EXHIBIT 2.04
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of March 2, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc., an Illinois corporation, (the
"Company"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇.▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇.▇▇▇▇▇▇▇") (each
of ▇.▇▇▇▇▇▇▇ and ▇.▇▇▇▇▇▇▇ hereinafter individually referred to as a
"Shareholder" and collectively referred to as the "Shareholders").
▇.▇▇▇▇▇▇▇ and ▇.▇▇▇▇▇▇▇ own beneficially and of record all of the issued
and outstanding capital stock of the Company.
DoveBid desires to purchase from the Shareholders, and each Shareholder
desires to sell to DoveBid, all shares of the capital stock of the Company owned
by the Shareholders (collectively, the "Shares") on the terms and conditions set
forth in this Agreement.
Now, therefore, the parties agree as follows:
ARTICLE I
STOCK SALE AND PURCHASE
1.1 Agreement to Sell and Purchase Stock. At the Closing, each
-------------------------------------
Shareholder shall sell, transfer and deliver to DoveBid, and DoveBid shall
purchase and accept from each Shareholder, all of the Shares owned by such
Shareholder, free and clear of all security interests, liens, pledges, charges,
escrows, options, rights of first refusal, mortgages, indentures, security
agreements or other claims, encumbrances, agreements, arrangements or
commitments of any kind or character (collectively, "Liens") in exchange for the
following aggregate consideration (the "Purchase Price"), which shall be subject
to reduction in accordance with Section 1.2:
(i) cash in the amount of $1,307,808.30 (the "Closing Payment"),
of which $653,904.15 shall be paid to ▇.▇▇▇▇▇▇▇ and $653,904.15 shall be paid to
▇.▇▇▇▇▇▇▇, in each case, subject to reduction in accordance with Section 1.2;
(ii) cash in the amount of $225,000, to be paid to the
Shareholders as provided in Section 1.4 below (the "Deferred Payment");
(iii) two convertible subordinated promissory notes, one payable to
▇.▇▇▇▇▇▇▇ in the principal amount of $1,375,000 and one payable to ▇.▇▇▇▇▇▇▇ in
the principal amount of $1,375,000, each in the form attached hereto as Exhibit
-------
A (each, a "Convertible Subordinated Promissory Note"); and
-
(iv) cash in the amount of $217,191.70 to be paid to the
Shareholders as provided in Section 1.5 below (the "Judgment Amount").
1.2 Purchase Price Adjustment. At the Closing, the Shareholders shall
-------------------------
deliver a balance sheet of the Company as of the business day immediately
preceding the date of the Closing (the "Closing Balance Sheet"), in each case,
prepared in accordance with United States generally accepted accounting
principles ("GAAP") excluding notes, together with a detailed list of all
accrued expenses and liabilities of the Company as of the Closing Date as
determined in accordance with GAAP (the "Closing Liabilities Schedule"). In the
event that the aggregate book value of stockholders' equity of the Company,
determined in accordance with GAAP, consistently applied with prior periods, set
forth on the Closing Balance Sheet (such amount, the "Closing Stockholders'
Equity") is less than $450,000, the initial aggregate Purchase Price of
$4,500,000 shall be reduced by one dollar for each dollar that Closing
Stockholders' Equity is less than $450,000. In the event of any reduction in
the Purchase Price, the respective Closing Payments to the Shareholders shall be
proportionately reduced, and such reduced aggregate consideration shall
constitute the "Purchase Price" for all purposes under this Agreement.
1.3 Closing. The purchase and sale of the Shares, and the consummation
-------
of the other transactions contemplated hereby (the "Closing"), will take place
at the offices of DoveBid at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. Pacific Time, on March 2, 2000 or, if all conditions to
closing have not been satisfied or waived by said date, at such other time and
place as DoveBid and Shareholders shall mutually agree upon. At the Closing, the
Shareholders will deliver to DoveBid certificates representing all of the
Shares, duly endorsed for transfer to DoveBid, against delivery to the
Shareholders by DoveBid of the Purchase Price. The date on which the Closing
occurs is referred to herein as the "Closing Date."
1.4 Deferred Payment.
----------------
(a) Closing Stockholders' Equity. On or prior to the 90th calendar day
-----------------------------
following the Closing Date, DoveBid shall provide ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
representative of the Shareholders (the "Representative") with a certificate,
signed by an officer of DoveBid, stating whether Purchaser believes that the
amount of Closing Stockholders' Equity used to determine the Purchase Price
pursuant to Section 1.2 hereof ("Original CSE") was correct or incorrect, and if
incorrect, DoveBid's revised calculation of Closing Stockholders' Equity
("Revised CSE"), together with detailed calculations substantiating such revised
calculation. In the event that such certificate states that the Original CSE
was correct, DoveBid shall pay to the Representative (for distribution by him to
the Shareholders) $112,500. In the event that such certificate sets forth a
Revised CSE, within five business days of the Representative's receipt of such
certificate, Representative shall either (a) agree with such revised calculation
by countersigning such certificate and delivering a copy thereof to DoveBid,
whereupon DoveBid shall (i) retain an amount of the Deferred Payment (which
amount shall not be capped at $112,500) equal to the amount by which the
Original CSE exceeds the Revised CSE (such excess, the "CSE True-Up") and (ii)
pay to the Representative an amount (for distribution by him to the
Shareholders) equal to (x) $112,500 minus (y) the CSE True-Up, or (b) disagree
with such revised calculation, whereupon DoveBid and the Representative shall
submit such dispute to arbitration as if it were a Contested Claim, as defined
in Article VIII hereof, in accordance with Section 8.7 hereof. If the
Representative shall not have responded within such five business day period,
the Representative shall be deemed to have agreed with such revised calculation
and the payments set forth in clause (a) of the preceding sentence.
(b) Deferred Payment Balance. On the six month anniversary of the
------------------------
Closing Date, DoveBid shall pay the balance of the Deferred Payment, if any, to
the Representative (for distribution by him to the Shareholders) provided that,
if on such date, there is outstanding an unresolved Notice of Claim or Contested
Claim (as defined in Article VIII hereof), an amount equal to the amount of
Damages (as defined in Article VIII hereof), claimed in such Notice of Claim or
Contested Claim shall be withheld from such payment to the Representative,
pending resolution of the Notice of Claim or Contested Claim pursuant to the
Article VIII hereof.
1.5 Judgment Amount. The Judgment Amount shall be deposited by DoveBid
----------------
into an interest bearing bank account pending the resolution of the matter of
the default judgment (the "Default Judgment") entered against the Company in
Rangen, Inc. v. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. (Case No. CV-97-1619) (the "Rangen
------------------------------------------
Litigation") in the District Court of the Fifth Judicial District of the State
of Idaho on August 4, 1999. The Shareholders shall use best efforts to have the
Default Judgment vacated or otherwise settled and DoveBid agrees to promptly pay
the Judgment Amount, together with all interest paid thereon, to the
Representative (for distribution by him to the Shareholders) (i) in the event
that the Default Judgment is vacated, the Rangen Litigation is dismissed with
prejudice and the Company is released of all claims thereunder, or (ii) upon
receipt of satisfactory evidence of the settlement of the Rangen Litigation and
the release of all claims against the Company thereunder.
