ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of
March 5, 2005 between NEOWARE SYSTEMS, INC., a Delaware corporation
("PURCHASER"), ESESIX COMPUTER GMBH, a German limited liability company
registered in the commercial register of the lower court of Ingolstadt under HRB
190393 ("SELLER"), and Xxxxxxxxx Xxxxxxx, the majority shareholder of Seller
("XX. XXXXXXX", each of Xx. Xxxxxxx, Seller and Purchaser a "PARTY", and
together, the "PARTIES").
RECITALS
A. Seller is presently engaged in the business of manufacturing,
distributing and selling thin client hardware and software products, including,
but not limited to products sold under the THINTUNE brand, and including, but
not limited to, products listed on SCHEDULE A hereto (the "BUSINESS").
B. Seller desires to sell and transfer to Purchaser, and Purchaser
desires to purchase from Seller, all of the assets owned or held for use by
Seller or used by Seller which are attributable to the Business, other than the
Excluded Assets (as hereinafter defined), (the "SOLD ASSETS") on the terms and
subject to the conditions set forth in this Agreement.
C. Simultaneously with the Closing (as hereinafter defined), Purchaser
intends to grant to its subsidiary Neoware Systems GmbH ("NEOWARE GERMANY") a
right to use certain of the Sold Assets for the purpose of operating its
business. Seller and Purchaser assume that following the consummation of this
Agreement and the grant of the right to use the Sold Assets to Neoware Germany,
pursuant to Section 613a of the German Civil Code, the employees of Seller
attributed to the Business shall transfer automatically to Neoware Germany.
D. Following the consummation of the transactions contemplated by the
terms of this Agreement, Seller will continue to engage in the Retained Business
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound, the Parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE, SALE AND TRANSFER OF ASSETS
1.1 Sale of Assets. Subject to the terms and conditions hereof, Seller
hereby sells to Purchaser, free and clear of all Liens and encumbrances, the
Sold Assets, all as more specifically described in this Section 1.1, and
Purchaser hereby purchases the Sold Assets. The Sold Assets shall include:
(a) Tangible Assets. All computers and tools used for
manufacturing and for providing services, vehicles, tools and computers
operated prior to the Closing by the Transferred Employees, copies of
software, files, books and records, and all other tangible personal
property owned, held, or used by Seller in connection with the
operation of the Business, including without limitation, the assets
listed on SCHEDULE 1.1(A) hereto, and except for property excluded
under Section 1.5 hereof (the "SOLD TANGIBLE ASSETS");
(b) Governmental Licenses, Permits and Approvals. To the
extent transferable, all rights and incidents of interest of Seller, to
or under all licenses, permits and authorizations (collectively, the
"APPROVALS") issued or requested to be issued by any Governmental
Entity in connection with the operation of the Business;
(c) Intangible Assets. All trademarks, know-how, trade secrets
related to the manufacturing of the products of the Business, rights
relating to test programs, software and any and all other intangible
assets owned by Seller relating to the Business, including, without
limitation, the assets listed on SCHEDULE 1.1(C) hereto (the "SOLD
INTANGIBLE ASSETS");
(d) Sold Contracts. The lease agreements for vehicles listed
on SCHEDULE 1.1(D) hereto.
(e) Books and Records. Copies of all books, records, documents
and files (tangible or electronic), including, without limitation,
financial data, customer lists, research and technical information, and
reports, sales and purchase records, and marketing and advertising data
of Seller relating to the Business or the Sold Assets;
(f) Goodwill. The goodwill of the Business, including, but not
limited to the customers listed in SCHEDULE 1.1(F) hereto; and
(g) Inventory. All raw material, works-in-progress and
finished goods inventories relating to the Business listed in SCHEDULE
1.1(G) hereto (the "SOLD INVENTORY").
1.2 Assumed Liabilities. All warranties in connection with hardware
(the "WARRANTIES") in existence (vor oder bis zum Closing entstandene
Gewahrleistungsanspruche hinsichtlich Hardware) on the Closing Date with respect
to products of the Business sold by Seller on or prior to the Closing Date until
the expiration of such Warranties (the "ASSUMED LIABILITIES"); provided,
however, that the Warranties are the only liabilities assumed by Purchaser.
1.3 Transfer of Sold Assets. Seller hereby transfers and assigns to
Purchaser the Sold Assets, free and clear of all Liens and encumbrances other
than the Assumed Liabilities, effective as of the Closing. Purchaser hereby
accepts such transfer.
(a) Transfer of Sold Tangible Assets. Seller and Purchaser
hereby agree that the possession of movable (beweglich) Sold Assets
shall be deemed transferred effective as of the Closing. To the extent
any Sold Tangible Asset is in the possession of a third party, Seller
assigns and transfers, effective as of the Closing, its claim for
return of such Sold Tangible Asset (Herausgabeanspruch) to Purchaser
and shall deliver, on the Closing Date, the respective receipts, if
any, to Purchaser. To the extent that a third party holds a security
interest in any Sold Tangible Asset, whether in the form of a retention
of title (Eigentumsvorbehalt) or a chattel mortgage
(Sicherungseigentum), notwithstanding its contractual obligation to
transfer title to all Sold Tangible Assets to Purchaser free and clear
of any Liens, liabilities and obligations, Seller assigns and
transfers, effective as of the Closing, its respective contingent
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rights (Anwartschaftsrechte) to obtain title in such Sold Tangible
Asset to Purchaser, and Seller shall be obligated to (i) pay and
discharge any such Liens, liabilities and obligations, and (ii) ensure
that Purchaser will obtain title in such Sold Tangible Asset, all at no
cost to Purchaser. With respect to any movable (beweglich) Sold Assets
subject to fiduciary transfers of ownership (Sicherungsubereignung),
Seller assigns, effective as of the Closing, and Purchaser hereby
accepts as discharge of Seller's obligations under this Agreement, all
claims of retransfer of title under the security agreement
(Eigentumsruckubertragungsanspruche aus der Sicherungsabrede) against
the respective owner.
(b) Transfer of Sold Intangible Assets. The transfer of the
Sold Intangible Assets shall be made by assignment and transfer to
Purchaser of any physical documents or materials constituting, or
evidencing in any way the existence of the Sold Intangible Assets. If
and to the extent the Sold Intangible Assets comprise any tangible
property, Seller shall transfer the direct possession to such tangible
property to Purchaser or a person designated by Purchaser. To the
extent any tangible item of the Sold Intangible Assets is in the
possession of a third party, Seller shall assign and transfer,
effective as of the Closing, its claim for return of such tangible item
of the Sold Intangible Assets (Herausgabeanspruch) to Purchaser, and
shall provide Purchaser with such documents and evidence as are
necessary for Purchaser to claim the return of such tangible item of
the Sold Intangible Assets from such third party.
(c) Transfer of Sold Contracts. The transfer and assignment of
the Sold Contracts shall be made by way of an assignment and assumption
(schuldbefreiende Vertragsubernahme) of the respective Sold Contracts
and all rights and obligations thereunder in each case effective as of
the Closing Date. To the extent that the assignment of any Sold
Contract or license or any claim or right arising thereunder or
resulting therefrom is not permitted without the consent of a third
party, this Agreement shall constitute an agreement to assign such Sold
Contract, subject only to such consent.
Any transfer or assignment to Purchaser by Seller of any
interest under any Sold Contract or license that requires the consent
of a third party shall be made subject to such consent or approval
being obtained. In the event any such consent or approval is not
obtained, Seller shall continue to use its commercially reasonable
efforts to obtain any such approval or consent as soon as practicable
until such time as such consent or approval has been obtained, and
Seller will cooperate with Purchaser in any lawful and economically
feasible arrangement to provide that Purchaser shall receive the
interest of Seller in the benefits under any such Sold Contract or
license, including performance by Seller, as agent, of all of its
rights and obligations, as Purchaser may reasonably direct or approve,
provided that Purchaser shall undertake to pay or satisfy the
corresponding liabilities arising after the Closing Date (and not based
on events occurring on or prior to the Closing Date which shall remain
the liability of Seller) for the enjoyment of such benefits to the
extent Purchaser would have been responsible therefor hereunder if such
consent or approval had been obtained.
Nothing hereunder shall make Purchaser liable for any act,
neglect, default or omission in respect of any Sold Contract, license
or other agreement or arrangement prior to the Closing Date. From and
after the Closing Date until the whole of the benefit and burden of
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each such Sold Contract or license shall have been assigned to
Purchaser, Seller shall not terminate or amend any of the Contracts or
licenses without Purchaser's written consent. Nothing in this Section
1.3(c) shall be deemed a waiver by Purchaser of its right to have
received on or before the Closing an effective assignment of all of the
Sold Assets nor shall this Section 1.3(c) be deemed to constitute an
agreement to exclude from Purchaser any of the Sold Assets described
under Section 1.1.
1.4 Transferred Employees. The Parties agree that the employment
agreements of the Transferred Employees (as defined in Section 5.13(a) hereof)
(other than Transferred Employees objecting to their transfer) will
automatically be transferred as set forth in Section C of the recitals to
Neoware Germany pursuant to Section 613a of the German Civil Code as of the
Closing.
1.5 Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the following rights, properties and assets
(collectively, the "EXCLUDED ASSETS") will not be included in the Sold Assets:
(a) Tangible Assets. The tangible assets which are not related
to the Business.
(b) Excluded Product. The network product named AlphaNet or
THINTUNE Alpha (the "EXCLUDED PRODUCT").
(c) Accounts Receivable. All accounts receivable (Forderungen)
of Seller; and
(d) Retained Business. All tangible and intangible assets
relating to the Retained Business.
