EXHIBIT 2.12
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement") is made and entered
into as of July 6, 2000 by and among DoveBid, Inc., a Delaware corporation
("DoveBid"), ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Wee Soon Keng, Supanit ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ S. D. Yau, Strongland Investments Ltd. and Manyways International Ltd
(collectively, the "Shareholders") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Team Pte Ltd., an exempt
private limited company incorporated in Singapore ("VMT"), ▇▇▇▇▇▇ ▇▇▇▇▇▇ Co Ltd,
a Thailand corporation ("VMC") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ Co Ltd, a Hong Kong
corporation ("VMY" and, collectively with VMT and VMC, the "Signing Companies").
▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ owns legally and beneficially all of the issued
share capital of VMT; ▇▇▇▇▇▇▇ Wee Heng ▇▇▇▇, ▇▇▇▇▇▇ Wee Soon Keng, Supanit
Chaiyawat and the other four individuals set forth on Appendix 1 hereto own
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legally and beneficially all of the issued share capital of VMC; VMT owns
legally and beneficially 50.0% of the issued share capital of VM Team Sdn Bhd, a
Malaysian corporation ("VMTSB" and, together with the Signing Companies, the
"Companies"); and ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Wee Soon Keng, VMT, Strongland
Investments Ltd and Manyways International Ltd own legally and beneficially all
of the issued share capital of VMY, where each such percentage is calculated on
a fully-diluted basis.
DoveBid and/or its designees desire to purchase from, or have procured
by, the Shareholders, and the Shareholders desire to sell to, or procure for,
DoveBid, all of the share capital of the Signing Companies (collectively, the
"Shares") on the terms and conditions set forth in this Agreement.
Now, therefore, the parties agree as follows:
ARTICLE I
SHARE SALE AND PURCHASE
1.1 Agreement to Sell and Purchase Shares of VMT.
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(a) At the Closing (as defined in Section 1.4 below), ▇▇▇▇▇▇▇
Wee ▇▇▇▇ ▇▇▇▇ (the "VMT Shareholder") shall sell, transfer and deliver to
DoveBid, and DoveBid shall purchase and accept from the VMT Shareholder, all of
shares and other ownership interests beneficially and of record owned by the VMT
Shareholder in VMT, 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, subject to adjustment as set forth in Section
1.1(c) below (the "VMT Purchase Price"):
(i) cash in the amount of $3,975,000 (the "VMT Closing
Payment"), subject to reduction in accordance with Section 1.1(c);
(ii) a convertible subordinated promissory note payable
to ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ in the principal amount of $1,000,000 in the form
attached hereto as Exhibit A (the "VMT Convertible Subordinated Promissory
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Note"); and
(iii) the VMT Deferred Payments (as defined in Section
1.1(d) below).
(b) All payments of DoveBid to the VMT Shareholder pursuant
to this Agreement shall be made to ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇.
(c) VMT Purchase Price Adjustment.
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(i) At the Closing, the VMT Shareholder shall deliver a
balance sheet of VMT as of the business day immediately preceding the date of
the Closing (the "VMT Closing Balance Sheet") prepared in accordance with United
States generally accepted accounting principles ("GAAP"), together with a
detailed list of all accrued expenses and liabilities of VMT as of the Closing
Date as determined in accordance with GAAP (the "VMT Closing Liabilities
Schedule"). For the purposes of preparing the VMT Closing Balance Sheet and the
VMT Closing Liabilities Schedule, all amounts shall be converted to US Dollars
using the relevant closing mid-point exchange rates published in the Asian Wall
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Street Journal on the second business day prior to the Closing (if no exchange
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rates are published on the second business day prior to the Closing, then the
applicable exchange rates shall be the relevant closing mid-point exchange rates
published in the Asian Wall Street Journal on the preceding business day). In
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the event that the aggregate book value of equity of VMT, determined in
accordance with GAAP, set forth on the VMT Closing Balance Sheet (such amount,
the "VMT Closing Shareholders' Equity") is less than $500,000, the VMT Closing
Payment shall be reduced by one dollar for each dollar that VMT Closing
Shareholders' Equity is less than $500,000. In the event of any reduction in the
VMT Closing Payment, the aggregate VMT Purchase Price shall be appropriately
adjusted and such reduced aggregate consideration shall constitute the "VMT
Purchase Price" for all purposes under this Agreement.
(ii) On or prior to the 90/th/ calendar day following the
Closing Date, DoveBid shall provide the VMT Shareholder with a certificate,
signed by an officer of DoveBid, stating whether DoveBid believes that the
amount of VMT Closing Shareholders' Equity used to determine the VMT Purchase
Price pursuant to Section 1.2(a) above (the "Original VMT CSE") was correct or
incorrect as of the Closing Date, and if incorrect, DoveBid's revised
calculation of VMT Closing Shareholders' Equity ("Revised VMT CSE"), together
with detailed calculations substantiating such revised calculation. In the event
that such certificate sets forth a Revised VMT CSE, within five (5) business
days of VMT Shareholders' receipt of such certificate, the VMT Shareholder shall
either (i) agree with such revised calculation by countersigning such
certificate and delivering a copy thereof to DoveBid, whereupon the amount by
which the Original VMT CSE exceeds the Revised VMT CSE (such excess, the "VMT
CSE True-Up") shall be offset against any VMT Deferred Payment otherwise payable
by DoveBid or (ii) disagree with such revised calculation, whereupon DoveBid and
the VMT Shareholder shall submit such dispute to arbitration as if it were a
Contested Claim, as defined in Article VIII hereof, in accordance with Section
8.6 hereof. If the VMT Shareholders shall not have responded within such five
(5) business day period, the VMT Shareholder shall be deemed to have agreed with
such revised calculation and the offset or withholding, as applicable, of the
VMT CSE True-Up.
(d) VMT Deferred Payments. On the six month, one year and two
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year anniversaries of the Closing Date, DoveBid shall pay the VMT Shareholders
in cash $525,000,
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$750,000 and $750,000, respectively (collectively, the "VMT Deferred Payments");
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 VMT
Shareholder, pending resolution of the Notice of Claim or Contested Claim
pursuant to the Article VIII hereof; and provided that, if on such date, there
has been a resolved Notice of Claim or Contested Claim (as defined in Article
VIII hereof) that has not been paid by a VMT Shareholder or VMT, an amount equal
to such unpaid amount shall be withheld from such payment to the VMT
Shareholders and such withheld amount shall be deemed to have been paid by such
VMT Shareholder or VMT to DoveBid.
1.2 Agreement to Sell and Purchase Shares of VMY.
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(a) At the Closing (as defined in Section 1.4 below), ▇▇▇▇▇▇▇ Wee
Heng ▇▇▇▇, ▇▇▇▇▇▇ Wee Soon Keng, Strongland Investments Ltd and Manyways
International Ltd, (the "VMY Shareholders") shall sell, transfer and deliver to
DoveBid, and DoveBid shall purchase and accept from the VMY Shareholders, all of
the shares and other ownership interests beneficially and of record owned by the
VMY Shareholders in VMY, free and clear of all Liens in exchange for the
following aggregate consideration, subject to adjustment as set forth in Section
1.2(c) below (the "VMY Purchase Price"):
(i) cash in the amount of $339,375 (the "VMY Closing
Payment"), subject to reduction in accordance with Section 1.2(c);
(ii) a convertible subordinated promissory note payable to
Manyways International Ltd in the principal amount of $81,480 and a convertible
subordinated note payable to Strongland Investments Ltd in the principal amount
of $18,520, both in the form attached hereto as Exhibit A (collectively the "VMY
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Convertible Subordinated Promissory Note" and, together with the VMT Convertible
Subordinated Promissory Note, the "Convertible Subordinated Promissory Notes");
and
(iii) the VMY Deferred Payment (as defined in Section 1.2(d)
below).
(b) All payments of DoveBid to the VMY Shareholders pursuant to
this Agreement shall be made to Manyways International Ltd and Strongland
Investments Ltd on a pro rata basis with respect to the percentage of shares
owned by each such VMY Shareholder as indicated on Appendix 1 hereto.
(c) VMY Purchase Price Adjustment.
(i) At the Closing, the VMY Shareholders shall deliver a
balance sheet of VMY as of the business day immediately preceding the date of
the Closing (the "VMY Closing Balance Sheet") prepared in accordance with United
States generally accepted accounting principles ("GAAP"), together with a
detailed list of all accrued expenses and liabilities of VMY as of the Closing
Date as determined in accordance with GAAP (the "VMY Closing Liabilities
Schedule"). For the purposes of preparing the VMY Closing Balance Sheet and the
VMY Closing Liabilities Schedule, all amounts shall be converted to US Dollars
using the relevant closing mid-point exchange rates published in the Asian Wall
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Street Journal on the
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second business day prior to the Closing (if no exchange rates are published on
the second business day prior to the Closing, then the applicable exchange rates
shall be the relevant closing mid-point exchange rates published in the Asian
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Wall Street Journal on the preceding business day). In the event that the
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aggregate book value of equity of VMY, determined in accordance with GAAP, set
forth on the VMY Closing Balance Sheet (such amount, the "VMY Closing
Shareholders' Equity") is less than $0, the VMY Closing Payment shall be reduced
by one dollar for each dollar that VMY Closing Shareholders' Equity is less than
$0. In the event of any reduction in the VMY Closing Payment, the aggregate VMY
Purchase Price shall be appropriately adjusted and such reduced aggregate
consideration shall constitute the "VMY Purchase Price" for all purposes under
this Agreement.
