Exhibit 2.2
ASSET PURCHASE AGREEMENT
BY AND AMONG
SMITH MICRO SOFTWARE, INC.;
IS ACQUISITION SUB, INC.;
INSIGNIA SOLUTIONS PLC; AND
VARIOUS SUBSIDIARIES OF INSIGNIA SOLUTIONS PLC
Dated as of February 11, 2007
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE TRANSACTION AGREEMENT.......................................................... 1
1.1 Purchased Assets....................................................................... 1
1.2 Excluded Assets........................................................................ 3
1.3 Assumed Liabilities.................................................................... 4
1.4 Excluded Liabilities................................................................... 4
1.5 Non-Assignable Assets.................................................................. 5
ARTICLE 2 CONSIDERATION FOR TRANSFER......................................................... 6
2.1 Purchase Price......................................................................... 6
2.2 Holdback Amount........................................................................ 6
2.3 Withholding............................................................................ 7
ARTICLE 3 CLOSING AND CLOSING DELIVERIES..................................................... 7
3.1 Closing; Time and Place............................................................... 7
3.2 Deliveries by Selling Parties......................................................... 7
3.3 Deliveries by Purchaser............................................................... 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES............................. 9
4.1 Organization, Good Standing, Qualification............................................ 9
4.2 Authority of Selling Parties.......................................................... 10
4.3 Subsidiaries.......................................................................... 11
4.4 Capitalization........................................................................ 11
4.5 Seller Financial Statements and Internal Controls..................................... 12
4.6 Liabilities........................................................................... 13
4.7 Absence of Certain Changes............................................................ 14
4.8 Accounts Receivable................................................................... 17
4.9 Restrictions on Business Activities................................................... 17
4.10 Real Property; Leases................................................................. 18
4.11 Assets; Absence of Liens and Encumbrances............................................. 18
4.12 Intellectual Property................................................................. 19
4.13 Product Warranties; Defects; Liabilities; Services.................................... 23
4.14 Seller Contracts...................................................................... 23
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(continued)
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4.15 Change of Control Payments............................................................ 25
4.16 Interested Party Transactions......................................................... 25
4.17 Compliance with Laws.................................................................. 26
4.18 Litigation............................................................................ 26
4.19 Insurance............................................................................. 26
4.20 Minute Books.......................................................................... 26
4.21 Environmental Matters................................................................. 27
4.22 Brokers' and Finders' Fees............................................................ 27
4.23 Employee Benefit Plans................................................................ 28
4.24 Employment Matters.................................................................... 29
4.25 Tax Matters........................................................................... 31
4.26 Foreign Corrupt Practices Act......................................................... 32
4.27 Bank Accounts......................................................................... 33
4.28 Customers; Distributors............................................................... 33
4.29 Seller Customer Information........................................................... 33
4.30 Inventory............................................................................. 33
4.31 Governmental Authorization............................................................ 33
4.32 Opinion of Financial Advisor.......................................................... 33
4.33 Representations Complete.............................................................. 34
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASING PARTIES.......................... 34
5.1 Organization of Purchasing Parties.................................................... 34
5.2 Authority............................................................................. 34
5.3 No Conflict........................................................................... 35
5.4 Brokers' and Finders' Fees............................................................ 35
ARTICLE 6 PRE-CLOSING COVENANTS............................................................. 35
6.1 Conduct of the Business Prior to Closing.............................................. 35
6.2 No Solicitation....................................................................... 37
6.3 Certain Notifications................................................................. 38
6.4 Updating the Disclosure Schedules..................................................... 39
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TABLE OF CONTENTS
(continued)
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6.5 Access to Information................................................................. 39
6.6 Commercially Reasonable Efforts....................................................... 39
6.7 Consents.............................................................................. 39
6.8 Korean Joint Venture.................................................................. 39
6.9 Employees............................................................................. 39
6.10 Bridge Loan Proceeds.................................................................. 40
ARTICLE 7 POST CLOSING COVENANTS............................................................ 40
7.1 Seller Intellectual Property.......................................................... 40
7.2 Cooperation........................................................................... 40
7.3 Reserved.............................................................................. 41
7.4 Return of Purchased Assets............................................................ 41
7.5 Records and Documents................................................................. 41
7.6 Bulk Sales Indemnification............................................................ 41
7.7 Noncompetition Agreement.............................................................. 41
7.8 Non-Solicitation of Employees......................................................... 42
7.9 Maintenance of Government Approvals................................................... 42
7.10 Enforcement of Contracts.............................................................. 42
ARTICLE 8 EMPLOYEES......................................................................... 43
8.1 Transferred Employees................................................................. 43
8.2 European Union Legislation............................................................ 44
8.3 No Employment Guaranteed.............................................................. 45
8.4 Contractor Agreements................................................................. 45
8.5 No Benefit to Employees Intended...................................................... 46
ARTICLE 9 CONDITIONS TO CLOSING............................................................. 46
9.1 Conditions to Purchaser's Obligation to Close......................................... 46
9.2 Conditions to Seller's Obligation to Close............................................ 47
9.3 No Legal Impediments to Closing....................................................... 47
ARTICLE 10 TAX MATTERS....................................................................... 48
10.1 Tax Matters........................................................................... 48
ARTICLE 11 TERMINATION....................................................................... 48
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(continued)
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11.1 Circumstances for Termination......................................................... 48
11.2 Effect of Termination................................................................. 49
ARTICLE 12 INDEMNIFICATION................................................................... 49
12.1 Survival of Representations, Warranties and Covenants................................. 49
12.2 Indemnification....................................................................... 49
12.3 Limitations........................................................................... 51
12.4 Procedure for Claims Against Holdback Amount.......................................... 51
12.5 Purchase Price Adjustment............................................................. 53
ARTICLE 13 MISCELLANEOUS PROVISIONS...................................................... 53
13.1 Expenses.............................................................................. 53
13.2 Interpretation........................................................................ 53
13.3 Entire Agreement...................................................................... 53
13.4 Amendment, Waivers and Consents....................................................... 53
13.5 Successors and Assigns................................................................ 53
13.6 Governing Law......................................................................... 54
13.7 Jurisdiction; Waiver of Jury Trial.................................................... 54
13.8 Rules of Construction................................................................. 54
13.9 Additional Documents.................................................................. 54
13.10 Severability.......................................................................... 54
13.11 Exhibits.............................................................................. 54
13.12 Notices............................................................................... 54
13.13 Rights of Parties..................................................................... 55
13.14 Counterparts.......................................................................... 55
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") dated as of February 11, 2007,
by and among:
(A)SMITH MICRO SOFTWARE, INC., a company incorporated in Delaware
("Purchaser");
(B) IS Acquisition Sub, Inc., a company incorporated in Delaware and a
wholly-owned subsidiary of Purchaser (the "Acquisition Sub"): (Purchaser and the
Acquisition Sub being collectively referred to herein as the "Purchasing
Parties");
(C) INSIGNIA SOLUTIONS plc, a company incorporated under the laws of
England and Wales (company no. 1961960) ("Seller"); and
(D) the subsidiaries of Seller as set forth on Schedule 1 hereto, each of
which shall be a signatory to this Agreement (such subsidiaries and Seller
collectively referred to herein as the "Selling Parties", and each a "Selling
Party").
The capitalized terms used in this Agreement are defined in Exhibit A
hereto, unless otherwise defined herein.
RECITALS
WHEREAS, the Selling Parties are engaged in, among other things, providing
device management and over-the-air repair capabilities to mobile operators and
terminal manufacturers (the "Business"); and
WHEREAS, the Purchasing Parties desire to purchase from the Selling
Parties, and the Selling Parties desire to sell to the Purchasing Parties, all
of the assets of the Selling Parties used in the Business, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
representations, warranties, covenants and promises contained herein, the
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
THE TRANSACTION AGREEMENT
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, the Selling Parties shall sell, transfer, convey, assign and deliver
to the Purchasing Parties, and the Purchasing Parties shall purchase from the
Selling Parties, all of their respective right, title and interest in, to and
under the following (collectively, the "Purchased Assets"):
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(a) Receivables. All accounts and notes receivable, negotiable
instruments and chattel papers of the Selling Parties (the "Receivables"),
including the Receivables listed on Schedule 1.1(a), to the extent such
Receivables have not been paid prior to the Closing;
(b) Inventory. All inventory of products and components, wherever
located and whether held by a Selling Party or an Affiliate or third parties,
including all raw materials, work in process, samples, packaging, supplies,
service parts, purchased parts and goods and the finished goods listed on
Schedule 1.1(b) owned by the Selling Parties or their Affiliates as of the
Closing Date (collectively, the "Inventory"), and any and all rights to market
and sell all such Inventory;
(c) Machinery and Equipment. All machinery and equipment owned by
any of the Selling Parties or their Affiliates and rights in, to and under all
leases related to machinery and equipment to which any Selling Party or
Affiliate is a party (collectively, the "Machinery and Equipment"), including
the Machinery and Equipment listed on Schedule 1.1(c);
(d) Owned and Leased Vehicles. All vehicles owned by any of the
Selling Parties or their Affiliates and all rights in, to and under vehicle
leases to which any Selling Party or Affiliate is a party (collectively, the
"Owned and Leased Vehicles"), including the Owned and Leased Vehicles listed on
Schedule 1.1(d);
(e) Personal Property. All personal property, office furnishings and
furniture, decorations, supplies and other tangible personal property owned by
any of the Selling Parties or their Affiliates (the "Personal Property"),
including the Personal Property listed on Schedule 1.1(e).
(f) Leased Real Property. All rights in, to and under the real
estate leases listed on Schedule 1.1(f) (the "Real Property Leases"), together
with all of the Selling Parties' and their Affiliates' right, title and interest
in and to all land, buildings, structures, easements, appurtenances,
improvements (including construction in progress) and fixtures located thereon
(the "Leased Real Property");
(g) Leased Personal Property. All rights in, to and under leases of
personal property to which any of the Selling Parties or their Affiliates is a
party (the "Personal Property Leases"), including the Personal Property Leases
listed on Schedule 1.1(g);
(h) Intellectual Property. All Seller Intellectual Property,
including the Seller Intellectual Property listed on Schedule 1.1(h);
(i) Deposits and Advances. All performance and other bonds, security
and other deposits, advances, advance payments, prepaid credits and deferred
charges (the "Deposits and Advances"), including the Deposits and Advances
listed on Schedule 1.1(i);
(j) Rebates and Credits. All rights in, to and under claims for
refunds, rebates or other discounts due from suppliers or vendors and rights to
offset in respect thereof (the "Rebates and Credits"), including those Rebates
and Credits listed on Schedule 1.1(j);
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(k) Seller Contracts. All rights in, to and under any and all
Contracts to which Seller or any of its Subsidiaries is a party or may be bound
or receive benefits or receive and/or grant rights in and/or to the Seller
Intellectual Property or by which the Purchased Assets or Assumed Liabilities
may be affected (collectively, "Seller Contracts"), including those Seller
Contracts listed on Schedule 1.1(k)(i); provided, however, that the Seller
Contracts listed on Schedule 1.1(k)(ii) shall not be Purchased Assets;
(l) Governmental Approvals. All Governmental Approvals (and pending
applications therefor), including the Governmental Approvals listed on Schedule
1.1(l);
(m) Claims. All claims, choses-in-action, rights in action, rights
to tender claims or demands to any of the Selling Parties' insurance companies,
rights to any insurance proceeds, and other similar claims, including those
listed on Schedule 1.1(m);
(n) Books and Records. All books, files, papers, agreements,
correspondence, databases, information systems, programs, software, documents,
records and documentation thereof related to any of the Purchased Assets or the
Assumed Liabilities, or used in the conduct of the Business, on whatever medium
(the "Books and Records");
(o) Cash. All cash, cash equivalents and marketable securities;
(p) Other Assets. All other assets, properties, rights and claims
related to the operations or conduct of the Business or which arise in or from
the conduct thereof; and
(q) Goodwill. All goodwill of the Selling Parties of every kind and
description pertaining to or used in the Business which will be acquired by the
Purchasing Parties at the Closing, together with the exclusive right to
represent themselves as carrying on the Business in succession to the Selling
Parties.
1.2 Excluded Assets. Notwithstanding Section 1.1, the following assets of
Seller (the "Excluded Assets") shall not be included in the Purchased Assets:
(a) Certain Debt. Any intercompany or intracompany receivable cash
balances owed to any of the Selling Parties;
(b) Seller Corporate Documents. Seals, certificates of organization,
minute books or other similar records related to the organization of the Selling
Parties;
(c) Employee Benefit Contracts. Seller Employee Plans and contracts
of insurance for employee group medical, dental and life insurance plans;
(d) Insurance Policies. All insurance policies and all refunds for
unearned premiums;
(e) Records. All personnel, financial, Tax and accounting records
and other records that the Selling Parties are required by law to retain in
their possession; and
(f) Tax Refunds. All refunds or rights of recovery relating to Taxes
of Seller.
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1.3 Assumed Liabilities. Subject to the terms and conditions of this
Agreement, at the Closing, the Selling Parties shall assign, and the Purchasing
Parties shall assume only the Assumed Liabilities. Thereafter, the Purchasing
Parties shall pay and discharge all such Assumed Liabilities as and when such
Assumed Liabilities become due and owing. For the purposes of this Agreement,
the "Assumed Liabilities" shall mean those Liabilities and payment obligations
of the Selling Parties which shall be designated by the Selling Parties prior to
Closing, in an amount not to exceed $2,575,000 in eventual payments or net
increase in balance sheet accruals (determined in accordance with GAAP as of the
Closing Date) by the Purchasing Parties; provided that (i) deferred revenue
obligations of the Selling Parties assumed by the Purchasing Parties shall not
count towards such dollar limit on Assumed Liabilities and (ii) the amount of
Assumed Liabilities shall include the value of accrued vacation time that is
credited to Employees who are hired by any of the Purchasing Parties at Closing
and that is not paid by the Selling Parties. Notwithstanding the foregoing, the
Purchasing Parties shall not, without the prior written consent of Purchaser,
assume liability or payment obligations for any Taxes (other than
employment-related Taxes, but excluding any interest, fines, penalties or
additions thereon) or all or any portion of the Liability described in Section
1.4(p). If the Selling Parties shall be required to pay any amounts included in
Assumed Liabilities, then the Purchasing Parties shall reimburse the Selling
Parties thereofor, subject to potential offset for any amounts owing to the
Purchasing Parties by the Selling Parties.
1.4 Excluded Liabilities. Except for the Assumed Liabilities, the
Purchasing Parties shall not assume and shall not be liable or responsible for
any Liability of the Selling Parties or any Affiliate of Seller (collectively,
the "Excluded Liabilities"). Without limiting the foregoing, except for the
Assumed Liabilities, Purchaser shall not be obligated to assume, and does not
assume, and hereby disclaims any of the following Liabilities of the Selling
Parties or their Affiliates:
(a) Any Liability for breaches of any Seller Contract prior to the
Closing or any Liability for payments or amounts due under any Seller Contract
prior to the Closing; except that Liabilities for obligations under Seller
Contracts that appear as Liabilities in the Seller Financial Statements, and
Liabilities for payment obligations under the Seller Contracts listed on
Schedule 1.1(k)(i) arising after the date of the Seller Financial Statements
shall, for purposes of this Agreement, be Assumed Liabilities;
(b) Any Liability for contingent liabilities to the extent not fully
reflected on the audited balance sheet of Seller as of December 31, 2006;
(c) Any note payable or other Liability payable to any current or
former member of Seller's or any other Selling Party's board of directors,
including any Liability for accrued but unpaid fees payable to such directors;
(d) Any intercompany or intracompany payable owed by any Selling
Party to any Selling Party;
(e) Any Liability for Taxes attributable to or imposed upon any
Selling Party or Affiliate for any Tax period, or attributable to or imposed
upon the Purchased Assets or the
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Business for the Pre- Closing Tax Period, other than Taxes that are included in
the Assumed Liabilities, including any Transfer Taxes;
(f) Any Liability arising from accidents, torts, misconduct,
negligence, breach of fiduciary duty, violation of applicable law or statements
made or omitted to be made (including libelous or defamatory statements) prior
to the Closing, whether or not covered by workers' compensation or other forms
of insurance;
(g) Any Liability arising as a result of any legal or equitable
action or judicial or administrative Proceeding initiated at any time, to the
extent related to any action or omission prior to the Closing relating to (i)
infringement or misappropriation of any Intellectual Property Rights or any
other rights of any Person (including any right of privacy or publicity); (ii)
breach of product warranties to the extent not reserved against in the Seller
Financial Statements; (iii) injury, death, property damage or other losses
arising with respect to or caused by Seller Products or the manufacturer or
design thereof; or (iv) violations of any Legal Requirements (including federal
and state securities laws);
(h) Any Liability arising out of any Seller Employee Plans or any
contract of insurance for employee group medical, dental or life insurance
plans;
(i) Any Liability for making payments of any kind to current or
former Employees (including as a result of the Transaction, the termination of
an employee by a Selling Party, or other claims arising out of the terms of
employment with a Selling Party) of the Selling Parties or with respect to
payroll taxes relating to employees of the Selling Parties;
(j) Any Liability incurred to any third party in connection with the
making or performance of this Agreement and the Transaction;
(k) Any Liability to third parties for expenses and fees incurred by
the Selling Parties incidental to the preparation of the Transaction Documents,
preparation or delivery of materials or information requested by Purchaser, and
the consummation of the Transaction, including all broker, investment banker,
financial advisor, counsel and accounting fees;
(l) Any Liability for the violation of any Legal Requirement
applicable to the Selling Parties, the Purchased Assets or the Assumed
Liabilities prior to the Closing;
(m) Other than any portion thereof specifically included in the
Assumed Liabilities under Section 1.3, any Liability to any of the Selling
Parties' shareholders, members, or other equity holders;
(n) Any Liability with respect to options to purchase securities of,
or interests in, any Selling Party or Affiliate;
(o) Any Liability arising out of that certain Stock Purchase and
Sale Agreement by and among the Seller, Kenora Ltd., the Shareholders of Kenora
Ltd., Korrogo-Technologies Ltd., and mi4e Device Management AB, other than
Liabilities arising pursuant to Section 1.5 thereof;
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(p) Any Liability relating to the judgment against Insignia France
held by Mr. Groff; and
(q) Any costs or expenses associated with any Contracts not assumed
by the Purchasing Parties hereunder. 1.5 Non-Assignable Assets.
1.5 Non-Assignable Assets.
(a) Notwithstanding the foregoing, if any Seller Contract or other
Purchased Asset is not assignable or transferable (each, a "Non-Assignable
Asset") without the consent of, or waiver by, a third party (each, a "Required
Consent"), either as a result of the provisions thereof or applicable Legal
Requirements, and any such Required Consent is not obtained on or prior to the
Closing Date, this Agreement and the related instruments of transfer shall not
constitute an assignment or transfer of such Non-Assignable Asset, and the
Purchasing Parties or their designee(s) shall not assume the Selling Parties'
rights or obligations under such Non-Assignable Asset (and such Non-Assignable
Asset shall not be included in the Purchased Assets). Instead, without limiting
the Selling Parties' obligations under Section 6.7 or the Purchasing Parties'
rights under Section 9.1, each of the parties hereto shall use commercially
reasonable efforts to obtain all such Required Consents as soon as reasonably
practicable after the Closing Date and thereafter the Selling Parties shall
assign to Purchaser or its designee such Non-Assignable Assets. Following any
such assignment, such assets shall be deemed Purchased Assets for purposes of
this Agreement.
(b) After the Closing and subject to payment of the Purchase Price
by Purchaser pursuant to Section 2.1, the Selling Parties shall cooperate with
the Purchasing Parties in any reasonable arrangement designed to provide the
Purchasing Parties or their designee(s) with all of the benefits of the
Non-Assignable Assets after the Closing as if the appropriate Required Consents
had been obtained, including by granting subleases or other rights and
establishing arrangements whereby the Purchasing Parties or their designee(s)
shall undertake the work necessary to perform under the Seller Contracts.
ARTICLE 2
CONSIDERATION FOR TRANSFER
2.1 Purchase Price. As full consideration for the sale, assignment,
transfer and delivery of the Purchased Assets by the Selling Parties to the
Purchaser Parties, Purchaser shall deliver to Seller, acting on its own behalf
and on behalf of the Selling Parties, consideration of Sixteen Million Dollars
(US$16,000,000) (the "Purchase Price"), payable in the following manner:
(a) Purchaser shall deliver to Seller for the account of the Selling
Parties by wire transfer of immediately available funds, funds equal to Thirteen
Million dollars (U.S.) (US$13,000,000), less any principal amount in excess of
$1,500,000 payable by the Selling Parties under the Promissory Note initially
delivered to Seller on December 22, 2006;
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(b) Purchaser shall discharge and forgive the liabilities of Seller
or its Subsidiaries to Purchaser pursuant to the Promissory Note initially
delivered to Seller on December 22, 2006; and
(c) One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Holdback Amount") shall be payable by Purchaser subject to and in accordance
with Section 2.2.
