-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fuy9MO4lXQaxZMdimY/5q29EUMQb1waKjSF74e+58demz3uHT0A3ylO0c7URfNZU GuCbTQ0mg6vqwH2w0uFYRQ== 0000950116-03-003218.txt : 20030716 0000950116-03-003218.hdr.sgml : 20030716 20030716155235 ACCESSION NUMBER: 0000950116-03-003218 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030711 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030716 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEOWARE SYSTEMS INC CENTRAL INDEX KEY: 0000894743 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 232705700 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21240 FILM NUMBER: 03789438 BUSINESS ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102778300 MAIL ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FORMER COMPANY: FORMER CONFORMED NAME: HDS NETWORK SYSTEMS INC DATE OF NAME CHANGE: 19950313 FORMER COMPANY: FORMER CONFORMED NAME: INFORMATION SYSTEMS ACQUISITION CORP DATE OF NAME CHANGE: 19930108 8-K 1 eightk.txt 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): July 11, 2003 ------------- NEOWARE SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-21240 23-2705700 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File No.) (IRS Employer incorporation) Identification No.) 400 Feheley Drive King of Prussia, Pennsylvania 19406 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Registrant's telephone number including area code) (610) 277-8300 -------------- Item 5. Other Events. On July 11, 2003, Neoware Systems, Inc., a Delaware corporation ("Neoware"), completed a $26,250,000 private placement of its Common Stock to limited number of accredited investors. A total of 1,500,000 shares were sold at $17.50 per share. The private placement is further described in the press release announcing the financing, which is attached hereto as Exhibit 99.1, and is incorporated herein by reference. Item 7. Financial Statements, Pro forma Financial Information and Exhibits. (c) Exhibits. Exhibit No. Description of Exhibits ----------- ----------------------- 10.1 Securities Purchase Agreement dated as of July 10, 2003 between the Company and the persons listed as Purchasers therein. 10.2 Registration Rights Agreement dated as of July 10, 2003 between the Company and the persons listed as Investors therein. 99 Press release dated July 11, 2003 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. NEOWARE SYSTEMS, INC. Dated: July 16, 2003 By: Keith D. Schneck, ------------------------ Keith D. Schneck, Executive Vice President and Chief Financial Officer EX-10 3 ex10-1.txt EXHIBIT 10.1 Exhibit 10.1 SECURITIES PURCHASE AGREEMENT This SECURITIES PURCHASE AGREEMENT is dated as of July 10, 2003 by and between NEOWARE SYSTEMS, INC., a Delaware corporation with its principal office at 400 Feheley Drive, King of Prussia, Pennsylvania 19406 (the "Company"), and the persons listed as the Purchasers on the signature pages hereto (the "Purchasers"). WHEREAS, the Company desires to issue and sell to the Purchasers shares ("Shares") of the Company's authorized but unissued common stock, $0.001 par value per share (the "Common Stock"), in connection with an offering (the "Offering") of a minimum of 1,000,000 Shares and a maximum of 1,500,000 Shares of Common Stock; and WHEREAS, each Purchaser wishes to purchase the Shares on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings: (a) "Affiliate" of a party, means any corporation or other business entity controlled by, controlling or under common control with such party. For this purpose "control" shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting or income interest in such corporation or other business entity. (b) "Closing Date" means, with respect to any Purchaser, the date of the Closing of such Purchaser's purchase of Shares hereunder. (c) "EGE" means Emerging Growth Equities, Ltd., a Pennsylvania limited partnership. (d) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated there under. (e) "Placement Agents" means EGE and C.E. Unterberg, Towbin (f) "Registration Rights Agreement" shall mean that certain Registration Rights Agreement, dated as of the date hereof, among the Company and the Purchasers. (g) "SEC" shall mean the Securities and Exchange Commission. 4 (h) "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated there under. (i) "Unterberg" means C.E. Unterberg, Towbin, a California limited partnership. 2. Purchase and Sale of the Shares. 2.1 Purchase and Sale. Subject to and upon the terms and conditions set forth in this Agreement, the Company agrees to issue and sell to the Purchasers severally and not jointly, and each Purchaser hereby agrees to purchase from the Company severally and not jointly, at the Closing, at a purchase price per Share of $17.50 (the "Purchase Price"), the number of Shares obtained by dividing (a) the amount set forth on such Purchaser's signature page hereto under the heading "Aggregate Subscription Amount" by (b) the Purchase Price. In the event that, with respect to any Purchaser, a fraction results from such calculation, the Company shall issue and sell to such Purchaser the greatest number of whole Shares obtained from such calculation and shall return to the Purchaser the difference between such Purchaser's Aggregate Subscription Amount and the actual aggregate Purchase Price for the Shares so purchased by such Purchaser. 2.2 Closing. Subject to the satisfaction or waiver of the conditions set forth in Section 5 of this Agreement, the purchase and sale of the Shares shall take place at an initial closing (the "Initial Closing") and, if necessary, one or more additional closings subsequent to the Initial Closing (each a "Subsequent Closing," and together with the Initial Closing, each a "Closing") at the offices of the Company's counsel, McCausland, Keen & Buckman, Radnor Court, Suite 160, 259 Radnor-Chester Road, Radnor, Pennsylvania, 19087, upon the acceptance by the Company of each Purchaser's purchase of the Shares; provided, however, that, at the Initial Closing, the Company shall be required to receive gross proceeds of a minimum of $17,500,000 from sales of the Shares to all Purchasers in connection with the Offering. On or prior to the applicable Closing, each Purchaser shall (a) execute this Agreement and the Registration Rights Agreement, together with such other documents relating to the purchase of the Shares as the Company may reasonably request, and deliver the same to EGE to be held in escrow pending the Closing, and (b) deliver, by wire transfer or other form of payment in same day funds the amount of such Purchaser's Aggregate Subscription Amount, to the escrow account established by EGE at Wachovia Bank as escrow agent (the "Escrow Agent") pursuant to the terms of that certain Escrow Agreement (the "Escrow Agreement"), dated as of July 9, 2003, by and among the Company, the Escrow Agent and the Placement Agents in the form attached as Exhibit A hereto. Upon each Closing, (i) the Company shall execute this Agreement and the Registration Rights Agreement, together with such other documents relating to the purchase of the Shares as the Purchasers may reasonably request, and deliver the same to each Purchaser in such Closing, (ii) Placement Agents shall release each such Purchaser's executed Agreement, Registration Rights Agreement and other documents to the Company and (iii) the Escrow Agent shall release the funds in the escrow account to the Company. Within three business days after the Closing, the Company shall deliver to each Purchaser a stock certificate registered in the name of the Purchaser, representing the number of Shares purchased by the Purchaser, as computed pursuant to Section 2.1 hereof. 5 3. Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers as of the Closing Date as follows: 3.1 Incorporation. