AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
BETWEEN
MEMORY CARD TECHNOLOGY, A/S,
IN SUSPENSION OF PAYMENTS,
AND
DATARAM CORPORATION
THIS AGREEMENT is entered into on this 15th day of March,
2001, by and between Memory Card Technology, A/S, in
suspension of payments, a corporation of Denmark, CVR No.
13087474 in the Danish central business register (hereinafter
referred to as "Seller") and Dataram Corporation, a New Jersey
corporation of the United States (hereinafter referred to as
"Buyer").
WHEREAS, Seller has been conducting the business of the
design, manufacturing and distribution of memory modules used
in computers and other electronic devices, together with
providing third party electronic manufacturing services to
computer and other electronic equipment manufacturers (the
"Business"); and
WHEREAS, Seller has developed expertise and manufacturing
capabilities in all major and next-generation memory
technologies including DRAM/SDRAM, SRAM, SGRAM, FLASH, DIRECT
RAMBUS and DDR MEMORY; and
WHEREAS, Seller's name, product reputation, technology,
employee expertise and know-how, and customer relations have
made it well known in the computer memory market; and
WHEREAS, Seller has been listed on the Copenhagen Stock
Exchange since November 24, 1997; and
WHEREAS, Seller on January 29, 2001, announced to the
Bankruptcy Court in Aarhus, Denmark, that it has suspended its
payments to creditors; and
WHEREAS, Buyer is in the business of selling memory
systems; and
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WHEREAS, Buyer has reviewed certain due diligence
materials assembled by the Seller and has interviewed the
executive officers of the Seller; and
WHEREAS, Seller wishes to cease its business and sell to
Buyer and Buyer wishes to purchase from the Seller certain of
the assets, properties, rights and claims of the Business as
described herein and upon the terms and conditions and subject
to certain obligations as set forth in this asset purchase
agreement (the "Agreement"), subject to the approval of the
Seller's creditors and the duly appointed supervisor (the
"Supervisor") as may be required under Danish Bankruptcy Law.
NOW THEREFORE in consideration of the representations,
warranties, covenants and agreements herein contained, Seller
and Buyer agree as follows:
Article I
THE TRANSACTION
1.1 Purchase and Sale of Assets. At the Closing,
Seller shall sell, transfer, assign and deliver to Buyer, or
its designated wholly owned subsidiary entity, and Buyer, or
its designated wholly owned subsidiary entity, shall purchase,
accept and receive, full and unencumbered title to and
interest in, relating to or arising from the Purchased Assets.
However, designation of a wholly-owned subsidiary by the Buyer
will not reduce the liability of the Buyer to the Seller under
this Agreement.
1.2 Purchased Assets. The "Purchased Assets" are
substantially all of the assets, properties, rights, good will
and claims acquired for, used in, held for use in, relating to
or arising from the conduct of the Business, wherever located,
(excepting only such assets as are expressly excluded under
this Agreement) described as follows:
(a) All accounts receivable of the Seller and
Acquired Subsidiaries, as defined in Section 1.2(m), except
those expressly excluded accounts receivable noted on Schedule
1.2(a) hereto, as of Closing;
(b) Inventories of the Seller and Acquired
Subsidiaries as defined in Section 1.2(m), whether
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raw materials, spare parts, supplies, work in process,
demonstration units, research and development units or
finished goods, and whether in transit, at customs, on
consignment, yet to be delivered or otherwise, as well as
office supplies, stationery, brochures and like materials, as
of Closing ("Inventory");
(c) Vehicles and vehicle leases listed in Schedule
1.2(c) which Seller will transfer into Buyer's name. To the
extent that Seller remains obligated under vehicle leases,
Buyer shall indemnify and hold Seller harmless from any
liability, on a going forward basis from and after Closing,
which Seller may incur thereunder;
(d) Plant, equipment, machinery, furniture and
fixtures, as well as leases of same, the major items of which
are identified in Schedule 1.2(d). Seller shall obtain all
necessary consents to the assignment of the scheduled leases
to Buyer (attached as a separate Exhibit A is the current
leasing agreement of SMD lines with Uni-leasing;
(e) Tools, dies, jigs, molds, patterns, service
manuals, service aids, service and testing tooling and
equipment and drawings, literature and blueprints (including
but not limited to manuals, schematics and related
information);
(f) Such aspects of Seller's computer software
programs, source codes, object codes, information systems,
program specifications and related material and documentation
and any and all licenses and copies thereof and rights thereto
which relate to the conduct of the Business;
(g) Exclusive ownership for its own use patents,
trademarks, trade names, trade styles, trade dress, web sites,
logos, product designations (pending or in process for any of
the foregoing), (collectively, the "Intellectual Property," a
non-exhaustive list of which is attached as Schedule 1.2(g))
used in the conduct of the Business, including expressly the
name Memory Card Technology, Hypertec and every other name by
which the Seller and any of its subsidiaries have used in
business
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provided, however, that Seller temporarily may retain its
corporate name Memory Card Technology A/S, but this name shall
not be further used in business by the Seller and the Seller
shall take such steps as are reasonably practical to change
its name at the earliest possible date;
(h) Information in the nature of know-how, trade
secrets, inventions, patterns, processes, ideas, designs,
devices, engineering drawings and related information and
documentation;
(i) All records of the Business, including but not
limited to service records, vendor and customer records and
materials related to customer leads and employee records;
(j) Rights and claims under service and parts
contracts, manufacturing contracts, joint ventures and leases
under which Seller is the lessor for products of the Business
listed in Schedule 1.2(j);
(k) Rights under agreements with employees, former
employees and others concerning confidentiality,
noncompetition and the assignment of inventions;
(l) Permits, licenses, approvals, registrations,
authorizations and indicia of authority (and pending
applications for any thereof) to the extent transferable;
(m) Full and unencumbered ownership of the direct and
indirect subsidiaries of the Seller as set forth in Schedule
1.2(m) hereto (the "Acquired Subsidiaries");
(n) Goodwill. This Agreement includes the transfer
of Seller's goodwill including but not limited to customer
files. In entering into this Agreement Buyer is relying upon
Seller's name, reputation, technology and know-how that have
made Seller a well known and respected supplier of computer
memory;
(o) Real Estate Leasehold. Buyer shall be assigned
the existing lease of Seller's premises at
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Xxxxxxxxx 00, XX-0000 Xxxx X, Xxxxxxx, and Seller shall obtain
any necessary landlord consent to the assignment. Any
security deposit held by the landlord as security for
rehabilitating the premises upon termination of the lease
shall be assigned by Seller for the benefit of the Buyer.