2.2 Holdback Amount. As security for the Seller Indemnification
Obligations, at the Closing, Purchaser shall retain from the Purchase Price an
amount of cash equal to the Holdback Amount. On the 12-month anniversary of the
Closing Date (or, if such date is not a Business Day, the first Business Day
thereafter) (the "Holdback Due Date"), Purchaser shall deliver the Holdback
Amount to the Seller; provided, however, that Purchaser may withhold from such
delivery (i) any amounts applied in satisfaction of the Seller Indemnification
Obligations and (ii) any amounts then in dispute related to Seller
Indemnification Obligations.
2.3 Withholding. Purchaser shall be entitled to deduct and withhold from
any consideration payable or otherwise deliverable pursuant to this Agreement to
any Selling Party such amounts as may be required to be deducted or withheld
therefrom under any provision of federal, state, local or foreign Tax law or
under any other applicable Legal Requirement. To the extent such amounts are
properly deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the person to whom such amounts
would otherwise have been paid.
ARTICLE 3
CLOSING AND CLOSING DELIVERIES
3.1 Closing; Time and Place. The closing of the Transaction (the
"Closing") shall occur at the offices of Morrison & Foerster LLP, 555 West Fifth
Street, Suite 3500 Los Angeles, California at 10:00 A.M. Pacific time on the
third Business Day after the day on which all of the conditions to closing set
forth in Article 9 are satisfied or waived (other than conditions that are
intended to be satisfied at the Closing), or at such other date, time or place
as the parties may agree (the "Closing Date").
3.2 Deliveries by Selling Parties. At the Closing, the Selling Parties
shall (i) take all steps necessary to place Purchaser in actual possession and
operating control of the Purchased Assets and (ii) deliver each of the following
items, duly executed and delivered by the applicable Selling Party or Selling
Parties, all of which shall be in a form and substance reasonably acceptable to
Purchaser and Purchaser's counsel:
(a) General Assignment and Bill of Sale. General Assignment and Bill
of Sale covering all of the applicable Purchased Assets, substantially in the
form attached hereto as Exhibit B (the "General Assignment and Bill of Sale");
(b) Assignment and Assumption Agreement[s]. One or more Assignment
and Assumption Agreements between various Seller and Insignia Subsidiaries and
various of the Purchasing Parties covering all of the Assumed Liabilities,
substantially in the form attached hereto as Exhibit C ("Assignment and
Assumption Agreement");
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(c) Intellectual Property Assignment. Any and all documents
necessary to properly assign and record the assignment to the Purchasing Parties
all of the Selling Parties' right, title and interest in and to all of the
Seller Intellectual Property, including an Intellectual Property Assignment
Agreement (the "IP Assignment") substantially in the form of Exhibit D hereto,
for all of the Seller Intellectual Property, including the Seller Intellectual
Property listed on Schedule 4.12(a);
(d) Transition Services Agreement. A transition services agreement,
substantially in the form attached hereto as Exhibit E (the "Transition Services
Agreement"), obligating the Selling Parties and the Purchaser to provide certain
transition services to each other after the Closing;
(e) Offer Letter. An Offer Letter, in a form reasonably acceptable
to Purchaser (the "Offer Letter"), shall be executed and delivered by Mark
McMillan;
(f) Other Conveyance Instruments. Such other specific instruments of
sale, transfer, conveyance and assignment as Purchaser may reasonably request;
(g) Books and Records. The Books and Records;
(h) Seller Contracts. Originals of all Seller Contracts, to the
extent such originals are in the possession of Seller or any Insignia
Subsidiary;
(i) Assignment of Seller Contracts. Assignments to Purchaser or its
Affiliates of the Seller Contracts;
(j) Assignment of Leases. Assignments of all Real Property Leases
and Personal Property Leases;
(k) Payoff and Release Letters. Payoff and release letters agreeing
to release all Liens against the Business or any of the Purchased Assets in form
and substance reasonably satisfactory to Purchaser;
(l) Certificate of Representations and Warranties and Board of
Directors Approval. A Certificate executed on behalf of Seller by (i) an
executive officer of Seller, certifying as to the matters in Section 9.1(a) and
(ii) its Corporate Secretary that the board of directors of Seller has approved
this Agreement and the Transaction in accordance with Section 9.1(e) and
attaching all resolutions of the board of directors pertaining to the
Transaction;
(m) Financial Statements. A copy of Seller's audited financial
statements as of and for the year ended December 31, 2006;
(n) Certificates of Good Standing. A certificate from each of the
jurisdictions in the United States in which each of the Selling Parties is
organized, certifying to that Entity's good standing and qualification to do
business in that jurisdiction and to such Entity's payment of all applicable
franchise Taxes, as of a date no earlier than two (2) Business Days prior to the
Closing Date;
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(o) Opinion of Counsel. Purchaser shall have received from Fenwick &
West LLP, counsel for Seller, an opinion in the form set forth in Exhibit H
attached hereto, which shall be addressed to Purchaser, dated as of the Closing
Date;
(p) FIRPTA Certificate. From Insignia Solutions, Inc., a Delaware
corporation, a certificate issued pursuant to and in compliance with Treasury
Regulation Section 1.1445-2(b)(2), certifying that the Selling Party is not a
foreign person; and
(q) Other Documentation. Such other certificates, instruments or
documents required pursuant to the provisions of this Agreement or otherwise
reasonably necessary or appropriate to transfer the Purchased Assets in
accordance with the terms hereof and consummate the Transaction, and to vest in
Purchaser and its successors and assigns full, complete, absolute, legal and
equitable title to the Purchased Assets, free and clear of all Encumbrances.
3.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver the
following items, duly executed by Purchaser as applicable, all of which shall be
in a form and substance reasonably acceptable to Seller and Seller's counsel:
(a) Wire Transfer. A wire transfer of immediately available funds,
to an account of Seller designated by Seller in writing to Purchaser at least
two Business Days prior to the date of such transfer, in the amount provided in
Section 2.1(a);
(b) Certificate of Representations and Warranties. A Certificate
executed on behalf of Purchaser by its Chief Executive Officer, certifying the
matters in Section 9.2(a); and
(c) Assignment and Assumption Agreement[s]. Fully executed copies of
the Assignment and Assumption Agreement[s].
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES
Except as specifically set forth on Schedule 4 (the "Seller Disclosure
Schedule") attached to this Agreement (the parts of which are numbered to
correspond to the individual Section numbers of this Article 4, and which
disclosure schedule shall qualify such referenced section and which shall also
qualify any other representation and warranty to the extent the relevance of
such disclosure to other representations and warranties is clearly apparent from
the actual text of the disclosed exception), Seller hereby represents and
warrants (without limiting any other representations or warranties made by any
of the Selling Parties in this Agreement or any other Transaction Document) to
Purchaser as follows:
4.1 Organization, Good Standing, Qualification. Each Selling Party is an
entity duly organized, validly existing and in good standing under the Laws of
the jurisdiction of its organization with all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as now proposed to be conducted. Each Selling Party is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction listed on Schedule 4.1(a) and in each
jurisdiction in which the
9
conduct of its business or the ownership, leasing, holding or use of its
properties makes such qualification necessary, except such other jurisdictions
where the failure to be so qualified or licensed or in good standing could not
reasonably be expected to have a Seller Material Adverse Effect. The copies of
organizational documents (including charter, articles of association and bylaws)
of each of the Selling Parties (the "Seller Organizational Documents"), each as
amended to date, and previously delivered to Purchaser's counsel, are complete
and correct, and no amendments thereto are pending. No Selling Party has
violated its applicable Seller Organizational Documents in any respect material
to the Transaction. Schedule 4.1(b) lists every state or foreign jurisdiction in
which each of the Selling Parties has facilities, maintains an office or has an
Employee. None of the Selling Parties nor any of their predecessors has
conducted any business under or otherwise used for any purpose in any
jurisdiction any fictitious name, assumed name, trade name or other name.
4.2 Authority of Selling Parties.
(a) Each of the Selling Parties (to the extent a signatory) has full
right, power and authority to enter into this Agreement and any other
agreements, certificates or documents contemplated thereby or hereby
(collectively, the "Related Agreements", and together with the Agreement, the
"Transaction Documents") and to consummate the Transaction. The execution,
delivery and performance of the Transaction Documents by each of the Selling
Parties has been duly authorized by all necessary action of such Selling Party,
and no other action on the part of such Selling Party is required in connection
therewith. The Transaction Documents constitute, or will when executed and
delivered by such Selling Party constitute, valid and binding obligations of
such Selling Party, enforceable in accordance with their respective terms,
except as such enforceability may be subject to applicable bankruptcy,
reorganization, insolvency, moratorium and similar Laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
(b) Except as set forth on Schedule 4.2(b), no consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, or notice to any court, administrative agency or commission or other
international, federal, state, county, local or foreign governmental authority,
instrumentality, agency or commission (each, a "Governmental Entity"), is
required by, or with respect to, the Selling Parties or any of their
Subsidiaries in connection with the execution and delivery of this Agreement and
the Transaction Documents to which such Selling Party is a party or the
consummation of the Transaction.
(c) Schedule 4.2(c) contains a complete and accurate list of all
Required Consents. Except as set forth on Schedule 4.2(c), the execution,
delivery and performance by each Selling Party of the Agreement and the
Transaction Documents to which such Selling Party is a party, and the
consummation of the Transaction, do not and will not conflict with or violate or
result in the violation of or default under (with or without notice or lapse of
time, or both) or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under, or
result in the imposition or creation of any Lien upon any of the properties or
assets (tangible or intangible) under (i) any provision of the charter, by-laws
and any other applicable Seller Organizational Document (as amended to date),
(ii) any Laws, order, writ, judgment, injunction, decree, determination or
arbitration award binding upon or applicable to any Selling Party, and (iii) any
indenture or loan or credit agreement or any other material
10
agreement, contract, instrument, mortgage, Lien, lease, permit, authorization,
whether written or oral, to which any Selling Party is a party or is bound, or
result in the creation or imposition of any Lien on any of the assets or the
property of such Selling Party. Except as set forth on Schedule 4.2(c), the
execution, delivery and performance by each Selling Party of the Agreement and
the Transaction Documents to which such Selling Party is a party, and the
consummation of the Transaction do not and will not cause such Selling Party or
Purchaser to become subject to, or to become liable for the payment of, any
Transfer Taxes (other than Transfer Taxes that would not be Assumed
Liabilities).
4.3 Subsidiaries. Except for the Entities set forth in Schedule 4.3(a)
(the "Insignia Subsidiaries") and the Joint Venture Interest set forth in
Schedule 4.3(b), none of the Selling Parties owns, directly or indirectly, any
capital stock of or any other equity interest in, or controls, directly or
indirectly, any other Person, and none of the Selling Parties are or have
otherwise been, directly or indirectly, a party to, member of or participant in
any partnership, joint venture or similar business entity. Except as
specifically indicated in Schedule 4.3(c), none of the Insignia Subsidiaries is
material to Seller's business, operations or financial condition. Each Insignia
Subsidiary is duly organized, validly existing and in good standing (to the
extent applicable) under the Laws of its jurisdiction of formation. Each
Insignia Subsidiary has the full corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as now proposed to be conducted. Each Insignia Subsidiary is duly qualified or
licensed to do business and is in good standing (to the extent applicable) as a
foreign organization in each jurisdiction listed on Schedule 4.3(d) and in each
jurisdiction in which the conduct of its business or the ownership, leasing,
holding or use of its properties makes such qualification necessary, except such
other jurisdictions where the failure to be so qualified or licensed or in good
standing could not reasonably be expected to have a Seller Material Adverse
Effect.
4.4 Capitalization.
(a) All of the outstanding capital stock of, or other ownership
interest in, each Insignia Subsidiary, is owned by Seller, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). There are no
outstanding (i) securities of any Insignia Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities or ownership
interests in any Insignia Subsidiary or (ii) options or other rights to acquire
from any Insignia Subsidiary, or obligation on the part of any Insignia
Subsidiary to issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable for any capital
stock, voting securities or ownership interests in, any Insignia Subsidiary (the
items in clauses (i) and (ii) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of any Insignia Subsidiary to
repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
All of the outstanding share capital of each Insignia Subsidiary has been duly
authorized and is validly issued, fully paid and non-assessable, have been
issued in full compliance with all applicable securities laws and other
applicable Laws, and are free and clear of all Encumbrances.
11
(b) There is no (i) outstanding preemptive right, subscription,
option, call, warrant or other right to acquire any securities or ownership
interest in any of the Insignia Subsidiaries or any agreement to create any such
obligation; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any securities of any Insignia
Subsidiary; (iii) contract under which any Insignia Subsidiary is or may become
obligated to sell, issue or otherwise dispose of or redeem, purchase or
otherwise acquire any of its securities; or (iv) shareholder agreement, voting
trust or other agreement, arrangement or understanding that may affect the
exercise of voting or any other rights with respect to the capital stock or
ownership interest in any Insignia Subsidiary. There are no declared or accrued
but unpaid dividends with respect to any shares of capital stock of any Insignia
Subsidiary.
(c) No Seller Options or warrants issued by Seller or any other
Selling Party (the "Seller Warrants") will constitute Assumed Liabilities;
following the Closing Purchaser shall have no Liabilities under the Seller
Option Plans.
4.5 Seller Financial Statements and Internal Controls.
(a) Since January 1, 2003, Seller has filed with the Securities and
Exchange Commission (the "SEC") all material forms, registration statements,
prospectuses, reports, schedules and documents (including all exhibits,
post-effective amendments and supplements thereto) (the "Seller SEC Documents")
required to be filed by it under each of the Securities Act of 1933, as amended
(the "Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), all of which, as amended if applicable, complied in all
material respects as to form with all applicable requirements of the Securities
Act and/or the Exchange Act and the Sarbanes-Oxley Act ("SOX") and the rules and
regulations thereunder. As of their respective dates (taking into account any
amendments or supplements filed prior to the date hereof), the Seller SEC
Documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the principal executive officer and principal financial
officer of Seller (or each former principal executive officer of Seller and each
former principal financial officer of Seller, as applicable) has made all
certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or
Sections 302 and 906 of SOX and the rules and regulations of the SEC promulgated
thereunder with respect to the Seller SEC Documents, and the statements
contained in such certifications are true and correct. For purposes of this
Section 4.5(b), "principal executive officer" and "principal financial officer"
shall have the meanings given to such terms in SOX. Neither Seller nor any
Insignia Subsidiary has outstanding, or has arranged any outstanding,
"extensions of credit" to directors or executive officers within the meaning of
Section 402 of SOX.
(c) The consolidated financial statements of Seller included in the
Seller SEC Documents comply as to form, as of their respective dates of filing
with the SEC, in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
effective in the United States ("GAAP") applied on a basis consistent throughout
the periods indicated and consistent with each other (except, in the case of
unaudited statements, as permitted by Form 10-Q or 8-K or the applicable rules
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present
12
the consolidated financial position of Seller and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which are not material). The
books and records of Seller and the Insignia Subsidiaries are maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
(d) The consolidated financial statements of Seller as of and for
the year ended December 31, 2006 (collectively, the "Seller Financial
Statements", and the balance sheet included therein at December 31, 2006 being
the "Seller Balance Sheet" and December 31, 2006 being the "Balance Sheet Date")
will comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, will have been prepared in accordance with GAAP and will fairly present
the consolidated financial position of Seller and its consolidated subsidiaries
as of the Balance Sheet Date and the consolidated results of their operations
and cash flows for the period then ended.
(e) Neither Seller nor any Insignia Subsidiary is a party to, or has
any commitment to become a party to, any joint venture, off-balance sheet
partnership or any similar contract or arrangement (including any contract or
arrangement relating to any transaction or relationship between or among Seller
and any Insignia Subsidiary, on the one hand, and any unconsolidated Affiliate,
including any structured finance, special purpose or limited purpose entity or
Person, on the other hand or any "off-balance sheet arrangements" (as defined in
Item 303(a) of Regulation S-K)), where the result, purpose or intended effect of
such contract or arrangement is to avoid disclosure of any material transaction
involving, or material liabilities of, Seller or any Insignia Subsidiary in
Seller's or such Insignia Subsidiary's published financial statements or other
of the Seller SEC Documents.
(f) Seller maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(g) Except as otherwise disclosed in the Seller SEC Documents, since
December 31, 2004, Seller has not received from its independent auditors any
oral or written notification of a (x) "reportable condition" or (y) "material
weakness" in Seller's internal controls. For purposes of this Agreement, the
terms "reportable condition" and "material weakness" shall have the meanings
assigned to them in the Statements of Auditing Standards 60, as in effect on the
date hereof.
(h) To Seller's Knowledge, no current or former Employee has
provided information to any Governmental Entity regarding the commission of any
crime or the violation of any Law applicable to Seller, any Insignia Subsidiary
or any part of their respective operations.
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(i) During the periods covered by Seller Financial Statements,
Seller's external auditor was independent of Seller and its management.
(j) Seller has in place a revenue recognition policy consistent with
GAAP.
4.6 Liabilities.
(a) As of the Closing, neither Seller nor any Insignia Subsidiary
will have (i) any liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type, whether accrued, absolute,
contingent, matured, unmatured or other (whether or not required to be reflected
in Seller Financial Statements in accordance with GAAP), that has not (A) been
reflected or reserved against in the Seller Balance Sheet or (B) arisen in the
ordinary course of Seller's business consistent with past practices since the
Balance Sheet Date, other than Excluded Liabilities not assumed by any
Purchasing Party pursuant to this Agreement or by operation of law, or (ii) any
"off-balance sheet arrangements" (as such term is defined in Item 303(a)(4) of
Regulation S-K promulgated under the Exchange Act).
(b) Schedule 4.6(b) sets forth an accurate and complete breakdown of
(i) the aging of the accounts payable of Seller and its Subsidiaries as of
December 31, 2006; (ii) any customer deposits or other deposits held by Seller
and its Subsidiaries as of the date hereof; and (iii) all notes payable and
other indebtedness of Seller and its Subsidiaries as of the date hereof.
(c) As of the Closing all accounts payable of Seller and its
Subsidiaries as of December 31, 2006 will be reflected on the Seller Financial
Statements. All accounts payable of Seller and its Subsidiaries that arose after
December 31, 2006 have been recorded on the accounting books and records of
Seller. All outstanding accounts payable of Seller and its Subsidiaries
represent valid obligations arising from bona fide purchases of assets or
services, which assets or services have been delivered to Seller or its
Subsidiaries.
(d) Neither Seller nor any Insignia Subsidiary has, at any time, (i)
made a general assignment for the benefit of creditors, (ii) filed, or had filed
against it, any bankruptcy petition or similar filing, (iii) suffered the
attachment or other judicial seizure of all or a substantial portion of its
assets, or (iv) been convicted of, or pleaded guilty or no contest to, any
felony. To the Knowledge of Seller, none of its current officers, directors or
Employees has been convicted of, or pleaded guilty or no contest to, any felony.
(e) Neither Seller nor any Insignia Subsidiary is or has been a
party to any agreement whereby it has guaranteed or otherwise agreed to cause,
insure or become liable for, or pledged any of its assets to secure, the
performance or payment of, any obligation or other liability of any Person
(other than Seller or an Insignia Subsidiary).