(ii) On or prior to the 90/th/ calendar day following the Closing
Date, DoveBid shall provide the VMY Shareholders with a certificate, signed by
an officer of DoveBid, stating whether DoveBid believes that the amount of VMY
Closing Shareholders' Equity used to determine the VMY Purchase Price pursuant
to Section 1.2(a) above (the "Original VMY CSE") was correct or incorrect as of
the Closing Date, and if incorrect, DoveBid's revised calculation of VMY Closing
Shareholders' Equity ("Revised VMY CSE"), together with detailed calculations
substantiating such revised calculation. In the event that such certificate sets
forth a Revised VMY CSE, within five (5) business days of VMY Shareholders'
receipt of such certificate, the VMY Shareholders shall either (i) agree with
such revised calculation by countersigning such certificate and delivering a
copy thereof to DoveBid, whereupon the amount by which the Original VMY CSE
exceeds the Revised VMY CSE (such excess, the "VMY CSE True-Up") shall be offset
against any VMY Deferred Payment otherwise payable by DoveBid or (ii) disagree
with such revised calculation, whereupon DoveBid and the VMY Shareholders shall
submit such dispute to arbitration as if it were a Contested Claim, as defined
in Article VIII hereof, in accordance with Section 8.6 hereof. If the VMY
Shareholders shall not have responded within such five (5) business day period,
the VMY Shareholders shall be deemed to have agreed with such revised
calculation and the offset or withholding, as applicable, of the VMY CSE True-
Up.
(d) VMY Deferred Payment. On the six month anniversary of the Closing
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Date, DoveBid shall pay the VMY Shareholders (excluding ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇▇ Wee Soon Keng) in cash $35,625 (the "VMY Deferred Payment"); 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 VMY
Shareholders (excluding ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ Wee Soon Keng), pending
resolution of the Notice of Claim or Contested Claim pursuant to the Article
VIII hereof; and provided that, if on such date, there has been a resolved
Notice of Claim or Contested Claim (as defined in Article VIII hereof) that has
not been paid by a VMY Shareholder (excluding ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇
Wee Soon Keng) or VMY, an amount equal to such unpaid amount shall be withheld
from such payment to the VMY Shareholders (excluding ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇▇ Wee Soon Keng) and such withheld amount shall be deemed to have been paid
by such VMY Shareholder (excluding ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ Wee Soon
Keng) or VMY to DoveBid.
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1.3 Agreement to Sell and Purchase Shares of VMC.
---------------------------------------------
(a) At the Closing (as defined in Section 1.4 below), (i)
▇▇▇▇▇▇▇ Wee Heng ▇▇▇▇, ▇▇▇▇▇▇ Wee Soon Keng and Supanit Chaiyawat (the "VMC
Shareholders") shall sell, transfer and deliver to DoveBid, (ii) the VMC
Shareholders shall procure the transfer and delivery of each holder of share
capital of VMC who is not a VMC Shareholder to DoveBid and/or its designees, and
(iii) DoveBid and/or its designees shall purchase and accept from the VMC
Shareholders and the other individuals who hold VMC share capital as indicated
on Appendix 1 hereto, all of the shares and other ownership interests
beneficially and of record owned by the VMC Shareholders in VMC, free and clear
of all Liens in exchange for the following aggregate consideration (the "VMC
Purchase Price"):
(i) cash in the amount of $330,225 (the "VMC Closing
Payment"), subject to reduction in accordance with Section 1.3(c) below and held
in escrow pursuant to the terms of Escrow Agreement attached hereto as Exhibit E
(the "Escrow Agreement");
(ii) the VMC Deferred Payment (as defined in Section 1.3(d)
below); and
(iii) the VMC Earn Out Payments (as defined in Section
1.3(e) below).
(b) All payments of DoveBid to the VMC Shareholders pursuant to
this Agreement shall be made to Supanit Chaiyawat.
(c) VMC Purchase Price Adjustment.
(i) At the Closing, the VMC Shareholders shall deliver a
balance sheet of VMC as of the business day immediately preceding the date of
the Closing (the "VMC Closing Balance Sheet") prepared in accordance with United
States generally accepted accounting principles ("GAAP"), together with a
detailed list of all accrued expenses and liabilities of VMC as of the Closing
Date as determined in accordance with GAAP (the "VMC Closing Liabilities
Schedule"). For the purposes of preparing the VMC Closing Balance Sheet and the
VMC Closing Liabilities Schedule, all amounts shall be converted to US Dollars
using the relevant closing mid-point exchange rates published in the Asian Wall
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Street Journal on the second business day prior to the Closing (if no exchange
--------------
rates are published on the second business day prior to the Closing, then the
applicable exchange rates shall be the relevant closing mid-point exchange rates
published in the Asian Wall Street Journal on the preceding business day). In
-------------------------
the event that the aggregate book value of equity of VMC, determined in
accordance with GAAP, set forth on the VMC Closing Balance Sheet (such amount,
the "VMC Closing Shareholders' Equity") is less than $50,000, the VMC Closing
Payment shall be reduced by one dollar for each dollar that VMC Closing
Shareholders' Equity is less than $50,000. In the event of any reduction in the
VMC Closing Payment, the aggregate VMC Purchase Price shall be appropriately
adjusted and such reduced aggregate consideration shall constitute the "VMC
Purchase Price" for all purposes under this Agreement.
(ii) On or prior to the 90/th/ calendar day following the
Closing Date, DoveBid shall provide the VMC Shareholders with a certificate,
signed by an officer of DoveBid, stating whether DoveBid believes that the
amount of VMC Closing Shareholders'
5
Equity used to determine the VMC Purchase Price pursuant to Section 1.3(a) above
(the "Original VMC CSE") was correct or incorrect as of the Closing Date, and if
incorrect, DoveBid's revised calculation of VMC Closing Shareholders'Equity
("Revised VMC CSE"), together with detailed calculations substantiating such
revised calculation. In the event that such certificate sets forth a Revised VMC
CSE, within five (5) business days of VMC Shareholders' receipt of such
certificate, the VMC Shareholders shall either (i) agree with such revised
calculation by countersigning such certificate and delivering a copy thereof to
DoveBid, whereupon the amount by which the Original VMC CSE exceeds the Revised
VMC CSE (such excess, the "VMC CSE True-Up") shall be offset against any VMC
Deferred Payment otherwise payable by DoveBid or (ii) disagree with such revised
calculation, whereupon DoveBid and the VMC Shareholders shall submit such
dispute to arbitration as if it were a Contested Claim, as defined in Article
VIII hereof, in accordance with Section 8.6 hereof. If the VMC Shareholders
shall not have responded within such five (5) business day period, the VMC
Shareholders shall be deemed to have agreed with such revised calculation and
the offset or withholding, as applicable, of the VMC CSE True-Up.
(d) VMC Deferred Payment. On the six month anniversary of the Closing
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Date, DoveBid shall pay the VMC Shareholders in cash $26,775 (the "VMC Deferred
Payment"); 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 VMC Shareholders, pending resolution of the Notice of Claim or
Contested Claim pursuant to the Article VIII hereof; and provided that, if on
such date, there has been a resolved Notice of Claim or Contested Claim (as
defined in Article VIII hereof) that has not been paid by a VMC Shareholder or
VMC, an amount equal to such unpaid amount shall be withheld from such payment
to the VMC Shareholders and such withheld amount shall be deemed to have been
paid by such VMC Shareholder or VMC to DoveBid. The VMC Deferred Payment will
be held in escrow pursuant to the terms of the Escrow Agreement.
(e) VMC Earn Out Payments. Supanit Chaiyawat shall be entitled to
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receive the following amounts (the "VMC Earn Out Payments") in the event the
following events occur: (i) In calendar year 2000, if VMC's net revenues,
determined by DoveBid in accordance with GAAP, equal or exceed $500,000 then
DoveBid will pay $100,000 to Supanit Chaiyawat, and if VMC has no net loss for
the period (calculated by including all VMC costs and expenses but no other
DoveBid overhead costs and expenses) and such net revenues equal or exceed
$800,000, then DoveBid will pay an additional $100,000 to Supanit Chaiyawat;
(ii) In calendar year 2001, if VMC's net revenues, determined by DoveBid in
accordance with GAAP, equal or exceed $1,600,000 then DoveBid will pay $150,000
to Supanit Chaiyawat, and if VMC has no net loss for the period (calculated by
including all VMC costs and expenses and all applicable DoveBid overhead costs
and expenses) and such net revenues equal or exceed $2,400,000, then DoveBid
will pay an additional $150,000 to Supanit Chaiyawat; and (iii) in calendar year
2002, if VMC's net revenues, determined by DoveBid in accordance with GAAP,
equal or exceed $3,200,000 then DoveBid will pay $150,000 to Supanit Chaiyawat,
and if VMC has no net loss for the period (calculated by including all VMC costs
and expenses and all applicable DoveBid overhead costs and expenses) and such
net revenues equal or exceed $4,800,000, then DoveBid will pay an additional
$150,000 to Supanit Chaiyawat. Notwithstanding anything to the contrary in this
Section 1.3(e), if on the date any payment pursuant to this Section 1.3(e) is
due, there is
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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 Supanit Chaiyawat, pending resolution of the
Notice of Claim or Contested Claim pursuant to the Article VIII hereof; and
provided that, if on such date, there has been a resolved Notice of Claim or
Contested Claim (as defined in Article VIII hereof) that has not been paid by a
VMC Shareholder or VMC, an amount equal to such unpaid amount shall be withheld
from such payment to Supanit Chaiyawat and such withheld amount shall be deemed
to have been paid by Supanit Chaiyawat or VMC to DoveBid.
