Exhibit 2.3
Deed-Role-No.: ___________/1998
AGREEMENT OF PURCHASE AND TRANSFER OF GMBH SHARES
dated as of November 19, 1998
among
DATA I/O CORPORATION,
DATA I/O EUROPEAN OPERATIONS GMBH
and
SHAREHOLDERS OF SMS HOLDING GMBH
SET FORTH IN SECTION 1.1
Today this
nineteenth day of November nineteen hundred ninety eight
- 19.11.1998 -
Appeared before me,
Xx. Xxxxxxx Xxxxxx
Notary with the official seat in 00000 Xxxxxx and, the office Briennerstr. 25,
in the premises Xxxxxxxxxxx. 00, 00000 Xxxxxx:
1. Dr. Xxxxxx Xxxxxx, born: 05.10.1963, business address: Xxxxxxxx
Xxxx(xxxx)x 00, 00000 Xxxxxx, here not acting in his own name,
but in the name of
(a) Data I/O European Operations GmbH, a German limited liability
company with its registered place of business in Grafelfing (HRB Munich
103439) (,,Purchaser"), subject to the attached power of attorney dated
19.11.1998
(b) Data I/O Corporation, a Washington corporation (,,DAIO"), subject
to the attached power of attorney dated 18.11.1998.
The powers were presented in fax copy. The originals of the powers
shall be sent to the Notary.
2. Gotz Steudel, born: 27 April 1942, residing at: Xx Xxxxxxxxx 00,
X-00000 Xxxxxxx, identified by German Identity Card No.:
9336025222, here acting
(a) in his own name,
(b) as well as in the name of
- Xxxxx Xxxxxxx, born: 21 July 1967, residing at: Xxxxxxxxxxxx. 00,
X-00000 Xxxxxxxxxx,
- Xxxxxx Xxxxxxx, born: 23 September 1973, residing at:
Xx Xxxxxxxxx 00, X-00000 Xxxxxxx,
subject to the attached powers of attorney dated 14.11.1998.
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3. Antoine Issaverdens, born: 20 November 1941, residing at: 00, Xxxxxx
Xxxxxxx, X-00000 Xxxxx, personally known to me, here acting
(a) on his own name, as well as
(b) in the name of
- Nicolas ver Xxxxx, born: 21 August 1953, residing at: 20, Cite
Malesherbes, F-75009 Paris,
- Dominique Peninon, born: 21 February 1948, residing at: 00, Xxx
Xxxxxxxx, X-00000 Xxxxx,
- Xxx. Xxxxxxxx Fesnau, born: 16 February 1962, residing at: 00, Xxxxxx
Xxxxx Xxxx, X-00000 Xxxxx,
- Xxxxx Commun de Placement a Risque Alpha Ventures IV, a French
partnership (,,Alpha IV"),
- Fonds Commun de Placement a Risque Alpha Ventures V, a French
partnership (,,Alpha V"),
- Ste civile FINAB, a French civil law partnership (,,Finab")
(registered at the Paris Commercial Register D 348 155 508),
- Xxxxxx Xxxxxxx, born: 19 October 1960, residing at: Am Xxxxxxxxx 00,
X-00000 Xxxxxx,
- Xxxx Xxxxxxxx, born: 06 February 1961, residing at: Xxxxxxxxxx. 00,
X-00000 Xxxxxxxxxxx-Xxxxxxxxxxxxx,
- Xxxxxx Xxxxxxx, born: 03 October 1964, residing at: Schulthei(beta)-
Xxxxxxx-Xxx. 0, X-00000 Xxxxxx,
- Xxxxxx Xxxxxxx, born: 08 May 1968, residing at: Xxxxxxxxxxxxx 00,
X-00000 Xxxxxxxx,
subject to the attached powers of attorney. Xx. Xxxxxxx'x power was
presented in fax copy. The original of this power shall be sent to the Notary.
(Messrs. X. Xxxxxxx, X. Xxxxxxx, X. Xxxxxxx, Adamski, Schlegel, Schuler,
Tschogl, ver Xxxxx, Peninon and Issaverdens, and Mrs. Fesnau, together with
Alpha IV, Alpha V and Finab are jointly referred to as ,,Shareholders" and
individually referred to as a ,,Shareholder.")
The Appeared requested the notarization of the following declarations:
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AGREEMENT (,,AGREEMENT") OF
PURCHASE AND TRANSFER OF GMBH SHARES
RECITALS
A. Shareholders own beneficially and of record 100% of the issued and
outstanding nominal share capital of Company (as defined in Section 1.1).
B. DAIO desires to purchase, and Company desires to sell, the business
and assets of Company related to the design, development, manufacture, sale or
distribution of any device or system used to program programmable integrated
circuits (,,IC Programmer Products Business") in a series of three transactions.
C. In the first transaction, prior to execution of this Agreement DAIO
purchased all of the intellectual property and related rights of
SMS-Mikrocomputer-Systeme GmbH, a wholly-owned subsidiary of Company registered
with the Commercial Registry at the Amtsgericht [local court] Ravensburg under
number HRB 585W (,,Mikrocomputer"), pursuant to the ,,Subsidiary Technology
Purchase Agreement" (Deed No. _______/1998 of the acting notary). In the second
transaction, prior to the execution of this Agreement DAIO purchased all of the
Excalibur intellectual property and related rights currently being developed by
Company and Company retained a license to such Excalibur intellectual property
in Germany, Austria, Lichtenstein and the predominantly German-speaking portions
of Switzerland and Italy pursuant to the ,,Excalibur Technology Purchase
Agreement" (Deed No. _______/1998 of the acting notary) which, together with the
Subsidiary Technology Purchase Agreement, are referred to as the ,,Related
Agreements."
D. In the third transaction, after execution of the Related Agreements,
Purchaser desires to purchase, and Shareholders desire to sell, all of the
shares of Company's nominal share capital owned by Shareholders on the terms and
conditions set forth in this Agreement.
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AGREEMENT
1. COMPANY; PURCHASE AND SALE OF SHARES
1.1 The Shares. SMS Holding GmbH ("Company") is registered with the
Commercial Registry at the Amtsgericht [local court] Ravensburg under number
HRB 596W with a nominal share capital in the amount of DM 1,500,000. The
registered seat of Company is Wangen (Allgau). This nominal share capital is
being held as follows:
Gotz Steudel: with shares in the nominal amount of DM 200,000.
DM 31,700.
DM 127,000.
DM 6,300.
Xxxxx Xxxxxxx: with shares in the nominal amount of DM 5,800.
DM 23,000.
DM 1,200.
Xxxxxx Xxxxxxx: with shares in the nominal amount of DM 5,800.
DM 23,000.
DM 1,200.
Xxxxxx Xxxxxxx: with shares in the nominal amount of DM 20,200.
DM 81,000.
DM 3,800.
Xxxx Xxxxxxxx: with shares in the nominal amount of DM 5,800.
DM 23,000.
DM 1,200.
Xxxxxx Xxxxxxx: with shares in the nominal amount of DM 5,800.
DM 23,000.
DM 1,200.
Xxxxxx Xxxxxxx: with shares in the nominal amount of DM 1,400.
DM 5,600.
DM 500.
Nicolas ver Xxxxx: with a share in the nominal amount of DM 8,300.
Dominique Peninon: with a share in the nominal amount of DM 4,100.
Antoine Issaverdens: with shares in the nominal amount of DM 2,100.
DM 1,000.
Xxx. Xxxxxxxx Fesnau: with a share in the nominal amount of DM 3,100.
Alpha IV: with shares in the nominal amount of DM 6,800
DM 166,600.
Alpha V: with shares in the nominal amount of DM 27,900.
DM 60,400.
DM 86,700.
DM 260,000.
DM 260,000.
Finab: with shares in the nominal amount of DM 6,500.
DM 4,000.
DM 2,000.
DM 1,500.
DM 1,500.
The share capital has been fully paid up.
1.2 Purchase and Sale. Shareholders do hereby sell all outstanding shares
in Company (the ,,Shares"), as described in Section 1.1 (a) - (n) with a nominal
value of DM 1,500,000, to Purchaser. Shareholders do hereby transfer all right,
title and interest in all of the Shares to Purchaser. Purchaser does hereby
accept said sales and said transfers.
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1.3 Agreements Relating to Transfer. Relating to all the above sales and
transfers, the parties agree as follows:
(a) All sales and transfers shall be effected with economic effect
as of the date hereof.
(b) The profits for the year 1998 for Company will be attributed to
Purchaser. As far as profits for previous years have not been distributed among
Shareholders, those profits shall also be due to Purchaser.
(c) The transfer of the Shares under this Agreement is subject to the
condition precedent of the payment of the purchase price as set forth in
Section 1.4. Representative will infrom the Notary in writing as soon as the
conditon has been fulfilled.