1.6 Retained Liabilities. Excepting the Assumed Liabilities, Seller
will retain, and Purchaser will not assume or be responsible or liable with
respect to, any liabilities or obligations of Seller or its Affiliates or their
respective predecessors-in-interest, whether or not arising out of or relating
to the operation of the Business or associated with or arising from any of the
Sold Assets or any other rights, properties or assets used in or associated with
the Business at any time, whether fixed or contingent, direct or indirect, or
known or unknown, including, but not limited to, liabilities relating to
liabilities for Taxes relating to the sale of the Sold Assets, liabilities with
respect to any of Seller's employees other than Transferred Employees, and
liabilities with respect to Transferred Employees relating to time periods prior
to Closing (collectively the "RETAINED LIABILITIES").
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. Purchaser will pay for the Sold Assets a purchase
price in the amount of EUR 6,469,489.23 subject to adjustment as provided in
Sections 2.2 (b) hereof (the "PURCHASE PRICE"). The Parties are of the opinion
that the transactions contemplated by this Agreement will be considered a sale
of a businesses pursuant to Section 1, Para. 1a of the German Code on Value
Added Tax (Umsatzsteuergesetz or UStG), and will therefore not be subject to
VAT. In the event that Finanzamt Ingolstadt or any other competent tax authority
shall have issued a final and binding decision providing that the transaction
contemplated by this Agreement is subject to VAT, Purchaser shall pay to Seller
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the applicable VAT plus interest charged by the tax authorities, if any, within
one month following the date of the final and binding decision of the tax
authorities; provided, however, that Seller notified Purchaser without delay of
any threatened and ongoing VAT tax inspection and asserts the opinion that
transactions contemplated hereby will not be subject to VAT, and provided
Purchaser or its representatives shall have the opportunity to directly contest
the position of the tax authorities, and discuss and negotiate with the tax
authorities and cooperates with Purchaser if it decides to contest the position
of the tax authorities.
2.2 Payment of Purchase Price.
(a) Closing Payment and Escrow. At the Closing (as defined in
Section 3.1 hereof), Purchaser shall:
(i) pay to Seller an amount equal to EUR 5,365,384.60
(the "CLOSING PAYMENT") to the bank account of Seller at
Volksbank Pfaffenhofen, _____________________; and
(ii) deposit into an escrow account (the "ESCROW
ACCOUNT") EUR 596,153.84 (the "ESCROW AMOUNT"), to be held and
disbursed by Xx. Xxxx-Xxxxxxx Xxxxxxxx (or if Xx. Xxxx-Xxxxxxx
Xxxxxxxx is unable to serve, by another party appointed by
Seller and Purchaser), as escrow agent (the "ESCROW AGENT").
The Escrow Amount shall be held by the Escrow Agent pursuant
to the Escrow Agreement. The Escrow Amount will be subject to
set-off for any indemnification claims arising during the
six-month period commencing on the Closing Date (the "ESCROW
PERIOD"), and as otherwise provided herein and in the Escrow
Agreement.
The Escrow Agreement shall terminate at the
close of business on the last day of the Escrow Period, unless
there are any unresolved indemnification or other claims or
disputes on such date pursuant to which Purchaser may be
entitled to all or a portion of the Escrow Amount. In the
event of any such unresolved claims or disputes, the Escrow
Agreement will continue in force, but any portion of the
Escrow Amount which exceeds the amount for which a claim has
been made or a dispute exists shall be released to Seller,
except as provided in the Escrow Agreement. Seller's liability
for the claims of Purchaser under this Agreement, shall not be
limited to the Escrow Amount.
(iii) The portion of the Purchase Price of EUR
507,950.77 which is allocated to the Sold Inventory (the
"INVENTORY PURCHASE Price") shall be paid by Purchaser in
accordance with the terms and conditions of the Transitional
Supply and Manufacturing Support Services Agreement attached
hereto as Exhibit E.
(b) Earn-Out.
(i) Purchaser shall pay to Seller an additional cash
consideration (the "CONTINGENT CONSIDERATION") in an amount
equal to $950,000 if the sum of revenues from sales of
THINTUNE products listed on SCHEDULE 2.2(B)(I)(1) and
Purchaser's thin client products listed on SCHEDULE
2.2(b)(i)(2) by Purchaser during the 2005 calendar year and by
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Seller in the time period January 1, 2005 until the Closing
Date in Germany, Austria and Switzerland ("DACH"), and Poland,
the Czech Republic, Hungary, Slovakia, Slovenia and Russia
(together with DACH, the "TERRITORY"; and the "EARN-OUT
REVENUES") exceed 2004 calendar year revenues from sales of
thin client products listed on SCHEDULE 2.2(B)(I)(2) by
Purchaser and the 2004 calendar year revenues of esesix
Computer from the sale of THINTUNE products listed on SCHEDULE
2.2(B)(I)(1) in the Territory (the "2004 REVENUES") by
$1,000,000.
(ii) The amount of the Earn-Out Revenues and 2004
Revenues of Purchaser under this Section 2.2(b) shall be
calculated (A) pursuant to US GAAP applied consistently with
Purchaser's past practice, and Earn-Out Revenues and 2004
Revenues of Seller under this Section 2.2(b) shall be
calculated pursuant to the generally accepted accounting
principles pursuant to the German Commercial Code applied
consistently with Seller's past practice, and (B) using the
actual average exchange rate for the quarter that the revenues
are reported; provided, however, that all the Earn-Out
Revenues and 2004 Revenues of Purchaser and Seller shall be
subject to adjustment for credits related to product returns,
price adjustments and non-payment of invoices.
(iii) Contingent Consideration, if any, payable under
Section 2.2(b)(i) shall be payable to Seller within ninety
(90) days after the end of the 2005 calendar year. The Parties
are in agreement that Seller shall be entitled to payment of
Contingent Consideration of $950,000 only if the conditions
pursuant to Section 2.2(b)(i) hereto have been satisfied.
(iv) Seller and Purchaser shall have the right, at
their sole expense, to audit the respective other Party's
records related and limited to the performance under Section
2.4(b)(i) as is necessary to verify the amount of Contingent
Consideration payable, upon at least ten days prior notice, in
a manner not disruptive of the respective Party's business
during normal business hours.
(v) Each of Seller and Purchaser shall provide the
other Party promptly with copies of any information requested
by the Party which is reasonably necessary to confirm or
verify the 2004 Revenues, the Earn-Out Revenues or any other
information or matters addressed in this Section 2.2(b) which
are related to the calculation of the Contingent
Consideration.
(vi) At Closing, Purchaser shall deliver to Seller,
and Seller shall deliver to Purchaser, a calculation of its
respective 2004 Revenues, adjusted as set forth in Section
2.2(B)(II) hereof. Within sixty (60) days after the Closing,
Seller shall have delivered to Purchaser a calculation of its
revenues from sales of THINTUNE products listed on SCHEDULE
2.2(B)(I)(1) in the time period January 1, 2005 until the
Closing Date. Sixty (60) days following the end of the 2005
calendar year, Purchaser shall deliver to Seller a calculation
of the Earn-Out Revenues and of the Contingent Consideration,
if any.
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(vii) In the event that Purchaser and Seller are
unable to agree on the determination of any matter under this
Section 2.2(b), either Purchaser or Seller may deliver to the
other notice in writing setting forth the disputed items and a
proposed resolution of such disputed items (a "DISPUTE
NOTICE"). Seller and Purchaser shall endeavor in good faith to
resolve any disputed items within thirty (30) days of the
receipt of a Dispute Notice. If Seller and Purchaser are
unable to resolve all disputed items within such thirty (30)
day period, they shall mutually appoint within ten (10) days
following the expiration of such thirty (30) day period Ernst
& Young (the "ACCOUNTING ARBITRATOR") to resolve the items
remaining in dispute (the "DISPUTED ITEMS"). The Accounting
Arbitrator shall use all reasonable efforts to provide an
opinion as regards all Disputed Items within thirty (30) days
following its appointment and the determination of the
Accounting Arbitrator in respect of the correctness of each of
the Disputed Items shall be conclusive and binding on Seller
and Purchaser absent manifest error. The scope of the
Accounting Arbitrator's review shall be limited to only the
Disputed Items. All fees and expenses of any Accounting
Arbitrator selected in accordance with this Section 2.2(b)
shall be borne equally by Purchaser and Seller.
ARTICLE III
CLOSING
3.1 Closing. The transfer of the Sold Assets and the Business and the
consummation of the transactions contemplated by this Agreement (the "CLOSING")
shall occur automatically immediately after all the Closing Conditions set forth
in Section 4.1 hereof have been fulfilled or waived by the Parties pursuant to
Section 4.2 hereof. The date of the Closing shall be the "Closing Date".
3.2 Seller's Deliveries. On the Date hereof, Seller shall deliver, or
cause to be delivered, to Purchaser:
(a) Satisfactory evidence that the intellectual property and
copy rights licensed by Seller from its Affiliate eSeSIX
Information-Technologies GmbH are owned by eSeSIX
Information-Technologies GmbH;
(b) a copy of the Escrow Agreement duly executed by Seller;
(c) a copy of the Distribution Agreement duly executed by
Seller;
(d) a copy of the Transitional Supply and Manufacturing
Support Services Agreement duly executed by Seller;
(e) an agreement duly executed by Seller and eSeSIX
Information-Technologies GmbH terminating the license agreement of
January 15, 2004 between eSeSIX Information-Technologies GmbH and
Seller;
(f) signed consent to the transfer of the trademark "THINTUNE"
and "Jstream" as well as of all domains listed on SCHEDULE 1.1(C)
hereto to Purchaser addressed to the relevant authorities;
(g) the calculation of the 2004 Revenues of Seller; and
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(h) a copy of the License Agreement duly executed by Seller.
3.3 Purchaser's Deliveries. On the date hereof, Purchaser shall
deliver, or cause to be delivered, or transfer to Seller:
(a) the Closing Payment per wire transfer of immediately
available funds to the bank account of Seller pursuant to Section 2.2
(a) (i) hereof;
(b) the Escrow Amount per wire transfer of immediately
available funds to the Escrow Account;
(c) a copy of the Escrow Agreement duly executed by Purchaser;
(d) a copy of the Distribution Agreement duly executed by
Purchaser;
(e) a copy of the Transitional Supply and Manufacturing
Support Services Agreement duly executed by Purchaser;
(f) the calculation of the 2004 Revenues of Purchaser; and
(g) a copy of the License Agreement duly executed by
Purchaser.
