EXHIBIT 2.08
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of May 18, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), Xxxxxx Xxxx Corporation, a Michigan corporation, (the "Company"),
and Xxxxxx Xxxx ("X.Xxxx") and Xxxxx Xxxx ("X.Xxxx") (each of X.Xxxx and X.Xxxx
hereinafter individually referred to as a "Shareholder" and collectively
referred to herein as the "Shareholders") and for purposes of Section 9.2 only,
the Xxxxxx Xxxx Qualified Terminable Interest Martial Trust, a trust formed
under the laws of Michigan (the "Levy Trust"). Capitalized terms used herein
but not defined in this Agreement shall have the meanings given such terms in
the NLA Purchase Agreement (as defined below).
The Shareholders 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.
The Stock Purchase Agreement dated as of March 24, 2000 (the "NLA Purchase
Agreement") by and among DoveBid, Xxxxxx Xxxx Associates, Inc., a Michigan
corporation ("NLA"), the Shareholders and the Xxxxxx Xxxx Qualified Terminable
Interest Marital Trust, a trust formed under the laws of Michigan (the "Levy
Trust") contemplates the sale of the Shares to DoveBid pursuant to this
Agreement, and the consolidation of the balance sheet of Xxxxxx Xxxx and the
balance sheet of NLA for the purpose of determining certain balance sheet
thresholds and making the Purchase Price Adjustments under Section 1.2 of the
NLA Purchase 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:
(a) cash in the amount of $430,874.00 (the "Purchase Price") to be
paid at the Closing, of which (i) $215,437.00 shall be paid to X.Xxxx, and (ii)
$215,437.00 shall be paid to X.Xxxx; and
(b) cash in the amount of $185,000.00 (the "Tax Payment") to be paid
on April 1, 2001, of which (i) $92,500.00 shall be paid to X.Xxxx, and (ii)
$92,500.00 shall be paid to X.Xxxx.
1.2 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 May 18, 2000 or, if all conditions to closing
have not been satisfied or waived by said date, at such other time and place as
DoveBid and Shareholders shall mutually agree upon. At the Closing, the
Shareholders will deliver to DoveBid certificates representing all of the
Shares, duly endorsed for transfer to DoveBid, against delivery to the
Shareholders by DoveBid of the Purchase Price. The date on which the Closing
occurs is referred to herein as the "Closing Date."
1.3 Closing Cash. All cash held by Xxxxxx Xxxx immediately prior to the
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Closing ("Closing Cash") shall, during the time from the Closing until the date
of the Purchase Price Adjustment (as defined in Section 1.2(c) of the NLA
Purchase Agreement), be held in an interest bearing account with a national bank
or lending institution reasonably approved by DoveBid and the Shareholders, and
any interest earned on such Closing Cash shall be added to and considered a part
of Cash (as defined under the NLA Purchase Agreement).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND THE COMPANIES
Except as specifically set forth in the disclosure letter provided by the
Shareholders and the Company to DoveBid simultaneously with the signing of this
Agreement, dated as of the date of this Agreement (the "Company Disclosure
Letter"), the parts of which are numbered to correspond to the sections of this
Agreement, each of the Shareholders hereby jointly and severally represent and
warrant to DoveBid as follows:
2.1 Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Michigan. The Company and each of its subsidiaries has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted, and is qualified to conduct
business in each jurisdiction in which the character of the properties owned,
leased or licensed by it or the nature of such activities makes such
qualification necessary. Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation, Bylaws or other charter documents.
2.2 Power, Authorization and Validity.
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2.2.1 The Company and each Shareholder has the right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement, and all agreements to which the Company and each Shareholder is or
will be a party that are required to be executed pursuant to this Agreement (the
"Ancillary Agreements"). The execution, delivery and performance of this
Agreement and the Ancillary Agreements have been duly and validly approved and
authorized by the Company's Board of Directors. No vote of the shareholders of
the Company is required by the Articles of Incorporation, bylaws, other
governing documents of the Company or applicable law with respect to the due
authorization and approval of this Agreement, the Ancillary Agreements or the
transactions contemplated hereby or thereby. Each Shareholder is an "accredited
investor" as such term is defined in Rule 501 promulgated under the Securities
Act of 1933, as amended (the "Securities Act").
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable the Company or the Shareholders to enter into,
and to perform their respective obligations under, this Agreement and the
Ancillary Agreements, except for such qualifications and filings as may be
required to comply with federal and state securities laws as may be required in
connection with the transactions contemplated by this Agreement. All such
qualifications and filings will, in the case of qualifications, be effective on
the Closing, and will, in the case of filings, be made within the time
prescribed by applicable law.
2.2.3 This Agreement and the Ancillary Agreements are, or when
executed by the Company and the Shareholders will be, valid and binding
obligations of the Company and the Shareholders enforceable against the Company
and the Shareholders in accordance with their respective terms, except as to the
effect, if any, of (a) applicable bankruptcy and other similar laws affecting
the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities.
2.3 Capitalization. The authorized capital stock of the Company consists
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entirely of 50,000 shares of Common Stock, $1.00 par value per share, of which a
total of 2,000 shares are issued and outstanding, and of which: (i) 1,000 shares
are owned beneficially and of record by X.Xxxx, and (ii) 1,000 shares are owned
beneficially and of record by X.Xxxx, and no other entity or individual owns
either beneficially or of record, any other equity interest of the Company or
has any right to purchase or otherwise receive any equity interest in the
Company. On the date of this Agreement each Shareholder has, and on the Closing
Date each Shareholder will have, good and marketable title to that number of
shares of capital stock of the Company set forth in this Section 2.3, free and
clear of any and all Liens, which shares do and shall constitute collectively
all of the outstanding shares of the Company's capital stock. On the date of
this Agreement, there are no, and on the Closing Date, there will be no,
options, warrants, calls, commitments, conversion privileges or preemptive or
other rights or agreements outstanding to purchase or otherwise acquire any of
shares of the Company's capital stock or any securities convertible into or
exchangeable for shares of the Company's capital stock or obligating the Company
to grant, extend, or enter into any such option, warrant, call, right,
commitment, conversion privilege or other right or agreement. Each share of the
Company's capital stock has been duly authorized and validly issued, is fully
paid and nonassessable, is not subject to any right of rescission, and has been
offered, issued, sold and delivered by the Company in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of applicable federal and state securities laws, other laws and requirements set
forth in applicable agreements or instruments. There is no voting agreement,
right of first refusal or other restriction (other than normal restrictions on
transfer under applicable federal and state securities laws) applicable to any
of the Company's outstanding securities. The Company is not under any
obligation to register under the Securities Act, any of its presently
outstanding securities or any securities that may be subsequently issued.
2.4 Subsidiaries. Except as disclosed on the Company Disclosure Letter,
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the Company does not have any subsidiaries or any equity or other ownership
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity. The Company owns all the issued and outstanding capital
stock of its subsidiaries, free and clear of all Liens. The Company is not
obligated to make and is not bound by any agreement or obligation to make any
investment in or capital contribution in or on behalf of any other entity.
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 either of the Company or any of its subsidiaries, (b) any instrument
or contract to which the Company, any of its subsidiaries or any Shareholder is
a party or by which any of their respective assets or properties are bound or
affected, or (c) any federal, state, local or foreign judgment, writ, decree,
order, statute, rule or regulation applicable to either the Company, any of its
subsidiaries or either Shareholder or their respective assets or properties,
except any termination, breach, default, impairment or violation which would not
individually or in the aggregate result in a Material Adverse Effect (as defined
in Section 10.7(c) below) on the Company. The consummation of the transactions
contemplated by this Agreement does not and will not require the consent,
waiver, release or approval of or notice to any third party.
2.6 Litigation. There is no action, proceeding, claim or investigation
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pending against the Company or any of its subsidiaries before any court or
administrative agency, nor to the Knowledge (as defined in Section 10.7(b)) of
the Company or any Shareholder has any such action, proceeding, claim or
investigation been threatened. There is no reasonable basis for any shareholder
or former shareholder of the Company, or to the Knowledge of the Company or any
Shareholder, any other person, firm, corporation, or entity, to assert a claim
against the Company, any of its subsidiaries, any Shareholder or DoveBid based
upon: (a) ownership or rights to ownership of any shares or other ownership
interest in the Company, (b) any rights as a shareholder of the Company,
including any option or preemptive rights or rights to notice or to vote, or (c)
any rights under any agreement among the Company and its shareholders. There
are no outstanding orders, awards, judgments, injunctions, decrees or other
requirements of any court, arbitrator or governmental or regulatory body against
the Company or any of its subsidiaries, or their assets, properties or
securities.
2.7 Taxes. The Company has timely filed all federal, state, local and
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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, have established an
adequate accrual or reserve for the payment of all taxes payable in respect of
the periods subsequent to the periods covered by the most recent applicable tax
returns, 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.