(d) Each Shareholder hereby consents to the sales and transfers
described in Section 1.2 and hereby waives any and all rights relating to any
rights of consent, first refusal, bring-along and any other right such
Shareholder may have in relation to the Shares according to law or otherwise,
including but not limited to, any rights covered by Section 10 of the articles
of association of Company, and such waiver is hereby accepted by all
Shareholders entitled to do so.
1.4 Purchase Price.
(a) The aggregate purchase price to be paid by Purchaser or DAIO to
Shareholders for the Shares (the ,,Purchase Price") is US$2,268,337.42. The
Purchase Price is equal to US$3,825,000 minus the difference, if any,
obtained by subtracting from the Liabilities (as hereinafter defined) of
Company and its subsidiaries (,,Subsidiaries") as of September 30, 1998 the
Transfer Value (as hereinafter defined) of Company and its Subsidiaries as
of September 30, 1998 and applying an exchange rate of 1.65 DM per US$1.00,
minus the Estimated Company Expenses (as defined in Section 7.3(b)), minus
the amount paid to Alliant Partners under Section 1.5(a)(iii). The
,,Liabilities" shall be the total liabilities of Company and its
Subsidiaries (including without limitation, any Shareholder debt) as
calculated on the basis of the unaudited balance sheet dated September 30,
1998 of Company and its Subsidiaries (the ,,September Balance Sheet") as
attached in Schedule 2.6(a)(ii). The ,,Transfer Value" shall be DM
3,032,846.84, calculated as the sum of (i) the amount of Company's cash at
September 30, 1998 plus the amount of Company's accounts receivable at
September 30, 1998, net of applicable reserves, plus (ii) the book value of
all inventory at September 30, 1998 which is used in the business of
Company in the ordinary course, net of applicable reserves, plus (iii) the
book value of all property, plant and equipment owned by Company and its
Subsidiaries at September 30, 1998, plus (iv) those prepaid expenses and
deposits recorded on Company's books at September 30, 1998, plus (v)
one-half of the DM 375,000 dividend to be paid by Mikrocomputer to Company.
Liabilities, Transfer Value and appropriate reserves were determined in
accordance with generally accepted accounting principles in Germany as in
effect from time to time (,,GoB") consistently applied.
(b) The calculation of the Purchase Price, which is as set forth in
Schedule 1.4, excludes any amounts paid by DAIO pursuant to the Related
Agreements. The amounts paid by Purchaser or DAIO on behalf of Company described
in Sections 1.5(a)(i) and (ii) shall reduce the amount payable by DAIO to
Company under Section 1.3 of the Excalibur Technology Purchase Agreement.
(c) Concurrent with the execution of this Agreement, Purchaser or
DAIO does herewith pay the Purchase Price to Alpha Associes S.A., acting as
representative for Shareholders (,,Representative"), in U.S. Dollars, by
certified or cashier's check to be distributed by Representative to Shareholders
in accordance with Section 1.6. Shareholders hereby expressly agree that the
appeared Mr. Issaverdens is authorized to collect such check for Shareholders.
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1.5 Additional Payments.
(a) In addition to payment of the Purchase Price as described in
Section 1.4, concurrent with the execution of this Agreement, Purchaser or
DAIO does herewith:
(i) pay, on behalf of Company, to Representative DM 2,257,475,
representing the aggregate amount of principal and accrued interest payable
by Company to Alpha IV, Alpha V, Finab, Messrs. Peninon, ver Xxxxx,
Issaverdens and Mrs. Fesnau (the ,,Alpha Payees") by certified or cashier's
check in U.S. Dollars made payable to Representative (it being understood
and agreed by the parties that if there is any difference due to the
conversion of such amount from U.S. Dollars into Deutschmarks, the
respective party will pay such difference to the other party within 15 days
from the date hereof), and Shareholders hereby expressly agree that the
appeared Mr. Issaverdens is authorized to collect such check for
Shareholders;
(ii) pay, on behalf of Company, to Xxx. Xxxxxxx Xxxxxxx
DM 451,837, representing the balance of the purchase price and accrued
interest owed by Company for the shares of stock purchased by Company from
Xxx. Xxxxxxx by certified or cashier's check in U.S. Dollars made payable
to Xxx. Xxxxxxx (it being understood and agreed by the parties that if
there is any difference due to the conversion of such amount from U.S.
Dollars into Deutschmarks, the respective party will pay such difference to
the other party within 15 days from the date hereof), Xx. Xxxxxxx expressly
declares that he is authorized to collect the check for Xxxxxxx Xxxxxxx;
and
(iii) pay to Alliant Partners Palo Alto, CA, USA US$188,886.00,
in U.S. Dollars, by certified or cashier's check made payable to Alliant
Partners.
(b) In addition to payment of the amounts described in Sections 1.4
and 1.5(a), after the date hereof Purchaser will pay the Company Expenses
(as defined in Section 7.3(a)) to the third parties owed such Company Expenses
when such Company Expenses are due in accordance with their terms.
(c) Concurrent with the execution of this Agreement, Representative,
on behalf of the Alpha Payees, in its attached receipt and release dated the
date hereof substantially in the form of Exhibit 1.5(c)(i), has acknowledged
that upon its receipt of the amount described in (a)(i) above, the Alpha Payees
shall have no further claims or rights whatsoever against Company or its
Subsidiaries, and Xxx. Xxxxxxx, in her attached receipt and release dated
the date hereof in the form of Exhibit 1.5(c)(ii), has acknowledged that
upon her receipt of the amount described in (a)(ii) above, she shall have
no further claims or rights whatsoever against Company or its Subsidiaries.
1.6 Distribution by Representative. Alpha Associes S.A. is hereby
irrevocably constituted and appointed by each Shareholder as the representative
of Shareholders through whom all actions on behalf of Shareholders relating to
this Agreement after the date hereof, including those acts as are required,
authorized or contemplated by Sections 1.4, 1.5, 1.6 and 6 hereof, shall be made
or directed, and hereby acknowledges that Representative shall be the only
person authorized to take any action so required, authorized or contemplated by
this Agreement on behalf of Shareholders and to receive notice on behalf of
Shareholders under this Agreement. Shareholders further acknowledge that the
foregoing appointment and designation shall be deemed to be coupled with an
interest and shall survive the dissolution, disability, death or incompetency of
any or all of Shareholders. Without limiting the generality of the foregoing,
Representative is authorized, in its sole discretion, to dispute, refrain from
disputing, consent to, assume the defense of, arbitrate, litigate or settle any
claims for indemnification under Section 6 and to negotiate and compromise any
dispute which may arise under, and exercise or refrain from exercising remedies
available under, and make any determinations under Section 6, and to sign any
releases or other documents with respect to such dispute or remedy. Shareholders
shall be bound by all notices received, agreements and determinations made by
and documents executed and delivered by Representative under this Agreement.
Representative has declared that it accepts its appointment and authorization to
act as Representative on behalf of Shareholders in accordance with the terms of
this Agreement. Shareholders shall be solely responsible for instructing
Representative to split the amount paid to Representative pursuant to Section
1.4 among Shareholders in accordance with their respective pro rata
shareholdings in the aggregate share capital of Company as set forth in Section
1.1. Neither Purchaser nor DAIO shall have any liability or responsibility for
any breach by Shareholders or Representative of its obligations under this
Section 1.6.
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2. REPRESENTATIONS AND WARRANTIES RELATING TO COMPANY
As used in this Agreement, ,,knowledge" or ,,best knowledge" of a
Shareholder shall be deemed to be the actual knowledge of each other Shareholder
and Company's managing director (Geschaftsfuhrer). At the time of execution of
this Agreement (or at such other time expressly set forth in a particular
representation and warranty in this Section 2), each Shareholder, severally, but
not jointly, hereby represents and warrants (in the form of selbstandige
Garantieversprechen) to Purchaser as follows, it being understood and agreed by
Shareholders that the representations and warranties contained in this Section 2
are the basis upon which DAIO has entered into each of the Related Agreements:
2.1 Corporate Existence and Power. Each of Company and its Subsidiaries
is a duly organized and validly existing entity under the laws of its
jurisdiction of incorporation or formation; has all corporate power and
authority to conduct its business as now conducted; and is duly qualified to
transact business as aforeign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary. Attached as
Schedule 2.1(a) and Schedule 2.1(b) are true and correct copies of the local
trade registry excerpt for Company and the articles of association of Company,
respectively. Both of such documents correctly show the present status of
Company and no application to the commercial register is pending with respect
to Company or any Subsidiary.
