EXHIBIT 2.14
ASSET PURCHASE AGREEMENT
dated as of the 30th day of December, 1999
by and among
DOVEBID, INC.,
UNIDYNE INTERNATIONAL, INC.,
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AND
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of December
30, 1999, by and among DoveBid, Inc., a Delaware corporation, and/or any
assignee of same (collectively, "DoveBid"), Unidyne International, Inc., a
Delaware corporation ("Unidyne"), and ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ (together, the
"Stockholders").
WHEREAS, the Board of Directors of Unidyne and DoveBid deem it
advisable and in the best interests of Unidyne and DoveBid, respectively, that
Unidyne sell to DoveBid, and that DoveBid purchase from Unidyne, certain assets
in consideration for cash and a promissory note on the terms and subject to the
conditions of this Agreement; and
WHEREAS, concurrently herewith, DoveBid also is entering into a
substantially similar Asset Purchase Agreement with B&B Custom Circuit Supplies,
Inc. ("B&B") and the shareholders of B&B (the "B&B Shareholders) covering
DoveBid's purchase of substantially all of the assets of B&B (the "B&B
Agreement").
NOW, THEREFORE, in consideration of the premises and of the
agreements, representations, warranties, provisions and covenants herein
contained, and intending to be legally bound, the parties hereto hereby agree as
follows:
1. PURCHASE AND SALE.
1.1 Sale of Assets. Unidyne hereby undertakes to transfer to DoveBid
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substantially all of Unidyne's assets (other than the Excluded Assets described
in Section 1.2 immediately below), including all of Unidyne's right, title and
interest in and to the assets described in Schedule 1.1 (each an "Asset" and
collectively the "Assets") and DoveBid agrees to purchase the Assets from
Unidyne. Except as expressly provided in Section 1.3 below, the Assets will be
transferred to DoveBid free and clear of all liens, security interests,
mortgages, indentures, pledges, options, attachments, charges, voting trusts,
restrictions, encumbrances and claims of every kind (collectively, "Liens"). In
return for its sale of the Assets, Unidyne will receive from DoveBid (i) the
Convertible Subordinated Promissory Note (as defined in Section 6.8 below), and
(ii) cash consideration equal to $2,250,000 (the "Cash Consideration") payable
as set forth in Sections 2.2 and 2.3 below, subject to DoveBid's right to retain
$500,000 of the Cash Consideration as a holdback as more specifically set forth
in Section 2.3 below.
1.2 Excluded Assets. Unidyne is not selling to DoveBid, and DoveBid is not
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purchasing from Unidyne, the following assets (collectively, the "Excluded
Assets"): (i) the cash and accounts receivable of Unidyne at Closing, except
cash and accounts receivable that are the proceeds of Pending Sale Assets (as
defined in Section 3.3 below), which cash and accounts receivable do constitute
part of the Assets being purchased by DoveBid, and (ii) Unidyne's rights as
lessor with respect to the equipment leased by Unidyne to third parties as
specifically listed on Schedule 1.2 hereto.
1.3 Pending Sale Assets. The Pending Sale Assets (as defined in Section 3.3
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below) and the proceeds thereof constitute part of the Assets being sold to
DoveBid under this Agreement, and DoveBid shall succeed to all of Unidyne's
rights with respect thereto, including the right to be paid the purchase price
for the Pending Sale Assets by the third-party purchasers of the
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Pending Sale Assets. The Pending Sales Assets, like all of the other Assets,
shall be turned over to DoveBid's ownership, possession and control at the
Closing, and DoveBid will transfer and release the applicable Pending Sale Asset
to the applicable purchaser thereof upon DoveBid being paid in full the purchase
price for such Pending Sale Asset(s) as specified on Part II of Schedule 3.3
hereto. Any and all amounts due or payable by any purchaser or any other person
or entity in connection with any Pending Sale Assets shall be remitted to
DoveBid upon (i) the Closing, if due or payable from the purchaser or any other
person or entity prior to the Closing, or (ii) promptly when due or payable from
the purchaser or any other person or entity, if due or payable from such
purchaser or other person or entity after the Closing.
1.4 No Assumed Obligations and Liabilities. Without regard to whether any
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law, governmental authority, or other third party may impose or attempt to
impose any liability of Unidyne, in whole or in part, on DoveBid, DoveBid does
not assume, and Unidyne shall continue to be solely liable for, all liabilities
and obligations, fixed or contingent, known or unknown, of Unidyne. Without
limiting the generality of the foregoing, DoveBid shall neither assume nor have
any liability for any obligation of Unidyne under any contract, whether oral or
written (including, without limitation, any employment contract of Unidyne).
1.5 DoveBid's Hiring Rights. Although DoveBid shall have no obligation or
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liability with respect to any employee of Unidyne, DoveBid shall have the right,
in its sole discretion, to hire any employee or employees of Unidyne as DoveBid
may elect. This provision does not benefit and is not intended to inure to the
benefit of any third parties, including, without limitation, any employees of
Unidyne.
2. CLOSING.
2.1 Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") will take place at DoveBid's corporate headquarters in
Foster City, California, when all of the conditions set forth in Sections 6 and
7 have either been satisfied or waived in writing by the party entitled to the
benefit of such condition.
2.2 Delivery of Consideration. At the Closing, DoveBid shall deliver to
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Unidyne the Cash Consideration minus $500,000 (such net amount being hereinafter
referred to as the "Closing Cash Payment") and the Convertible Subordinated
Promissory Note duly executed by DoveBid. The Closing Cash Payment shall be
made via wire transfer of immediately available funds to Unidyne per wire
transfer instructions provided by Unidyne in writing, or by delivery of a
cashier's check made payable to Unidyne.
2.3 Holdback Amount. DoveBid shall retain $500,000 of the Cash
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Consideration (the "Holdback Amount") as security for (i) the indemnification
and other obligations of Unidyne and the Stockholders under this Agreement
(including any claim for damages by DoveBid for breach of any obligations,
representations or warranties of Unidyne or the Stockholders under this
Agreement), and (ii) the indemnification and other obligations of B&B and the
B&B Shareholders under the B&B Agreement (including any claim for damages by
DoveBid for breach of any obligations, representations or warranties of B&B or
the B&B Shareholders under the B&B Agreement); and Unidyne hereby grants DoveBid
a security interest in such $500,000 and any accrued interest thereon in order
to secure all such indemnity and other obligations and
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claims. Because there is a substantially identical holdback provision in the B&B
Agreement, Unidyne and the Stockholders acknowledge and agree that there
effectively is an aggregate $1,000,000 holdback amount when both Section 2.3 of
this Agreement and Section 2.3 of the B&B Agreement are taken into account (the
"Combined Holdback Amount"), and that DoveBid may proceed against all or any
portion of the Combined Holdback Amount to the extent necessary to make DoveBid
whole on its claims arising and asserted before January 3, 2001. Accordingly,
Unidyne and the Stockholders here expressly acknowledge and agree that claims of
DoveBid against B&B or the B&B Shareholders arising under or in connection with
the B&B Agreement may be satisfied from all or a portion of the Holdback Amount
under this Agreement. DoveBid shall pay the Holdback Amount jointly to the
Stockholders (by a check made payable to both Stockholders) on January 3, 2001
unless exhausted or depleted due to indemnification claims by DoveBid or another
Indemnified Party (as defined in Section 9.3(i) below) or by any claim for
damages by DoveBid against (i) Unidyne or the Stockholders for breach of any of
their respective obligations, representations or warranties under this
Agreement, or (ii) B&B or the B&B Shareholders for breach of any of their
respective obligations , representation or warranties under the B&B Agreement.