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 and the Company hereby jointly and severally
represent and warrant to DoveBid as follows:
2.1 Organization and Good Standing. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Illinois, has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to conduct business in each jurisdiction in which
the character of the properties owned, leased or licensed by it or the nature of
such activities makes such qualification necessary.
2.2 Power, Authorization and Validity.
---------------------------------
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 and the Shareholders. 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 entirely of 10,000 shares of common stock, no par value, and 1,000
shares of preferred stock, no par value, of which a total of 1,000 shares of
common stock are issued and outstanding, and of which 500 shares are owned
beneficially and of record by ▇.▇▇▇▇▇▇▇ and 500 shares are owned beneficially
and of record by ▇.▇▇▇▇▇▇▇, and no other entity or individual owns either
beneficially or of record, any other equity interest of the Company. On the date
of this Agreement each Shareholder has, and on the Closing Date each Shareholder
will have, good and marketable title to that number of shares of capital stock
of the Company set forth in this Section 2.3, free and clear of any and all
Liens, which shares do and shall constitute collectively all of the outstanding
shares of the Company's capital stock. On the date of this Agreement, there are
no, and on the Closing Date, there will be no, options, warrants, calls,
commitments, conversion privileges or preemptive or other rights or agreements
outstanding to purchase any of shares of the Company's capital stock or any
securities convertible into or exchangeable for shares of the Company's capital
stock or obligating the Company to grant, extend, or enter into any such option,
warrant, call, right, commitment, conversion privilege or other right or
agreement. There is no voting agreement, right of first refusal or other
restriction (other than normal restrictions on transfer under applicable federal
and state securities laws) applicable to any of the Company's outstanding
securities. Each share of the Company's capital stock has been duly authorized
and validly issued, is fully paid and nonassessable, is not subject to any right
of rescission, and has been offered, issued, sold and delivered by the Company
in compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state securities laws, other
laws and requirements set forth in applicable agreements or instruments. The
Company is not under any obligation to register under the Securities Act, any of
its presently outstanding securities or any securities that may be subsequently
issued.
2.4 Subsidiaries. The Company does not have any subsidiaries or any
-------------
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity.
2.5 No Conflict. Neither the execution and delivery of this Agreement
-----------
nor any 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, (b) any instrument or contract to
which the Company or any Shareholder is a party or by which either of the
Company or either Shareholder is a party, or any of the Company' or
Shareholders' 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 of the Company or either Shareholder or their
respective assets or properties. The consummation of the transactions
contemplated by this Agreement does not and will not require the consent,
waiver, release or approval of any third party.
2.6 Litigation. There is no action, proceeding, claim or investigation
-----------
pending against the Company before any court or administrative agency, nor has
any such action, proceeding, claim or investigation been threatened. There is
no reasonable basis for any shareholder or former shareholder of the Company, or
any other person, firm, corporation, or entity, to assert a claim against the
Company, any Shareholder or DoveBid based upon: (a) ownership or rights to
ownership of any shares or other ownership interest in the Company, (b) any
rights as a shareholder of the Company, including any option or preemptive
rights or rights to notice or to vote, or (c) any rights under any agreement
among the Company and its shareholders. There are no outstanding orders,
awards, judgments, injunctions, decrees or other requirements of any court,
arbitrator or governmental or regulatory body against the Company or their
assets, properties or securities.
2.7 Taxes. The Company has timely filed all federal, state, local and
-----
foreign tax returns required to be filed, have 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, have made all necessary estimated tax payments, and have
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
Sheets will be established in the ordinary course of business. The Company is
not delinquent in the payment of any tax or in the filing of any tax returns,
and no deficiencies for any tax have been threatened, claimed, proposed or
assessed. The Company has not received any notification from the Internal
Revenue Service or any other taxing authority regarding any material issues
that: (a) are currently pending before the Internal Revenue Service or any
other taxing authority (including but not limited to any sales or use tax
authority) regarding the Company or (b) have been raised by the Internal Revenue
Service or other taxing authority and not yet finally resolved. No tax return
of the Company has ever been audited by the Internal Revenue Service or any
state taxing agency or authority. There is not in effect any waiver by the
Company of any statute of limitations with respect to any taxes; and the Company
has not consented to extend to a date later than the date hereof the period in
which any tax may be assessed or collected by any taxing authority. The Company
is not a "personal holding company" within the meaning of the Internal Revenue
Code of 1986, as amended (the "Code"). The Company has not filed any election
under Section 341(f) of the Code. The Company has withheld with respect to each
of its employees and independent contractors all taxes, including but not
limited to federal and state income taxes, FICA, Medicare, FUTA and
other taxes, required to be withheld, and paid such withheld amounts to the
appropriate tax authority within the time prescribed by law.
For the purposes of this Agreement, the terms "tax" and "taxes" include all
federal, state, local and foreign income, gains, franchise, excise, property,
sales, use, employment, license, payroll, occupation, recording, value added or
transfer taxes, governmental charges, fees, levies or assessments (whether
payable directly or by withholding), and, with respect to such taxes, any
estimated tax, interest and penalties or additions to tax and interest on such
penalties and additions to tax.
2.8 Financial Statements. The Company has delivered to DoveBid, attached
--------------------
hereto as Exhibit B, copies of: (a) the Company's unaudited consolidated balance
---------
sheet as of December 31, 1999 (the "Balance Sheet") and (b) the Company's
unaudited consolidated income statement and statement of cash flows for the ten
months ended December 31, 1999 (together, with the Balance Sheet and the Closing
Balance Sheet, the "Financial Statements"). The Financial Statements (a) are in
accordance with the books and records of the Company, (b) fairly present the
financial condition of the Company at the date therein indicated and the results
of operations for the period therein specified and (c) have been prepared in
accordance with GAAP excluding notes. The Company has no debt, liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected or reserved against in
the Financial Statements and the Closing Liabilities Schedule.
2.9 Title to Assets and Properties. The Company has good and marketable
-------------------------------
title to all of its assets as shown on the Balance Sheets and Closing Balance
Sheets, free and clear of all Liens (other than for taxes not yet due and
payable). All machinery and equipment included in such assets is in good
condition and repair, normal wear and tear excepted, and all leases of real or
personal property to which the Company is a party are fully effective and afford
the Company peaceful and undisturbed possession of the subject matter of the
lease. The Company is not in violation of any zoning, building, safety or
environmental ordinance, regulation or requirement or other law or regulation
applicable to the operation of owned or leased properties, or has received any
notice of violation with which it has not complied.