ARTICLE IV
CLOSING CONDITIONS
4.1 Conditions Precedent. The Closing shall occur when each of the
following conditions ("CLOSING CONDITIONS") have been fulfilled:
(a) The Austrian Share Purchase Agreement has been duly
executed by the parties thereto and notarized by a notary public;
(b) Seller, Purchaser and the Escrow Agent have entered into
the Escrow Agreement;
(c) Seller and Purchaser have entered into the Distribution
Agreement;
(d) Seller and Purchaser have entered into the Transitional
Supply and Manufacturing Support Services Agreement;
(e) the Closing Payment has been credited to the bank account
as specified in Section 2.2 (a)(i) hereof; and
(f) the Escrow Amount has been credited to the Escrow Account.
4.2 Waiver of Closing Conditions.
(a) The Closing Conditions set forth in Sections 4.1(a),
4.1(b), 4.1(c) and 4.1(d) hereof may be waived by Purchaser; and
(b) the Closing Condition set forth in Section 4.1(e), and
4.1(f) may be waived by Seller.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND XX. XXXXXXX
Seller and Xx. Xxxxxxx hereby jointly and severally represent and
warrant to Purchaser, in the form of an independent guarantee (selbstandiges
Garantieversprechen pursuant to Section 311 of the German Civil Code), as of the
Closing Date that:
5.1 Organization. Seller is duly organized and existing under the laws
of Germany. The articles of association of Seller, attached hereto as SCHEDULE
5.1 (I), are presently valid and in force and no changes have been resolved
until the Closing Date. SCHEDULE 5.1 (II) is a true, correct, current, and
complete copy of the commercial register extracts relating to Seller.
5.2 Authorization and Effect of Agreement. Seller has the requisite
corporate power to execute and deliver this Agreement and to perform the
transactions contemplated hereby to be performed by Seller. The execution by
Seller of this Agreement and the performance by Seller of the transactions
contemplated hereby to be performed by Seller have been duly authorized by all
necessary action on the part of Seller's corporate bodies and, if applicable,
holders of the Seller's indebtedness. This Agreement has been duly executed by
Seller and, assuming the due execution of this Agreement by Purchaser,
constitutes a valid and binding obligation of Seller enforceable in accordance
with its terms.
5.3 No Restrictions Against Sale of the Assets. The execution of this
Agreement by Seller does not, and the performance by Seller of the transactions
contemplated hereby to be performed by it will not, (i) conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, (A) the articles of association or bylaws of Seller, or
(B) any Legal Requirement to which Seller or any of the Sold Assets is subject,
or (ii) result in the creation or imposition of any Liens in favor of any third
person or entity upon any of the Sold Assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Seller under any
Legal Requirement in connection with the execution of this Agreement by Seller
or the performance by Seller of the transactions contemplated hereby to be
performed by it.
5.4 Sold Assets.
(a) Seller has good, marketable and exclusive title to all of
the Sold Assets and the valid and enforceable power and unqualified
right to use, sell and transfer to Purchaser, the Sold Assets.
(b) After Closing, Purchaser will have good, marketable and
exclusive title to the Sold Assets, free and clear of all Liens, except
for Liens listed or described on SCHEDULE 5.4 (B).
(c) Except as set forth in SCHEDULE 5.4(C), no Person, other
than Seller, has any rights or interests in the Sold Assets or the
Business.
(d) The Sold Assets include all of the assets, property and
rights, tangible or intangible, required by Purchaser to operate the
Business, as operated by Seller as of December 31, 2004 and immediately
prior to Closing, and to produce, sell, distribute, maintain, design,
enhance and license, and design and develop derivatives of, the
products of the Business, or derivatives thereof.
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(e) All items of the Sold Inventory are in good operating
condition and of a quality usable and saleable in the Ordinary Course
of Business, subject to appropriate and adequate allowances reflected
in the Financial Statements according to the generally accepted
accounting principles pursuant to the German Commercial Code for
obsolete, excess, slow moving and other irregular items. All cost for
items of the Sold Inventory listed in Schedule 1.1(g) hereof are the
actual costs incurred.
5.5 Intellectual Property.
(a) Title. SCHEDULE 5.5 (A) (I) contains a complete and
correct list of all Intellectual Property that is owned by Seller and
primarily related to, used in, held for use in connection with, or
necessary for the conduct of, or otherwise material to the Business
(the "OWNED INTELLECTUAL PROPERTY"). Seller owns or has the right to
use pursuant to license, sublicense, agreement or permission all
Intellectual Property, including all Intellectual Property rights, free
and clear of any Liens (except as set forth on SCHEDULE 5.5(A) (II))
and free from any requirement of any past, present or future royalty
payments, license fees, charges or other payments, or conditions or
restrictions whatsoever. Except as set forth in SCHEDULE 5.5(A) (II),
the Sold Intangible Assets comprise all of the Intellectual Property
and Intellectual Property rights used in and/or necessary to the
conduct and operation of the Business as being conducted by Seller as
of December 31, 2004 and immediately prior to Closing.
(b) Development. Other than "shrink-wrap" and similar widely
available binary code and commercial end-user licenses, to the extent
that any Intellectual Property has been developed or created
independently or jointly by any Person other than Seller for which
Seller has, directly or indirectly, paid, Seller has a written
agreement with such Person with respect thereto, and Seller thereby has
obtained ownership of, and is the exclusive owner of, all such
Intellectual Property and its further development, and associated
Intellectual Property rights to the existing Intellectual Property and
its future development by operation of law or by valid assignment.
(c) Transfer. Except as set forth on SCHEDULE 5.5 (C),
immediately after the Closing, Purchaser will own all of the Owned
Intellectual Property and will have a right to use all other
Intellectual Property, free and clear of any Liens (except as set forth
on SCHEDULE 5.5 (A)(II)) and on the same terms and conditions as in
effect prior to the Closing.
(d) No Infringement. The operation of the Business does not,
and will not, when conducted by Purchaser, infringe or otherwise
conflict with any rights of any Person in respect of any Intellectual
Property. Seller has not received any notice from any Person claiming
that such operation or any act, product, technology or service of
Seller infringes or misappropriates the intellectual property of any
Person (nor does Seller have Knowledge of any claims or any basis
therefor). There have been no assertions to Seller by any Persons
relating to the invalidity or unenforceability of any Intellectual
Property. To Seller's Knowledge, none of the Intellectual Property is
being infringed or otherwise used or available for use, by any other
Person.
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(e) Licensing Arrangements. SCHEDULE 5.5 (E) sets forth all
agreements, arrangements or laws (i) pursuant to which Seller has
licensed Intellectual Property to, or the use of Intellectual Property
is otherwise permitted (through non-assertion, settlement or similar
agreements or otherwise) by, any other Person, and (ii) pursuant to
which Seller has had Intellectual Property licensed to it, or has
otherwise been permitted to use Intellectual Property (through
non-assertion, settlement or similar agreements or otherwise). All of
the agreements or arrangements set forth on SCHEDULE 5.5(E) (A) are in
full force and effect in accordance with their terms and no default
exists thereunder by Seller, or to the Knowledge of Seller after due
inquiry, by any other party thereto, and (B) are free and clear of all
Liens. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such arrangements and
agreements. Seller has delivered to Purchaser true and complete copies
of all licenses and arrangements (including amendments) set forth on
SCHEDULE 5.5 (E). All royalties, license fees, charges and other
amounts payable by, on behalf of, to, or for the account of, the Seller
in respect of any Intellectual Property are disclosed in the Financial
Statements.
(f) No Intellectual Property Litigation or Disputes. No claim
or demand of any Person has been made, nor is there any proceeding that
is pending, or to the Knowledge of Seller after due inquiry,
threatened, nor is there a reasonable basis therefor, which (i)
challenges the rights of Seller in respect of any Intellectual
Property, (ii) asserts that Seller is infringing or otherwise in
conflict with, or is, except as set forth in SCHEDULE 5.5(F), required
to pay any royalty, license fee, charge or other amount with regard to,
any Intellectual Property, or (iii) claims that any default exists
under any agreement or arrangement listed on SCHEDULE 5.5(F). None of
the Intellectual Property is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within
the last five years, whether or not resolved in favor of Seller. There
are no contracts, licenses or agreements between Seller and any other
Person with respect to the Intellectual Property under which there is
any dispute regarding the scope of such agreement or performances under
such agreement, including with respect to any payments to be made or
received by Seller thereunder.
(g) Due Registration, Etc. To the extent deemed necessary or
appropriate by Seller, the Owned Intellectual Property has been duly
registered with, filed in or issued by, as the case may be, the
relevant Patent and Trademark Office, Copyright Office or such other
filing offices, domestic or foreign, and Seller has taken such other
reasonable steps to ensure full protection under any applicable laws or
regulations, and such registrations, filings, issuances and other
actions remain in full force and effect. Seller has no Knowledge of any
necessary steps to protect the Intellectual Property which have not
been taken, which if not taken would jeopardize Seller's rights to the
Intellectual Property. In each case in which Seller has acquired any
Intellectual Property related to the Business from any Person, Seller
has obtained a valid and enforceable assignment sufficient to
irrevocably transfer all rights in such Intellectual Property to Seller
and, to the maximum extent provided for by, and in accordance with,
applicable laws and regulations, Seller has recorded each such
assignment with the relevant governmental authorities.
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(h) Use of Name and Xxxx. SCHEDULE 5.5(H) lists all names and
marks presently used in the Business and, except as separately set
forth in SCHEDULE 5.5(H), there are, and immediately after the Closing
will be, no contractual restriction or limitations pursuant to any
orders, decisions, injunctions, judgments, awards or decrees of any
Governmental Authority on the Purchaser's right to use the names and
marks in the conduct of the Business as carried on by Seller prior to
Closing or as such Business may be extended by Purchaser.
