[letterhead graphic] EXHIBIT 10.61

 

EXCLUSIVE AGREEMENT TO CONDUCT A SEALED-BID AUCTION

 

This Exclusive Agreement to Conduct a Sealed-Bid Auction (“Agreement”) is made
as of March 1, 2001

             BETWEEN:

Shaman Pharmaceuticals, as debtor-in-possession
213 East Grand Avenue
South San Francisco, California 94080
Attention:        Ms. Lisa Conte
Telephone:      (650) 266-7466
Fax:                   (650) 873-8367

             (“Seller”),

             AND

DoveBid, Inc.
1241 East Hillsdale Boulevard
Foster City, California 94404
Attention:        Kirk Dove
Telephone:      (650) 571-7400
Fax:                   (650) 572-1502

             (“Auctioneer”).

             WHEREAS, on January 5, 2001, Seller filed a petition for relief
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Northern District of California  (the “Court”); and

             WHEREAS, Seller wishes to sell certain assets by sealed-bid
auction, and Auctioneer has agreed to conduct that auction on the terms and
conditions set forth below;

             NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are mutually acknowledged, Auctioneer and Seller agree
as follows:

             1.                       REPRESENTATION:  Seller agrees to retain
Auctioneer on an exclusive basis to conduct a sealed-bid auction (the “Auction”)
of the intellectual property (the “Assets”) set forth on Exhibit A to this
Agreement.  Auctioneer’s engagement pursuant to this Agreement, and all of its
obligations hereunder, are subject to and contingent upon the Court’s approval
of this Agreement.

             2.                       CONDUCT OF THE AUCTION:  (a)  Auctioneer
and Seller will cooperate to establish a mutually agreeable deadline for bid
submission.  Auctioneer may, in its discretion, choose to: (i) offer the Assets
for sale by the piece or by the lot, and/or (ii) promote the Auction over the
Internet at www.dovebid.com (the “Website”).  Seller agrees that Auctioneer may
use the Seller's name, street address and logo in the advertising of this
Auction, as well as on the Website.

             (b)                      All Assets in the Auction shall be sold to
the highest bidder (subject only to Seller’s minimum bid requirements placed on
any individual Asset, if any, and to the purchaser’s timely payment in full and
removal of purchased Assets).  Auctioneer, however, does not guarantee that any
sale will be completed, and Auctioneer is not responsible in the event that a
purchaser fails to live up to its agreement and complete a purchase.

             (c)                      Auctioneer assumes no obligation, and
makes no representations or warranties, with respect to the requirements
necessary to effect the transfer of Assets.  It shall be the Seller’s sole
obligation to prepare all necessary documents and take all necessary steps to
transfer title to the Assets.

             3.                       DISCLAIMERS OF WARRANTIES:  Auctioneer
shall state both in its advertising for the Auction and at the Auction that all
Assets are being sold “as is, where is and with all faults” and with any
additional disclaimers of warranty, including disclaimers of the warranties of
merchantability and fitness for a particular purpose.  Seller agrees to defend
(by counsel satisfactory to Auctioneer) and indemnify Auctioneer and hold
Auctioneer harmless from and against any claim or liability asserted against
Auctioneer by any third party (including any purchaser of any Assets at the
Auction) based on the alleged existence or breach of any alleged warranties
(including alleged warranties of merchantability or fitness for a particular
purpose), or from or against any fees or expenses (including attorney’s fees)
incurred by Auctioneer in defending against any such claim or liability.  Seller
acknowledges and agrees that Auctioneer has no knowledge with respect to, and
has no obligation to investigate, the merchantability or fitness for any
particular use of any Asset.

             4.                       COMMISSION:  Auctioneer shall receive a
commission equal to a percentage of the gross proceeds of sale after expenses
are deducted (the “Commission”) according to the following schedule:

(i)          Auctioneer shall receive 10% of the first $2,000,000 of gross
proceeds after expenses are deducted, or any portion thereof.

(ii)         In the event that gross proceeds after expenses are deducted exceed
$2,000,000, Auctioneer shall receive 7.5% of the first $1,000,000 of such
excess, or any portion thereof.

(iii)        Auctioneer shall receive 5% of all gross proceeds after expenses
are deducted in excess of $3,000,000.

For purposes of this Agreement, “gross proceeds” means all revenue from the sale
of Assets pursuant to this Agreement, excluding any sales taxes collected by
Auctioneer.

             5.                       AUCTION EXPENSES:  (a)    Seller shall
provide Auctioneer an allowance toward certain Auction advertising expenses,
which may include digital photography of the Assets, print and electronic media
production, creative services, ad placement fees, brochure and catalog
production, telemarketing, data list purchases, fax and email advertising and
postage incurred in connection with the Auction. Seller also agrees to reimburse
Auctioneer for miscellaneous expenses related to the Auction, including
accounting, insurance, permits and UCC searches/lien releases.  Auctioneer’s
total reimbursable expenses shall not exceed $20,000.  Seller acknowledges and
agrees that all of the above amounts (collectively referred to as the “Auction
Allowance”) shall in all events be deducted from the gross proceeds and paid to
Auctioneer following the Auction.  Seller’s responsibility for reimbursing
Auctioneer for the Auction Allowance is not contingent on the consummation of
the sale of any or all of the Assets.