2.10 Absence of Certain Changes. Since December 31, 1999, there has not
--------------------------
been with respect to the Company:
(a) any change in the financial condition, properties, assets,
liabilities, business or operations thereof which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or will have a material adverse effect thereon;
(b) any contingent liability incurred thereby as guarantor or
otherwise with respect to the obligations of others;
(c) any mortgage, encumbrance or Lien placed on any of the
properties thereof;
(d) any material obligation or liability incurred thereby other
than obligations and liabilities incurred in the ordinary course of business in
individual amounts less than $25,000;
(e) any purchase or sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets thereof other than in the ordinary course of business in
individual amounts less than $25,000;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
thereof;
(g) any declaration, setting aside or payment of any dividend on,
or the making of any other distribution in respect of, the capital stock
thereof, any split, combination or recapitalization of the capital stock thereof
or any direct or indirect redemption, purchase or other acquisition of the
membership interests thereof;
(h) any labor dispute or claim of unfair labor practices, any
change in the compensation payable or to become payable to any of its officers,
managers, employees or agents, or any bonus payment or arrangement made to or
with any of such officers, managers, employees or agents;
(i) any change with respect to the management, supervisory or
other key personnel thereof;
(j) any payment or discharge of a Lien or liability thereof which
Lien was not either shown on the Balance Sheet or incurred in the ordinary
course of business thereafter;
(k) any obligation or liability incurred thereby to any of its
officers, employees, directors or shareholders or any loans or advances made
thereby to any of its officers, employees, directors or shareholders except
normal compensation and expense allowances payable to officers and employees;
(l) any amendment or change in the Articles of 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
-------------------------
Letter sets forth a list of each of the following oral or written contracts,
agreements, understandings and arrangements, a true and complete copy of each
(or, in the case of an oral agreement, a written summary of all of the material
terms of which) has been provided to DoveBid:
(a) Contract, agreement or other understanding or arrangement
providing for payments by or to the Company in an aggregate amount of $25,000 or
more in any year;
(b) Company IP Rights Agreement (as defined in Section 2.12), and
contract, license, agreement or other understanding or arrangement as licensor
or licensee;
(c) Contract, lease, license, agreement or other understanding or
arrangement for the lease of real or personal property;
(d) Joint venture contract or arrangement or any other agreement
that involves or could involve a sharing of profits, expenses or losses with any
other party;
(e) Instrument evidencing or related in any way to indebtedness
for borrowed money by way of direct loan, sale of debt securities, purchase
money obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business and for no more than
$25,000 in amount, and except as disclosed in the Financial Statements;
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit the Company's freedom to compete in any
line of business in any geographic area, or which grants any exclusive rights or
obligations;
(g) Contract, agreement or other understanding or arrangement for
or relating to the employment of any officer, employee, contractor, or
consultant of the Company; or
(h) Any other agreement not specified above which is material to
the business of the Company.
All agreements, contracts, plans, leases, instruments, arrangements,
licenses and commitments identified in this Section 2.11 are valid and in full
force and effect. The Company is not, nor, to the knowledge of the Company, is
any other party thereto, in material breach or default under the terms of any
such agreement, contract, plan, lease, instrument, arrangement, license or
commitment. The Company does not have any liability for renegotiation of
government contracts or subcontracts, if any.
2.12 Intellectual Property. The Company owns, or has a valid right to
---------------------
use, sell or license all Intellectual Property Rights (as defined below)
necessary or required for the conduct of business as presently conducted (such
Intellectual Property Rights being hereinafter collectively referred to as the
"Company IP Rights") and such rights to use, sell or license are sufficient for
the conduct of the Company's businesses as presently conducted. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not constitute a breach of any
instrument or agreement governing or affecting any Company IP Rights (the
"Company IP Rights Agreements"), do not and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Company
IP Right or impair the right of the Company to use, sell or license any Company
IP Right or portion thereof. There is no royalty, honoraria, fee or other
payment payable by the Company to any person by reason of the ownership, use,
license, sale or disposition of any Company IP Right (other than as set forth in
the Company IP Rights Agreements listed in Section 2.11 to the Company
Disclosure Schedule). Neither the manufacture, marketing, license, sale or
intended use of any product currently licensed or sold by the Company or
currently under development by the Company or the provision of any service
currently provided by the Company or currently planned to be provided by the
Company violates any license or agreement between
the Company and any third party or infringes any Intellectual Property Right of
any other person or entity; and there is no pending or threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any Company IP Right nor is there any basis for any such claim, nor
has the Company received any notice asserting that any Company IP Right or the
proposed use, sale, license or disposition thereof conflicts, or will conflict,
with the rights of any other person or entity, nor is there any basis for any
such assertion. The Company has taken reasonable and necessary steps designed to
safeguard and maintain the secrecy and confidentiality of, and their proprietary
rights in, all Company IP Rights. Each officer, employee 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 Schedule contains a list of all applications, registrations, filings
and other formal actions made or taken pursuant to federal, state and foreign
laws by the Company to perfect or protect its interest in Company IP Rights,
including, without limitation, all patents, patent applications, trademarks,
trademark applications 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
▇▇▇▇ applications, Internet domain names, Internet or World Wide Web URLs or
addresses, copyright, copyright applications, franchises, licenses, inventories,
know-how, trade secrets, customer lists, proprietary processes and formulae, all
source and object code, algorithms, architecture, structure, display screens,
layouts, inventions, development tools and all documentation and media
constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records.
2.13 Compliance with Laws. The Company has complied, or prior to the
--------------------
Closing Date will have complied, and is or will be at the Closing in material
compliance with, all applicable laws, ordinances, regulations, and rules, and
all orders, writs, injunctions, awards, judgments, and decrees applicable to it
or to the assets, properties, and business thereof, including, without
limitation: (a) all applicable federal and state securities laws and
regulations, (b) all applicable federal, state, and local laws, ordinances,
regulations, and all orders, writs, injunctions, awards, judgments, and decrees
pertaining to (i) the sale, licensing, leasing, ownership, or management of its
owned, leased or licensed real or personal property, products and technical
data, (ii) employment and employment practices, terms and conditions of
employment, and wages and hours and (iii) safety, health, fire prevention,
environmental protection, hazardous materials, toxic waste disposal, building
standards, zoning and other similar matters (c) the Export Administration Act
and regulations promulgated thereunder and all other laws, regulations, rules,
orders, writs, injunctions, judgments and decrees applicable to the export or
re-export of controlled commodities or technical data and (d) the Immigration
Reform and Control Act. The Company has received all material permits and
approvals from, and has made all material filings with, third parties, including
government agencies and authorities, that are necessary in connection with its
present business. There are no legal or administrative proceedings or
investigations involving the Company pending or threatened before any
governmental entity.
2.14 Certain Transactions and Agreements. None of the officers,
-----------------------------------
directors, shareholders or employees of the Company, nor any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with the
Company (except with respect to any interest in less than one percent of the
stock of any corporation whose stock is publicly traded). None of said officers
directors, shareholders or employees, nor any member of their immediate
families, is directly or indirectly interested in any contract or informal
arrangement with the Company, except for normal compensation for services as an
officer, director, shareholder or employee 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.
-------------------------------------
2.15.1 The Company does not have any employment contract or
consulting agreement currently in effect that is not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions). 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 The Company (i) has not ever been nor are now subject to a
union organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization, or (iv) has no current labor disputes. The
Company has good labor relations, and have no knowledge of any facts indicating
that the consummation of the transactions contemplated hereby will have a
material adverse effect on such labor relations, and has no knowledge that any
of their key employees intends to leave its employ.
2.15.3 Section 2.15.1 to the Company Disclosure Schedule identifies
(i) each "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) all other
written or formal plans or agreements involving direct or indirect compensation
or benefits (including any employment agreements entered into between the
Company and any employee of the Company, but excluding workers' compensation,
unemployment compensation and other government-mandated programs) currently or
previously maintained, contributed to or entered into by the Company under which
the Company or any ERISA Affiliate (as defined below) thereof has any present or
future obligation or liability (collectively, the "Company Employee Plans").