(i) Protection of Information. Except as disclosed on SCHEDULE
5.5 (I), Seller has taken reasonable steps to protect Seller's rights
in Seller's confidential information and trade secrets that it wishes
to protect or any trade secrets or confidential information of third
parties provided to Seller relating to the Business, and, without
limiting the foregoing, Seller has and enforces a policy requiring each
employee and consultant engaged in the Business to execute a
proprietary information/confidentiality agreement and all current and
former employees and consultants of Seller engaged in the Business have
executed such an agreement.
(j) Effect of Agreement. Neither this Agreement nor the
transactions contemplated by this Agreement, including the assignment
to Purchaser expressly, by operation of law or otherwise, of any
contracts or agreements, will result in (i) Purchaser or Seller
granting to any third party any right to or with respect to any
Intellectual Property owned by, or licensed to, any of them, or (ii)
Purchaser being bound by, or subject to, any non-competition or other
Material restriction on the operation or scope of its businesses.
5.6 Principal Customers and Suppliers.
(a) SCHEDULE 5.6(A) contains a true and complete list of the
name and address of each customer that purchased in excess of 5% of
Seller's sales of goods or services of the Business during the twelve
months ending on December 31, 2004, and since that date, no such
customer has terminated its relationship with or adversely curtailed
its purchases from Seller or indicated (for any reason) its intention
so to terminate its relationship or curtail its purchases;
(b) SCHEDULE 5.6(B) contains a true and complete list of each
supplier from whom Seller purchased in excess of 5% of Seller's
purchases of goods or services of the Business during the twelve months
ending on December 31, 2004, and since that date, no such supplier has
terminated its relationship with or adversely curtailed its
accommodations, sales or services to Seller or indicated (for any
reason) its intention to terminate such relationship or curtail its
accommodations, sales or services;
(c) Except as set forth on SCHEDULE 5.6(C), Seller is not
involved in any claim or controversy with any of the customers or
suppliers who are listed on SCHEDULE 5.6(A) or SCHEDULE 5.6(B) and
neither Seller, nor any of its customers or suppliers is in default
with respect to its obligations pursuant to contracts in place between
the respective parties.
5.7 Product Warranties. Except as set forth in SCHEDULE 5.7, (i) Seller
has not given warranties related to products of the Business sold prior to
Closing, whether express or implied, written or oral, and (ii) there are no
pending or threatened claims with respect to any Warranty, and, to Seller's
knowledge, Seller has no liability with respect to any Warranty, whether known
or unknown, absolute, accrued, contingent or otherwise and regardless whether it
became or will become due before, on , or after Closing.
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5.8 Financial Statements.
(a) SCHEDULE 5.8(A) hereto contains true and complete copies
of the unaudited financial statements of Seller at December 31, 2002,
2003, and 2004, including the related balance sheet, profit and loss
statement, cash flow statement and notes for the years then ended (the
"FINANCIAL STATEMENTS").
(b) The Financial Statements fairly present, in all material
respects, the financial condition, the assets and liabilities and
results of operation of Seller, the Business and the Retained Business
as of the dates indicated therein and the results of operations and
changes in the financial position of Seller and the Business for the
periods specified therein, have been prepared in conformity with
generally accepted accounting principles pursuant to the German
Commercial Code (Handelsgesetzbuch) applied on a consistent basis
during the periods covered thereby and prior periods (except in each
case as stated therein). All actual liabilities have been accounted for
in the Financial Statements, and adequate accruals have been made for
uncertain liabilities or threatened losses.
(c) Seller has no liabilities or obligations which would be
required under the accounting principles pursuant to the German
Commercial Code (Handelsgesetzbuch) to be reflected on the balance
sheets of Seller as of the Closing Date, except for liabilities and
obligations (i) reflected or reserved against in the Financial
Statements, (ii) incurred or arising in the Ordinary Course of business
since January 1, 2005, (iii) incurred or arising other than in the
Ordinary Course of business since January 1, 2005 and not, individually
or in the aggregate, Material, or (iv) described on SCHEDULE 5.8(C).
Seller has no threatened liabilities or obligations arising in
connection with the Sold Assets or the Sold Contracts, which
liabilities or obligations are not required to be reflected in the
balance sheet, i.e., are not "bilanzierungsfahig".
(d) SCHEDULE 5.8(D) contains true and complete schedules of
(i) Seller's revenues by product lines for the years ended December 31,
2003 and 2004, (ii) revenues and direct costs of the Business for the
year ended December 31, 2004, and (iii) revenues and margins of the
Business by product line and customers for the years ended December 31,
2003 and 2004.
5.9 Operation of the Business. Except as set forth in SCHEDULE 5.9, (i)
Seller has operated the Business only through Seller and not through any other
divisions or any direct or indirect subsidiary or Affiliate of Seller, and (ii)
no part of the operation of the Business is operated by or through any entity
other than Seller.
5.10 Operation of the Business Since December 31, 2004. Except as
described on SCHEDULE 5.10, since December 31, 2004, Seller has conducted the
operation of the Business in the Ordinary Course, and no change has occurred
which Materially and adversely affects the Sold Assets or the condition
(financial or otherwise), results of operations or prospects of the Business,
nor, to Seller's Knowledge, have any events occurred, nor do there exist any
circumstances which might reasonably be expected to result, either before or
after the Closing Date, in any such change.
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5.11 Income and Other Taxes. Except as set forth on SCHEDULE 5.11:
(a) All Tax Returns required to be filed through and including
the Closing Date in connection with the operations of the Seller's
business are true, complete and correct in all respects and have been
properly and timely filed, including any extensions of time within
which to file any Tax Return, which have been timely filed. No Liens
have been imposed on or asserted against any of the Sold Assets as a
result of or in connection with any failure to pay any Taxes;
(b) All Taxes required to be paid or withheld and deposited
through and including the Closing Date in connection with the Business
have been duly and timely paid or deposited by Seller. Seller has
properly withheld or collected all amounts required by law for income
Taxes and employment Taxes relating to its employees, creditors,
independent contractors and other third parties, for sales Taxes on
sales, and has properly and timely remitted such withheld or collected
amounts to the appropriate Governmental Entity. Seller has no
liabilities for any Taxes for any taxable period ending prior to or
coincident with the Closing Date; and
(c) Seller is not currently being audited or is the subject of
other Action by any Governmental Entity. Seller has not received any
notice from any Governmental Entity of any pending examination or any
proposed deficiency, addition, assessment, demand for payment or
adjustment relating to or affecting Seller, the Business, or the Sold
Assets, and Seller has no reason to believe that any Governmental
Entity may assess (or threaten to assess) any Taxes for any periods
ending on or prior to the Closing Date.
5.12 Employee and Labor Matters.
(a) SCHEDULE 5.12 (A) hereto sets forth a complete and
accurate list of all employees (as defined in accordance with
applicable civil, labor, social security or tax laws) of Seller and its
Affiliates attributed to the Business, including directors and
officers, part-time employees, employees from temporary employment
agencies, employees with pending employment agreements or with
employment agreements with a fixed term, or freelancers (collectively
referred to as the "TRANSFERRED EMPLOYEES").
(b) Except for the Transferred Employees, no employees or
other individuals related to the business of Seller and/or its
Affiliates are considered material to operate the Business nor will
transfer, by operation of law or otherwise, following the consummation
of this Agreement to the Purchaser or any of its Affiliates.
(c) There is no litigation pending or threatened that involves
any Transferred Employee. There is no material matter under discussion
between Seller and any labor union, works council, or other body of
employee representation, nor is there, any strike or work stoppage
relating to the employees of Seller or the Business, and no such strike
or work stoppage has been threatened. SCHEDULE 5.12(C) sets forth each
collective bargaining agreement (Tarifvertrag), shop agreement
(Betriebsvereinbarung), company practice (betriebliche Ubung),
collective promise (Gesamtzusage), or other contract and agreement with
any labor union, works council, or other body of employee
representation relating to the Transferred Employees or otherwise
applicable to the Transferred Employees.
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(d) All Transferred Employees have been duly remunerated in
compliance with all applicable provisions of Law, the relevant
employment contracts and applicable company's policies. Seller has paid
all the remuneration for each of the Transferred Employees for work
performed before and on the Closing Date, including, but not limited to
the monthly salaries, overtime compensation, and all other compensation
attributable to time periods prior to Closing.
(e) SCHEDULE 5.12(E) lists every variable compensation, stock
option, severance pay, vacation, bonus, or other incentive plan, and
any other written or unwritten employee program, agreement, or
arrangement relating to health, pension, life and other insurance, or
any other employee benefit plan, currently or previously adopted,
maintained, sponsored or contributed by Seller or any Affiliate of
Seller for the benefit of any of the Transferred Employees under which
any of the Transferred Employees are eligible to participate, or in
connection with which Seller or any of its Affiliates have or may have
a contingent or non-contingent liability (collectively, the "BENEFIT
PLANS"). SCHEDULE 5.12(E) includes the names of Transferred Employees
or other Persons who are or may be entitled to participate in, or
receive benefits under, any Benefit Plan and the scope and amount of
the respective benefit thereunder.
(f) Any contributions required to be made by Seller or any of
its Affiliates to pension, social, medical or other insurance for the
Transferred Employees have been made, including contributions for all
individuals categorized by Seller as independent, or as employed by any
of its Affiliates, but who would be considered pursuant to applicable
Law as employee transferring to Purchaser or any of Purchaser's
Affiliates.
(g) There are no liabilities of Seller or of any of its
Affiliates with respect to the Benefit Plans, whether absolute,
accrued, contingent, or otherwise, other than those set forth in
SCHEDULE 5.12 (G) (I). The consummation of the transactions
contemplated by this Agreement will not entitle any Transferred
Employee to any payment or compensation, or accelerate the time of
payment of same, or increase the amount of any compensation due to any
Transferred Employee. Except as set forth in SCHEDULE 5.12 (G) (II), in
the six months prior to Closing, there has been no increase of salaries
or of other compensation of any of the Transferred Employees.