4.7 Absence of Certain Changes. Except as set forth in Schedule 4.7, since
the Balance Sheet Date there has not been, and between the date hereof and the
Closing there will not have, occurred or arisen any:
(a) transaction by Seller or any Insignia Subsidiary, except in the
ordinary course of business and consistent with past practices;
14
(b) amendments or changes to any Seller Organizational Document;
(c) capital expenditure or capital commitment by Seller or any
Insignia Subsidiary in any amount in excess of $10,000 in any individual case or
$25,000 in the aggregate;
(d) payment, discharge or satisfaction of any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise
of Seller or any Insignia Subsidiary), other than payments, discharges or
satisfactions in the ordinary course of business and consistent with past
practices;
(e) destruction of, damage to or loss of any material assets,
business or customer of Seller or any Insignia Subsidiary (whether or not
covered by insurance);
(f) work stoppage, labor strike or other labor trouble, or any
action, suit, claim, labor dispute or grievance relating to any labor,
employment and/or safety matter involving Seller or any Insignia Subsidiary,
including charges of wrongful discharge, discrimination, wage and hour
violations, or other unlawful labor and/or employment practices or actions;
(g) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by Seller or any Insignia
Subsidiary;
(h) revaluation by Seller or any its Subsidiaries of any of their
assets, including the writing down of the value of inventory or writing off of
notes or accounts receivable;
(i) (x) declaration, setting aside or payment of a dividend or other
distribution (whether in cash, stock or property) with respect to any Seller
Shares or Subsidiary Securities, or any direct or indirect redemption, purchase
or other acquisition by Seller or any Insignia Subsidiary of any Seller Shares
or Subsidiary Securities, other than repurchases of Seller Shares from current
and former Employees, consultants or other Persons performing services for
Seller pursuant to agreements under which Seller has the option to repurchase
such shares at cost upon the termination of employment or other services, (y)
any split, combination or reclassification of any Seller Shares, or Subsidiary
Securities, or (z) any issuance or authorization of the issuance of any other
securities in respect of, in lieu of or in substitution for, any Seller Shares
or Subsidiary Securities;
(j) increase in the salary or other compensation payable or to
become payable by Seller or any Insignia Subsidiary to any of their officers,
directors, Employees, consultants, contractors, or advisors, including the
modification of any existing compensation or equity arrangements with such
individuals, or the declaration, payment or commitment or obligation of any kind
for the payment by Seller or any Insignia Subsidiary of a bonus or other
additional salary or compensation to any such Person other than pursuant to
arrangements or commitments in effect on the date hereof and set forth in
Schedule 4.7(j);
15
(k) employee terminations and/or layoffs by the Seller and its
Subsidiaries; between the Balance Sheet Date and the date of this Agreement
Seller and its Subsidiaries have preserved intact and kept available the
services of its employees, and during the period from the date of this Agreement
to the Closing Seller and its Subsidiaries will use their reasonable best
efforts to preserve intact and keep available the services of its employees, in
each case in accordance with past practice, it being understood that termination
of employees with poor performance ratings or for cause shall not constitute a
violation of this clause (k);
(l) (i) grant of any severance or termination pay to any director,
officer or Employee, except payments made pursuant to written agreements
outstanding on the date hereof and as disclosed in the Seller Disclosure
Schedule, (ii) adoption or amendment of any employee benefit plan or severance
plan, (iii) entering into any employment contract, extension of any employment
offer, payment or agreement to pay any bonus or special remuneration to any
director or Employee or (iv) increase in the salaries, wage, rates or other
compensation of Employees, other than payments made pursuant to standard written
agreements outstanding on the date hereof and disclosed in Schedule 4.7(l);
(m) entering into of any Seller Contract (including any strategic
alliance, joint development or joint marketing agreement or any loan agreement
or instrument), any termination, extension, amendment or modification of the
terms of any Seller Contract or any waiver, release or assignment of any
material rights or claims thereunder, except in the ordinary course of business
and consistent with past practices;
(n) sale, lease, license or other disposition of any of the assets
or properties of Seller or any Insignia Subsidiary, or creation of any Lien in
such assets or properties, except non-exclusive licenses to customers in the
ordinary course of business and consistent with past practices;
(o) loan by Seller or any Insignia Subsidiary to any Person,
incurrence by Seller or any Insignia Subsidiary of any indebtedness, guarantee
by Seller or any Insignia Subsidiary of any indebtedness, issuance or sale of
any debt securities of Seller or any Insignia Subsidiary or purchase of or
guaranteeing of any debt securities of others, except for advances to Employees
for travel and business expenses in the ordinary course of business and
consistent with past practices;
(p) waiver or release of any right or claim of Seller or any
Insignia Subsidiary, including any write-off or other compromise of any account
receivable of Seller, except in the ordinary course of business and consistent
with past practices;
(q) commencement, or notice or threat of commencement, of any
lawsuit or proceeding against or investigation of Seller or any Insignia
Subsidiary or their affairs, or commencement or settlement of any litigation by
Seller or any Insignia Subsidiary (except for (i) any lawsuit, proceeding or
investigation relating to claims arising out of Assumed Liabilities and (ii) any
lawsuit, proceeding or investigation arising after the date of this Agreement if
it could nor reasonably represent a liability on the part of the Purchaser
following the Closing);
(r) (i) transfer or sale by Seller or any Insignia Subsidiary of any
rights to Seller Intellectual Property or the entering into of any license
agreement (other than non-exclusive end-user license agreements entered into by
Seller in the ordinary course of business
16
consistent with past practices that do not include any rights with respect to
source code), distribution agreement, reseller agreement, security agreement,
assignment or other conveyance or option for the foregoing, with respect to
Seller Intellectual Property with any Person, (ii) the purchase or other
acquisition of any Intellectual Property or the entering into of any license
agreement, distribution agreement, reseller agreement, security agreement,
assignment or other conveyance or option for the foregoing, with respect to the
Intellectual Property of any Person, or (iii) entering into, or amendment of,
any agreement with respect to the development of any Intellectual Property with
a third party;
(s) agreement, or modification to any agreement, pursuant to which
any Person was granted marketing, distribution, development, manufacturing or
similar rights of any type or scope with respect to any products, services or
technology of Seller or any Insignia Subsidiary;
(t) event, occurrence, change, effect or condition of any character,
which individually or in the aggregate, has had or reasonably could be expected
to have a Seller Material Adverse Effect; or
(u) agreement by Seller or any Insignia Subsidiary, or any officer
or Employees thereof, to do any of the things described in the preceding clauses
(a) through (u) (other than negotiations with Purchaser and its representatives
regarding the Transaction).
4.8 Accounts Receivable. Schedule 4.8 lists all accounts receivable of
Seller and its Subsidiaries as of December 31, 2006, together with an aging
schedule indicating a range of days elapsed since being invoiced. All of the
accounts receivable of Seller and its Subsidiaries (i) represent bona fide
transactions that arose in the ordinary course of business, (ii) are carried at
values determined in accordance with GAAP consistently applied and (iii) as of
the Closing Date, will be good and collectible in full within 120 days of the
Closing Date, except, with respect to clause (iii), to the extent of any reserve
for uncollectible accounts receivable set forth on the most recent balance sheet
included in the Seller Financial Statements and except such amounts not
collected within 120 days of the Closing Date but collected prior to the
expiration of the Survival Period. No Person has any Lien on any accounts
receivable of Seller or any Insignia Subsidiary, and no request or agreement for
deduction or discount has been made with respect to any accounts receivable of
Seller or any Insignia Subsidiary.
4.9 Restrictions on Business Activities.
(a) There is no Seller Contract (non-competition or otherwise) or
judgment, injunction, order or decree to which Seller or any Insignia Subsidiary
is a party, subject or otherwise binding upon Seller or any Insignia Subsidiary,
that has had or could reasonably be expected to have the effect of prohibiting
or impairing any business practice of Seller or any Insignia Subsidiary, any
acquisition of property (tangible or intangible) by Seller or any Insignia
Subsidiary, the conduct of business by Seller or any Insignia Subsidiary, or
otherwise limiting the freedom of Seller or any Insignia Subsidiary to engage in
any line of business or to compete with any Person, in each case whether arising
as a result of a change in control of Seller or any Insignia Subsidiary or
otherwise. Without limiting the generality of the foregoing, neither Seller nor
any Insignia Subsidiary has (i) entered into any agreement under which Seller or
any Insignia
17
Subsidiary is restricted from selling, licensing, manufacturing or otherwise
distributing any of its technology or products or from providing services to
customers or potential customers or any class of customers, in any geographic
area, during any period of time, or in any segment of the market or (ii) granted
any Person exclusive rights to sell, license, manufacture or otherwise
distribute any of Seller's or any Insignia Subsidiary's technology or products
in any geographic area or with respect to any customers or potential customers
or any class of customers during any period of time or in any segment of the
market.
(b) There is no Seller Contract (non-competition or otherwise) or
judgment, injunction, order or decree to which Seller or any Insignia Subsidiary
is a party, subject or otherwise binding upon Seller or any Insignia Subsidiary
that could reasonably be expected to have the effect of prohibiting or impairing
any business practice of Purchaser or any of its subsidiaries, any acquisition
of property (tangible or intangible) by Purchaser or any of its subsidiaries,
the conduct of business by Purchaser or any of its subsidiaries, or otherwise
limiting the freedom of Purchaser or any of its subsidiaries to engage in any
line of business or to compete with any Person after the Closing Date.
4.10 Real Property; Leases.
(a) None of the real property used or occupied by Seller or any
Insignia Subsidiary, in each case, together with all buildout, fixtures and
improvements created thereon, is owned by Seller or any Insignia Subsidiary, nor
has Seller or any Insignia Subsidiary owned any real property within the past
three (3) years.
(b) Schedule 4.10(b) sets forth all leases, subleases and other
agreements pursuant to which Seller and each of the Insignia Subsidiaries
derives its rights in the Leased Real Property, including, with respect to each
such Real Property Lease, the identity of the landlord or sublandlord, the
addresses, the date of such Real Property Lease and each amendment thereto, and
the aggregate annual rent.
(c) The Real Property Leases are in good standing and are valid,
binding and enforceable in accordance with their respective terms, and there
does not exist under any such Real Property Lease any default by Seller or any
Insignia Subsidiary or, to Seller's Knowledge, by any other Person, or any event
that, with or without notice or lapse of time or both, would constitute a
default by Seller or any Insignia Subsidiary or, to Seller's Knowledge, by any
other Person. Seller has delivered to Purchaser complete copies of all Real
Property Leases, including all amendments and agreements related thereto, and
the Real Property Leases constitute the entire agreement between Seller or any
Insignia Subsidiary and each landlord or sublandlord with respect to the Leased
Real Property.
(d) Seller or an Insignia Subsidiary is the holder of the tenant's
interest under the Real Property Leases and has not assigned the Real Property
Leases or subleased all or any portion of the premises leased thereunder.
Neither Seller nor any Insignia Subsidiary has made any alterations, additions
or improvements to the premises leased under the Leases that are required to be
removed (or of which any landlord or sublandlord could require removal) at the
termination of the applicable Real Property Lease term. Seller or an Insignia
Subsidiary owns all trade fixtures, equipment and personal property located in
the premises leased under the Real Property Leases and the landlords thereunder
have no Lien thereon or claim thereto.
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4.11 Assets; Absence of Liens and Encumbrances.
(a) Schedule 4.11(a) accurately identifies all equipment, materials,
tangible prototypes, tools, supplies, vehicles, furniture, fixtures,
improvements and other tangible assets of Seller or any Insignia Subsidiary with
an individual book value of greater than $5,000, and accurately sets forth the
original cost and book value of each of such asset.
(b) Seller and each of the Insignia Subsidiaries has good and valid
title to, or, in the case of Leased Real Property and leased properties and
assets, valid leasehold interests in, all of its tangible properties and assets,
real, personal and mixed, used or held for use in its business, free and clear
of any Liens. Upon Closing, Purchaser will acquire exclusive, good and
marketable title or license to or a valid leasehold interest in (as the case may
be) the Purchased Assets.
(c) All facilities, machinery, equipment, fixtures, vehicles, and
other personal properties owned, leased or used by Seller or any Insignia
Subsidiary (i) are adequate for the conduct of the business of Seller and its
Subsidiaries as currently conducted and as currently proposed to be conducted,
(ii) are in good operating condition, subject to normal wear and tear, and
reasonably fit and usable for the purposes for which they are being used, and
(iii) comply in all respects with, and are being operated and otherwise used in
full compliance with, all applicable Law.
(d) The execution and delivery by the Selling Parties of this
Agreement and any of the Related Agreements to which any of the Selling Parties
is a party, and the consummation of the Transaction, do not and will not result
in the imposition of any Liens upon or with respect to any of the properties of
Seller or any Insignia Subsidiary.
4.12 Intellectual Property.
(a) Schedule 4.12(a) lists all Seller Intellectual Property,
including, without limitation (i) all Seller Registered Intellectual Property,
(ii) all hardware products and tools, software and firmware products and tools
and services that are currently sold, published, offered, or under development
by Seller and any Insignia Subsidiary, and (iii) all licenses, sublicenses and
other agreements to which Seller or any Insignia Subsidiary is a party and
pursuant to which Seller or any Insignia Subsidiary or any other Person is
authorized to use any of Seller Intellectual Property or exercise any rights
with respect thereto.
(b) Seller has complied with all requirements of the United States
and foreign patent offices or applicable Governmental Entities to maintain
Seller Patents, including payment of all required fees to such offices or
agencies. Seller has no Knowledge of any prior art references or prior public
uses, sales, offers for sale or disclosures which could reasonably be expected
to invalidate Seller Patents or any claim thereof, or of any conduct the result
of which could reasonably be expected to render Seller Patents or any claim
thereof invalid or unenforceable. The original, first and joint inventors of the
subject matter claimed in the patents and patent applications included in Seller
Registered Intellectual Property (the "Seller Patents")
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are properly represented in Seller Patents, and the applicable statutes
governing marking of products covered by the inventions in Seller Patents have
been fully complied with. All Seller Patents are valid and assignable to
Purchaser at closing.
(c) Each item of Seller Intellectual Property is either (i) owned
solely by Seller or an Insignia Subsidiary free and clear of any Liens, or (ii)
rightfully used and authorized for use by Seller or an Insignia Subsidiary and
their permitted successors pursuant to a valid and enforceable written license.
Each item of Seller Intellectual Property is free and clear of any Encumbrances,
except for non-exclusive licenses granted to end-user customers in the ordinary
course of business. All of Seller Intellectual Property that is used or held for
use by Seller or any Insignia Subsidiary pursuant to a license or other grant of
a right by a third party to use its proprietary information is separately
identified as such in Schedule 4.12(c). Seller and its Subsidiaries have all
rights in Seller Intellectual Property necessary to carry out Seller's and the
Subsidiaries' former and current activities, including rights to make, use,
exclude others from using, reproduce, modify, adapt, create derivative works
based on, translate, distribute (directly and indirectly), transmit, display and
perform publicly, license, rent, lease, assign and sell Seller Intellectual
Property in all geographic locations and fields of use, and to sublicense any or
all such rights to third parties, including the right to grant further
sublicenses. The Seller Intellectual Property constitutes all the Intellectual
Property Rights used in or necessary to the conduct of the Business as it is
currently conducted.
(d) Seller and each of the Insignia Subsidiaries are in compliance
with and have not breached, violated or defaulted under, or received notice that
any of them have breached, violated or defaulted under, any of the terms or
conditions of any license, sublicense or other agreement to which Seller or any
Insignia Subsidiary is a party or is otherwise bound relating to any of Seller
Intellectual Property, nor does Seller have Knowledge of any event or occurrence
that could reasonably be expected to constitute such a breach, violation or
default (with or without the lapse of time, giving of notice or both). Each such
agreement is in full force and effect, and neither Seller nor any Insignia
Subsidiary is in default thereunder, nor to the Knowledge of Seller is any party
obligated to Seller or any Insignia Subsidiary pursuant to any such agreement in
default thereunder. Following the Closing Date, subject to receipt of any
Required Consents, Purchaser will be permitted to exercise all of Seller's
rights under such contracts, licenses and agreements to the same extent Seller
and each Insignia Subsidiary would have been able to had the Transaction not
occurred and without the payment of any additional amounts or consideration
other than fees, royalties or payments which Seller or any Insignia Subsidiary
would otherwise have been required to pay had the Transaction not occurred.
Neither Seller nor any Insignia Subsidiary is obligated to provide any
consideration (whether financial or otherwise) to any third party, nor is any
third party otherwise entitled to any consideration, with respect to any
exercise of rights by Seller or any Insignia Subsidiary or Purchaser, as
successor to Seller or any Insignia Subsidiary, in Seller Intellectual Property.
(e) To the Knowledge of Seller, the use of Seller Intellectual
Property by Seller and the Insignia Subsidiaries, as previously used and as
currently used, has not infringed and does not infringe any other Person's
copyright, trade secret rights, right of privacy, right in personal data, moral
right, patent, trademark, service mark, trade name, firm name, logo, trade
dress, mask work or other intellectual property right, or give rise to any claim
of unfair competition. No funds or facilities of any university were used in the
development of Seller
20
Intellectual Property. No claims (i) challenging the validity, enforceability,
effectiveness or ownership by Seller or any Insignia Subsidiary of any of Seller
Intellectual Property or (ii) to the effect that the use, reproduction,
modification, manufacture, distribution, licensing, sublicensing, sale, or any
other exercise of rights in any Seller Intellectual Property by Seller and its
Subsidiaries or by any licensee of Seller of any Insignia Subsidiary, infringes
or will infringe on any intellectual property or other proprietary or personal
right of any Person have been asserted against Seller or any Insignia Subsidiary
or, to Seller's Knowledge, are threatened by any Person nor, to Seller's
Knowledge, does there exist any valid basis for such a claim. There are no legal
or governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any of
Seller Intellectual Property owned by Seller, other than review of pending
patent and trademark applications, and neither Seller nor any Insignia
Subsidiary is aware of any information indicating that such proceedings are
threatened or contemplated by any Governmental Entity or any other Person. All
Seller Registered Intellectual Property is valid and subsisting. To Seller's
Knowledge, there is no unauthorized use, infringement, or misappropriation of
any Seller Intellectual Property by any third party or Employee.
(f) Seller and the Insignia Subsidiaries have secured from all
parties (including current and former Employees) who have created any portion
of, or otherwise have any rights in or to, Seller Intellectual Property owned by
Seller or any of the Insignia Subsidiaries valid and enforceable written
assignments of any such work, invention, improvement or other rights to Seller
and each Insignia Subsidiary and have provided true and complete copies of such
assignments to Purchaser.
(g) Upon Closing, each item of Seller Intellectual Property will be
owned by Purchaser or will be immediately available for use by Purchaser on
terms and conditions substantially identical to those under which Seller and the
Insignia Subsidiaries presently uses such Seller Intellectual Property, without
any affirmative act by Purchaser or any other Person. Such ownership and right
to use are (and upon Closing, will be) free and clear of any Encumbrances.
(h) Seller Intellectual Property owned by Seller or any Insignia
Subsidiary is not subject to any source code escrow or similar agreement.
(i) Seller and the Insignia Subsidiaries have taken commercially
reasonable measures to protect the proprietary nature of Seller Intellectual
Property and to maintain in confidence all Trade Secrets and Confidential
Information owned or used by Seller or any of the Insignia Subsidiaries,
including by having and enforcing a policy requiring all current and former
employees, consultants and contractors of Seller and the Insignia Subsidiaries
to execute appropriate confidentiality and intellectual property assignment
agreements. Seller has no Knowledge of any violation or unauthorized disclosure
of any Trade Secret or Confidential Information related to the Business, the
Purchased Assets or the Assumed Liabilities, or obligations of confidentiality
with respect to such.
(j) Seller Intellectual Property does not contain any computer code
designed to disrupt, disable or harm in any manner the operation of any software
or hardware. None of Seller Intellectual Property contains any worm, bomb,
backdoor, clock, timer or other disabling
21
device, code, design or routine which causes the software or any portion thereof
to be erased, inoperable or otherwise incapable of being used, either
automatically, with the passage of time or upon command by any party.
(k) Schedule 4.12(k) lists all licenses, sublicenses and other
agreements pursuant to which Seller is authorized to use any Intellectual
Property of third Persons that is (i) incorporated in or bundled with the Seller
Products or Seller Intellectual Property or (ii) used in connection with, any
Seller Product or Service, or any product or service currently under
development.
(l) Except as set forth on Schedule 4.12(l), the Seller Intellectual
Property does not include any Publicly Available Software. Neither Seller nor
any of the Insignia Subsidiaries have used Publicly Available Software in whole
or in part in the former, current or currently planned development of any part
of Seller Intellectual Property in a manner that may subject Seller Intellectual
Property owned by Seller, in whole or in part, to all or part of the license
obligations of any Publicly Available Software. To Seller's Knowledge, no source
code licensee of Seller has received from Seller or distributed to any third
party any combination of Publicly Available Software and Seller Intellectual
Property owned by Seller in a manner that may subject Seller Intellectual
Property owned by Seller, in whole or in part, to all or part of the license
obligations of any Publicly Available Software.
(m) None of Seller's or any of the Insignia Subsidiaries'
professional services agreements with their customers, agreements with
merchants, agreements with outside consultants for the performance of
professional services on the behalf of Seller, the Subsidiaries or any of their
respective customers, nor any agreement or license with any end user or reseller
of Seller's or any Insignia Subsidiary's products, confers upon any Person other
than Seller or any Insignia Subsidiary any ownership right with respect to any
Intellectual Property developed in connection with such agreement or license.