All accruals or reserves for taxes on the Closing Balance Sheet (as defined in
the NLA Purchase Agreement) for Xxxxxx Xxxx 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. For any period during the last five years, the
Company has not received any written notification from the Internal Revenue
Service or any other taxing authority regarding any material issues or audit
that: (a) are currently pending before the Internal Revenue Service or any other
taxing authority (including but not limited to any sales or use tax authority)
regarding the Company or (b) have been raised by the Internal Revenue Service or
other taxing authority and not yet finally resolved. No tax return of the
Company has ever been audited by the Internal Revenue Service or any state or
other taxing agency or authority. There is not in effect any waiver by the
Company of any statute of limitations with respect to any taxes; and the Company
has not consented to extend to a date later than the date hereof the period in
which any tax may be assessed or collected by any taxing authority. The Company
is not a "personal holding company" within the meaning of the Internal Revenue
Code of 1986, as amended (the "Code"). The Company has not filed any election
under Section 341(f) of the Code. The Company has withheld with respect to each
of its employees and independent contractors all taxes, including but not
limited to federal and state income taxes, FICA, Medicare, FUTA and other taxes,
required to be withheld, and has paid such withheld amounts to the appropriate
tax authority within the time prescribed by law.
Effective as of January 1, 1987, the Company made a valid election under
Section 1362 of the Code to be an S corporation within the meaning of Sections
1361 and 1362 of the Code effective for all taxable periods beginning on or
subsequent to January 1, 1987. Part 2.7 of the Company Disclosure Letter sets
forth each state and locality where the Company has made a valid election under
the applicable law of such jurisdiction to be an S corporation effective for all
taxable periods beginning on or subsequent to the date of such election, and the
date of such election. None of the Company nor Shareholders have taken any
action inconsistent with the requirements of Company' S corporation status, nor
has the Company nor any Shareholder failed to take any action required in order
to maintain the Company's S Corporation status, and the Company's S corporation
election has not been terminated (whether inadvertently or otherwise) since each
such effective date and is currently valid and in effect in each such
jurisdiction in which an election was made.
For the purposes of this Agreement, the terms "tax" and "taxes" include all
federal, state, local and foreign income, gains, franchise, excise, property,
sales, use, employment, withholding, license, payroll, occupation, recording,
value added or transfer taxes, governmental charges, fees, levies or assessments
(whether payable directly or by withholding), and, with respect to such taxes,
any estimated tax, interest and penalties or additions to tax and interest on
such penalties and additions to tax.
2.8 Financial Statements. The Company has delivered to DoveBid, attached
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hereto as Exhibit A, copies of: (a) the Company's compiled balance sheet as of
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December 31, 1998, and the Company's compiled balance sheets as of December 31,
1999 and March 31, 2000, respectively (the "Balance Sheets") and (b) the
Company's compiled income statement and statement of cash flows for the twelve
months ended December 31, 1998, and the Company's unaudited income statements
and statement of cash flows for the twelve month period ended December 31, 1999
and the three month period ended March 31, 2000, respectively (together, with
the Balance Sheets and the Closing Balance Sheet, the "Financial Statements").
The Financial Statements (a) are in accordance with the books and records of the
Company, (b) fairly
present the financial condition of the Company and its subsidiaries at the date
therein indicated and the results of operations for the period therein specified
(except for the unaudited balance sheet dated as of March 31, 2000, and the
unaudited income statements and statement of cash flows for the three month
period ended March 31, 2000, which fairly present in all material respects the
financial condition of the Company and its subsidiaries at the date therein
indicated and the results of operations for the period therein specified) and
(c) have been prepared in accordance with GAAP, applied on a consistent basis
with prior periods. The Company (including its subsidiaries) has no debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected or reserved
against in the Financial Statements and the Closing Liabilities Schedule, other
than such liabilities and obligations which (i) are not required to be reflected
on the Balance Sheet in accordance with this Section 2.8, (ii) were incurred in
the ordinary course of the Company's business consistent with past practice, and
(iii) are not material in amount to the Company or its financial condition,
assets or business.
2.9 Title to Assets and Properties. The Company has good and marketable
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title to all of its assets as shown on the Balance Sheets and Closing Balance
Sheet (as defined in the NLA Purchase Agreement) for Xxxxxx Xxxx, free and clear
of all Liens (other than for taxes not yet due and payable). The Company owns
or has the right to hold and use all assets, which are necessary to operate its
business as presently conducted. All leases of real or personal property to
which the Company or any subsidiary of the Company is a party are fully
effective and afford the Company peaceful and undisturbed possession of the
subject matter of the lease. To the Knowledge of the Company and the
Shareholders, the Company and its subsidiaries are not in violation of any
zoning, building, safety or environmental ordinance, regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties, or has received any written notice of violation with which it has
not complied.
2.10 Absence of Certain Changes. Since March 31, 2000, there has not been
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with respect to the Company (including its subsidiaries):
(a) any change in the financial condition, properties, assets,
liabilities, business or operations thereof which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business consistent with past practice, has had or will have a
Material Adverse Effect thereon;
(b) any contingent liability incurred thereby as guarantor or
otherwise with respect to the obligations of others;
(c) any mortgage, encumbrance or Lien placed on any of the properties
thereof;
(d) any material obligation or liability incurred thereby other than
obligations and liabilities incurred in the ordinary course of business
consistent with past practice in individual amounts less than $35,000;
(e) any purchase or sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets thereof
other than in the ordinary course of business consistent with past practice in
individual amounts less than $35,000;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
thereof;
(g) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock thereof,
any split, combination or recapitalization of the capital stock thereof or any
direct or indirect redemption, purchase or other acquisition of the ownership
interests thereof (except for the Permitted Asset Transfers (as such term is
defined in Section 4.14 below));
(h) any labor dispute or claim of unfair labor practices, any change
in the compensation payable or to become payable to any of its officers,
managers, employees or agents, or any bonus payment or arrangement made to or
with any of such officers, managers, employees or agents;
(i) any change with respect to the management, supervisory or other
key personnel thereof;
(j) any payment or discharge of a Lien or liability thereof which Lien
was not either shown on the Balance Sheets or incurred in the ordinary course of
business consistent with past practice thereafter;
(k) any obligation or liability incurred thereby to any of its
officers, employees, directors or shareholders or any loans or advances made
thereby to any of its officers, employees, directors or shareholders except
normal compensation and expense allowances payable to officers and employees;
(l) any amendment or change in the Articles of Incorporation, bylaws
or other governing documents of the Company; or
(m) any change in the accounting policies or procedures of the
Company.
2.11 Contracts and Commitments. Section 2.11 of the Company Disclosure
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Letter sets forth a list of each of the following oral or written contracts,
agreements, understandings and arrangements of the Company and its subsidiaries,
a true and complete copy of each (or, in the case of an oral agreement, a
written summary of all of the material terms of which) has been provided to
DoveBid:
(a) Contract, agreement or other understanding or arrangement
providing for payments by or to the Company or any of its subsidiaries in an
aggregate amount of $35,000 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 consistent with past
practice and for no more than $35,000 in amount, and except as disclosed in the
Financial Statements and the Closing Balance Sheet (as defined in the NLA
Purchase Agreement) for Xxxxxx Xxxx;
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit the Company's or any of its
subsidiaries' freedom to compete in any line of business in any geographic area,
or which grants any exclusive rights or obligations;
(g) Contract, agreement or other understanding or arrangement for or
relating to the employment of any officer, employee, contractor, or consultant
of the Company or any subsidiary of the Company; or
(h) Any other agreement not specified above which is material to the
business, financial condition or prospects of the Company.
All agreements, contracts, plans, leases, instruments, arrangements,
licenses and commitments identified in this Section 2.11 are valid and in full
force and effect. The Company is not, nor, to the Knowledge of the Company, is
any other party thereto, in material breach or default under the terms of any
such agreement, contract, plan, lease, instrument, arrangement, license or
commitment.
2.12 Intellectual Property. The Company owns, or has a valid right to
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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 Letter). The provision of any service currently provided by the
Company or currently planned to be provided by the Company does not violate any
license or agreement between the Company and any third party or infringe any
Intellectual Property Right of any other person or entity; and there is no
pending or, to the Knowledge of the
Company or any of the Shareholders, threatened claim or litigation contesting
the validity, ownership or right to use, sell, license or dispose of any Company
IP Right, nor to the Knowledge of the Company or any of the Shareholders, is
there any basis for any such claim, nor has the Company received any notice
asserting that any Company IP Right or the proposed use, sale, license or
disposition thereof conflicts, or will conflict, with the rights of any other
person or entity. Each officer, employee and consultant of the Company has
executed and delivered to the Company an agreement in the form provided to
DoveBid regarding the protection of proprietary information and the assignment
to the Company of all Intellectual Property Rights arising from the services
performed for the Company by such person. Section 2.12 to the Company Disclosure
Letter contains a list of all applications, registrations, filings and other
formal actions made or taken pursuant to federal, state and foreign laws by the
Company to perfect or protect its interest in Company IP Rights, including,
without limitation, all patents, patent applications, trademarks, trademark
applications and service marks. As used herein, the term "Intellectual Property
Rights" shall mean all worldwide industrial or intellectual property rights,
including, without limitation, patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks, service xxxx
applications, Internet domain names, Internet or World Wide Web URLs or
addresses, copyright, copyright applications, franchises, licenses, inventories,
know-how, trade secrets, customer lists, proprietary processes and formulae, all
source and object code, algorithms, architecture, structure, display screens,
layouts, inventions, development tools and all documentation and media
constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records (in whatever media or format).