For purposes of this Section 2.15, "ERISA Affiliate" shall mean any entity which
is a member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as defined
in Section 414(c) of the Code, or (C) an "affiliated service group," as defined
in Section 414(m) of the Code, or treasury regulations promulgated under Section
414(o) of the Code, any of which includes the Company. Copies of all Company
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof (including summary plan
descriptions) have been delivered to DoveBid, together with the three most
recent annual reports (Form 5500, including, if applicable, Schedule B thereto)
prepared in connection with any such Company Employee Plan. All
Company Employee Plans which individually or collectively would constitute an
"employee pension benefit plan," as defined in Section 3(2) of ERISA
(collectively, the "Company Pension Plans"), are identified as such in Section
2.15.3 to the Company Disclosure Schedule. All contributions due from the
Company with respect to any of the Company Employee Plans have been made as
required under ERISA or have been accrued on the Financial Statements. Each
Company Employee Plan has been maintained substantially in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including, without limitation, ERISA and the Code, which
are applicable to such Company Employee Plans.
2.15.4 No Company Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in Section
3(37) of ERISA. No Company Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any Company Employee Plan which is
covered by Title I of ERISA which would result in a liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Company Employee Plan has or will make
the Company or any officer or director of the Company subject to any liability
under Title I of ERISA or liable for any tax (as defined in Section 2.7 hereof)
or penalty pursuant to Sections 4972, 4975, 4976 or 4979 of the Code or Section
502 of ERISA.
2.15.5 Any Company Pension Plan which is intended to be qualified
under Section 401(a) of the Code (a "Company 401(a) Plan") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. The Company has delivered to DoveBid a complete and correct copy of the
most recent Internal Revenue Service determination letter with respect to each
Company 401(a) Plan.
2.15.6 Section 2.15.6 to the Company Disclosure Schedule lists each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' benefits, vacation benefits,
severance benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses
and all forms of incentive compensation or post-retirement insurance,
compensation or benefits for employees, consultants or directors which (A) is
not a Company Employee Plan, (B) is entered into, maintained or contributed to,
as the case may be, by the Company and (C) covers any employee or former
employee of the Company. Such contracts, plans and arrangements as are
described in this Section 2.15.6 are herein referred to collectively as the
"Company Benefit Arrangements." Each Company Benefit Arrangement has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Company Benefit Arrangement. The Company has delivered to
DoveBid a complete and correct copy or description of each Company Benefit
Arrangement.
2.15.7 There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or
coverage under, any Company Employee Plan or Company Benefit Arrangement that
would increase the expense of maintaining such Company Employee Plan or Company
Benefit Arrangement above the level of the expense incurred in respect thereof
since the date of the Balance Sheet.
2.15.8 The Company has provided, or will have provided prior to the
Closing, to individuals entitled thereto all required notices and coverage
pursuant to Section 4980B of the Code and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any
"qualifying event" (as defined in Section 4980B(f)(3) of the Code) occurring
prior to and including the Closing Date, and no tax payable on account of
Section 4980B of the Code has been incurred with respect to any current or
former employees (or their beneficiaries) of the Company.
2.15.9 No benefit payable or which may become payable by the
Company pursuant to any Company Employee Plan or any Company Benefit Arrangement
or as a result of or arising under this Agreement shall constitute an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code) which is
subject to the imposition of an excise tax under Section 4999 of the Code or
which would not be deductible by reason of Section 280G of the Code.
2.15.10 The Company is in compliance with all applicable laws,
agreements and contracts relating to employment, employment practices, wages,
hours, and terms and conditions of employment, including, but not limited to,
employee compensation matters, but not including ERISA.
2.15.11 No employee of the Company is in violation of any term of
any employment contract, patent disclosure agreement, noncompetition agreement,
or any other contract or agreement, or any restrictive covenant relating to the
right of any such employee to be employed thereby, or to use trade secrets or
proprietary information of others, and the employment of such employees does not
subject the Company to any liability.
2.15.12 A list of all employees, officers, directors and consultants
of the Company and their current compensation is set forth on Section 2.15.12 to
the Company Disclosure Schedule.
2.15.13 The Company is not a party to any (a) agreement with any
officer, director, shareholder or other employee thereof (i) the benefits of
which are contingent, or the terms of which are altered, upon the occurrence of
a transaction involving the Company in the nature of any of the transactions
contemplated by this Agreement, (ii) providing any term of employment or
compensation guarantee, or (iii) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the reason
for such termination of employment, or (b) agreement or plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
2.16 Company Documents. The Company has made available to DoveBid for
-----------------
examination true and complete copies of all documents and information listed in
the Company Disclosure Schedule or other exhibits called for by this Agreement
which has been requested by DoveBid and/or its legal counsel, including, without
limitation, the following: (a) copies of the Company' Articles of Incorporation,
bylaws and other governance documents as currently in effect; (b) all records of
all proceedings, consents, actions, and meetings of the shareholders, the board
of directors and any committees thereof; (c) its journal reflecting all equity
issuances and transfers; and (d) all permits, orders, and consents issued by any
regulatory agency with respect to the Company, or any securities of the Company,
and all applications for such permits, orders, and consents.
2.17 No Brokers. 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.
2.18 Accounts Receivable. Subject to the reserves set forth on the
-------------------
Balance Sheets, if any, all accounts receivable of the Company set forth on the
Balance Sheets have arisen in the ordinary course of the Company's businesses,
represent valid, enforceable and fully collectible obligations due to the
Company, and have been and are not subject to any set-off, counterclaim or
future performance obligation on the part of the Company.
2.19 Books and Records.
-----------------
2.19.1 The books, records and accounts of the Company (a) are in
true, complete and correct, (b) have been maintained in accordance with good
business practices on a basis consistent with prior years, (c) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of the Company, and (d) accurately and fairly reflect
the basis for the Financial Statements.
2.19.2 The Company has devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or specific
authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and
(ii) to maintain accountability for assets, and (c) the amount recorded for
assets on the books and records of the Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
2.20 Insurance. The Company maintains and at all times during the prior
----------
three years have maintained policies of insurance and bonds of the type and in
amounts customarily carried by persons conducting businesses or owning assets
similar in type and size to those of Company, including all legally required
workers' compensation insurance and errors and omissions, casualty, fire and
general liability insurance. There is no claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been timely paid and the Company are
otherwise in compliance with the terms of
such policies and bonds. The Company has no knowledge of any threatened
termination of, or premium increase with respect to, any of such policies. Prior
to the Closing, the Shareholders shall have obtained, and fully prepaid all
premiums associated with, "claims made" insurance for the Company for activities
of the Company prior to the Closing, which insurance shall 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 are set forth in Section 2.20 of the Company Disclosure
Letter, together with the name of the insurer under each policy, the type of
policy, the policy coverage amount and any applicable deductible.
2.21 Disclosure. Neither the Company Disclosure Schedule, this Agreement,
----------
its exhibits and schedules, nor any of the certificates or documents to be
delivered by the Company to DoveBid pursuant to this Agreement, taken together,
contains or will contain any untrue statement of a fact or omits or will omit to
state any fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which such statements were made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOVEBID
Except as specifically set forth in the disclosure letter provided by
DoveBid to the Company simultaneously with the signing of this Agreement, dated
as of the date of this Agreement (the "DoveBid Disclosure Letter"), the parts of
which are numbered to correspond to the sections of this Agreement, DoveBid
hereby represents and warrants to the Company as follows:
3.1 Organization and Good Standing. DoveBid is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted and as proposed to
be conducted, and is qualified to conduct business in each jurisdiction in which
the character of the properties owned, leased or licensed by it or the nature of
such activities makes such qualification necessary except where the failure to
be qualified will not have a material adverse effect on the business, operations
or financial condition of DoveBid.