2.2 Authority. The execution, delivery and performance by Company and
Mikrocomputer of the Related Agreements to which it is a party, and the
consummation of the transactions contemplated thereby at the time of their
execution were within Company's and Mikrocomputer's corporate power and were
duly authorized by all necessary corporate actions on the part of Company and
Mikrocomputer, as the case may be, and their respective shareholders. Each
Related Agreement to which Company or Mikrocomputer is a party when executed
and delivered by it was a valid and binding obligation of Company or
Mikrocomputer, as the case may be, enforceable against it in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws relating to creditors'
rights generally and by general equitable principles.
2.3 No Conflict. Except as set forth on Schedule 2.3, the execution,
delivery and performance by Company and Mikrocomputer of each Related
Agreement to which it is a party, and the consummation by Company and
Mikrocomputer of the transactions contemplated thereby did not and will not: (a)
contravene or conflict with its respective articles of association or the
internal regulations of its management; (b) contravene or conflict with or
constitute a material violation of any provision of any German law, rule,
regulation, order, judgment, injunction or decree binding upon or applicable to
Company, any Subsidiary or any of their respective property or assets; (c)
constitute a material default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Company or any
Subsidiary or to a loss of any benefit to which Company or any Subsidiary is
entitled under any provision of any material contract, agreement or
understanding binding upon Company or any Subsidiary or to which Company or any
Subsidiary is a party by which Company, any Subsidiary or any of their
respective assets are or may be bound, or constitute a default (or an event
which, with the lapse of time or the giving of notice, or both, would constitute
a default) thereunder, or violate any material license, franchise, permit or
other similar authorization held by Company or any Subsidiary; (d) result in the
creation or imposition of any material lien, security interest, charge or
encumbrance of any nature on any property of Company or any Subsidiary; or (e)
give to others any material interest or rights, including rights of termination,
acceleration or cancellation, in or with respect to any Contract (as defined in
Section 2.16) or any agreement by which any of the property or assets of Company
or any Subsidiary is bound.
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2.4 Capitalization. The nominal share capital of Company consists of the
shares as set forth in Section 1.1. All of the shares of nominal share
capital of Company have been duly authorized and validly issued, are fully paid
and non-assessable, and have not been issued in violation of any preemptive
rights of subscription, rights of first refusal or similar rights arising by law
or under the articles of association of Company or any agreement to which
Company is a party. Except as set forth in Schedule 2.4, no repayments of
capital have been made, nor have any hidden profit distributions been made
relating to the shares of Company or any Subsidiary. There are no silent
interests, loans with profit participation, special participation or other
rights which grant an entitlement in respect of profits or liquidation proceeds
of Company or its Subsidiaries. Except as set forth on Schedule 2.4, there are
no outstanding preemptive, conversion or other rights, liens, options, warrants
or agreements granted or issued by or binding upon Company, any Subsidiary or
any Shareholder for the purchase or acquisition of any shares of capital stock
of Company (or any Subsidiary) or any other securities convertible into,
exchangeable for or evidencing the right to acquire or dispose of any shares of
such capital stock. All outstanding shares of capital stock, convertible
securities, rights, options and warrants of Company are owned by Shareholders in
the numbers specified in Section 1.1. Except as required in the articles of
association (or articles of incorporation, as the case may be) of Company or any
Subsidiary (the ,,Articles"), neither Company nor any Subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any convertible securities, rights or
options. Neither Company nor any Subsidiary is a party to any agreement granting
registration rights to any person with respect to equity or debt securities of
Company or any Subsidiary. Except as set forth in any of the Articles, none of
Company, any Subsidiary or any Shareholder is a party to, and has no knowledge
of, any agreement restricting the voting or transfer of any shares of the
capital stock of Company or any Subsidiary. All outstanding securities of
Company and each Subsidiary have been issued and, at the date hereof, the Shares
will have been sold and transferred to Purchaser in compliance with applicable
securities laws of Germany.
2.5 Subsidiaries. Company does not have any branches, affiliates or
subsidiaries except as set forth on Schedule 2.5(a). Company is the sole
legal and beneficial owner of each Subsidiary. All outstanding shares of capital
stock, convertible securities, rights, options and warrants of each Subsidiary
are owned by Company as specified on Schedule 2.5(a), free and clear of any
mortgages, pledges, charges, liens, security interests, assessments, taxes or
other encumbrances (,,Liens"). Attached as Schedule 2.5(b), Schedule 2.5(c)(i)
and Schedule 2.5(c)(ii) are true and correct copies of the local trade registry
excerpt for Mikrocomputer, the Articles of Mikrocomputer and the Articles of
each other Subsidiary, respectively. All of such documents correctly show the
respective present status of each Subsidiary. All of the shares of nominal share
capital of Mikrocomputer and all of the shares of capital stock of each other
Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable, and have not been issued in violation of any preemptive rights
of subscription, rights of first refusal or similar rights arising by law or
under such Subsidiary's Articles or any agreement to which Company or such
Subsidiary is a party. No repayments of capital have been made, nor have any
hidden profit distributions been made relating to the shares of any Subsidiary.
Company does not own, control, hold or have any rights or options to subscribe
for, purchase or acquire, whether directly or indirectly, any shares of stock,
partnership interest, join venture interest, equity participation or any other
security or interest in any other person or entity other than the Subsidiaries.
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2.6 Financial Statements.
(a) As set forth on Schedule 2.6(a)(i) and Schedule 2.6(a)(ii), the
(i) audited balance sheet of Company and its Subsidiaries for the fiscal
year ended December 31, 1997 (the ,,1997 Balance Sheet") and the related income
statements of Company and its Subsidiaries for such year, and (ii) the September
Balance Sheet and the related income statements of Company and its Subsidiaries
for such nine (9)-month period (collectively, the ,,Financial Statements"),
respectively, are true and complete in all material respects and accurately and
fairly present the asset, liability, financial and revenue positions of Company
and its Subsidiaries, including without limitation, the tax and social security
premiums relating to Company and its Subsidiaries, at such dates and for the
periods indicated. The Financial Statements were prepared in accordance with the
relevant statutory provisions prevailing from time to time, the Articles of
Company and GoB consistently applied, except, in the case of the interim
financial statements referenced above, for the absence of footnote disclosures
(that, if presented, would not materially differ from those included in the 1997
Balance Sheet). No financial statements of any person or entity other than
Company and its Subsidiaries are required by GoB to be included in the financial
statements of Company.
(b) Except as set forth on Schedule 2.6(b), neither Company nor any
Subsidiary had on September 30, 1998, any obligations or liabilities of any
nature (whether known or unknown and whether fixed or contingent, including
without limitation, any tax liabilities due or any obligation of Company or any
Subsidiary to supply products or services for which there is not a corresponding
liability recorded in the September Balance Sheet) that were not fully
disclosed, reflected or reserved against in the September Balance Sheet. Company
and each Subsidiary has maintained since September 30, 1998 a system of
accounting established and administered in accordance with GoB.
2.7 Actions Pending. Except as set forth on Schedule 2.7, there is no
action, suit, investigation or proceeding pending or, to the knowledge of
such Shareholder, threatened before any administrative or arbitration or civil
court, against Company, any Subsidiary or any of their respective property or
assets, and such Shareholder is not aware of any events which might form the
basis for any such action, suit, investigation or proceeding. There are no
outstanding orders, judgments, writs or decrees against Company or any
Subsidiary.
Page 84
2.8 Required Consents. Except as set forth on Schedule 2.8, at the time
of execution of this Agreement or any Related Agreement there are (or were)
no consents, approvals, authorizations, orders, registrations or qualifications
of or with any person, court, regulatory authority or governmental body which
are (or were) required for the consummation of the transactions contemplated by
this Agreement or any Related Agreement.
2.9 Taxes. Company and each Subsidiary have accurately prepared and timely
filed all tax returns and social insurance contribution declarations
required by applicable law to be filed by them. Neither Company nor any
Subsidiary has failed to timely pay any taxes, social insurance liabilities or
assessments. The September Balance Sheet includes adequate reserves for all
taxes and social insurance liabilities accrued but not yet payable on September
30, 1998. Except as set forth on Schedule 2.9, no tax returns of Company or any
Subsidiary are currently being audited by any taxing authorities, and such
Shareholder is not aware of any threatened or pending audits. No deficiency
assessment with respect to or proposed adjustment of Company's or any
Subsidiary's taxes or social insurance liabilities is pending or, to the best
knowledge of such Shareholder, threatened. Additional payments of taxes and/or
social security premiums due to tax and/or social security audits relating to
Company and its Subsidiaries for the period through September 30, 1998 which
were not fully disclosed, reflected or provided for in the September Balance
Sheet shall be borne by Shareholders if and to the extent they are attributable
to such period.