1.3 Assets Not Purchased under the Agreement. The
following assets are not purchased under this Agreement but
shall remain the property of Seller:
(a) Expressly excluded accounts receivables set
forth in Schedule 1.2(a);
(b) Interests in subsidiaries not included in
the purchase, as set forth on Schedule 1.2(m), and the assets
held by these subsidiaries at Closing hereof;
(c) Return of insurance premiums for periods up
to Closing;
(d) VAT claim of approximately DKK 638,536 under
section 13(1)(11) of the Danish VAT Act (Momsloven);
(e) VAT Claims of Memory Card Technology South
America, SA, aggregating approximately $200,000 not arising
out of current options;
(f) An intercompany receivable of USD 335,000,
of which USD 67,000 has already been written off on the books
of Memory Card Technology, Colombia, Limitadas balanced by an
intercompany payable from Memory Card Technology South
America, SA;
(g) Oracle licenses; and
(h) Cash
1.4 Obligations and Liabilities: Buyer shall assume
only such obligations and liabilities of the Seller as are
expressly set forth in this Agreement, and no others.
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Article II
WARRANTIES AND REPRESENTATIONS
2.1 Seller Representations and Warranties. Seller
has delivered to Buyer a disclosure letter dated the date
hereof setting forth such lists and information as may be
required under this Article II (the "Disclosure Letter").
Except with respect to free and unencumbered title to the
Purchased Assets, obligations to employees, and the authority
of the Seller to enter into this Agreement, the liability of
Seller for breach of any representation or warranty is limited
to the escrow established under Section 7.1. This Agreement
may be terminated by the Buyer prior to Closing for a material
breach of the representations and warranties of the Seller as
its sole remedy. Where a representation is made to the
knowledge of the officers of the Seller, it is the knowledge
of Xxxx Xxxxxxx and Xxxx Xxxxx Xxxxxxx whose knowledge is
referred to. Subject to the foregoing, Seller represents and
warrants to Buyer as follows:
2.1.1 Organization.
Seller and each Acquired Subsidiaries is an organization
duly organized, and validly existing under the laws of its
jurisdiction of incorporation, with full power and authority
to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or
use, and to perform all its obligations.
2.1.2 Authority; No Conflict.
This Agreement constitutes the legal, valid and binding
obligation of the Seller, enforceable against it in accordance
with its terms, has been duly authorized by its Board of
Directors and is not inconsistent with the laws of Denmark. No
further approvals of this Agreement are necessary to
effectuate its terms, except for approval of this Agreement by
75% of Seller's creditors. Except as set forth in Part 2.1.2
of the Disclosure Letter this Agreement does not conflict
with any agreement to which the Seller or any Acquired
Subsidiary is a party or give rise to the right of any party
to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any contract; or result in the
imposition or creation of any encumbrance upon any of the
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assets owned or used by the Seller or any Acquired
Subsidiaries.
2.1.3 Ownership.
The Seller directly or indirectly through another
Acquired Subsidiary owns 100% of all equity interest in each
Acquired Subsidiary and no person has a right or other option
to buy any of the assets transferred hereby or any equity
interest in any Acquired Subsidiary.
2.1.4 Balance Sheet.
The Seller has delivered to Buyer a balance sheet dated
as of February 28, 2001 (the "Balance Sheet") which fairly
presents the book value of the Seller's assets as adjusted as
of that date. The March 15, 2001 balance sheet will be
prepared on the basis of the same accounting practices as the
balance sheet dated February 28, 2001 previously delivered in
accordance with Section 6.4 hereof, but will include an
accrual through March 15, 2001 for employee salary and
associated taxes for all employees world wide to be paid at
the end of March payroll.
2.1.5 Books and Records.
The minute books, stock record books, and other records
of the Acquired Subsidiaries, all of which have been made
available to the Buyer, are complete and correct in all
material respects and have been maintained in accordance with
sound business practices. The minute books contain accurate
and complete records of all meetings held of, and corporate
action taken by, the stockholders, the Boards of Directors,
and committees of the Boards of Directors, of the Acquired
Subsidiaries.
2.1.6 Title to Property; Leases of Property;
Encumbrances.
The Seller and the Acquired Subsidiaries own no real
property. Part 2.1.6 of the Disclosure Letter contains a
complete and accurate list of all material leases, subleases,
licenses and other agreements under which the Seller and
Acquired Subsidiaries have the right to use or occupy, now or
in the future, any property, real or personal. All material
personal property owned by the Seller and Acquired
Subsidiaries are free and
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clear of all encumbrances, except as set forth in Part 2.1.6
of the Disclosure Letter.
(b) None of the properties set forth in Part 2.1.6 of
the Disclosure Letter is in violation in any material respect
of any applicable building, zoning, health or other law,
ordinance or regulation in respect of its buildings or other
structures or its operation. All such properties have
received all material governmental authorizations required in
connection with the ownership or operation thereof.
(c) Each of the leasehold interests listed on Part
2.1.6 of the Disclosure Letter (the "Leases") is in full force
and effect in accordance with its terms and has not been
modified except as set forth on Part 2.1.6 of the Disclosure
Letter with all rent paid to date. The Seller has delivered to
Buyer a true and complete copy of each Lease. Except as set
forth in Part 2.1.6 of the Disclosure Letter, no default under
any material Lease has been asserted by any party thereto
against the other, and there is no default or event which
alone or with notice or lapse of time, or both, would
constitute a default thereunder.