1.4 Closing. The purchase and sale of the Shares, and the
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consummation of the other transactions contemplated hereby (the "Closing"), will
take place at the offices of DoveBid's counsel, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, #▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ at 10.00 a.m. Singapore
local time on June __, 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 on or before the date 90 days from the
date first written above. At the Closing, Shareholders will deliver to DoveBid
duly executed share transfer forms of all of the Shares in favor of DoveBid (or
DoveBid's designee) accompanied by the share certificates representing all of
the Shares (or an express indemnity in a form satisfactory to DoveBid in the
case of any certificate found to be missing), together with such documents as
may be required by the relevant tax authorities (including the Stamp Duty Office
of the Inland Revenue Authority of Singapore) to facilitate the stamping of the
share transfer forms (if required), against delivery by DoveBid of the VMT
Closing Payment, the VMC Closing Payment and the VMY Closing Payment, each by
wire transfer, the duly signed VMT Convertible Subordinated Promissory Note and
VMY Convertible Subordinated Promissory Note, and a certified true copy of
DoveBid's corporate resolutions approving and authorizing the purchase of the
Shares and the issue of the VMT Convertible Subordinated Promissory Note and the
VMY Convertible Subordinated Promissory Note. The date on which the Closing
occurs is referred to herein as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS AND THE SIGNING COMPANIES
Except as specifically set forth in the disclosure letter provided by
the Shareholders and the Signing Companies to DoveBid simultaneously with the
signing of this Agreement, dated as of the date of this Agreement (the
"Disclosure Letter"), the parts of which are numbered to correspond to the
sections of this Agreement, (i) ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ and VMT hereby jointly and
severally represent and warrant to DoveBid with respect to representations and
warranties regarding VMT and jointly and severally represent and warrant to
DoveBid to the best of their respective Knowledge with respect to
representations and warranties regarding the Companies other than VMT, (ii)
▇▇▇▇▇▇ Wee Soon Keng to the best of his Knowledge, and Supanit Chaiyawat hereby
jointly and severally represent and warrant to DoveBid with respect to
representations and warranties regarding VMC, and (iii) VMT, Strongland
Investments Ltd., Manyways International Ltd., and ▇▇▇▇▇▇▇ S. D. ▇▇▇ hereby
jointly and severally represent and warrant to DoveBid with respect to
representations and warranties regarding VMY as follows:
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2.1 Organization. Each Company is a corporation duly organized and validly
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existing under the laws of its jurisdiction of incorporation, has the corporate
power and authority to own, operate and lease its properties and to carry on its
business as now 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 Each 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 and documents to which each Company and each
Shareholder is or will be a party that are required to be executed pursuant to
this Agreement (the "Ancillary Documents"). The execution, delivery and
performance of this Agreement and the Ancillary Documents have been duly and
validly approved and authorized by each Company's shareholders and Board of
Directors and all necessary actions under applicable law.
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable each Company and each Shareholder to enter
into, and to perform their respective obligations under, this Agreement and the
Ancillary Documents, except for such qualifications and filings as may be
required to comply with applicable securities laws of such jurisdictions 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 Documents are, or when
executed by the Signing Companies and the Shareholders will be, valid and
binding obligations of the Signing Companies and the Shareholders enforceable
against the Signing Companies 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 share capital of VMT consists
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entirely of 200,000 ordinary shares, S$1.00 par value per share, of which a
total of 100,000 shares are issued and paid up and 100,000 shares are owned
legally and beneficially by ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇. The authorized share capital
of VMY consists entirely of 100,000 ordinary shares, HK$1.00 par value per
share, of which a total of 100,000 shares are issued and outstanding, 46,998
shares are owned beneficially and of record by VMT, 1 share is owned
beneficially and of record by ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇, 1 share is owned
beneficially and of record by ▇▇▇▇▇▇ Wee Soon Keng, 10,000 shares are owned
beneficially and of record by Strongland Investments Ltd, and 44,000 shares are
owned beneficially and of record by Manyways International Ltd. The authorized
share capital of VMC consists entirely of 20,000 ordinary shares, 100 Baht par
value per share, of which a total of 20,000 ordinary shares are issued and
outstanding, 5,000 shares are owned beneficially and of record by ▇▇▇▇▇▇▇ Wee
▇▇▇▇ ▇▇▇▇, 9,800 shares are owned beneficially and of record by Supanit
Chaiyawat, 4,800 shares are owned beneficially and of record by ▇▇▇▇▇▇ Wee Soon
Keng and the
8
remaining 400 shares are owned by the four shareholders set forth on Appendix 1.
----------
The authorized share capital of VMTSB consists entirely of 100,000 ordinary
shares, RM1.00 par value per share, of which a total of 100 shares are issued
and paid up, 50 shares are owned of record by VMT, 20 shares are owned by Leng
▇▇▇▇▇ ▇▇▇▇▇▇, 20 shares are owned by ▇▇▇ ▇▇▇▇ Chuay, and 10 shares are owned by
▇▇▇▇▇ ▇▇▇▇ Keow. No other entity or individual owns either beneficially or of
record, any other equity interest of the Companies. On the date of this
Agreement, the Shareholders have, and on the Closing Date the Shareholders will
have, good title to that number of shares of share capital of the Companies set
forth across such Shareholders name in Appendix 1 hereto, free and clear of any
and all Liens. The share capital of the Companies set forth in Appendix 1 hereto
do and shall constitute collectively all of the outstanding shares of the
Companies' share capital. 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 Companies' share capital, or any securities
convertible into or exchangeable for shares of the Companies' share capital, or
obligating any 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 securities laws) applicable to
any of the Companies' issued and paid up shares. Each share of the Companies'
share capital has been duly authorized and validly issued, is fully paid, is not
subject to any right of rescission, and has been offered, issued, sold and
delivered by each Company in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable securities laws,
other applicable laws and requirements set forth in applicable agreements or
instruments. No Company is under any obligation to register any of its presently
issued and paid up shares, or any securities that may be subsequently issued,
under the securities laws of any jurisdiction.
2.4 Subsidiaries. No Company has 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 governance document of any Company, (b) any instrument or contract to which
any Company or Shareholder is a party or by which either any Company or
Shareholder, or any of the Companies' or any Shareholder's assets or properties,
are bound or affected, or (c) any judgment, writ, decree, order, statute, rule
or regulation ("Laws") applicable to either any Company or any Shareholder or
their respective assets or properties (including but not limited to any Laws
regarding foreign ownership of the Shares). 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 any Company, nor any persons for whose acts or defaults any
Company may be liable, before any court or administrative agency, nor has any
such action, proceeding, claim or investigation been threatened. Each
Shareholder represents that there is no reasonable basis for such Shareholder to
assert a claim against any Company, any Shareholder or DoveBid based upon: (a)
ownership or rights to ownership of any shares or other ownership interest in
any Company,
9
(b) any rights as a shareholder of any Company, including any option or
preemptive rights or rights to notice or to vote, or (c) any rights under any
agreement among any Company and its shareholders. To the Knowledge of the
Signing Companies and the Shareholders, there is no reasonable basis for any
shareholder or former shareholder of any Company, or any other person, firm,
corporation, or entity, to assert a claim against any Company, any Shareholder
other than such Shareholder or DoveBid based upon: (a) ownership or rights to
ownership of any shares or other ownership interest in any Company, (b) any
rights as a shareholder of any Company, including any option or preemptive
rights or rights to notice or to vote, or (c) any rights under any agreement
among any 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 any Company or assets, properties or
securities of any Company.
2.7 Taxes. Each Company has timely filed all tax returns required to be
-----
filed, has paid all taxes required to be paid in respect of all periods for
which returns have been filed, has established an adequate accrual or reserve
for the payment of all taxes payable in respect of the periods subsequent to the
periods covered by the most recent applicable tax returns, has made all
necessary estimated tax payments, and has no liability for taxes in excess of
the amount so paid or accruals or reserves so established. All accruals or
reserves for taxes on the Closing Balance Sheet will be established in the
ordinary course of business. Each 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. Each Company has not
received any notification from any taxing authority regarding any material
issues that: (a) are currently pending before any taxing authority (including
but not limited to any sales or use tax authority) regarding such Company or (b)
have been raised by such other taxing authority and not yet finally resolved. No
tax return of such Company has ever been audited by any taxing agency or
authority. There is not in effect any waiver by any Company of any statute of
limitations with respect to any taxes; and no Company has 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. Each Company has withheld with respect to
each of its employees and independent contractors all taxes required to be
withheld, and paid such withheld amounts to the appropriate tax authority within
the time prescribed by law. For the purposes of this Agreement, the terms "tax"
and "taxes" include all income, gains, franchise, excise, property, sales, use,
employment, license, payroll, occupation, recording, value added or transfer
taxes, governmental charges, 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. Each Company has delivered to DoveBid and attached
--------------------
in the Disclosure Schedule copies of: (a) VMT's audited balance sheet as of
March 31, 2000, and each of the other Companies' audited balance sheet as of
December 31, 1999, (b) VMT's audited income statement and statement of cash
flows for the twelve months ended March 31, 2000, and each of the other
Companies' audited income statement and statement of cash flows for the twelve
months ended December 31, 1999, (c) other than VMT, each Company's unaudited
balance sheet as of March 31, 2000 (the "Balance Sheet"), and (d) other than
VMT, each Company's unaudited income statement and statement of cash flows for
the three months ended March 31, 2000 (the documents referenced in this
sentence, together, with the Closing Balance Sheet and the Closing Liabilities
Schedule for each Company, the "Financial Statements"). The
10
Financial Statements (a) are in accordance with the books and records of the
respective Company, (b) fairly present the financial condition of the respective
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
applied on a consistent basis. No Company has any 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.