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect upon the Company taken as a whole. The Company has all requisite corporate power and authority to carry on its business as now conducted. 3.2 Capitalization. The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, of which 13,911,447 shares are outstanding on the date hereof, and 1,000,000 shares of Preferred Stock, $0.001 par value per share, of which no shares are outstanding on the date hereof. Except as set forth in Schedule 3.2 hereto, there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any shares of the capital stock of the Company or other equity interests in the Company or any securities convertible into or exchangeable for such shares of capital stock or other equity interests, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or other equity interests. 3.3 Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. When executed and delivered by the Company, each of this Agreement and the Registration Rights Agreement shall constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. The Company has all requisite corporate power to enter into this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement, and the Registration Rights Agreement. 3.4 Valid Issuance of the Shares. The Shares being purchased hereunder will, upon issuance pursuant to the terms hereof, be duly authorized and validly issued, fully paid and nonassessable. 3.5 Offering. No form of general solicitation or general advertising was used by the Company or its representatives in connection with the offer, sale or issuance of the Shares. In reliance on, and assuming the accuracy of, the representations and warranties of the Purchasers in Section 4 hereof, the offer, sale and issuance of the Shares in conformity with the terms of this Agreement will not result in a violation of the requirements of Section 5 of the Securities Act. 6 3.6 Financial Statements. The Company has furnished or otherwise made available to each Purchaser its audited Statements of Operations, Stockholders' Equity and Cash Flows for the fiscal year ended June 30, 2002, its audited Balance Sheet as of June 30, 2002, and its unaudited Statements of Operations, Stockholders' Equity and Cash Flows for the nine months ended March 31, 2003 and its unaudited Balance Sheet as of March 31, 2003. All such financial statements are hereinafter referred to collectively as the "Financial Statements." The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, and fairly present, in all material respects, the financial position of the Company and the results of its operations as of the date and for the periods indicated thereon, except that the unaudited financial statements may not be in accordance with generally accepted accounting principles because of the absence of footnotes normally contained therein and are subject to normal year-end audit adjustments which, individually, and in the aggregate, will not be material. Since March 31, 2003, to the Company's knowledge, there has been no material adverse change (actual or threatened) in the assets, liabilities (contingent or other), affairs, operations, prospects or condition (financial or other) of the Company. Notwithstanding anything to the contrary in this Agreement, the Company's current financial performance may vary materially from expectations disclosed in the Company's SEC Documents (as such term is defined below) and other publicly released information by the Company due to corporate response to recent market volatility, the timing of the receipt of customer orders, customer seasonality and uncertainty in global markets and the Company's markets, and such other factors as are set forth in the SEC Documents and other publicly released information by the Company. 3.7 SEC Documents. The Company has furnished or otherwise made available to each Purchaser a true and complete copy of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2002, the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30, 2002, December 31, 2002, and March 31, 2003 and any other statement, report, registration statement (other than registration statements on Form S-8) or definitive proxy statement filed by the Company with the SEC during the period commencing June 30, 2002, and ending on the date hereof (all such materials being called, collectively, the "SEC Documents"). As of their respective filing dates, the SEC Documents complied as to form in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, as of their respective filing dates, except to the extent corrected by a subsequently filed SEC Document. 3.8 Consents. All consents, approvals, orders and authorizations required on the part of the Company in connection with the execution, delivery or performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein, other than for Regulation D and state blue sky filings with respect to the sale of Shares which will be made post-closing in accordance with such laws, and therein have been obtained and will be effective as of the Closing Date, provided that this representation and warranty is made in reliance on, and assuming the accuracy of, the representations and warranties of the Purchasers in Section 4 hereof to the extent that the accuracy of such representations and warranties are relevant to the determination of whether any such consent, approval, order or authorization is required. 7 3.9 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by the Company and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the Certificate of Incorporation or Bylaws of the Company or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations applicable to the Company or its properties or assets, except in the case of clause (ii) to the extent that such violations and defaults would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company and its properties and assets. 3.10 Placement Agents. In consideration for services rendered by the Placement Agents in placing the Shares, the Company has agreed to pay the Placement Agents an aggregate cash commission equal to six percent (6%) of the gross proceeds of the sale of the Shares sold under this Agreement. Other than as set forth herein, the Company has no obligation to pay brokers' fees or commissions by virtue of the sale of the Shares. 3.11 Absence of Litigation. There is no action, suit, proceeding or, to the Company's knowledge, investigation, pending, or, to the Company's knowledge, threatened by or before any governmental body against the Company and in which an unfavorable outcome, ruling or finding in any said matter, or for all matters taken as a whole, might have a material adverse effect on the Company. The foregoing includes, without limitation, any such action, suit, proceeding or investigation that questions this Agreement or the Registration Rights Agreement or the right of the Company to execute, deliver and perform under same. 4. Representations and Warranties of the Purchasers. Each Purchaser, severally and not jointly, represents and warrants to the Company as of the Closing Date as follows: 8 4.1 Authorization. All action on the part of the Purchaser and, if applicable, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. When executed and delivered, each of this Agreement and the Registration Rights Agreement will constitute the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. The Purchaser has all requisite power or corporate power, whichever is applicable, to enter into each of this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. 