemed
acceptable to DoveBid.
6.10 Insurance Matters. The Shareholders 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 name
DoveBid as an additional insured, which shall expire no earlier than the third
anniversary of the Closing and which shall contain coverage that is reasonably
acceptable to DoveBid.
6.11 Working Capital; GAAP Adjustments. The Company shall have at least
---------------------------------
$850,000 in Working Capital, not less than $365,000 of which shall be cash, and
DoveBid shall have received a certificate to such effect dated the Closing Date
signed by the Shareholders and the President of the Company. "Working Capital"
means an amount equal to (x) the sum of (A) cash plus (B) accounts receivable,
minus (y) accounts payable and current other payables. DoveBid shall have
received the GAAP Adjustments.
6.12 SEP XXX. The Company shall have paid and satisfied in full all of
-------
its obligations under the Company's SEP XXX, and the Company shall have
terminated the SEP XXX.
6.13 Due Diligence. The results of DoveBid's due diligence review of the
-------------
Company's businesses, finances, practices and procedures shall be satisfactory
to DoveBid in its sole discretion.
6.14 Closing of DoveBid's Series C Financing. DoveBid shall have closed
---------------------------------------
the sale of shares of its Series C Preferred Stock to investors on terms
satisfactory to DoveBid in its sole discretion.
6.15 UCC Termination Statements Each of the Company and the Trees Trust
--------------------------
shall have executed all required termination statements of the UCC-1 financing
statement filed pursuant to the Trees Security Agreement.
ARTICLE VII
TERMINATION
7.1 Right to Terminate. This Agreement may be terminated and the
------------------
transactions contemplated herein abandoned at any time prior to the Closing: (i)
by the mutual written consent of the parties hereto (which, for purposes of this
Article, DoveBid shall be considered one party and the Company, both
Shareholders and all Beneficiaries collectively shall be considered one party);
(ii) by either party, if such party is not in material breach of any
representation, warranty, covenant or agreement contained in this Agreement, and
such other party is in material breach of any representation, warranty, covenant
or agreement contained in this Agreement and such breaching party fails to cure
such material breach within fifteen days after written notice of such material
breach from the non-breaching party; (iii) by either party, if there is a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated herein, or if any statute, rule,
regulation or order is enacted, promulgated or issued or deemed applicable to
the transactions contemplated herein by any governmental body that would make
consummation of the transactions contemplated herein illegal; or (iv) by either
party if the transactions contemplated herein have not been consummated by March
3, 2000; provided, that if DoveBid believes, in good faith, that the filing of
its registration statement on Form S-1 will be delayed beyond DoveBid's current
expectations, DoveBid will so notify the Shareholders, and each of DoveBid, the
Shareholders and Beneficiaries shall proceed in good faith to agree upon an
appropriate later date.
7.2 Termination Procedures. If either party wishes to terminate this
----------------------
Agreement pursuant to Section 7.1, such party shall deliver to the other party a
written notice stating that such party is terminating this Agreement and setting
forth a brief description of the basis of such termination. Termination of this
Agreement will be effective upon the receipt of such notice if such notice
complies with the provisions of Section 7.1.
7.3 Continuing Obligations. Following any termination of this Agreement
----------------------
pursuant to this Article VII, the parties to this Agreement will continue to be
liable for breaches of this Agreement prior to such termination and will
continue to perform their respective obligations under Article IX. After
termination of this Agreement in accordance with this Article VII,
except for the continuing obligations set forth in the preceding sentence, the
parties to this Agreement will be without any further obligation or liability
upon any party in favor of the other party.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. The representations, warranties,
---------------------------
covenants and agreements of DoveBid contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, until the earlier of the
termination of this Agreement or the Closing Date, whereupon such
representations, warranties, covenants and agreements will expire (except for
covenants that by their terms survive for a longer period). All
representations, warranties, covenants and agreements of the Company and the
Shareholders contained in this Agreement will remain operative and in full force
and effect from the date of this Agreement until the earlier of the termination
of this Agreement or the three year anniversary of the Closing (except for
covenants that by their terms survive for a longer or shorter period, and for
the representations and warranties set forth in Sections 2.3 and 2.7, which
shall survive for the statute of limitations period applicable to a claim which
would constitute a breach thereof).