2.9 Title to Assets and Properties. Each Company has good and marketable
-------------------------------
title to all of its assets as shown on the Balance Sheet and the Closing Balance
Sheet, free and clear of all Liens (other than for taxes not yet due and
payable). All machinery and equipment 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 any Company is a party are fully effective and afford
the Company peaceful and undisturbed possession of the subject matter of the
lease. Section 2.9 of the Disclosure Letter sets forth a detailed list of each
Company's inventory as of March 31, 2000. No Company is in violation of any
zoning, building, safety or environmental ordinance, regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties, and has not received any notice of violation with which it has not
complied. The Companies' assets include all tangible and intangible assets,
rights and properties necessary for the conduct of their respective operations.
2.10 Absence of Certain Changes. Since March 31, 2000, there has not been
--------------------------
with respect to any 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 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 share capital thereof,
any split, combination or
11
recapitalization of the share capital 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 any governance document of any
Company; or
(m) any change in the accounting policies or procedures of any
Company.
2.11 Contracts and Commitments. Section 2.11 of the 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 any 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;
12
(f) Contract, agreement or other understanding or arrangement
containing covenants purporting to limit any 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 any Company;
(h) Contract, agreement or other understanding or arrangement for or
relating to the acquisition or disposition of assets outside the ordinary course
of business, or pursuant to which any Company has any ownership or other
participation interest in any corporation, partnership or other business
enterprise;
(i) Surety or guarantee in favor of third parties, or any security
interest in favor of third parties, such third parties to include Shareholder,
each Company's employees, any Company and the managing director and other
officers of any Company or any Shareholder;
(j) Guarantee or surety or statement of several liability of any third
party in respect of any borrowing of any Company; or
(k) Any other agreement not specified above which is material to the
business of any 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. No Company, nor 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. Each 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 Companies' 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 any Company to use, sell or license any Company IP Right or portion
thereof. There is no royalty, honoraria, fee or other payment payable by any
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 any Company IP
Rights Agreements listed in Section 2.12 to the Disclosure Letter). To the
Knowledge of the Signing Companies and the Shareholders, neither the
manufacture, marketing, license, sale or intended use of any product currently
licensed or sold by any Company or currently under development by any Company or
the provision of any service currently provided by any Company or currently
planned to be provided by any Company violates any license or agreement between
any Company and any third party or infringes any Intellectual Property Right of
any other person or
13
entity; there is no pending or, to the Knowledge of the Signing Companies and
the Shareholders, 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 any 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, director and consultant of any Company has
executed and delivered to any Company an agreement in the form provided to
DoveBid regarding the protection of proprietary information and the assignment
to any Company of all Intellectual Property Rights arising from the services
performed for any Company by such person. Section 2.12 to the Disclosure Letter
contains a list of all applications, registrations, filings and other formal
actions made or taken by any 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. Each 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 securities laws and regulations, (b) all
applicable laws, ordinances, regulations and governmental licenses, and all
orders, writs, injunctions, awards, judgments, and decrees pertaining to (i) the
sale, licensing, leasing, ownership, or management of its owned, leased or
licensed real or personal property, products and technical data, (ii) employment
and employment practices, terms and conditions of employment, and wages and
hours, and (iii) safety, health, fire prevention, environmental protection,
hazardous materials, toxic waste disposal, building standards, zoning and other
similar matters, (c) the export or re-export of controlled commodities or
technical data and (d) immigration matters. No Company, nor any director,
officer, agent or employee of any Company, has, for or on behalf of any Company,
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or (iii) made any other unlawful
payment. No Company has had, or does have, any officer or director from the
United States, nor is, or has, any beneficial holder of any Company's capital
stock been from the United States. Each 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 any Company pending or threatened before
any governmental entity.
14
2.14 Certain Transactions and Agreements. To the Knowledge of the Signing
-----------------------------------
Companies and the Shareholders, (a) none of the officers, directors,
shareholders or employees of any Company, nor any member of their immediate
families, has any direct or indirect ownership interest in any firm or
corporation that competes with any Company (except with respect to any interest
in less than one percent of the stock of any corporation whose stock is publicly
traded); (b) 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 any Company, except for normal
compensation for services as an officer, director, shareholder or employee
thereof; and (c) 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 any Company, except for the
normal rights of a shareholder of any Company.
2.15. Employee Matters.
----------------
2.15.1 The Company does not have any contract or agreement with any
employee or consultant currently in effect that is not terminable by any Company
at any time, for any or no reason, without notice (other than agreements with
the sole purpose of providing for the confidentiality of proprietary information
or assignment of inventions).
2.15.2 No Company (i) has ever been nor is now subject to a union
organizing effort, (ii) is subject to any collective bargaining agreement with
respect to any of its employees, (iii) is subject to any other contract, written
or oral, with any trade or labor union, employees' association or similar
organization, or (iv) has current labor disputes. Each Company has good labor
relations, and has no Knowledge of any facts indicating that the consummation of
the transactions contemplated hereby will have a material adverse effect on such
labor relations, and has no Knowledge that any of its key employees intends to
leave its employ. For purposes of this Agreement, "Knowledge" shall mean (i)
actual Knowledge of such party's officers and (ii) knowledge such party (and
that its officers and directors would possess in the case of a corporation)
after reasonable inquiry.
2.15.3 Section 2.15.3 to the Disclosure Letter identifies all
written or formal plans or agreements involving direct or indirect compensation
or benefits (including any employment agreements entered into between each
Company and any of its employees, but excluding workers' compensation,
unemployment compensation and other government-mandated programs) currently or
previously maintained, contributed to or entered into by any Company under which
any Company has any present or future obligation or liability (collectively, the
"Company Employee Plans"). 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. All contributions due from any Company with respect to any
of the Company Employee Plans have been made as required or have been accrued on
the Financial Statements. Each Company Employee Plan has been maintained
substantially in compliance with its terms and with the requirements prescribed
by any and all applicable statutes, laws, orders, rules and regulations.
2.15.4 Section 2.15.4 to the Disclosure Letter identifies all
pension arrangements with all employees, former employees, current or former
managing directors, and current or
15
former other officers of any Company (collectively the "Company Pension Plans").
No Company has any obligations with respect to any Company Pension Plans, except
as disclosed in the Financial Statements. The Company Pension Plans are and have
always been insured through the insurance companies set forth in Section 2.15.4
to the Disclosure Letter. After the Closing Date, the Company Pension Plans will
continue to be insured through these insurance companies. All premiums that have
become due prior to or upon the Closing Date have been fully and timely paid by
each Company.
2.15.5 Section 2.15.5 to the Disclosure Letter lists each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' benefits, vacation benefits,
severance benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses
and all forms of incentive compensation or post-retirement insurance,
compensation or benefits for employees, consultants or directors which (A) is
not a Company Employee Plan or a Company Pension Plan, (B) is entered into,
maintained or contributed to, as the case may be, by any Company, and (C) covers
any employee or former employee of any Company. Such contracts, plans and
arrangements as are described in this Section 2.15.5 are herein referred to
collectively as the "Company Benefit Arrangements." Each Company Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, laws, rules
and regulations which are applicable to such Company Benefit Arrangement. Each
Company has delivered to DoveBid a complete and correct copy or description of
each Company Benefit Arrangement.
2.15.6 There has been no amendment to, written interpretation or
announcement (whether or not written) by any Company relating to, or change in
employee participation or coverage under, any Company Employee Plan, Company
Pension Plan or Company Benefit Arrangement that would increase the expense of
maintaining such Company Employee Plan, Company Pension Plan or Company Benefit
Arrangement above the level of the expense incurred in respect thereof since the
date of the Balance Sheet.
2.15.7 Each Company is in compliance with all applicable laws,
agreements and contracts relating to employment, employment practices, wages,
hours, labor circumstances, hygiene, work place protection, health and safety
protection and terms and conditions of employment, including, but not limited
to, employee compensation matters.
2.15.8 No employee of any Company is in violation of any term of
any employment contract, invention assignment agreement, confidentiality
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 any Company to any liability.
2.15.9 No Company is a party to any (a) agreement with any officer,
director, shareholder or other employee thereof (i) the benefits of which are
contingent, or the terms of which are altered, upon the occurrence of a
transaction involving any Company in the nature of any of the transactions
contemplated by this Agreement, (ii) providing any term of employment
16
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. Each Company has made available to DoveBid for
-----------------
examination true and complete copies of all documents and information listed in
the Disclosure Letter or other exhibits called for by this Agreement which have
been requested by DoveBid and/or its legal counsel, including, without
limitation, the following: (a) copies of each Company's 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 and shareholder registers reflecting all equity issuances and
transfers; and (d) all permits, orders, and consents issued by any regulatory
agency with respect to such Company, or any securities of such Company, and all
applications for such permits, orders, and consents.
2.17 No Brokers. No Company and no Shareholder is or will be obligated for
----------
the payment of fees or expenses of any investment banker, broker or finder in
connection with the origin, negotiation or execution of this Agreement or in
connection with any transaction contemplated hereby.
2.18 Accounts Receivable. Section 2.18 of the Disclosure Letter sets forth
-------------------
an aging schedule for each Company's accounts receivable as of the business day
preceding the Closing Date. Subject to the reserves set forth on the Closing
Balance Sheet, if any, all accounts receivable of the Companies set forth on the
Closing Balance Sheet have arisen in the ordinary course of the Companies'
businesses, represent valid, enforceable and fully collectible obligations due
to the Companies, and have been and are not subject to any set-off, counterclaim
or future performance obligation on the part of the Companies.