2.13 Compliance with Laws. The Company and its subsidiaries have
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complied, or prior to the Closing Date will have complied, and are or will be at
the Closing in full compliance with, all applicable laws, ordinances,
regulations, and rules, and all orders, writs, injunctions, awards, judgments,
and decrees applicable to them or to the assets, properties, and business
thereof (except for such non-compliance that would not result in a Company
Material Adverse Effect), including, without limitation: (a) all applicable
federal and state securities laws and regulations, (b) all applicable federal,
state, and local laws, ordinances, regulations, and all orders, writs,
injunctions, awards, judgments, and decrees pertaining to (i) the sale,
licensing, leasing, ownership, or management of its owned, leased or licensed
real or personal property, products and technical data, (ii) employment and
employment practices, terms and conditions of employment, and wages and hours
and (iii) safety, health, fire prevention, environmental protection, hazardous
materials, toxic waste disposal, building standards, zoning and other similar
matters (c) the Export Administration Act and regulations promulgated thereunder
and all other laws, regulations, rules, orders, writs, injunctions, judgments
and decrees applicable to the export or re-export of controlled commodities or
technical data, and (d) the Immigration Reform and Control Act. The Company has
received all permits and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are necessary in
connection with its present business (except for such permits, approvals or
filings that would not result in a Company Material Adverse Effect). There are
no legal or administrative proceedings or investigations involving the Company
or any of its subsidiaries pending or threatened before any governmental entity.
2.14 Certain Transactions and Agreements. To the Knowledge of the Company
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and the Shareholders, none of the directors or shareholders of the Company, nor
any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with the Company (except with respect to any interest
in less than one percent of the stock of any corporation whose stock is publicly
traded). None of said officers directors, shareholders or employees, nor any
member of their immediate families, is directly or indirectly interested in any
contract or informal arrangement with the Company, except for normal
compensation for services as an officer, director or shareholder thereof. None
of said officers, directors, shareholders or employees nor any member of their
immediate families has any interest in any property, real or personal, tangible
or intangible, including any Intellectual Property Rights, used in or pertaining
to the business of the Company, except for the normal rights of a shareholder of
the Company.
2.15. Employees, ERISA and Other Compliance.
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2.15.1 Neither the Company nor any subsidiary of the Company has any
employment contract or consulting agreement currently in effect that is not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions)
without liability to the Company or such subsidiary. All officers, directors,
employees and consultants of the Company having access to proprietary
information have executed and delivered to the Company an agreement regarding
the protection of such proprietary information and the assignment of inventions
to the Company; true and complete copies of the form of all such agreements have
been delivered to DoveBid.
2.15.2 Neither the Company nor any subsidiary of the Company (i) has
ever been or is now subject to a union organizing effort, (ii) is subject to any
collective bargaining agreement with respect to any of its employees, (iii) is
subject to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization, or (iv) has any current labor
disputes. To the Knowledge of the Company or any Shareholder, there are no
facts indicating that the consummation of the transactions contemplated hereby
will have a Company Material Adverse Effect on such labor relations, and neither
the Company nor any Shareholder has any Knowledge that any of the Company's key
employees intends to leave its employ.
2.15.3 Section 2.15.1 to the Company Disclosure Letter identifies (i)
each "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) all other
written or formal plans or agreements involving direct or indirect compensation
or benefits (including, but not limited to any employment, severance or other
similar contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' benefits, vacation benefits, severance benefits,
disability benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses and all forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors, but excluding workers' compensation,
unemployment compensation and other government-mandated programs) currently or
previously maintained, contributed to or entered into by the Company under which
the Company or any ERISA Affiliate (as defined below) thereof has any present or
future obligation or liability (collectively, the "Company Employee Plans").
For purposes of this Section 2.15, "ERISA Affiliate" shall mean any entity which
is a member of (A) a "controlled group of corporations,"
as defined in Section 414(b) of the Code, (B) a group of entities under "common
control," as defined in Section 414(c) of the Code, or (C) an "affiliated
service group," as defined in Section 414(m) of the Code, or treasury
regulations promulgated under Section 414(o) of the Code, any of which includes
the Company. Copies of all Company Employee Plans (and, if applicable, related
trust agreements) and all amendments thereto and written interpretations thereof
(including summary plan descriptions) have been delivered to DoveBid, together
with the three most recent annual reports (Form 5500, including, if applicable,
Schedule B thereto) prepared in connection with any such Company Employee Plan.
All Company Employee Plans which individually or collectively would constitute
an "employee pension benefit plan," as defined in Section 3(2) of ERISA
(collectively, the "Company Pension Plans"), are identified as such in Section
2.15.3 to the Company Disclosure Letter. All contributions due from the Company
with respect to any of the Company Employee Plans have been made as required
under ERISA or have been accrued on the Financial Statements. To the Knowledge
of the Company and the Shareholders, each Company Employee Plan has been
maintained in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including, without
limitation, ERISA and the Code, which are applicable to such Company Employee
Plans.
2.15.4 No Company Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in Section
3(37) of ERISA. No Company Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any Company Employee Plan which is
covered by Title I of ERISA which would result in a liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Company Employee Plan has or will make
the Company or any officer or director of the Company subject to any liability
under Title I of ERISA or liable for any tax (as defined in Section 2.7 hereof)
or penalty pursuant to Sections 4972, 4975, 4976 or 4979 of the Code or Section
502 of ERISA.
2.15.5 Any Company Pension Plan which is intended to be qualified
under Section 401(a) of the Code (a "Company 401(a) Plan") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. The Company has delivered to DoveBid a complete and correct copy of the
most recent Internal Revenue Service determination letter with respect to each
Company 401(a) Plan.
2.15.6 There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any subsidiary of the
Company relating to, or change in employee participation or coverage under, any
Company Employee Plan or Company Benefit Arrangement that would increase the
expense of maintaining such Company Employee Plan or Company Benefit Arrangement
above the level of the expense incurred in respect thereof since the date of the
March 31, 2000 Balance Sheet.
2.15.7 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.
2.15.8 No benefit payable or which may become payable by the Company
or any subsidiary of the Company pursuant to any Company Employee Plan or any
Company Benefit Arrangement or as a result of or arising under this Agreement
shall constitute an "excess parachute payment" (as defined in Section 280G(b)(1)
of the Code) which is subject to the imposition of an excise tax under Section
4999 of the Code or which would not be deductible by reason of Section 280G of
the Code.
2.15.9 The Company and each of its subsidiaries are in compliance with
all applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters, but not including ERISA.
2.15.10 To the Knowledge of the Company and each Shareholder, no
employee of the Company or any of its subsidiaries is in violation of any term
of any employment contract, patent disclosure agreement, noncompetition
agreement, or any other contract or agreement, or any restrictive covenant
relating to the right of any such employee to be employed thereby, or to use
trade secrets or proprietary information of others, and the employment of such
employee does not subject the Company or such subsidiaries to any liability.
2.15.11 A list of all employees, officers, directors and consultants
of the Company and each subsidiary of the Company and their current compensation
is set forth on Section 2.15.11 to the Company Disclosure Letter.
2.15.12 Neither the Company nor any subsidiary of the Company is a
party to any (a) agreement with any officer, director, shareholder or other
employee thereof (i) the benefits of which are contingent, or the terms of which
are altered, upon the occurrence of a transaction involving the Company or such
subsidiary in the nature of any of the transactions contemplated by this
Agreement, (ii) providing any term of employment or compensation guarantee, or
(iii) providing severance benefits or other benefits after the termination of
employment of such employee regardless of the reason for such termination of
employment, or (b) agreement or plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
2.16 Company Documents. The Company has made available to DoveBid for
-----------------
examination true and complete copies of all documents and information listed in
the Company Disclosure Letter or other exhibits called for by this Agreement
which has been requested by DoveBid and/or its legal counsel, including, without
limitation, the following: (a) copies of the Articles of Incorporation, bylaws
and other governance documents as currently in effect of the Company and each of
its subsidiaries; (b) all records of all proceedings, consents, actions, and
meetings of the shareholders, the board of directors and any committees thereof;
(c) its journal
reflecting all equity issuances and transfers; and (d) all permits, orders, and
consents issued by any regulatory agency with respect to the Company or its
subsidiaries, or any securities of the Company, and all applications for such
permits, orders, and consents.