4.2 Purchase Entirely for Own Account. The Purchaser is acquiring the Shares being purchased by it hereunder for investment, for its own account, and not for resale or with a view to distribution thereof in violation of the Securities Act. 4.3 Investor Status; Etc. The Purchaser is an "Accredited Investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purpose of acquiring the Shares. The Purchaser's financial condition is such that it is able to bear the risk of holding the Shares for an indefinite period of time and the risk of loss of its entire investment. The Purchaser has been afforded the opportunity to ask questions of and receive answers from the management of the Company concerning this investment and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company's stage of development so as to be able to evaluate the risks and merits of its investment in the Company. The Purchaser has carefully read the SEC Documents and has relied solely on the information contained therein and herein and on any additional information provided to the Purchaser by the Company. 4.4 Shares Not Registered. The Purchaser understands that the Shares have not been registered under the Securities Act or the securities laws of any state, by reason of their issuance by the Company in a transaction exempt from the registration requirements of the Securities Act and applicable state securities laws, and that the Shares must continue to be held by the Purchaser unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration. The Purchaser understands that the exemptions from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depend on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts. The Purchaser further understands that, except as provided in the Registration Rights Agreement, the Company is under no obligation to register any of the Shares on the Purchaser's behalf or to assist the Purchaser in complying with any exemption under the Securities Act or applicable state securities laws. 4.5 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by the Purchaser and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default by the Purchaser (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the organizational documents of the Purchaser or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to the Purchaser or its respective properties or assets. 9 4.6 Consents. All consents, approvals, orders and authorizations required on the part of the Purchaser in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein have been obtained and are effective as of the Closing Date. 4.7 Company Representations and Warranties. No representations or warranties have been made to the Purchaser by the Company, or any officer, employee, agent, affiliate or subsidiary of the Company, other than the representations and warranties of the Company contained herein, and in purchasing the Shares the Purchaser is not relying on any representations relating to the Company other than those contained herein. 4.8 No Recommendation. The Purchaser understands that no federal or state agency has made any findings or determination as to the fairness of the offering of the Shares hereunder (or any part thereof) for public investment, or any recommendation or endorsement of the Shares (or any part thereof). 5. Conditions Precedent. 5.1 Conditions to the Obligation of the Purchasers to Consummate the Closing. The obligation of each Purchaser to consummate the Closing and to purchase and pay for the Shares being purchased by it pursuant to this Agreement is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of the Company shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by the Purchasers that, in the case of any representation and warranty of the Company contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.1(a)). (b) The Registration Rights Agreement shall have been executed and delivered by the Company. (c) The Company shall have performed all obligations and conditions herein required to be performed or observed by the Company on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. 10 (e) The purchase of and payment for the Shares by the Purchasers shall not be prohibited by any law or governmental order or regulation. All necessary consents, approvals, licenses, permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions contemplated hereby, other than for Regulation D and state blue sky filings with respect to the sale of the Shares, shall have been duly obtained or made and shall be in full force and effect. (f) The Company shall have received gross proceeds of a minimum of $17,500,000 from sales of the Shares to all Purchasers in connection with the Offering. (g) The Company shall have filed an application for listing of the Shares on the NASDAQ National Market on or before the Closing. (h) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to the Purchasers, and the Purchasers shall have received copies (executed or certified, as may be appropriate) of all documents which the Purchasers may have reasonably requested in connection with such transactions. 5.2 Conditions to the Obligation of the Company to Consummate the Closing. The obligation of the Company to consummate the Closing and to issue and sell to the Purchasers the Shares to be purchased at the Closing is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of each Purchaser shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by the Company that, in the case of any representation and warranty of a Purchaser contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.2(a)). (b) The Registration Rights Agreement shall have been executed and delivered by the Purchasers. (c) The Purchasers shall have performed all obligations and conditions herein required to be performed or observed by the Purchasers on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. (e) The sale of the Shares by the Company shall not be prohibited by any law or governmental order or regulation. All necessary consents, approvals, licenses, permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions contemplated hereby, other than for Regulation D and state blue sky filings with respect to the sale of the Shares, shall have been duly obtained or made and shall be in full force and effect. 11 (f) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to the Company, and the Company shall have received counterpart originals, or certified or other copies of all documents, including without limitation records of corporate or other proceedings, which it may have reasonably requested in connection therewith. 6. Transfer, Legends. 6.1 Securities Law Transfer Restrictions. No Purchaser shall sell, assign, pledge, transfer or otherwise dispose or encumber any of the Shares being purchased by it hereunder, except (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an available exemption from registration under the Securities Act and applicable state securities laws and, if requested by the Company, upon delivery by the Purchaser of an opinion of counsel reasonably satisfactory to the Company and its counsel to the effect that the proposed transfer is exempt from registration under the Securities Act and applicable state securities laws. Any transfer or purported transfer of the Shares in violation of this Section 6.1 shall be voidable by the Company. The Company shall not register any transfer of the Shares in violation of this Section 6.1. The Company may, and may instruct any transfer agent for the Company, to place such stop transfer orders as may be required on the transfer books of the Company in order to ensure compliance with the provisions of this Section 6.1. 6.2 Legends. Each certificate representing any of the Shares shall be endorsed with the legends set forth below, and each Purchaser covenants that, except to the extent such restrictions are waived by the Company, it shall not transfer the Shares represented by any such certificate without complying with the restrictions on transfer described in this Agreement and the legends endorsed on such certificate: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT." 12 7. Escrow Agreement. In connection with and in consideration of this Agreement, each Purchaser severally and not jointly hereby adopts and agrees to be bound by the terms and conditions of the Escrow Agreement, as if the Purchaser had executed such Escrow Agreement. 