2.19 Books and Records.
-----------------
2.19.1 The books, records and accounts of each Company (a) are
true, complete and correct, (b) have been maintained in accordance with good
business practices on a basis consistent with prior years, (c) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of each Company, and (d) accurately and fairly
reflect the basis for the Financial Statements.
2.19.2 Each Company's balance sheet, and profit and loss accounts
are subject to annual audit by each Company's auditors according to GAAP applied
on a consistent basis, and such audit and each Company's system of internal
accounting controls is 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 each Company is compared
17
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
2.20 Insurance. Each Company maintains and at all times during the three
----------
years prior to Closing has maintained policies of insurance of the type and in
amounts customarily carried by persons conducting businesses or owning assets
similar in type and size to those of such 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 each Company
is otherwise in compliance with the terms of such policies and bonds. No Company
has any Knowledge of any threatened termination of, or premium increase with
respect to, any of such policies. Prior to the Closing, VMT shall have renewed,
and fully prepaid all premiums relating to its "professional indemnity"
insurance, which insurance shall be assignable to DoveBid at the Closing, shall
expire no earlier than the first anniversary of the Closing and shall contain
coverage that is customary for each such Company's industry and be reasonably
acceptable to DoveBid. All policies of insurance now held by the Companies are
set forth in Section 2.20 of the 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 Securities Law Representations. Each of ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇,
------------------------------
Strongland Investments Ltd and Manyways International Ltd hereby represents and
warrants to, and agrees with, DoveBid as follows:
2.21.1 The Convertible Subordinated Promissory Note and any
securities issuable upon conversion thereof (collectively, with the Convertible
Subordinated Promissory Note, the "DoveBid Securities") will be acquired for
investment for such Shareholder's own account, not as a nominee or agent, and
not with a view to the public resale or distribution thereof within the meaning
of the Securities Act, and such Shareholder has no present intention of selling,
granting any participation in, or otherwise distributing the same.
2.21.2 Such Shareholder has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the DoveBid Securities. Such Shareholder
further has had an opportunity to ask questions and receive answers from DoveBid
regarding the terms and conditions of the offering of the DoveBid Securities and
to obtain additional information (to the extent DoveBid possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to such Shareholder or to which
such Shareholder had access.
2.21.3 Such Shareholder understands that the purchase of the
DoveBid Securities involves substantial risk. Such Shareholder: (i) has
experience as an investor in securities of companies in the development stage
and acknowledges that such Shareholder is able to fend for itself, can bear the
economic risk of such Shareholder's investment in the DoveBid Securities and has
such Knowledge and experience in financial or business matters that such
Shareholder is capable of evaluating the merits and risks of this investment in
the DoveBid Securities and protecting its own interests in connection with this
investment and/or (ii) has a preexisting
18
personal or business relationship with DoveBid and certain of its officers,
directors or controlling persons of a nature and duration that enables such
Shareholder to be aware of the character, business acumen and financial
circumstances of such persons.
2.21.4 Such Shareholder is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act.
2.21.5 Such Shareholder understands that the DoveBid Securities are
characterized as "restricted securities" under the Securities Act of 1933, as
amended (the "Securities Act") inasmuch as they are being acquired from DoveBid
in a transaction not involving a public offering and that under the Securities
Act and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, such Shareholder represents that such Shareholder is familiar
with Rule 144 of the U.S. Securities and Exchange Commission, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Such Shareholder understands that DoveBid is under no obligation
to register any of the securities sold hereunder. Such Shareholder understands
that (i) DoveBid has withdrawn its Registration Statement on Form S-1 (No. 333-
32184) and (ii) no public market now exists for any of the DoveBid Securities
and that it is uncertain whether a public market will ever exist for the DoveBid
Securities.
2.22 Further Limitations on Disposition. Without in any way limiting the
----------------------------------
representations set forth in Section 2.21 above, each Shareholder further agrees
not to make any disposition of all or any portion of the DoveBid Securities
unless and until: (i) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or (ii) such Shareholder shall
have notified DoveBid of the proposed disposition and shall have furnished
DoveBid with a statement of the circumstances surrounding the proposed
disposition, and, at the expense of such Shareholder or its transferee, with an
opinion of counsel, reasonably satisfactory to DoveBid, that such disposition
will not require registration of such securities under the Securities Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any DoveBid Securities in compliance with SEC Rule 144 or Rule 144A,
or (ii) for any transfer of any DoveBid Securities by a Shareholder that is a
partnership or a corporation to (A) a partner of such partnership or shareholder
of such corporation, (B) a controlled affiliate of such partnership or
corporation, (C) a retired partner of such partnership who retires after the
date hereof, (D) the estate of any such partner or shareholder, or (iii) for the
transfer by gift, will or intestate succession by any Shareholder to his or her
spouse or lineal descendants or ancestors or any trust for any of the foregoing;
provided that, in each of the foregoing cases the transferee agrees in writing
to be subject to the terms of this Section 2.21 (other than Section 2.21.4) to
the same extent as if the transferee were an original Shareholder hereunder.
2.23 "Market Stand-Off" Agreement. Each Shareholder hereby agrees that,
----------------------------
during the period of duration specified by DoveBid and an underwriter of common
stock or other securities of DoveBid, following the effective date of an initial
public offering of DoveBid's common stock, such Shareholder shall not, to the
extent requested by DoveBid and such underwriter,
19
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of DoveBid held by it at any time during such period except common
stock included in such registration; provided, however, that such agreement
shall not exceed one hundred eighty (180) days.
In order to enforce the foregoing covenant, DoveBid may impose stop-transfer
instructions with respect to all securities of DoveBid held by each Shareholder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
2.24 Legends. It is understood that the certificates evidencing the
-------
DoveBid Securities will bear the legends set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
SHAREHOLDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A 180 DAY MARKET STAND-OFF
RESTRICTION AS SET FORTH IN A CERTAIN AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES
MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE INITIAL
PUBLIC OFFERING OF THE COMMON STOCK OF THE ISSUER HEREOF. SUCH RESTRICTION
IS BINDING ON TRANSFEREES OF THESE SHARES.
2.25 Disclosure. Neither the Disclosure Letter, this Agreement, its
----------
exhibits and schedules, nor any of the certificates or documents to be delivered
by the Companies or Shareholders 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.
20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOVEBID
Except as specifically set forth in the disclosure letter provided by
DoveBid to the Shareholders simultaneously with the signing of this Agreement,
dated as of the date of this Agreement, the parts of which are numbered to
correspond to the sections of this Agreement, DoveBid hereby represents and
warrants to the Shareholders 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 Documents"). The execution, delivery
and performance of this Agreement and the DoveBid Ancillary Documents 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 Documents, except
for (a) the filing of appropriate documents with the relevant authorities of
California and Delaware and other states in which DoveBid is qualified to do
business, if any, and (b) such qualifications and filings as may be required to
comply with United States federal and state securities laws and the securities
laws of any other jurisdiction as may be required in connection with the
transactions contemplated by this Agreement. All such qualifications and filings
will, in the case of qualifications, be effective on the Closing, and will, in
the case of filings be made within the time prescribed by applicable law.
3.2.3 This Agreement and the DoveBid Ancillary Documents 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.
21
3.3 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any DoveBid Ancillary Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of (a)
any provision of the Certificate of Incorporation or bylaws of DoveBid, as
currently in effect, (b) any instrument or contract to which DoveBid is a party
or by which DoveBid's assets or properties are bound or affected, or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to DoveBid or its assets or properties. DoveBid has
received all necessary consents, waivers, approvals or releases of third parties
in connection with the consummation of the transactions contemplated hereunder.
3.4 Financial Condition. DoveBid has made available to the Shareholders
-------------------
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 are in accordance with
the books and records of DoveBid 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
Shareholders and the Signing Companies 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 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 any Company's
business, prospects, results of operations or financial condition. Each Signing
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 Shareholders and the Signing Companies will each use their best efforts to
carry on and preserve each Company's business and its relationships with
customers, suppliers, employees and others in substantially the same manner as
it has prior to the date hereof. If any Shareholder or Signing Company becomes
aware of a material deterioration in the relationship with any customer,
supplier or key employee, it will promptly bring such information to the
attention of DoveBid in writing and, if requested by DoveBid, will use its best
efforts to restore the relationship.