(h) All liabilities or obligations for pensions and other
benefits including, without limitation, Christmas or other bonuses,
allowances, and payments for early retirement (Altersteilzeit), are
fully reflected and accrued for in the Financial Statements. All of the
pension liabilities of Seller and of its Affiliates related to
Transferred Employees are funded and all premiums for the funding are
paid until the Closing Date.
5.13 Compliance with Law. Through and including the Closing Date,
Seller (i) has not violated or operated the Business in violation of, and has
not used the Sold Assets in violation of, any Legal Requirement, (ii) to
Seller's Knowledge, has not been alleged to be in violation of any Legal
Requirement, and (iii) has not received any notice of any alleged violation of,
or any citation for noncompliance with, any Legal Requirement.
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5.14 Governmental Approvals. To the best of Seller's Knowledge, Seller
possesses, and is operating in compliance with, all approvals Material to the
operation of the Business.
5.15 No Litigation. There is no outstanding judgment, order, decree,
award, stipulation or injunction of any Governmental Entity or arbitrator
against or Action pending or, to Seller's Knowledge, threatened, against Seller
relating to or affecting the Business or the Sold Assets or affecting Seller's
ability to perform its obligations under this Agreement or under any agreement
or instrument contemplated by this Agreement.
5.16 Transactions with Affiliates. Except as set forth on SCHEDULE
5.16, there are no written or oral contracts or agreements between Seller and
its Affiliates relating to the Business.
5.17 No Insolvency, Liquidation or Winding-Up.
(a) No order has been made or petition presented, or
resolution passed for the insolvency, winding-up or liquidation of
Seller, and there is no outstanding: (i) petition or order for the
insolvency, liquidation or winding-up of Seller; (ii) appointment of an
insolvency administrator over the whole or part of the undertaking of
assets of Seller; (iii) petition or order for administration of Seller;
(iv) voluntary arrangement between Seller and any of its creditors; or
(v) unfulfilled or unsatisfied judgment or court order against Seller
relating to the Business or the Sold Assets.
(b) There are no circumstances which would entitle any Person
to present a petition for commencement of insolvency procedure, the
winding-up or administration of Seller or to appoint an insolvency
administrator or receiver over the whole or any part of the assets of
Seller.
(c) Seller is not deemed unable to pay its debts within the
meaning of applicable law.
(d) Operations of Seller have not been terminated.
(e) Seller is not entering into this Agreement with the intent
to defraud, delay or hinder its creditors, and the consummation of the
transactions contemplated by this Agreement will not have any such
effect.
5.18 Relevant Information. The information with respect to Seller, its
Affiliates and the Business made available to Purchaser by Seller prior to
Closing was complete and accurate and constitutes all information relevant and
necessary for the evaluation of the Business.
5.19 Brokers' Fees. No broker, finder or similar agent has been
employed by or on behalf of Seller in connection with this Agreement or the
transactions contemplated hereby, and Seller has not entered into any agreement
or understanding of any kind with any person or entity for the payment of any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
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5.20 Disclosure. No representation or warranty of Seller in this
Agreement and no information contained in any schedule or other writing
delivered pursuant to this Agreement or at the Closing contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact required to make the statements herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller, in the form of an
independent guarantee (selbstandiges Garantieversprechen pursuant to Section 311
of the German Civil Code), as of the Closing Date that:
6.1 Organization and Good Standing. Purchaser has been duly organized
and is existing as a corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.
6.2 Execution. This Agreement has been duly authorized by all necessary
corporate action on the part of Purchaser, has been duly executed and delivered
by Purchaser and constitutes the legal, valid and binding agreement of Purchaser
enforceable against Purchaser in accordance with its terms.
6.3 No Conflicts. The execution and performance of this Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby will not conflict with or result in the violation of the provisions of
the Certificate of Incorporation or By-laws of Purchaser.
ARTICLE VII
COVENANTS
7.1 Currency Exchange Rate. Excepting as set forth in Section
2.2(b)(ii) hereof, for all purposes under this Agreement, the Parties shall deem
that the currency exchange rate between Euro and US Dollars is 1 EUR = 1.30 $.
7.2 Website. Seller shall provide a prominent link, with the content
approved by the Purchaser, from the main page of Seller's web site (or any
successor web site), from the products page and such other pages as Purchaser
may reasonably request, to Purchaser's web site at xxx.xxxxxxx.xxx for a
two-year-period commencing on the Closing Date.
7.3 Non-Solicitation. Xx. Xxxxxxx and Seller agree that they shall not
indirectly or directly solicit, divert or hire away, or indirectly or directly
attempt to solicit, divert, or hire away, any customers or any person employed
by Purchaser or its Affiliates, except that Seller may hire Xxxxxx Xxxxxx in the
event the employment agreement of Xxxxxx Xxxxxx with Neoware Germany shall
terminate.
7.4 Sufficiency of Sold Assets. Following the Closing, if Seller or
Purchaser determines that Seller has failed to transfer to Purchaser any
tangible or intangible assets or Contracts pertaining to the Business, including
but not limited to properties or rights, and/or any assets necessary for
Purchaser to operate the Business as operated by Seller prior to Closing
(excepting the Excluded Assets) Seller shall promptly take all actions as shall
be necessary, or otherwise reasonably requested by Purchaser, to transfer such
assets, properties and rights to Purchaser, at no cost for Purchaser.
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7.5 Purchaser's Warranty Obligations. Purchaser shall assume
responsibility for, and shall bear the cost of complying with, all Warranties in
existence on the Closing Date with respect to the hardware part of the products
of the Business sold by Seller on or prior to the Closing Date until the
expiration of such Warranties. Purchaser agrees to provide all services required
to correct, repair or replace products or parts thereof covered by the
Warranties in accordance with the terms of the Warranties.
7.6 Non-competition. For a period of four years from the Closing Date,
Seller and Xx. Xxxxxxx shall not conduct any activity directly or indirectly
competing with Purchaser and/or its Affiliates in the Business. In particular,
Seller and Xx. Xxxxxxx shall not conduct, establish acquire, hold, finance or
support, directly or indirectly, any business which would directly or indirectly
compete with Purchaser and/or its Affiliates in the Business, or acquire, hold,
or finance a participation in such a business, or advise or be employed by such
a business; provided, however, that (i) the activities of Seller required to
fulfil its obligations under the Distribution Agreement, the Transitional
Services and the Transitional Supply and Manufacturing Support Services
Agreement, and (ii) the activities of Seller in connection with the Excluded
Product pursuant to Section 7.12 or in connection with the Retained Business
hereof shall not be considered as competing activities. This Section 7.6 shall
not apply to the acquisition of less than 1 % of the shares of companies listed
on a public stock exchange. In the event of breach of this non-competition
restriction by Seller and/or Xx. Xxxxxxx, each of Seller and Xx. Xxxxxxx shall
pay to Purchaser for each occurrence a contractual penalty of USD 1,000,000.
7.7 Necessary Information and Access. Until December 31, 2005,
Purchaser shall have the right to audit at its own expense Seller's financial
statements and books and records covering the time period January 1, 2005 until
the Closing Date. Seller shall provide access to its books and records solely
for the purpose of conducting the audit to an accountant appointed by Purchaser
during its business hours.
7.8 Confidentiality.
(a) The Parties understand and agree that all Proprietary
Information (as defined below) shall be treated as confidential. The
receiving Party shall use the same degree of care as it uses with
regard to its own proprietary information to prevent disclosure, use,
or publication of the disclosing Party's or its Affiliates' Proprietary
Information. Proprietary Information of the originating Party or its
Affiliates shall be held confidential by the receiving Party unless it
is or has been:
(i) obtained legally and freely from a third party
without restriction as to the disclosure of such information;
(ii) made available by the disclosing Party or its
Affiliates for general release independent of the receiving
Party or its Affiliates;
(iii) made public as required by applicable Laws,
court proceedings, or stock exchange regulations; or
(iv) within the public domain or later becomes part
of the public domain as a result of acts by someone other than
the receiving Party or its Affiliates, and through no fault or
wrongful act of the receiving Party or its Affiliates.
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(b) A receiving Party may disclose Proprietary Information of
a disclosing Party or its Affiliates to directors, officers, employees
and agents of the receiving Party, including their respective brokers,
lenders, insurance carriers, or prospective purchasers who have
specifically agreed in writing to nondisclosure in accordance with the
terms and conditions hereof. Any disclosure of Proprietary Information
required by legal process shall only be made after providing the
disclosing Party with notice thereof in order to permit the disclosing
Party to seek an appropriate protective order or exemption. Violation
by a Party or its Affiliates or agents of the foregoing provisions
shall entitle the disclosing Party or its Affiliates, at its option, to
obtain injunctive relief without showing of irreparable harm or injury
and without bond. The provisions of this Section 7.8 will be effective
until the later of (i) the termination date of the Distribution
Agreement between Seller and Purchaser, (ii) the termination date of
the Transitional Supply and Manufacturing Support Services Agreement
between Seller and Purchaser, or (iii) the fifth anniversary of the
Closing Date.
7.9 Expenses. All costs and expenses (including, without limitation,
all legal fees and expenses and fees and expenses of any brokers, finders or
similar agents) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring the same. The costs of
the notarization of this deed shall be shared by Seller and Purchaser at equal
parts.
7.10 Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each of the Parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Legal
Requirements, to consummate and make effective the transactions
contemplated by this Agreement.
(b) If at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this Agreement,
Seller and Purchaser, and the proper officers or directors of Seller
and Purchaser, as the case may be, and Xx. Xxxxxxx shall take or cause
to be taken all such necessary or convenient action and execute and
file, or cause to be executed and filed, all necessary or convenient
documentation.