2.17 Environmental Matters. To the Knowledge of the Company and each
---------------------
Shareholder, the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below), which compliance includes the
possession by the Company and its subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Neither the Company nor any
of its subsidiaries has received any written notice or other communication (in
writing or otherwise), whether from a governmental body, citizens-group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is not in compliance with any Environmental Law, and, to the Company's and each
Shareholder's Knowledge, there are no circumstances that may prevent or
interfere with the compliance by the Company or any of its subsidiaries with any
current Environmental Law in the future. All governmental authorizations
currently held by the Company or any of its subsidiaries pursuant to any
Environmental Law (if any) are identified in Section 2.17 to the Company
Disclosure Letter. For purposes of this Section 2.17: (i) "Environmental Law"
means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law.
2.18 No Brokers. Neither the Company nor the Shareholders are or will be
----------
obligated for the payment of fees or expenses of any investment banker, broker
or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
2.19 Accounts Receivable. Subject to the reserves set forth on the
-------------------
Balance Sheets, if any, all accounts receivable of the Company set forth on the
Balance Sheets have arisen in the ordinary course of the Company's businesses
consistent with past practice, represent valid, enforceable and fully
collectible obligations due to the Company, and have been and are not subject to
any set-off, counterclaim or, to the Knowledge of the Company or each
Shareholder, future performance obligation on the part of the Company.
2.20 Books and Records.
-----------------
2.20.1 The books, records and accounts of the Company and each
subsidiary (a) are in true, complete and correct, (b) have been maintained in
accordance with good business practices on a basis consistent with prior years,
(c) accurately and fairly reflect the transactions and dispositions of the
assets of the Company and its subsidiaries, and (d) accurately and fairly
reflect the basis for the Financial Statements.
2.20.2 The Company has devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or specific
authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and
(ii) to maintain accountability for assets, and (c) the amount recorded for
assets on the books and records of the Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
2.21 Insurance. The Company maintains and at all times during the prior
----------
three years has maintained all legally required workers' compensation insurance
and errors and omissions, casualty, fire and general liability insurance. There
is no claim pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
timely paid and the Company 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 Company shall have obtained, and fully prepaid all premiums
associated with, "claims made" insurance for the Company for activities of the
Company prior to the Closing and effective immediately after the Closing, which
shall include errors and omission insurance and employment practices liability
insurance, and which insurance shall be assignable to DoveBid at the Closing,
shall expire no earlier than the third anniversary of the Closing and shall
contain coverage that is customary for the Company's industry and be reasonably
acceptable to DoveBid. All policies of insurance now held by the Company and
each of its subsidiaries are set forth in Section 2.21 of the Company Disclosure
Letter, together with the name of the insurer under each policy, the type of
policy, the policy coverage amount and any applicable deductible.
2.22 Disclosure. Neither the Company Disclosure Letter, this Agreement,
----------
its exhibits and schedules, nor any of the certificates or documents to be
delivered by the Company to DoveBid pursuant to this Agreement, taken together,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading in any material respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOVEBID
Except as specifically set forth in the disclosure letter provided by
DoveBid to the Company simultaneously with the signing of this Agreement, dated
as of the date of this Agreement (the "DoveBid Disclosure Letter"), the parts of
which are numbered to correspond to the sections of this Agreement, DoveBid
hereby represents and warrants to the Company as follows:
3.1 Organization and Good Standing. DoveBid is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted and as proposed to
be conducted.
3.2 Power, Authorization and Validity.
---------------------------------
3.2.1 DoveBid has the corporate right, power and authority to enter
into and perform its obligations under this Agreement, and all agreements to
which DoveBid is or will be a party that are required to be executed pursuant to
this Agreement (the "DoveBid Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Agreements have been
duly and validly approved and authorized by DoveBid's Board of Directors.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable DoveBid to enter into, and to perform its
obligations under, this Agreement and the DoveBid Ancillary Agreements, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such filings as may be required to comply with federal
and state securities laws (which filings will be accomplished within the time
required by law).
3.2.3 This Agreement and the DoveBid Ancillary Agreements are, or
when executed by DoveBid will be, valid and binding obligations of DoveBid
enforceable against DoveBid in accordance with their respective terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities.
3.3 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any DoveBid Ancillary Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of (a)
any provision of the Articles of Incorporation or bylaws of DoveBid, as
currently in effect, (b) any instrument or contract to which DoveBid is a party
or by which DoveBid's assets or properties are bound or affected, or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to DoveBid or its assets or properties, except any
termination, breach, default, impairment or violation which would not
individually or in the aggregate result in a Material Adverse Effect on DoveBid.
The consummation of the transactions contemplated by this Agreement does not and
will not require the consent, waiver, release or approval of or notice to any
third party.
3.4 Registration Statement. DoveBid has made available to the Shareholder
----------------------
its Registration Statement on Form S-1 as filed with the Securities and Exchange
Commission (the "SEC") on March 10, 2000, as amended (the "Registration
Statement"). To the Knowledge of DoveBid at the time the Registration Statement
was filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) and subject to portions and sections
of the Registration Statement which remain to be completed, the Registration
Statement did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading in any material respect, except to the extent
corrected prior to the date of this Agreement by a subsequent filing made by
DoveBid. Since the filing of the Registration Statement with the SEC on March
10, 2000, to the Knowledge of DoveBid there has not been a Material Adverse
Effect on DoveBid. On April 26, 2000 DoveBid filed with the SEC a Withdrawal of
Registration relating to the Registration Statement.
3.5 Xxxx-Xxxxx-Xxxxxx Compliance. The execution and delivery of this
----------------------------
Agreement and the consummation of the transactions contemplated thereby will not
require any consent, approval or filing pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act (the "HSR Act").
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Advice of Changes. During the period from the date of this Agreement
-----------------
until the earlier of the Closing or the termination of this Agreement, each
party will promptly advise the other party in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of such party contained in this Agreement, if made on or as of the date
of such event or at the Closing untrue or inaccurate in any material respect and
(b) of any material adverse change in the such party's business, prospects,
customers, results of operations or financial condition. The Company on the one
hand and DoveBid on the other hand each agrees to cooperate with the other and
each of their respective auditors in order to book financial entries in
accordance with GAAP and in a manner acceptable to each such party and its
auditors.
4.2 Maintenance of Business. During the period from the date of this
-----------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will use its best efforts to carry on and preserve its business and
its relationships with customers, suppliers, employees, business partners and
others in substantially the same manner as it has prior to the date hereof. If
the Company becomes aware of a material deterioration in the relationship with
any customer, supplier, business partner or key employee, it will promptly bring
such information to the attention of DoveBid in writing and, if requested by
DoveBid, will exert its best efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will continue to conduct its business and maintain its business
relationships in the ordinary and usual course (consistent with past practice)
and will not, without the prior written consent of an officer of DoveBid:
(a) borrow any money, or otherwise incur any indebtedness in excess of
$35,000;
(b) enter into any transaction not in the ordinary course of business
consistent with past practice;
(c) acquire or be obligated to acquire or take positions in assets
greater than $35,000 without DoveBid's prior written consent, not to be
unreasonably withheld;
(d) make any expenditure or sale of fixed or other non-current assets
in excess of $35,000 in the aggregate, outside the normal course of business;
(e) encumber or permit to be encumbered any of its assets except in
the ordinary course of its business consistent with past practice and to an
extent that is not material to its business;
(f) dispose of any of its assets except in the ordinary course of
business consistent with past practice (except for the Permitted Asset Transfers
(defined below));
(g) enter into any material lease or contract for the purchase or sale
of any property, real or personal, except in the ordinary course of business
consistent with past practice;
(h) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to the date of
this Agreement, subject only to ordinary wear and tear;
(i) fail to use its commercially reasonable efforts to maintain and
preserve its business organization intact, retain its present employees and
maintain its relationships and present agreements with suppliers, customers and
others having business relations with the Company, or fail to maintain its
current debt and lease instruments;
(j) pay any bonus, increased salary or special remuneration to any
officer, director, employee or consultant or enter into any new employment or
consulting agreement with any such person, except as set forth in Section 4.3(j)
of the Company Disclosure Letter;
(k) change accounting methods, policies or procedures;
(l) introduce any material new method of management or operations;
(m) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any equity interest, or redeem or otherwise acquire
any of its equity interests (except for the Permitted Asset Transfers);
(n) amend or terminate any contract, agreement or license to which it
is a party, except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(o) lend any amount to any person or entity, other than (i) advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount and documented by receipts
for the claimed amounts or (ii) any loans pursuant to the Company 401(k) Plan;
(p) guarantee or act as a surety for any obligation, except in the
ordinary course of business, consistent with past practice, which are not
material in amount and except as required under the Pending Transactions;
(q) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(r) issue or sell any shares of its capital stock or any other of its
securities, or issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments to issue any securities,
or accelerate the vesting of any outstanding option or other security;
(s) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(t) merge, consolidate or reorganize with, or acquire any entity;
(u) amend its Articles of Incorporation, bylaws or any other
governance document;
(v) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
(w) agree to any audit assessment by any tax authority or file any
federal or state income or franchise tax return;
(x) change any insurance coverage; or
(y) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(x).