(n) Neither Seller nor any Insignia Subsidiary has transferred
ownership of, or granted any exclusive license with respect to, any Seller
Intellectual Property to any Person.
(o) Neither Seller nor any of the Insignia Subsidiaries has
participated in any standards setting activities or joined any standards setting
organizations that would affect the proprietary nature of Seller Intellectual
Property owned by Seller or restrict the ability of Seller or any of the
Insignia Subsidiaries to enforce, license, or exclude others from using Seller
Intellectual Property owned by Seller.
(p) Seller has never agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict with respect
to any of Seller Intellectual Property or any Intellectual Property that was
formerly Seller Intellectual Property.
(q) Schedule 4.12(q) contains a list, including names, addresses,
contact names, telephone numbers, termination date and next renewal date, of all
agreements pursuant to which Seller or any Insignia Subsidiary is obligated to
provide support services (such agreements, as supplemented below, are referred
to collectively as the "Support Agreements"). Copies of all Support Agreements
in force on the date of this Agreement have been provided to
22
Purchaser. Neither the Standard Support Agreement nor any other agreement would
obligate the Purchaser after the date of this Agreement to provide any
improvement, enhancement, change in functionality or other alteration to the
performance of any Seller Product or Service, other than error corrections and
upgrades if and when made available to Seller's customers generally. The
versions of the Seller Products currently supported by Seller are set forth on
Schedule 2.14(q). Neither Seller nor any Insignia Subsidiary has granted any
other Person the right to furnish support or maintenance services with respect
to the Seller Products to any other third Person.
4.13 Product Warranties; Defects; Liabilities; Services.
(a) Each product (including any software product) manufactured,
sold, licensed, leased or delivered by Seller or any Insignia Subsidiary (the
"Seller Products") has been in conformity with the specifications for such
Seller Product, all applicable contractual commitments and all applicable
express and implied warranties, except for such violations as could not
individually or in the aggregate reasonably be expected to have a Seller
Material Adverse Effect. Neither Seller nor any Insignia Subsidiary has any
liability or obligation for replacement or repair thereof or other damages in
connection therewith except liabilities or obligations for replacement or repair
incurred in the ordinary course of business consistent with past practice. No
Seller Product is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale, license or lease or beyond
that implied or imposed by applicable Law.
(b) All services provided by Seller or any of the Insignia
Subsidiaries to any third party ("Services") were performed in conformity with
the terms and requirements of all applicable warranties and other Seller
Contracts and with all applicable Laws. There is no claim pending or, to
Seller's Knowledge, threatened against Seller or any of the Insignia
Subsidiaries relating to any Services and, to Seller's Knowledge, there is no
reasonable basis for the assertion of any such claim.
4.14 Seller Contracts.
(a) Schedule 4.14 lists each of the following types of Seller
Contracts (including names of parties and date of execution):
(i) any collective bargaining agreement;
(ii) any employment or consulting agreement, contract or
commitment with any officer, director, Employee, contractor,
consultant, advisor or member of Seller's or any Insignia
Subsidiary's board of directors;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property having a value
individually in excess of $10,000;
(v) any agreement of indemnification or guaranty to any
Person;
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(vi) any agreement containing any covenant limiting the
freedom of Seller or any Insignia Subsidiary to engage in any line
of business or in any geographic territory or to compete with any
Person, or which grants to any Person any exclusivity to any
geographic territory, any customer, or any product or service;
(vii) any agreement relating to capital expenditures and
involving future payments in excess of $10,000;
(viii) any agreement relating to the disposition of assets or
any interest in any business enterprise outside the ordinary course
of Seller's or any Insignia Subsidiary's business or any agreement
relating to the acquisition of assets or any interest in any
business enterprise;
(ix) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to
the borrowing of money or the extension of credit;
(x) any purchase order or contract (including for services)
involving $10,000 or more;
(xi) any dealer, distribution, joint marketing (including any
pilot program), development, content provider, destination site or
merchant agreement;
(xii) any joint venture, partnership, strategic alliance or
other agreement involving the sharing of profits, losses, costs or
liabilities with any Person or any development, data-sharing,
marketing, resale, distribution or similar arrangement relating to
any product or service;
(xiii) any agreement pursuant to which Seller or any Insignia
Subsidiary has granted or may be obligated to grant in the future,
to any Person, a source code license or option or other right to use
or acquire source code, including any agreements which provide for
source code escrow arrangements;
(xiv) any sales representative, original equipment
manufacturer, value added re-seller, remarketer or other agreement
for distribution of Seller's or any Insignia Subsidiary's products
or services, or the products or services of any other Person;
(xv) any agreement pursuant to which Seller or any Insignia
Subsidiary has advanced or loaned any amount to any Shareholder or
Person holding an ownership interest in any Insignia Subsidiary, or
any director, officer, Employee, or consultant of Seller or of any
Insignia Subsidiary, other than business travel advances in the
ordinary course of business consistent with past practice;
(xvi) any commitment to any customer or third party to deliver
products or services, including all end-user licenses;
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(xvii) any commitment to any customer or third party to
provide support or maintenance, to develop or customize any product
or service, or to provide, support, customize or develop any
third-party product, service or platform, other than those included
in Schedule 4.12(q);
(xviii) any contractual obligations that Seller would be
required to disclose pursuant to Item 303(a)(5) of Regulation S-K
promulgated under the Exchange Act;
(xix) each proposed agreement as to which any bid, offer,
written proposal, term sheet or similar document has been submitted
or received by Seller; or
(xx) any other agreement that involves $10,000 or more or is
not cancelable by Seller or an Insignia Subsidiary without penalty
within 60 days.
(b) Each Seller Contract is in full force and effect and is valid,
binding and enforceable against each party thereto in accordance with its terms.
Seller and each of the Insignia Subsidiaries are in compliance with and have not
breached, violated or defaulted under, or received notice that they have
breached, violated or defaulted under, any of the terms or conditions of any
such Seller Contract, nor does Seller have Knowledge of any event or occurrence
that would constitute such a breach, violation or default (with or without the
lapse of time, giving of notice or both) or Knowledge of any default by any
third party. Seller has provided complete and accurate copies of all Seller
Contracts to Purchaser.
4.15 Change of Control Payments. Schedule 4.15 sets forth (i) each plan,
agreement or arrangement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers, directors or
Employees of Seller or any Insignia Subsidiary as a result of or in connection
with the Transaction or the Transaction Documents and (ii) a summary of the
nature and amounts that may become payable pursuant to each such plan, agreement
or arrangement.
4.16 Interested Party Transactions.
(a) To Seller's Knowledge, no officer, director or Affiliate of
Seller or any of the Insignia Subsidiaries (nor any ancestor, sibling,
descendant or spouse of any of such Persons, or any trust, partnership or
corporation in which any of such Persons has or has had an economic interest),
has or has had, directly or indirectly, (i) an economic interest in any Person
which furnished or sold, or furnishes or sells, services or products that Seller
or any Insignia Subsidiary furnishes or sells, or proposes to furnish or sell,
or (ii) an economic interest in any Person that purchases from or sells or
furnishes to, Seller or any Insignia Subsidiary, any goods or services or (iii)
a beneficial interest in any Seller Contract; provided, however, that ownership
of no more than 1% of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any entity" for
purposes of this Section 4.16.
(b) There are no receivables of Seller or any Insignia Subsidiary
owed by any director, officer, current or former Employee, or consultant to
Seller or any Insignia Subsidiary (or any ancestor, sibling, descendant, or
spouse of any such Persons, or any trust, partnership, or
25
corporation in which any of such Persons has an economic interest), other than
advances in the ordinary and usual course of business for reimbursable business
expenses (as determined in accordance with Seller's established employee
reimbursement policies and consistent with past practice). None of the
Shareholders or Persons holding an ownership interest in any Insignia Subsidiary
has agreed to, or assumed, any obligation or duty to guaranty or otherwise
assume or incur any obligation or liability of Seller or any Insignia
Subsidiary.
4.17 Compliance with Laws. Seller and each of the Insignia Subsidiaries
has complied with and is in compliance with, is not in violation of, and has not
received any notices of violation with respect to, any Law, except for such
violations as could not individually or in the aggregate reasonably be expected
to have a Seller Material Adverse Effect. Neither Seller nor any Insignia
Subsidiary has received any written notice from any Governmental Entity or any
other Person regarding any actual, alleged, possible or potential violation of,
or failure to comply with, any Law that has not been cured or resolved. Seller
and each of the Insignia Subsidiaries is in compliance with its stated privacy
policies contained on any websites maintained by or on behalf of Seller or any
of the Insignia Subsidiaries and all applicable privacy and anti-SPAM Laws.
4.18 Litigation. Except as disclosed on Schedule 4.18, there is no action,
suit or proceeding of any nature pending or, to Seller's Knowledge, threatened
against Seller or any of the Insignia Subsidiaries, any of their respective
properties or assets or any of their respective officers, directors or
Employees, nor, to the Knowledge of Seller, is there any reasonable basis
therefor. There is no investigation pending or, to Seller's Knowledge,
threatened against Seller or any of the Insignia Subsidiaries, any of their
respective properties or any of their respective officers, directors or
Employees by or before any Governmental Entity. No Governmental Entity has at
any time challenged or questioned the legal right of Seller or any Insignia
Subsidiary to conduct its operations as presently or previously conducted or as
presently proposed to be conducted and none of Seller, the Insignia Subsidiaries
or their properties is subject to any order that materially impairs Seller's or
such Insignia Subsidiary's ability to operate.
4.19 Insurance. Schedule 4.19 sets forth all insurance policies and
fidelity bonds covering the assets, business, equipment, properties, operations,
Employees, officers and directors of Seller, any of the Insignia Subsidiaries or
any Affiliate thereof, including the type of coverage, the carrier, the amount
of coverage, the term and the annual premiums of such policies. There is no
claim by Seller or any of the Insignia Subsidiaries or any Affiliate thereof
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed or that Seller has a reason to believe will be
denied or disputed by the underwriters of such policies or bonds. There is no
pending claim that will exceed the policy limits. All premiums due and payable
under all such policies and bonds have been paid (or if installment payments are
due, will be paid if incurred prior to the Closing) and Seller, the Insignia
Subsidiaries and their Affiliates are otherwise in material compliance with the
terms of such policies and bonds. Seller has no Knowledge of a threatened
termination of, or premium increase with respect to, any of such policies. None
of Seller, any of the Insignia Subsidiaries or any Affiliate of either has ever
maintained, established, sponsored, participated in or contributed to any
self-insurance plan or program.
26
4.20 Minute Books. The corporate minutes of Seller and the Insignia
Subsidiaries have been made available to counsel for Purchaser and contain
complete and accurate records of all actions taken, and summaries of all
meetings held, by the shareholders and the board of directors of Seller (and any
committees thereof) since January 1, 2003. The books, records and accounts of
Seller and the Insignia Subsidiaries are true, complete and correct, and are
stated in reasonable detail and accurately and fairly reflect the transactions
and dispositions of the assets of Seller and the Insignia Subsidiaries.
4.21 Environmental Matters.
(a) Hazardous Material. Neither Seller nor any of the Insignia
Subsidiaries has (i) operated any underground storage tanks at any property that
Seller or any Insignia Subsidiary has at any time owned, operated, occupied or
leased; or (ii) released any substance that has been designated by any
Governmental Entity or by applicable Law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the federal Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said Laws (a "Hazardous Material"), but
excluding office and janitorial supplies properly and safely maintained. No
Hazardous Materials are present, as a result of the actions of Seller or any
Insignia Subsidiary, or, to Seller's Knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that Seller or any
Insignia Subsidiary has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Neither Seller nor any of the
Insignia Subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its Employees or others to Hazardous Materials in violation
of any Law, nor has Seller or any of the Insignia Subsidiaries disposed of,
transported, sold, or manufactured any product containing a Hazardous Material
(any or all of the foregoing being collectively referred to as "Hazardous
Materials Activities"), in violation of any Law promulgated to prohibit,
regulate or control Hazardous Materials or any Hazardous Materials Activity.
(c) Permits. Seller and each of the Insignia Subsidiaries currently
hold all Seller Authorizations and permits necessary for the conduct of their
respective Hazardous Material Activities and other business as such activities
and business are currently being conducted and as currently proposed to be
conducted.
(d) Environmental Liabilities. No action, proceeding, investigation,
revocation proceeding, amendment procedure, writ, injunction or claim is pending
or, to Seller's Knowledge, threatened, concerning any Seller Authorization,
Hazardous Material or any Hazardous Materials Activity of Seller or any of the
Insignia Subsidiaries. Neither Seller nor any of the Insignia Subsidiaries is
aware of any fact or circumstance which could involve Seller or any Insignia
Subsidiary in any environmental litigation or impose upon Seller or any Insignia
Subsidiary any environmental liability.
27
4.22 Brokers' and Finders' Fees. Except as set forth on Schedule 4.22,
neither Seller nor any of the Insignia Subsidiaries has incurred, or will incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement, the
Transaction. Seller has previously provided Purchaser with a copy of all
agreements set forth on Schedule 4.22.
4.23 Employee Benefit Plans.
(a) Schedule. Schedule 4.23(a) sets forth each Seller Employee Plan.
Neither Seller nor any of the Insignia Subsidiaries has any stated plan,
intention or commitment to establish any new Seller Employee Plan, to modify any
Seller Employee Plan (except to the extent required by Law or to conform any
such Seller Employee Plan to the requirements of any applicable Law, in each
case as previously disclosed to Purchaser in writing, or as required by this
Agreement), or to enter into any Seller Employee Plan.
(b) [Reserved]
(c) Employee Plan Compliance. (i) Seller and each Insignia
Subsidiary has performed all obligations required to be performed by it under
each Seller Employee Plan and each Seller Employee Plan has been established and
maintained in accordance with its terms and in compliance with all applicable
Law, including ERISA and the Code; (ii) no non-exempt "prohibited transaction,"
within the meaning of Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to any Seller Employee Plan; (iii) there are no actions,
suits or claims pending, or, to the Knowledge of Seller, threatened or
anticipated (other than routine claims for benefits) against any Seller Employee
Plan or fiduciary thereto or against the assets of any Seller Employee Plan;
(iv) there are no audits, inquiries or proceedings pending or, to the Knowledge
of Seller, threatened by the IRS or DOL with respect to any Seller Employee
Plan; (v) neither Seller nor any of the Insignia Subsidiaries nor any ERISA
Affiliate is subject to any penalty or Tax with respect to any Seller Employee
Plan under Section 501(i) of ERISA or Section 4975 through 4980D of the Code and
(vi) no Seller Employee Plan is sponsored or maintained by any Co-Employer.
(d) Plan Status. None of Seller, any Insignia Subsidiary or any
ERISA Affiliate now, or has ever, maintained, established, sponsored,
participated in, or contributed to, any Pension Plan which is subject to Title
IV of ERISA or Section 412 of the Code. Neither Seller nor any ERISA Affiliate
has incurred, nor do they reasonably expect to incur, any liability with respect
to any transaction described in Section 4069 of ERISA. No Seller Employee Plan
is a Multiple Employer Plan as defined in Section 210 of ERISA.
(e) Multiemployer Plans. At no time has Seller, any Insignia
Subsidiary or any ERISA Affiliate contributed to or been required to contribute
to any "multiemployer plan", as defined in Section 3(37) of ERISA.
(f) No Post-Employment Obligations. No Seller Employee Plan
provides, or has any liability to provide, life insurance, medical or other
employee welfare benefits to any Employee upon his or her retirement or
termination of employment for any reason, except as may be required by Law, and
neither Seller nor any Insignia Subsidiary has ever represented,
28
promised or contracted (whether in oral or written form) to any current or
former Employee (either individually or to Employees as a group) that such
Employee(s) would be provided with life insurance, medical or other employee
welfare benefits upon their retirement or termination of employment, except to
the extent required by Law.
(g) Effect of Transaction.
(i) The execution and delivery by the Selling Parties of this
Agreement and any Related Agreement to which such Selling Party is a
party, and the consummation of the Transaction, will not conflict
with or result in any violation of or default under (with or without
notice or lapse of time, or both), or give rise to a right of
termination, cancellation, modification or acceleration of any
obligation or loss of any benefit under any Seller Employee Plan,
trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former
Employee.
(h) COBRA Continuation Coverage. Purchaser acknowledges that the
buying group (as defined in Treasury Regulation Section 54.4980B-9, Q&A 3(b))
may be responsible for providing continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") to those
individuals who are M&A qualified beneficiaries (as defined in Treasury
Regulation Section 54.4980B-9, Q&A 4(a)) with respect to the Purchased Assets
(collectively, the "M&A Qualified Beneficiaries") and in accordance with
Treasury Regulation Section 54.4980B-9 Q&A (8)(c) once Seller ceases to provide
any and all group health coverage to its employees. In the event Seller ceases
to provide any and all group health coverage to its employees, Seller shall
provide to Purchaser within five (5) business days of such cessation a list: (i)
of employees whose employment related to the purchase of the Purchased Assets
and (ii) any qualified beneficiaries who are currently receiving or have elected
COBRA continuation coverage and whose employment related to the Purchased Assets
immediately prior to such individual's qualifying event.
4.24 Employment Matters.
(a) Schedule 4.24(a) sets forth, with respect to each Employee
(including any Employee who is on a leave of absence or on layoff status subject
to recall) (i) the name of such Employee and the date as of which such Employee
was originally hired by Seller or any of the Insignia Subsidiaries, and whether
the Employee is on an active or inactive status; (ii) such Employee's title;
(iii) such Employee's annualized compensation as of the date of this Agreement,
including base salary, vacation and/or paid time off accrual amounts, bonus
and/or commission potential, severance pay potential, and any other compensation
forms; (iv) each current benefit plan in which such Employee participates or is
eligible to participate; (v) any governmental authorization, permit or license
that is held by such Employee and that is used in connection with Seller's
business; and (vi) whether the Employee has executed Seller's standard form
nondisclosure, confidentiality and assignment of inventions agreement.
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(b) Schedule 4.24(b) contains a list of individuals who are
currently performing services for Seller or any of the Insignia Subsidiaries and
are classified as "consultants" or "independent contractors," the respective
compensation of each such "consultant" or "independent contractor" and whether
Seller is party to a consulting or independent contractor agreement with the
individual. Any such agreements have been delivered to Purchaser and are set
forth on Schedule 4.24(b). Any Persons now or heretofore engaged by Seller or
any of the Insignia Subsidiaries as independent contractors, rather than
Employees, have been properly classified as such, are not entitled to any
compensation or benefits to which regular, full-time Employees are or were at
the relevant time entitled, and were and have been engaged in accordance with
all applicable Laws.
(c) A copy of each Employment Agreement and any amendment thereto
has been provided to Purchaser. Except as set forth in Schedule 4.24(c), the
employment of each of the Employees is terminable by Seller at will.
(d) Seller and each Insignia Subsidiary has delivered to Purchaser
accurate and complete copies of all employment agreements relating to the
employment of the current employees.
(e) (i) None of Seller's Employees have given Seller or any of the
Insignia Subsidiaries notice or any other communication terminating his or her
employment with Seller or any of the Insignia Subsidiaries, or terminating his
or her employment upon a sale of, or business combination relating to, Seller or
any Insignia Subsidiary or in connection with the Transaction, or expressed or
otherwise indicated that he or she will not accept employment with Purchaser;
(ii) neither Seller nor any Insignia Subsidiary has a present intention to
terminate the employment of any current employee; (iii) to Seller's Knowledge,
as of the date of this Agreement no current employee has received, or is
currently considering, an offer to join a business that likely would be
competitive with Seller's or any Insignia Subsidiary's business; (iv) to
Seller's Knowledge, no Employee, consultant or contractor is a party to or is
bound by any employment contract, patent disclosure agreement, noncompetition
agreement, any other restrictive covenant or other contract with any Person, or
subject to any judgment, decree or order of any court or administrative agency,
any of which could reasonably be expected to have a material adverse effect in
any way on (A) the performance by such Person of any of his or her duties or
responsibilities for Seller or any Insignia Subsidiary, or (B) Seller's business
or operations; (v) to Seller's Knowledge, no current Employee, contractor or
consultant is in violation of any term of any employment contract, patent
disclosure agreement, noncompetition agreement, or any other restrictive
covenant to a former employer or entity relating to the right of any such
Employee, contractor or consultant to be employed or retained by Seller or any
Insignia Subsidiary, as the case may be; and (vi) neither Seller nor any
Insignia Subsidiary is, and neither has ever been, engaged in any dispute or
litigation with a current or former Employee regarding intellectual property
matters.