7.11 Seller-Assumed Support Services. Notwithstanding any other
provision herein to the contrary, Seller shall assume, commencing at the
Closing, all obligations and liabilities of any nature whatsoever arising out
of, relating to, or in connection with the matters set forth in this Section
7.11.
(a) For the three-month period commencing on the Closing Date,
Seller shall have the responsibility for and shall bear the cost of
providing engineering and technical support services, access to
Seller's key personnel and documentation, introductions to vendors and
customers and other similar support (the "TRANSITIONAL SERVICES") to
assist Purchaser with respect to the manufacturing, distribution and
sales of the Products, as set forth in EXHIBIT D hereto, which are
services in addition to the services and activities contemplated by the
Transitional Supply Agreement and the Distribution Agreement and at no
additional cost to Purchaser. Services provided by Seller under this
Section 7.11(a) shall be consistent, in all material respects, with the
quality and manner of performance of similar services provided by or
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made available to support the products of the Business in connection
with Seller's operations prior to the Closing Date. Seller shall use
business practices, standards and internal controls that are
substantially the same as those used by Seller prior to the Closing
Date and consistent with past practices, with only such changes as are
agreed to between Seller and Purchaser.
(b) Seller shall designate at least one contact person within
Seller's organization who is knowledgeable and experienced in the
design, workings, capabilities and use of the products of the Business
who will be responsible for initially responding to inquiries relating
to the support services to be provided on behalf of Purchaser.
7.12 Sale of Excluded Product. Seller shall have the right to continue
to distribute and sell the Excluded Product listed in SCHEDULE 7.12; provided,
however that Seller shall not be permitted to enhance or replace the Excluded
Product with a new product unless the new product is purchased from Purchaser.
Seller shall be prohibited to use the name THINTUNE in connection with the
Excluded Product or any other product.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival.
(a) Notwithstanding any investigation conducted at any time
with regard thereto by or on behalf of Purchaser, the representations
and warranties of Seller contained in this Agreement or in any exhibit
or schedule hereto shall survive the Closing; provided, however, that
(i) the representations and warranties contained in Sections 5.1, 5.2,
5.3 and 5.6, and the related claims for indemnification, shall survive
until the fifth anniversary of the Closing Date; (ii) the
representations and warranties contained in Section 5.12, and the
related claims for indemnification, shall survive six months from the
time the relevant Tax assessments become final and binding
(bestandskraftig), and (iii) all other representations and warranties
of Seller and Purchaser, and related claims for indemnification, shall
survive until the second anniversary of the Closing Date. The
termination of the representations and warranties provided herein shall
not affect the rights of a Party in respect of any claim made prior to
the expiration of the applicable survival period. The agreements and
covenants contained in this Agreement shall survive the Closing Date
indefinitely or in accordance with their terms, if any.
(b) The expiry period for any remedies of Purchaser shall be
interrupted pursuant to Sections 203 et seq. of the German Civil Code
by timely written demand for fulfillment.
8.2 Indemnification.
(a) Seller and Xx. Xxxxxxx shall jointly and severally
(Gesamtschuldnerisch) be liable to defend, indemnify and hold harmless
Purchaser and its Affiliates from and against any Damages arising out
of or resulting from: (i) any inaccuracy in or breach of any
representation or warranty made by Seller in this Agreement or in any
writing delivered pursuant to this Agreement or at the Closing; or (ii)
the failure of Seller and/or Xx. Xxxxxxx to perform or observe fully
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any covenant, agreement or provision to be performed or observed by
Seller or Xx. Xxxxxxx, pursuant to this Agreement or the Transitional
Supply Agreement. In the event of any breach or non-performance of any
representations and warranties or covenants by Seller and/or Xx.
Xxxxxxx, Seller and Xx. Xxxxxxx shall be jointly and severally liable
for putting Purchaser and its Affiliates into the same position that
they would have been in had the respective representation and warranty
or covenant not been breached or been performed (Naturalrestitution),
or, at the election of Purchaser, to pay damages for non-performance
(Schadenersatz wegen Nichterfullung); provided, however, that,
excepting the obligations of Xx. Xxxxxxx pursuant to Sections 7.3, 7.6
and 7.8 hereof, in the event that Seller and Xx. Xxxxxxx are liable to
pay damages under this Agreement, the liability of Xx. Xxxxxxx for
Damages shall be limited to 60 % of each Damage.
(b) Purchaser covenants and agrees to defend, indemnify and
hold harmless Seller from and against any Damages arising out of or
resulting from the failure of Purchaser to perform or observe the
covenants contained in Section 2.2(b) hereof.
8.3 Procedures. If either Party seeks indemnification under this
Article VIII, it shall give notice ("CLAIM NOTICE") to the other Party of the
basis of the claim (the "CLAIM") (i) within a reasonable time after discovery of
the facts, and (ii) in any event, within the time periods set forth in Section
8.1, provided that the failure to give such notice shall not relieve the
indemnifying Party of any liability hereunder except to the extent that the
indemnified Party is materially adversely prejudiced by such failure. The
indemnifying Party shall give notice to the indemnified Party within thirty (30)
days after receipt of the notice requested by this Section 8.3 advising whether
it (i) acknowledges its obligation to indemnify the indemnified Party, or (ii)
disputes its obligation to indemnify the indemnified Party. If the indemnifying
Party acknowledges its indemnification obligation with respect to the Claim, and
(i) such Claim is based upon an asserted liability or obligation to a person or
entity that is not a Party to this Agreement (a "THIRD PARTY CLAIM"), the
indemnifying Party shall have the right to defend or settle such Third Party
Claim subject to the terms and conditions of Section 8.4 hereof, or (ii) if such
Claim is not a Third Party Claim, the indemnified Party shall be entitled to
immediate satisfaction of such Claim. If the indemnifying Party does not notify
the indemnified Party within fifteen (15) business days following receipt of
notice of a Claim that is not a Third Party Claim that it disputes such Claim,
such Claim shall be deemed a liability of the indemnifying Party, and the
indemnifying Party shall pay the amount of the Claim on demand by the
indemnified Party, or in the case of any notice in which the amount of the Claim
is estimated, on such later date when the amount of the Claim is finally
determined. If the indemnifying Party disputes the Claim in a timely manner as
set forth herein, the indemnifying Party and the indemnified Party shall proceed
in good faith to negotiate a resolution of the dispute, or, if necessary, to
resolve the dispute as set forth in Section 9.5 hereof.
8.4 Third Party Claims.
(a) The indemnifying Party shall have thirty (30) days after
receipt of the Claim Notice to undertake, conduct and control, through
counsel satisfactory to the indemnified Party, and at the indemnifying
Party's expense, the settlement or defense of a Third Party Claim, and
the indemnified Party shall cooperate with the indemnifying Party in
connection therewith, provided that (i) the indemnifying Party shall
permit the indemnified Party to participate in such settlement or
defense through counsel chosen by the indemnified Party, provided that
21
the fees and expenses of such counsel shall not be borne by the
indemnifying Party, and (ii) the indemnifying Party shall not settle
any Third Party Claim without the indemnified Party's consent. So long
as the indemnifying Party is vigorously contesting any such Third Party
Claim in good faith, the indemnified Party shall not pay or settle such
claim without the indemnifying Party's consent, which consent shall not
be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, if the indemnifying Party assumes control of such defense,
and there exists a conflict of interest between the interests of the
indemnifying Party and those of the indemnified Party with respect to
such Third Party Claim, the indemnified Party may retain counsel
satisfactory to it and the reasonable fees and expenses of such counsel
to the indemnified Party shall be paid by the indemnified Party.
(b) If the indemnifying Party does not notify the indemnified
Party within thirty days after receipt of the Claim Notice that it
elects to undertake the defense of the Third Party Claim described
therein, the indemnified Party shall have the right to contest, settle
or compromise the Third Party Claim in the exercise of its reasonable
discretion, on behalf of and for the account and risk of the
indemnifying Party; provided that the indemnified Party shall notify
the indemnifying Party of any compromise or settlement of any such
Third Party Claim.
(c) Seller shall not be entitled to assume the defense for any
Third Party Claim (and shall be liable for the reasonable fees and
expenses incurred by the Purchaser in defending such claim) if the
Third Party Claim seeks an order, injunction or other equitable relief
or relief for other than money damages against Purchaser which
Purchaser determines, after conferring with its counsel, cannot be
separated from any related claim for money damages and/or which, if
successful, would adversely affect the Sold Assets, the Business, or
the properties or prospects of the Business.
8.5 Tax Matters. Seller shall indemnify and hold Purchaser and its
Affiliates harmless from and against any and all Taxes which are or may become
due or are claimed from Purchaser or any of its Affiliates with respect to
business activities of Seller or its Affiliates for any Pre-Closing Tax Period.
If the indemnification payment by Seller is considered, by any applicable Law,
income of Purchaser or its respective Affiliate, or is otherwise subject to any
Taxes payable by Purchaser or its respective Affiliate, Seller shall, upon the
first written demand of Purchaser, pay such additional amounts as may be
necessary to ensure that, after the payment of such Taxes by Purchaser or its
respective Affiliate on Seller' initial indemnification payment (and all
payments of Taxes to be made by Purchaser or its respective Affiliate with
respect to the payment of any and all such additional amounts by Seller),
Purchaser or its respective Affiliate receives the net amount equal to the full
amount they would have received had no Taxes been imposed on account of Seller'
initial indemnification payment, or any payment of any such additional amounts,
by Seller.
8.6 Limitation on Amount.
(a) Seller and Xx. Xxxxxxx shall not be liable for claims made
under this Article VIII until the aggregate amount of the Damages
incurred by Purchaser shall exceed $50,000, in which event the
indemnification obligations of Seller and Xx. Xxxxxxx shall apply to
the amount of all claims made under this Article VIII; provided,
however, that Seller and Xx. Xxxxxxx shall not be liable in the
aggregate pursuant to this Article VIII for an amount in excess of EUR
5,961,538.46, plus the amount, if any, of the Contingent Consideration
paid to Seller.