To the extent the Holdback Amount is depleted but not entirely exhausted by such
claims, DoveBid shall so pay on such date only the portion of the Holdback
Amount that has not been depleted by such claims. Any payment of all or any
portion of the Holdback Amount to the Stockholders on January 3, 2001 or
thereafter shall not preclude or prejudice any claims that DoveBid then or
thereafter might have against Unidyne or the Stockholders.
3. REPRESENTATIONS AND WARRANTIES OF UNIDYNE AND STOCKHOLDER.
(A) Representations and Warranties of Unidyne and the Stockholders.
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Unidyne and the Stockholders jointly and severally represent and warrant that
all of the following representations and warranties in this Section 3(A) are
true at the time of Closing, and that such representations and warranties shall
survive the Closing for a period of three (3) years (the last day of such period
being hereinafter called the "Expiration Date"), except that (i) the warranties
and representations set forth in Sections 3.5 (Environmental Matters) and 3.9
(Employee Plans) hereof shall survive until such date as the limitations period
has run for each act, inaction, fact, event or circumstance which constitutes a
breach thereof, which date shall be deemed to be the Expiration Date for
Sections 3.5 (Environmental Matters) and 3.9 (Employee Plans),and (ii) the
warranties and representations set forth in Section 3.11 (Taxes) hereof shall
survive until such date as the limitations period has run for all tax periods
ended on or prior to the Closing, which date shall be deemed to be the
Expiration Date for Section 3.11 (Taxes).
3.1 Due Organization. Unidyne is a corporation duly organized, validly
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existing and in good standing under the laws of the state of its incorporation,
and is duly authorized and qualified to own and lease the Assets and to do
business under all applicable laws, regulations, ordinances and orders of public
authorities and to carry on its business in the places and in the manner as now
conducted, except where the failure to be so authorized or qualified would not
have a material adverse effect on the business, operations, properties, assets
or condition (financial or otherwise), of Unidyne (a "Material Adverse Effect").
True, complete and correct copies of the Articles of Incorporation and Bylaws,
each as amended, of Unidyne (collectively, the "Charter Documents"), have been
made available to DoveBid.
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3.2 Authorization. (i) The representatives of Unidyne executing this
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Agreement have the corporate authority to enter into and bind Unidyne to the
terms of this Agreement, (ii) Unidyne has the full legal right, power and
authority to enter into this Agreement and (iii) no other corporate action is
necessary for the authorization, execution, delivery and performance by Unidyne
of this Agreement and any other agreements contemplated by this Agreement.
3.3 Inventory/Equipment Lists; Pending Sale Assets. Part I of Schedule 3.3
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hereto contains a true and correct specific list of the Assets constituting
inventory and equipment ("Inventory/Equipment Assets") and the book value of
such Assets. Part II of Schedule 3.3 hereto contains a true and correct specific
list of those Inventory/Equipment Assets which Unidyne, as of the Closing, has
previously contracted to sell to third parties other than DoveBid (each a
"Pending Sale Asset" and collectively the "Pending Sale Assets"), and which
sales remains pending and unconsummated as of the Closing. For each Pending Sale
Asset, Part II of Schedule 3.3 hereto also contains the price at which Unidyne
has so contracted to sell such Pending Sale Asset (including an itemization of
any and all cash and non-cash consideration to be paid by the purchaser of such
Pending Sale Asset) and which remains due and payable from the purchaser
thereof. Unidyne and the Stockholders represent and warrant that no sales tax
shall be collectible, due or payable in connection with the consummation of the
sale of any Pending Sale Asset because Unidyne and the Stockholders have
determined that each purchaser of a Pending Sale Asset is a qualified reseller
exempt from sales tax.
3.4 Permits and Intangibles. Unidyne holds all licenses, franchises,
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permits and other governmental authorizations including permits, titles
(including motor vehicle titles and current registrations), fuel permits,
licenses, franchises, certificates, trademarks (or applications therefor), trade
names (or applications therefor), patents (or applications therefor), and
copyrights, the absence of any of which would have a Material Adverse Effect.
Schedule 3.4 contains an accurate list and summary description of all such
copyrights, trademarks (or applications therefor), trade names (or applications
therefor), patents (or applications therefor), licenses, franchises, permits and
other governmental authorizations. To the knowledge of Unidyne, the copyrights,
trademarks (or applications therefor), trade names (or applications therefor),
patents (or applications therefor), licenses, franchises, permits and other
governmental authorizations listed on Schedule 3.4 are valid, and Unidyne has
not received any notice that any governmental authority intends to cancel,
terminate or not renew any such item. Unidyne has conducted and is conducting
its business in compliance with the requirements, standards, criteria and
conditions set forth in applicable permits, licenses, orders, approvals,
variances, rules and regulations and is not in violation of any of the foregoing
except where such non-compliance or violation would not have a Material Adverse
Effect. The transactions contemplated by this Agreement will not result in a
default under or a breach or violation of, or have a Material Adverse Effect
upon the rights and benefits afforded by, any such licenses, franchises, permits
or government authorizations.
3.5 Environmental Matters. Except to the extent that noncompliance with
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any Environmental Law (as defined below), either singly or in the aggregate,
does not have a Material Adverse Effect, (i) Unidyne has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively
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"Environmental Laws") including, without limitation, Environmental Laws relating
to protection of the air, water or land or to the generation, storage, use,
handling, transportation, treatment or disposal of Solid Wastes, Hazardous
Wastes or Hazardous Substances (as such terms are defined in any applicable
Environmental Law), (ii) Unidyne has obtained and complied with all necessary
permits and other approvals necessary to treat, transport, store, dispose of or
otherwise handle Solid Wastes, Hazardous Wastes or Hazardous Substances and has
reported, to the extent required by all Environmental Laws, all past and present
sites owned and operated by Unidyne where Solid Wastes, Hazardous Wastes or
Hazardous Substances have been treated, stored, used, disposed of or otherwise
handled, (iii) there have been no releases (as defined in Environmental Laws)
at, from, under, in or on any property owned or operated by Unidyne except as
permitted by Environmental Laws, (iv) to the knowledge of Unidyne there is no
on-site or off-site location to which Unidyne has transported or disposed of
Solid Wastes, Hazardous Wastes or Hazardous Substances or arranged for the
transportation of Solid Wastes, Hazardous Wastes or Hazardous Substances, which
site is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against Unidyne or
DoveBid for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended and (v) Unidyne has no contingent liability in connection with any
release of any Solid Waste, Hazardous Waste or Hazardous Substance into the
environment. There have been no material releases of Hazardous Wastes or
Hazardous Substances by Unidyne.