             (b)                      Seller authorizes Auctioneer, and grants
to Auctioneer a power of attorney coupled with an interest, to incur expenses on
its behalf and to recoup such expenses from the gross proceeds to the extent
that such expenses are reasonably necessary for the conduct of the Auction and
arise from Seller’s breach of its representations, warranties or covenants
contained in this Agreement.

             6.                       PRE-AUCTION ASSET TRANSACTIONS:  Seller
may not withdraw, sell or otherwise dispose of any of the Assets except at the
Auction without the written consent of Auctioneer.

             7.                       COLLECTION AND DISBURSEMENT OF AUCTION
PROCEEDS:  (a)     Auctioneer shall collect from the purchasers of the Assets
the gross proceeds, any applicable sales taxes and deposit such funds into a
bank depository account maintained by the Auctioneer.  All applicable sales
taxes collected by Auctioneer shall be paid to the appropriate taxing
authorities out of the account.  Thereafter, Seller shall be issued a check from
the account (a “Settlement Check”) within 15 business days after the auction
check-out period (which shall be deemed to end when all sold Assets have been
removed by each purchaser and all payments from purchasers have been received by
Auctioneer, notwithstanding any check-out instructions that Auctioneer may
communicate to the public), and after Auctioneer has been paid from the account
its reimbursable expenses pursuant to Section 5 and amounts allocable to
Commission, subject to open items or uncollected accounts, if any; provided
however, that Seller shall receive a Settlement Check for the remaining balance
no later than 30 calendar days after the Auction, subject to open items or
uncollected accounts, if any.

             (b)                      No later than 30 calendar days after the
Auction, Auctioneer shall also issue to Seller, Seller’s counsel, the U.S.
Trustee and the Court a settlement report (the “Settlement Report”) itemizing,
specifically, a record of sales of the Assets and the allocation of the funds
generated by such sales.  The Settlement Report shall be deemed to comply with
Federal Rule of Bankruptcy Procedure 6004(f)(1).

             (c)                      Seller shall have sole responsibility for
obtaining all court approvals necessary in connection with the settlement of
Seller’s auction account.

             (d)                      Notwithstanding the provisions of Section
726(b) of the Bankruptcy Code, in all instances where the Court and the terms of
this Agreement permit Auctioneer to retain proceeds received from sales of the
Assets (as compensation for Auction services, as reimbursement for expenses
incurred in connection with the Auction or otherwise), Auctioneer shall have the
right to retain such proceeds without obtaining the approval of Seller or any
other party unless explicitly instructed by the Court.  Moreover, Auctioneer’s
right to retain such proceeds shall survive the conversion of Seller’s
bankruptcy proceeding into a proceeding under a different chapter of the federal
bankruptcy code.

             8.                       RIGHT OF SURRENDER:  In the event that
some Assets remain unsold at the conclusion of the Auction, or a purchaser fails
to perform its obligation to pay the purchase price of an Asset, Auctioneer
shall have the right to surrender, and shall have no further obligations with
respect to such Assets.

             9.                       USE OF PREMISES:  (a)         For the
purposes of this Agreement, the “Premises” shall mean any location where any
information or documentation concerning the Assets is stored.  Seller authorizes
Auctioneer and its representatives to enter upon and use the Premises for such
purposes as are reasonable and necessary to conduct the Auctions.  Seller agrees
that Auctioneer shall not be charged a fee for the use of the Premises.  Seller
further agrees that it shall furnish utilities to the Premises, at Seller’s sole
expense.

             (b)                      Seller acknowledges and agrees that
Auctioneer has no interest of any kind or nature in the Premises, and that
Auctioneer has no knowledge as to any previous use or occupancy of the
Premises.  Seller acknowledges and agrees that Auctioneer shall not be
responsible for damage or injury to the Premises resulting from or arising in
connection with the sale of the Assets, except to the extent that such damage or
injury is caused by Auctioneer’s gross negligence.

             10.                     REPRESENTATIONS AND WARRANTIES:  Seller
represents and warrants to Auctioneer as follows:

             (a)                      Seller is authorized to execute and
perform this Agreement, and this Agreement constitutes a valid and legally
binding obligation of Seller, enforceable in accordance with its terms.

             (b)                      Seller now holds (and, up to the moment of
the Auction or other sale provided for under this Agreement, will hold) good and
marketable title to all Assets free and clear of any lien, security interest,
leasehold interest, co-ownership interest or any other type of encumbrance or
interest.