8.2 Agreement to Indemnify. Subject to the limitations set forth in this
----------------------
Article VIII, each of the Shareholders and Beneficiaries, jointly and severally,
hereby indemnify and hold harmless DoveBid and its officers, directors, agents
and employees, and each person, if any, who controls or may control DoveBid
within the meaning of the Securities Act (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, any Shareholder or any Beneficiary in
this Agreement or any certificate, document or instrument delivered by or on
behalf of the Company, a Shareholder or a Beneficiary pursuant to this
Agreement;
(b) resulting from any failure of any Shareholder to have good, valid
and marketable title to the issued and outstanding shares held by such
Shareholder, free and clear of Liens, or any claim by a current or former
shareholder, or any other person, firm, corporation or entity, seeking to assert
or based upon ownership or rights to ownership of equity interest of the Company
(or the Purchase Price), any rights of a shareholder of the Company, including
any options, or preemptive rights or rights to notice or to vote, any rights
under the Company's Articles of Incorporation, bylaws or other charter
documents, any right under any agreement among the Company and the Shareholders
or any claim that his or her equity interests or other securities were
wrongfully repurchased by the Company;
(c) in connection with a liability of the Company arising out of any
acts, events, omissions or transactions occurring prior to the Closing Date,
which liabilities were not disclosed to DoveBid in this Agreement or the Company
Disclosure Letter and were either known or should have been known by the
Shareholders or Beneficiaries at the time of the Closing, or any breach of any
agreement entered into by the Company or the Shareholders prior to the Closing;
or
(d) resulting from any claim by any investment banker, broker, finder
or other agent claiming to represent or be the beneficiary of an agreement,
understanding or arrangement with the Company, Shareholders or Beneficiaries in
connection with the origin, negotiation or execution of this Agreement or in
connection with any transaction contemplated hereby.
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,
and before the DoveBid Indemnitee pays or settles any such claim, the DoveBid
Indemnitee shall give Xxxxxxx X. Trees and Xxxxxxx Xxxxxx, as representatives of
the Shareholders and Beneficiaries (the "Representatives"), 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), the basis for the DoveBid Indemnitee's request
for indemnification under this Agreement, and whether DoveBid elects to defend
such claim or tender such claim to the Representatives; provided, however, that
the failure of the DoveBid Indemnitee to give timely notice hereunder shall
relieve the Shareholders and Beneficiaries of their indemnification obligations
under this Agreement to the extent, but only to the extent that, such failure
materially prejudices the defense of such claim.
8.3.2 In the event that DoveBid elects to defend such claim, DoveBid
shall defend, and the Representatives may, if they so elect by written notice
delivered to DoveBid within five business days of receiving notice of the Third
Person Claim, join in the defense of, any Third Person Claim, and if the
Representatives elect to join in such defense, and such defense is ultimately
unsuccessful, the Damages incurred by DoveBid in connection with such Third
Person Claim shall be treated as an Uncontested Claim hereunder. 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 (as defined in Section 8.5) made
by any DoveBid Indemnitee hereunder. The Representatives shall have the right
to receive copies of all pleadings, notices and communications with respect to
the Third Person Claim to the extent that receipt of such documents by the
Representatives do not affect any privilege relating to the DoveBid Indemnitee,
and may participate in settlement negotiations with respect to the Third Person
Claim. No DoveBid Indemnitee shall enter into any settlement of a Third Person
Claim without the prior written consent of the Representatives (which consent
shall not be unreasonably withheld); provided, that if the Representatives shall
have consented in
writing to any such settlement, then the Representatives shall have no power or
authority to object to any Claim by any DoveBid Indemnitee for indemnity under
Article VIII for the amount of such settlement; such Claim shall be treated as
an Uncontested Claim hereunder, and the Shareholders and Beneficiaries 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 Person Claim
to the fullest extent provided in Article VIII.
8.3.3 In the event that DoveBid elects to tender a Third Person Claim
to the Representatives, the Representatives shall defend such claim, and shall
have no power or authority to object to any Claim by any DoveBid Indemnitee for
indemnity under Article VIII for the amount of any Damages arising out of or in
connection with such Third Person Claim; such Claim shall be treated as an
Uncontested Claim hereunder, and the Shareholders and Beneficiaries will remain
responsible to indemnify the DoveBid Indemnitee for all Damages arising out of,
resulting from or caused by the Third Person Claim to the fullest extent
provided in Article VIII. The Representatives may not enter into any settlement
of a Third Person Claim tendered to the Representatives without the prior
written consent of DoveBid; provided, that the Representatives may settle such
claim without DoveBid's prior written consent if such settlement involves only
the payment of money damages by the Shareholders and Beneficiaries, and such
settlement provides for a complete release of all DoveBid Indemnitees from all
liabilities in connection with such Third Person Claim. DoveBid shall have the
right to receive copies of all pleadings, notices and communications with
respect to the tendered Third Person Claim, and the costs and expenses incurred
by DoveBid in connection with monitoring the Representatives' defense of such
claim shall be included in the Damages for which DoveBid shall receive
uncontested indemnity pursuant to this Section 8.3.3.