8. Miscellaneous Provisions. 8.1 Public Statements or Releases. None of the parties to this Agreement shall make, issue, or release any announcement, whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without the prior consent of the other parties, which shall not be unreasonably withheld or delayed, provided, that nothing in this Section 8.1 shall prevent any of the parties hereto from making such public announcements as it may consider necessary in order to satisfy its legal obligations, but to the extent not inconsistent with such obligations, it shall provide the other parties with an opportunity to review and comment on any proposed public announcement before it is made. The parties hereto agree that upon Closing the Company may issue a press release in substantially the forth attached hereto as Exhibit B. 8.2 Further Assurances. Each party agrees to cooperate fully with the other party and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by the other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Agreement. 8.3 Rights Cumulative. Each and all of the various rights, powers and remedies of the parties shall be considered to be cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. 8.4 Pronouns. All pronouns or any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 8.5 Notices. (a) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by postage prepaid first class mail, courier or telecopy or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. 13 (b) All correspondence to the Company shall be addressed as follows: Neoware Systems, Inc. 400 Feheley Drive King of Prussia, PA 19406 Attention: Keith D. Schneck, Executive Vice President & CFO Telecopier: (610) 275-5739 with a copy to: McCausland, Keen & Buckman Radnor Court, Suite 160 259 North Radnor-Chester Road Radnor, PA 19087 Attention: Nancy D. Weisberg, Esq. Telecopier: (610) 341-1099 (c) All correspondence to the Purchasers shall be addressed to each Purchaser at its address set forth on its signature page hereto. (d) Any party may change the address to which correspondence to it is to be addressed by notification as provided for herein. 8.6 Captions. The captions and paragraph headings of this Agreement are solely for the convenience of reference and shall not affect its interpretation. 8.7 Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the parties hereto. 8.8 Governing Law. This Agreement shall be governed by and construed in accordance with the internal and substantive laws of Delaware and without regard to any conflicts of laws concepts which concepts, which would apply the substantive law of some other jurisdiction. 8.9 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 8.10 Expenses. Each party will bear its own costs and expenses in connection with this Agreement. 14 8.11 Assignment. The rights and obligations of the parties hereto shall inure to the benefit of and shall be binding upon the authorized successors and permitted assigns of each party. No Purchaser may assign its rights or obligations under this Agreement or designate another person (i) to perform all or part of its obligations under this Agreement or (ii) to have all or part of its rights and benefits under this Agreement, in each case without the prior written consent of the Company. The Company may not assign its rights or obligations under this Agreement without the prior written consent of the Purchasers holding a majority of the Shares then outstanding. In the event of any assignment in accordance with the terms of this Agreement, the assignee shall specifically assume and be bound by the provisions of the Agreement by executing and agreeing to an assumption agreement reasonably acceptable to the other party. 8.12 Survival. The respective representations and warranties given by the parties hereto, and the other covenants and agreements contained herein, shall survive the Closing Date and the consummation of the transactions contemplated herein for a period of one year. 8.13 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto respecting the subject matter hereof and supersedes all prior agreements, negotiations, understandings, representations and statements respecting the subject matter hereof, whether written or oral. No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the parties hereto unless made in writing and duly executed by the Company and the Purchasers. 8.14 Counterparts. This Agreement may be executed in a number of counterparts, each of which together, shall for all purposes constitute one Agreement, binding on all of the parties hereto, notwithstanding that all such parties have not signed the same counterpart. 15 IN WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement as of the day and year first above written. NEOWARE SYSTEMS, INC. By: Keith D. Schneck ---------------------------------- Name: Keith D. Schneck Title: Executive Vice President & CFO PURCHASER: Print Name of Purchaser: - ----------------------- [See below for Purchasers' names and the number of shares purchased] - -------------------------------------------------------------------- By: _________________________________________ Name: Title: Purchaser's Address and Fax Number for Notice: - --------------------------------------------- _________________________________________ _________________________________________ _________________________________________ Aggregate Subscription Amount: _______________________________ - ----------------------------- Email Address or Fax Number for - ------------------------------- Notification of Purchase Price Calculation: __________________ - ------------------------------------------ All funds should be delivered to the Escrow Agent for the benefit of the Company by bank wire transfer or other form of payment in same day funds as follows: Wachovia Bank Charlotte, North Carolina ABA# 053000219 WB# 5000000016439 Attn: CT1870 Jerry Arleth FFC: Neoware Systems, Inc. Escrow A/C# 1572008740 Notify: (215) 670-6305 16 This Securities Purchase Agreement was entered into with the following Purchasers: Number of --------- Names of Purchasers Shares Purchased - ------------------- ---------------- Advantage Advisers Augusta Fund, LLC 50,000 Amaranth L.L.C 150,000 Ardsley Partners Fund II, L.P. 130,000 Ardsley Offshore Fund, Ltd. 157,500 Ardsley Partners Institutional Fund, L.P. 57,500 Atlas Capital Master Fund 152,600 Atlas Capital (Q.P.) L.P 47,400 BayStar Capital II, L.P. 75,000 Endeavor LP 2,400 E.S. Tallmadge Residuary Trust 2 890 First American Insurance Small Cap Growth Fund 1,670 First American Small Growth Opportunities Fund 248,560 W. Jerome Frautschi 13,410 Greater Milwaukee Foundation - Microcap 4,270 Lyndhurst Associates 4,240 Marion Lynton 5,000 Milwaukee Jewish Federation 3,900 Oregon Retail Employees Pension Trust 6,730 The Pinnacle Fund, L.P. 125,000 Henry Posner III Agency 1,110 Posner Partners Microcap 4,730 Paul M. Posner Agency 1,250 SF Capital Partners Ltd. 100,000 St. Paul Electric Construc Pension SC 2,220 St. Paul Electric Construc Supp SC 2,540 Swiftcurrent Partners, L.P. 85,000 Swiftcurrent Offshore, Ltd. 65,000 Waterfield Small Cap Growth 1,540 WM Chester - Chester Children Small Cap 540 17 Schedule 3.2 Capitalization 1. Options to purchase an aggregate of 1,760,625 shares of the Company's Common Stock are outstanding under the Company's 1995 Stock Option Plan and the 2002 Non-Qualified Stock Option Plan as of the date of the Agreement. 2. Warrants to purchase 13,000 shares of the Company's Common Stock are outstanding as of the date of the Agreement. 