4.4 Satisfaction of Conditions Precedent. From the date of this Agreement
------------------------------------
until the earlier of termination of this Agreement or the Closing, the Company
will use its best efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article VI, and the Company will use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions contemplated hereby.
From the date of this Agreement until the earlier of termination of this
Agreement or the Closing, DoveBid will use its best efforts to satisfy or cause
to be satisfied all the conditions precedent that are set forth in Article V.
4.5 Regulatory Approvals. DoveBid, the Company and each Shareholder will
--------------------
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or foreign
that may be reasonably required (including, without limitation, any consent,
approval, order, authorization, registration, declaration or filing pursuant to
the HSR Act), or that DoveBid may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. The Company,
each Shareholder and DoveBid will use their respective best efforts to obtain
all such authorizations, approvals and consents.
4.6 Necessary Consents. The Company and each Shareholder will use their
------------------
best efforts to obtain such written consents and take such other actions as may
be necessary or appropriate in DoveBid's judgment to allow the consummation of
the transactions contemplated hereby and to allow DoveBid to carry on the
Company' business after the Closing.
4.7 Litigation. The Company will notify DoveBid in writing promptly after
----------
learning of any material actions, suits, proceedings or investigations by or
before any court, board or governmental agency, initiated by or against it, or
known by it to be threatened against it.
4.8 No Other Negotiations. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company and the
Shareholders will not, and will not authorize or permit any officer,
shareholder, director, employee, investment banker, attorney, agent,
representative or affiliate of the Company, or any other person or entity, on
its behalf to, directly or indirectly, solicit, initiate or encourage any offer
from any person or entity or consider any inquiries or proposals received from
any other person or entity, participate in any negotiations or discussions
regarding, furnish to any person or entity any information with respect to, or
enter into any agreement, commitment, letter of intent or understanding
concerning, the possible disposition of all or any portion of the Company's
business, assets or equity interests by merger, sale or any other means (other
than the transactions contemplated hereby with DoveBid). The Company will
promptly and in any event within 24 hours notify DoveBid orally and in writing
of any such inquiry or proposal, including the name of the persons making such
proposal and all of the terms thereof. Any violation of the restrictions set
forth in this section by any officer, director or employee of the Company or any
investment banker, attorney or other advisor or representative of the Company
shall be deemed to be a material breach of this Section 4.8 by the Company.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company will allow
DoveBid and its agents reasonable access to the files, books, records and
offices of the Company, including, without limitation, any and all information
relating to the Company's taxes, commitments, contracts, customer lists, leases,
licenses, and real, personal and intangible property and financial condition.
The Company will cause its accountants to cooperate with DoveBid and its agents
in making available all financial information reasonably requested, including
without limitation the right to examine all working papers pertaining to all
financial statements prepared or audited by such accountants.
4.10 Blue Sky Laws. From the date of this Agreement until the earlier of
-------------
termination of this Agreement or the Closing, the Company shall use its best
efforts to assist DoveBid to the extent necessary to comply with the securities
and Blue Sky laws of all jurisdictions that are applicable in connection with
the transactions contemplated herein.
4.11 Permitted Asset Transfers. Prior to the Closing the Company shall
-------------------------
have transferred to the Shareholders or their designees the personal and real
property and other assets listed on Schedule 4.11(a) pursuant to the asset
transfer agreements and related documentation in the forms attached hereto as
Schedule 4.11(b) (the "Permitted Asset Transfers Agreements"), without any
liability, cost or obligation to the Company or DoveBid (collectively, the
"Permitted Asset Transfers").
4.12 Further Assurances. The Company, the Shareholders and DoveBid shall
------------------
each deliver or cause to be delivered to the other, at such other times and
places as shall be reasonably agreed, such additional instruments, and take such
additional actions as can be taken without unreasonable expense, as any other
may reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. The Shareholders and the Company will
cooperate and use their reasonable efforts to have the present officers,
directors and employees of the Company cooperate with DoveBid on and after
Closing in furnishing information, evidence, testimony and other assistance in
connection with any tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE SHAREHOLDERS AND THE COMPANIES
The obligations of the Shareholders and the Company with respect to actions
to be taken at Closing are subject to the satisfaction or waiver by the
Shareholders at or prior to Closing of all of the following conditions.
5.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of DoveBid set forth in this Agreement shall be true and correct in
all material respects at the Closing with the same effect as though such
representations and warranties had been made as of that time. The covenants set
forth in this Agreement to be performed by DoveBid at or before the Closing
shall have been duly performed. DoveBid shall have delivered to the Company a
certificate to such effect dated the Closing Date signed by an authorized
officer of DoveBid.
5.2 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by DoveBid and shall be acceptable to the Shareholders.
5.3 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of the Company as a
result of which the management of the Company deems it materially detrimental to
the Company or its Shareholders to proceed with the transactions hereunder.
5.4 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transaction contemplated herein (including any consent or filing required under
the HSR Act) shall have been obtained and made and no action or proceeding shall
have been instituted or threatened to restrain or prohibit the transactions
contemplated herein.
5.5 No DoveBid Material Adverse Effect. No event or circumstance shall
----------------------------------
have occurred between the execution of this Agreement and the Closing which
would constitute DoveBid Material Adverse Effect.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DOVEBID
The obligations of DoveBid with respect to actions to be taken at the
Closing are subject to the satisfaction or waiver by DoveBid at or prior to the
Closing of all of the following conditions.
6.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of the Shareholders and the Company set forth in this Agreement shall
be true and correct in all material respects at the Closing with the same effect
as though such representations and warranties had been made as of that time.
The covenants set forth in this Agreement to be performed by the Shareholders
and the Company on or before the Closing shall have been duly performed. The
Shareholders and the Company shall have delivered to DoveBid a certificate to
such effect dated the Closing Date signed by each of the Shareholders and the
President of the Company.
6.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated herein and no governmental agency or
body shall have taken any other action or made any request of DoveBid as a
result of which the management of DoveBid deems it inadvisable to proceed with
the transactions hereunder.
6.3 No Material Adverse Effect. No event or circumstance shall have
--------------------------
occurred between the execution of this Agreement and the Closing which would
constitute a Material Adverse Effect on the Company.
6.4 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other
related legal matters shall have been executed by the Company and shall be
acceptable to DoveBid.
6.5 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated herein (including any consent or filing required under
the HSR Act) shall have been obtained and made; the Company shall have obtained
and delivered to DoveBid such additional consents to the transactions
contemplated herein as DoveBid may reasonably request including, without
limitation, DoveBid's receipt on or prior to Closing of consents of third
parties listed in Section 2.5 of the Company Disclosure Letter; and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein.
6.6 Good Standing Certificate. DoveBid shall have received evidence
-------------------------
reasonably satisfactory to it that the Company and each of its subsidiaries are
each validly existing, in good standing and authorized to do business and that
all state franchise and/or income tax returns and taxes due by the Company and
such subsidiaries for all periods prior to the Closing have been filed and paid.
DoveBid's failure to require or receive such evidence in no way vitiates or
affects the Company's or the Shareholders' representations and warranties
regarding such matters and DoveBid's reliance on such representations or
warranties.
6.7 Due Diligence. The results of DoveBid's due diligence review of the
-------------
Company's businesses, assets, finances, practices and procedures shall be
satisfactory to DoveBid in its sole discretion.
6.8 Permitted Asset Transfers. The Shareholders and the Company shall
--------------------------
have completed to the satisfaction of DoveBid the Permitted Asset Transfers.
6.9 Release of Claims. DoveBid shall have received copies of a Release of
-----------------
Claims executed by X.Xxxx and X.Xxxx in substantially the forms of Exhibit B
---------
attached hereto.
6.10 Insurance Matters. The Company shall have obtained, and fully
-----------------
prepaid all premiums associated with, "claims made" insurance for the Company
for activities of the Company prior of the Closing that will be assigned to
DoveBid at the Closing, that expire no earlier than the third anniversary of the
Closing and that contain coverage that is customary for the Company' industry
and is reasonably acceptable to DoveBid.