(f) Neither Seller nor any of the Insignia Subsidiaries is
presently, nor have they been in the past, a party to or bound by any union
contract, collective bargaining agreement or similar contract. Neither Seller
nor any of the Insignia Subsidiaries knows of any activities or proceedings of
any labor union to organize any Employees.
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(g) Neither Seller nor any of the Insignia Subsidiaries is presently
engaged or has ever been engaged in any unfair labor practice of any nature,
that, if adversely determined, would result in any liability to Seller or any of
the Insignia Subsidiaries. There has never been any slowdown, work stoppage,
labor dispute or union organizing activity, or any similar activity or dispute,
affecting Seller, any of the Insignia Subsidiaries or any Employees.
(h) To the extent applicable, the current and former Employees have
been, and currently are, properly classified under the Fair Labor Standards Act
of 1938, as amended, and under any applicable Law. Neither Seller nor any of the
Insignia Subsidiaries is delinquent to, or has failed to pay, any of its
Employees, consultants or contractors for any wages (including overtime),
salaries, commissions, bonuses, benefits or other compensation for any services
performed by them or amounts required to be reimbursed to such individuals.
Neither Seller nor any of the Insignia Subsidiaries is liable for any payment to
any trust or other fund or to any Governmental Entity, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice).
(i) [Reserved]
(j) Seller and each of the Insignia Subsidiaries is in compliance
with all applicable Laws, agreements, contracts and promises respecting
employment, employment practices, employee benefits, terms and conditions of
employment, immigration matters, labor matters, and wages and hours, in each
case, with respect to its Employees.
(k) There are no claims pending or, to Seller's Knowledge,
threatened, before any Governmental Entity by any Employees for compensation,
pending severance benefits, vacation time, vacation pay or pension benefits, or
any other claim threatened or pending before any Governmental Entity (or any
state "referral agency") from any Employee or any other Person arising out of
Seller's or any Insignia Subsidiary's status as employer, whether in the form of
claims for employment discrimination, harassment, retaliation, unfair labor
practices, grievances, wrongful discharge, breach of contract, tort, unfair
competition or otherwise. In addition, there are no pending, threatened or
reasonably anticipated claims or actions against Seller or any of the Insignia
Subsidiaries under any workers compensation policy or long-term disability
policy.
(l) Seller and each Insignia Subsidiary, and to Seller's Knowledge
each Employee, is in compliance with all applicable visa and work permit
requirements, and no visa or work permit held by an Employee will expire during
the six (6) month period beginning at the date of this Agreement.
(m) To the Seller's Knowledge, neither the execution, delivery and
performance of the Transaction Documents, nor the carrying on of the Business as
presently conducted or as presently proposed to be conducted, nor any activity
of any officers, directors, Employees or consultants of Seller or a Insignia
Subsidiary in connection with the carrying on of the Business as presently
conducted or as presently proposed to be conducted, will conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract or agreement under which any of such officers, directors,
Employees or consultants is now bound.
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4.25 Tax Matters.
(a) Each Selling Party has timely filed all Tax Returns that it was
required to file, and such Tax Returns are true, correct and complete in all
respects. All Taxes shown to be payable on such Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
there is no Liability for unpaid Taxes with respect to any period ending on or
prior to the Balance Sheet Date, whether or not shown as due or reportable on
such Tax Returns, in excess of any accruals or reserves for such Taxes
established on the Seller Balance Sheet (other than any accruals or reserves for
deferred Taxes). No Taxes will be payable by any Selling Party with respect to
any period ending after the Balance Sheet Date, other than Taxes incurred in the
ordinary course of business and consistent with this Agreement. Each Selling
Party has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party. There are no Liens for Taxes on the
Purchased Assets or with respect to the Business, other than Liens for Taxes not
yet due and payable.
(b) The Seller Disclosure Schedule lists all Tax Returns with
respect to the Purchased Assets or the Business filed by each Selling Party for
all Taxable periods since its inception, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
an audit. To the Knowledge of the Selling Parties, no other audit of any Tax
Return with respect to the Purchased Assets or the Business is currently pending
or threatened. No claim has ever been made in writing or, to the Knowledge of
the Selling Parties, orally by any Tax Authority in a jurisdiction where a
Selling Party does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction with respect to the Purchased Assets or the Business. The
Selling Parties have delivered or made available to Purchaser correct and
complete copies of all Tax Returns filed, examination reports, and statements of
deficiencies assessed or agreed to by any Selling Party since its inception to
the extent relating to the Purchased Assets or the Business.
(c) None of the Purchased Assets is an interest in any joint
venture, partnership or other arrangement or contract which could be treated as
a partnership or "disregarded entity" for U.S. federal income tax purposes.
(d) None of the Purchased Assets or Assumed Liabilities includes an
obligation under any agreement, contract or arrangement that may result in the
payment of any amount that would not be deductible by reason of Section 280G or
Section 404 of the Code.
(e) The Selling Parties have treated themselves as owners of the
Purchased Assets for Tax purposes. None of the Purchased Assets is the subject
of a "safe-harbor lease" within the provisions of former Section 168(f)(8) of
the Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982. None of the Purchased Assets directly or indirectly
secures any debt the interest on which is tax-exempt under Section 103(a) of the
Code. None of the Purchased Assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
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(f) Insignia Solutions, Inc., a Delaware corporation, is a "United
States person" within the meaning of Section 7701(a)(30) of the Code.
4.26 Foreign Corrupt Practices Act. Neither Seller nor any of the Insignia
Subsidiaries (including any of their officers or directors) has taken any action
which would cause it to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any rules or regulations thereunder.
4.27 Bank Accounts. Schedule 4.27 contains a true and complete list of the
name of each bank or other financial institution at which Seller or any Insignia
Subsidiary has an account, deposit or safe deposit box, the account number
thereof and the names of all Persons authorized to draw thereon or to have
access thereto.
4.28 Customers; Distributors. Schedule 4.28 accurately identifies, and
provides an accurate summary of the revenues received from, each customer that,
together with such customer's Affiliates, contributed more than ten percent
(10%) of the consolidated gross revenues of Seller and the Insignia Subsidiaries
in fiscal years ended December 31, 2006 and 2005. Neither Seller nor any
Insignia Subsidiary has received written notice from any customer listed on
Schedule 4.28 indicating that such customer intends to reduce or not continue
its business relationship with Seller and the Insignia Subsidiaries. Neither
Seller nor any Insignia Subsidiary has received notice from any distributor of
any of Seller's products indicating that any such distributor intends to cease
acting as a distributor of such products or otherwise dealing with Seller and
the Insignia Subsidiaries. 4.29 Seller Customer Information. Neither Seller nor
any of the Insignia Subsidiaries has sold, transferred, disclosed, made
available to the public or otherwise released for distribution any of its
customer files and other customer information relating to Seller's or any of the
Insignia Subsidiaries current and former customers (the "Seller Customer
Information"). Except for information as provided to sales representatives
(which information is subject to a customary non-disclosure agreement), no
Person other than Seller or one of the Insignia Subsidiaries possesses or has
any claims or rights with respect to use of Seller Customer Information.
4.30 Inventory. Neither Seller nor any of the Insignia Subsidiaries has
any physical inventory, as defined under GAAP.
4.31 Governmental Authorization. Schedule 4.31 lists each consent,
license, permit, grant or other authorization issued to Seller, any of the
Insignia Subsidiaries or any Employee by a Governmental Entity (i) pursuant to
which Seller or any of the Insignia Subsidiaries currently operates or holds any
interest in any of its properties or (ii) which is required for the operation of
its business as currently conducted or as currently proposed to be conducted or
the holding of any such interest (collectively, the "Seller Authorizations").
Seller Authorizations are in full force and effect and constitute all
authorizations required to permit Seller and each of the Insignia Subsidiaries
to operate or conduct its business as currently conducted or as currently
proposed to be conducted or to hold any interest in its properties or assets.
None of Seller, any Insignia Subsidiary nor any Employee is in violation of any
material term of any Seller Authorization.
33
4.32 Opinion of Financial Advisor. Seller's financial advisor, SVB
Alliant, has delivered to Seller's board of directors a written opinion to the
effect that, as of the date of this Agreement, the consideration to be paid by
the Purchaser hereunder is fair to the Seller from a financial point of view.
4.33 Representations Complete. None of the representations or warranties
made by any Selling Party in this Agreement or any other Transaction Document,
nor any statement made in Seller Disclosure Schedule or any certificate
furnished by any Selling Party pursuant to this Agreement, when taken together,
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASING PARTIES
The Purchasing Parties hereby represent and warrant (without limiting any
other representations or warranties made by any of the Purchasing Parties in
this Agreement or any other Transaction Document) to Seller as follows:
5.1 Organization of Purchasing Parties. Each of the Purchasing Parties is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Purchasing Parties has the full
corporate power and authority to own its properties and to carry on its business
as now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the conduct of its business or the
ownership, leasing, holding or use of its properties makes such qualification
necessary, except such jurisdictions where the failure to be so qualified or
licensed or in good standing could not reasonably be expected to have a material
adverse effect on the ability of such Purchasing Party to perform its
obligations pursuant to this Agreement and the Transaction Documents and to
consummate the Transaction in a timely manner (a "Purchaser Material Adverse
Effect").
5.2 Authority. Each of the Purchasing Parties has all requisite corporate
power and authority to enter into this Agreement and the other Transaction
Documents to which it is a party and to consummate the Transaction. The
execution and delivery of this Agreement and the other Transaction Documents to
which each Purchasing Party is a party and the consummation of the Transaction
have been duly authorized by all necessary corporate action on the part of such
Purchasing Party. This Agreement has been, and each of the Transaction Documents
to which each Purchasing Party is a party will be at the Closing, duly executed
and delivered by such Purchasing Party and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto (other than the
Purchasing Parties), this Agreement constitutes, and in the case of the other
Transaction Documents will at Closing constitute, valid and binding obligations
of the Purchasing Parties, enforceable against each Purchasing Party in
accordance with their respective terms, except as such enforceability may be
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar Laws affecting the enforcement of creditors' rights generally and by
general principles of equity. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
Governmental Entity, is required by or with respect to each Purchasing Party in
connection with
34
the execution and delivery of this Agreement and the Related Agreements by each
Purchasing Party or the consummation by the Purchasing Parties of the
Transaction except for such other filings, authorizations, consents and
approvals that if not obtained or made could not reasonably be expected to have
a Purchaser Material Adverse Effect.
5.3 No Conflict. The execution and delivery by each Purchasing Party of
this Agreement and the other Transaction Documents to which such Purchasing
Party is a party, and the consummation of the Transaction, do not and will not
conflict with or result in any violation of or default under (with or without
notice or lapse of time, or both) or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation or By-laws
of a Purchasing Party, as in effect on the date hereof, (ii) any material
contract to which a Purchasing Party is a party or to which they or any of their
respective properties or assets (whether tangible or intangible) is subject or
bound, or (iii) any Law applicable to a Purchasing Party or any of its
respective properties (whether tangible or intangible) or assets, except, in the
case of (ii) or (iii), for such conflicts, violations or defaults as could not
individually or in the aggregate reasonably be expected to have a Purchaser
Material Adverse Effect.
5.4 Brokers' and Finders' Fees. No Purchasing Party has incurred, or will
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement,
the Related Agreements and the Transaction.
ARTICLE 6
PRE-CLOSING COVENANTS
6.1 Conduct of the Business Prior to Closing.
(a) From the date of this Agreement until the Closing, the Selling
Parties shall, and shall cause their respective Affiliates and Representatives
to:
(i) operate the Business only in the ordinary course of
business;
(ii) pay all of the Selling Parties' Liabilities where failure
to pay could reasonably be expected to result in material harm to
the Business and Taxes when due, subject to good faith disputes over
such Liabilities or Taxes;
(iii) maintain insurance coverage in amounts adequate to cover
the reasonably anticipated risks of the Selling Parties and in
amounts consistent with past practice;
(iv) prosecute pending applications for Intellectual Property
registration; and
(v) operate the Business in the ordinary course and not enter
into or renew any agreement with a customer, supplier or distributor
for a term of more than one year or specifying the purchase or sale
of more than $10,000 in products without providing Purchaser with
two Business Days prior notice and receiving Purchaser's written
consent to the terms thereof, which consent shall not be
unreasonably withheld.
35
(b) From the date of this Agreement until the Closing Date, Seller
and the Insignia Subsidiaries shall not, and shall cause their respective
members, officers, directors and employees, not to:
(i) Enter into, create, incur or assume (A) any borrowings
under capital leases or (B) any obligations which would have a
Seller Material Adverse Effect or a material adverse effect on
Purchaser's ability to conduct the Business in substantially the
same manner and condition as currently conducted by Seller;
(ii) Acquire by merging or consolidating with, or by
purchasing any equity securities or assets (which are material,
individually or in the aggregate, to Seller) of, or by any other
manner, any business or any Person;
(iii) Sell, transfer, lease, license or otherwise encumber any
of the Purchased Assets, except for the sale of Inventory and the
granting of non-exclusive licenses in the ordinary course of
business;
(iv) Enter into any agreements or commitments with another
Person, except on commercially reasonable terms in the ordinary
course of business;
(v) Violate in any material respect any Legal Requirement
applicable to Seller;
(vi) Materially change or announce any change to the Seller
products or any services sold by Seller;
(vii) Violate or amend in any material respect or terminate
any Seller Contract or Governmental Approval, except amendments and
terminations in the ordinary course of business consistent with
Seller's past practices;
(viii) Commence a Proceeding other than (A) for the routine
collection of accounts receivables, (B) for injunctive relief on the
grounds that Seller has suffered immediate and irreparable harm not
compensable in money damages if Seller has obtained the prior
written consent of Purchaser, such consent not to be unreasonably
withheld or (C) with respect to the Excluded Assets or Excluded
Liabilities;
(ix) Purchase, lease, license or otherwise acquire any assets,
except for supplies acquired by Seller in the ordinary course of
business;
(x) Make any capital expenditure in excess of Twenty-Five
Thousand Dollars ($25,000), individually or in the aggregate;
(xi) Borrow from any Person (other than Purchaser) by way of a
loan, advance, guaranty, endorsement, indemnity, or warranty (other
than an increase in amounts borrowed under receivables financing
arrangements with Silicon Valley Bank in place on the date hereof);
36
(xii) Change its credit practices, accounting methods or
practices or standards used to maintain its books, accounts or
business records;
(xiii) Incur or become subject to any Liability, contingent or
otherwise, except current Liabilities in the ordinary course of
business;
(xiv) Make any material change affecting the Business;
(xv) Amend any charter or organizational documents in any
manner that could adversely effect Seller's or the Insignia
Subsidiaries' ability to consummate the Transaction and perform its
obligations hereunder;
(xvi) Hire any new employee other than in the ordinary course
of business, terminate any officer or key Employee of Seller or any
Insignia Subsidiary, increase the annual level of compensation of
any Employee except for regular, scheduled compensation increases in
the ordinary course of business, establish or adopt any Employee
Benefit Plan, or grant any bonuses, benefits or other forms of
direct or indirect compensation to any employee, officer, director
or consultant;
(xvii) Make or change any election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any
amendment to a Tax Return, enter into any closing agreement, settle
any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim
or assessment in respect of Taxes, in each case only to the extent
such action could (1) affect the liability of Purchaser for Taxes of
Seller or Taxes with respect to the Purchased Assets or the
Business, or (2) give rise to a Lien on any of the Purchased Assets
or the Business or otherwise affect Purchaser's enjoyment of the
Purchased Assets or the Business;
(xviii) Fail to maintain the Purchased Assets, taken as a
whole, in good repair, order and condition, reasonable wear and tear
excepted; or
(xix) Enter into any Contract specifying the purchase or sale
of more than $10,000 in products or the payment of more than
$10,000, or agree, in writing or otherwise, to take any of the
actions described in Section 6.1(b)(i) through (xxi) above, or any
action that would make any of its representations or warranties
contained in this Agreement untrue or incorrect in any material
respect or prevent it from performing or cause it not to perform in
any material respect its covenants hereunder.
6.2 No Solicitation. Until the earlier of (a) the Closing and (b) the
termination of this Agreement pursuant to its terms, no Selling Party shall, and
no Selling Party shall cause its Affiliates or Representatives to, directly or
indirectly, (i) initiate, solicit or encourage (including by way of furnishing
information regarding the Selling Parties, the Business or the Purchased
37
Assets) any inquiries, the Business or the Purchased Assets (whether by way of
merger, purchase of capital shares, purchase of assets or otherwise, but
excluding (A) a sale of capital shares that would not interfere with the
Transaction (including, without limitation, imposing an obligation to obtain
shareholder approval of the Transaction) and (B) a merger following the Closing)
(a "Competing Transaction") or (ii) hold any discussions or enter into any
agreements with, or provide any information or respond to, any third party
concerning a proposed Competing Transaction or cooperate in any way with, agree
to, assist or participate in, solicit, consider, entertain, facilitate or
encourage any effort or attempt by any third party to do or seek any of the
foregoing. If at any time prior to the earlier of (x) the Closing and (y) the
termination of this Agreement pursuant to its terms, any Selling Party is
approached in any manner by a third party concerning a Competing Transaction (a
"Competing Party"), Seller shall promptly inform Purchaser regarding such
contact and furnish Purchaser with a copy of any inquiry or proposal, or, if not
in writing, a description thereof, including the name of such Competing Party,
and Seller shall keep Purchaser informed of the status and details of any future
notices, requests, correspondence or communications related thereto.
6.3 Certain Notifications. From the date hereof through the Closing, the
Seller shall confer with one or more designated representatives of Purchaser as
frequently as requested by Purchaser or to report or update Purchaser regarding
material operational matters and the general status of on-going operations of
the Business. Seller shall promptly notify Purchaser of any material change in
the financial condition, results of operations, properties, business or
prospects of the Business and shall keep Purchaser fully informed of such events
and permit Purchaser's representatives to participate in all discussions related
thereto. From the date hereof through the Closing, Seller shall promptly notify
Purchaser in writing regarding any:
(a) Action taken by Seller not in the ordinary course of business
and any circumstance or event that could reasonably be expected to have a Seller
Material Adverse Effect;
(b) Fact, circumstance, event, or action by Seller (A) which, if
known on the date of this Agreement, would have been required to be disclosed in
or pursuant to this Agreement; or (B) the existence, occurrence, or taking of
which would result in any of the representations and warranties of Seller
contained in this Agreement or in any other Transaction Document not being true
and correct when made or at Closing;
(c) Breach of any covenant or obligation of Seller hereunder;
(d) Circumstance or event which will result in, or could reasonably
be expected to result in, the failure of Seller to timely satisfy any of the
closing conditions specified in Article 9 of this Agreement; or
(e) Filing by Seller with the SEC.
6.4 Updating the Disclosure Schedules. If any event, condition, fact or
circumstance that is required to be disclosed pursuant to Section 6.3 would
require a change to the Seller Disclosure Schedule if the Seller Disclosure
Schedule were dated as of the date of the occurrence, existence or discovery of
such event, condition, fact or circumstance, then Seller
38
shall promptly deliver to Purchaser an update to the Seller Disclosure Schedule
specifying such change; provided, however, that no such update shall be deemed
to supplement or amend the Seller Disclosure Schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
Seller in this Agreement or (ii) determining whether any of the conditions set
forth in Article 9 have been satisfied.
6.5 Access to Information. From the date of this Agreement until the
Closing, but subject to the provisions of the Confidentiality Agreement, Seller
and its Affiliates shall (i) permit Purchaser and its Representatives to have
free and complete access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Business to all premises,
properties, personnel, books, records (including Tax records) contracts and
documents of or pertaining to the Selling Parties or the Business, (ii)
reasonably cooperate with Purchaser and its Representatives to obtain access to
Persons having business relationships with the Selling Parties, including
suppliers, licensees, customers and distributors, and (iii) furnish Purchaser
with all financial, operating and other data and information related to the
Selling Parties or the Business (including copies thereof), as Purchaser may
reasonably request, including access to all information relating to Seller's
negotiations with the customer described in Schedule 9.1(f). No information or
knowledge obtained in any investigation pursuant to this Section 6.4 shall
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the parties to consummate the Transaction.
6.6 Commercially Reasonable Efforts. From the date of this Agreement until
the Closing, each of the Selling Parties and Purchaser shall use commercially
reasonable efforts to cause to be fulfilled and satisfied all of the conditions
to Closing set forth in Article 9.