18 EX-10 4 ex10-2.txt EXHIBIT 10.2 Exhibit 10.2 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of July 10, 2003 by and among Neoware Systems, Inc., a Delaware corporation (the "Company") and the persons listed as the Investors on the signature pages hereto (the "Investors"), and each person or entity that subsequently becomes a party to this Agreement pursuant to, and in accordance with, the provisions of Section 11 hereof (collectively, the "Permitted Transferees" and each individually a "Permitted Transferee"). WHEREAS, pursuant to a securities purchase agreement (the "Securities Purchase Agreement"), dated as of the date hereof, the Company has agreed to issue and sell to the Investors, and each Investor has agreed to purchase from the Company, shares (the "Shares") of the Company's authorized but unissued common stock, $0.001 par value per share (the "Common Stock"); and WHEREAS, the terms of the Securities Purchase Agreement provide that it shall be a condition precedent to the closing of the transactions thereunder for the Company and the Investors to execute and deliver this Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "Board" shall mean the board of directors of the Company. "Closing" shall mean the Initial Closing under the Securities Purchase Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder. "Holder" shall mean, collectively, the Investors and the Permitted Transferees; provided, however, that the term "Holder" shall not include any of the foregoing that ceases to own or hold any Registrable Securities. "Qualifying Holder" shall have the meaning ascribed thereto in Section 11 hereof. "Registrable Securities" shall mean the Shares issued to the Investors pursuant to the Securities Purchase Agreement, and shall include any shares of the Company's Common Stock issued with respect to the Registrable Securities as a result of any stock split, stock dividend, recapitalization, exchange or similar event; provided, however, that all Registrable Securities shall cease to be Registrable Securities once they have been sold pursuant to a registration statement. 19 "Rule 144" shall mean Rule 144 promulgated under the Securities Act and any successor or substitute rule, law or provision. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated there under. 2. EFFECTIVENESS. This Agreement shall become effective and legally binding upon the Closing. 3. MANDATORY REGISTRATION. (a) Within thirty (30) days after the Closing (or, if the date that is thirty (30) days after the Closing is not a business day, the next business day immediately following such date), the Company will prepare and file with the SEC a registration statement on Form S-3 or any successor form (except that if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, then such registration shall be on Form S-1 or any successor form) for the purpose of registering under the Securities Act all of the Registrable Securities for resale by, and for the account of, the Holders as selling stockholders thereunder (the "Registration Statement"). The Registration Statement shall permit the Holders to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, any or all of the Registrable Securities. The Company agrees to use commercially reasonable efforts to cause the Registration Statement to become effective as soon as practicable (which shall include using commercially reasonable efforts to respond to any comments of the SEC in respect of the Registration Statement within fifteen (15) business days following receipt thereof). The Company shall use its best efforts to keep the Registration Statement effective until such date that is the earlier of (i) the date when all of the Registrable Securities registered thereunder shall have been sold or (ii) two (2) years after the Closing, subject to extension as set forth below (such date is referred to herein as the "Mandatory Registration Termination Date"). Thereafter, the Company shall be entitled to withdraw the Registration Statement and the Holders shall have no further right to offer or sell any of the Registrable Securities pursuant to the Registration Statement (or any prospectus relating thereto). In the event the right of the selling Holders to use the Registration Statement (and the prospectus relating thereto) is delayed or suspended pursuant to Sections 4(c) or 10 hereof, if the events described in subsection (a)(i) or (ii) have not yet occurred, the Company shall be required to extend the Mandatory Registration Termination Date by the same number of days as such delay or Suspension Period (as defined in Section 10 hereof), provided that such delay is not the result of the Holders' failure or delay to furnish information required under Section 5 hereof. 20 (b) In the event that the Registration Statement is not filed with the SEC within thirty (30) days after the Closing (or, if the date that is thirty (30) days after the Closing is not a business day, the next business day immediately following such date), or the Company fails to use its commercially reasonable efforts to respond to any comments of the SEC in respect of the Registration Statement within fifteen (15) business days following receipt thereof, the Company will issue to all Investors, for no additional consideration, an additional 1.0% of the Shares sold to each such Investor. For every additional thirty (30) days that the Company continues to be delayed from filing the Registration Statement with the SEC or continues to fail to use its commercially reasonable efforts to respond to any comments of the SEC in respect of the Registration Statement, the Company will issue to all Investors, for no additional consideration, an additional 1.0% of the Shares sold to each such Investor; provided, however, that in no event shall the amount of additional shares issued by the Company to the Investors pursuant to this Section 3(b) exceed a maximum of an additional 3.0% of the Shares sold to each such Investor. (c) Within three (3) business days after a Registration Statement that covers applicable Registrable Securities is declared effective by the SEC, the Company shall deliver, or shall cause legal counsel to deliver, to the transfer agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in substantially the form attached hereto as Exhibit B. 4. OBLIGATIONS OF THE COMPANY. In connection with the Company's obligation under Section 3 hereof to file the Registration Statement with the SEC and to use commercially reasonable efforts to cause the Registration Statement to become effective, the Company shall: (a) Prepare and file with the SEC, as expeditiously as reasonably practicable, such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement; (b) Promptly furnish to the selling Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents (including, without limitation, prospectus amendments and supplements as are prepared by the Company in accordance with Section 4(a) above) as the selling Holders may reasonably request in order to facilitate the disposition of such selling Holder's Registrable Securities; 21 (c) Promptly notify the selling Holders, at any time when a prospectus relating to the Registration Statement is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the prospectus included in or relating to the Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; and, thereafter, the Company will promptly prepare (and, when completed, give notice to each selling Holder) a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; provided that upon such notification by the Company, the selling Holders will not offer or sell Registrable Securities until the Company has notified the selling Holders that it has prepared a supplement or amendment to such prospectus and delivered copies of such supplement or amendment to the selling Holders (it being understood and agreed by the Company that the foregoing proviso shall in no way diminish or otherwise impair the Company's obligation