4.3 Conduct of Business. During the period from the date of this
-------------------
Agreement until the earlier of the Closing or the termination of this Agreement,
each Shareholder and Signing
22
Company shall use their respective best efforts to cause each Company to,
conduct each Company's business and maintain each Company's business
relationships in the ordinary and usual course and will not, without the prior
written consent of DoveBid:
(a) borrow any money, or otherwise incur any indebtedness;
(b) enter into any transaction not in the ordinary course of
business;
(c) make any expenditure or sale of fixed or other non-current assets
in excess of $25,000 in the aggregate, outside the normal course of business;
(d) encumber or permit to be encumbered any of its assets except in
the ordinary course of its business consistent with past practice and to an
extent that is not material to its business;
(e) dispose of any of its assets except in the ordinary course of
business consistent with past practice;
(f) enter into any material lease or contract for the purchase or
sale of any property, real or personal, except in the ordinary course of
business consistent with past practice;
(g) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to the date of
this Agreement, subject only to ordinary wear and tear;
(h) 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 any Company, or fail to maintain its current debt and
lease instruments, or fail to perform all its material obligations under debt
and lease instruments or any other agreements relating to or affecting any
Company's assets, properties, equipment and rights;
(i) pay any bonus, extraordinary fees, commissions or other unusual
distributions or increase the salary, commission level or other remuneration
payable to any officer, director, employee, consultant or agent, or shareholder,
or enter into any new employment or consulting agreement with any such person;
(j) change accounting methods, policies or procedures;
(k) introduce any material new method of management or operations;
(l) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any equity interest, or redeem or otherwise acquire
any of its equity interests;
(m) amend or terminate any contract, agreement or license to which it
is a party, except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
23
(n) lend any amount to any person or entity, other than advances for
travel and expenses which are incurred in the ordinary course of business
consistent with past practice, are not material in amount and are documented by
receipts for the claimed amounts;
(o) guarantee or act as a surety for any obligation, except for the
endorsement of checks and other negotiable instruments in the ordinary course of
business, consistent with past practice, which are not material in amount;
(p) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(q) issue or sell any shares of its capital stock or any other
securities, or issue or create any warrants, obligations, subscriptions,
options, calls, convertible securities, or other commitments to issue any
securities, or accelerate the vesting of any outstanding option or other
security;
(r) split or combine its outstanding securities or enter into any
recapitalization affecting the number of shares outstanding or affecting any
other of its securities;
(s) merge, consolidate or reorganize with, or acquire, any entity;
(t) amend any of its governance documents;
(u) license any of its technology or Intellectual Property Rights
except in the ordinary course of business consistent with past practice;
(v) agree to any audit assessment by any tax authority or file any
income or franchise tax return;
(w) change any insurance coverage or issue any certificates of
insurance, and will maintain all insurance coverage in effect at the date of
this Agreement;
(x) enter into any debt or lease instruments, or into amendments of
any existing debt or lease instruments and will maintain all debt or lease
instruments in effect at the date of this Agreement;
(y) fail to comply with all permits, laws, rules or regulations, or
consent orders applicable to any Company or any Company's business; or
(z) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(y).
4.4 Satisfaction of Conditions Precedent. From the date of this Agreement
------------------------------------
until the earlier of termination of this Agreement or the Closing, each of the
Shareholders and the Signing Companies will use their respective best efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth
in Article VI, and each of the Shareholders and the Signing Companies will use
their respective best efforts to cause the transactions contemplated by this
Agreement to be consummated, and, without limiting the generality of the
foregoing, to
24
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 Signing Companies and the
--------------------
Shareholders will execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any governmental body, that may be
reasonably required, or that DoveBid may reasonably request, in connection with
the consummation of the transactions contemplated by this Agreement. The Signing
Companies and the Shareholders will use their best efforts to obtain all such
authorizations, approvals and consents.
4.6 Necessary Consents. the Signing Companies and the Shareholders will
------------------
use their respective best efforts to obtain such written consents and take such
other actions as may be reasonably necessary or appropriate in DoveBid's
judgment to allow the consummation of the transactions contemplated hereby and
to allow DoveBid to carry on each Company's business after the Closing.
4.7 Litigation. The Signing Companies and the Shareholders 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 any Company, or known by it to be threatened
against any Company.
4.8 No Other Negotiations. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Signing Companies
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 Companies or any Shareholder, or any other
person or entity, on either of their behalves to, directly or indirectly,
solicit, initiate or encourage any offer from any person or entity or consider
any inquiries or proposals received from any other person or entity, participate
in any negotiations or discussions regarding, furnish to any person or entity
any information with respect to, or enter into any agreement, commitment, letter
of intent or understanding concerning, the possible disposition of all or any
substantial portion of any Company's business, assets or equity interests by
merger, sale or any other means (other than the transactions contemplated hereby
with DoveBid). The Signing Companies or the Shareholders will promptly and in
any event within 36 hours notify DoveBid orally and in writing of any such
inquiry or proposal, including the name of the persons making such proposal and
all of the terms thereof. Any violation of the restrictions set forth in this
section by any officer, director or employee or shareholder or any investment
banker, attorney or other advisor or representative of any Company or
Shareholders shall be deemed to be a breach of this Section 4.8 by the Signing
Companies and the Shareholders.
4.9 Access to Information. From the date of this Agreement until the
---------------------
earlier of termination of this Agreement or the Closing, the Signing Companies
and the Shareholders will cause each Company to allow DoveBid and its agents
reasonable access to the files, books, records and offices of such Company,
including, without limitation, any and all information relating to such
Company's taxes, commitments, contracts, leases, licenses, and real, personal
and intangible property and financial condition. the Signing Companies and the
Shareholders
25
will cause each Company to instruct its accountants, employees and agents to
cooperate with DoveBid and its agents in making available all financial
information reasonably requested, including without limitation the right to
examine all working papers pertaining to all financial statements prepared or
audited by such accountants.
4.10 Securities Laws. From the date of this Agreement until the earlier of
---------------
termination of this Agreement or the Closing, he Signing Companies and the
Shareholders shall use their respective best efforts to assist DoveBid to the
extent necessary to comply with all applicable securities laws in connection
with the transactions contemplated herein.
4.11 Additional Insurance. ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ agrees to reimburse
--------------------
DoveBid for all premiums relating to two successive, one-year "professional
indemnity" insurance policies that DoveBid will obtain for VMT upon the
expiration of VMT's existing policy. DoveBid agrees to use all reasonable
efforts to obtain such insurance from VMT's current carrier. In the event such
efforts do not result in obtaining such insurance from VMT's current carrier,
DoveBid will obtain substantially similar insurance from a comparable carrier at
a competitive rate.
4.12 Further Assurances. The Signing Companies, 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 Signing
Companies shall cause each Company to cooperate and use their reasonable efforts
to have each Company's present officers, directors and employees of each 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. The obligations
set forth in this Section 4.12 shall include, but not be limited to, any
instruments, actions, cooperations and other assistance to obtain any
governmental consents or any licenses deemed reasonably necessary to DoveBid to
carry on the business of the Companies.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE SIGNING COMPANIES AND THE SHAREHOLDERS
The obligations of a Signing Company and the Shareholders of such Signing
Company with respect to actions to be taken at the Closing for that particular
Signing Company are subject to the satisfaction, or waiver by such 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
26
have been duly performed. DoveBid shall have delivered to the Shareholders a
certificate to such effect dated the Closing Date signed by an authorized
officer of DoveBid.
5.2 Documents. All actions, proceedings, instruments and documents
---------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by DoveBid and shall be acceptable to 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 any Signing
Company or any Shareholder as a result of which the management of any Signing
Company or any Shareholder deems it materially detrimental to such Signing
Company or such Shareholder to proceed with the transactions hereunder.
5.4 Consents and Approvals. All necessary consents of and filings with any
----------------------
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made, and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein.
5.5 Convertible Subordinated Promissory Notes and Subordination Agreement.
----------------------------------------------------------------------
DoveBid shall have executed and delivered the Convertible Subordinated
Promissory Notes and the Subordination Agreements attached as Annex A thereto to
each Shareholder that receives one pursuant to Article I hereof.
5.6 Employment Agreement. DoveBid shall have executed and delivered to
--------------------
▇▇▇▇▇▇▇ Wee Heng ▇▇▇▇, ▇▇▇▇▇▇▇ S. D. ▇▇▇ and Supanit Chaiyawat the Employment
Agreement in substantially the form attached hereto as Exhibit C-1, Exhibit C-2
------------------------
and Exhibit C-3, respectively (collectively, the "Employment Agreements").
-----------------------------
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 Signing Companies and the Shareholders 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 Signing Companies
and the Shareholders on or before the Closing shall have been duly performed.
The Signing Companies and the Shareholders shall have delivered to DoveBid a
certificate to such effect dated the Closing Date signed by a duly authorized
officer or director of the Signing Companies and the Shareholders.
27
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 any 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 ▇▇▇▇▇▇▇ Wee ▇▇▇▇
▇▇▇▇ as to VMT, Supanit Chaiyawat as to VMC, ▇▇▇▇▇▇▇ S. D. Yau as to VMY, and
▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇ as to VMTSB.
6.4 Documents. All actions, proceedings, instruments and documents
---------
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been executed
by the Companies and/or Shareholders 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; each 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 Disclosure Letter; and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein.
6.6 Good Standing. DoveBid shall have received evidence reasonably
-------------
satisfactory to it that each Company is validly existing, and authorized to do
business and that all tax returns and taxes due by such 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 any Signing Company's or any
Shareholder's representations and warranties regarding such matters and
DoveBid's reliance on such representations or warranties.
6.7 Convertible Subordinated Promissory Notes and Subordination Agreement.
----------------------------------------------------------------------
Each of ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇, Strongland Investments Ltd and Manyways
International Ltd shall have executed and delivered to DoveBid the Convertible
Subordinated Promissory Notes and the Subordination Agreement attached as Annex
A thereto.
6.8 Employment Agreements. ▇▇▇▇▇▇▇ Wee Heng ▇▇▇▇, ▇▇▇▇▇▇▇ S. D. ▇▇▇ and
---------------------
Supanit Chaiyawat shall have executed and delivered to DoveBid the Employment
Agreements.
6.9 Releases of Claims. Each Shareholder shall have executed and delivered
------------------
the applicable Release of Claims in substantially the forms of Exhibit D-1
-----------
through Exhibit D-6 attached hereto.
-----------
6.10 Lease. VMT and DoveBid shall have executed a month-to-month lease at
-----
VMT's current Singapore location pursuant to terms deemed acceptable to DoveBid.
28
6.11 Insurance Matters. VMT shall have renewed, and fully prepaid all
-----------------
premiums in relation to "professional indemnity" insurance prior of the Closing
that will be assigned to DoveBid at the Closing, that expires no earlier than
the first anniversary of the Closing and that contains coverage that is
customary for the Companies' industry and is reasonably acceptable to DoveBid.
6.12 Due Diligence. The results of DoveBid's due diligence review of the
-------------
Companies' businesses, finances, practices and procedures shall be satisfactory
to DoveBid in its sole discretion.