2.1.7 Condition and Sufficiency of Assets.
The manufacturing lines in Denmark and Australia, and all
other material buildings, plants, structures, and equipment
(including, without limitation, the electrical, mechanical,
plumbing, elevator, heating, ventilating, air conditioning and
fire safety systems) owned, leased or used by the Seller and
the Acquired Subsidiaries at such locations, to the knowledge
of the officers of the Seller, are structurally sound, are in
good operating condition and repair (except as set forth in
Part 2.1.7 of the Disclosure Letter), and are adequate for the
uses to which they are being put, and none of such material
buildings, plants, structures, or equipment is in need of
maintenance or repairs, in both cases, except for ordinary,
routine maintenance and repairs that are not material in
nature or cost. The Seller and Acquired Subsidiaries own or
have the legal right to use (and at the Closing will own or
have the legal right to use) all assets, properties and rights
necessary for the continued conduct of their respective
businesses immediately after the Closing in substantially the
same manner as conducted prior to the Closing.
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2.1.8 No Undisclosed Liabilities.
Except as set forth in Part 2.1.8 of the Disclosure
Letter, the Seller and Acquired Subsidiaries have, to the
knowledge of officers of the Seller, no liabilities or
obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise).
2.1.9 Taxes.
The Acquired Subsidiaries have filed or caused to be
filed on a timely basis all federal and other material tax
returns that are or were required to be filed by or with
respect to any of them, either separately or as a member of a
group. The Acquired Subsidiaries have paid, or made provision
for the payment of, all Taxes (including all taxes required to
be withheld or collected) that are shown as due on such tax
returns or pursuant to any assessment received by the Seller
and the Acquired Subsidiaries with respect to such returns
unless disclosed in Part 2.1.9 of the Disclosure Letter.
2.1.10 No Material Adverse Change.
Since the date of the Balance Sheet, to the knowledge of
the Sellers there has not been any material adverse change in
the business, operations, properties, prospects, assets, or
condition of any Seller or Acquired Subsidiary not disclosed
in the Balance Sheet, and no event has occurred or
circumstance exists that is reasonably likely to result in
such a material adverse change that has not been fully
disclosed to the Buyer.
2.1.11 Compliance with Legal Requirements.
Except as set forth in Part 2.1.11 of the Disclosure
Letter, to the knowledge of officers of the Seller, the Seller
and each Acquired Subsidiary is, and at all times since June
30, 1997 has been, in compliance in all material respects with
each legal requirement that is or was applicable to it, to its
Intellectual Property, or to the conduct or operation of its
business or the ownership or use of any of its assets;
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2.1.12 Legal Proceedings; Orders.
Except as set forth in Part 2.1.12 of the Disclosure
Letter, to the knowledge of officers of the Seller, there is
no order or pending proceeding, and no investigation:
(a) that has been commenced by or against the
Seller or any Acquired Subsidiary to which any of the Seller
or any Acquired Subsidiary is subject, or that otherwise
relates to or may affect the business of, or any of the assets
owned or used by, the Seller and Acquired Subsidiaries; or
(b) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
To the knowledge of officers of the Seller, no such
proceeding or investigation has been threatened. The
proceedings and investigations listed in Part 2.1.12 of the
Disclosure Letter will not have a material adverse effect on
the business, operations, assets, condition, or prospects of
any Seller and Acquired Subsidiaries.
2.1.13 Absence of Certain Changes and Events.
Except as set forth in Part 2.1.13 of the Disclosure
Letter, since the date of the Balance Sheet, the Seller and
Acquired Subsidiaries have, subject to the Seller's suspension
of payments and to the extent possible, conducted their
business only in the ordinary course of a company in
suspension of payments.
2.1.14 Contracts.
Part 2.1.14 of the Disclosure Letter contains a complete
and accurate list, and the Seller has delivered to the Buyer
true and complete copies, of each material contract of the
Seller or any Acquired Subsidiary.
2.1.15 Insurance.
The Seller has delivered to Buyer and Part 2.1.15 of the
Disclosure Letter contains a true and complete list of all:
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(a) material policies of insurance to which the
Seller and all Acquired Subsidiaries are a party or under
which the Seller or any Acquired Subsidiary is or has been
covered at any time within the three years preceding the date
of this Agreement; and
(b) pending applications for material policies
of insurance.
2.1.16 Environmental Matters.
Except as set forth in Part 2.1.16 of the Disclosure
Letter to the knowledge of the officers of the Seller:
(a) The operations and Facilities of the Seller
and each Acquired Subsidiary are, and at all times since
January 30, 1997 have been, in compliance in all material
respects with and are not liable under any applicable
Environmental Laws.
(b) The Seller has delivered to the Buyer true
and complete copies and results of any reports, studies,
analyses, tests, or monitoring results, containing material
information, possessed or initiated by the Seller or any
Acquired Subsidiary pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities.
2.1.17 Intellectual Property.
(a) One or more of the Seller or the Acquired
Subsidiaries is the owner of all right, title, and interest in
and to the Intellectual Property, free and clear of any and
all liens, security interests, charges, encumbrances,
entities, and other adverse claims.
(b) No patent has been or is now involved in any
interference, reissue, reexamination, or opposition
proceeding. To the knowledge of officers of the Seller, there
is no potentially interfering patent or patent application of
any third party.
(c) Except as set forth in Part 2.1.17(c) of the
Disclosure Letter, to the knowledge of the officers of the
Seller, no Intellectual Property is being infringed. There has
been no challenge to the validity or enforceability of any
patent or trademark, nor, to the
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knowledge of officers of the Seller, no threat of any such
challenge. To the knowledge of officers of the Seller, none
of the products manufactured and sold, nor any process or
know-how used, by the Seller or any Acquired Subsidiary
infringes or is alleged to infringe any patent or other
proprietary right of any other person.
2.1.18 Employees.
No employees or directors have any material rights
against the Seller or any Acquired Subsidiary or any third
parties for which the Seller or any Acquired Subsidiary shall
be liable other than what is generally provided for in the
Danish Salaried Employees Act (funktionoerloven) or the Danish
Holiday Act (ferieloven) or similar legislation in any country
where an Acquired Subsidiary conducts business and no employee
has submitted any claims towards the Seller pursuant to such
rules or any other regulation. No employees or directors of
the Seller or any Acquired Subsidiary shall have any other
rights against the Buyer arising out of (1) incentive schemes
connected to the sale of the assets of the Seller and the
shares of any Acquired Subsidiary or the insolvency
proceedings of the Seller, (2) any share option programmes or
(3) any stay bonuses. Except as set forth in part 2.1.18 of
the Disclosure Letter, no employee or director dismissed prior
to the closing date has submitted claims for redundancy
payment or damages as a result of the cessation of their
employment that are still outstanding.