             (c)                      None of the Assets infringes or violates
(or contains any parts or components which infringe or violate) any third
party’s copyright, patent, trademark, trade secret or other proprietary rights.

             (d)                      No sale of the Assets will constitute a
bulk sale subject to the Bulk Transfer Article of the Uniform Commercial Code
for any state in which any of the Assets are located (the “Bulk Transfer
Article”).

             (e)                      No Hazardous Substances are contained in
or made a part of the Assets.  For purposes of this Agreement, the term
“Hazardous Substances” shall mean, either individually or collectively, any
chemical, solid, liquid, gas, or other substance having the characteristics
identified in, listed under, or designated pursuant to (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA) as
amended, 42 USCA Section 9601(4), as a “hazardous substance,” (ii) the Resource,
Conservation and Recovery Act, 42 USCA Sections 6903(5) and 6921, as a
“hazardous waste,” or (iii) any other laws, statutes, or regulations of a
government or political subdivision or agency thereof, as presenting an imminent
and substantial danger to the public health or welfare or to the environment, or
as otherwise requiring special handling, collection, storage, treatment,
disposal, or transportation.  Seller agrees that nothing in this Agreement shall
be construed to require Auctioneer to remove any Hazardous Substances that are
present on the Premises or are contained in or a part of the Assets.

             Seller acknowledges and agrees that Auctioneer is relying on the
foregoing representations and warranties in proceeding to conduct the Auction
and/or sales provided for under this Agreement.  Seller agrees to defend (by
counsel satisfactory to Auctioneer) and indemnify Auctioneer and hold Auctioneer
harmless from and against any claim, demand, cause of action, liability or
expense (including attorneys’ fees) asserted against or incurred by Auctioneer
in connection with Seller’s breach of any of its representations, warranties or
obligations in this Agreement.  If any action at law or in equity is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys’ fees and costs from the other party.

             Seller further acknowledges and agrees that Auctioneer shall rely
entirely on information provided by Seller concerning ownership of and title to
the Assets, and that Auctioneer has no responsibility to conduct any independent
investigation in respect thereof.

             11.                     LIMITATION OF LIABILITY:   Auctioneer’s
maximum liability for the breach of any obligation in connection with this
Agreement or the Auction, and for any and all damages of any type or nature
(whether in contract, tort or otherwise) sustained or claimed by Seller or any
other person or entity in connection with this Agreement or the Auction, shall
be limited to the amounts actually received by Auctioneer as compensation under
this Agreement.

             12.                     TECHNOLOGY DISCLAIMER:  AUCTIONEER DOES NOT
WARRANT THAT THE FUNCTIONS, FEATURES OR CONTENT CONTAINED IN THE WEBSITE,
INCLUDING ANY THIRD-PARTY SOFTWARE, PRODUCTS OR OTHER MATERIALS USED IN
CONNECTION WITH THE WEBSITE, WILL BE TIMELY, SECURE, UNINTERRUPTED OR
ERROR-FREE, OR THAT DEFECTS WILL BE CORRECTED.

             13.                     INDEPENDENT PARTIES:  This Agreement shall
not be construed (i) to create a partnership or joint venture between Seller and
Auctioneer, or (ii) to imply that Auctioneer is buying the assets of, or any
interest in, Seller.

             14.                     COUNTERPARTS; FACSIMILE SIGNATURES:  This
Agreement may be executed in any number of counterparts, each of which, when
executed, will be deemed to be an original and all of which, when taken
together, will be deemed to be but one and the same instrument.  Delivering
signatures via facsimile shall be an acceptable means of executing this
Agreement, and signatures so delivered shall be fully binding on the signing
party.

             15.                     GOVERNING LAW; J URISDICTION:  This
Agreement shall be governed by, and construed and enforced in accordance with,
the substantive laws of the State of California as applied to agreements made in
California, without regard to choice of law principles.  Each party consents to
jurisdiction and service of process within California for any action or
proceeding arising under this Agreement, and any such action will lie within the
exclusive jurisdiction of the Court, which shall hear any such action upon
motion and as a core matter without a jury.

             16.                     SEVERABILITY:  The provisions of this
Agreement shall be severable.  Should any part, term or provision of this
Agreement be construed by any court of competent jurisdiction to be illegal,
invalid or unenforceable for any reason, the legality, validity and
enforceability of the remaining parts, terms and provisions shall not be
affected thereby.

             17.                     COMPLETE AGREEMENT:  This agreement
constitutes the entire understanding between the parties and replaces any and
all prior agreements related to the Auction.  This Agreement may not be modified
or amended except in writing signed by both parties.

DoveBid, Inc. Shaman Pharmaceuticals, as debtor-in-possession (“Auctioneer”)
(“Seller”) California Bond Number 57BSBAI7624       By:   Kirk Dove By:   Thomas
F. White     Title: President of Auction Services Title: SVP Commercial Strategy

 

EXHIBIT A

ASSETS