6.7 Consents. On or prior to the Closing Date, each of the Selling Parties
shall use its respective commercially reasonable efforts to obtain all Required
Consents and make and deliver all filings and notices listed or required to be
listed on Schedule 4.2(c), and those required to transfer or assign to Purchaser
all of the right, title and interest of the Selling Parties and their Affiliates
in and to all of the Seller Contracts. Purchaser shall not be obligated to agree
to any material changes in, or the imposition of any material condition to the
transfer to Purchaser of, any Seller Contract or Governmental Approval as a
condition to obtaining any Consent.
6.8 Korean Joint Venture. Prior to the Closing Date, Seller shall acquire
the remaining interest in Insignia Asia Corporation and shall cause Insignia
Asia Corporation to become party to this Agreement as a Selling Party, and
Seller shall update the Seller Disclosure Schedules to reflect Insignia Asia
Corporation as a Selling Party.
6.9 Employees. Prior top the Closing Date, Seller shall promptly notify
Purchaser if it learns that any employee receives an offer to join a business
that likely would be competitive with Seller's or any Insignia Subsidiary's
business.
6.10 Bridge Loan Proceeds. Notwithstanding any other provision of this
Agreement, Purchaser must approve, in writing in advance, any expenditure of any
funds loaned by Purchaser to Seller from and after the date of this Agreement.
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ARTICLE 7
POST CLOSING COVENANTS
7.1 Seller Intellectual Property.
(a) Each of the Selling Parties agree, from and after the Closing
Date, that they will not, and shall cause their respective Representatives not
to, use any of the Seller Intellectual Property. If any Selling Party or any
assignee of any Selling Party owns or has any right or interest in any Seller
Intellectual Property that cannot be, or for any reason is not, assigned to
Purchaser at the Closing, such Selling Party shall grant or cause to be granted
to Purchaser, at the Closing, a worldwide, royalty-free, fully paid up,
perpetual, irrevocable, transferable, sublicensable, and exclusive license to
exercise all rights in and to such Seller Intellectual Property.
(b) With respect to each patent or trademark within the Seller
Registered Intellectual Property for which the owner of record as of the Closing
date is not the Selling Party which is the assignor of such Seller Registered
Intellectual Property under this Agreement, the Selling Parties shall, promptly
following the Closing, use commercially reasonable efforts to procure that the
Selling Party which is the assignor of such Registered Intellectual Property
Right under this Agreement is noted as the owner of record of such Seller
Registered Intellectual Property in all applicable patent or trademark offices
(U.S. or foreign) where such Seller Registered Intellectual Property is
registered or filed (together the "Offices").
(c) The Selling Parties shall, promptly following the Closing, use
commercially reasonable efforts to procure that all Encumbrances on any Seller
Registered Intellectual Property, which Encumbrances were in existence prior to
the Closing Date, are released and cleared from the record of each such Seller
Registered Intellectual Property. In the event that the Selling Parties are
unable to procure the release and clearance of any such Encumbrance on any
Seller Registered Intellectual Property, Seller shall indemnify, defend and hold
harmless Purchaser from and against any and all Damages arising out of any claim
against Purchaser seeking to enforce such Encumbrance.
(d) The Selling Parties shall (i) not later than five (5) Business
Days following the Closing, amend the Certificate of Incorporation of Insignia
Solutions, Inc. and the organizational documents of any other Subsidiary, as
applicable, so that the name of such company or Subsidiary, as applicable, does
not include the word "Insignia", and (ii) include, in the next solicitation by
the Seller of proxies or written consents from the shareholders of the Seller, a
proposal to change the name of the Seller to a name not including the word
"Insignia" and, subject to receiving the requisite consent of shareholders as a
result of such solicitation, promptly take action, following the applicable
meeting of shareholders or effectiveness of the written consents, to amend the
organizational documents of Seller so that the name of Seller does not include
the word "Insignia".
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7.2 Cooperation.
After the Closing, upon the reasonable request of Purchaser, each Selling Party
shall (i) execute and deliver any and all further materials, documents and
instruments of conveyance, transfer or assignment as may reasonably be requested
by Purchaser to effect, record or verify the transfer to, and vesting in
Purchaser, of such Selling Party's right, title and interest in and to the
Purchased Assets, free and clear of all Encumbrances, in accordance with the
terms of this Agreement, (ii) cooperate with Purchaser, at Purchaser's expense,
to enforce the terms of any Seller Contracts, including terms relating to
confidentiality and Intellectual Property Rights, and to transfer all
Governmental Approvals (to the extent transferable) to the Purchaser, (iii)
permit the Purchaser and its Representatives continued access to information
referred to in Section 6.5 that remains under such Selling Party's dominion and
control and (iv) cooperate with reasonable requests from Purchaser to ensure an
orderly transfer of customer relationships involving the Business to Purchaser.
After the Closing, each Selling Party shall promptly deliver to Purchaser (i)
any mail, packages, orders, inquiries and other communications addressed to such
Selling Party and relating to the Business and (ii) any property that such
Selling Party receives and that properly belongs to Purchaser.
7.3 Reserved.
7.4 Return of Purchased Assets. If, for any reason after the Closing, any
asset is ultimately determined to be an Excluded Asset, (i) Purchaser shall
transfer and convey (without further consideration) to the appropriate Selling
Party, and such Selling Party shall accept, such asset; (ii) the appropriate
Selling Party shall assume, and agree to pay, perform, fulfill and discharge
(without further consideration) any liabilities associated with such assets; and
(iii) Purchaser and the appropriate Selling Party shall execute such documents
or instruments of conveyance or assumption and take such further acts which are
reasonably necessary or desirable to effect the transfer of such asset back to
the Selling Party.
7.5 Records and Documents. Following the Closing, Purchaser shall take
possession of those records and documents related to the Business as may be
necessary or useful in connection with Purchaser's conduct of the Business after
the Closing. Purchaser shall use its reasonable efforts to maintain such records
and documents for at least six years after the Closing. At Seller's request,
Purchaser shall provide Seller and its representatives with reasonable access to
such records and documents.
7.6 Bulk Sales Indemnification. Purchaser hereby waives compliance by each
Selling Party with any applicable bulk sales Legal Requirements in connection
with the Transaction; provided, however, that Seller shall indemnify, defend and
hold harmless Purchaser with respect to any and all Damages related to,
resulting from or arising out of any noncompliance by any Selling Party with
applicable bulk sales Legal Requirements in connection with the Transaction.
7.7 Noncompetition Agreement.
(a) Noncompetition. For and in consideration of the Transaction
contemplated herein, during the period commencing with the Closing Date and
ending on the fifth anniversary of the Closing Date (the "Noncompetition
Period"), no Selling Party or any of
41
their Subsidiaries shall engage in any Competitive Activity anywhere in the
world. For purposes of this Agreement, "Competitive Activity" shall mean
directly or indirectly (or having any interest in, or performing any services
for, any Person directly or indirectly) engaging in any activity that is the
same as, or directly competitive with any part of the Business.
(b) Scope and Choice of Law. It is the understanding of the parties
that the scope of the covenants contained in this Section 7.7, both as to time
and area covered, are necessary to protect the rights of Purchaser and the
goodwill that is a part of the Business of Seller to be acquired by Purchaser.
It is the parties' intention that these covenants be enforced to the greatest
extent (but to no greater extent) in time, area, and degree of participation as
is permitted by the law of that jurisdiction whose law is found to be applicable
to any acts in breach of these covenants. It being the purpose of this Agreement
to govern competition by the Selling Parties, these covenants shall be governed
by and construed according to that law (from among those jurisdictions arguably
applicable to this Agreement and those in which a breach of this Agreement is
alleged to have occurred or to be threatened) which best gives them effect. If
any such covenants or any part of such covenants is held invalid, void or
unenforceable by any court of competent jurisdiction, such invalidity, voidness,
or unenforceability shall in no way render invalid, void, or unenforceable any
other part of them or any separate agreements not declared invalid, void or
unenforceable; and this Agreement shall in such case be construed as if the
invalid, void or unenforceable provisions were omitted.
(c) Remedy for Breach. The parties agree that Purchaser shall be
entitled to seek injunctive relief against the Selling Parties in the event of
any breach or threatened breach of any of such covenants by the Selling Parties,
in addition to any other relief (including damages) available to Purchaser under
this Agreement.
(d) Assignment by Purchaser. The parties agree that the covenants of
the Selling Parties not to compete contained in this Section 7.7 may be assigned
by Purchaser to any Person to whom may be transferred all or substantially all
of the assets related to the Business. It is the parties' intention that these
covenants of Seller shall inure to the benefit of any Person that may succeed to
the Business and/or Purchased Assets of Seller (as acquired by Purchaser under
this Agreement) with the same force and effect as if these covenants were made
directly with such successor.
7.8 Non-Solicitation of Employees. From the date hereof until two years
after the Closing Date, Seller shall not, and shall cause its Subsidiaries not
to, solicit for employment or hire the Transferred Employees or any employee of
the Purchaser or any of its Affiliates employed in any capacity related to the
Business; provided, however, that this Section 7.8 shall not preclude Seller or
any of its Affiliates from soliciting for employment or hiring any such
individual who responds to a general solicitation through a public medium that
is not targeted at the Transferred Employees or any employee of the Purchaser or
any Insignia Subsidiary employed in any capacity related to the Business.
7.9 Maintenance of Government Approvals. With effect from the Closing
Date, the Purchaser shall be solely responsible for obtaining and maintaining
all governmental approvals regarding the Business (including, without
limitation, the Governmental Approvals), as well as all ongoing regulatory
compliance relating to thereto (including, without limitation, the reporting of
adverse events).
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7.10 Enforcement of Contracts. Seller and its Subsidiaries shall enforce
all of their existing contracts and agreements prohibiting or restraining
competition or the solicitation of employees.
ARTICLE 8
EMPLOYEES
8.1 Transferred Employees.
(a) On or before the tenth day prior to the Closing, Purchaser or
one of the other Purchasing Parties shall offer employment commencing on the
Closing Date to each person listed on Schedule 8.1(a) (each, a "Prospective
Employee"), except with respect to any Prospective Employee who is an EU
Transferring Employee as noted on Schedule 8.1(a). Except as otherwise set forth
on Schedule 8.1(a), such offers shall provide for compensation and benefits that
are substantially equivalent, taken as a whole, to those provided by Seller and
its Subsidiaries. Purchaser shall provide Seller prompt notice of any such
offers. Seller shall use commercially reasonable efforts to encourage each
Prospective Employee to whom such an offer has been made to accept such offer of
employment and to continue his or her current employment until commencing
employment with Purchaser or a Purchasing Party. Any Prospective Employee who
accepts such an offer of employment pursuant to the terms and conditions of such
offer shall be referred to in this Agreement as a "Transferred Employee". To the
extent a Prospective Employee is an EU Transferring Employee, the provisions of
Section 8.2 shall apply.
(b) The parties intend that existing contracts of employment of any
of the Prospective Employees (other than EU Transferring Employees) shall not be
assumed by Purchaser as a result of the Transaction, but rather that the
Prospective Employees will be provided new offers of employment.
(c) Seller shall, and shall take all action necessary to cause each
Prospective Employee who becomes a Transferred Employee or an EU Transferring
Employee to, cease active participation under all Employee Benefit Plans and any
other current or deferred compensation, incentive, fringe benefit or payroll
plan, policy or program maintained by Seller or its Affiliates as of the close
of the calendar month ending on or immediately after the Closing Date, or such
other date as is required pursuant to the relevant Employee Benefit Plan. Seller
shall be solely responsible for all obligations and liabilities for severance or
termination pay, benefits or notice under any plan, program, policy or
applicable law with respect to any employee of Seller or any other Selling Party
(each a "Current Employee") which accrue on or prior to the Closing Date, or
such other date referred to in the immediately preceding sentence, or with
respect to any Current Employee who is not a Transferred Employee or an EU
Transferring Employee which accrue after the Closing Date.
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(d) Seller shall retain responsibility for and continue to pay all
expenses and benefits under the Employee Benefit Plans and all medical, dental,
health, hospital, life insurance and disability expenses and benefits with
respect to claims incurred (whether or not reported) on or prior to the Closing
Date by Transferred Employees or EU Transferring Employees and their spouses and
dependents, or incurred at any time by Current Employees and their spouses and
dependents who are not Transferred Employees or EU Transferring Employees. For
purposes of this Agreement, a claim shall be deemed to be incurred on the date
that the event giving rise to such claim occurs.
(e) Purchaser agrees to assume the accured but unused vacation of
each Transferred Employee and EU Transferred Employee who consents to such
assignment; Seller agrees to pay to each Transferred Employee and EU Transferred
Employee who does not consent to such assumption an amount equal to the value of
the Employee's accrued but unused vacation.
(f) In order to secure an orderly and effective transition of the
employee benefit arrangements for Transferred Employees and EU Transferring
Employees and their respective beneficiaries and dependents, the Selling Parties
and Purchaser shall cooperate, both before and after the Closing Date, and
subject to applicable law, regarding the exchange information related to the
Transferred Employees and EU Transferring Employees, including employment
records and benefits information.
(g) Each of the Selling Parties shall, until the Closing Date:
(i) perform its obligations (including without limitation in
respect of emoluments and outgoings) under the contracts of
employment of such Transferred Employees and EU Transferring
Employees, subject to the Selling Parties ability to so perform;
(ii) not terminate, or give notice to terminate, the contract
of employment of, nor dismiss, any of the Transferred Employees or
EU Transferring Employees (other than for cause) without the prior
written approval of Purchaser, which approval shall not be
unreasonably withheld;
(iii) pay to the Transferred Employees and EU Transferring
Employees all sums to which they are legally entitled up to and
including the Closing Date, except to the extent Purchaser does not
approve any such payments and subject to the Selling Parties ability
to so pay;
(iv) comply in all respects with Legal Requirements requiring
prior notice by Seller or any Selling Party to the Transferred
Employees in connection with any aspect of the Transaction (and to
provide to the Purchaser such information that the Purchaser may
reasonably request in writing in order to verify such compliance);
(v) not replace, deploy or assign any other person to the
Business or increase the hours spent by any person on the Business
such as to result in the likelihood of such person being wholly or
mainly assigned to the Business within the meaning of the EU Codes;
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(vi) not make, propose or permit any changes to the terms,
conditions or working conditions of any EU Transferring Employees;
or
(vii) introduce any new contractual or customary practice
concerning the making of any lump sum payment on the termination of
employment of any EU Transferring Employees.
8.2 European Union Legislation. To the extent any part of the Business to
be transferred under this Agreement is situated within the territorial scope and
application of the EU Codes, the following terms shall apply:
(a) Purchaser shall comply and procure compliance with its
obligations as a transferee under the EU Codes in respect of the compulsory
transfer of Prospective Employees (each an "EU Transferring Employee") from
Selling Parties to Purchasing Parties including, without limitation, the terms
and conditions on which EU Transferring Employees are engaged by Purchasing
Parties after the Closing Date, to inform and consult (whether prior to or
following Closing) with EU Transferring Employees, their representatives or any
employees of Purchasing Parties in respect of the transfer of the Business under
this Agreement including, without limitation, any requirement to provide
information to Selling Parties in connection with measures to be taken by
Purchasing Parties in respect of EU Transferring Employees after the Closing
Date.
(b) Seller shall comply and procure compliance with its obligations
as a transferor under the EU Codes in respect of any requirement of Selling
Parties to inform and consult (whether prior to or following Closing) with EU
Transferring Employees, their representatives or any employees of the Selling
Parties in respect of the transfer of the Business under this Agreement. Seller
shall also use its best efforts to cause the EU Transferring Employees to
consent to employment with the Purchasing Parties.
(c) Seller warrants that it has fully and accurately disclosed to
the best of its knowledge and belief to Purchaser the employee liability
information which for the purposes of this Agreement means the following in
respect of each EU Transferring Employee: the identity, age, job title, job
description, start date, details of all amounts payable and benefits provided
to, all terms and conditions of employment or engagement (whether contractual or
otherwise), information of any claim, threatened claim or reasonable grounds to
believe that such EU Transferring Employee may bring a claim; any information of
any applicable collective agreement, details of all arrangements with any trade
union, employee representative body or works council, details of all strikes or
industrial action (whether actual or threatened), details of any long-term
absence and the reason for it. Subject to applicable law, Seller shall provide
the following information in respect of each EU Transferring Employee to
Purchaser at least fourteen days prior to the Closing Date: sex, date of birth,
performance evaluations, information of any disciplinary or grievance taken by
or in respect of such EU Transferring Employee within the last 2 years, and all
policies and procedures relating to their employment.
(d) Where by reason of the EU Codes an EU Transferring Employee
after the Closing Date is employed by a Purchasing Party on terms and conditions
less favorable than those which would have been offered to a Prospective
Employee pursuant to Section 7.1(b) had
45
such Transferred Employee not been an EU Transferring Employee, the employing
Purchasing Party shall offer to such EU Transferring Employee terms of
employment in accordance with Section 8.1(b).
8.3 No Employment Guaranteed. Nothing in this Agreement shall restrict
Purchaser or any other Purchasing Party from terminating or modifying the
conditions or benefits of the employment of any Transferred Employee at any time
with or without cause.
8.4 Contractor Agreements. Seller shall use commercially reasonable
efforts to encourage each independent contractor to whom an offer has been made
to enter into a Contractor Agreement, and to continue his or her current
contracting arrangement with Seller or a Selling Party until commencing a
contracting arrangement with Purchaser or a Purchasing Party.
8.5 No Benefit to Employees Intended. This Article 8 is not intended to,
and does not, create any rights or obligations to or for the benefit of any
Person other than the Purchasing Parties and the Selling Parties, and in
particular creates no rights or obligations to or for the benefit of any Current
Employee, Transferred Employee or EU Transferring Employee. Any rights or
benefits to be obtained by any Current Employee, Transferred Employee or EU
Transferring Employee referred to in this Article 8 or otherwise shall be
granted directly by the obligor with respect thereto.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to Purchaser's Obligation to Close. The obligations of
Purchaser to consummate the Transaction shall be subject to the satisfaction, on
or prior to the Closing Date, of each of the following conditions, any of which
may be waived by Purchaser in writing:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of the Selling Parties in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as of the
Closing (or, to the extent such representations and warranties speak as of a
specific date or time, they shall be true in all respects as of such date or
time), except as otherwise contemplated by this Agreement and except for such
inaccuracies under such representations and warranties which, taken together in
their entirety, would not, individually or in the aggregate, reasonably be
expected to result in a Seller Material Adverse Effect, and (ii) as of the
Closing the Selling Parties shall have performed, in all material respects, all
covenants and obligations in this Agreement required to be performed by any of
the Selling Parties on or prior to the Closing;
(b) Material Adverse Changes. There shall not have occurred since
the date of this Agreement any change, event or effect that has had a Seller
Material Adverse Effect.
(c) Documents. Seller shall have delivered to Purchaser all of the
documents and agreements set forth in Section 3.2;
46
(d) Consents. Seller shall have delivered to Purchaser all Required
Consents set forth on Schedule 9.1(d) and other consents required (i) for the
transfer of the other Purchased Assets; (ii) for the consummation of the
Transaction; or (iii) to prevent a breach or termination of any Seller Contract
set forth on Schedule 9.1(d), including, without limitation, the receipt by
Seller of Bitfone Corporation's consent to the assignment of the License
Agreement by and between Seller and Bitfone Corporation on terms satisfactory to
Purchaser, such approval not to be unreasonably withheld;
(e) Board of Directors Approvals. This Agreement, the Related
Agreements and the Transaction shall have been duly approved by the board of
directors of Seller;
(f) Customer Agreement Seller shall have entered into an agreement
with the customer identified on Schedule 9.1(f), which agreement shall have been
approved by Purchaser prior to execution by Seller, such approval not to be
reasonably withheld;
(g) Financial Statements. Seller shall have delivered to Purchaser
audited financial statements as of and for the year ended December 31, 2006;
(h) Legal Proceedings. Seller shall have settled all Legal
Proceedings pending as of the date of this Agreement against Seller or any
Insignia Subsidiary; all Legal Proceedings threatened against Seller or any
Insignia Subsidiary, if the Legal Proceeding could reasonably represent a
liability on the part of the Purchaser following the Closing, shall have been
resolved;
(i) U.K. Employees. As of the Closing Seller shall have no U.K
employees; and
(j) Prospective Employees and Contractors. Not less than 80% of the
individuals listed on Schedule 9.1(j) shall have entered into an offer letter
providing for them to become Transferred Employees, which letter shall not have
been rescinded or rendered unenforceable prior to Closing; provided that if any
such individual shall not have received an offer letter from Purchaser on terms
consistent with Section 8.1(a), not later than the date ten days before each of
the conditions set forth in clauses (a)-(i) of this Section 9.1 shall have been
satisfied or waived by Purchaser, then such individual shall be deemed not to be
listed on Schedule 9.1(j). Purchaser agrees to provide offer letters or
contractor agreements, as the case may be, to the individuals listed on Schedule
9.1(j) no less than ten (10) days prior to the Closing Date.