2.1.19 Brokers or Finders.
The Seller and the Acquired Subsidiaries and their
respective officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement that will become the obligation
of the Buyer.
2.2 Buyer Representations and Warranties. Buyer
Represents and Warrants to Seller as follows:
2.2.1 Organization and Good Standing.
The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of its
jurisdiction of incorporation.
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2.2.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid,
and binding obligation of the Buyer, enforceable against it in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency and other similar laws
affecting creditors' rights generally or general equitable
principles. Upon the execution and delivery by Buyer of this
Agreement, this Agreement will constitute the legal, valid,
and binding obligations of the Buyer and/or any assigns as the
case may be, enforceable against it in accordance with its
respective terms, except as enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or general equitable principles.
The Buyer has the absolute and unrestricted right, power,
authority and capacity to execute and deliver this Agreement
and to perform its obligations hereunder.
(b) Neither the execution and delivery of this
Agreement or any Closing Document by the Buyer or its assigns,
nor the consummation or performance of any of the Contemplated
Transactions by the Buyer or its assigns will violate any
agreement to which it is a party.
The Buyer will not be required to give any notice to or
obtain any consent from any person in connection with the
execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
2.2.3 Certain Proceedings.
There is no pending proceeding that has been commenced
against the Buyer and that challenges, or may have the effect
of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To the
knowledge of the Seller, no such proceeding has been
threatened.
2.2.4 Brokers or Finders.
The Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement that will
become the obligation of the Seller.
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Article III
EMPLOYEES
3.1 Employees of Seller to be Employed by Buyer. All
employees employed by the Seller as of Closing shall from that
date be employed by the Buyer pursuant to the Danish Act on
the legal status of employees in connection with transfers of
undertakings (Lov om lonmodtagers retsstilling ved
virksomhedsoverdragelse). Consequently the Buyer shall step
into all rights and obligations of the Seller towards the
employees as of Closing, including but not limited to all
individual contracts, collective agreements and obligations
arising out of the Danish Salaried Employee's Act.
3.2 Accruals. The Seller shall indemnify and
reimburse Buyer for any liability for payments in accordance
with (1) the Danish Holiday Act or similar legislation in a
country where an Acquired Subsidiary conducts business, (2)
incentive schemes connected to the sale of the assets of the
Seller and the shares of any Acquired Subsidiary or the
insolvency proceedings of the Seller, (3) any share option
programmes or (4) any stay bonuses as well as (5) any material
undisclosed obligation toward any employee or director of the
Seller of any of the Acquired Subsidiaries.
3.3 Notice to Employees. Pursuant to the Danish Act
on the legal status of employees in connection with transfers
of undertakings, the Seller is obliged to inform the employee
representatives of the reason for the takeover and of its
legal, financial and social consequences for the employees.
The Seller has done so, and the Buyer warrants to fulfil
Buyer's obligations towards the employees in pursuance of the
said act.
3.4 Certain Senior Managers. Buyer shall from the
date of Closing employ the CEO Xxxx Xxxxxxx and the CFO Xxxx
Xxxxx Xxxxxxx in accordance with separate contracts concluded
between Buyer and Xxxx Xxxxxxx and Xxxx Xxxxx Xxxxxxx. It is
a condition to Closing that Xxxx Xxxxxxx and Xxxx Xxxxx
Xxxxxxx as well as production manager Xxxx Xxxxxxxx, as of
Closing, have not given notice of termination of their present
contracts with Seller.
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Article IV
CONTRACTUAL RELATIONSHIPS
4.1 Buyer's Assumption of Certain Contracts. Buyer
shall assume, on a forward going basis, the rights and
obligations arising out of contracts and agreements entered
into by Seller in the ordinary course of conducting the
Business, subject to the approval, where necessary, of the
other contracting party. Buyer does not assume obligations
for payments under such contracts which were incurred prior to
Closing, and for which performance by the other contracting
party was complete prior to Closing. In no event shall
Buyer's obligation to assume apply to any individual contract
which exceeds DKK 200,000, except in the case of contracts
listed in Schedule 4.1.
4.2 Terms of Assumption. Buyer shall assume rights
and obligations of paragraph 4.1 above, subject to the
following terms:
(a) Supply and Leasing Agreements
Buyer shall notify the other parties to such agreements
promptly after Closing and, if necessary, commence
negotiations with a view to obtaining their approval of
Buyer's replacement of Seller in the contract, but Buyer shall
not be liable for payments for periods prior to Closing.
In the event that a supplier/lessor does not approve of the
order being executed by the Buyer, the Buyer in the name of
the Seller but for Buyer's own risk and account shall perform
such contract.
(b) Customer and Sales Agreements and Offers
Buyer shall take over the Seller's portfolio of received, but
as of Closing, not yet executed orders or partly executed
orders, as offers submitted but not accepted, as well as any
Letters of Credit in connection thereto.
The list attached as Exhibit B shows orders and offers
received or placed but not yet executed. The list also
contains information regarding the name of
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the customer, the volume of the order, due date and price.
Buyer shall attempt, to the extent this is considered
reasonable, to achieve the other parties' approval of the
order or the offer being executed by the Buyer.
In the event that the customer does not approve of the order
being executed by the Buyer, the Buyer in the name of the
Seller but for Buyer's own risk and account shall perform such
contract.
Buyer also replaces the Seller in any sales agreements entered
into by the Seller, but shall not be liable for obligations by
the Seller incurred prior to Closing.
The procedure follows the above-stated procedure relating to
orders and offers.
(c) Distribution Agreements
Following the conclusion of this Agreement, the Seller shall
as soon as possible seek to obtain the approval of the
distributors and agents stipulated Exhibit C with a view to
transferring the agency/distributor contracts to the Buyer.