22
(b) The liability of Seller and of Xx. Xxxxxxx in connection
with his obligations pursuant to Section 7.6 and 7.8 hereof shall not
be subject to any limitations.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (i)
if delivered personally (including by overnight express or messenger), upon
delivery, (ii) if delivered by registered or certified mail (return receipt
requested), upon the earlier of actual delivery or three days after being
mailed, or (iii) if given by telecopy, upon confirmation of transmission by
telecopy, in each case to the Parties at the following addresses:
(a) If to the Purchaser, addressed to:
Neoware Systems, Inc.
000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Chairman and
Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
XxXxxxxxxx, Keen & Xxxxxxx
Radnor Court, Suite 160
000 X. Xxxxxx-Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esquire
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Day
Xxxxxxxxxxxxxxxxxxxx 00
00000 Xxxxxx
Xxxxxxx
Attention: Xxxxxxx X. Xxxxx, Esquire
Facsimile: (49) (00) 0000-00000
(b) If to Seller, addressed to:
eSeSIX Computer GmbH
Xxxxx-Xxxx 0
00000 Xxxxxxxxxxxx
Xxxxxxx
Attn: Xxxxxxxxx Xxxxxxx, Managing Director
Facsimile: (49) (8441) 279 101
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With a copy to:
Xxxxx Xxxxxxx
Xxxxx-Xxxx 0
00000 Xxxxxxxxxxxx
Xxxxxxx
Facsimile: (49) (8441) 890 299
(c) If to Xx. Xxxxxxx, addressed to:
Xxxxxxxxx Xxxxxxx
Xxx Xxxxxxx 0
00000 Xxxxxxxxxxxx
Xxxxxxx
9.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Federal Republic of Germany without giving
effect to its conflict of laws provisions.
9.3 Controlling Language. The English language version of this
Agreement shall be controlling in all respects; provided that where a German
term has been inserted in parentheses and/or italics it alone (and not the
English term to which it relates) shall be authoritative for the purpose of the
interpretation of the relevant English term in this Agreement.
9.4 Conflicts. If and to the extent a conflict arises between the
contents of this Agreement and any document or agreement entered into in
connection with this Agreement, the terms of this Agreement shall prevail.
9.5 Dispute Resolution. All disputes arising out of or in connection
with this Agreement shall be brought forth by the Parties on their respective
behalf and on behalf of their respective Affiliates, and shall be finally
settled by arbitration under the Rules of Arbitration of the International
Chamber of Commerce (the "ICC RULES") by three arbitrators appointed in
accordance with the ICC Rules in effect at the time of application. The language
of the arbitral proceedings shall be English. The place of arbitration shall be
Munich.
9.6 Entire Agreement. This Agreement, including the annexes and
schedules attached hereto and other documents referred to herein, contains the
entire understanding of the Parties hereto in respect of its subject matter and
supersedes all prior and contemporaneous agreements and understandings, oral and
written, between the Parties with respect to such subject matter.
9.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs and
assigns; provided, however, that Seller shall not directly or indirectly
transfer or assign any of Seller's rights or obligations hereunder in whole or
in part without the prior written consent of Purchaser. Subject to the
foregoing, this Agreement is not intended to benefit, and shall not run to the
benefit of or be enforceable by, any other person or entity other than the
Parties hereto and their permitted successors and assigns.
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9.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same Agreement.
9.9 Recitals, Schedules, Exhibits and Annexes. The recitals, schedules,
exhibits and annexes to this Agreement are incorporated herein and, by this
reference, made a part hereof as if fully set forth at length herein.
9.10 Construction. The article, section and subsection headings used
herein are inserted for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. As used in this Agreement, the
masculine, feminine or neuter gender, and the singular or plural, shall be
deemed to include the others whenever and wherever the context so requires. For
the purposes of this Agreement, unless the context clearly requires, "or" is not
exclusive.
9.11 Amendments and Supplements. This Agreement may be amended or
supplemented or the performance of a provision hereof waived only by an
instrument in writing executed and delivered by a duly authorized director or
officer or attorney-in-fact of each of the Parties hereto, including any
amendment to this provision. If required by applicable Laws, such amendment,
supplement or waiver shall be notarized.
9.12 Severability. Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding, unless to do so
would alter substantially the intended effect of this Agreement, in which case
the remaining provisions or portions of this Agreement shall be read together so
as to give effect to the extent possible to the intentions of the Parties. In
the event the Parties hereto inadvertently did not address certain issues in
this Agreement which subsequently become relevant (Vertragslucke), the
unaddressed issue shall be handled so as to give effect to the extent possible
to the intentions of the Parties as reflected in this Agreement.
The Parties agree that with notarization of this Agreement, the condition
precedent set forth in Section 4.1(a) of the Austrian Share Purchase Agreement
has been fulfilled.
The notary has informed the persons appearing that (i) the parties represented
by them are jointly liable for the costs of the notarization of this purchase
agreement deed, and (ii) he has not advised on tax matters.
This deed, including the attachments (Anlagen) EXHIBIT A, EXHIBIT B, EXHIBIT C
together with its addenda (only as far they bear the remark "read-out" by the
notary), EXHIBIT D, EXHIBIT E (together with Attachments C through F), and
EXHIBIT F thereto, was read aloud to the parties by the acting notary. As far as
reading aloud was not mandatory according to Section 14 of the German Code of
Recording (Beurkundungsgesetz) (i.e., attachments not mentioned explicitly
above), the parties declare that they have acknowledged the contents of these
attachments and they waive to have these attachments read aloud by the notary.
Instead of being read aloud, these attachments were signed by the parties on
each page.
25
This deed was approved by the persons appearing and executed by the persons
appearing and the notary each with their own hand on the date first written
above.
IN WITNESS WHEREOF, each of the Parties hereto has executed this Agreement, or
has caused this Agreement to be executed on its behalf by a representative duly
authorized, all as of the date first above set forth.
NEOWARE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------
Title: Chief Financial Officer
------------------------------
ESESIX COMPUTER GMBH
By: /s/ Xxxxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxxx
------------------------------
Title: Managing Director
------------------------------
XXXXXXXXX XXXXXXX
By: /s/ Xxxxxxxxx Xxxxxxx
------------------------------
26
EXHIBIT A
DEFINITIONS
Unless otherwise defined herein or the context otherwise requires, the
terms defined in this EXHIBIT A shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined. Unless otherwise indicated, any reference
herein to a Section, Article, Exhibit or Schedule shall mean the applicable
section, article, annex or schedule of or to this Agreement.
"2004 REVENUES" shall have the meaning as set forth in
Section 2.2(b)(i) hereof.
"ACCOUNTING ARBITRATOR" shall have the meaning as set forth in
Section 2.2(b)(vi) hereof.
"ACTION" shall mean any actual or threatened claim, action, suit,
arbitration, hearing, inquiry, proceeding, complaint, charge or investigation by
or before any Governmental Entity or arbitrator and any appeal from any of the
foregoing.
"AFFILIATE" shall mean "verbundenes Unternehmen," as defined in
Sections 15 et seq. of the German Stock Corporation Act (AktG).
"AGREEMENT" shall mean this Asset Purchase Agreement, together with all
schedules and exhibits hereto.
"APPROVAL" shall have the meaning as set forth in Section 1.1(c)
hereof.
"ASSUMED LIABILITIES" shall have the meaning as set forth in
Section 1.2 hereof.
"AUSTRIAN SHARE PURCHASE AGREEMENT" shall mean the share purchase and
transfer agreement between Xx. Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxx and Xxxxxxx Federa
and Purchaser in connection with all shares in eSeSIX Information-Technology
GmbH, an Austrian limited liability company.
"BENEFIT PLANS" shall have the meaning as set forth in Section 5.12(e)
hereof.
"BUSINESS" shall have the meaning as set forth in Section A of the
recitals.
"CLAIM" shall have the meaning as set forth in Section 8.3 hereof.
"CLAIM NOTICE" shall have the meaning as set forth in Section 8.3
hereof.
"CLOSING" shall have the meaning as set forth in Section 1.3 hereof.
"CLOSING CONDITIONS" shall have the meaning as set forth in Section 4.1
hereof.
"CLOSING DATE" shall have the meaning as set forth in Section 3.1
hereof.
"CLOSING PAYMENT" shall have the meaning as set forth in
Section 2.2 (a)(i) hereof.
"CONTINGENT CONSIDERATION" shall have the meaning as set forth in
Section 2.2(b)(i) hereof.
27
"CONTRACTS" shall mean all contracts, agreements (including, without
limitation, employment and non-competition agreements), leases (whether real or
personal property), commitments, instruments, guarantees, bids, orders and
proposals.
"DACH" shall have the meaning as set forth in Section 2.2(b)(i) hereof.
"DAMAGES" shall mean any and all losses, liabilities, obligations,
costs, expenses, damages or judgments of any kind or nature whatsoever
(including consequential damages (Mangelfolgeschaden), reasonable attorneys',
accountants' and experts' fees, disbursements of counsel, and other costs and
expenses incurred pursuing indemnification claims under Article VIII hereof).
"DISPUTED ITEMS" shall have the meaning as set forth in
Section 2.2(b)(vii) hereof.
"DISPUTE NOTICE" shall have the meaning as set forth in
Section 2.2(b)(vii) hereof.
"DISTRIBUTION AGREEMENT" shall mean the Distribution Agreement in the
form attached hereto as EXHIBIT C.
"EARN-OUT REVENUES" shall have the meaning as set forth in
Section 2.2(b)(i) hereof.
"ESCROW ACCOUNT" shall have the meaning as set forth in
Section 2.2(a)(ii) hereof.
"ESCROW AGENT" shall have the meaning as set forth in
Section 2.2(a)(ii) hereof.