8.4 The Representatives. Each of the Shareholders and Beneficiaries
-------------------
approves the designation of and designates the Representatives as the
representatives of the Shareholders and Beneficiaries and as the attorneys-in-
fact and agents for and on behalf of each Shareholder and Beneficiary with
respect to claims for indemnification under this Article VIII and the taking by
the Representatives of any and all actions and the making of any decisions
required or permitted to be taken by the Representatives under this Agreement,
including, without limitation, the exercise of the power to: (a) agree to,
negotiate, enter into settlements and compromises of, demand arbitration of, and
comply with orders of courts and awards of arbitrators with respect to, such
claims; (b) arbitrate, resolve, settle or compromise any claim for indemnity
made pursuant to Article VIII; and (c) take all actions necessary in the
judgment of the Representatives for the accomplishment of the foregoing. The
Representatives will have authority and power to act on behalf of each
Shareholder and Beneficiary with respect to the disposition, settlement or other
handling of all claims under Article VIII and all rights or obligations arising
under Article VIII. The Shareholders and Beneficiaries will be bound by all
actions taken and documents executed by the Representatives in connection with
Article VIII, and DoveBid will be entitled to rely on any action or decision of
the Representatives. In performing the functions specified in this Agreement,
the Representatives, in their capacity as such, will not be liable to any
Shareholder and Beneficiary in the absence of gross negligence or willful
misconduct on the part of the Representatives. The Shareholders and
Beneficiaries shall severally indemnify the Representatives and hold each of
them harmless against any loss, liability or expense incurred without gross
negligence or willful misconduct on the part of the Representatives and arising
out
of or in connection with the acceptance or administration of their duties
hereunder. Any out-of-pocket costs and expenses reasonably incurred by the
Representatives in connection with actions taken by the Representatives pursuant
to the terms of Article VIII (including without limitation the hiring of legal
counsel and the incurring of legal fees and costs) will be paid by the
Shareholders to the Representatives pro rata in proportion to their respective
percentage equity interests in the Company.
8.5 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 the Representatives promptly after DoveBid becomes aware of the
existence of any potential claim by a DoveBid Indemnitee for indemnity for
Damages under Article VIII, including in connection with any Third Person Claim.
In the event that DoveBid has delivered to the Representatives one or more
Notices of Claim on or prior to the date on which the Deferred Payment is due to
be paid, any amounts claimed as Damages in such Notice(s) of Claim shall be
withheld from the Deferred Payment until final resolution of the Claims
specified therein in accordance with this Article VIII.
8.6 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.
8.7 Resolution of Notice of Claim. Any Notice of Claim received by the
-----------------------------
Representative will be resolved as follows:
(a) Uncontested Claims. In the event that, within fifteen calendar
------------------
days after a Notice of Claim is received by the Representative, the
Representatives do not contest such Notice of Claim in writing to DoveBid (an
"Uncontested Claim"), the Representatives will be conclusively deemed to have
consented, on behalf of all Shareholders and Beneficiaries, 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
amounts against the Deferred Payment, and, without further notice, to have
stipulated to the entry of a final judgment
for damages against the Shareholders and Beneficiaries for such amount in any
court having jurisdiction over the matter where venue is proper. However,
Damages shall not be limited to the amounts of the Deferred Payment.
(b) Contested Claims. In the event that the Representatives give
----------------
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 agreement executed by
DoveBid and the Representatives or (B) in the absence of such a written
settlement agreement, by binding arbitration between DoveBid and the
Representatives in accordance with the terms and provisions of Section 8.7(c).