2.10 Employee Plans. Schedule 2.10 lists each employee benefit plan,
pension benefit plan and any other bonus, severance or termination pay,
stock option or stock purchase, incentive pay or other similar plan, program or
arrangement covering present or former employees of Company which is maintained
or contributed to by Company or any Subsidiary (the ,,Plans"). Company and each
Subsidiary are in compliance with all applicable laws and regulations relating
to the Plans. Except as set forth on Schedule 2.10, no employee has been granted
a bonus which is not customary for companies of this type in Germany, or any
other share in the results of Company or any Subsidiary in whatever manner
calculated nor has any employee received any retirement or pension entitlement
against Company or any Subsidiary.
2.11 Employees. Neither Company nor any Subsidiary has any collective
bargaining arrangements or agreements covering any of its respective
employees. Except as set forth on Schedule 2.11, neither Company nor any
Subsidiary has any employment contract or other agreement relating to the right
of any managing director, employee, or consultant to be employed or engaged by
Company or such Subsidiary. Except as set forth on Schedule 2.11, no former or
present managing director or employee has any claims against Company or any
Subsidiary and there are no liabilities resulting from the termination of any
employment contract or such other agreement.
Page 85
2.12 Intellectual Properties.
(a) Ownership. Each of Schedule 2.12(a)(i) and Schedule 2.12(a)(ii)
sets forth a true and complete list of all patents, patent applications,
registrations, applications for registration, assignments, intellectual
property-related contracts (whether written or oral), copyrights, trademarks,
trade names, service marks, computer software, trade secrets (including
compositions, know-how, drawings, specifications, designs and processes),
inventions or other intellectual property rights which are (or were at the time
of execution of any Related Agreement) used in the conduct of Company's business
(the ,,Company Intellectual Properties") and Mikrocomputer's business (the
,,Mikrocomputer Intellectual Properties"), respectively, at the time of
execution of this Agreement or any Related Agreement.
(b) Adequacy of Technical Documentation. At the time of execution of
this Agreement or any Related Agreement, the respective technical and
descriptive materials and documentation (other than inventory) relating to the
respective IC Programmer Products Business of Company and Mikrocomputer,
including without limitation, schematics, parts lists, supplier lists, board
layouts, mask works, user manuals and assembly drawings, notes and instructions
(the ,,Company Documentation" and ,,Mikrocomputer Documentation," respectively),
include the respective source codes, system documentation, bills of material,
drawings, statements of principles of operation and schematics related to any of
the Company Intellectual Properties and Mikrocomputer Intellectual Properties,
as well as any accompanying commentary or explanation.
(c) Protection; No Infringement. Company and its Subsidiaries have
taken reasonable steps and precautions to protect and preserve the
confidentiality of all of the trade secrets and confidential information of
Company, its Subsidiaries or others entrusted to Company. To the best knowledge
of such Shareholder, the operations of Company and its Subsidiaries as conducted
at the time of execution of this Agreement or any Related Agreement do (or did)
not infringe any copyright, trademark, service xxxx, trade name, patent rights
or any other right of any person, whether registered or unregistered, nor do (or
did) they involve the misappropriation of any trade secret of any person.
Neither Company nor any Subsidiary has received notice from any person alleging
that such infringement or misappropriation has occurred or is continuing.
(d) Personnel Agreements. All personnel, including employees, agents,
consultants, and contractors, who have contributed to or participated in
the conception and development of the Company Intellectual Properties,
Mikrocomputer Intellectual Properties, Company Documentation and Mikrocomputer
Documentation on behalf of Company or any of its Subsidiaries, as the case may
be, either (1) have been party to a ,,work-for-hire" arrangement or agreement
with Company or such Subsidiary, as the case may be, in accordance with
applicable law, that has accorded Company or such Subsidiary full, effective,
exclusive, and original ownership of all tangible and intangible property
thereby arising or (2) have executed appropriate instruments of assignment in
favor of Company or such Subsidiary, as the case may be, as assignee that have
conveyed to Company or such Subsidiary full, effective, and exclusive ownership
of all tangible and intangible property thereby arising, in each case subject to
the restrictions of applicable law, including the German Act on Inventions by
Employees (Arbeitnehmererfindungsgesetz).
(e) Third-Party Materials and Rights. To the best knowledge of such
Shareholder, except as set forth in Schedule 2.12(e)(i) and Schedule
2.12(e)(ii), at the time of execution of this Agreement or any Related Agreement
each of Company and Mikrocomputer possesses (or possessed) full right and
authority to use all know-how, proprietary information, copyrights, trademarks,
patent rights and other proprietary and intellectual properties necessary to the
conduct of its respective business as conducted at the time of execution of this
Agreement or any Related Agreement, without infringing the rights of others,
including without limitation, the Company Intellectual Properties and
Mikrocomputer Intellectual Properties, all of which will be (or were)
transferred to Purchaser at the time of execution of this Agreement or any
Related Agreement free and clear of all Liens, claims, options, or claims of
ownership of any person or of any obligation to pay royalties. Except as set
forth on Schedule 2.12(e)(i) and Schedule 2.12(e)(ii), at the time of execution
of this Agreement or any Related Agreement neither Company nor any Subsidiary
has (or had) granted licenses or other rights to any third party (including any
employees of Company or any Subsidiary) with respect to the Company Intellectual
Properties or Mikrocomputer Intellectual Properties.
Page 86
2.13 Assets. At the time of execution of this Agreement or any Related
Agreement, Company and its Subsidiaries have (or had) good and marketable
title to, or a valid leasehold interest in, or a valid right to use, all
material assets and properties (including without limitation, the Company
Intellectual Properties, Company Documentation, Mikrocomputer Intellectual
Properties and Mikrocomputer Documentation), tangible or intangible, used by it
at the time of execution of this Agreement or any Related Agreement, located on
its premises or, if applicable, shown on the September Balance Sheet or acquired
thereafter, free and clear of all Liens except those indicated on Schedule 2.13
and except for inventory disposed of in the ordinary course of business since
the date of the September Balance Sheet. The September Balance Sheet reflects
all material assets and properties, tangible or intangible, which are required
by Company for its business as conducted at the time of execution of this
Agreement or any Related Agreement, except for inventory disposed of in the
ordinary course of business since the date of the September Balance Sheet or for
retention of title in the ordinary course of business arising under applicable
law. Except as set forth on Schedule 2.13, all of Company's material equipment
and other tangible assets (whether owned or leased) are in good condition
(except for ordinary wear and tear) and are fit for use in the ordinary course
of business. Except as set forth on Schedule 2.13, at the time of execution of
this Agreement or any Related Agreement, Company shall own (or owned), or have
(or had) a valid leasehold interest in, or a valid right to use, all the
material assets or rights necessary for the conduct of its business.
2.14 Compliance with Laws. To the best knowledge of such Shareholder,
neither Company nor any Subsidiary has materially violated any applicable
law or governmental regulation or requirement, including without limitation, any
environmental and securities laws and laws restricting the export of goods and
services, and neither Company nor any Subsidiary has received notice of or claim
alleging any such material violation.
2.15 Licenses. Company and each Subsidiary have all licenses, permits,
approvals and any similar authority necessary for their respective business
operations, and to the best knowledge of such Shareholder, all such licenses are
valid and in full force and effect. No violations have been communicated to
Company in respect of such licenses. Such Shareholder is not aware of the
existence of any facts or circumstances which might constitute any such
violations, and no proceeding is pending or, to such Shareholder's best
knowledge, threatened toward the revocation, termination or limitation of any
such licenses, or the imposition of conditions thereon.
Page 87
2.16 Material Agreements. Schedule 2.16 sets forth a true and complete
list, at the time of execution of this Agreement or any Related Agreement,
of all agreements, understandings, instruments, contracts or proposed
transactions, whether written or oral, to which Company or any Subsidiary is (or
was) a party or by which it is (or was) bound (i) which individually involve
obligations of or payments to Company or any Subsidiary in excess of DM 85,000,
or (ii) which will not be (or was not) terminated at the time of execution of
this Agreement or any Related Agreement, or in the case of termination, provide
(or provided) for liabilities on the part of Company or any Subsidiary, and
involve any Shareholder, such Shareholder's relatives within the meaning of
Section 15 of the German Tax Code (Abgabenordnung) or such Shareholder's
affiliated companies within the meaning of Section 15 of the German Stock
Corporation Act (Aktiengesetz) or (iii) which are (or were) control and profit
distribution agreements within the meaning of Section 291 of the German Stock
Corporation Act (Aktiengesetz) with any third party (the ,,Contracts"). True and
complete copies of all written Contracts (with all supplements and amendments
thereto) have been delivered to Purchaser. At the time of execution of this
Agreement or any Related Agreement, Company and such Subsidiary, as the case may
be, have (or had) complied with all material provisions of the Contracts to
which it is (or was) a party, are (or were) not in arrears with respect to any
amounts owed thereunder and are (or were) not otherwise in default under any
thereof nor has any party asserted that Company or such Subsidiary, as the case
may be, is (or was) in default under any thereof, and to the best knowledge of
such Shareholder, no condition exists which with the passage of time or the
giving of notice would constitute a default under any thereof. Such Shareholder
has no knowledge of any breach or anticipated breach by the other parties to any
Contract. To the best knowledge of such Shareholder, at the time of execution of
this Agreement or any Related Agreement all of the Contracts are (or were)
legal, valid, binding, in full force and effect, and enforceable by Company or
such Subsidiary in accordance with their respective terms. Except as set forth
on Schedule 2.16, execution of this Agreement or any Related Agreement and
consummation of the transactions contemplated hereby or thereby shall not give
any third party the right to terminate any Contract.