to promptly prepare a prospectus amendment or supplement as above provided in this Section 4(c) and deliver copies of same as above provided in Section 4(b) hereof); (d) Use commercially reasonable efforts to register and qualify the Registrable Securities covered by the Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably appropriate in the opinion of the Company and the managing underwriters, if any, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, to file a general consent to service of process or to become subject to any material tax in any such states or jurisdictions, and provided further that (notwithstanding anything in this Agreement to the contrary with respect to the bearing of expenses) if any jurisdiction in which any of such Registrable Securities shall be qualified shall require that expenses incurred in connection with the qualification therein of any such Registrable Securities be borne by the selling Holder, then the selling Holders shall, to the extent required by such jurisdiction, pay their pro rata share of such qualification expenses; and (e) Promptly after a sale of Registrable Securities pursuant to the Registration Statement (assuming that no stop order is in effect with respect to the Registration Statement at the time of such sale), the Company shall cooperate with the selling Holder and provide the transfer agent for the Common Stock with such instructions and legal opinions as may be required in order to facilitate the issuance to the purchaser (or the selling Holder's broker) of new unlegended certificates for such Registrable Securities. 5. FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling Holders shall furnish to the Company such information regarding them and the securities held by them as the Company shall reasonably request and as shall be required in order to effect any registration by the Company pursuant to this Agreement. 6. EXPENSES OF REGISTRATION. All expenses incurred in connection with the registration of the Registrable Securities pursuant to this Agreement (excluding underwriting, brokerage and other selling commissions and discounts), including without limitation all registration and qualification and filing fees, printing, and fees and disbursements of counsel for the Company, shall be borne by the Company. 22 7. DELAY OF REGISTRATION. The Holders shall not take any action to restrain, enjoin or otherwise delay any registration as the result of any controversy which might arise with respect to the interpretation or implementation of this Agreement. 8. INDEMNIFICATION AND CONTRIBUTION. (a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, any investment banking firm acting as an underwriter for the selling Holder, any broker/dealer acting on behalf of any selling Holder and each officer and director of such selling Holder, such underwriter, such broker/dealer and each person, if any, who controls such selling Holder, underwriter or broker/dealer within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading in light of the circumstances in which they are made; and will reimburse such selling Holder, such underwriter, broker/dealer or such officer, director or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with the Registration Statement, any preliminary prospectus or final prospectus relating thereto or any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished expressly for use in connection with the Registration Statement or any such preliminary prospectus or final prospectus by the selling Holder, any underwriter for them or controlling person with respect to them. This Section 8(a) shall not inure to the benefit of any selling Holder with respect to any person asserting loss, damage, liability or action as a result of a selling Holder selling Registrable Securities during a Suspension Period (as defined in Section 10 hereof) or selling in violation of Section 5(c) of the Securities Act. (b) To the extent permitted by law, each selling Holder will severally and not jointly indemnify and hold harmless the Company, each of its officers and directors, each person, if any, who controls the Company within the meaning of the Securities Act, any investment banking firm acting as underwriter for the Company or the selling Holder, or any broker/dealer acting on behalf of the Company or any other selling Holder, and all other selling Holders against 23 any losses, claims, damages or liabilities to which the Company or any such director, officer, controlling person, underwriter, or broker/dealer or other selling Holder may become subject to, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement or any preliminary prospectus or final prospectus, relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they are made, in each case to the extent and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished by such selling Holder expressly for use in connection with the Registration Statement or any preliminary prospectus or final prospectus related thereto; and such selling Holders will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter, broker/dealer or other selling Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the liability of each selling Holder hereunder shall be limited to the gross proceeds (net of underwriting discounts and commissions, if any) received by such selling Holder from the sale of Registrable Securities covered by the Registration Statement; and provided, further, however, that the indemnity agreement contained in this Section 8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of those selling Holder(s) against which the request for indemnity is being made (which consent shall not be unreasonably withheld). (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party desires, jointly with any other indemnifying party similarly noticed, to assume at its expense the defense thereof with counsel mutually satisfactory to the indemnifying parties with the consent of the indemnified party (which consent will not be unreasonably withheld, conditioned or delayed). In the event that the indemnifying party assumes any such defense, the indemnified party may participate in such defense with its own counsel and at its own expense, provided, however, that the counsel for the indemnifying party shall act as lead counsel in all matters pertaining to such defense or settlement of such claim and the indemnifying party shall only pay for such indemnified party's expenses for the period prior to the date of its participation on such defense. The failure to notify an indemnifying party promptly of the commencement of any such action, if materially prejudicial to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 8 to the extent of such prejudice, but the omission so to notify the indemnifying party will not relieve him of any liability which he may have to any indemnified party otherwise other than under this Section 8. 24 (d) Notwithstanding anything to the contrary herein, without the prior written consent of the indemnified party, the indemnifying party shall not be entitled to settle any claim, suit or proceeding unless in connection with such settlement the indemnified party receives an unconditional release with respect to the subject matter of such claim, suit or proceeding and such settlement does not contain any admission of fault by the indemnified party. (e) In order to provide for just and equitable contribution under the Securities Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 8 hereof but is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 8 hereof provide for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party, then the Company and the applicable selling Holder shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), in either such case (after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the applicable selling Holder on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 25 Notwithstanding any other provision of this Section 8(e), in no event shall (i) any selling Holder be required to undertake liability to any person under this Section 8(e) for any amounts in excess of the dollar amount of the gross proceeds to be received by the selling Holder from the sale of such selling Holder's Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Registration Statement under which such Registrable Securities are or were to be registered under the Securities Act and (ii) any underwriter be required to undertake liability to any person hereunder for any amounts in excess of the aggregate discount, commission or other compensation payable to such underwriter with respect to the Registrable Securities underwritten by it and distributed pursuant to the Registration Statement. 