3.6 Title and Condition of Assets. The Assets consisting of equipment and
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other material fixed Assets may be in need of repair and are being purchased by
DoveBid in "AS IS" condition. All fixed Assets are either owned by Unidyne or
leased under an agreement indicated in Schedule 3.6. Except as set forth in
Schedule 3.6, Unidyne is the sole and exclusive owner of, and has good and
marketable title to, all of the Assets, wherever located, free and clear of all
Liens and no other person, firm or corporation has or will have at the Closing
any interest whatsoever in any of the Assets.
3.7 Significant Customers; Material Contracts and Commitments. Unidyne has
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(i) delivered to DoveBid an accurate list (Schedule 3.7) of all significant
customers (i.e., those customers representing five percent (5%) or more of
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Unidyne's revenues for the 12 months prior to the date of this Agreement), and
(ii) delivered or made available to DoveBid complete and accurate copies of all
contracts requiring payment or performance by Unidyne in an amount or with a
value in excess of $25,000 ("Material Contracts") to which Unidyne is a party or
by which Unidyne or any of its respective properties are bound (including, but
not limited to, contracts with significant customers, joint venture or
partnership agreements, contracts with any labor organizations, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase land,
leases, liens, pledges or other security agreements) as of the Closing, and in
each case has delivered or shall deliver true, complete and correct copies of
such agreements to DoveBid following DoveBid's request therefor. None of
Unidyne's significant customers has cancelled or substantially reduced or, to
the knowledge of Unidyne, is currently attempting or threatening to cancel any
Material Contract or substantially reduce utilization of the services provided
by Unidyne, and Unidyne has complied with all material commitments and
obligations pertaining to any Material Contract, and is not in default under any
such Material Contract, and no notice of default has been received, and no
Stockholder nor any affiliate of any Stockholder a
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party to any such Material Contract. Unidyne has not been the subject of any
election in respect of union representation of employees and is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union. No employees of Unidyne are
represented by any labor union or covered by any collective bargaining agreement
and no campaign to establish such representation has ever occurred or, to the
knowledge of Unidyne, is in progress. There is no pending or, to Unidyne's
knowledge, threatened labor dispute involving Unidyne and any group of its
employees, nor has Unidyne experienced any labor interruptions over the past
three years, and Unidyne considers its relationship with employees to be good.
3.8 Insurance. Unidyne historically has maintained and currently maintains
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reasonable and adequate casualty, general liability and workers' compensation
insurance coverage, and Unidyne will keep such insurance policies in full force
and effect for three years after the Closing to cover any claims made against
Unidyne after the Closing pertaining to any losses or casualties occurring prior
to the Closing. Upon request by DoveBid annually during such three-year period,
Unidyne or the Stockholders shall furnish evidence that such coverage remains in
full force and effect.
3.9 Employee Plans; Compliance with Laws. To the extent that Unidyne now
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maintains or sponsors or contributes to, or has ever maintained or sponsored or
contributed to, any one or more employee benefit plans, employee welfare benefit
plans, employee pension benefit plans, multi-employer plans or multi-employer
welfare arrangements, including, without limitation, plans or arrangements as
defined in Sections 3(3), (1), (2), (37) and (40), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and including,
without limitation, benefit plans or arrangements that are not subject to ERISA,
such as employment agreements and any other agreements containing "golden
parachute" provisions and deferred compensation agreements (each and all of the
foregoing being hereinafter individually referred to as a "Plan" and
collectively referred to as the "Plans"), all Plans have been and are presently
in material compliance with all applicable provisions of ERISA and the
regulations issued thereunder, the Internal Revenue Code of 1986, as amended
(the "Code") and the regulations issued thereunder, as well as with all other
applicable laws, and have been administered, operated and managed in all
material respects in accordance with their governing documents, if any. All
reports and other documents required to be filed with any governmental agency or
distributed to Plan participants or beneficiaries (including, but not limited
to, annual reports, summary annual reports, actuarial reports, PBGC-1 Forms,
audits or tax returns) have been timely filed or distributed. None of (i) the
Stockholders, (ii) any Plan or (iii) Unidyne has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. No Plan has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA; and no circumstances
exist pursuant to which Unidyne could have any direct or indirect liability
whatsoever (including being subject to any statutory lien to secure payment of
any such liability), to the Pension Benefit Guaranty Corporation under Title IV
of ERISA or to the Internal Revenue Service for any excise tax or penalty with
respect to any Plan now or hereinafter maintained or contributed to by Unidyne
or any member of a "controlled group" (as defined in Section 4001(a)(14) of
ERISA) that includes Unidyne; and neither Unidyne nor any member of a
"controlled group" (as defined above) that includes Unidyne currently has (or at
the Closing will have) any obligation whatsoever to contribute to any "multi-
employer pension plan" (as defined in ERISA Section 4001(a)(14)), nor
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has any withdrawal liability whatsoever (whether or not yet assessed) arising
under or capable of assertion under Title IV of ERISA (including, but not
limited to, Sections 4201, 4202, 4203, 4204, or 4205 thereof). Both before and
after the Closing, Unidyne and the Stockholders will be and remain solely
responsible for dealing with any and all matters pertaining to any Plan and any
liabilities in respect thereof, and the consummation of the transactions
contemplated hereby will not result in any liability of DoveBid to any person or
entity in respect of any Plan (including, without limitation, any liability to
any Plan, any governmental entity, any employee of Unidyne, or Unidyne).
3.10 Conformity with Law. Unidyne is not in violation of any law or
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regulation applicable to Unidyne or any order applicable to Unidyne of any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it which would
have a Material Adverse Effect; there are no claims, actions, suits or
proceedings pending or, to the knowledge of Unidyne, threatened, against or
affecting Unidyne, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it which would have a Material Adverse
Effect, and no notice of any such claim, action, suit or proceeding, whether
pending or threatened, has been received by Unidyne. Unidyne has conducted and
is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in applicable federal, state and local
statutes, ordinances, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing which would have a Material Adverse
Effect.
3.11 Taxes.
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(i) All Tax Returns (as hereinafter defined) required to have been
filed by or with respect to Unidyne with any Taxing Authority (as hereinafter
defined) have been duly filed, and each such Tax Return accurately, correctly
and completely reflects the income, franchise or other Tax liability and all
other information, including the tax basis and recovery periods for assets,
required to be reported thereon. Unidyne has furnished or made available to
DoveBid complete and accurate copies of all income and franchise tax returns,
and any amendments thereto, filed by Unidyne for all taxable years ending on or
after December 31, 1993. All Taxes (whether or not shown on any Tax Return and
whether or not assessed) owed by Unidyne have been paid. There are no Liens of
any kind upon or with respect to any Asset, including without limitation, any
Lien for any Tax.