2.17 Insurance. Schedule 2.17 sets forth a list of each insurance policy
maintained by Company and each Subsidiary with respect to its respective
properties, assets and business and to the best knowledge of such Shareholder,
each such policy is in full force and effect, valid, unchallenged, incontestable
and no notice of termination has been given or is expected to be given with
respect thereto. Neither Company nor any Subsidiary is in default with respect
to its obligations under any such insurance policy and nor has it been denied
insurance coverage.
2.18 Suppliers and Customers. Schedule 2.18 accurately sets forth a list
of the top ten suppliers and the top ten customers of Company for the first
nine months of 1998. Except as set forth in Schedule 2.18, no material supplier,
vendor or service provider of Company or any Subsidiary has given Company notice
that it shall stop, or materially decrease the rate of, or materially and
adversely change the terms with respect to, supplying materials, products or
services to Company or any Subsidiary. Except as set forth on Schedule 2.18, no
material customer or distributor of Company or any Subsidiary has given Company
or such Subsidiary notice that it shall stop, or materially decrease the rate
of, buying any materials, products or services from Company or such Subsidiary.
Except as set forth in Schedule 2.18, execution of this Agreement or any Related
Agreement and consummation of the transactions contemplated hereby or thereby
shall not give any customer, supplier, vendor or service provider the right to
terminate any contract or agreement it may have with Company or any Subsidiary.
Page 88
2.19 Accounts Receivable. Except as set forth on Schedule 2.19, all of the
accounts receivable, net of the reserves applicable thereto, reflected on
the September Balance Sheet are good and valid receivables, unchallenged by the
debtors thereof and insured by the accounts receivable insurance described in
Schedule 2.17 in accordance with the terms of such insurance.
2.20 Inventory. The inventory of Company shown on the September Balance
Sheet and the inventory of the Company at the date hereof, net of the
reserves applicable thereto determined in accordance with GoB and included in
the September Balance Sheet, consists of a quantity and quality usable and
salable in the ordinary course of business, is not obsolete or damaged, is
merchantable and fit for its intended use, and is not defective.
2.21 Transactions with Affiliates. Except as set forth on Schedule 2.21,
there are no loans, leases, agreements, contracts, or other continuing
transactions between Company or any Subsidiary and (a) any employee, consultant,
shareholder or managing director of Company or any Subsidiary or (b) any
individual, corporation, partnership, joint venture, trust, university,
unincorporated organization, or a government or any agency or political
subdivision thereof owning any capital stock of Company or any Subsidiary or (c)
any member of the immediate family of such employee, consultant, shareholder or
managing director, or (d) any corporation or other entity controlled by such
employee, consultant, shareholder or managing director, or a member of the
immediate family of such officer, employee, consultant, director or shareholder
(collectively, an ,,Affiliate").
2.22 No Material Adverse Change. Except as set forth on Schedule 2.22,
since the date of the 1997 Balance Sheet, there has not been: (a) any
material adverse change in the condition (financial or otherwise), business,
assets, liabilities or prospects of Company or any Subsidiary or any material
decline in the rate of sales of Company or any Subsidiary; (b) any material
damage, destruction or loss of any of the assets of Company or any Subsidiary
(whether or not covered by insurance) or any write-down in the value of any
material inventory or write-off as uncollectible of any material notes or
accounts receivable; (c) any material increase in compensation payable to or for
the benefit of or committed to be paid to or for the benefit of, any director,
shareholder or officer of Company or any Subsidiary; (d) any modification,
waiver, change, amendment, release, rescission, accord and satisfaction or
termination of, or with respect to, any material term, condition or provision of
any Contract or material license, other than any satisfaction by performance in
accordance with the terms thereof; or (e) any action, suit or proceeding pending
or threatened wherein an unfavorable judgment, decree, injunction, order or
ruling would prevent the performance of this Agreement or any of the
transactions contemplated hereby or materially and adversely affect the right of
Purchaser to own, operate or control Company or any Subsidiary.
2.23 Indebtedness. Schedule 2.23 sets forth all indebtedness of Company or
any Subsidiary as of September 30, 1998, or for which Company or any Subsidiary
had commitments at such date. Neither Company nor any Subsidiary is in default
with respect to any such indebtedness. To the extent Company or any Subsidiary
has granted any security in favor of a third party, such security is only
securing debt or obligations of Company or any of its Subsidiaries.
Page 89
2.24 Year 2000 Compliance. At the time of execution of this Agreement or
any Related Agreement, all computer hardware and software produced by
Company or any Subsidiary, including but not limited to system and application
programs, files, databases and computer services, the failure or
disfunctionality of which would either individually or in the aggregate have a
material adverse effect on Company's or any Subsidiary's condition (financial or
otherwise), business, assets, liabilities or prospects or any material decline
in the rate of sales of Company or any Subsidiary, is Year 2000 compliant.
,,Year 2000 compliant" means that such hardware or software will (a) process
date data from at least the years 1900 through 2101 without error or
interruption; (b) maintain functionality with respect to the introduction,
processing or output of records containing dates falling on or after January 1,
2000; and (c) be interoperable with other Year 2000 compliant hardware or
software which may deliver records to, receive records from or interact with
such hardware or software in the course of processing data.
2.25 Brokerage Fees. Other than the fee payable to Alliant Partners
pursuant to Section 1.5(a)(iii), no broker's, finder's or financial
management fees or commissions will be payable, nor are there similar
arrangements in place, with respect to this Agreement or any Related Agreement
or the transactions contemplated hereby or thereby based on any agreement,
arrangement or understanding with any Shareholder, Company or any Subsidiary.
2.26 Disclosure. At the time of execution of this Agreement or any Related
Agreement, this Agreement, including all Schedules hereto and any
certificates and instruments delivered pursuant hereto, when taken as a whole,
does (or did) not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
and therein not misleading.
2.27 Other Agreements. Except as set forth on Schedule 2.27, there are no
agreements, understandings, instruments, contracts or proposed
transactions, whether written or oral, to which Company or any Subsidiary is a
party or by which it is bound which obligate or bind Company or any Subsidiary
to supply future products at a discount, accept returns or exchanges of past or
future products, or grant allowances or credits with respect to past or future
products except in the ordinary course of business consistent with past
practices and in accordance with Company's standard return or warranty policy.
3. FURTHER REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder severally, but not jointly, represents and warrants
(in the form of selbstandige Garantieversprechen) to Purchaser as follows:
3.1 Title to Shares. Shareholder is the unrestricted and sole legal and
beneficial owner of the Shares set forth in Section 1.1 across from
Shareholder's name. Shareholder does hereby transfer to Purchaser good and
marketable title to such Shares, free and clear of all Liens. The Shares to be
transferred to Purchaser by Shareholder do not constitute all or substantially
all of Shareholder's assets within the meaning of Section 419 of the German
Civil Code.
Page 90
3.2 Corporate Existence and Power. If Shareholder is other than a natural
person, such Shareholder is a duly organized and validly existing entity under
the laws of France and has all corporate power and authority to conduct its
business as now conducted.
3.3 Authority.
(a) If Shareholder is other than a natural person, that the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby are within Shareholder's power and have
been duly authorized by all necessary actions on the part of Shareholder and its
shareholders, partners or members. If Shareholder is a natural person, that
Shareholder has full power and authority to execute, deliver and perform this
Agreement, and to consummate the transactions contemplated hereby.
(b) This Agreement when executed and delivered by each Shareholder
is a valid and binding obligation of Shareholder, enforceable against
Shareholder in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
relating to creditors' rights generally and by general equitable principles.
3.4 No Conflict. The execution, delivery and performance of this Agreement
by Shareholder, and the consummation by Shareholder of the transactions
contemplated hereby does not and will not (a) contravene or conflict with its
formation documents or the internal regulations of Shareholder's management
board or (b) contravene or conflict with or constitute a material violation of
any provision of any law, rule, regulation, order, judgment, injunction or
decree binding upon or applicable to Shareholder or Company or any of its
respective property or assets.