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 Shareholders collectively
shall be considered one party); (ii) by either party, if such party is not in
material breach of any representation, warranty, covenant or agreement
contained in this Agreement, and the other party is in material breach of any
representation, warranty, covenant or agreement contained in this Agreement and
such breaching party fails to cure such material breach within fifteen (15) days
after written notice of such material breach from the non-breaching party; (iii)
by either party, if there is a final nonappealable order of a federal or state
court in effect preventing consummation of the transactions contemplated herein,
or if any statute, rule, regulation or order is enacted, promulgated or issued
or deemed applicable to the transactions contemplated herein by any governmental
body that would make consummation of the transactions contemplated herein
illegal; or (iv) by either party if the transactions contemplated herein have
not occurred by May 22, 2000; provided that DoveBid shall have the right in its
discretion to extend this date to no later than May 22, 2000.
7.2 Termination Procedures. If either party wishes to terminate this
----------------------
Agreement pursuant to Section 7.1, such party shall deliver to the other party a
written notice stating that such party is terminating this Agreement and setting
forth a brief description of the basis of such termination. Termination of this
Agreement will be effective upon the receipt of such notice.
7.3 Continuing Obligations. Following any termination of this Agreement
----------------------
pursuant to this Article VII, the parties to this Agreement will continue to be
liable for breaches of this Agreement prior to such termination and will
continue to perform their respective obligations under Article X. Except for
the continuing obligations set forth in the preceding sentence, upon termination
of this Agreement pursuant to this Article VII the parties to this Agreement
will be without any further obligation or liability upon any party in favor of
the other party.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. The representations, warranties,
---------------------------
covenants and agreements of DoveBid contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, from the date of this Agreement
until the earlier of the termination of this Agreement or the one (1) year
anniversary of the Closing, (except for the obligation of DoveBid to make the
Tax Payment under Section 1.1(b) hereof and for any other covenants that by
their terms survive for a longer period). All representations, warranties,
covenants and agreements of the Company and the Shareholders contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the parties to this Agreement, from the
date of this Agreement until the earlier of the termination of this Agreement or
the one (1) year anniversary of the Closing, (except for covenants that by their
terms survive for a longer period, and for the representations and warranties
set forth in first four sentences of Section 2.3, Section 2.7 and Section 2.17
(to the extent that representations and warranties relate to any of the assets
being transferred to the Shareholders in the Permitted Asset Transfers or the
Acquired Land (as defined in the Company Disclosure Letter) and Section 9.1),
which shall survive for the statute of limitations period applicable to any
claim which would constitute a breach thereof).
8.2 Agreement to Indemnify.
----------------------
(a) Indemnification by the Shareholders. Subject to the limitations
-----------------------------------
set forth in this Article VIII, each Shareholder, jointly and severally, hereby
indemnifies and holds harmless DoveBid and its subsidiaries, affiliates,
officers, directors, agents, representatives and employees, and each person, if
any, who controls or may control DoveBid within the meaning of the Securities
Act (individually, a "DoveBid Indemnitee" and collectively, "DoveBid
Indemnitees") from and against any and all claims, demands, actions, causes of
actions, losses, costs, damages, liabilities and expenses including, without
limitation, reasonable legal fees and expenses (reduced by any reduction in tax
payable by such party as a result thereof, such tax benefit being determined
after taking into account the effect of recovery under this Article VIII and
calculated at such party's incremental effective rate of tax) ("Damages"):
(i) arising out of any misrepresentation, or breach of, or
default in connection with, any of the representations or warranties,
covenants and agreements given or made by the Company or any Shareholder in
this Agreement or any certificate, document or instrument delivered by or
on behalf of the Company or the Shareholders pursuant to this Agreement;
(ii) resulting from any failure of any Shareholder to have good,
valid and marketable title to the issued and outstanding shares held by
such Shareholder, free and clear of Liens, or any claim by a current or
former shareholder, or any other person, firm, corporation or entity,
seeking to assert or based upon ownership or rights to ownership of equity
interest of the Company (or the Purchase Price or the Tax Payment), any
rights of a shareholder of the Company, including any options, or
preemptive rights or rights to notice or to vote, any rights under the
Company' Articles of Incorporation, bylaws or other charter documents, any
right under any agreement among the Company and the Shareholders or any
claim that his or her equity interests or other securities were wrongfully
repurchased by the Company;
(iii) in connection with a liability of the Company arising out
of any acts, events, omissions or transactions occurring prior to the
Closing Date, which liabilities were not disclosed to DoveBid in this
Agreement, the Financial Statements, the Company Disclosure Letter or the
Closing Balance Sheet and which the Shareholders had Knowledge of at the
time of the Closing; or
(iv) resulting from any claim by any investment banker, broker,
finder or other agent engaged by the Company or any Shareholder in
connection with the origin, negotiation or execution of this Agreement or
in connection with any transaction contemplated hereby.
(b) Indemnification by DoveBid. Subject to the limitations set forth
--------------------------
in this Article VIII, DoveBid hereby indemnifies and holds harmless the
Shareholders from and against any and all Damages: (i) arising out of any
misrepresentation, or breach of, or default in connection with, any of the
representations or warranties, covenants and agreements given or made by the
DoveBid in this Agreement or any certificate, document or instrument delivered
by or on behalf of the DoveBid pursuant to this Agreement; or (ii) resulting
from any claim by any investment banker, broker, finder or other agent engaged
by DoveBid in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transaction contemplated hereby.
8.3 Limitations and Threshold; Escrow.
---------------------------------
(a) Except for fraud or intentional misrepresentation and for claims
relating to a breach of representation, warranty or covenant in Article IX
hereof, the indemnification provided for under Section 8.2(a) shall not apply
unless and until aggregate Damages for which the DoveBid Indemnitees would be
otherwise entitled to receive indemnification exceed an amount equal to the
difference of (i) $175,000, less (ii) the aggregate Damages received by the
DoveBid Indemnitees under Section 8.2(a) of the NLA Purchase Agreement (the
"Shareholder Threshold"); provided, however, that once such aggregate Damages
exceed the Shareholder Threshold, such DoveBid Indemnitees shall be entitled to
indemnification for the aggregate amount of all Damages without regard to the
Shareholder Threshold. Except for fraud or intentional misrepresentation and
for claims relating to a breach of representation, warranty or covenant in
Article IX hereof, and the obligation of DoveBid to make the Tax Payment under
Section 1.1(b) hereof, the indemnification provided for under Section 8.2(b)
shall not apply unless and until aggregate Damages for which the Shareholders
would be otherwise entitled to receive indemnification exceed an amount equal to
the difference of (i) $175,000, less (ii) the aggregate Damages received by the
Shareholders (as parties under the NLA Purchase Agreement) under Section 8.2(b)
of the NLA Purchase Agreement (the "DoveBid Threshold"); provided, however, that
once such aggregate Damages exceed the DoveBid Threshold, such Shareholders
shall be entitled to indemnification for the aggregate amount of all Damages
without regard to the DoveBid Threshold.
(b) Except for liability based on a claim of fraud or intentional
misrepresentation and for claims relating to a breach of representation,
warranty or covenant in Article IX hereof, the maximum liability of a party for
Damages under this Article VIII shall not exceed an amount equal to the
difference of (i) $10,000,000, less (ii) the aggregate Damages incurred by such
party under Article VIII of the NLA Purchase Agreement (the "Liability Cap").
Following the Closing, except for liability based on a claim of fraud or
intentional misrepresentation or any claim under Article IX of this Agreement,
the remedies provided in this Article VIII shall be the sole and exclusive
remedy of a party with respect to any breach, default or failure or perform by a
party under this Agreement.
8.4 Satisfaction of Claims.
----------------------
(a) The Shareholders and DoveBid agree that any Claim for
indemnification under Section 8.2(a) may at the election of DoveBid be satisfied
by either: (i) retaining any Escrow Shares (as defined under the NLA Purchase
Agreement) held under the NLA Purchase Agreement subject to the right of the
Shareholders to promptly satisfy such Claims by paying cash to DoveBid in the
full amount of such Claim within twenty (20) days of resolution of such Claim;
or (ii) through the payment of cash or other property or assets to DoveBid by
the Shareholders. To the extent that DoveBid elects to satisfy any Claim for
indemnification under this Article VIII by retaining Escrow Shares and the
Shareholders do not timely fully pay such Claim in cash, then such shares shall
be valued at a price of $10.50 per share (subject to proportional adjustment for
any stock splits, stock combinations, recapitalizations or like events)
for purposes of satisfying such Claim regardless of whether the actual market
price of DoveBid common stock is higher or lower, and in such event DoveBid
shall not have the right to recover any deficiency and the Shareholders will not
have the right to recover any excess. Claims for indemnification under Section
8.2(b) shall be satisfied by DoveBid by payment of cash.
(b) Claims for indemnification by a party under this Article VIII must
be made in writing prior to the expiration of the Survival Period; provided that
if a Notice of Claim is asserted in writing before the expiration of the
Survival Period, then (notwithstanding the subsequent expiration of the Survival
Period) the obligation of the Shareholders to indemnify the DoveBid Indemnitees
(on the one hand) and the obligation of DoveBid to Indemnify the Shareholders
(on the other hand) with respect to such Claim shall continue until such Claim
is finally resolved and satisfied in full in accordance with this Agreement.