3.2 Power, Authorization and Validity.
---------------------------------
3.2.1 DoveBid has the corporate right, power and authority to enter
into and perform its obligations under this Agreement, and all agreements to
which DoveBid is or will be a party that are required to be executed pursuant to
this Agreement (the "DoveBid Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Agreements have been
duly and validly approved and authorized by DoveBid's Board of Directors. No
vote of the shareholders of DoveBid is required by the Certificate of
Incorporation, bylaws, other governing documents of DoveBid or applicable law
with respect to
the due authorization and approval of this Agreement, the DoveBid Ancillary
Documents or the transactions contemplated hereby and thereby.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable DoveBid to enter into, and to perform its
obligations under, this Agreement and the DoveBid Ancillary Agreements, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such qualifications and filings as may be required to
comply with 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.
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. DoveBid has
received all necessary consents, waivers, approvals or releases of third parties
in connection with the consummation of the transactions contemplated hereunder.
3.4 Financial Condition. DoveBid has made available to the Company
-------------------
copies of: (a) DoveBid's unaudited consolidated balance sheet as of December 31,
1999 (the "DoveBid Balance Sheet") and (b) DoveBid's unaudited consolidated
income statement and statement of cash flows for the twelve months ended
December 31, 1999 (together, with the DoveBid Balance Sheet, the "DoveBid
Financial Statements"). The DoveBid Financial Statements (a) are in accordance
with the books and records of the Company at the date therein indicated and the
results of operations for the period therein specified. Since December 31, 1999,
there has not been any change in the financial condition, properties, assets,
liabilities, business or operations of DoveBid which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or will have a material adverse effect on the
business, operations or financial condition of DoveBid.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Advice of Changes. During the period from the date of this Agreement
-----------------
until the earlier of the Closing or the termination of this Agreement, the
Company will promptly advise DoveBid in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of the Company contained in this Agreement, if made on or as of the
date of such event or at the Closing untrue or inaccurate in any material
respect and (b) of any material adverse change in the Company's business,
prospects, results of operations or financial condition. The Company agrees to
cooperate with DoveBid's auditors in order to book financial entries in
accordance with GAAP and in a manner acceptable to DoveBid and its auditors.
4.2 Maintenance of Business. During the period from the date of this
-----------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will use its best efforts to carry on and preserve its business and
its relationships with customers, suppliers, employees and others in
substantially the same manner as it has prior to the date hereof. If the
Company becomes aware of a material deterioration in the relationship with any
customer, supplier or key employee, it will promptly bring such information to
the attention of DoveBid in writing and, if requested by DoveBid, will exert its
best efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
the Company will continue to conduct its business and maintain its business
relationships in the ordinary and usual course and will not, without the prior
written consent of an officer of DoveBid:
(a) borrow any money, or otherwise incur any indebtedness;
(b) enter into any transaction not in the ordinary course of
business;
(c) take positions in assets greater than $1,000,000 without
DoveBid's prior written consent, not to be unreasonably withheld;
(d) make any expenditure or sale of fixed or other non-current
assets in excess of $25,000 in the aggregate, outside the normal course of
business;
(e) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past practice and to an
extent that is not material to its business;
(f) dispose of any of its assets except in the ordinary course of
business consistent with past practice;
(g) enter into any material lease or contract for the purchase or
sale of any property, real or personal, except in the ordinary course of
business consistent with past practice;
(h) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
(i) fail to use its best efforts to maintain and preserve its
business organization intact, retain its present employees and maintain its
relationships and present agreements with suppliers, customers and others having
business relations with the Company, or fail to maintain its current debt and
lease instruments;
(j) pay any bonus, increased salary or special remuneration to
any 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 Schedule;
(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;
(n) amend or terminate any contract, agreement or license to
which it is a party, except those amended or terminated in the ordinary course
of business, consistent with past practice, and which are not material in amount
or effect;
(o) lend any amount to any person or entity, other than (i)
advances for travel and expenses which are incurred in the ordinary course of
business consistent with past practice, not material in amount and documented by
receipts for the claimed amounts or (ii) any loans pursuant to the Company
401(k) Plan;
(p) guarantee or act as a surety for any obligation, except for
the endorsement of checks and other negotiable instruments in the ordinary
course of business, consistent with past practice, which are not material in
amount;
(q) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(r) issue or sell any shares of its capital stock or any other of
its securities, or issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments to issue any securities,
or accelerate the vesting of any outstanding option or other security;
(s) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(t) merge, consolidate or reorganize with, or acquire any entity;
(u) amend its Articles of Incorporation, bylaws or any other
governance document;
(v) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
(w) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return;
(x) change any insurance coverage or issue any certificates of
insurance; 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.
4.5 Regulatory Approvals. DoveBid, the Company and each Shareholder will
--------------------
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or foreign
that may be reasonably required, or that DoveBid may reasonably request, in
connection with the consummation of the transactions contemplated by this
Agreement. The Company and each Shareholder will use their best efforts to
obtain all such authorizations, approvals and consents.
4.6 Necessary Consents. The Company and each Shareholder will use their
------------------
best efforts to obtain such written consents and take such other actions as may
be necessary or appropriate in DoveBid's judgment to allow the consummation of
the transactions contemplated hereby and to allow DoveBid to carry on the
Company' 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 substantial portion of the
Company's business, assets or equity interests by merger, sale or any other
means (other than the transactions contemplated hereby with DoveBid). The
Company will promptly and in any event within 24
hours notify DoveBid orally and in writing of any such inquiry or proposal,
including the name of the persons making such proposal and all of the terms
thereof. Any violation of the restrictions set forth in this section by any
officer, director or employee of the Company or any investment banker, attorney
or other advisor or representative of the Company shall be deemed to be a breach
of this Section 4.8 by the Company.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Company will allow
DoveBid and its agents reasonable access the files, books, records and offices
of the Company, including, without limitation, any and all information relating
to the Company's taxes, commitments, contracts, leases, licenses, and real,
personal and intangible property and financial condition. The Company will
cause its accountants to cooperate with DoveBid and its agents in making
available all financial information reasonably requested, including without
limitation the right to examine all working papers pertaining to all financial
statements prepared or audited by such accountants.
4.10 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 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. Following the Closing, the Shareholders agree to
cooperate with DoveBid in terminating the Business Loan Agreement between the
Company and LaSalle Bank, N.A. dated as of January 18, 2000, and paying off all
amounts borrowed by the Company thereunder; provided, that the obligation to
fund such payoff shall be DoveBid's not the Shareholders.
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 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 to proceed with the transactions hereunder.
5.4 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transaction contemplated herein shall have been obtained and made and no action
or proceeding shall have been instituted or threatened to restrain or prohibit
the transactions contemplated herein.
5.5 Convertible Subordinated Promissory Note and Subordination
----------------------------------------------------------
Agreement. DoveBid shall have executed and delivered each Convertible
---------
Subordinated Promissory Note and the Subordination Agreement attached as Annex A
thereto.