6.13 Completion of Audit. An audit of each Company's financial statements
-------------------
for the years ended December 31, 1997, 1998 and 1999 by a reputable firm of
independent accountants acceptable to DoveBid shall have been completed and the
results of such audit shall be satisfactory to DoveBid in its sole discretion.
6.14 Termination and Execution of Certain Agreements. To the extent
-----------------------------------------------
determined by DoveBid, the agreements set forth in Section 2.14 of the
Disclosure Letter shall be terminated and agreements with Buyer that replace
such agreements shall be entered into.
6.15 Board Approval. This Agreement and the Ancillary Documents shall have
--------------
been approved by DoveBid's Board of Directors.
6.16 Transfer of Shares. The Shares shall have been transferred by the
------------------
Shareholders to DoveBid.
6.17 Termination of Bank Debt Arrangements. VMT shall have terminated all
-------------------------------------
of its existing bank debt arrangements, including those with ▇▇▇▇▇ ▇▇▇▇▇ Bank
Ltd and Oversea Chinese Banking Corp except for the Letter of Guarantee No.
2CMPG201749 for S$20,000.00 dated 20 February 1998 issued by ▇▇▇▇▇ ▇▇▇▇▇ Bank
Ltd to the Government of the Republic of Singapore expiring on 30 November 2000
with a claim period of 6 months from the expiry date.
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 (where, for purposes of this
Article VII, DoveBid shall be considered one party and the Signing Companies and
the Shareholders collectively shall be considered one party); (ii) by either
party, if such party is not in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, and 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 any court of competent jurisdiction 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
29
herein illegal; or (iv) by DoveBid if the transactions contemplated herein have
not occurred by July 7, 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 have no further obligation or liability to the other party.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 Agreement to Indemnify. Subject to the limitations set forth in this
----------------------
Article VIII, each Shareholder hereby indemnifies and holds harmless DoveBid and
its officers, directors, agents and employees, and each person, if any, who
controls or may control DoveBid within the meaning of the Securities Act
(individually, a "DoveBid Indemnitee" and collectively, "DoveBid Indemnitees")
from and against any and all claims, demands, actions, causes of actions,
losses, costs, damages, liabilities and expenses including, without limitation,
reasonable legal fees and expenses ("Damages"):
(a) arising out of any misrepresentation, or breach of, or default in
connection with, any of the representations, warranties, covenants and
agreements given or made by the Signing Companies or the Shareholders in this
Agreement or any certificate, document or instrument delivered by or on behalf
of a Signing Company or the Shareholders pursuant to this Agreement;
(b) resulting from any failure of any Shareholder to have good, valid
title to the issued and outstanding shares of any Company 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 any Company
(or such Signing Company's Purchase Price), any rights of a shareholder of any
Company, including any options, or preemptive rights or rights to notice or to
vote, any rights under any Company's governance documents, any right under any
agreement among the Companies and the Shareholders or any claim that any
shareholder's equity interests or other securities were wrongfully repurchased
by any Company;
(c) in connection with a liability of the Shareholders arising out of
any acts, events, omissions or transactions occurring prior to or
contemporaneously with the Closing Date, which liabilities were not disclosed to
DoveBid in this Agreement or the Disclosure Letter and were either known or
should have been known by a Signing Company or the Shareholders at the time of
the Closing, or any breach of any agreement entered into by a Signing Company or
the Shareholders prior to the Closing;
30
(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) in connection with any of the Signing Companies' or the
Shareholders' expenses incurred with respect to the transactions contemplated by
this Agreement and the Ancillary Documents and any Transfer Taxes (as defined in
Section 10.6 below).
If 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 such
Shareholder on the Claim, suit or action. No Shareholder shall be required to
indemnify or hold harmless any DoveBid Indemnitee pursuant to clauses (a), (b)
or (c) above if the Damages did not relate to such Shareholder or a Signing
Company in which such Shareholder held share capital and only related to other
Shareholders and Signing Companies.
8.2 Third Person Claims.
-------------------
8.2.1 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 a Shareholder, give such Shareholder written notice
of such Third Person Claim describing in reasonable detail the nature of such
Third Person Claim, a copy of all papers served with respect to that Third
Person Claim (if any), an estimate of the amount of Damages attributable to the
Third Person Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis for the DoveBid
Indemnitee's request for indemnification under this Agreement; provided,
however, that the failure of the DoveBid Indemnitee to give timely notice
hereunder shall relieve the Shareholder of its indemnification obligations under
this Agreement only to the extent that such failure materially prejudices such
Shareholder's ability to defend such claim.
8.2.2 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, such Shareholder
shall have the right to assume the defense thereof. Such Shareholder 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 such Shareholder 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 such Shareholder (which
consent shall not be unreasonably withheld), provided that, if such Shareholder
shall have consented in writing to any such settlement, then such Shareholder
shall have no right to object to any Claim by any DoveBid Indemnitee for
indemnity under Article VIII for the amount of such settlement;
31
and such Shareholder will remain responsible to indemnify the DoveBid Indemnitee
for all Damages that may be incurred arising out of, resulting from or caused by
the Third-Party Claim to the fullest extent provided in Article VIII.
8.3 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 such Shareholder after DoveBid becomes aware of the existence of any
potential claim by a DoveBid Indemnitee Person for indemnity for Damages under
Article VIII, including in connection with any Third Person Claim.
8.4 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.
8.5 Resolution of Notice of Claim. Any Notice of Claim received by a
-----------------------------
Shareholder will be resolved as follows:
(a) Uncontested Claims. In the event that, within fifteen calendar
------------------
days after a Notice of Claim is received by such Shareholder, such Shareholder
does not contest such Notice of Claim in writing to DoveBid (an "Uncontested
Claim"), such Shareholder will be conclusively deemed to have consented to the
recovery by the DoveBid Indemnitee of the full amount of Damages specified in
the Notice of Claim in accordance with this Article VIII, including the offset
of any such Damages against the Debt, the Deferred Payments or against amounts
owed by DoveBid to such Shareholder pursuant to the Convertible Promissory Notes
or otherwise, and, without further notice, to have stipulated to the entry of a
final judgment for damages against such Shareholder for such amount in any court
having jurisdiction over the matter where venue is proper.
(b) Contested Claims. In the event that such Shareholder gives
----------------
DoveBid written notice contesting all or any portion of a Notice of Claim (a
"Contested Claim") within the fifteen day period, then such Contested Claim will
be resolved by either (A) a written
32
settlement agreement executed by DoveBid and such Shareholder, or (B) in the
absence of such a written settlement agreement, by binding arbitration between
DoveBid and such Shareholder in accordance with the terms and provisions of
Section 8.5(c).
(c) Arbitration of Contested Claims. DoveBid and the Shareholders
-------------------------------
agree that any Contested Claim will be submitted to mandatory, final and binding
arbitration in San Mateo County, California in accordance with the Commercial
Arbitration Rules of the American Arbitration Association from time to time in
effect (the "Rules"). The parties may agree on a retired judge as sole
arbitrator. In the absence of such agreement, there will be three arbitrators,
selected in accordance with the Rules. If there are three arbitrators, a
decision reached by at least two of the three arbitrators will be the decision
of the arbitration panel; provided, however, that in the case of monetary
damages, if there is no agreement of two arbitrators as to the amount of the
award, then the highest and lowest amounts will be disregarded, and the
remaining amount will be the final award of the arbitration panel. The parties
covenant that they will participate in the arbitration in good faith, and that
they will share in its costs in accordance with subparagraph (i) below. A
Contested Claim finally resolved in favor of DoveBid may be satisfied as if such
Claim were an Uncontested Claim pursuant to Section 8.5(a). The provisions of
this Section 8.5(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(s)
may be entered in any court having competent jurisdiction.
(i) Payment of Costs. DoveBid on the one hand, and Shareholders, on
----------------
the other hand, will bear the expense of deposits and advances required by the
arbitrator(s) in equal proportions, but either party may advance such amounts,
subject to recovery as an addition or offset to any award. The arbitrator(s)
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(s) may apportion such costs, fees and expenses between
the parties in such a manner as the arbitrator(s) 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(s) 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
Shareholders and DoveBid, together with a signed copy of the Final Award. The
Final Award will constitute a conclusive determination of all issues in
question, binding upon Shareholders. Shareholders and DoveBid, and will include
an affirmative statement to such effect.
33
(iv) Timing. Shareholders, DoveBid and the arbitrator(s) will
------
conclude each arbitration pursuant to this Section 8.5 as promptly as possible
for the Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator(s) 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
NONCOMPETITION
9.1 Prohibited Activities. The Shareholders will not, for any reason
---------------------
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature other than DoveBid or its subsidiaries (including
any Company):
(a) engage directly or as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative, in
any business selling any products or services then in competition with DoveBid
or its subsidiaries (including any Company);
(b) call upon any person who is, at that time, an employee of DoveBid
or its subsidiaries (including any Company) for the purpose or with the intent
of enticing such employee away from or out of the employ of DoveBid or its
subsidiaries (including any Company);
(c) call upon any person or entity which is, at that time, or that
has been, within one (1) year prior to that time, a customer of DoveBid or its
subsidiaries (including any Company) for the purpose of soliciting or selling
products or services in competition with DoveBid;
(d) call upon any prospective acquisition candidate, on the
Shareholders' own behalf or on behalf of any competitor of DoveBid or its
subsidiaries (including any Company), which candidate was either called upon by
DoveBid or the Companies for which DoveBid or its subsidiaries (including any
Company) made an acquisition analysis, for the purpose of acquiring such entity,
provided that, the Shareholders shall not be charged with a violation of this
Section unless and until a Shareholder shall have knowledge or notice that such
prospective acquisition candidate was called upon, or that an acquisition
analysis was made, for the purpose of acquiring such entity; or
(e) except in furtherance of DoveBid's or its subsidiaries'
(including any Company's) business, disclose customers, whether in existence or
proposed, of DoveBid or its subsidiaries (including any Company) to any person,
firm, partnership, corporation or business for any reason or purpose whatsoever
excluding disclosure to DoveBid.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Shareholders from acquiring as an investment not more than one
percent (1%) of the share
34
capital of any business whose stock is traded on a national securities exchange
or over-the-counter market.