If the period in which Seller is in suspension of payments
(Betalingsstandsning) according to the Danish Bankruptcy Act
has lapsed and the Buyer was unsuccessful in obtaining an
agreement with an agent or distributor regarding transfer of a
distribution agreement, the Seller is entitled to terminate
such agreement and the Buyer shall subsequently assist the
Seller in performing the contract in the notice period.
Article V
COMPLAINTS
5.1 The Buyer is entitled but not obliged to at the
Buyer's own risk and expense, to meet complaints from
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customers relating to deliveries made by the Seller prior to
Closing.
5.2 The Buyer is obliged, at the Seller's written
request and at the Seller's expense, of this clause 5, to
perform work relating to complaints.
5.3 The expenses relating to the performance of
remedy-work on behalf of Seller shall be made up as Buyer's
actual external expenses without supplement or, if the Buyer
itself remedies the complaint, at the cost price (wages and
materials). Expenses relating to complaints shall be invoiced
to Seller monthly in arrears. With the invoice, the Seller
shall receive a statement of the work performed.
Article VI
PURCHASE PRICE AND PAYMENT
6.1 Purchase Price. The purchase price for the
assets shall be:
(a) DKK 161,900,000 (less escrow funds in the
amount of USD 1,000,000 pursuant to Section 7.1 and a further
amount to be determined pursuant to Section 7.2), payable at
Closing in U.S. Dollars converted at the official rate of
exchange of the National Bank of Denmark (Denmarks
Nationalbank - Xxxxxx page DNKA 21) applicable as of the day
of Closing; plus
(b) USD 12,000,000 representing the good will of
Memory Card Technology, A/S, Denmark, payable at Closing.
6.2 Inventory. The payment set forth in paragraph
6.1(a) includes 60% of the book value of the inventory
acquired by the Buyer, as provided in Section 1.2(b) of this
Agreement.
6.3 Accounts Receivable. The payment set forth in
paragraph 6.1(a) includes 100% of the book value of the
accounts receivable of the Seller as provided in Section
1.2(a) of this Agreement.
17
6.4 Adjustment to Purchase Price. The purchase price
for the assets set forth in paragraph 6.1(a), above, is as
reflected in Seller's balance sheet of February 28, 2001, and
shall be adjusted to reflect changes in the individual items
of the balance sheet from that date to March 15, 2001, using
the same principles as were applied to the February 28, 2001,
balance sheet. The final elements of the March 15, 2001
balance sheet and the final calculation of the amount of
6.1(a) shall be arrived at by mutual consent through
discussions of the Chief Financial Officers of the Buyer and
the Seller.
Article VII
ESCROW ACCOUNTS
7.1 Escrow A. The sum of USD 1,000,000 shall be
reserved from the purchase price amount set forth in paragraph
6.1 above, and placed in an escrow account of USD 1,000,000 to
be held by Xxxx-Xxxxx Dragsted in Aarhus, Denmark (the "Escrow
Agent"). The escrowed funds shall be held for the purpose of
indemnifying the Buyer for Seller's breach of any
representations or warranties under Article II of this
Agreement.
(a) The escrowed funds shall be invested in
interest bearing accounts by the Escrow Agent, with the
interest being payable periodically to the Seller or its
successor in interest after deduction of a reasonable Escrow
Agent fee;
(b) Upon receipt by the Escrow Agent of a
certification of either (1) a duly executed agreement between
the parties, or (2) a final and binding arbitral award issued
in accordance with Article XVII of this Agreement, the Escrow
Agent shall make payment of the certified amount after five
days from receipt of such certification;
(e) Any balances remaining in the Escrow Fund
which are not the subject of an unresolved dispute on December
31, 2001, together with any unpaid interest shall be paid to
the Seller or its successor in interest.
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7.2 Escrow B. A sum equal to 90% of the difference
between (1) 100% of the accounts receivable of the Seller as
provided in Section 1.2(a) of this Agreement and (2) a sum of
the insured accounts of the Seller and the prime accounts of
the Seller on March 15, 2001 as set forth on a schedule to be
delivered at Closing shall be deposited in an interest bearing
escrow account with a bank (the "Escrow Agent") selected by
the Seller.
(a) In the event a non-insured, non-prime
account shall not have been paid within one-hundred twenty
(120) days from the date of Closing, then the Buyer shall
notify the Seller of such nonpayment and the Seller shall
direct the payment of 90% of such amount to the Buyer.
(b) Upon payment by an account debtor of any
non-insured, non-prime account, then one-hundred and twenty
(120) days from the date of Closing, the Buyer shall direct
the release from the escrow to the Seller of 90% of such paid
amount. Buyer will send monthly statements to the Seller
listing the receipt of all such payments.
(c) The Buyer warrants to the Seller that it
will use its best efforts to collect all accounts.
(d) Upon receipt by the Escrow Agent of a
certification of either (1) a duly executed agreement between
the parties, or (2) a final and binding arbitral award issued
in accordance with Article XVII of this Agreement, the Escrow
Agent shall make payment of the certified amount after five
days from receipt of such certification.
(e) Upon payment to the Buyer of any
reimbursement obligation, the Buyer shall assign the account
to the Seller who may commence litigation for collection.
(f) All interest which shall accrue on this
account shall accrue for the benefit of the Seller and paid to
the Seller or its successor by the Escrow Agent.
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Article VIII
CONDITIONS TO CLOSING
The Seller shall deliver at Closing:
8.1. Engagement Letters between Pricewaterhouse-
Coopers and Ernst & Young and the Buyer according to which
Pricewaterhouse-Coopers and Ernst & Young undertake, on the
account of the Buyer, to supply all such audited accounts as
may be deemed necessary by the Securities Exchange Commission
of the United States of America, for, but not limited to, SEC
8-K filings, within 65 days from the Closing.
8.2. Draft of the usual completion statement
specifying the costs and expenses which either Party is
assumed to reimburse the other Party, including the Seller's
obligation to reimburse the Buyer or its assignee for holiday
allowances for all employees through to March 15, 2001.
8.3. Assignment of any non-competition undertaking
from Xx. Xxxx X. Xxxxxx to the Seller not to compete with the
Business.