3.5 Actions Pending. There is no action, suit, investigation or legal or
administrative proceeding pending or, to the best knowledge of Shareholder,
threatened, against Shareholder which would adversely affect Shareholder's
performance under this Agreement, and Shareholder is not aware of any events
which might form the basis for any such action, suit, investigation or
proceeding.
Page 91
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Shareholders as follows:
4.1 Corporate Existence and Power. Purchaser is a limited liability
company duly organized and validly existing under the laws of Germany; has
all corporate power and authority to conduct its business as now conducted and
as proposed to be conducted; and is duly qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
make such qualification necessary, except where failure to be so qualified will
not, individually or in the aggregate, have any material adverse effect on its
financial condition, operations or prospects.
4.2 Authority. The execution, delivery and performance by Purchaser of
this Agreement, and the consummation of the transactions contemplated hereby by
Purchaser are within its corporate power and have been duly authorized by all
necessary corporate actions on the part of Purchaser. This Agreement when
executed and delivered by Purchaser is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other similar laws relating to creditors' rights generally and by general
equitable principles.
4.3 No Conflict. The execution, delivery and performance by Purchaser of
this Agreement and the consummation by Purchaser of the transactions
contemplated hereby does not and will not: (a) contravene or conflict with its
articles of association or the internal regulations of Purchaser's management
board, (b) contravene or conflict with or constitute a material violation of any
provision of any law, rule, regulation, order, judgment, injunction or decree
binding upon or applicable to Purchaser or any of its property or assets, (c)
constitute a material default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Purchaser or to a
loss of any benefit to which Purchaser is entitled under any provision of any
material contract, agreement or understanding binding upon Purchaser or to which
Purchaser is a party by which Purchaser or any of its assets are or may be
bound, or constitute a default (or an event which, with the lapse of time or the
giving of notice, or both, would constitute a default) thereunder, or violate
any material license, franchise, permit or other similar authorization held by
Purchaser, (d) result in the creation or imposition of any material lien,
security interest, charge or encumbrance of any nature on any property of
Purchaser, or (e) give to others any interest or rights, including rights of
termination, acceleration or cancellation, in or respect to any agreement to
which Purchaser is a party or by which Purchaser is bound or by which any of its
material property or assets are bound.
4.4 Actions Pending. There is no action, suit, investigation or legal or
administrative proceeding pending or, to the knowledge of Purchaser, threatened,
against Purchaser or any of its property or assets which would adversely affect
Purchaser's performance under this Agreement and Purchaser is not aware of any
facts which might form the basis for any such action, suit, investigation or
proceeding. There are no outstanding orders, judgments, writs or decrees against
Purchaser which would adversely affect Purchaser's performance under this
Agreement.
Page 92
4.5 Brokerage Fees. Other than the fee payable to Alliant Partners
pursuant to Section 1.5(a)(iii), no broker's, finder's or financial
management fees or commissions will be payable with respect to this Agreement,
any Related Agreement or the transactions contemplated hereby or thereby based
on any agreement, arrangement or understanding with Purchaser.
4.6 Receipt of Information. Purchaser has been furnished access to the
business records of Company and its Subsidiaries and such additional information
and documents as it has requested and has been afforded an opportunity to ask
questions of, and receive answers from, representatives of Shareholder, Company
and its Subsidiaries concerning the terms and conditions of this Agreement, the
business, operations, market potential, capitalization, financial condition and
prospects of Company and its Subsidiaries, and all other matters deemed
relevant.
4.7 DAIO 1997 Revenue. DAIO's total revenue and revenue from continuing
operations for its 1997 fiscal year were US$61,096,000 and US$46,284,000,
respectively.
4.8 Taxes. DAIO or Purchaser agrees to pay all taxes due from DAIO and
Purchaser relating to this Agreement or the Related Agreements and to cause
Company and Mikrocomputer to pay all taxes due from them relating to this
Agreement or the Related Agreements, as the case may be.
5. NON-COMPETITION
5.1 Non-competition. Until the second anniversary of the date hereof, each
Shareholder who is an employee of Company and Xx. Xxxx Xxxxxxx agrees vis-a-vis
Purchaser and Company that such Shareholder will not, directly or indirectly,
own, manage, operate, join, control or participate in the ownership, management,
operation or control of or be connected with, in any manner, any person or
entity engaged in competition with Company or its Subsidiaries with respect to
any product or service sold or activity engaged in by Company or its
Subsidiaries at the date hereof, including, without limitation, products or
services used in the IC Programmer Products Business in any geographical area in
which such product or service is sold or activity is engaged in at the date
hereof. Such Shareholder shall be deemed to be connected with such business if
such business is carried on by a partnership, corporation or association of
which such Shareholder is a partner, shareholder, member or agent, provided that
nothing herein shall prevent the purchase or ownership by such Shareholder of
shares which constitute less than five percent (5%) of the outstanding equity
securities of a publicly-held corporation.
5.2 Injunctive Relief. Each Shareholder acknowledges that the provisions
of Section 5.1 are essential to Purchaser, that Purchaser would not enter into
this Agreement if it did not include covenants not to compete or solicit and
that damages sustained by Purchaser and its Affiliates as a result of a breach
of such covenants cannot be adequately remedied by money damages, and such
Shareholder agrees that Purchaser, notwithstanding any other provision of this
Agreement, in addition to any other remedy Purchaser may have under this
Agreement or at law, shall be entitled to injunctive and other equitable relief
to prevent or curtail any breach of any provision of Section 5.1. Each
Shareholder acknowledges that the covenants in this Section 5 are reasonable.
5.3 Xx. Xxxx Steudel. For the purposes of this Section 5 Xx. Xxxx Xxxxxxx is
treated like an employee of the Company.
Page 93
6. INDEMNIFICATION
6.1 Indemnification. Each Shareholder agrees to indemnify and hold
harmless Purchaser, DAIO and their respective directors, officers,
affiliates, successors and assigns (a ,,Purchaser Party") from and against any
and all losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by such persons as a result of any breach of the
representations, warranties or covenants made by any Shareholder herein or made
by Company or Mikrocomputer in the Related Agreements, it being expressly agreed
that no tax liability of Company or Mikrocomputer in connection with the amounts
paid by Purchaser or DAIO, as the case may be, under the Related Agreements
shall give rise to indemnification under this Agreement or any Related
Agreement, or to any other claim against Shareholders by a Purchaser Party.
Purchaser agrees to indemnify and hold harmless each Shareholder from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, costs of investigation and reasonable
attorneys' fees, charges and disbursements) incurred by such Shareholder as a
result of any breach of the representations, warranties or covenants made by
Purchaser herein.
6.2 Indemnification Remedies. Claims for indemnification by a Purchaser
Party arising from a breach of the representations, warranties or covenants
made in this Agreement by Shareholders, other than Section 3 or 5, shall be
borne by the Shareholders severally, but not jointly, in accordance with their
respective pro rata shareholdings in the aggregate share capital of Company as
set forth in Section 1.1 and shall be payable in cash by wire transfer in
immediately available funds to an account designated by the Purchaser Party.
Claims for indemnification by a Purchaser Party arising from a breach of the
representations, warranties or covenants made in Section 3 or 5 shall be borne
by the Shareholder or Shareholders responsible for such breach, severally, but
not jointly, and shall be payable in cash by wire transfer in immediately
available funds to an account designated by the Purchaser Party. Claims for
indemnification by a Shareholder or Shareholders arising from a breach of the
representations, warranties or covenants made in this Agreement by Purchaser or
DAIO shall be borne by Purchaser and shall be payable in cash by wire transfer
in immediately available funds to an account designated by Representative.
6.3 Indemnification Procedure for Third Party Claims. The following
procedures shall apply to claims for indemnification brought against a
party entitled to indemnification under Section 6.1 arising from a dispute with
or a claim asserted by a third party:
Page 94
(a) Notice of Indemnification for Third Party Claims. Any party
entitled to indemnification under Section 6.1 (,,Indemnified Party") will
give written notice to the indemnifying party (,,Indemnifying Party") of any
third party claim with respect to which it seeks indemnification promptly after
the discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6, except to the extent that the Indemnifying
Party is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought by a third party against an Indemnified Party in
respect of which indemnification is sought hereunder, the Indemnifying Party
shall be entitled to participate in and, unless in the reasonable judgment of
the Indemnified Party a conflict of interest between it and the Indemnifying
Party exists in respect of such action, proceeding or claim, to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Party.
In the event that the Indemnifying Party advises an Indemnified Party that it
will contest such a claim for indemnification hereunder, or fails, within 15
days of receipt of any indemnification notice to notify, in writing, such person
of its election to defend, settle or compromise, at its sole cost and expense,
any action, proceeding or claim (or discontinues its defense at any time after
it commences such defense), then the Indemnified Party may, at its option,
defend, settle or otherwise compromise or pay such action or claim. In any
event, unless and until the Indemnifying Party elects in writing to assume and
does so assume the defense of any such claim, proceeding or action, the
Indemnified Party's reasonable costs and expenses arising out of the defense,
settlement or compromise of any such action, claim or proceeding shall be losses
subject to indemnification hereunder.