(ii) Unidyne is not and has not since January 1, 1995 been a member
of any affiliated, combined, consolidated, unitary or similar group.
(iii) Unidyne has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party.
(iv) Unidyne does not expect any Taxing Authority to assess any
additional Taxes against or in respect of it for any past period. There is no
dispute or claim concerning any Tax liability of Unidyne either (i) claimed or
raised by any Taxing Authority or (ii) otherwise known to Unidyne. No issues
have been raised in any examination by any Taxing Authority with
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respect to Unidyne which, by application of similar principles, reasonably could
be expected to result in a proposed deficiency for any other period not so
examined. Unidyne has delivered to DoveBid complete and correct copies of all
federal, state, local and foreign income Tax Returns filed by, and all Tax
examination reports and statements of deficiencies assessed against or agreed to
by, Unidyne since January 1, 1996.
(v) Unidyne does not own any subsidiary corporation.
For all purposes of this Agreement related to any Tax matters:
"Tax" means any federal, state, local, or foreign income, gross
receipts, ad valorem, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, net worth, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, workers compensation, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever imposed by any federal, state, local or foreign
government or any agency or political subdivision of any such government,
including any interest, penalty, or addition thereto, without regard to whether
such tax is disputed or not or arose before, on or after the Closing.
"Tax Returns" means all reports, elections, declarations, claims for
refund, estimates, information statements and returns (including any schedules
and attachments thereto) relating to, or required to be filed in connection
with, any Taxes pursuant to the statutes, rules and regulations of any federal,
state, local or foreign government taxing authority.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction, having or purporting to have jurisdiction with respect to any Tax.
3.12 No Violations. Neither Unidyne nor, to the knowledge of Unidyne, any
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other party thereto is (i) in violation of any Charter Document or (ii) in
default under any material lease, instrument, agreement, license, or permit to
which it is a party or by which its properties are bound (the "Material
Documents"); and, except as set forth in the schedules and documents attached to
this Agreement, (a) the transactions contemplated hereby will not have a
Material Adverse Effect on the rights and benefits of Unidyne under the Material
Documents and the ability of Unidyne to assign Unidyne's rights under such
Material Documents to DoveBid, and (b) the execution of this Agreement and the
performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach or constitute a default under any of the terms or provisions of the
Material Documents or the Charter Documents. None of the Material Documents
requires notice to, or the consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect or give rise to any right to termination, cancellation or
acceleration or loss of any right or benefit.
3.13 Government Contracts. Unidyne is not a party to any governmental
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contracts subject to price redetermination or renegotiation.
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3.14 No Powers of Attorney. Neither Unidyne nor either of the Stockholders
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has granted a power of attorney to any person or entity for any reason or
purpose., except for the Power of Attorney granted by ▇▇▇▇ ▇▇▇▇▇ to ▇▇▇▇ ▇▇▇▇▇▇
dated December 23, 1999 in connection with the negotiation, execution and
closing of this Agreement and the ancillary documents contemplated under this
Agreement.
3.15 Validity of Obligations. The execution and delivery of this Agreement
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by Unidyne and the Stockholders and the performance of the transactions
contemplated herein have been duly and validly authorized by the Board of
Directors of Unidyne and the Stockholders and this Agreement has been duly and
validly authorized by all necessary corporate action and, assuming due
authorization, execution and delivery by DoveBid, is a legal, valid and binding
obligation of Unidyne and the Stockholders, enforceable against Unidyne and the
Stockholders in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
3.16 Relations with Governments. Unidyne has not made, offered or agreed
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to offer anything of value to any governmental official, political party or
candidate for government office which would cause Unidyne to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect.
3.17 WARN Act. As of the date hereof, Unidyne has not taken any action so
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as to require any compliance under the Worker Adjustment and Retraining
Notification Act (the "WARN Act"). Unidyne shall comply with its obligations
under the WARN Act, and if applicable, make the appropriate notifications
thereunder sixty (60) or more days prior to the Closing. Unidyne shall be solely
liable and responsible for any debt, obligation, contribution or other liability
arising from any failure by Unidyne to comply fully with its WARN Act
obligations.
3.18 Entire Business. At the Closing, Unidyne will sell and transfer to
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DoveBid good, valid and marketable title to all of the Assets except for the
Excluded Assets.
3.19 Stockholders' Authority; Ownership. The Stockholders are the sole
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owners of Unidyne and each of the Stockholders has the full legal right, power
and authority to enter into this Agreement.
4. REPRESENTATIONS OF DOVEBID.
DoveBid represents and warrants that all of the following
representations and warranties are true at the date of this Agreement and shall
be true at the time of the Closing and that such representations and warranties
shall survive the Closing until the Expiration Date.
4.1 Due Organization. DoveBid is duly organized, validly existing and in
----------------
good standing under the laws of the State of Delaware, and is duly authorized
and qualified under all applicable laws, regulations, ordinances and orders of
public authorities to carry on its business in the places and in the manner as
now conducted except for where the failure to be so authorized or qualified
would not have a material adverse effect on the business, operations, affairs,
properties, assets or condition (financial or otherwise), of DoveBid and on
DoveBid's subsidiaries, taken as a whole (a "DoveBid Material Adverse Effect").
9
4.2 Validity of Obligations. The execution and delivery of this Agreement,
-----------------------
the Employment Agreements (as defined in Section 6.6), the Lease (as defined in
Section 6.7) and the Convertible Subordinated Promissory Note, by DoveBid and
the performance by DoveBid of the transactions contemplated herein or therein
have been duly and validly authorized by the Board of Directors of DoveBid and
this Agreement, the Convertible Subordinated Promissory Note, the Employment
Agreements and the Lease have been duly and validly authorized by all necessary
corporate action, duly executed and delivered and are legal, valid and binding
obligations of DoveBid, enforceable against DoveBid in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
4.3 Authorization. The representatives of DoveBid executing this Agreement
-------------
have the requisite authority to enter into and bind DoveBid to the terms of this
Agreement. DoveBid has the full legal right, power and authority to enter into
this Agreement and no other action is necessary for the authorization,
execution, delivery and performance by DoveBid of the Agreement and any other
agreements contemplated by the Agreement.
4.4 No Conflicts. The execution, delivery and performance of this
------------
Agreement, the consummation of any transactions herein referred to or
contemplated by and the fulfillment of the terms hereof and thereof will not:
(i) conflict with, or result in a breach or violation of, the
Certificate of Incorporation or Bylaws of DoveBid;
(ii) materially conflict with, or result in a material default
(or would constitute a default but for any requirement of notice or lapse of
time or both) under any document, agreement or other instrument to which DoveBid
is a party, or result in the creation or imposition of any Lien on any of
DoveBid's properties pursuant to (A) any law or regulation to which DoveBid or
any of its property is subject, or (B) any judgment, order or decree to which
DoveBid is bound or any of its property is subject; or
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of DoveBid.