9.2 Term. The obligations set forth in this Article IX shall not terminate
----
until the later of (i) the fourth (4/th/) anniversary of the Closing Date or
(ii) two (2) years after such Shareholder is no longer employed by DoveBid;
provided, however, that if a Shareholder has executed an Employment Agreement
and is terminated for "Cause" as such term is defined in such Shareholder's
employment agreement with DoveBid, then the obligations set forth in this
Article IX shall terminate one (1) year after such Shareholder is no longer
employed by DoveBid.
9.3 Damages. Because of the difficulty of measuring economic losses to
-------
DoveBid as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to DoveBid for which it
would have no other adequate remedy, the Shareholders agree that the foregoing
covenants may be enforced by DoveBid, in the event of breach by the Shareholders
by injunctions and restraining orders.
9.4 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants in this Article IX impose a reasonable restraint on the
Shareholders in light of the activities and business of DoveBid or its
subsidiaries (including any Company) on the date of the execution of this
Agreement and the current plans of DoveBid; but it is also the intent of DoveBid
and the Shareholders that such covenants be construed and enforced in accordance
with the changing activities and business of DoveBid or its subsidiaries
(including any Company) throughout the term of this covenant.
9.5 Independent Covenant. All of the covenants in this Article IX shall be
--------------------
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Shareholders against
DoveBid or its subsidiaries (including any Company), whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
DoveBid of such covenants. It is specifically agreed that the period of four (4)
years stated at the beginning of this Article IX, during which the agreements
and covenants of the Shareholders made in this Article IX shall be effective,
shall be computed by excluding from such computation any time during which any
Shareholder or VMT is in violation of any provision of this Article IX. The
covenants contained in this Article IX shall not be affected by any breach of
any other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
9.6 Materiality. The Signing Companies and the Shareholders hereby agree
-----------
that the covenants in this Article IX are a material and substantial part of
this transaction.
ARTICLE X
GENERAL
10.1 Confidentiality. The Signing Companies, 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
Signing Companies, the Shareholders and DoveBid each
35
agree (a) to use their respective best efforts to prevent the unauthorized
disclosure of any confidential information concerning the other that was or is
disclosed during the course of such negotiations and preparations, and (b) to
not make use of or permit to be used any such confidential information other
than for the purpose of effectuating the Closing and related transactions. The
obligations of this Section 10.1 will not apply to information that is required,
in the opinion of counsel to a party hereto, to be disclosed by statute,
governmental rule or regulation, or securities exchange listing agreement or,
following the Closing, to the disclosure of information regarding each Company
by DoveBid. If this Agreement is terminated, all copies of documents containing
confidential information shall be returned by the receiving party to the
disclosing party. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 10.1 and because of
the immediate and irreparable damage that would be caused for which they would
have no other adequate remedy, the parties hereto agree that, in the event of a
breach by any of them of the foregoing covenants, the covenant may be enforced
against the other parties by injunctions and restraining orders.
10.2 Successors and Assigns. Neither DoveBid, nor any Signing 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 the Shareholders,
except that DoveBid may assign its rights and obligations hereunder without the
prior written consent of the Shareholders 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.
10.3 Entire Agreement; Amendments. This Agreement (including the schedules
----------------------------
and exhibits attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Shareholders, the
Signing Companies and DoveBid and supersede any prior agreement, understanding
or discussions relating to DoveBid or the transactions contemplated by this
Agreement including but not limited to those certain letter of intent agreements
dated May 29, 2000 between DoveBid and VMT, June 15, 2000 between DoveBid and
VMC and June 20, 2000 between DoveBid and VMY. 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 Signing Companies and
DoveBid, each (if a corporation) acting through their respective officer or
directors, and duly authorized by each of their Board of Directors.
10.4 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same agreement.
10.5 Expenses. 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
36
in the performance and compliance with all conditions to be performed by DoveBid
under this Agreement. Shareholders will pay their and the Signing Companies'
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 any expenses incurred by Ernst & Young LLP in connection
with satisfaction of the completion of the audit required by Section 6.13 hereof
shall be paid by DoveBid. Any expenses of Shareholders and the Signing Companies
not paid by Shareholders at or prior to the Closing shall be treated as Damages
under Article VIII.
10.6 Taxes. Shareholders shall pay all sales, use, transfer, income,
-----
registration, real property transfer, recording, gains, stock transfer, capital,
personal and other similar taxes and fees other than stamp taxes ("Transfer
Taxes") incurred in connection with the transactions contemplated by this
Agreement. Shareholders shall cause the Companies to file, all necessary
documentation and tax returns with respect to such Transfer Taxes. In addition,
Shareholders acknowledge that they, and not DoveBid or VMT, will pay all taxes
due upon the receipt by Shareholders of each element of the VMT Purchase Price,
the VMC Purchase Price and the VMY Purchase Price pursuant to this Agreement.
DoveBid shall pay all stamp taxes in relation to the transactions contemplated
by this Agreement.
10.7 Notices. All notices and other communications required or permitted
-------
hereunder shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered by depositing the same in the mail or with an
internationally recognized overnight courier service, addressed to the party to
be notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person to such party or to an officer or
agent of such party (or in the case of 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 VMT, VMC, ▇▇▇▇▇▇▇ Wee ▇▇▇▇
▇▇▇▇ or ▇▇▇▇▇▇ Wee Soon Keng, to:
▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Team Pte Ltd.
▇▇. ▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
37
Fax: ▇▇-▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇ ▇▇▇▇ Gan ▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇
#▇▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇ Beng
Fax: ▇▇-▇▇▇ ▇▇▇▇
(iii) If mailed, delivered or faxed to Supanit Chaiyawat or VMC,
to:
Supanit Chaiyawat
▇▇▇▇▇▇ ▇▇▇▇▇▇ Co Ltd.
▇▇. ▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇ ▇▇▇▇
(iv) If mailed, delivered or faxed to VMY, ▇▇▇▇▇▇▇ S.D. ▇▇▇,
Strongland Investments Ltd, Manyways International Ltd to:
▇▇▇▇▇▇▇ S.D. Yau
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ Co Ltd.
19/F ▇▇▇▇▇▇▇▇ Commercial ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇▇ ▇▇▇▇
or to such other address (or in the case of a Shareholder, the fax number) as
any party hereto shall specify in writing to the other parties hereto pursuant
to this Section 10.7 from time to time. Such notice shall be effective only upon
actual receipt.
10.8 Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed and enforced in accordance with the internal laws of the State of
California (and not the law of conflicts), without regard to choice of laws
principles, except that applicable law in the various jurisdictions in which the
Companies are incorporated shall govern with respect to the transfer of the
ordinary shares of share capital of the Companies. 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
38
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.
10.9 Exercise of Rights and Remedies. Except as otherwise provided
-------------------------------
herein, no delay of, or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
10.10 Time. Time is of the essence with respect to this Agreement.
----
10.11 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
10.12 Remedies Cumulative. No right, remedy or election given by any term
-------------------
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law, or in equity or by
contract.
10.13 Construction. This Agreement has been negotiated among DoveBid, the
------------
Signing Companies, the Shareholders and their respective legal counsel, and
legal or equitable principles that might require the construction of this
Agreement or any provision of this Agreement against the party drafting this
Agreement will not apply in any construction or interpretation of this
Agreement.
10.14 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.
10.15 United States Dollars. Unless otherwise indicated, all dollar
---------------------
amounts set forth in this Agreement are United States dollars.
39
IN WITNESS WHEREOF, the parties hereto have caused this Share Purchase
Agreement to be duly executed by the respective authorized representatives of
DoveBid, the Signing Companies and the Shareholders as of the day and year first
above written.
DOVEBID:
DOVEBID, INC.
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and General Counsel
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ Wee Soon Keng
--------------------------------------------
▇▇▇▇▇▇ Wee Soon Keng
/s/ Supanit Chaiyawat
--------------------------------------------
Supanit Chaiyawat
/s/ ▇▇▇▇▇▇▇ S. D. Yau
--------------------------------------------
▇▇▇▇▇▇▇ S. D. ▇▇▇
STRONGLAND INVESTMENTS LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Managing Director
MANYWAYS INTERNATIONAL LTD
By: /s/ ▇▇▇▇▇▇▇ S. D. Yau
------------------------------------------
Name: ▇▇▇▇▇▇▇ S. D. ▇▇▇
Title: Managing Director
VMT:
▇▇▇▇▇▇ ▇▇▇▇▇▇ TEAM PTE LTD.
By: /s/ ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ Wee ▇▇▇▇ ▇▇▇▇
Title: Managing Director
40
VMC:
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO LTD.
By: /s/ Supanit Chaiyawat
-----------------------------------------
Name: Supanit Chaiyawat
Title: Managing Director
VMY:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ CO LTD.
By: /s/ ▇▇▇▇▇▇▇ S. D. Yau
-----------------------------------------
Name: ▇▇▇▇▇▇▇ S. D. ▇▇▇
Title: Managing Director
41