(b) Cooperation; Settlement. The Indemnified Party shall cooperate
fully with the Indemnifying Party in connection with any negotiation or
defense of any such third party action or claim by the Indemnifying Party and
shall furnish to the Indemnifying Party all information reasonably available to
the Indemnified Party which relates to such action or claim. The Indemnifying
Party shall keep the Indemnified Party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the Indemnifying Party elects to defend any such third party action or claim,
then the Indemnified Party shall be entitled to participate in such defense with
counsel of its choice at its sole cost and expense. The Indemnifying Party shall
not be liable for any settlement of any action, claim or proceeding effected
without its written consent, provided, however, that the Indemnifying Party
shall not unreasonably withhold, delay or condition its consent. Anything in
this Section 6 to the contrary notwithstanding, the Indemnifying Party shall
not, without the Indemnified Party's prior written consent, settle or compromise
any third party claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the Indemnified Party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party, a release from all liability in respect of
such claim.
(c) Payment of Indemnification Claims. The indemnification required
by this Section 6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred. The indemnity
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnified Party against the Indemnifying Party or others,
and (ii) any liabilities the Indemnifying Party may be subject to pursuant to
the law. Any payment not made when due shall bear interest from the date of
written notice of the amount due at a rate of two percent (2%) above the
Diskontsatz of the Deutsche Bundesbank (or any similar interest rate replacing
the Diskontsatz).
Page 95
6.4 Indemnification Procedure for Other Claims. A claim for
indemnification not involving a third party shall be asserted by written notice
from the Indemnified Party to the Indemnifying Party.
6.5 Limitations on Indemnification.
(a) Threshold Amount. Notwithstanding the provisions of Section 6.1,
Shareholders shall not be liable for such losses, damages, liabilities,
costs and expenses until such time as the aggregate amount thereof reaches
US$75,000 (but then Shareholders shall be liable for the entire US$75,000
plus any such liability in excess of US$75,000), subject to the limitations
set forth in Section 6.2 and (b) below.
(b) Maximum Amount. Notwithstanding the provisions of Section 6.1,
the aggregate amount payable by all Indemnifying Parties pursuant to this
Section 6 with respect to all claims for indemnification shall not exceed (i)
US$2,500,000 for a breach of Subsection 2.1, 2.2, 2.3(a), 2.4, 2.5, 2.7, 2.12,
3.1, 3.2, 3.3, 3.4(a), 3.5, 4.1, 4.2, 4.3(a) or 4.4 and (ii) US$1,250,000 for a
breach of any other Section or Subsection not listed in (i) above; provided,
that the aggregate amount payable by Purchaser, on the one hand, and
Shareholders, on the other hand, as the Indemnifying Party pursuant to this
Section 6 shall in no event exceed US$2,500,000 and any payments made by such
Indemnifying Party under (i) or (ii) above shall reduce any amount payable by
such Indemnifying Party in the future under (i) or (ii) above.
(c) Statute of Limitations. Claims for breach of the representations
and warranties under this Agreement may be made until the first anniversary
of the date hereof. As far as claims relate to unpaid taxes and/or social
security or other administrative payments, such claims may be made against
Shareholders until six (6) months after the final and conclusive assessment of
such taxes and/or payments, provided that Purchaser is aware of the assessment,
and the foregoing sentence shall not apply.
(d) Exclusion. Section 460 of the German Civil Code is hereby
expressly excluded.
7. MISCELLANEOUS
7.1 Publicity. Each Shareholder agrees that no public release or
announcement concerning this Agreement, any Related Agreement or the
transactions contemplated hereby or thereby shall be issued by such party
without the prior consent of Purchaser, such consent not to be unreasonably
withheld, except as such release or announcement may be required by applicable
law, rules or regulations. Purchaser agrees that no public release or
announcement concerning this Agreement, any Related Agreement or the
transactions contemplated hereby or thereby shall be issued by it without the
prior consent of Representative, such consent not to be unreasonably withheld,
except as such release or announcement may be required by applicable law, rules
or regulations.
Page 96
7.2 Further Assurances. Each Shareholder will from time to time after the
date hereof, at Purchaser's request and without further consideration,
execute and deliver such other instruments of conveyance, assignment and
transfer and take such other actions as Purchaser may reasonably request in
order more effectively to convey, assign, transfer to, evidence and vest in
Purchaser, the Shares or the transactions contemplated hereby or in any Related
Agreement.
7.3 Expenses.
(a) Except as otherwise specified in this Agreement, each of the
parties shall each pay such party's respective expenses, costs and fees
(including, without limitation, attorneys' and accountants' fees) incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby. All expenses, costs and fees (including,
without limitation, attorneys' and accountants' fees) incurred by Company or any
Subsidiary in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby (the ,,Company Expenses") shall
be shared by Shareholders in accordance with the respective pro rata
shareholdings in the aggregate share capital of Company of each Shareholder as
set forth in Section 1.1, except that all notarization costs for this Agreement
and any Related Agreement shall be paid by Purchaser or DAIO.
(b) Not later than the close of business two (2) business days prior
to the date hereof, Company shall have provided to Purchaser an estimate in
good faith of the total amount of the Company Expenses (the ,,Estimated Company
Expenses") based upon the bills and/or fee estimates provided to Company by
Company's attorney(s) and other professionals, if any. Concurrently with the
execution of this Agreement, Purchaser shall deduct the Estimated Company
Expenses from the consideration payable to Shareholders pursuant to Section
1.4(a). A final account of the Company Expenses shall be made by Purchaser and
delivered in writing to Representative. If the Estimated Company Expenses are
different from the Company Expenses, then the difference between the Estimated
Company Expenses and the Company Expenses shall be paid by Shareholders to
Purchaser, or vice versa, as the case may be, in U.S. Dollars within 15 days
after Representative's receipt of such final account by certified or cashier's
check or wire transfer in immediately available funds.
7.4 DAIO Guaranty. DAIO hereby guarantees to Shareholders unconditionally,
irrevocably and upon first demand all payment obligations of Purchaser in
connection with this Agreement and the Related Agreements.
Page 97
7.5 Resignations. Concurrent with execution of this Agreement,
Shareholders shall provide to Purchaser letters of resignation for all members
of Company's advisory board (Beirat), effective as of the date hereof.
7.6 Modification. No waiver or modification of this Agreement shall be
valid unless in writing and duly executed by all parties hereto. No evidence of
any waiver or modification shall be offered or received in evidence in any
proceedings, arbitration, or litigation between any of the parties arising out
of or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing and duly executed
by all parties hereto. The parties further agree that the provisions of this
Section 7.6 may not be waived except as set forth herein.
7.7 No Waiver. Failure or delay on the part of any party in exercising
any rights, power or privileges under this Agreement shall not be deemed a
waiver of any exercise of any right, power or privilege of such party.
7.8 Binding Effect; Assignment. This Agreement and each Related Agreement
to which it is a party shall be binding upon and inure to the benefit of
Company, DAIO, each Shareholder and Purchaser and their respective heirs,
successors and assigns. No party shall have the right to delegate its
obligations hereunder or to assign its rights hereunder or any interest herein
without the prior written consent of the other parties; provided that no consent
will be required in connection with any assignment by Purchaser (i) relating to
the sale of all or substantially all of DAIO's, Purchaser's or any of their
Affiliates' assets, equity interests or business, whether by means of a sale,
merger, consolidation, reorganization or other similar transaction or (ii) to an
entity controlling, under the control of, or under common control with
Purchaser.
7.9 Survival. All of the representations and warranties set forth in this
Agreement or any Related Agreement shall survive the execution and delivery
of this Agreement or such Related Agreement, as the case may be, and the
consummation of the transactions contemplated hereby and thereby in accordance
with the terms hereof or of such Related Agreements, as the case may be
(regardless of any investigation, inquiry or examination made by or on behalf of
any party, or the acceptance by any party of any delivery of property or any
writing delivered hereunder or thereunder).
Page 98
7.10 Notices. All notices, demands and other communications called for or
required by this Agreement shall be in writing and shall be addressed to
the parties at their respective addresses stated below or to such other address
as a party may subsequently designate by ten days' advance written notice to the
other parties. Communications hereunder shall be deemed to have been received
(i) upon delivery in person, (ii) five days after mailing it by certified mail,
return receipt requested and postage prepaid, (iii) the second business day
after depositing it with a commercial overnight carrier which provides written
verification of delivery or (iv) the day of transmission by telefacsimile if
sent before 2:00 p.m. recipient's time (or if the day of transmittal is not a
business day for the recipient, the next business day), provided that a copy of
such notice is sent on the same day by certified mail, return receipt requested
and postage prepaid, with an indication that the original was sent by facsimile
and the date of its transmittal.