5.6 Employment Agreement. DoveBid shall have executed and delivered to
--------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ an Employment Agreement in substantially the form of Exhibit C
---------
attached hereto ("Employment Agreement").
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DOVEBID
The obligations of DoveBid with respect to actions to be taken at the
Closing are subject to the satisfaction, or waiver by DoveBid, at or prior to
the Closing of all of the following conditions.
6.1 Representations and Warranties; Covenants. The representations and
-----------------------------------------
warranties of the Shareholders and the Company set forth in this Agreement shall
be true and correct at the Closing with the same effect as though such
representations and warranties had been made as of that time. The covenants set
forth in this Agreement to be performed by the Shareholders and the Company on
or before the Closing shall have been duly performed. The Shareholders and the
Company shall have delivered to DoveBid a certificate to such effect dated the
Closing Date signed by 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 materially detrimental to
DoveBid 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's business, prospects,
financial condition or operating results; and DoveBid shall have received a
certificate to such effect dated the Closing Date signed by the Shareholders and
the President of the Company.
6.4 Satisfaction. All actions, proceedings, instruments and documents
------------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by the Company and shall be acceptable to DoveBid.
6.5 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; the Company
shall have obtained and delivered to DoveBid such additional consents to the
transactions contemplated herein as DoveBid may reasonably request including,
without limitation, DoveBid's receipt on or prior to Closing of consents of
third parties listed in Section 2.5 of the Company Disclosure Schedule; and no
action or proceeding shall have been instituted or threatened to restrain or
prohibit the transactions contemplated herein.
6.6 Good Standing Certificate or Equivalent. DoveBid shall have received
---------------------------------------
evidence satisfactory to it that the Company is validly existing, in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes due by the Company 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 Convertible Subordinated Promissory Note and Subordination
----------------------------------------------------------
Agreement. Each Shareholder shall have executed and delivered to DoveBid his
---------
Convertible Subordinated Promissory Note and the Subordination Agreement
attached as Annex A thereto.
6.8 Employment Agreements. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have executed and
---------------------
delivered to DoveBid his Employment Agreement.
6.9 Release of Claims. DoveBid shall have received copies of a Release
-----------------
of Claims executed by each Shareholder in substantially the form of Exhibit D
attached hereto. ---------
6.10 Lease Matters. The lessor of the Company's Wheeling, Illinois
-------------
facility shall have consented to the assignment of the lease relating to the
premises from the Company to DoveBid.
6.11 Insurance Matters. The Shareholders shall have obtained, and fully
-----------------
prepaid all premiums associated with, "claims made" insurance for the Company
for activities of the Company prior 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's industry
and is reasonably acceptable to DoveBid.
6.12 Due Diligence. The results of DoveBid's due diligence review of the
-------------
Company's businesses, finances, practices and procedures shall be satisfactory
to DoveBid in its sole discretion.
6.13 Closing of DoveBid's Series C Financing. DoveBid shall have closed
---------------------------------------
the sale of shares of its Series C Preferred Stock to investors on terms
satisfactory to DoveBid in its sole discretion.
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 both Company and both
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 such other party is in
material breach of any representation, warranty, covenant or agreement contained
in this Agreement and such breaching party fails to cure such material breach
within fifteen days after written notice of such material breach from the non-
breaching party; (iii) by either party, if there is a final nonappealable order
of a federal or state court in effect preventing consummation of the
transactions contemplated herein, or if any statute, rule, regulation or order
is enacted, promulgated or issued or deemed applicable to the transactions
contemplated herein by any governmental body that would make consummation of the
transactions contemplated herein illegal; or (iv) by either party if the
transactions contemplated herein have not occurred by March 2, 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 IX. Except for
the continuing obligations set forth in the preceding sentence, the parties to
this Agreement will be without any further obligation or liability upon any
party in favor of the other party.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Survival of Representations. The representations, warranties,
---------------------------
covenants and agreements of DoveBid contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, until the earlier of the
termination of this Agreement or the Closing Date, whereupon such
representations, warranties, covenants and agreements will expire (except for
covenants that by their terms survive for a longer period). All
representations, warranties, covenants and agreements of the Company and the
Shareholders contained in this Agreement will remain operative and in full force
and effect from the date of this Agreement until the earlier of the termination
of this Agreement or the three year anniversary of the Closing, (except for
covenants that by their terms survive for a longer period, and for the
representations and warranties set forth in Sections 2.3 and 2.7, which shall
survive for the statute of limitations period applicable to any claim which
would constitute a breach thereof).
8.2 Agreement to Indemnify. Subject to the limitations set forth in this
----------------------
Article VIII, each of the Shareholders, jointly and severally, hereby indemnify
and hold harmless DoveBid and its officers, directors, agents and employees, and
each person, if any, who controls or may control DoveBid within the meaning of
the Securities Act (individually, a "DoveBid Indemnitee" and collectively,
"DoveBid Indemnitees") from and against any and all claims, demands, actions,
causes of actions, losses, costs, damages, liabilities and expenses including,
without limitation, reasonable legal fees and expenses ("Damages"):
(a) arising out of any misrepresentation, or breach of, or
default in connection with, any of the representations, warranties, covenants
and agreements given or made by the Company 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;
(b) resulting from any failure of any Shareholder to have good,
valid and marketable title to the issued and outstanding shares held by such
Shareholder, free and clear of Liens, or any claim by a current or former
shareholder, or any other person, firm, corporation or entity, seeking to assert
or based upon ownership or rights to ownership of equity interest of the Company
(or the Purchase Price), any rights of a shareholder of the Company, including
any options, or preemptive rights or rights to notice or to vote, any rights
under the Company's Articles of Incorporation, bylaws or other charter
documents, any right under any agreement among the Company and the Shareholders
or any claim that his or her equity interests or other securities were
wrongfully repurchased by the Company;
(c) in connection with a liability of the Company arising out of
any acts, events, omissions or transactions occurring prior to the Closing Date,
which liabilities were not disclosed to DoveBid in this Agreement or the Company
Disclosure Letter and were either known or should have been known by the
Shareholders at the time of the Closing, or any breach of any agreement entered
into by the Company or the Shareholders prior to the Closing;
(d) resulting from any claim by any investment banker, broker,
finder or other agent in connection with the origin, negotiation or execution of
this Agreement or in connection with any transaction contemplated hereby; or
(e) arising out of the Rangen Litigation and/or the Default
Judgment.
The Shareholders agree that any Damages arising under Section 8.2(e)
above shall be an Uncontested Claim for the purposes of this Article VIII and
the Representative will be conclusively deemed to have consented, on behalf of
all Shareholders, to the recovery by the DoveBid Indemnitees of the full amount
of such Damages, including the offset of any such amount against the Judgment
Amount, provided that the recovery of such Damages shall not be limited to the
Judgment Amount.
A Dovebid Indemnitee shall not be entitled to indemnification
hereunder when the aggregate amount of Damages with respect to such Claim or
Claims, together with all prior Claims by any DoveBid Indemnitee, exceeds
$45,000 (the "Threshold Amount"), provided that once the aggregate of all Claims
exceed the Threshold Amount, all such Claims may be made without deducting the
Threshold Amount. The maximum aggregate liability of the Shareholder for Claims
for indemnification under this Article VIII shall not exceed the Purchase Price.