8.4. Stock certificates, where issued or equivalent
proof of ownership in respect of all Acquired Subsidiaries
owned by the Seller duly assigned to the Buyer.
8.5. Evidence that the Seller has initiated
proceedings in Denmark to have declared null and void a
Mortgage (in Danish "ejerpantebrev") dated 1 March 1994 duly
assigned to the Buyer.
8.6. Consent of FDB Ejendomme c.o.o.p. according to
which FBD accepts the Buyer or Buyer's assignee as the Lessee
according to the terms of the Lease Agreement (in Danish
"lejeaftale") dated November 1998 in respect of Xxxxxxxxx 00,
XX-0000 Xxxx X, Xxxxxxx, including the transfer of any
deposits paid by the Vendor to the landlord together with a
statement of FBD that no rent is presently due.
8.7. Consent of Unileasing A/S to the assignment to
Buyer or Buyer's assignee of an equipment lease covering
equipment at Seller's premises in Viby, Denmark, according to
Financial Lease Agreement with Unileasing A/S, dated 29 April
1999, and Lease Agreement on IT-Equipment to employees dated
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31 August 2000, together with a statement of Unileasing that
no rent is presently due.
8.8. Assignments of all registration certificates or
applications for the same for all Intellectual Property,
including patents, marks, web sites, business logos, utility
models of any nature hereunder, the name Memory Card
Technology A/S, and all the business logos and domain names of
the Seller.
8.9. Written assignment of the License Agreement with
Micron Electronics Inc., dated 28 June 2000, and the Direct
Rambus RIMM Module Agreement with Rambus Inc., dated 15 July
1998 to the extent possible.
8.10. In respect of accounts receivable, Xxxxxxx
Credit Insurance's written consent to assignment of present
insurances stating that Xxxxxxx Credit Insurance accepts full
liability according to the existing insurance policy in
respect of all insured debtors assigned to the Buyer or
Buyer's Assignee.
8.11. An assignment of the small interest in Memory
Card Technology Chile Limitadas owned by Xx. Xxxxxx Conde and
JP Group Inc.'s interest in Memory Card Technology Argentina,
S.A. and Memory Card Technology Mexico S.A. de C.U. to an
entity formed by the Buyer.
8.12. An opinion letter from counsel to the Seller or
various counsels to the Acquired Subsidiaries, as the case may
be, evidencing that title to all of the subsidiaries being
transferred to the Buyer will be owned by the Buyer or
entities in which the Buyer will have a 100% interest,
directly or indirectly.
8.13. Certificates from Skandia which manages pension
plans on behalf of the employees of Memory Card Technology A/S
stating that all payments now due have been paid.
8.14. Assignments of any letters of credit issued in
favor of Memory Card Technology A/S to the Buyer or Buyer's
assignee to the extent transferable.
8.15. An opinion of counsel to the Seller including
without limitation an opinion that the transfer of the assets
to the Buyer under this Agreement will comply with all
requirements of Danish law, including Danish bankruptcy law
and that upon the transfer, the assets will be held by the
21
Buyer free and clear of all liens, encumbrances and claims of
creditors and stockholders of Memory Card Technology A/S. A
form of the substance of such an opinion is attached hereto as
Exhibit D.
8.16. Consent of WestPac Banking Corp. to a change in
control of Hypertec.
8.17. A list of the names of the top twenty customers
of the Seller.
8.18. An Assignment and General Release by which
Seller shall assign to Buyer (or Buyer's assignee) all of its
rights to indebtedness owed by the Acquired Subsidiaries.
8.19. Executed Employment Agreements of Xxxx Xxxxxxx
and Xxxx Xxxxx Xxxxxxx with Buyer have been received by the
Buyer.
8.20. Secretary's Certificate evidencing the adoption
of a resolution of the Board of Directors of the Seller
approving this Agreement.
8.21. Certificate of the President and Chief
Financial Officer of the Company that all representations and
warranties made in the Agreement are true at Closing, to the
best of their knowledge.
If Seller fails to deliver any of the above items through
a failure to obtain the consent of a third party, Seller shall
not be liable in damages to the Buyer for the default but the
Buyer shall not be obligated to close.
Article IX
CLOSING
9.1 Closing Time and Place. The closing of the sale
and purchase of assets (the "Closing") shall take place at the
Seller's premises on or before March 30, 2001 at such time as
the parties shall agree, but as soon as practical, but the
Closing shall be adjusted as of March 15, 2001.
9.2 Balance Sheet. Seller not later than two (2)
business days prior to Closing shall deliver a proposed form
of balance sheet dated March 15, 2001 and a proposed
calculation of the Section 6.1(a) amount.
22
9.3 Payment Directive. Seller not later than two (2)
business days prior to Closing shall deliver a letter
countersigned by the Supervisor identifying the banks and the
accounts into which the purchase price, including Escrow B,
shall be paid with full wire transfer instructions.
9.4 Seller's Transfer of Assets. At the Closing,
Seller shall deliver to Buyer bills of sale and such other
documents as may be necessary to convey to and vest in Buyer
title to the Purchased Assets free and clear of all liens and
encumbrances, together with the duly endorsed stock
certificates of all subsidiaries or other evidence of
ownership of Acquired Subsidiaries and automobile ownership
certificates and shall provide documentary proof satisfactory
to counsel for Buyer of compliance with all of the conditions
to Closing of Article VIII, above, including without
limitation, documentation and the opinion of counsel that upon
payment of the purchase price the Buyer has taken the
Purchased Assets free of the claims of Seller's creditors and
stockholders.
9.5 Buyer's Payment of the Purchase Price. At the
Closing, Buyer shall pay the purchase price in accordance with
Article VI, above and such payment shall be available to
Seller on the Closing date.
9.6 Termination of Operations. Upon the completion
of the Closing Seller and its retained subsidiaries shall
forthwith cease to operate its business.
Article X
COSTS AND EXPENSES
10.1 All stamp duties, share transfer fees, dues,
levies or the like incurred in connection with this
transaction shall be borne by the Buyer.
10.2 Each of the parties shall bear their own costs
and expenses including fees in respect of external advisors,
including investment bankers, auditors and lawyers.