(c) Arbitration of Contested Claims. Each of DoveBid, the
-------------------------------
Shareholders and the Beneficiaries agree that any Contested Claim will be
submitted to mandatory, final and binding arbitration before J.A.M.S./ENDISPUTE
or its successor ("J.A.M.S."), pursuant to the United States Arbitration Act, 9
U.S.C., Section 1 et seq. and that any such arbitration will be conducted in San
Mateo County, California. Either DoveBid or the Representatives may commence
the arbitration process called for by this Agreement by filing a written demand
for arbitration with J.A.M.S. and giving a copy of such demand to each of the
other parties to this Agreement. The arbitration will be conducted in
accordance with the provisions of J.A.M.S' Streamlined Arbitration Rules and
Procedures in effect at the time of filing of the demand for arbitration,
subject to the provisions of Section 8.7(c) of this Agreement. The parties will
cooperate with J.A.M.S. and with each other in promptly selecting an arbitrator
from J.A.M.S.' panel of neutrals, and in scheduling the arbitration proceedings
in order to fulfill the provisions, purposes and intent of this Agreement. The
parties covenant that they will participate in the arbitration in good faith,
and that they will share in its costs in accordance with subparagraph (i) below.
A Contested Claim finally resolved in favor of DoveBid may be satisfied as if
such Claim were an Uncontested Claim pursuant to Section 8.7(a). The provisions
of this Section 8.7(c) may be enforced by any court of competent jurisdiction,
and the party seeking enforcement will be entitled to an award of all costs,
fees and expenses, including attorneys' fees, to be paid by the party against
whom enforcement is ordered. Judgment upon the award rendered by the arbitrator
may be entered in any court having competent jurisdiction.
(i) Payment of Costs. DoveBid on the one hand, and the Shareholders
----------------
and Beneficiaries (through the Representative), on the other hand, will bear the
expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator shall determine the party
who is the Prevailing Party and the party who is the Non-Prevailing Party. The
Non-Prevailing Party shall pay all reasonable costs, fees and expenses related
to the arbitration, including reasonable fees and expenses of attorneys,
accountants and other professionals incurred by the prevailing party, but not
including the fees of each arbitrator and the administrative fee of the
arbitration proceedings, which shall be shared equally by DoveBid, on the one
hand, and the Shareholders and Beneficiaries, on the other hand. If such an
award would result in manifest injustice, however, the arbitrator may apportion
such costs, fees and expenses between the parties in such a manner as the
arbitrator deems just and equitable.
(ii) Burden of Proof. Except as may be otherwise expressly provided
---------------
herein, for any Contested Claim submitted to arbitration, the burden of proof
will be as it would be if the claim were litigated in a judicial proceeding
governed by California law exclusively.
(iii) Award. Upon the conclusion of any arbitration proceedings
-----
hereunder, the arbitrator will render findings of fact and conclusions of law
and a final written arbitration award setting forth the basis and reasons for
any decision reached (the "Final Award") and will deliver such documents to the
Representatives and DoveBid, together with a signed copy of the Final Award.
The Final Award will constitute a conclusive determination of all issues in
question, binding upon the Shareholders, the Beneficiaries, the Representatives
and DoveBid, and will include an affirmative statement to such effect.
(iv) Timing. The Representatives, DoveBid and the arbitrator will
------
conclude each arbitration pursuant to this Section 8.7 as promptly as possible
for the Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator chosen in accordance with
--------------------
these provisions will not have the power to alter, amend or otherwise affect the
terms of these arbitration provisions or the provisions of this Agreement.
ARTICLE IX
GENERAL
9.1 Confidentiality. The Company, the Shareholders, the Beneficiaries and
---------------
DoveBid each recognize that they have received and will receive confidential
information concerning the other during the course of the negotiations and
preparations of this Agreement and the transactions contemplated herein.
Accordingly, the Company, the Shareholders, the Beneficiaries and DoveBid each
agree (a) to use their respective best efforts to prevent the unauthorized
disclosure of any confidential information concerning the other that was or is
disclosed during the course of such negotiations and preparations, and is
clearly designated in writing as confidential at the time of disclosure, and (b)
to not make use of or permit to be used any such confidential information other
than for the purpose of effectuating the Closing and related transactions. The
obligations of this Section 9.1 will not apply to information that is required,
in the opinion of counsel to a party hereto, to be disclosed by statute, or
governmental rule or regulation, or, following the Closing, to the disclosure of
information regarding the Company by DoveBid. If this Agreement is terminated,
all copies of documents containing confidential information shall be returned by
the receiving party to the disclosing party. Because of the difficulty of
measuring economic losses as a result of the breach of the foregoing covenants
in Section 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. DoveBid acknowledges that the disclosure of the pendency of
the transactions contemplated hereby to the employees of the Company, and the
legal, accounting and other professional advisors of the Company and the
Shareholders, provided that such disclosure was accompanied by appropriate
cautions regarding
the confidentiality of such information, did not violate the provisions of this
Section 9.1. Any public announcement of this transaction shall be prepared by
DoveBid, and approved by the Shareholders prior to its release, which approval
shall not be unreasonably withheld or delayed.