To Purchaser: Data I/O Corporation
Attention: President & CEO
00000 Xxxxxxx Xxxx X.X.
Xxxxxxx, XX
U.S.A.
Phone: (000) 000-0000
Fax: (000) 000-0000
CC: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
To Shareholders: Alpha Associes S.A.
00 Xxx Xxxxxxxx
00000 Xxxxx XXXXXX
Phone: 33-(0)-1-53-21-88-88
Fax: 33-(0)-1-40-16-43-23
7.11 Full Understanding. In executing this Agreement, each party fully,
completely, and unconditionally acknowledges and agrees that it (a) has had
an equal opportunity to participate in drafting this Agreement, (b) has
consulted with, and had the advice and counsel of a duly licensed and competent
attorney and that it has executed this Agreement after independent
investigation, voluntarily and without fraud, duress, or undue influence, (c)
expressly consents that this Agreement be given full force and effect according
to each and every of its express terms and provisions and (d) agrees that no
ambiguity shall be construed against any party based upon a claim that party
drafted the applicable language.
7.12 Entire Agreement. This Agreement (including all Exhibits and Schedules
hereto) and the Related Agreements contain all of the terms and conditions
agreed upon by the parties relating to the subject matter hereof and supersede
and cancel all other prior agreements, negotiations, correspondence,
undertakings, communications and understandings of the parties, whether written
or oral, respecting that subject matter.
Page 99
7.13 Captions and Construction. Captions in this Agreement are for the
convenience of the reader and are not to be considered in the interpretation
of the terms.
7.14 Severability. If any one or more of the provisions of this Agreement,
or the applicability of any such provision to a specific situation, shall be
held invalid or unenforceable, such provision shall be modified to the minimum
extent necessary to make it or its application valid and enforceable, and the
validity and enforceability of all other provisions of this Agreement and all
other applications of any such provision shall not be affected thereby.
7.15 Governing Law. This Agreement and any Related Agreement shall be
subject to the laws of the Federal Republic of Germany, excluding its laws
of its international conflict of law rules and excluding the UN Convention on
the International Sale of Goods. If any dispute, controversy or claim arises
between the parties out of or in relation to this Agreement or any Related
Agreement or concerning the interpretation, enforceability, performance, breach,
termination or validity hereof or thereof, including without limitation, this
Section 7.15, the parties shall attempt, by mutual negotiation, to come to a
reasonable settlement of the same as soon as possible. If no settlement is
reached within 30 days from the first notification of a dispute in writing by
either party, the same and all disputes arising from or in connection with this
Agreement and the Exhibits and Schedules attached hereto and any Related
Agreement shall be subject to the exclusive jurisdiction of the Landgericht
Munchen I, as far as legally permissible.
7.16 German Language. To the extent German terms are used in this Agreemen
or any Related Agreement and conflict with the English terms used in this
Agreement or such Related Agreement, the German terms shall prevail and take
precedence over the English translation.
7.17 Confidentiality. Each Shareholder agrees that it will, and it will
cause its Affiliates to, keep confidential and not disclose or divulge any
confidential or proprietary information relating to Company, any of its
Subsidiaries, Purchaser or DAIO, including without limitation, financial
statements, business plans, designs, programs, know-how, customer lists and
other non-public information; provided, however, that Shareholder may disclose
such information (a) on a confidential basis to its attorneys, accountants,
consultants and other professionals to the extent necessary to obtain their
services in connection with this Agreement or the transactions contemplated
hereby so long as such consultants and other professionals are subject to
confidentiality obligations with respect to such information consistent with
this Section 7.17, (b) to any entity controlling, controlled by or under common
control with such Shareholder, or to any partner or stockholder of such
Shareholder, (c) if and when such information becomes generally known to the
public through no wrongful act or omission of such Shareholder or any Affiliate
or other person acting on behalf of such Shareholder or (d) as required by
applicable law so long as Purchaser is given prior written notice before
disclosure if reasonably possible and such Shareholder agrees to use reasonable
efforts to cooperate with any attempts made by Purchaser to prevent such
disclosure.
7.18 Taxes. Any and all sales, excise, transfer or similar taxes payable
by reason of the sale and transfer of the Shares shall be paid by the party
on which the obligation to pay any such taxes is imposed by the statute or
ordinance imposing such tax. DAIO acknowledges that the taxes, if any, related
to the Related Agreements are liabilities of Company and Mikrocomputer and are
being transferred as part of this Agreement.
Page 100
8. DEFINITIONS AND ACCOUNTING TERMS
8.1 Definitions. As used in this Agreement, the following terms shall
have the meaning stated in the Section referenced opposite the term:
Definition Section
1997 Balance Sheet 2.6(a)
Affiliate 2.21
Alpha Payees 1.5(a)(i)
Articles 2.4
Company 1.1
Company Documentation 2.12(b)
Company Expenses 7.3(a)
Company Intellectual Properties 2.12(a)
Contracts 2.16
DAIO Introduction
Estimated Company Expenses 7.3(b)
Excalibur Technology Purchase Agreement Recitals
Financial Statements 2.6(a)
GoB 1.4(a)
IC Programmer Products Business Recitals
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
Liabilities 1.4(a)
Liens 2.5
Mikrocomputer Recitals
Mikrocomputer Documentation 2.12(b)
Mikrocomputer Intellectual Properties 2.12(a)
Plans 2.10
Purchase Price 1.4(a)
Purchaser Introduction
Purchaser Party 6.1
Related Agreements Recitals
Representative 1.4(c)
September Balance Sheet 1.4(a)
Shareholder(s) Introduction
Shares 1.2
Subsidiaries 1.4(a)
Subsidiary Technology Purchase Agreement Recitals
Transfer Value 1.4(a)
8.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GoB consistently applied, and all
financial data submitted pursuant to this Agreement, unless otherwise specified,
shall be prepared in accordance with GoB.
Reference is hereby made to all Exhibits and Schedules attached to this
present record. All Exhibits and Schedules have been read aloud by the Notary.
As far as Schedules 2.1(a), 2.1(b), 2.5(b), 2.5(c)(i), 2.5(c)(ii),
2.6(a)(i) as well as 2.6(a)(ii) are concerned, those are contained in a Deed of
Reference of today by the acting Notary (Deed Role No. 2-3826/1998) which is
hereby referenced as well. The original of that Deed was inspected by the
parties. They waive their right to have that Deed read out again and to enclose
a copy to this Deed. Schedule 2.6(a)(ii) [SMS Holding GmbH] page 12: 4th line
reads as follows: "Decrease in finished good and work in progress DM 138.862,39
instead of DM 45.368,82).
Neither of the companies own real estate, inheritable building rights
or buildings on third party owned real property.
THIS DEED has been read aloud in the English language by the acting
Notary to the persons appeared, approved by the persons appeared, and signed by
the persons appeared and the acting Notary in their own hands as follows:
Page 101
OMITTED EXHIBITS AND SCHEDULES FROM EXHIBIT 2.3
The following Exhibits and Schedules have been omitted from Exhibit 2.3 in
accordance with Item 601(b)(2) of Regulation S-K. The Registrant will furnish
supplementally a copy of any omitted Exhibit or Schedule to the Commission upon
request.
Exhibit Number Description
1.5(c)(i) Receipt and Release (Alpha Payees)
1.5(c)(ii) Receipt and Release (Xxx. Xxxxxxx Xxxxxxx)
Schedule Number Description
1.4 Purchase Price Calculation
2.1(a) Local Trade Registry Excerpt of Company
2.1(b) Articles of Company
2.3 No Conflict
2.4 Capitalization
2.5(a) Subsidiaries
2.5(b) Local Trade Registry Excerpt of Mikrocomputer
2.5(c)(i) Articles of Mikrocomputer
2.5(c)(ii) Articles of Each Other Subsidiary
2.6(a)(i) 1997 Balance Sheet and Related Income Statements
2.6(a)(ii) September Balance Sheet and Related Income Statements
2.6(b) Undisclosed Liabilities
2.7 Actions Pending
2.8 Required Consents
2.9 Taxes
2.10 Employee Plans
2.11 Employees
2.12(a)(i) Company Intellectual Properties
2.12(a)(ii) Mikrocomputer Intellectual Properties
2.12(e)(i) Company Third Party Materials and Rights
2.12(e)(ii) Mikrocomputer Third Party Materials and Rights
2.13 Assets
2.16 Material Agreements
2.17 Insurance
2.18 Suppliers and Customers
2.19 Accounts Receivable
2.21 Transactions with Affiliates
2.22 No Material Adverse Change
2.23 Indebtedness
2.27 Other Agreements
Page 102