The obligation of indemnity shall terminate on the three-year anniversary of the
Closing Date; provided, that if, on or prior to such date, written notice of the
occurrence of a matter giving rise to a Claim is given by a DoveBid Indemnitee
or a suit or action is commenced against a Shareholder by a DoveBid Indemnitee,
the relevant DoveBid Indemnitee shall not be precluded from pursuing such Claim
or suit or action or from recovering from the Shareholder on the Claim, suit or
action by reason of the termination otherwise provided for above. The
limitations on indemnification set forth in this paragraph shall not apply to
the indemnification of Damages incurred by DoveBid with respect to the Rangen
Litigation and/or the Default Judgment.
8.3 Third Person Claims.
-------------------
8.3.1 Promptly after a DoveBid Indemnitee has received notice of or
has knowledge of any claim by a person not a party to this Agreement ("Third
Person"), or the commencement of any action or proceeding by a Third Person
(such claim or commencement of such action or proceeding being a "Third Person
Claim") that could give rise to a right of indemnification under this Agreement,
the DoveBid Indemnitee shall, as a condition precedent to a claim with respect
thereto being made against the Shareholders, give the Representative written
notice of such Third Person Claim describing in reasonable detail the nature of
such Third Person Claim, a copy of all papers served with respect to that Third
Person Claim (if any), an estimate of the amount of Damages attributable to the
Third Person Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis for the DoveBid
Indemnitee's request for indemnification under this Agreement; provided,
however, that the failure of the DoveBid Indemnitee to give timely notice
hereunder shall relieve the Shareholders of their indemnification obligations
under this Agreement to the extent, but only to the extent that, such failure
materially prejudices the Shareholders' ability to defend such claim.
8.3.2 DoveBid shall defend any Third Person Claim, and the costs
and expenses incurred by DoveBid in connection with such defense (including but
not limited to reasonable
attorneys' fees, other professionals' and experts' fees and court or arbitration
costs) shall be included in the Damages for which DoveBid may seek indemnity
pursuant to a Claim made by any DoveBid Indemnitee hereunder. If DoveBid fails
to defend such Third Person Claim, the Shareholders shall have the right to
assume the defense thereof. The Representative shall have the right to receive
copies of all pleadings, notices and communications with respect to the Third
Person Claim to the extent that receipt of such documents by the Representative
does not affect any privilege relating to the DoveBid Indemnitee, and may
participate in settlement negotiations with respect to the Third Person Claim.
No DoveBid Indemnitee shall enter into any settlement of a Third Person Claim
without the prior written consent of the Representative (which consent shall not
be unreasonably withheld), provided, that if the Representative shall have
consented in writing to any such settlement, then the Representative shall have
no power or authority to object to any Claim by any DoveBid Indemnitee for
indemnity under Article VIII for the amount of such settlement; and the
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.
8.4 Representative. Each of the Shareholders approves the designation of
--------------
and designates the Representative as the representative of the Shareholders and
as the attorney-in-fact and agent for and on behalf of each Shareholder with
respect to the certification of Closing Stockholders' Equity under Section 1.4
hereof and claims for indemnification under this Article VIII and the taking by
the Representative of any and all actions and the making of any decisions
required or permitted to be taken by the Representative under this Agreement,
including, without limitation, the exercise of the power to: (a) agree to,
negotiate, enter into settlements and compromises of, demand arbitration of, and
comply with orders of courts and awards of arbitrators with respect to, such
claims; (b) arbitrate, resolve, settle or compromise any claim for indemnity
made pursuant to Article VIII; and (c) take all actions necessary in the
judgment of the Representative for the accomplishment of the foregoing. The
Representative will have authority and power to act on behalf of each
Shareholder with respect to the disposition, settlement or other handling of all
claims under Article VIII and all rights or obligations arising under Article
VIII. The Shareholders will be bound by all actions taken and documents executed
by the Representative in connection with Article VIII, and DoveBid will be
entitled to rely on any action or decision of the Representative. In performing
the functions specified in this Agreement, the Representative will not be liable
to any Shareholder in the absence of gross negligence or willful misconduct on
the part of the Representative. The Shareholders shall severally indemnify the
Representative and hold him harmless against any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of the
Representative and arising out of or in connection with the acceptance or
administration of his duties hereunder. Any out-of-pocket costs and expenses
reasonably incurred by the Representative in connection with actions taken by
the Representative pursuant to the terms of Article VIII (including without
limitation the hiring of legal counsel and the incurring of legal fees and
costs) will be paid by the Shareholders to the Representative pro rata in
proportion to their respective percentage equity interests in the Company.
8.5 Notice of Claim. As used herein, the term "Claim" means a claim for
---------------
indemnification of a DoveBid Indemnitee for Damages under Article VIII. DoveBid
may give notice of a Claim under this Agreement whether for its own Damages or
for Damages incurred by any other DoveBid Indemnitee, and DoveBid will give
written notice of a Claim executed by
an officer of DoveBid (a "Notice of Claim") to the Representative promptly after
DoveBid becomes aware of the existence of any potential claim by a DoveBid
Indemnitee Person for indemnity for Damages under Article VIII, including in
connection with any Third Person Claim .
8.6 Contents of Notice of Claim. Each Notice of Claim by DoveBid will
---------------------------
contain the following information:
(a) that DoveBid has incurred, paid or properly accrued (in
accordance with GAAP) or, in good faith, believes it will have to incur, pay or
accrue (in accordance with GAAP), Damages in an aggregate stated amount arising
from such Claim (which amount may be the amount of damages claimed by a third
party in an action brought against any DoveBid Indemnitee based on alleged
facts, which if true, would give rise to liability for Damages to such DoveBid
Indemnitee under Article VIII); and
(b) a brief description, in reasonable detail (to the extent
reasonably available to DoveBid), of the facts, circumstances or events giving
rise to the alleged Damages based on DoveBid's good faith belief thereof,
including, without limitation, the identity and address of any third-party
claimant (to the extent reasonably available to DoveBid) and copies of any
formal demand or complaint, the amount of Damages, the date each such item was
incurred, paid or properly accrued, or the basis for such anticipated liability,
and the specific nature of the breach to which such item is related.
8.7 Resolution of Notice of Claim. Any Notice of Claim received by the
-----------------------------
Representative will be resolved as follows:
(a) Uncontested Claims. In the event that, within fifteen
------------------
calendar days after a Notice of Claim is received by the Representative, the
Representative does not contest such Notice of Claim in writing to DoveBid (an
"Uncontested Claim"), the Representative will be conclusively deemed to have
consented, on behalf of all Shareholders, to the recovery by the DoveBid
Indemnitee of the full amount of Damages specified in the Notice of Claim in
accordance with this Article VIII, including the offset of any such amount
against the Deferred Payment or against amounts owed by DoveBid to the
Shareholders pursuant to the Convertible Promissory Notes or otherwise, and,
without further notice, to have stipulated to the entry of a final judgment for
damages against the Shareholders for such amount in any court having
jurisdiction over the matter where venue is proper.