8.5 Third Person Claims.
-------------------
8.5.1 Promptly after either a DoveBid Indemnitee or the Shareholders
(as the case may be) have received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person (such claim or commencement of such
action or proceeding being a "Third Person Claim") that could give rise to a
right of indemnification under this Article VIII, such party shall, as a
condition precedent to a claim with respect thereto, give to the Shareholders or
DoveBid (as the case may be) written notice of such Third Person Claim
describing in reasonable detail the nature of such Third Person Claim, a copy of
all papers served with respect to that Third Person Claim (if any), an estimate
of the amount of Damages attributable to the Third Person Claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis for the DoveBid Indemnitee's or the Shareholders' request
for indemnification under this Article VIII; provided, however, that the failure
of a party to give timely notice hereunder shall relieve the Shareholders or
DoveBid (as the case may be) of their indemnification obligations under this
Article VIII to the extent, but only to the extent that, such failure materially
prejudices such party's ability to defend such claim.
8.5.2 DoveBid shall defend any Third Person Claim, and the costs and
expenses incurred by DoveBid in connection with such defense (including but not
limited to reasonable attorneys' fees, other professionals' and experts' fees
and court or arbitration costs) shall be included in the Damages for which
DoveBid may seek indemnity pursuant to a Claim made by any DoveBid Indemnitee
hereunder; provided that the Shareholders will have the right to participate in
such defense at their sole cost and expense. The Shareholders 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 Shareholders does not affect any privilege relating to the DoveBid
Indemnitee, and may participate in settlement negotiations with respect to the
Third Person Claim. No DoveBid Indemnitee shall enter into any settlement of a
Third Person Claim without the prior written consent of the Shareholders (which
consent shall not be unreasonably withheld or delayed), provided, that if the
Shareholders shall have consented in writing to any such settlement, then the
Shareholders shall have no power or authority to object to any Claim by any
DoveBid Indemnitee for indemnity under this Article VIII for the amount of such
settlement and the Shareholders will remain responsible to indemnify the DoveBid
Indemnitee for all Damages they may incur arising out of, resulting from or
caused by
the Third-Party Claim to the fullest extent provided in Article VIII (except if
and only to the extent that the Shareholders shall have expressly reserved the
Shareholders' right to object to such Third Person Claim as a Contested Claim).
8.6 Notice of Claim. As used herein, the term "Claim" means a claim for
---------------
indemnification for Damages under Article VIII. DoveBid or the Shareholders may
give notice of a Claim under this Agreement prior to the end of the Survival
Period whether for its own Damages or for Damages incurred by any other DoveBid
Indemnitee or the Shareholders (as the case may be). DoveBid may give written
notice of a Claim under Section 8.2(a) executed by an authorized representative
of DoveBid to either Shareholder, and the Shareholders may give written notice
of a Claim under Section 8.2(b) executed by the Shareholders (a "Notice of
Claim") to DoveBid promptly after such notifying party becomes aware of the
existence of any potential claim for indemnity for Damages under Article VIII,
including in connection with any Third Person Claim.
8.7 Contents of Notice of Claim. Each Notice of Claim by DoveBid or the
---------------------------
Shareholders will contain the following information:
(a) that a DoveBid Indemnitee or the Shareholders (as the case may be)
has incurred, paid or properly accrued (in accordance with GAAP) or, in good
faith, believes it will have to incur, pay or accrue (in accordance with GAAP),
Damages in an aggregate stated amount arising from such Claim (which in the case
of DoveBid may be the amount of damages claimed by a third party in an action
brought against any DoveBid Indemnitee based on alleged facts, which if true,
would give rise to liability for Damages to such DoveBid Indemnitee under
Article VIII); and
(b) a brief description, in reasonable detail (to the extent
reasonably available to the party providing the Notice of Claim), of the facts,
circumstances or events giving rise to the alleged Damages based on such party's
good faith belief thereof, including, without limitation, the identity and
address of any third-party claimant (to the extent reasonably available) and
copies of any formal demand or complaint, the amount of Damages, the date each
such item was incurred, paid or properly accrued, or the basis for such
anticipated liability, and the specific nature of the breach to which such item
is related.
8.8 Resolution of Notice of Claim. Any Notice of Claim received by either
-----------------------------
the Shareholders or DoveBid will be resolved as follows:
(a) Uncontested Claims. In the event that, within twenty (20) calendar
------------------
days after a Notice of Claim is received by either the Shareholders or DoveBid,
such party does not contest such Notice of Claim in writing to the other party
sending the Notice of Claim (an "Uncontested Claim"), then such party will be
conclusively deemed to have consented to the recovery by the DoveBid Indemnitees
or the Shareholders (as the case may be) of the full amount of Damages specified
in the Notice of Claim in accordance with this Article VIII.
(b) Contested Claims. In the event that the either the Shareholders
----------------
or DoveBid (as the case may be) gives the other party written notice contesting
all or any portion of a Notice of Claim (a "Contested Claim") within the above
twenty (20) day period, then: (i) such
Contested Claim will be resolved by either (A) a written settlement agreement
executed by DoveBid and the Shareholders or (B) in the absence of such a written
settlement agreement, by binding arbitration between DoveBid and the
Shareholders in accordance with the terms and provisions of Section 8.8(c).
(c) Arbitration of Contested Claims. Each of DoveBid, and the
-------------------------------
Shareholders agree that any Contested Claim will be submitted to mandatory,
final and binding arbitration pursuant to the United States Arbitration Act, 9
U.S.C., Section 1 et seq. Either DoveBid or the Shareholders may commence the
arbitration process called for by this Agreement by sending a written demand for
arbitration to each of the other parties to this Agreement. The arbitration
will be conducted in accordance with United States Arbitration Act, 9 U.S.C.,
Section 1 et seq, subject to the provisions of this Section 8.8(c). The parties
will cooperate with each other in promptly selecting a single qualified
arbitrator with relevant experience in the commercial disputes and California
contract law, and in scheduling the arbitration proceedings in order to fulfill
the provisions, purposes and intent of this Agreement. The parties covenant
that they will participate in the arbitration in good faith, and that they will
share in its costs in accordance with subparagraph (i) below. A Contested Claim
finally resolved in favor of a party may be satisfied as if such Claim were an
Uncontested Claim pursuant to Section 8.8(a). The provisions of this Section
8.8(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, on the other hand, will bear the expense of deposits and advances
required by the arbitrator in equal proportions, but either party may advance
such amounts, subject to recovery as an addition or offset to any award. The
arbitrator shall determine the party who is the prevailing party and the party
who is the non-prevailing party. The non-prevailing party shall pay all
reasonable costs, fees and expenses related to the arbitration, including
reasonable fees and expenses of attorneys, accountants and other professionals
incurred by the prevailing party, the fees of each arbitrator and the
administrative fee of the arbitration proceedings. If such an award would result
in manifest injustice, however, the arbitrator may apportion such costs, fees
and expenses between the parties in such a manner as the arbitrator deems just
and equitable.
(ii) Burden of Proof. Except as may be otherwise expressly
---------------
provided herein, for any Contested Claim submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a judicial
proceeding governed by California law exclusively.
(iii) Award. Upon the conclusion of any arbitration proceedings
-----
hereunder, the arbitrator will render findings of fact and conclusions of law
and a final written arbitration award setting forth the basis and reasons for
any decision reached (the "Final Award") and will deliver such documents to the
Shareholders 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 and DoveBid, and will include an
affirmative statement to such effect.
(iv) Timing. The Shareholders and DoveBid and the arbitrator
------
will conclude each arbitration pursuant to this Section 8.8 as promptly as
possible for the Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator chosen in accordance
--------------------
with these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
ARTICLE IX
POST-CLOSING COVENANTS
9.1 Permitted Asset Transfers. The Shareholders agree to be responsible
-------------------------
for and to assume all liability, cost and obligation arising from or related to
the Permitted Asset Transfers and/or any of the assets transferred to the
Shareholders in the Permitted Asset Transfers (including, but not limited to,
the Acquired Land). The representations, warranties and covenants of X.Xxxx and
X.Xxxx under this Section 9.1 shall survive the termination or expiration of
this Agreement and the Closing and shall in no way be limited by the provisions
of Article VIII.
9.2 Amendment and Acknowledgment of the NLA Purchase Agreement.
----------------------------------------------------------
(a) Amendment. DoveBid, NLA, X.Xxxx, X.Xxxx, and the Levy Trust, each
---------
being parties to the NLA Purchase Agreement, each hereby agree to amend Section
1.2(c)(i) of the NLA Agreement as follows:
(i) the Closing Stockholders' Equity is less than $941,215,
Except as provided in this Section 9.2, all other provisions, terms and
conditions of the NLA Purchase Agreement shall remain unchanged and in full
force and effect.