9.2 Conditions to Seller's Obligation to Close. The obligations of the
Selling Parties to consummate the Transaction shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Seller in writing:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Purchaser in this Agreement shall be true and
correct in all respects as of the Closing Date (or, to the extent such
representations and warranties speak as of an earlier date, they shall be true
in all respects as of such earlier date), except as otherwise contemplated by
this Agreement and except for such inaccuracies under such representations and
warranties which, taken together in their entirety, would not, individually or
in the aggregate, reasonably be
47
expected to result in a Purchaser Material Adverse Effect, and (ii) Purchaser
shall have performed, in all material respects, all covenants and obligations in
this Agreement required to be performed by Purchaser as of the Closing Date; and
(b) Deliveries. Purchaser shall have delivered to Seller all of the
documents and agreements set forth in Section 3.3.
9.3 No Legal Impediments to Closing. The respective obligations of each
party to this Agreement to consummate the Transaction shall be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
which may be waived by Purchaser or Seller, as applicable, in writing:
(a) There shall not be in effect any Order issued by any
Governmental Entity preventing the consummation of the Transaction, seeking any
Damages as a result of the Transaction, or otherwise affecting the right or
ability of Purchaser to own, operate or control the Business or the Purchased
Assets, nor shall any Proceeding be pending that seeks any of the foregoing.
(b) There shall not be any Legal Requirement prohibiting Seller from
selling or Purchaser from owning, operating or controlling the Business or the
Purchased Assets or that makes this Agreement or the consummation of the
Transaction illegal.
ARTICLE 10
TAX MATTERS
10.1 Tax Matters
(a) Notwithstanding any Legal Requirements to the contrary, the
Selling Parties shall be responsible for and shall pay any Transfer Taxes when
due, and shall, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such Transfer Taxes; provided, however, that,
if required by any Legal Requirement, Purchaser will join in the execution of
any such Tax Returns and other documentation. To the extent practicable, the
Selling Parties shall deliver and the Purchasing Parties shall accept all of the
Purchased Assets through electronic delivery or in another manner agreed upon by
the parties hereto.
(b) The Selling Parties shall be responsible for and shall pay any
Taxes arising or resulting from or in connection with the conduct of the
Business or the ownership of the Purchased Assets attributable to the
Pre-Closing Tax Period (other than any Taxes included in the Assumed
Liabilities).
(c) All real property, personal property, ad valorem or other
similar Taxes (not including income Taxes) levied with respect to the Purchased
Assets or the Business for a Taxable period which includes (but does not end on)
the Closing Date shall be apportioned between Purchaser and the Selling Parties
based on the number of days included in such period through and including the
Closing Date and the number of days included in such period after the Closing
Date.
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(d) On or before the Closing Date, Insignia Solutions, Inc. shall
furnish to Purchaser Tax clearance certificates releasing Purchaser from
liability with respect to any California sales and use Tax or California
employment Tax liability of Insignia Solutions, Inc.
ARTICLE 11
TERMINATION
11.1 Circumstances for Termination.
At any time prior to the Closing, this Agreement may be terminated
by written notice explaining the reason for such termination:
(a) by the mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller, if (i) the non-terminating party
is in material breach of any material provision of this Agreement and such
breach shall not have been cured within ten (10)days of receipt by such party of
written notice from the terminating party of such breach and (ii) the
terminating party is not, on the date of termination, in material breach of any
material provision of this Agreement; and
(c) by either Seller or Purchaser, if (i) the Closing has not
occurred on or prior to May 31, 2007 for any reason and (ii) the party seeking
to terminate this Agreement hereunder has not caused such failure to close.
11.2 Effect of Termination. Subject to Section 11.1(c), if this Agreement
is terminated in accordance with Section 11.1, all obligations of the parties
hereunder shall terminate, except for the obligations set forth in this Article
11 (Termination) and Sections 13.1 (Expenses), 13.6 (Governing Law) and 13.7
(Jurisdiction; Waiver of Jury Trial); provided, however, that nothing herein
shall relieve any party from liability for any breach of this Agreement.
ARTICLE 12
INDEMNIFICATION
12.1 Survival of Representations, Warranties and Covenants.
(a) The representations and warranties of the Selling Parties set
forth in this Agreement or in any certificate, document or other instrument
delivered by or on behalf of a Selling Party pursuant to or in connection with
this Agreement shall survive the execution and delivery of this Agreement, any
investigation by or on behalf of any Purchasing Party and the shall terminate at
5:00 P.M. Pacific time on the 12-month anniversary of the Closing Date (the
"Survival Period"), except, in all cases, with respect to any Loss, claim or
breach of which any Indemnified Party shall have provided written notice to
Seller prior to such termination.
(b) The representations and warranties of the Purchasing Parties set
forth in this Agreement or in any certificate, document or other instrument
delivered by or on behalf of Purchaser pursuant to or in connection with this
Agreement shall terminate on the Closing Date.
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(c) The respective covenants, agreements and obligations of the
Selling Parties and the Purchasing Parties set forth in this Agreement or in any
certificate, document or other instrument delivered pursuant to this Agreement
shall survive the execution and delivery of this Agreement, any investigation by
or on behalf of any party hereto, and the Closing Date without limitation.
12.2 Indemnification. As an integral term of the Transaction, the Selling
Parties shall indemnify, defend and hold harmless the Purchasing Parties and
each of their officers, directors, employees, members, agents and Affiliates
(the "Indemnified Parties") against any and all claims, losses, liabilities,
damages, diminution in value, interest and penalties, costs and expenses,
including reasonable attorneys' fees and expenses, and expenses of investigation
and defense (collectively "Losses") incurred or suffered by any such Indemnified
Party directly or indirectly as a result of, with respect to or in connection
with:
(a) the failure of any representation or warranty of any Selling
Party set forth herein or in any certificate, document or other instrument
delivered pursuant to or in connection with this Agreement to be true and
correct in all respects as of the date of this Agreement and as of the Closing
Date (disregarding for purposes of this Section 12.2 any "materiality", "in all
material respects", "Seller Material Adverse Effect", "Knowledge" or similar
qualification contained therein or with respect thereto for purposes of
calculating the amount of Losses);
(b) any failure by any Selling Party to fully perform, fulfill or
comply with any covenant set forth herein or in any certificate, document or
other instrument delivered pursuant to or in connection with this Agreement;
(c) any claims by any current or former holder of Seller Shares,
Seller Options, Seller Warrants or Subsidiary Securities relating to or arising
out of the Transaction, this Agreement, the Related Agreements, or any Person's
status as an equity holder or ownership of equity interests in any Selling Party
at any time on or prior to the date of this Agreement, including the allocation
of the Purchase Price, whether for breach of fiduciary duty or otherwise, or any
claims by any current or former officer, director or shareholder to
indemnification by Seller, any Selling Party or any Purchasing Party with
respect to any such claims;
(d) regardless of any disclosure on the Seller Disclosure Schedule,
any "excess parachute payment" (within the meaning of Section 280G(b) of the
Code) made by Seller on or prior to the Closing Date or otherwise required to be
paid by Seller or any Selling Party pursuant to Seller Contracts entered into on
or prior to the Closing Date;
(e) any action, suit or proceeding commenced by any Indemnified
Party for the purpose of enforcing any of its rights under this Article 12 in
connection with any actual breach, failure, liability or matter of the type
referred to in clauses (a) through (i) of this Section 12.2;
(f) any claim made by an EU Transferring Employee which relates to
his employment or termination by the Seller prior to Closing (other than with
respect to any Assumed Liability);
50
(g) anything done or omitted to be done on or before Closing by the
Seller in respect of the employment of any person employed or engaged by the
Seller on or before Closing which by virtue of the EU Codes is deemed or will be
deemed to have been done or to have been omitted to be done by the Purchasing
Parties (other than with respect to any Assumed Liability);
(h) anything done or omitted to be done by the Seller by way of
consultation with, or the provision of information to, any persons employed by
the Seller on or prior to Closing, or any trade union or appropriate
representatives of any such persons, by which any Purchasing Party may incur
pursuant to the EU Codes; or
(i) any Liability for Taxes attributable to or imposed upon any
Selling Party or Affiliate for any Tax period, or attributable to or imposed
upon the Purchased Assets or the Business for the Pre-Closing Tax Period,
including any Transfer Taxes (other than with respect to any Assumed
Liabilities).
12.3 Limitations.
(a) No claims shall be made by any Indemnified Party for
indemnification pursuant to Section 12.2(a), other than a claim arising from any
breach or inaccuracy of any of the Fundamental Representations, unless and until
the aggregate amount of Losses for which the Indemnified Parties seek to be
indemnified pursuant to Section 12.2(a) exceed $50,000 (the "Threshold Amount"),
at which time the Indemnified Parties shall be entitled to indemnification for
all such Losses (including all Losses included within the Threshold Amount).
Notwithstanding the preceding sentence, claims arising from any breach or
inaccuracy of any of the Fundamental Representations may be made without regard
to the Threshold Amount.
(b) In no event shall the liability of Seller with respect to the
matters set forth in Section 12.2, other than any claim arising from any breach
or inaccuracy of any of the Fundamental Representations, exceed $5,000,000.
(c) The limitations set forth in this Section 12.3 shall not apply
with respect to (i) fraud, intentional misrepresentation or willful breach or
misconduct, (ii) any breach of which Seller or any Selling Party had Knowledge
on or prior to the Closing Date, or (iii) any equitable remedy, including a
preliminary or permanent injunction or specific performance.
(d) The representations, warranties, covenants and obligations of
the Selling Parties, and the rights and remedies that may be exercised by the
Indemnified Parties based on such representations, warranties, covenants and
obligations, will not be limited or affected by any investigation conducted by
Purchaser or any other Purchasing Party or any agent of Purchaser or any other
Purchasing Party with respect to, or any knowledge acquired (or capable of being
acquired) by Purchaser or other Purchasing Party or any agent of any Purchasing
Party at any time, whether before or after the execution and delivery of this
Agreement or the Closing, with respect to, the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant or obligation. The
wavier by Purchaser of any of the conditions set forth in Article 9 will not
affect or limit the provisions of this Article 12.
51
12.4 Procedure for Claims Against Holdback Amount.
(a) Claims. The Holdback Amount shall be available as a
non-exclusive resource to reimburse the Indemnified Parties for any Losses for
which they are entitled to be indemnified pursuant to Section 12.2 (the "Seller
Indemnification Obligations"). Promptly after becoming aware of any Losses for
which they are entitled to be indemnified pursuant to Section 12.2 (but in no
event later than the Holdback Due Date), the Purchaser shall deliver to Seller a
certificate signed by any appropriately authorized officer of Purchaser (a
"Holdback Certificate") (i) stating the aggregate amount of Losses or an
estimate thereof, in each case to the extent known or determinable at such time,
and (ii) specifying in reasonable detail the individual items of such Losses
included in the amount so stated, the date each such item was paid or properly
accrued or arose, and the nature of the misrepresentation, breach or claim to
which such item is related; provided, however, that no delay on the part of the
Purchaser in notifying Seller shall relieve Seller of any liability or
obligations hereunder, except to the extent that the Seller has been materially
prejudiced thereby, and then only to such extent. In the absence of any
objections to such Holdback Certificate as provided in Section 12.4(b) by the
date set forth in Section 12.4(b), Purchaser shall, subject to the other
provisions of this Agreement, be entitled to reduce the Holdback Amount by the
amount of such Losses in satisfaction of the Seller Indemnification Obligations.
(b) Objection to Holdback Certificate.
(i) Seller shall have thirty (30) days after delivery to it of
a Holdback Certificate to deliver to Purchaser a written response to
such Holdback Certificate (a "Holdback Response"). If after such
thirty (30) day period Seller has not delivered a Holdback Response
to Purchaser or it has delivered a Holdback Response which does not
dispute any portion of the Holdback Certificate, the reduction of
the Holdback Amount specified in the Holdback Certificate shall
become final. If the Holdback Response disputes any claims contained
in the Holdback Certificate, Seller and Purchaser shall attempt in
good faith for an additional thirty (30) days to agree upon the
rights of the respective parties with respect to each of such
claims. If Seller and Purchaser should so agree, a certificate
setting forth such agreement shall be prepared and signed by both
parties and Purchaser shall promptly pay over to Seller any portion
of the Holdback Amount that it has agreed to pay.
(ii) If no such agreement can be reached after good faith
negotiations, either Purchaser or Seller may, by written notice to
the other, demand arbitration of the matter, unless the amount of
the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration
conducted by three (3) arbitrators. Within fifteen (15) days after
such written notice is sent, Purchaser (on the one hand) and Seller
(on the other hand) shall each select one arbitrator, and the two
arbitrators so selected shall select a third arbitrator. The
decision of the arbitrators as to the validity and amount of any
claim in the Holdback Certificate shall be binding and conclusive
upon the parties to this Agreement.
52
(iii) Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction. Any such arbitration
shall be conducted under the commercial rules then in effect of the
American Arbitration Association. Any arbitration shall be held in
County of Los Angeles, California. The non-prevailing party to an
arbitration shall pay its own expenses, the fees of each arbitrator,
the administrative fee of the American Arbitration Association, and
the expenses, including, without limitation, the reasonable
attorneys' fees and costs, incurred by the prevailing party to the
arbitration (as determined by the arbitrator).
(c) Third-Party Claims. Promptly after the assertion by any third
party of any claim against any Indemnified Party (a "Third-Party Claim") that,
in the judgment of such Indemnified Party, may result in the incurrence by such
Indemnified Party of Losses for which such Indemnified Party would be entitled
to indemnification pursuant to this Agreement, such Indemnified Party shall
deliver to Seller a written notice describing in reasonable detail such
Third-Party Claim; provided, however, that no delay on the part of the
Indemnified Party in notifying Seller shall relieve Seller of any liability or
obligations hereunder, except to the extent that the Seller has been materially
prejudiced thereby, and then only to such extent. The Indemnified Party shall
have the right in its sole discretion to conduct the defense of any such
Third-Party Claim; provided, however, that the parties shall reasonably
cooperate with each other in the choice of counsel to defend the Indemnified
Party for claims for which such Indemnified Party would be entitled to
indemnification pursuant to this Agreement, and in the conduct of the defense of
any such Third Party Claim. If any such action or claim is settled with the
prior written consent of the Seller, or if there be a final judgment for the
plaintiff in any such action, the Indemnified Party shall be entitled to
indemnification for the amount of any Loss relating thereto.
12.5 Purchase Price Adjustment. Seller and Purchaser agree to treat each
indemnification payment pursuant to this Article 12 as an adjustment to the
Purchase Price for all Tax purposes and shall take no position contrary thereto
unless required to do so by any applicable Legal Requirement or pursuant to a
"determination" within the meaning of Section 1313(a) of the Code or an
analogous provision of state, local or foreign law.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Expenses. Except as expressly provided elsewhere in this Agreement,
whether or not the Transaction is consummated, each party shall pay it own costs
and expenses in connection with this Agreement and the Transaction, including
without limitation the fees and expenses of its advisers, accountants and legal
counsel.
13.2 Interpretation. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed, as the context
indicates, to be followed by the words "but (is/are) not limited to".
53
13.3 Entire Agreement. Except for the Confidentiality Agreement, which
shall survive the execution of this Agreement in accordance with its terms, this
Agreement, including the other documents and agreements specifically referred to
herein, constitutes the entire agreement between and among the parties hereto
with regard to the subject matter hereof, and supersedes all prior agreements
and understandings with regard to such subject matter. There are now no
agreements, representations or warranties between or among the parties other
than those set forth in the Agreement or the documents and agreements
contemplated in this Agreement except as set forth in the Confidentiality
Agreement.
13.4 Amendment, Waivers and Consents. This Agreement shall not be changed
or modified, in whole or in part, except by supplemental agreement signed by the
parties. Any party may waive compliance by any other party with any of the
covenants or conditions of this Agreement, but no waiver shall be binding unless
executed in writing by the party making the waiver. No waiver of any provision
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. Any consent under this Agreement shall be in writing and shall be
effective only to the extent specifically set forth in such writing.
13.5 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, provided, however, that no party hereto may assign any right or
obligation hereunder without the prior written consent of all other parties
hereto.
13.6 Governing Law. The rights and obligations of the parties shall be
governed by, and this Agreement shall be interpreted, construed and enforced in
accordance with, the laws of the State of California, excluding its conflict of
laws rules to the extent such rules would apply the law of another jurisdiction.
13.7 Jurisdiction; Waiver of Jury Trial.
(a) Any judicial proceeding brought against any of the parties to
this Agreement or any dispute arising out of this Agreement or related hereto
may be brought in the courts of the State of California or in the United States
District Court for the Southern District of California, and, by execution and
delivery of this Agreement, each of the parties to this Agreement accepts the
exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents to jurisdiction shall not constitute general consents to service of
process in the State of California for any purpose except as provided above and
shall not be deemed to confer rights on any Person other than the parties to
this Agreement. Each of the parties to this Agreement agree that service of any
process, summons, notice or document by U.S. mail to such party's address for
notice hereunder shall be effective service of process for any action, suit or
proceeding in California with respect to any matters for which it has submitted
to jurisdiction pursuant to this Section 13.7(a).
(b) Each of the parties hereto hereby irrevocably waives its right
to a jury trial in connection with any action, proceeding or claim arising out
of or relating to this Agreement or any transaction contemplated hereby.
54
13.8 Rules of Construction. The parties acknowledge that each party has
read and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement. 13.9 Additional Documents. Each of the parties agree to
execute and deliver such other documents and take such further action as may be
reasonably required to effectuate the provisions of this Agreement.
13.10 Severability. If any provision of this Agreement, as applied to
either party or to any circumstance, is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision.
13.11 Exhibits. All Exhibits and Schedules attached hereto shall be deemed
to be a part of this Agreement and are fully incorporated in this Agreement by
this reference.
13.12 Notices. Any notice required or permitted to be given hereunder
shall be sufficient if in writing and (a) delivered in person or by express
delivery or courier service, (b) sent by facsimile, or (c) deposited in the mail
registered or certified first class, postage prepaid and return receipt
requested (provided that any notice given pursuant to clause (b) is also
confirmed by the means described in clause (a) or (c)) to such address or
facsimile of the party set forth below or to such other place or places as such
party from time to time may designate in writing in compliance with the terms
hereof. Each notice shall be deemed given when so delivered personally, or sent
by facsimile transmission, or, if sent by express delivery or courier service
one (1) Business Day after being sent, or if mailed, five (5) Business Days
after the date of deposit in the mail. A notice of change of address or
facsimile number shall be effective only when done in accordance with this
Section 13.12.
To any of the
Purchasing Parties at: Smith Micro Software Inc.
51 Columbia
Aliso Viejo, CA 92656
Facsimile: (949) 389-1738
Attention: William W. Smith, Jr.
With copies to: Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013
Facsimile: 213-892-5454
Attention: Allen Z. Sussman, Esq.
55
To any of the
Selling Parties at: c/o Insignia Solutions, Inc.
51 East Campbell Avenue, Suite 130
Campbell, California 95008
Facsimile: 408-874-2602
Attention: Mark McMillan
With copies to: Fenwick & West LLP
555 California Street, 12th Floor
San Francisco, CA 94104
Facsimile: 415-281-1350
Attention: David K. Michaels, Esq.
13.13 Rights of Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over or against any party to this Agreement. A party
who is not a party to this Agreement shall have no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any of its terms.
13.14 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
56
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by their respective officers thereunto duly authorized
all as of the date first written above.
"Purchaser" "Seller"
SMITH MICRO SOFTWARE INC. INSIGNIA SOLUTIONS PLC
By: /s/ William W. Smith, Jr. By: /s/ Mark McMillan
--------------------------------- -------------------------
Name: William W. Smith, Jr. Name: Mark McMillan
Title: President and Chief Executive Officer Title: Chief Executive Officer
IS ACQUISITION SUB, INC.
INSIGNIA SOLUTIONS INC
By: /s/ William W. Smith, Jr.