4.5 WARN Act. DoveBid will not take any action which would cause Unidyne
--------
to violate the WARN Act.
5. COVENANTS.
5.1 Bulk Sales Compliance. The parties agree to waive compliance with any
---------------------
applicable bulk sales statutes with respect to the sale and transfer of the
Assets hereunder; provided, that notwithstanding anything to the contrary
--------
contained in this Agreement, Unidyne and the Stockholders will jointly and
severally indemnify and hold DoveBid harmless from and against any and all
liabilities, including liability for any Taxes, imposed upon, or asserted
against DoveBid as a result of Unidyne's noncompliance with any such bulk sales
or bulk transfer laws.
10
5.2 Payment of Employment Liabilities. Unidyne agrees to pay all accrued
---------------------------------
and unpaid liabilities and obligations with respect to Unidyne's employees
relating to the period prior to the Closing in accordance with all applicable
laws.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS AND UNIDYNE.
The obligations of the Stockholders and Unidyne with respect to
actions to be taken at Closing are subject to the satisfaction or waiver on or
prior to Closing of all of the following conditions.
6.1 Representations and Warranties; Performance of Obligations. All
----------------------------------------------------------
representations and warranties of DoveBid contained in Section 4 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 date; each
and all of the terms, covenants and conditions of this Agreement to be complied
with and performed by DoveBid on or before the Closing shall have been duly
complied with and performed in all material respects.
6.2 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to Unidyne and its counsel.
6.3 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 Unidyne as a
result of which the management of Unidyne deems it inadvisable to proceed with
the transactions hereunder.
6.4 Consents and Approvals. All necessary consents of and filings with any
----------------------
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein and no governmental agency or body shall have
taken any other action or made any request of Unidyne as a result of which
Unidyne deems it inadvisable to proceed with the transactions hereunder.
6.5 Employment Agreement. ▇▇▇▇ ▇▇▇▇▇ shall have entered into an employment
--------------------
agreement with DoveBid substantially in the form of Annex I hereto (the
"Employment Agreement").
6.6 Leases. DoveBid shall have entered into a lease substantially in the
------
form of Annex II (the "Lease").
6.7 Convertible Subordinated Promissory Note. DoveBid shall have executed
----------------------------------------
the subordinated convertible promissory note substantially in the form of Annex
III (the "Convertible Subordinated Promissory Note").
11
7. 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 on or prior to the Closing of
all of the following conditions.
7.1 Representations and Warranties; Performance of Obligations. All the
----------------------------------------------------------
representations and warranties of the Stockholders and Unidyne contained in this
Agreement shall be true and correct in all material respects at the Closing;
each and all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Stockholders and Unidyne on or before the
Closing, as the case may be, shall have been duly performed or complied with in
all material respects; and the Stockholders and Unidyne shall have delivered to
DoveBid a certificate dated the date of the Closing signed by the Stockholders
and certified by the Secretary or Assistant Secretary of Unidyne to such effect.
7.2 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.
7.3 Intentionally Blank.
-------------------
7.4 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; and DoveBid shall have received a
certificate signed by the Stockholders and certified by the Secretary or
Assistant Secretary of Unidyne dated the date of Closing to such effect.
7.5 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 Unidyne and approved by DoveBid. Such instruments and documents shall
include, without limitation, the ▇▇▇▇ of Sale (as defined in Section 7.10) and
other instruments and documents sufficient to convey to DoveBid good, valid and
marketable fee simple title to all Assets free and clear of all Liens,
including, without limitation, any documents or certificates of title for motor
vehicles or any other Assets for which documents or certificates of title are
issued under applicable law. Unidyne shall deliver to DoveBid full possession
and control of the Assets.
7.6 Consents and Approvals. All necessary consents of and filings with any
----------------------
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; Unidyne
shall have obtained and delivered to DoveBid such additional consents to the
transactions contemplated herein as DoveBid may reasonably request including,
without limitation, DoveBid's receipt on or prior to Closing of (a) consents of
third parties to those Material Contracts listed on Schedule 3.7 and (b) those
licenses, franchises, permits or governmental authorizations set forth on
Schedule 3.4 pursuant to the last sentence of Section 3.4, or assurances
reasonably acceptable to it that such licenses, franchises, permits or
governmental authorizations will be received at Closing or that the failure to
receive such licenses, franchises, permits or governmental authorizations at
Closing will not adversely affect
12
its ability to conduct the business of Unidyne as conducted prior to Closing;
and no action or proceeding 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 DoveBid deems it inadvisable to proceed with the transactions
hereunder.
7.7 Good Standing Certificate or Equivalent. At it sole discretion,
---------------------------------------
DoveBid shall have received evidence satisfactory to it that Unidyne is validly
existing, in good standing and authorized to do business and that all state
franchise and/or income tax returns and taxes due by Unidyne 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 Unidyne's or the
Stockholders' representations and warranties regarding such matters and
DoveBid's reliance on such representations or warranties.
7.8 Employment Agreements. ▇▇▇▇ ▇▇▇▇▇ shall have entered into the
---------------------
Employment Agreement with DoveBid.
7.9 Lease. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Associates, a California general partnership
-----
in which the Stockholders are directly or indirectly two of the general
partners, shall have entered into the Lease with DoveBid.
7.10 ▇▇▇▇ of Sale. The Stockholders and Unidyne shall have executed the
------------
▇▇▇▇ of Sale substantially in the form of Annex IV (the "▇▇▇▇ of Sale").
7.11 Convertible Subordinated Promissory Note and Subordination Agreement.
--------------------------------------------------------------------
Unidyne shall have executed the Convertible Subordinated Promissory Note and the
Subordination Agreement attached thereto as Annex A.
7.12 Name Change. Because Unidyne's corporate name and the name "Unidyne"
-----------
are part of the Assets being sold to DoveBid, Unidyne shall have changed its
name from Unidyne International, Inc. to a name which does not have "Unidyne" in
it and which is reasonably satisfactory to DoveBid, or, if DoveBid proceeds to
Closing before such name change has taken place, Unidyne as a post-closing
covenant will effect such name change no later than ten (10) days after the
Closing.