9.2 Successors and Assigns. Neither the Company, any Shareholder nor any
----------------------
Beneficiary may assign any of its rights or obligations hereunder without the
prior written consent of DoveBid except by will or by the laws of descent and
distribution. DoveBid may not assign any of its rights or obligations hereunder
without the prior written consent of Shareholders holding not less than a
majority of the voting power in the Company, except that DoveBid may assign its
rights and obligations hereunder without the prior written consent of any
Shareholder in connection with a merger, consolidation or sale of all or
substantially all of DoveBid's assets or in connection with a reincorporation,
reorganization or other corporate recapitalization, provided that the acquiring
or surviving corporation or entity agrees to assume all of DoveBid's obligations
under this Agreement. Any purported assignment in violation of this section
shall be void. 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 the Shareholders, the
Beneficiaries, the Company and DoveBid and supersede any prior agreement,
understanding or discussions relating to DoveBid or the transactions
contemplated by this Agreement. Except as otherwise stated herein, this
Agreement and the exhibits hereto may be modified or amended only by a written
instrument executed by the Shareholders, the Beneficiaries, the Company and
DoveBid, acting through their respective officers, and duly authorized by each
of their Board of Directors (in the case of the Company and DoveBid).
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. The Shareholders or the Company will pay the Shareholders, the
Beneficiaries 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; provided, that all such amounts shall have been paid and
satisfied in full prior to the date of the Closing Balance Sheet. Any expenses
of the Shareholders, the Beneficiaries or the Company not paid by the
Shareholders prior to the Closing shall be treated as Damages under Article
VIII. The Shareholders acknowledge that they, and not DoveBid or the Company,
will pay all income taxes due upon the receipt by the Shareholders 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 United States mail or a
nationally recognized overnight courier service, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person to such party or to an officer or
agent of such party, as follows:
(i) If mailed or delivered to DoveBid, to each of the following,
using two separate mailings or deliveries:
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Chief Financial Officer
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxx, General Counsel
(ii) If mailed or delivered to the Company, the Representatives,
the Shareholders or the Beneficiaries, to each of:
Xxxxx Xxxxx
Xxxxx, Saca & Xxxxx Law Corporation
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
or to such other address as any party hereto shall specify in writing to the
other parties hereto pursuant to this Section 9.7 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. Except as set
forth in Article VIII regarding the arbitration of Contested Claims, all
disputes arising out of this Agreement or the obligations of the parties
hereunder, including disputes that may arise following termination of this
Agreement, shall be
subject to the exclusive jurisdiction and venue of the California state courts
of San Mateo County, California (or, if there is federal jurisdiction, then the
exclusive jurisdiction and venue of the United States District Court having
jurisdiction over San Mateo County). EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO THE PERSONAL AND EXCLUSIVE JURISDICTION AND VENUE OF
SAID COURTS 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.
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. 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.
9.12 Construction. This Agreement has been negotiated among DoveBid, the
------------
Company, the Shareholders, the Beneficiaries 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.
[The Remainder Of This Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid and the Company and by each Shareholder and each Beneficiary as of the
day and year first above written.
DOVEBID, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxxxx
Vice President and General Counsel
HALTEK ELECTRONICS d/b/a TEST LAB COMPANY
By: /s/ Xxxxxxx X. Trees
-------------------------------------
Name:
Title:
THE MANFORD AND XXXXXX TREES LIVING TRUST
DATED MARCH 3, 1980
By: /s/ Xxxxxxx X. Trees
--------------------------------------
Xxxxxxx X. Trees, Trustee
By: /s/ Xxxxxx Trees
--------------------------------------
Xxxxxx Trees, Trustee
By: /s/ Xxxxxxx X. Trees
-------------------------------------
Xxxxxxx X. Trees
By: /s/ Xxxxxx Trees
-------------------------------------
Xxxxxx Trees
[First signature page to Stock Purchase Agreement]
THE XXXXXXX X. XXXXXX AND XXXXX X. XXXXXX
TRUST DATED NOVEMBER 7, 1995
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx, Trustee
By: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx, Trustee
/s/ Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
[Second signature page to Stock Purchase Agreement]