10.3 Any costs relating to the transfer of the Assets
including but not limited to costs relating to re-registration
of cars, take-over of IT-equipment, telephones, faxes, etc.
23
and transfer of intellectual property rights shall be paid by
the Buyer.
Article XI
VAT AND VAT LIABILITY
11.1 Buyer shall take over any VAT liability payable
on the transferred assets without this giving rise to a
deduction in the total purchase price.
Article XII
RESERVATIONS FOR TAX EFFECTS
12.1 In the event that the relevant Danish tax
authorities do not accept the amounts attributed to the
individual assets, either party may demand that the amounts be
adjusted as stipulated by the tax authorities, however the
total purchase price will remain fixed as finally adjusted
under clause 8.2.
Article XIII
INDEMNIFICATION
13.1 The Buyer shall have no right to
indemnification based upon facts and circumstances disclosed
to it by the Seller prior to the date hereof.
13.2 Except for breaches of representations and
warranties concerning title to assets conveyed hereunder and
the authority of the Seller to enter into this Agreement and
obligations to employees, the total aggregate liability of the
Seller for claims of indemnification shall not exceed the USD
1,000,000 held in the Escrow established under Article VII of
this Agreement.
13.3 No liability in the Seller shall arise for
indemnification unless and until total claims made shall
exceed USD 25,000. No single claim shall be for less than
USD 10,000.
24
13.4 No claim for indemnification, except a claim
based upon breach of title to assets conveyed hereunder, the
authority of the Seller to enter into this Agreement, and the
obligations to employees shall be made unless such claim is
made on or prior to December 31, 2001. All other claims may
be made up to the date the notice of liquidation is given to
creditors; however, not later than December 31, 2003.
13.5 No claim for indemnification shall be made if
the claim is covered by insurance of the Seller against which
the Buyer may make a direct claim.
13.6 No claim for indemnification shall be made to
the extent provisions or reserves were made in the Balance
Sheet.
13.7 No claim for indemnification shall be made by
any party other than the Buyer, a subsidiary of the Buyer, and
any assignee of the Buyer or any successor in interest of
either.
13.8 In the event a third party asserts a claim which
becomes the basis for a claim for indemnification, Buyer shall
give written notice to the Seller of such claim within thirty
days of receipt of the claim from the third party. If the
third party initiates litigation, the Seller at its own cost
and expense shall have the right to join in the defense of the
action. If the Seller agrees to be bound by and pay the full
amount of any judgement recovered, then Seller shall have the
full right to take over the defense of such claim.
13.9 Seller does not undertake any obligation of
indemnification after closing except for breaches of
representations and warranties set for in Article II and after
closing the Buyer may not cancel this agreement for breaches
of representations and warranties.
Article XIV
CERTAIN POST-CLOSING MATTERS
14.1 All notices, correspondence, information, orders
or inquiries relating to the assets transferred which are
received by the Seller on or after closing shall be passed on
to the Buyer. Similarly, all payments received by the Seller
on or the effective date of Closing in respect of receivables
transferred shall immediately be forwarded to the Buyer. The
Buyer shall similarly forward to the Seller any correspondence
25
etc. and payments received by Buyer after Closing which relate
to assets not transferred.
14.2 At the Seller's request the Buyer agrees to
assist the Seller and its remaining subsidiaries free of
charge and to a reasonable extent in certain matters after
Closing.
The Buyer's assistance shall include but not be limited
to the following:
Collection of the Seller's outstanding debts and
receivables
Current bookkeeping
Assistance to Seller's accountant in preparation of
Seller's accounts
Preparation of VAT returns
Preparation of wage/salary reports
Settlement of the Seller's accounts with the Seller's
insurance companies
Provision of vouchers from the Seller's files resting
with the Buyer
Other administrative matters required by law.
14.3 Subsequent to Closing Buyer shall, free of
charge to a reasonable extent make office space, telephone,
fax, computers, internet connection and other office
facilities available to Seller until liquidation of Seller.
14.4 Buyer shall free of charge and as long as it is
required under the Danish Company Accounts Act
(Arsregnskabsloven) and the Danish Bookkeeping Act
(Bogforingsloven) store all required materials, files of
Seller and/or Sellers estate, cf. the said act, and make these
available to Seller free of charge.
14.5 Buyer's obligation to provide assistance to
Seller and its remaining subsidiaries will terminate on
liquidation of the Seller.
14.6 Xxxx Xxxxxxx and Xxxx Xxxxx Xxxxxxx may also
continue as formal management of Seller until the present
suspension of payments period expires.
26
14.7 Buyer shall have no obligation to pay costs,
penalties, accounting and legal fees, or other expenses of the
Seller or its remaining subsidiaries in rendering assistance
pursuant to this Article.
Article XV
OTHER AGREEMENTS
15.1 Operation of the Business After March 15.
Assuming a Closing of this Agreement, then all operations of
the Seller after March 15, 2001 shall be for the account of
the Buyer. During this period, operations will be conducted
by the Seller in the ordinary course of a business in
suspension of payments. Buyer shall have the right to have
representatives on site to monitor all affairs.
15.2 Failure to Close by March 30. If this Agreement
does not close on or before March 30, 2001, then two business
days before the date of the Closing, Seller shall deliver a
new proposed balance sheet, all operations up to the date of
the new balance sheet shall be for the account of the Seller,
and the Section 6.1(a) payment adjusted with respect to the
new balance sheet in accordance with Section 6.4.
15.3 Covenant Not to Compete. Seller agrees that
neither it nor any subsidiary it retains, including JT Group,
Inc., California, shall compete in the Business after the date
of Closing, nor will it acquire any interest in any business
which competes in the Business from and after the date of
Closing.
15.4 Proceedings to Cancel Mortgage. Prior to
Closing Seller will initiate proceedings in its name to have
declared null and void under Danish law a Mortgage dated March
1, 1994 in the approximate amount of $57,000. Seller, at its
expense will continue to process this proceeding to its
conclusion. If Seller shall have not succeeded in obtaining
this judgment within fifteen (15) months of the date of
Closing, or if at a sooner date the Mortgage shall be
established as valid, then the Seller will reimburse Buyer for
any damages caused.