8. SPECIAL TAX MATTERS.
8.1 Cooperation in Tax Return Preparation. Each party hereto shall at its
-------------------------------------
own expense cooperate with each other and make available to each other such Tax
data and other information as may be reasonably required in connection with (i)
the preparation or filing of any Tax Return, election, consent or certification,
or any claim for refund, (ii) any determinations of liability for Taxes, or
(iii) an audit, examination or other proceeding with respect to Taxes ("Tax
Data"). Such cooperation shall include, without limitation, making their
respective employees and independent auditors reasonably available on a mutually
convenient basis for all reasonable purposes, including, without limitation, to
provide explanations and background information and to permit the copying of
books, records, schedules, workpapers, notices, revenue agent reports,
settlement or closing agreements and other documents containing the Tax Data
("Tax Documentation"). The Tax Data and the Tax Documentation shall be retained
until one year
13
after the expiration of all applicable statutes of limitations (including
extensions thereof); provided, however, that in the event an audit, examination,
-------- -------
investigation or other proceeding has been instituted prior to the expiration of
an applicable statute of limitations, the Tax Data and Tax Documentation
relating thereto shall be retained until there is a final determination thereof
(and the time for any appeal has expired).
8.2 Tax Return Preparation and Filing. The Stockholders and Unidyne will
---------------------------------
be responsible for preparing and filing (or causing the preparation and filing
of) all income Tax Returns for Unidyne.
8.3 Treatment of Transaction for Tax Purposes. The parties agree that for
-----------------------------------------
all purposes, including income tax and tax information reporting purposes, the
exchange of assets for cash and the assumption of liabilities by DoveBid as
provided for in this Agreement is a sale of assets from Unidyne to DoveBid to
which Code Section 1001 applies.
9. INDEMNIFICATION.
The Stockholders, Unidyne and DoveBid each make the following
covenants that are applicable to them, respectively:
9.1 General Indemnification by the Stockholders and Unidyne. The
-------------------------------------------------------
Stockholders and Unidyne, jointly and severally, covenant and agree that they
will indemnify, defend, protect and hold harmless DoveBid, at all times from and
after the date of this Agreement until the Expiration Date as defined in Section
3 above, from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by DoveBid as a result of or arising from (i) any breach
of the representations and warranties of the Stockholders or Unidyne set forth
herein or on the schedules or certificates delivered in connection herewith,
(ii) any breach or nonfulfillment of any covenant or agreement on the part of
the Stockholders or Unidyne under this Agreement, (iii) any third party claim
arising from the conduct of Unidyne or either of the Stockholders, (iv) any
breach of the representations and warranties of B&B or the stockholders of B&B
set forth in the B&B Agreement or on the schedules or certificates delivered in
connection with the B&B Agreement, (v) any breach or nonfulfillment of any
covenant or agreement on the part of B&B or the stockholders of B&B under the
B&B Agreement, or (vi) any third party claim arising from the conduct of B&B or
either of the stockholders of B&B.
9.2 Indemnification by DoveBid. DoveBid covenants and agrees that it will
--------------------------
indemnify, defend, protect and hold harmless Unidyne and the Stockholders at all
times from and after the date of this Agreement until the Expiration Date, from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by Unidyne and the Stockholders as a result of or arising from (i) any
breach by DoveBid of their representations and warranties set forth herein or on
the schedules or certificates attached hereto, or (ii) any nonfulfillment of any
covenant or agreement on the part of DoveBid under this Agreement.
14
9.3 Third Person Claims.
-------------------
(i) Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person (such claim or commencement of such
action or proceeding being a "Third Party Claim") that could give rise to a
right of indemnification under this Agreement, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 9.1 or Section 9.2
hereof (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such Third Party Claim describing in reasonable detail the
nature of such Third Party Claim, a copy of all papers served with respect to
that Third Party Claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement; provided,
--------
however, that the failure of the Indemnified Party to give timely notice
-------
hereunder shall relieve the Indemnifying Party of its indemnification
obligations under this Agreement to the extent, but only to the extent that,
such failure materially prejudices the Indemnifying Party's ability to defend
such claim. Within fifteen (15) days after receipt of such notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(a) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Section 9 with respect to that Third Party Claim
and (b) if the Indemnifying Party does not dispute its potential liability to
the Indemnified Party with respect to that Third Party Claim, whether the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against that Third Party Claim.
(ii) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim through counsel of its own choosing which is consented to by
the Indemnified Party (which consent shall not be unreasonably delayed or
withheld), then the Indemnifying Party shall have the right to defend, at its
sole cost and expense, that Third Party Claim by all appropriate proceedings,
which proceedings shall be prosecuted diligently by the Indemnifying Party to a
final conclusion or settled at the discretion of the Indemnifying Party in
accordance with this Section 9.3(ii) and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession with respect to that
Third Party Claim and otherwise cooperate with the Indemnifying Party in the
defense of that Third Party Claim; provided, however, that the Indemnifying
-------- -------
Party shall not enter into any settlement with respect to any Third Party Claim
that purports to limit the activities of, or otherwise restrict in any way, any
Indemnified Party or any affiliate of any Indemnified Party without the prior
consent of that Indemnified Party (which consent may be withheld in the sole
discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party, to file,
during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 9.3(ii) and will bear its own
costs and expenses with respect to that participation; provided, however, that
-------- -------
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified
15
Party, and the Indemnified Party has been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and,
on its written notification of that employment, the Indemnifying Party shall not
have the right to assume or continue the defense of such action on behalf of the
Indemnified Party.
(iii) If the Indemnifying Party (a) within the Election Period
(1) disputes its potential liability to the Indemnified Party under this Section
9, (2) elects not to defend the Indemnified Party pursuant to Section 9.3(ii) or
(3) fails to notify the Indemnified Party that the Indemnifying Party elects to
defend the Indemnified Party pursuant to Section 9.3(ii) or (b) elects to defend
the Indemnified Party pursuant to Section 9.3(ii) but fails diligently and
promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled, but any settlement shall require the consent
of the Indemnifying party, which consent shall not be unreasonably delayed or
withheld. The Indemnified Party shall have full control of such defense and
proceedings. Notwithstanding the foregoing, if the Indemnifying Party has
delivered a written notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 9 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
9.3 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all reasonable costs and expenses of such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section
9.3(iii), and the Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
(iv) The parties hereto will make appropriate adjustments for
any Tax benefits, Tax detriments or insurance proceeds in determining the amount
of any indemnification obligation under this Section 9. All indemnification
payments under this Section 9 shall be deemed adjustments to the consideration
provided for herein.
9.4 Exclusive Remedy. The indemnification provided for in this Section 9
----------------
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party,
provided that nothing herein shall be construed to limit the right of a party,
--------
in a proper case, to seek injunctive relief for a breach of this Agreement.
9.5 Limitations on Indemnification.
------------------------------
(i) DoveBid and the other persons or entities indemnified
pursuant to Section 9.1(i) shall not assert any claim for indemnification
hereunder against the Stockholders or Unidyne until such time as the aggregate
of all claims which such persons may have against the Unidyne and/or the
Stockholders (including, without limitation, all indemnification claims for
16
attorney's fees and costs) shall exceed $50,000 (the "Indemnification
Threshold"), provided that once the aggregate of all claims against Unidyne
and/or the Stockholders collectively exceed the Indemnification Threshold,
Unidyne and the Stockholders shall be responsible for only those claims in
excess of the Indemnification Threshold, and provided further that this Section
9.5(i) shall not apply to limit claims for indemnification pursuant to Sections
3.5, 3.11, 9.1(ii) or 9.1(iii).