"ESCROW AGREEMENT" shall mean the form of escrow agreement attached
hereto as EXHIBIT B.
"ESCROW AMOUNT" shall have the meaning as set forth in
Section 2.2(a)(ii) hereof.
"ESCROW PERIOD" shall have the meaning as set forth in
Section 2.2(a)(ii) hereof.
"EXCLUDED ASSETS" shall have the meaning as set forth in Section 1.5
hereof.
"EXCLUDED PRODUCT" shall have the meaning as set forth in
Section 1.5(b) hereof.
"FINANCIAL STATEMENTS" shall have the meaning as set forth in
Section 5.8(a) hereof.
"GOVERNMENTAL ENTITY" shall mean any local, state, federal or foreign
(i) court, (ii) government, or (iii) governmental department, commission,
instrumentality, board, agency or authority, including, without limitation, the
taxing authorities.
"ICC RULES" shall have the meaning as set forth in Section 9.5 hereof.
"INTELLECTUAL PROPERTY" shall mean all patents, trademarks, logos,
trade names, copyrights and mask works, and all registrations, applications and
associated goodwill for each of the foregoing, and all computer software,
computer programs, computer databases and related documentation and materials,
data, domain names, documentation, trade secrets, confidential business
information (including ideas, formulas, compositions, inventions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, designs, plans, proposals and technical data, financial,
marketing and business data, customer and supplier data, pricing and cost
information) and other intellectual property rights (in whatever form or
medium), all of which are attributable to and/or used within the Business prior
to Closing.
28
"INVENTORY PURCHASE PRICE" shall have the meaning as set forth in
Section 2.1(iii) hereof.
"KNOWLEDGE" shall mean (a) the actual knowledge of any of the
executives of Seller, including but not limited to Xx. Xxxxxxx, Xxxx Xxxxx and
Xxxxxx Xxxxxx, and (b) the knowledge that any of such persons would be
reasonably expected to have after making inquiry of those persons employed by
such party who would reasonably be expected to have knowledge of the issue in
question.
"LEGAL REQUIREMENT" shall mean any statute, law, ordinance, rule,
regulation, permit, order, writ, judgment, injunction, decree or any award
issued, enacted or promulgated by any Governmental Entity or any arbitrator.
"LICENSE AGREEMENT" shall mean the agreement attached hereto as
EXHIBIT F.
"LIEN" shall mean all liens, mortgages, assessments, security
interests, easements, claims, pledges, trusts, options or other charges,
encumbrances or restrictions.
"MATERIAL" shall mean any event, change or effect that is (or could
reasonably be expected to be) adverse to the Sold Assets or the Business or to
Purchaser's and Affiliates' ability to continue to operate the Business as
operated prior to the Closing, and having in the aggregate an adverse effect in
an amount reasonable estimated by Purchaser to be liquidated at more than
EUR 10,000.
"XX. XXXXXXX" is Xxxxxxxxx Xxxxxxx.
"NEOWARE GERMANY" shall have the meaning as set forth in Section C of
the recitals.
"ORDINARY COURSE" shall mean, when used with reference to Seller, the
ordinary and normal course of the operation of the Business, consistent with
past practices.
"OWNED INTELLECTUAL PROPERTY" shall have the meaning as set forth in
Section 5.5 (a) hereof.
"PARTY" shall mean each of Seller, Purchaser and Xx. Xxxxxxx.
"PARTIES" shall mean Seller, Purchaser and Xx. Xxxxxxx together.
"PERSON" shall mean all natural persons, corporations, business trusts,
associations, companies, partnerships and joint ventures.
"PRE-CLOSING TAX PERIOD" shall mean any Tax period (or portion thereof)
ending on or before the Closing Date.
"PROPRIETARY INFORMATION" shall mean the information created,
transferred, recorded, or employed as part of, or otherwise resulting from the
activities undertaken pursuant to the Agreement and any schedules and exhibits
thereto, which constitutes the confidential, proprietary, or trade secret
information of the disclosing Party or its Affiliates. Proprietary Information
may be of, but not limited to, a business, organizational, technical, financial,
29
marketing, operational, regulatory, or sales nature and shall include, without
limitation, any and all source codes and information relating to services,
methods of operation, price lists, customer lists, technology, designs,
specifications, or other proprietary information of the business or affairs of a
Party or its Affiliates. Following the Closing, all Proprietary Information
related the Business shall be considered Proprietary Information of Purchaser.
"PURCHASER" shall mean Neoware Systems, Inc.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.1
hereof.
"RETAINED BUSINESS" shall mean the business of Seller of distributing
and selling network communication products but specifically excluding the sale
of any stand-alone thin client hardware product, software product that converts
a personal computer into a thin client, or a bundled thin client hardware and
software product (with software meaning any management, operating system or
terminal emulation software) and performing its obligations under the
Distribution Agreement, the Transition Services and the Transitional Supply and
Manufacturing Support Services Agreement.
"RETAINED LIABILITIES" shall have the meaning as set forth in
Section 1.6 hereof.
"SOLD ASSETS" shall have the meaning as set forth in Section B of the
recitals.
"SOLD INVENTORY" shall have the meaning as set forth in Section 1.1(g)
hereof.
"SOLD INTANGIBLE ASSETS" shall have the meaning as set forth in
Section 1.1(c) hereof.
"SOLD TANGIBLE ASSETS" shall have the meaning as set forth in
Section 1.1(a) hereof.
"TAX" shall mean (i) any net income, sales, use, value added, transfer,
profits, withholding on amounts paid to or by Seller, payroll, employment,
excise, severance, stamp, occupation, premium, property tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or additional
amount imposed by any Taxing Authority, (ii) any liability of Seller for the
payment of any amounts of any of the foregoing types as a result of being a
member of an affiliated, consolidated, combined or unitary group, or being a
party to any agreement or arrangement whereby liability of Seller for payment of
such amounts was determined or taken into account with reference to the
liability of any other entity, and (iii) any liability of Seller for the payment
of any amounts as a result of being a party to any Tax sharing agreements or
arrangements (whether or not written) binding on Seller or with respect to the
payment of any amounts of any of the foregoing types as a result of any express
or implied obligation to indemnify any other person or entity.
"TAX RETURN" shall mean any report, estimate, declaration of estimated
or self-calculated Tax, information statement, form, and return relating to, or
required to be filed in connection with, any Taxes, including, without
limitation, any information return or report regarding backup withholdings and
other payments to third parties or Governmental Authorities.
"TERRITORY" shall have the meaning as set forth in Section 2.2(b)(i)
hereof.
"TRANSFERRED EMPLOYEES" shall have the meaning as defined in
Section 5.12 hereof.
30
"TRANSITIONAL SERVICES" shall have the meaning as set forth in
Section 7.11(a) hereof.
"TRANSITIONAL SUPPLY AND MANUFACTURING SUPPORT SERVICES AGREEMENT"
shall mean the agreement in the form attached hereto as EXHIBIT E.
"THIRD-PARTY CLAIM" shall have the meaning set forth in Section 8.3
hereof.
"WARRANTIES" shall have the meaning as set forth in Section 1.2 hereof.
31
EXHIBIT B
ESCROW AGREEMENT
32
EXHIBIT C
DISTRIBUTION AGREEMENT
33
EXHIBIT D
TRANSITIONAL SERVICES
Transitional Services to be provided by Seller shall include the following:
1. Provide all documentation of products of the Business acquired including but
not limited to:
o All engineering, manufacturing, tech support and customer databases
related to documentation, procedures, RMA, customer, engineering
problem reports, etc. including access in electronic and hard copy
format.
o All documentation for software production environment. Provide
pre-installed development environment (hardware and software)
including any build automation or scripts, such that Neoware can
reproduce any production image exactly by following Thintunes's
current release procedures. All software images should be in a
single library with clearly designated finished goods part numbers.
o Provide any software enhancements that have been provided to any
vendor that are to be installed at time of manufacture.
Documentation must describe exactly how to reproduce and/or modify
the custom image.
o All manufacturing, packaging, process, and testing documentation (as
well as instructions), and any owned tooling.
2. Provide all hardware and equipment dedicated to design, manufacture and
testing of thin client products.
3. Provide (two of each) complete thin client system sufficient to continue
development and testing of thin client products. Include ability to build the
final images from source code of all shipping products including, but not
limited to, source code, management tools, build procedures and scripts, and
build computers.
4. Provide complete software test procedures used to validate software prior to
release, including test scripts and manual test plans. Also provide documented
results, including exceptions and anomalies, of testing all software currently
in production.
5. Provide all vendor introductions and facilitate meetings.
6. Provide customer introductions and facilitate meetings.
7. Provide required training to Neoware operations, support, and development
teams on building and maintaining thin client S/W (including management system),
and the building, servicing and supporting of Thintune products.
8. Provide any other support including access to employees, documentation, third
party providers, etc. necessary to understand all technology, product,
customers, etc. acquired or licensed as part of the transaction.
9. Provide list of all finished goods part numbers for price and cost lists.
Cost list must be rolled up to the finished goods part numbers as placed on
customer PO's.
34
10. Provide list of all inventory as of date of close, any costs due for
remaining inventory and a weekly inventory reporting update of quantities.
11. Provide as of closing date backlog list with Customer PO#, name of products
sold, and applicable price.
12. For each finished goods part number will need complete sets of all current
manufacturing bills of material with both Thintune and manufacturing part
numbers. Will also require manufacturing procedures and approved vendor lists
for all components purchased.
13. Provide a list of all manufacturing equipment used in the production
process, as well as all ODM's, subcontractors, outsource providers etc. Need to
understand what services are being provided, if any, by such entities.
14. Transfer all computer systems used in the Thintune operation (manufacturing,
development, tech support, sales, etc.) today.
35
EXHIBIT E
TRANSITIONAL SUPPLY AND MANUFACTURING SUPPORT SERVICES AGREEMENT
36
EXHIBIT F
LICENSE AGREEMENT
37