(b) Contested Claims. In the event that the Representative gives
----------------
DoveBid written notice contesting all or any portion of a Notice of Claim (a
"Contested Claim") within the fifteen day period, then: (i) such Contested Claim
will be resolved by either (A) a written settlement agreement executed by
DoveBid and the Representative or (B) in the absence of such a written
settlement agreement, by binding arbitration between DoveBid and the
Representative in accordance with the terms and provisions of Section 8.7(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 before J.A.M.S./ENDISPUTE or its successor
("J.A.M.S."), pursuant to the United States
Arbitration Act, 9 U.S.C., Section 1 et seq. and that any such arbitration will
be conducted in San Mateo County, California. Either DoveBid or the
Representative may commence the arbitration process called for by this Agreement
by filing a written demand for arbitration with J.A.M.S. and giving a copy of
such demand to each of the other parties to this Agreement. The arbitration will
be conducted in accordance with the provisions of J.A.M.S.' Streamlined
Arbitration Rules and Procedures in effect at the time of filing of the demand
for arbitration, subject to the provisions of Section 8.7(c) of this Agreement.
The parties will cooperate with J.A.M.S. and with each other in promptly
selecting an arbitrator from J.A.M.S.' panel of neutrals, and in scheduling the
arbitration proceedings in order to fulfill the provisions, purposes and intent
of this Agreement. The parties covenant that they will participate in the
arbitration in good faith, and that they will share in its costs in accordance
with subparagraph (i) below. A Contested Claim finally resolved in favor of
DoveBid may be satisfied as if such Claim were an Uncontested Claim pursuant to
Section 8.7(a). The provisions of this Section 8.7(c) may be enforced by any
court of competent jurisdiction, and the party seeking enforcement will be
entitled to an award of all costs, fees and expenses, including attorneys' fees,
to be paid by the party against whom enforcement is ordered. Judgment upon the
award rendered by the arbitrator may be entered in any court having competent
jurisdiction.
(i) Payment of Costs. DoveBid on the one hand, and the
----------------
Shareholders (through the Representative), on the other hand, will bear the
expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator shall determine the party who
is the Prevailing Party and the party who is the Non-Prevailing Party. The Non-
Prevailing Party shall pay all reasonable costs, fees and expenses related to
the arbitration, including reasonable fees and expenses of attorneys,
accountants and other professionals incurred by the prevailing party, the fees
of each arbitrator and the administrative fee of the arbitration proceedings. If
such an award would result in manifest injustice, however, the arbitrator may
apportion such costs, fees and expenses between the parties in such a manner as
the arbitrator deems just and equitable.
(ii) Burden of Proof. Except as may be otherwise expressly
---------------
provided herein, for any Contested Claim submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a judicial
proceeding governed by California law exclusively.
(iii) Award. Upon the conclusion of any arbitration proceedings
-----
hereunder, the arbitrator will render findings of fact and conclusions of law
and a final written arbitration award setting forth the basis and reasons for
any decision reached (the "Final Award") and will deliver such documents to the
Representative and DoveBid, together with a signed copy of the Final Award. The
Final Award will constitute a conclusive determination of all issues in
question, binding upon the Shareholders, the Representative and DoveBid, and
will include an affirmative statement to such effect.
(iv) Timing. The Representative, DoveBid and the arbitrator will
------
conclude each arbitration pursuant to this Section 8.7 as promptly as possible
for the Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator chosen in accordance
--------------------
with these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
ARTICLE IX
GENERAL
9.1 Confidentiality. The Company, the Shareholders 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 9.1 will not apply to information that is required, in the opinion of
counsel to a party hereto, to be disclosed by statute, or governmental rule or
regulation, or, following the Closing, to the disclosure of information
regarding the Company by DoveBid. If this Agreement is terminated, all copies
of documents containing confidential information shall be returned by the
receiving party to the disclosing party. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants in Section
9.1 and because of the immediate and irreparable damage that would be caused for
which they would have no other adequate remedy, the parties hereto agree that,
in the event of a breach by any of them of the foregoing covenants, the covenant
may be enforced against the other parties by injunctions and restraining orders.
9.2 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, provided that the acquiring
or surviving corporation or entity agrees to assume all of DoveBid's obligations
under this Agreement. This provision does not govern the assignment of the
Convertible Subordinated Promissory Notes, which shall be governed solely by the
provisions thereof. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
9.3 Entire Agreement; Amendments. This Agreement (including the
----------------------------
schedules and exhibits attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among 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.
9.4 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same agreement.
9.5 Expenses; Taxes. DoveBid will pay the fees, expenses and
---------------
disbursements of DoveBid and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by DoveBid under this
Agreement. The Shareholders 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, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by them under this Agreement, provided, however, that
DoveBid shall pay all reasonable costs incurred for the preparation of the
financial statements and report of independent certified public accountants
thereon with respect to the Company for the periods ended February 28, 1998,
February 28, 1999 and December 31, 1999 or otherwise required by DoveBid in
connection with any registration of DoveBid's securities pursuant to the
Securities Act. 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 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. 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 pay all taxes due upon the
receipt by the Shareholders of each element of the Purchase Price pursuant to
this Agreement.
9.6 Notices. All notices and other communications required or permitted
-------
hereunder shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered by depositing the same in United States mail or a
nationally recognized overnight courier service, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person to such party or to an officer or
agent of such party (or in the case of the Shareholders by facsimile), as
follows:
(i) If mailed or delivered to DoveBid, to each of the following,
using two separate mailings or deliveries:
DoveBid, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
DoveBid, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, General Counsel
(ii) If mailed, delivered or faxed to the Representative, the
Company or the Shareholders, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ Chartered
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address (or in the case of the Shareholder's, the fax number)
as any party hereto shall specify in writing to the other parties hereto
pursuant to this Section 9.7 from time to time. Such notice shall be effective
only upon actual receipt.
9.7 Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of California, without giving
effect to laws concerning choice of law or conflicts of law. Except as set
forth in Article VIII regarding the arbitration of Contested Claims, all
disputes arising out of this Agreement or the obligations of the parties
hereunder, including disputes that may arise following termination of this
Agreement, shall be subject to the exclusive jurisdiction and venue of the
California state courts of San Mateo County, California (or, if there is federal
jurisdiction, then the exclusive jurisdiction and venue of the United States
District Court having jurisdiction over San Mateo County). EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE PERSONAL AND EXCLUSIVE
JURISDICTION AND VENUE OF SAID COURTS AND WAIVES TRIAL BY JURY AND ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME. The non-
prevailing party in any such dispute shall pay all reasonable costs, fees and
expenses related to the dispute, including reasonable fees and expenses of
attorneys, accountants and other professionals incurred by the prevailing party
in such dispute.
9.8 Exercise of Rights and Remedies. Except as otherwise provided
-------------------------------
herein, no delay of, or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
9.9 Time. Time is of the essence with respect to this Agreement.
----
9.10 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
9.11 Remedies Cumulative. No right, remedy or election given by any term
-------------------
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law, or in equity or by
contract.
9.12 Construction. This Agreement has been negotiated among DoveBid, the
------------
Company, the Shareholders and their respective legal counsel, and legal or
equitable principles that might require the construction of this Agreement or
any provision of this Agreement against the party drafting this Agreement will
not apply in any construction or interpretation of this Agreement.
9.13 Captions. The headings of this Agreement are inserted for
--------
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
[The Remainder Of This Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid and the Company and by each Shareholder as of the day and year first
above written.
DOVEBID, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and General Counsel
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