(b) Acknowledgement. Each of the parties to the NLA Purchase
---------------
Agreement hereby acknowledges that the Closing Balance Sheet (as defined in the
NLA Purchase Agreement) required to delivered pursuant to Section 1.2(a) of the
NLA Purchase Agreement is hereby attached as Schedule 9.2(b) to this Agreement.
9.3 Further Assurances. The Company, the Shareholders and DoveBid shall
------------------
each deliver or cause to be delivered to the other, at such other times and
places as shall be reasonably agreed, such additional instruments, and take such
additional actions as can be taken without unreasonable expense, as any other
may reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. The Shareholders agree to cooperate and
assist DoveBid in seeking or obtaining all consents, approvals, authorizations,
notices, terminations or amendments relating to any agreement or other
obligation of the Company which may be necessary or desirable in DoveBid's sole
judgment.
ARTICLE X
GENERAL
10.1 Confidentiality. The Company, the Shareholders and DoveBid each
---------------
recognize that they have received and will receive confidential information
concerning the other during the course of the negotiations and preparations of
this Agreement and the transactions contemplated herein. Accordingly, the
Company, the Shareholders and DoveBid each agree (a) to use their respective
best efforts to prevent the unauthorized disclosure of any confidential
information concerning the other that was or is disclosed during the course of
such negotiations and preparations, and is clearly designated in writing as
confidential at the time of disclosure, and (b) to not make use of or permit to
be used any such confidential information other than for the purpose of
effectuating the Closing and related transactions. The obligations of this
Section 10.1 will not apply to information that is required, in the opinion of
counsel to a party hereto, to be disclosed by statute, or governmental rule or
regulation, or, following the Closing, to the disclosure of information
regarding the Company by DoveBid. If this Agreement is terminated, all copies
of documents containing confidential information shall be returned by the
receiving party to the disclosing party. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants in Section
10.1 and because of the immediate and irreparable damage that would be caused
for which they would have no other adequate remedy, the parties hereto agree
that, in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.
10.2 Successors and Assigns. Neither the Company nor any Shareholder may
----------------------
assign any of its rights or obligations hereunder without the prior written
consent of DoveBid. DoveBid may not assign any of its rights or obligations
hereunder without the prior written consent of Shareholders holding not less
than a majority of the voting power in the Company, except that DoveBid may
assign its rights and obligations hereunder without the prior written consent of
any Shareholder in connection with a merger, consolidation or sale of all or
substantially all of DoveBid's assets or in connection with a reincorporation,
reorganization or other corporate recapitalization or reorganization, provided
that the acquiring or surviving corporation or entity agrees to assume all of
DoveBid's obligations under this Agreement. Except as provided in this Section,
this Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
10.3 Entire Agreement; Amendments. This Agreement (including the
----------------------------
schedules and exhibits attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Shareholders,
the Company and DoveBid and supersede any prior agreement, understanding or
discussions relating to DoveBid or the transactions contemplated by this
Agreement. Except as otherwise stated herein, this Agreement and the exhibits
hereto may be modified or amended only by a written instrument executed by the
Shareholders, the Company and DoveBid, acting through their respective officers,
and duly authorized by each of their Board of Directors.
10.4 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same agreement.
10.5 Expenses; Taxes. DoveBid will pay the fees, expenses and
---------------
disbursements of DoveBid and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by DoveBid under this
Agreement. The Shareholders will pay their and the Company's respective fees,
expenses and disbursements of counsel and accountants incurred in connection
with the subject matter of this Agreement and any amendments thereto incurred
prior to the Closing, including all costs and expenses incurred in the
performance and compliance with all conditions to be performed by them under
this Agreement. Any expenses of the Shareholders and the Company not paid by
the Shareholders at or prior to the Closing shall be treated as Damages under
Article VIII. The Shareholders and DoveBid shall jointly pay all transfer,
recording, stock transfer and other similar taxes and fees ("Transfer Taxes")
incurred in connection with the transactions contemplated by this Agreement
(excluding the Permitted Asset Transfers) it being acknowledged by the parties
that the Shareholders are solely responsible for all income, gains and other
similar taxes and fees incurred in connection with the transactions contemplated
by this Agreement (including any and all taxes related to the Permitted Asset
Transfers). The Company shall file, and the Shareholders shall cause the
Company to file, all necessary documentation and tax returns with respect to
such Transfer Taxes. In addition, the Shareholders acknowledge that they, and
not DoveBid or the Company, will be solely responsible for and will pay all
taxes due upon the receipt by the Shareholders of each element of the Purchase
Price and the Tax Payment pursuant to this Agreement and any taxes incurred or
due in connection with the Permitted Asset Transfers.
10.6 Notices. All notices and other communications required or permitted
-------
hereunder shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered by depositing the same in United States mail or a
nationally recognized overnight courier service, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person to such party or to an officer or
agent of such party, as follows:
(i) If mailed or delivered to DoveBid, to each of the following,
using two separate mailings or deliveries:
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Chief Financial Officer
DoveBid, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxx, Vice President and General
Counsel
(ii) If mailed or delivered to the Shareholders or the Company,
to:
Xxxxxx Xxxx
Xxxxx Xxxx
c/o Xxxxxx Xxxx Associates, Inc.
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxx Xxxxx Heuer & Xxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
or to such other address as any party hereto shall specify in writing to the
other parties hereto pursuant to this Section 10.7 from time to time. Such
notice shall be effective only upon actual receipt.
10.7 Interpretation, Defined Terms.
-----------------------------
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(b) For purposes of this Agreement, the term ""Knowledge," when used
with reference to (i) an individual means the actual knowledge of such
individual, after due inquiry of, Xxxxxxx Xxxxxx, Xxxxx Xxxxx, X.Xxxx, X.Xxxx
and Xxxx Xxxxxxxxx, with respect to a representation or warranty of such
individual contained in this Agreement, or any other certificate or agreement
required to be entered into or delivered at the Closing by such individual in
connection with the Agreement, or (ii) a person that is not an individual, means
(x) in the case of the Company the collective actual knowledge, after due
inquiry, of Xxxxxxx Xxxxxx, Xxxxx Xxxxx, X.Xxxx, X.Xxxx and Xxxx Xxxxxxxxx, and
(y) in the case of DoveBid means the collective actual knowledge, after due
inquiry, of the Xxxx Xxxx, Xxxx Xxxx, Xxxxxxx Xxxxxxxxxx, Xxxx X. Xxxxx and
Xxxxxxx X. Xxxxx.
(c) For purposes of this Agreement, the term "Material Adverse Effect"
when used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect that is or is reasonably likely to be
materially adverse to the business, assets, capitalization, financial condition,
operations or results of operations of such entity taken as a whole with its
subsidiaries.
(d) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or governmental agency, office, branch or
entity.
(e) For purposes of this Agreement, "subsidiary" of a specified entity
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more of
the stock or other equity or partnership interests the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
(f) Disclosure made with regard to a representation or warranty of a
party in a part of either the Company Disclosure Letter or DoveBid Disclosure
Letter shall also be deemed to be included within all other Sections of such
Disclosure Letter.
10.8 Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of California, without giving
effect to laws concerning choice of law or conflicts of law.
10.9 Exercise of Rights and Remedies. Except as otherwise provided
-------------------------------
herein, no delay of, or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
10.10 Time. Time is of the essence with respect to this Agreement.
----
10.11 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
10.12 Remedies Cumulative. Except as provided in the second sentence of
-------------------
Section 8.3(b), no right, remedy or election given by any term of this Agreement
shall be deemed exclusive but each shall be cumulative with all other rights,
remedies and elections available at law, or in equity or by contract.
10.13 Construction. This Agreement has been negotiated among DoveBid, the
------------
Company, the Shareholders and their respective legal counsel, and legal or
equitable principles that might require the construction of this Agreement or
any provision of this Agreement against the party drafting this Agreement will
not apply in any construction or interpretation of this Agreement.
10.14 Absence of Third Party Beneficiary Rights. No provisions of this
-----------------------------------------
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any
other rights of any kind in any client, customer, affiliate, partner or employee
of any party hereto or any other person or entity, unless specifically provided
otherwise herein, and, except as so provided, all provisions hereof will be
personal solely between the parties to this Agreement.
[The Remainder Of This Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid and the Company and by each Shareholder as of the day and year first
above written.
DOVEBID, INC.
By: _____________________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
XXXXXX XXXX CORPORATION
By: _____________________________________
Name: Xxxxxx Xxxx
Title: President
_________________________________________
Xxxxx Xxxx
_________________________________________
Xxxxxx Xxxx
For purposes of Section 9.2 only:
XXXXXX XXXX ASSOCIATES, INC.
By: _____________________________________
Name: Xxxxxx Xxxx
Title: President
THE XXXXXX XXXX QUALIFIED TERMINABLE INTEREST
MARTIAL TRUST
By: _____________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Trustee