-------------------------
Name: William W. Smith, Jr. By: /s/ Mark McMillan
Title: President and Chief Executive Officer -------------------------
Name: Mark McMillan
Title: Chief Executive Officer
INSIGNIA SOLUTIONS AB
By: /s/ Mark McMillan
-------------------------
Name: Mark McMillan
Title: Chief Executive Officer
EXHIBIT A
CERTAIN DEFINITIONS
"Affiliate" shall mean (i) any member of the immediate family (including
spouse, brother, sister, descendant, ancestor or in-law) of any officer,
director or ten percent (10%) or greater shareholder of a party, or (ii) any
corporation, partnership, trust or other entity in which a party or any such
family member has a ten percent (10%) or greater interest or is a director,
officer, partner or trustee. The term Affiliate shall also include any entity
which controls, is controlled by, or is under common control with any of the
individuals or entities described in the preceding sentence.
"Agreement" shall have the meaning specified in the Preamble.
"Antitrust Laws" shall mean the Sherman Act, as amended, the Clayton Act,
as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"Acquisition Sub" shall have the meaning specified in the Preamble.
"Assignment and Assumption Agreement" shall have the meaning specified in
Section 3.2(b).
"Assumed Liabilities" shall have the meaning specified in Section 1.3.
"Balance Sheet Date" shall have the meaning specified in Section 4.5(d).
"Books and Records" shall have the meaning specified in Section 1.1(n).
"Business" shall have the meaning set forth in the first Recital.
"Business Day" means any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking and savings and loan institutions are authorized or
required by law to be closed.
"Closing" shall have the meaning specified in Section 3.1.
"Closing Date" shall have the meaning specified in Section 3.1.
"Code" shall mean The Internal Revenue Code of 1986, as amended.
"Co-Employer" shall mean any Person that is or was considered to be a
co-employer with Seller or any Insignia Subsidiary.
"Competing Party" shall have the meaning specified in Section 6.2.
"Competing Transaction" shall have the meaning specified in Section 6.2.
"Competitive Activity" shall have the meaning specified in Section 7.7(a).
"Confidential Information" shall mean all Trade Secrets and other
confidential and/or proprietary information of a Person, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, financial projections, cost summaries, pricing
formulae, contract analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of such Person by its employees, officers, directors,
agents, representatives, or consultants.
"Confidentiality Agreement" shall mean that certain Non-Disclosure
Agreement between Purchaser and Seller, dated November 13, 2006.
"Consent" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Approval).
"Contract" shall mean any written agreement, contract, obligation,
promise, understanding, arrangement, commitment or undertaking of any nature.
"Copyrights" shall mean all copyrightable works and all copyrights and
applications, including in and to works of authorship and all other rights
corresponding thereto throughout the world, whether published or unpublished,
including rights to prepare, reproduce, perform, display and distribute
copyrighted works and copies, compilations and derivative works thereof
(including all material unregistered copyrights).
"Current Employee" shall have the meaning specified in Section 8.1(c).
"Damages" shall mean and include any loss, damage, injury, claim, demand,
settlement, judgment, award, fine, penalty, Tax, fee or expense of any nature.
"Deposits and Advances" shall have the meaning specified in Section
1.1(i).
"DOL" shall mean the United States Department of Labor.
"Employee" shall mean any current employee, officer or director of Seller
or any of the Insignia Subsidiaries.
"Employee Benefit Plan" shall mean all written and unwritten plans,
arrangements, programs or policies, whether funded or unfunded, relating to
Transferred Employees including (i) retirement, savings or pension plans, (ii)
other employee benefit plans or welfare arrangements, including health and
medical arrangement, life, disability or severance and indemnity programs and
(iii) bonus or other incentive, remuneration, profit sharing, long service or
deferred compensation arrangement.
"Employment Agreements" shall have the meaning specified in Section
3.2(e).
"Encumbrance" shall mean any lien (including Liens for Taxes), pledge,
hypothecation, charge, mortgage, security interest, encumbrance, equity, trust,
equitable interest, claim,
preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
"Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust or company or similar entity or
organization (including any limited liability company or joint stock company or
foreign entity).
"Environmental Claim" shall mean any claim, action, investigation or
notice against or involving Seller or any of its Affiliates or for which Seller
or any of its Affiliates is responsible by any person or entity alleging
liability under or a violation of any Environmental or Safety Law or liability
or for investigatory, cleanup or governmental response costs, or natural
resources or property damages, or personal injuries, attorney's fees or
penalties relating to the presence or release into the environment of any
Materials of Environmental Concern at any location.
"Environmental and Safety Laws" shall mean all statutes, laws and
regulations of any Governmental Entity relating to pollution or protection or
preservation of human health or safety or the environment, including, without
limitation, statutes, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, wastes,
radioactive materials, toxic or hazardous substances or hazardous waste,
petroleum and petroleum products, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon, or lead or lead-based paints or materials
("Materials of Environmental Concern"), or otherwise relating to the
manufacture, processing, distribution, use, treatment, generation, storage,
containment (whether above ground or underground), disposal, transport or
handling of Materials of Environmental Concern, or the preservation of the
environment or mitigation of adverse effects thereon.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any Person that, together with Seller or any
of the Insignia Subsidiaries, would be treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA and the regulations thereunder.
"EU Codes" shall mean EU Council Directive 2001/23/EC or any regulation,
law or code enacted by any EU Member State to implement such directive.
"EU Transferring Employee" shall have the meaning specified in Section
8.2(a).
"Exchange Act" shall have the meaning specified in Section 4.5(a).
"Excluded Assets" shall have the meaning specified in Section 1.2.
"Excluded Liabilities" shall have the meaning specified in Section 1.4.
"Fundamental Representations" shall mean the representations and
warranties of the Selling Parties set forth in Sections 4.1, 4.2, 4.3, 4.4, 4.21
and 4.25.
"GAAP" shall have the meaning specified in Section 4.5(c).
"General Assignment and Bill of Sale" shall have the meaning specified in
Section 3.2(a).
"Governmental Approval" shall mean any: (a) permit, license, certificate,
concession, approval, consent, ratification, permission, clearance,
confirmation, exemption, waiver, franchise, certification, designation, rating,
registration, variance, qualification, accreditation or authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Entity or pursuant to any Legal Requirement; or (b) right under any
Contract with any Governmental Entity.
"Governmental Entity" shall have the meaning specified in Section 4.2(b).
"Hazardous Material" shall have the meaning specified in Section 4.21(a).
"Hazardous Materials Activities" shall have the meaning specified in
Section 4.21(b).
"Holdback Amount" shall have the meaning specified in Section 2.1(c).
"Holdback Certificate" shall have the meaning specified in Section
12.4(a).
"Holdback Due Date" shall have the meaning specified in Section 2.2.
"Holdback Response" shall have the meaning specified in Section 12.4(b).
"Indemnified Party" or "Indemnified Parties" shall have the meaning
specified in Section 12.2.
"Insignia Subsidiaries" shall have the meaning specified in Section 4.3.
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, divisionals, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and all patents, applications, documents and
filings claiming priority to or serving as a basis for priority thereof; (ii)
all inventions (whether or not patentable), invention disclosures, improvements,
trade secrets, proprietary information, know how, computer software programs (in
both source code and object code form), technology, technical data and customer
lists, tangible or intangible proprietary information, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial
designs and any registrations and applications therefor throughout the world;
(v) all trade names, logos, common law trademarks and service marks, trademark
and service mark registrations and applications therefor throughout the world;
(vi) all databases and data collections and all rights therein throughout the
world; (vii) all moral and economic rights of authors and inventors, however
denominated, throughout the world; (viii) all Web addresses, sites and domain
names and numbers (including, without limitation, "insignia.com"); and (ix) any
similar or equivalent rights to any of the foregoing anywhere in the world.
"Intellectual Property Rights" shall mean any or all rights in and to
intellectual property and intangible industrial property rights, including,
without limitation, (i) Patents, Trade Secrets, Copyrights, Trademarks, (ii) any
rights similar, corresponding or equivalent to any of the foregoing anywhere in
the world, (iii) all other proprietary rights, and (iv) all copies and tangible
embodiments of the foregoing (in whatever form or medium), (v) all industrial
designs and any registrations and applications therefor throughout the world;
(vi) all trade names, logos, common law trademarks and service marks, trademark
and service mark registrations and applications therefor throughout the world;
(vii) all databases and data collections and all rights therein throughout the
world; (viii) all moral and economic rights of authors and inventors, however
denominated, throughout the world; (ix) all Web addresses, sites and domain
names and numbers (including, without limitation, "insignia.com"); and (x) any
similar or equivalent rights to any of the foregoing anywhere in the world.
"Inventory" shall have the meaning specified in Section 1.1(b).
"IP Assignment" shall have the meaning specified in Section 3.2(c).
"IRS" shall mean the United States Internal Revenue Service.
"Key Employee" shall mean each of Mark McMillan, George Monk, Nicholas,
Viscount Bearsted and Anders Furehed.
"Knowledge" (including any derivation thereof such as "known" or
"knowing") shall mean the actual knowledge of any officer of the Seller or any
of the Insignia Subsidiaries or any Key Employee, and such knowledge as would be
reasonably expected to be known by such individuals in the ordinary and usual
course of the performance of their professional responsibilities to the Seller
and any of the Insignia Subsidiaries.
"Law" shall mean any federal, state, foreign, or local law, statute,
ordinance, rule, regulation, writ, injunction, directive, order, judgment,
administrative interpretation, treaty, decree, administrative or judicial
decision and any other executive, legislative, regulatory or administrative
proclamation.
"Leased Real Property" shall have the meaning specified in Section 1.1(f).
"Legal Requirement" shall mean any law, statute, legislation,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation, permit, ruling,
directive, pronouncement, requirement (licensing or otherwise), specification,
determination, decision, opinion or interpretation that is, has been or may in
the future be issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity.
"Liability" shall mean any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
"Lien" shall mean any lien (including liens for Taxes), pledge, mortgage,
deed of trust, security interest, claim, lease, license, charge, option, right
of first refusal, easement, restriction, reservation, servitude, proxy, voting
trust or agreement, transfer restriction under any shareholder or similar
agreement, or encumbrance of any nature whatsoever.
"Losses" or "Loss" shall have the meaning specified in Section 12.2.
"Machinery and Equipment" shall have the meaning specified in Section
1.1(c).
"Materials of Environmental Concern" is defined under "Environmental and
Safety Laws" in this Exhibit A.
"Non-Assignable Asset" shall have the meaning specified in Section 1.5(a).
"Noncompetition Period" shall have the meaning specified in Section
7.7(a).
"Nonstatutory Option" shall mean any Seller Option (or portion thereof)
that is not an incentive stock option within the meaning of Section 422 of the
Code.
"Offer Letter" shall have the meaning specified in Section 3.2(e).
"Order" shall mean any: (a) temporary, preliminary or permanent order,
judgment, injunction, edict, decree, ruling, pronouncement, determination,
decision, opinion, verdict, sentence, stipulation, subpoena, writ or award that
is or has been issued, made, entered, rendered or otherwise put into effect by
or under the authority of any court, administrative agency or other Governmental
Entity or any arbitrator or arbitration panel; or (b) Contract with any
Governmental Entity that is or has been entered into in connection with any
Proceeding.
"Owned and Leased Vehicles" shall have the meaning specified in Section
1.1(d).
"Patents" shall mean all United States and foreign patents and utility
models and applications therefor and all reissues, divisions, re-examinations,
revisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and equivalent or similar rights anywhere in the
world in inventions and discoveries, including invention disclosures related to
the Business or any Purchased Assets.
"Person" shall mean any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity.
"Personal Property" shall have the meaning specified in Section 1.1(e).
"Personal Property Leases" shall have the meaning specified in Section
1.1(g).
"Pre-Closing Tax Period" shall include any Tax period ending on or before
the close of business on the Closing Date or, in the case of any Tax period
which includes, but does not end on, the Closing Date, the portion of such
period up to and including the Closing Date.
"Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit,
examination or investigation that is, has been or may in the future be
commenced, brought, conducted or heard at law or in equity or before any
Governmental Entity or any arbitrator or arbitration panel.
"Prospective Employee" shall have the meaning specified in Section 8.1(a).
"PTO" shall mean the United States Patent and Trademark Office.
"Publicly Available Software" shall mean each of (i) any software that
contains, or is derived in any manner (in whole or in part) from, any software
that is distributed as free software, open source software (e.g., GNU General
Public License, Apache Software License), or pursuant to similar licensing and
distribution models; and (ii) any software that requires as a condition of use,
modification, and/or distribution of such software that such software or other
software incorporated into, derived from, or distributed with such software (a)
be disclosed or distributed in source code form; (b) be licensed for the purpose
of making derivative works; or (c) be redistributable at no or minimal charge.
"Purchase Price" shall have the meaning specified in Section 2.1.
"Purchased Assets" shall have the meaning specified in Section 1.1.
"Purchaser" shall have the meaning specified in the Preamble.
"Purchaser Material Adverse Effect" shall have the meaning specified in
Section 5.1.
"Purchasing Parties" shall have the meaning specified in the Preamble.
"Real Property Leases" shall have the meaning specified in Section 1.1(f).
"Rebates and Credits" shall have the meaning specified in Section 1.1(j).
"Receivables" shall have the meaning specified in Section 1.1(a).
"Related Agreements" shall have the meaning specified in Section 4.2(a).
"Representatives" shall mean officers, directors, employees, holders,
attorneys, accountants, advisors and representatives. All Affiliates of a
Selling Party shall be deemed to be "Representatives" of such Selling Party.
"Required Consent" shall have the meaning specified in Section 1.5(a).
"SEC" shall have the meaning specified in Section 4.5(a).
"Securities Act" shall have the meaning specified in Section 4.5(a).
"Seller" shall have the meaning specified in the Preamble.
"Seller Authorizations" shall have the meaning specified in Section 4.31.
"Seller Balance Sheet" shall have the meaning specified in Section 4.5(d).
"Seller Benefit Plans" shall have the meaning specified in Section
4.10(a).
"Seller Contracts" shall have the meaning specified in Section 1.1(k).
"Seller Customer Information" shall have the meaning specified in Section
4.29.
"Seller Disclosure Schedule" shall have the meaning specified in Article
4.
"Seller Employee Plan" shall mean any plan, program, policy, practice,
contract, agreement or other arrangement (written or oral) providing for
deferred compensation, profit sharing, bonus, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits, welfare,
pension or other employee benefits or remuneration of any kind, whether formal
or informal, funded or unfunded, including each "employee benefit plan" within
the meaning of Section 3(3) of ERISA, which is or has been maintained,
contributed to, or required to be contributed to, by Seller or any Insignia
Subsidiary or ERISA Affiliate for the benefit of any current or former Employee,
or pursuant to which Seller or any of the Insignia Subsidiaries has or may have
any material liability contingent or otherwise.
"Seller Financial Statements" shall have the meaning specified in Section
4.5(d).
"Seller Indemnification Obligations" shall have the meaning specified in
Section 12.4(a).
"Seller Intellectual Property" shall mean any Intellectual Property that
has been used, is used, or is held for use in the business of Seller or any
Insignia Subsidiary as previously conducted, as currently conducted or as
currently proposed to be conducted.
"Seller Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, liabilities, condition (financial or other), or
results of operations of Seller or the Insignia Subsidiaries taken as a whole or
(b) the ability of Seller or the Insignia Subsidiaries to perform their
respective obligations pursuant to this Agreement and the Related Agreements and
to consummate the Transaction in a timely manner, provided that none of the
following shall be deemed to constitute a Seller Material Adverse Effect: (i)
any event, change or development that results from changes or conditions
affecting the industry in which Seller operates generally or the economy in the
United States or any foreign markets where any of the Selling Parties has
material operations or sales generally, provided such changes or conditions do
not have a materially disproportionate or unique effect on the Selling Parties,
or (ii) any event, change, development or state of facts arising from or
attributable to the announcement of this Agreement or the pendency of the
Transaction.
"Seller Option Plans" shall mean Seller's 1995 Incentive Stock Option
Plan, 1986 Executive Share Option Scheme and UK Employee Share Option Scheme
1996.
"Seller Options" shall mean options to purchase Seller Shares, including
all options outstanding under the Seller Option Plans.
"Seller Ordinary Shares" shall mean Seller's capital stock.
"Seller Organizational Documents" shall have the meaning specified in
Section 4.1.
"Seller Patents" shall have the meaning specified in Section 4.12(b).
"Seller Products" shall have the meaning specified in Section 4.13(a).
"Seller Real Property" shall have the meaning specified in Section
4.10(a).
"Seller Registered Intellectual Property" shall mean all United States,
international and foreign: (i) granted Patents and applications therefor; (ii)
registered Trademarks and applications to register Trademarks, including
intent-to-use applications, Trademark renewals, or other registrations or
applications related to Trademarks; (iii) Copyright registrations, applications
to register Copyrights, and Copyright renewals; any (iv) any other Intellectual
Property Rights that are the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any state,
government or other public legal authority at any time.
"Seller SEC Documents" shall have the meaning specified in Section 4.5(a).
"Seller Shares" shall have the meaning specified in Section 4.4(d).
"Seller Warrants" shall have the meaning specified in Section 4.4(c).
"Selling Party" and "Selling Parties" shall have the meaning specified in
the Preamble.
"Services" shall have the meaning specified in Section 4.13(b).
"Shareholder" or "Shareholders" shall mean the holder(s) of the Seller
Shares.
"SOX" shall have the meaning specified in Section 4.5(a).
"Standard Support Agreement" shall have the meaning specified in Section
4.12(q).
"Subsidiary Securities" shall have the meaning specified in Section
4.4(a).
"Support Agreements" shall have the meaning specified in Section 4.12(q).
"Survival Period" shall have the meaning specified in Section 12.1(a).
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means (a) any
federal, state, local or foreign income, alternative or add-on minimum income,
ad valorem, business license, documentary, employment, environmental, excise,
franchise, gains, gross income, gross receipts, license, occupation, payroll,
personal property, premium, profits, property transfer, real property,
recording, sales, services, severance, social security, stamp, transfer,
unemployment insurance, use, value added, windfall profit or withholding tax,
custom, duty, levy or other
governmental assessment, charge or fee in the nature of a tax (whether payable
directly or by withholding); (b) any liability for Taxes as a transferee; (c)
any liability for Taxes as a result of being or having been a member of an
affiliated, consolidated, combined or unitary group under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law), or a
party to any Tax sharing, Tax indemnity, Tax allocation or similar agreement or
arrangement; and (d) any estimated Tax, interest, fines, penalties or additions
to Tax with respect to amounts referred to in clauses (a), (b) or (c) hereof.
"Tax Authority" means any Governmental Entity responsible for the
imposition, assessment or collection of any Tax (domestic or foreign).
"Tax Return" shall mean any return, statement, declaration, notice,
certificate or other document that is or has been filed with or submitted to, or
required to be filed with or submitted to, any Governmental Entity in connection
with the determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement related to any Tax.
"Third-Party Claim" shall have the meaning specified in Section 12.4(c).
"Threshold Amount" shall have the meaning specified in Section 12.3(a).
"Trade Secrets" shall mean all trade secrets under applicable law and
other rights in know-how and confidential or proprietary information,
processing, manufacturing or marketing information, including new developments,
inventions, processes, ideas or other proprietary information that provide any
Selling Party with advantages over competitors who do not know or use it and
documentation thereof (including related papers, blueprints, drawings, research
data and results, flowcharts, diagrams, chemical compositions, formulae,
diaries, notebooks, specifications, designs, methods of manufacture, processing
techniques, data processing software, compilations of information, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals) and all claims and rights related thereto.
"Trademarks" shall mean any and all trademarks, service marks, trade
dress, logos, slogans, trade names, all material unregistered trademarks,
together with all adaptations, derivations and combinations thereof, and all
goodwill associated with any of the foregoing throughout the world, but
excluding all rights, title and interests in Seller's corporate name, corporate
service mark or corporate logo.
"Transaction" shall mean all transactions contemplated by this Agreement
and the Related Agreements.
"Transaction Documents" shall have the meaning specified in Section
4.2(a).
"Transaction Expenses" shall mean all fees and expenses incurred by Seller
or any Insignia Subsidiary in connection with the Transaction, including all
"change of control," severance, or similar payments and all legal, accounting,
investment banking, Tax and financial advisory and all other fees and expenses
of third parties incurred in connection with the negotiation and effectuation of
the terms and conditions of this Agreement and the Transaction.
"Transfer Taxes" shall mean all federal, state, local or foreign sales,
use, transfer, real property transfer, mortgage recording, stamp duty,
value-added or similar Taxes that may be imposed in connection with the transfer
of Purchased Assets or the assumption of the Assumed Liabilities, together with
any interest, additions to Tax or penalties with respect thereto and any
interest in respect of such additions to Tax or penalties.
"Transferred Employees" shall have the meaning specified in Section
8.1(a).
"Transition Services Agreement" shall have the meaning specified in
Section 3.2(d).