(ii) The Stockholders and Unidyne shall not assert any claim
(other than a Third Party Claim) pursuant to Section 9.2(i) for indemnification
hereunder against DoveBid until such time as the aggregate of all such claims
which the Stockholders or Unidyne may have against DoveBid shall exceed the
Indemnification Threshold, provided that once the aggregate of all claims
exceeds the Indemnification Threshold, DoveBid shall be responsible for only
those claims in excess of the Indemnification Threshold and provided further
that this Section 9.5(ii) shall not apply to limit claims for indemnification
pursuant to Sections 9.2(ii) or 9.2(iii).
(iii) Notwithstanding any other term of this Agreement, in no
event shall the Stockholders or Unidyne be liable under this Agreement,
including this Section 9, for an amount which exceeds the sum of (a) the Cash
Consideration and (b) the amount of the Convertible Subordinated Promissory
Note.
10. NONCOMPETITION.
10.1 Prohibited Activities. The Stockholders and Unidyne will not, for a
---------------------
period of four (4) years following the date of Closing, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage directly or as an officer, director, stockholder,
owner, partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in direct
competition with DoveBid (including its subsidiaries);
(ii) call upon any person who is, at that time, an employee of
DoveBid (including the subsidiaries thereof) in a managerial capacity for the
purpose or with the intent of enticing such employee away from or out of the
employ of DoveBid (including the subsidiaries thereof), provided that the
-------------
Stockholders shall be permitted to call upon and hire any member of his or her
immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of DoveBid
(including the subsidiaries thereof) for the purpose of soliciting or selling
products or services in direct competition with DoveBid;
(iv) call upon any prospective acquisition candidate, on the
Stockholders' or Unidyne's own behalf or on behalf of any competitor of DoveBid,
which candidate was either called upon by DoveBid (including the subsidiaries
thereof) or for which DoveBid (or any subsidiary thereof) made an acquisition
analysis, for the purpose of acquiring such entity, provided that the
--------
Stockholders or Unidyne shall not be charged with a violation of this Section
unless and until a Stockholder or Unidyne shall have knowledge or notice that
such prospective
17
acquisition candidate was called upon, or that an acquisition analysis was made,
for the purpose of acquiring such entity; or
(v) except in furtherance of DoveBid's business, disclose customers,
whether in existence or proposed, of the Stockholders or Unidyne to any person,
firm, partnership, corporation or business for any reason or purpose whatsoever
excluding disclosure to DoveBid or any of DoveBid's Subsidiaries and Affiliates.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Stockholders or Unidyne from acquiring as an investment not more
than three percent (3%) of the capital stock of any business whose stock is
traded on a national securities exchange or over-the-counter.
10.2 Damages. Because of the difficulty of measuring economic losses to
-------
DoveBid as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to DoveBid for which it
would have no other adequate remedy, the Stockholders and Unidyne agree that the
foregoing covenants may be enforced by DoveBid, in the event of breach by the
Stockholders or Unidyne, by injunctions and restraining orders.
10.3 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants in this Section 10 impose a reasonable restraint on the
Stockholders and Unidyne in light of the activities and business of DoveBid
(including the subsidiaries thereof) on the date of the execution of this
Agreement and the current plans of DoveBid; but it is also the intent of
DoveBid, the Stockholders and Unidyne that such covenants be construed and
enforced in accordance with the changing activities and business of DoveBid
(including the subsidiaries thereof) throughout the term of this covenant.
It is further agreed by the parties hereto that, in the event that the
Stockholders who have entered into an Employment Agreement shall thereafter
cease to be employed thereunder, and the Stockholders shall enter into a
business or pursue other activities not in competition with DoveBid and/or any
subsidiary thereof, or similar activities or business in locations the operation
of which, under such circumstances, does not violate clause (i) of Section 10.1,
and in any event such new business, activities or location are not in violation
of this Section 10 or of such Stockholders' obligations under this Section 10,
if any, such Stockholder shall not be chargeable with a violation of this
Section 10 if DoveBid and/or any subsidiary thereof shall thereafter enter the
same, similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
10.4 Severability; Reformation. The covenants in this Section 10 are
-------------------------
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
10.5 Independent Covenant. All of the covenants in this Section 10 shall be
--------------------
construed as an agreement independent of any other provision in this Agreement,
and the existence of any
18
claim or cause of action of the Stockholders or Unidyne against DoveBid
(including the subsidiaries thereof), whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by DoveBid of such
covenants. It is specifically agreed that the period of four (4) years stated at
the beginning of this Section 10, during which the agreements and covenants of
the Stockholders and Unidyne made in this Section 10 shall be effective, shall
be computed by excluding from such computation any time during which any
STOCKHOLDER or Unidyne is in violation of any provision of this Section 10. The
covenants contained in this Section 10 shall not be affected by any breach of
any other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
10.6 Materiality. Unidyne and the Stockholders hereby agree that the
-----------
covenants in this Section 10 are a material and substantial part of this
transaction.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
11.1 Stockholders and Unidyne. The Stockholders and Unidyne recognize and
------------------------
acknowledge that they had in the past, currently have, and in the future may
possibly have, access to certain confidential information of Unidyne and/or
DoveBid, such as lists of customers, operational policies, computer software,
and pricing and cost policies that are valuable, special and unique assets of
Unidyne's and/or DoveBid's respective businesses. The Stockholders and Unidyne
agree that they will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of DoveBid, (b) following
the Closing, as required in the course of performing any duties for DoveBid, and
(c) to counsel and other advisers, provided that such advisers (other than
--------
counsel and certified public accountants) agree to the confidentiality
provisions of this Section 11.1; provided, further, that confidential
-------- -------
information shall not include (i) such information which becomes known to the
public generally through no fault of the Stockholders or Unidyne, (ii) such
information required to be disclosed by law or the order of any governmental
authority under color of law, provided that prior to disclosing any information
--------
pursuant to this clause (ii), the Stockholders and Unidyne shall, if possible,
give prior written notice thereof to DoveBid and provide DoveBid with the
opportunity to contest such disclosure, or (iii) such information the disclosing
party reasonably believes it is required to disclose in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any Stockholder or Unidyne of the provisions of this
section, DoveBid shall be entitled to an injunction restraining such Stockholder
or Unidyne from disclosing, in whole or in part, such confidential information.