9. REPORTS UNDER THE EXCHANGE ACT. With respect to each Holder, from the date of Closing until the date on which all of the Registrable Securities that such Holder owns or has the right to acquire become freely transferable under Rule 144(k) promulgated under the Securities Act, the Company agrees to use its best efforts: (i) to make and keep public information available, as those terms are understood and defined in the General Instructions to Form S-3, or any successor or substitute form, and in Rule 144, (ii) to file with the SEC all reports and other documents required to be filed by an issuer of securities registered under Sections 13 or 15(d) of the Exchange Act, and (iii) if such filings are not available via EDGAR, to furnish to such Holder as long as the Holder owns or has the right to acquire any Registrable Securities prior to the applicable termination date described above, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company under Sections 13 or 15(d) of the Exchange Act as may be reasonably requested in availing such Holder of any rule or regulation of the SEC permitting the selling of any such Registrable Securities without registration. 10. DEFERRAL AND LOCK-UP. Notwithstanding anything in this Agreement to the contrary, if the Company shall furnish to the selling Holders a certificate signed by the President and Chief Executive Officer of the Company stating that the Board has made the good faith determination (i) that continued use by the selling Holders of the Registration Statement for purposes of effecting offers or sales of Registrable Securities pursuant thereto would require, under the Securities Act, disclosure in the Registration Statement (or the prospectus relating thereto) of material, nonpublic information concerning the Company, its business or prospects or any proposed transaction involving the Company, (ii) that such disclosure would be premature and would be adverse to the Company, its business or prospects or any such proposed transaction or would make the successful consummation by the Company of any such transaction significantly less likely and (iii) that it is therefore essential to suspend the use by the Holders of such Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Securities pursuant thereto, then the right of the selling Holders to use the Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Securities pursuant thereto shall be suspended for a period (the "Suspension Period") of not more than 60 days after delivery by the Company of the certificate referred to above in this Section 10. During the Suspension Period, none of the Holders shall offer or sell any Registrable Securities pursuant to or in reliance upon the Registration Statement (or the prospectus relating thereto). The Company may not exercise this right more than two times in each year after the Closing. 26 11. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Holder under this Agreement shall be transferred or assigned to any person unless (i) such person is a Qualifying Holder (as defined below), (ii) such person agrees to become a party to, and bound by all of the terms and conditions of, this Agreement by duly executing and delivering to the Company an Instrument of Adherence in the form attached as Exhibit A hereto, (iii) the transfer or assignment is made in accordance with the applicable requirements of the Securities Purchase Agreement and (iv) following the transfer or assignment, the further disposition of the Registrable Securities by such person is restricted under the Securities Act and applicable state securities laws. For purposes of this Section 11, the term "Qualifying Holder" shall mean, with respect to any Holder, (a) any corporation, partnership or other affiliated entity controlling, controlled by, or under common control with, such Holder, or any partner or former partner, if such Holder is a partnership, or (b) any other direct transferee from such Holder of at least 50% of those Registrable Securities held or that may be acquired by such Holder. None of the rights of any Holder under this Agreement shall be transferred or assigned to any person (including, without limitation, a Qualifying Holder) that acquires Registrable Securities in the event that and to the extent that such Person is eligible to resell such Registrable Securities pursuant to Rule 144(k) of the Securities Act. 12. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof, and it also supersedes any and all prior negotiations, correspondence, agreements or understandings with respect to the subject matter hereof. 13. MISCELLANEOUS. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors or assigns, provided that the terms and conditions of Section 11 hereof are satisfied. This Agreement shall also be binding upon and inure to the benefit of any transferee of any of the Registrable Securities provided that the terms and conditions of Section 11 hereof are satisfied. Notwithstanding anything in this Agreement to the contrary, if at any time any Holder shall cease to own all of its Registrable Securities, all of such Holder's rights under this Agreement shall immediately terminate. (b) (i) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by courier (overnight or same day) or telecopy or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. 27 (ii) All correspondence to the Company shall be addressed as follows: Neoware Systems, Inc. 400 Feheley Drive King of Prussia, PA 19406 Attention: Keith D. Schneck, Executive Vice President & CFO Telecopier: (610) 275-5739 with a copy to: McCausland, Keen & Buckman Radnor Court, Suite 160 259 North Radnor-Chester Road Radnor, PA 19087 Attention: Nancy D. Weisberg, Esq. Telecopier: (610) 341-1099 (iii) All correspondence to any Holder shall be sent to the address set forth on such Holder's signature page hereto (or, in the case of a Permitted Transferee, such Permitted Transferee's Instrument of Adherence hereto). (iv) Any party may change the address to which correspondence to it is to be addressed by notification as provided for herein. (c) The parties acknowledge and agree that in the event of any breach of this Agreement, remedies at law may be inadequate, and each of the parties hereto shall be entitled to seek specific performance of the obligations of the other parties hereto and such appropriate injunctive relief as may be granted by a court of competent jurisdiction. (d) This Agreement may be executed in a number of counterparts, each of which together shall for all purposes constitute one Agreement, binding on all the parties hereto notwithstanding that all such parties have not signed the same counterpart. 