Article XVI
27
NOTICES
All notices, consents, waivers or other communication
relating to this Agreement or the transactions contemplated
hereby must be in writing (in the English language) and must
be sent to the following addresses:
With respect to Seller:
Copies of all notices or other communication to Seller shall
be forwarded to:
Attorney Xxxx Xxxx-Xxxxxxxx, Supervisor
Gorrissen Xxxxxxxxxx Kierkegaard
Xxxxxxxxxxx 00
0000 Xxxxxx X
Xxxxxxx
Telephone x00 00 00 00 00
Telefax x00 00 00 00 00
With respect to Buyer:
President
Dataram Corporation
Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Article XVII
TERMINATION
17.1 If 75% of the creditors of the Seller have not
approved this Agreement by March 30, 2001, either party may
terminate this Agreement by written notice to the other
without further liability.
17.2 If this Agreement has not closed by March 30,
2001 because of a material default by one party, this
Agreement may be terminated by the non-defaulting party by
written notice.
Article XVIII
28
GOVERNING LAW AND VENUE
18.1 This Agreement shall be governed by and
construed in accordance with the laws of the Kingdom of
Denmark.
18.2 .Any dispute or claim arising out of or in
connection with this Agreement or in connection with any
breach, termination or invalidity hereof shall be settled by
arbitration in accordance with the Rules of Procedure of the
Danish Institute of Arbitration (Copenhagen Arbitration).
The arbitration tribunal shall be composed of 3 arbitrators.
Each party shall appoint one arbitrator and the Institute
shall appoint a third arbitrator who shall be chairman of the
arbitration tribunal. If a party has not appointed an
arbitrator within 30 days of having requested or received
notice of the arbitration, such arbitrator shall be appointed
by the Institute.
The place of arbitration shall be Copenhagen.
The language of the arbitration shall be the English language.
March 15, 2001
For the Seller: For the Buyer:
MEMORY CARD TECHNOLOGY A/S DATARAM CORPORATION
XXXXX XXXXX XXXXXX XXXXXXXXX
By: ______________________ By: _______________________
Xxxxx Xxxxx Xxxxxx Xxxxxxxxx
Chairman of the President
Board of Directors
APPROVED BY:
XXXX XXXXXXX XXXX XXXX-XXXXXXXX,
By: ______________________ ___________________________
Xxxx Xxxxxxx Xxxx Xxxx-Xxxxxxxx,
President Supervisor
29
Exhibits
Exhibit A - Current Lease Agreement With Uni-Leasing (attached
to Disclosure Letter)
Exhibit B - List Of Orders And Offers Received (attached to
Disclosure Letter)
Exhibit C - Distributors And Agents (attached to Disclosure
Letter)
Exhibit D - Opinion Of Counsel To The Seller
Schedules
Schedule 1.2(a) - Excluded Accounts Receivable Of The Seller
Schedule 1.2(c) - Vehicles And Vehicle Leases Which Seller
Will Transfer Into Buyer's Name (attached to
Disclosure Letter)
Schedule 1.2(d) - The Major Items Of Plant, Equipment,
Machinery, Furniture And Fixtures, As Well As
Leases Of Same (attached to Disclosure Letter)
Schedule 1.2(g) - Non-Exhaustive List Of Intellectual Property
Used In The Conduct Of The Business (attached to
Disclosure Letter)
Schedule 1.2(j) - Rights And Claims Under Service And Parts
Contracts, Manufacturing Contracts, Joint Ventures
And Leases Under Which Seller Is The Lessor For
Products Of The Business (attached to Disclosure
Letter)
Schedule 1.2(m) - Subsidiaries Included In The Purchase
Schedule 4.1 - Contracts Assumed By Buyer (attached to
Disclosure Letter)
30
Schedule 1.2(m)
Subsidiaries Included in the Purchase:
Memory Card Technology Colombia Limitadas
Memory Card Technology Argentina, S.A.
Memory Card Technology Chile Limitadas
Memory Card Technology Mexico S.A. de C.U.
Memory Card Technology GmbH
Memory Card Technology Srl.
Memory Card Technology Pty
Memory Card Technology Ltd.
Comtech Computer Ltd.
MCT (UK) Ltd.
Memory Card Technology Pty, Ltd.
Hypertec Pty Ltd.
Hypertec Memory Singapore Ptc. Ltd.
Hypertec Memory Hong Kong Ltd.
Hypertech Memory (Thailand) Ltd.
Hypertec Memory (Malaysia) Sdn Bhd
Subsidiaries Not Included in Purchase:
JT Group, Inc. (California)
Memory Card Technology A.B. (Sweden)
Micot Holding A/S (Denmark)
Micro Storage, Inc. (California)
Memory Card Technology South America, S.A. (Colombia)
Russian Liaison Office
31
Memory Card Technology A/S
In suspension of payments
Sonderhoj 22
DK-8260 Viby J.
March 16, 2001
Dear Sirs:
With reference to Asset Purchase Agreement as of today,
we hereby confirm that notwithstanding what is stated in
clause 7.2(a) and (b) the following is agreed instead:
(a) In the event Buyer has not within 120 days from
closing been paid minimum 90% of the total amount of non-
insured, non-prime accounts, then the Buyer shall notify the
Seller of such nonpayment and the Seller shall direct the
payment of such remaining amount to the Buyer. Buyer shall
apply any provisions prior to being paid any remaining amount.
(b) If and when Buyer has been fully paid under (a)
above, Buyer shall direct the release of the amount in the
escrow for the benefit of Seller.
Regarding clause 6.4 the following is agreed:
The last sentence shall be added: "... and approved by
the supervisor."
Regarding article 2, the Buyer represents that the Buyer
has not discovered any circumstances which may lead to claims
under article 2 of the Agreement or which may indicate that
the Sellers representations and warranties may be inaccurate
or incorrect.
Buyer will deliver, as soon as possible, a legal opinion
the content of which will be similar to the one to be provided
by Sellers legal counsel.
Finally we acknowledge receipt of the Disclosure Letter.
Sincerely,
DATARAM CORPORATION
Xxxxxx Xxxxxxxxx
President
_________________________
Accepted by Seller
1