Notwithstanding anything contained in this Agreement, nothing herein shall be
construed as prohibiting DoveBid from pursuing any other available remedy for
such breach or threatened breach, including the recovery of damages. To the
extent (and only to the extent) that (i) DoveBid has received any confidential
information from Unidyne in connection with the negotiation of this Agreement,
and (ii) this Agreement does not close so that the asset purchase contemplated
---
by this Agreement is not consummated, DoveBid agrees that it will not disclose
such confidential information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except (a) to authorized
representatives of Unidyne, (b) to DoveBid's counsel and other advisers,
provided that such advisers (other than counsel and certified public
--------
accountants) agree to the confidentiality provisions of this sentence); and
provided, further, that confidential information shall not include
-------- -------
19
(x) such information which becomes known to the public generally through no
fault of DoveBid, (y) such information required to be disclosed by law or the
order of any governmental authority under color of law, provided that prior to
--------
disclosing any information pursuant to this clause (y), DoveBid shall, if
possible, give prior written notice thereof to Unidyne and provide Unidyne with
the opportunity to contest such disclosure, or (z) such information which the
disclosing party reasonably believes it is required to disclose in connection
with the defense of a lawsuit against the disclosing party.
11.2 Damages. Because of the difficulty of measuring economic losses as a
-------
result of the breach of the foregoing covenants in Section 11.1 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.
11.3 Survival. The obligations of the parties under this Section 11 shall
--------
survive the termination of this Agreement.
12. GENERAL.
12.1 Cooperation. Unidyne, the Stockholders and DoveBid shall each deliver
-----------
or cause to be delivered to the other, at such other times and places as shall
be reasonably agreed to, such additional instruments, and take such additional
actions as can be taken without unreasonable expense, as any other may
reasonably request for the purpose of carrying out this Agreement. The
Stockholders and Unidyne will cooperate and use their reasonable efforts to have
the present officers, directors and employees of Unidyne 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.
12.2 Successors and Assigns. This Agreement and the rights of the parties
----------------------
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
DoveBid, the successors of Unidyne, and the heirs and legal representatives of
the Stockholders. This provision does not govern the assignment of the
Convertible Subordinated Promissory Note after the Closing. Any restrictions on
the assignment of the Convertible Subordinated Promissory Note are found in and
governed solely by the provisions of the Convertible Subordinated Promissory
Note.
12.3 Entire Agreement. This Agreement (including the schedules, exhibits
----------------
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders,
Unidyne and DoveBid and supersede any prior agreement, understanding or
discussions relating to DoveBid or the transactions contemplated by this
Agreement. This Agreement, upon execution, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms. Except
as otherwise stated herein, this Agreement and the Annexes hereto may be
modified or amended only by a written instrument executed by the Stockholders,
Unidyne and DoveBid, acting through their respective officers, duly authorized
by their respective Boards of Directors. Any disclosure made on any
20
Schedule delivered pursuant hereto shall be deemed to have been disclosed for
purposes of any other Schedule required hereby.
12.4 Counterparts. This Agreement may be executed simultaneously in two (2)
------------
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
12.5 Brokers and Agents. Each party represents and warrants that it employed
------------------
no broker or agent in connection with this transaction and agrees to indemnify
the other against all loss, cost, damages or expense arising out of claims for
fees or commission of brokers employed or alleged to have been employed by such
indemnifying party.
12.6 Expenses. Whether or not the transactions herein contemplated shall be
--------
consummated, (i) 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 and (ii) the
Stockholders and Unidyne will pay their respective fees, expenses and
disbursements of counsel and accountants incurred in connection with the subject
matter of this Agreement. Unidyne and the Stockholders shall pay all sales,
use, transfer, real property transfer, recording, gains, stock transfer and
other similar taxes and fees ("Transfer Taxes") incurred in connection with the
transactions contemplated by this Agreement. Unidyne shall file, and the
Stockholders shall cause Unidyne to file, all necessary documentation and Tax
Returns with respect to such Transfer Taxes. In addition, Unidyne and the
Stockholders acknowledge that they, and not DoveBid, will pay all taxes due upon
the receipt of the Converted Subordinated Promissory Note and cash consideration
payable to Unidyne pursuant to this Agreement.
12.7 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, addressed
to the party to be notified, postage prepaid and registered or certified with
return receipt requested, by delivering the same in person to such party or to
an officer or agent of such party or by facsimile transmission, as follows:
21
(i) If mailed, delivered or faxed to DoveBid , to each of the
following, using two separate mailings, deliveries or faxes:
DoveBid, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
Fax: 650/▇▇▇-▇▇▇▇
DoveBid, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, General Counsel
Fax: 650/▇▇▇-▇▇▇▇
(ii) If mailed, delivered or faxed to the Stockholders, addressed or
faxed to them at their respective addresses or fax numbers set forth on Annex V
hereto.
(iii) If mailed, delivered or faxed to Unidyne, addressed or faxed to
it at its address or fax number set forth on Annex V hereto,
or to such other address or fax number as any party hereto shall specify in
writing to the other parties hereto pursuant to this Section 12.7 from time to
time. A notice shall be deemed received by the party to whom it is addressed
(a) if by U.S. mail, three business days after it is deposited in the United
States mail, postage prepaid, by registered or certified mail, with return
receipt requested, (b) if by hand delivery (including via courier), at the time
it is personally delivered to the person to whom the notice is to be given, or
(c) if by facsimile transmission, at the time it is received by the party to
whom notice is to be given, provided that if the transmitting party has a
facsimile-machine-generated written confirmation of receipt by the facsimile
machine of the party to whom notice is given, a facsimile shall be deemed
received no later than 24 hours after the date and time evidenced by such
written confirmation; provided, however, in the case of each and every facsimile
transmission, in order for such facsimile transmission to qualify as notice
under this paragraph (c), the facsimile transmission must be followed by
promptly mailing a copy of such notice to the party to whom the facsimile
transmission was addressed.
12.8 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. All disputes arising out of
this Agreement or the obligations of the parties hereunder, including disputes
that may arise following termination of this Agreement, shall be subject to the
exclusive jurisdiction and venue of the California State courts of San Mateo
County, California (or, if there is federal jurisdiction, then the exclusive
jurisdiction and venue of the United States District Court having jurisdiction
over San Mateo County). Each party hereby irrevocably and unconditionally
consents to the personal and exclusive jurisdiction and venue of said courts and
waives trial by jury and any objection that it may now or hereafter
22
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same.
12.9 Survival of Representations and Warranties. The representations,
------------------------------------------
warranties, covenants and agreements of the parties made herein, or in writing
delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties until the applicable Expiration Date.
12.10 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.
12.11 Time. Time is of the essence with respect to this Agreement.
----
12.12 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.
12.13 Remedies Cumulative. No right, remedy or election given by any term of
-------------------
this Agreement shall be deemed exclusive but each shall be cumulative with all
other rights, remedies and elections available at law or in equity.
12.14 Construction. This Agreement has been negotiated among DoveBid,
------------
Unidyne, the Stockholders 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.
12.15 Captions. The headings of this Agreement are inserted for convenience
--------
only, shall not constitute a part of this Agreement or be used to construe or
interpret any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DOVEBID, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: General Counsel
UNIDYNE INTERNATIONAL, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
STOCKHOLDERS:
/s/ ▇▇▇▇ ▇▇▇▇ by ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇ - Attorney-in-Fact
/s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
24