28 IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date and year first above written. NEOWARE SYSTEMS, INC. By: Keith D. Schneck ---------------------------------- Name: Keith D. Schneck Title: Executive Vice President & CFO INVESTOR: Print Name of Investor: - ---------------------- [See below for Investors' names] - -------------------------------- By: ______________________________________ Name: Title: Investor's Address and Fax Number for Notice: - -------------------------------------------- ____________________________________________ ____________________________________________ ____________________________________________ This Registration Rights Agreement was entered into with the following Investors: Names of Investors - ------------------ Advantage Advisers Augusta Fund, LLC Amaranth L.L.C Ardsley Partners Fund II, L.P. Ardsley Offshore Fund, Ltd. Ardsley Partners Institutional Fund, L.P. Atlas Capital Master Fund Atlas Capital (Q.P.) L.P BayStar Capital II, L.P. Endeavor LP E.S. Tallmadge Residuary Trust 2 First American Insurance Small Cap Growth Fund First American Small Growth Opportunities Fund W. Jerome Frautschi Greater Milwaukee Foundation - Microcap Lyndhurst Associates Marion Lynton Milwaukee Jewish Federation Oregon Retail Employees Pension Trust The Pinnacle Fund, L.P. Henry Posner III Agency Posner Partners Microcap Paul M. Posner Agency SF Capital Partners Ltd. St. Paul Electric Construc Pension SC St. Paul Electric Construc Supp SC Swiftcurrent Partners, L.P. Swiftcurrent Offshore, Ltd. Waterfield Small Cap Growth WM Chester - Chester Children Small Cap [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] EXHIBIT A INSTRUMENT OF ADHERENCE Reference is hereby made to that certain Registration Rights Agreement, dated as of July 10, 2003, among Neoware Systems, Inc., a Delaware corporation (the "Company") and the Investors and the Permitted Transferees, as amended and in effect from time to time (the "Registration Rights Agreement'). Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in the Registration Rights Agreement. The undersigned, in order to become the owner or holder of, or have the right to acquire, _______ shares of Registrable Securities, hereby agrees that, from and after the date hereof, the undersigned has become a party to the Registration Rights Agreement in the capacity of a Permitted Transferee, and is entitled to all of the benefits under, and is subject to all of the obligations, restrictions and limitations set forth in, the Registration Rights Agreement that are applicable to Permitted Transferees. This Instrument of Adherence shall take effect and shall become a part of the Registration Rights Agreement immediately upon execution. Print Name of Permitted Transferee: - ---------------------------------- __________________________________________ By: ______________________________________ Name: Title: Permitted Transferee's Address and Fax Number for Notice: - -------------------------------------------------------- __________________________________________ __________________________________________ __________________________________________ Accepted: Neoware Systems, Inc. By: ______________________________________ Name: Title: Date: ____________________________________ EXHIBIT B FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT [Transfer Agent] Re: Neoware Systems, Inc. Ladies and Gentlemen: We are counsel to Neoware Systems, Inc., a Delaware corporation (the "Company"), and have represented the Company in connection with: (i) that certain Securities Purchase Agreement (the "Securities Purchase Agreement") entered into by and among the Company and the Purchasers named therein (the "Purchasers") pursuant to which the Company issued the Purchasers shares of the Company's Common Stock, par value $0.001 per share. Pursuant to the Securities Purchase Agreement, the Company has also entered into a Registration Rights Agreement with the Holders named therein (the "Registration Rights Agreement") pursuant to which the Company has agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), under the Securities Act of 1933, as amended (the "1933 Act"). In connection with the Company's obligations under the Registration Rights Agreement, on July 10, 2003, the Company filed a Registration Statement on Form [S-3/S-1] (File No. 333-____) (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder. In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [time of effectiveness] on [date of effectiveness] and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement. Very truly yours, MCCAUSLAND, KEEN & BUCKMAN cc: [Holders] EX-99 5 ex99.txt EXHIBIT 99 Exhibit 99 Neoware Systems Completes Private Equity Financing KING OF PRUSSIA, Pa., July 11, 2003 -- Neoware Systems, Inc. (Nasdaq:NWRE), the leading supplier of software, services, and thin client appliances, announced today that it has completed its recently announced private equity financing. Neoware sold 1.5 million shares at a per share price of $17.50, which represents a premium of 10% to the Company's average closing price over the preceding 15-day period. As a result of this transaction, the Company received net proceeds of nearly $25 million. The offer and sale of the securities being sold by Neoware in the private placement have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold absent registration, unless an exemption from applicable registration requirements is available. However, the Company has agreed to file a registration statement for the resale of the shares of common stock. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities. About Neoware Neoware provides software, services, and solutions to enable Appliance Computing, a proven Internet-based computing architecture targeted at business customers that is designed to be simpler and easier than traditional PC-based computing. Neoware's software and management tools power and manage a new generation of smart computing appliances that utilize the benefits of open, industry-standard technologies to create new alternatives to personal computers used in business and a wide variety of proprietary business devices. Neoware's products are designed to run local applications for specific vertical markets, plus allow access across a network to multi-user Windows servers, Linux servers, mainframes, minicomputers, and the Internet. Computing appliances that run and are managed by Neoware's software offer the cost benefits of industry-standard hardware and software, easier installation, and have lower up-front, maintenance, and administrative costs than proprietary or PC-based alternatives. More information about Neoware can be found on the Web at, http://www.neoware.com or via email at invest@neoware.com. Neoware is based in King of Prussia, Pa. Neoware is a registered trademark of Neoware Systems, Inc. All other names products and services are trademarks or registered trademarks of their respective holders. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strong balance sheet and cash position. These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in such forward-looking statements include timing and receipt of future orders, our timely development and customers' acceptance of our products, pricing pressures, rapid technological changes in the industry, growth of the Appliance Computing market, increased competition, our ability to attract and retain qualified personnel, adverse changes in customer order patterns, our ability to identify and successfully consummate and integrate future acquisitions, adverse changes in general economic conditions in the U.S. and internationally, risks associated with foreign operations and political and economic uncertainties associated with current world events. These and other risks are detailed from time to time in Neoware's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its reports on Form 10-K for the year ended June 30, 2002 and Form 10-Q for the quarter ended March 31, 2003. CONTACT: Neoware Systems, Inc. Keith Schneck (610) 277-8300 invest@neoware.com Cameron Associates Keith McGrath (212) 245-8000 x 203 kevin@cameronassoc.com -----END PRIVACY-ENHANCED MESSAGE-----