Exhibit 10.90
STOCK PURCHASE AND SALE AGREEMENT
DATED FEBRUARY 9, 2005
BY AND AMONG
INSIGNIA SOLUTIONS PLC,
KENORA LTD.
AND
THE SHAREHOLDERS OF KENORA LTD.
AND
KORROGO TECHNOLOGIES LTD.
AND
MI4E DEVICE MANAGEMENT AB
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF SHARES............................... 1
1.1 Sale and Purchase of Shares.................................. 1
1.2 Purchase Price............................................... 1
1.3 Holdback Shares.............................................. 2
1.4 Consideration to each Seller................................. 2
1.5 Earnout...................................................... 2
1.6 Closing...................................................... 5
1.7 Certain Adjustments.......................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 6
2.1 Existence; Good Standing; Corporate Authority;
Compliance With Law.......................................... 6
2.2 Capitalization of the Company................................ 6
2.3 Approval of Agreement; No Violation.......................... 7
2.4 Subsidiaries................................................. 7
2.5 Other Interests.............................................. 7
2.6 Financial Statements......................................... 7
2.7 Litigation................................................... 8
2.8 Absence of Certain Changes................................... 8
2.9 No Undisclosed Liabilities................................... 8
2.10 Taxes........................................................ 8
2.11 Contracts and Other Obligations.............................. 9
2.12 Contracts and Commitments.................................... 9
2.13 Employee Benefit Plans....................................... 10
2.14 Employees.................................................... 11
2.15 Labor Matters................................................ 11
2.16 Overtime, Back Wages, Vacation and Minimum Wages............. 11
2.17 Necessary Property........................................... 11
2.18 No Brokers................................................... 11
2.19 Intellectual Property........................................ 12
2.20 Software..................................................... 13
2.21 Environmental Matters........................................ 14
2.22 Title to Assets.............................................. 15
2.23 Quality and Condition of Assets.............................. 15
2.24 Indebtedness to and from Officers and Others................. 15
2.25 Inventory.................................................... 15
2.26 Real Property................................................ 15
2.27 Accounts Receivable.......................................... 15
2.28 Insurance.................................................... 15
2.29 Permits, Authorizations, Etc................................. 16
2.30 Books and Records............................................ 16
2.31 Customers.................................................... 16
2.32 Regulatory Compliance........................................ 16
2.33 Full Disclosure.............................................. 16
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS................. 17
3.1 Ownership of Shares.......................................... 17
3.2 Approval of Agreement; No Violation.......................... 17
3.3 No Brokers................................................... 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER................... 17
4.1 Existence; Good Standing; Corporate Authority;
Compliance With Law.......................................... 18
4.2 Authorization, Validity and Effect of Agreements............. 18
4.3 Capitalization............................................... 18
4.4 No Violation................................................. 19
4.5 SEC Documents................................................ 19
4.6 No Brokers................................................... 20
4.7 Full Disclosure.............................................. 20
4.8 Litigation................................................... 20
4.9 Insignia Common Stock........................................ 20
ARTICLE V COVENANTS................................................. 20
5.1 Operation of the Business.................................... 20
5.2 Insurance and Maintenance of Property........................ 21
5.3 Full Access.................................................. 21
5.4 Books, Records and Financial Statements...................... 22
5.5 Filings; Other Action........................................ 22
5.6 Third Party Offers and Negotiations.......................... 22
5.7 Tax Matters.................................................. 22
5.8 Notification of Certain Matters.............................. 22
5.9 Restrictions on Certain Transactions......................... 23
5.10 Non-Competition.............................................. 23
5.11 Non-Solicitation of Clients.................................. 24
5.12 Solicitation of Employees and Consultants.................... 24
5.13 Non-disruption; Other Matters................................ 24
5.14 Equitable Relief............................................. 24
5.15 Listed Accounts Receivable Collection........................ 25
ARTICLE VI CONDITIONS................................................ 25
6.1 Conditions to Each Party's Obligation to Effect the
Closing...................................................... 25
6.2 Conditions to Obligation of Sellers to Effect the Closing.... 25
6.3 Conditions to Obligation of Buyer to Effect the Closing...... 26
ARTICLE VII INDEMNIFICATION........................................... 27
7.1 Survival of Representations, Warranties and Covenants........ 27
7.2 Indemnification of the Sellers and the Company............... 27
7.3 Limitation on Indemnification................................ 28
7.4 Satisfaction of Indemnification through Either Retention
of Holdback Shares or offset of Initial Earnout Payment...... 28
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TABLE OF CONTENTS
(continued)
PAGE
7.5 Indemnification Regarding Brokerage Fees..................... 29
7.6 Notice and Defense of Third-Party Actions.................... 29
7.7 Notice of Direct Claims...................................... 30
7.8 Cooperation.................................................. 30
7.9 Continued Employment of Sellers as a Condition to
Receipt of Holdback Shares................................... 30
ARTICLE VIII TERMINATION............................................... 31
8.1 Termination by Mutual Consent................................ 31
8.2 Termination by Either Buyer or Sellers....................... 31
8.3 Termination by Sellers....................................... 31
8.4 Termination by Buyer......................................... 31
8.5 Effect of Termination and Abandonment........................ 31
8.6 Extension; Waiver............................................ 31
ARTICLE IX MISCELLANEOUS............................................. 32
9.1 Notices...................................................... 32
9.2 Assignments; Binding Effect.................................. 33
9.3 Entire Agreement............................................. 33
9.4 Amendment.................................................... 33
9.5 Governing Law................................................ 33
9.6 Counterparts................................................. 33
9.7 Headings..................................................... 34
9.8 Interpretation............................................... 34
9.9 Waivers...................................................... 34
9.10 Severability................................................. 34
9.11 Enforcement of Agreement..................................... 34
9.12 Subsidiaries................................................. 34
9.13 Further Assurances........................................... 34
9.14 Dispute Resolution Procedures................................ 35
9.15 Payment of Fees and Expenses................................. 35
9.16 Appointment and Powers of the Sellers Representatives........ 35
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STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (the "Agreement") is made this 9th
day of February, 2005, by and among Insignia Solutions plc, a company
incorporated under the laws of England ("Buyer" or "Insignia"), Kenora Ltd., a
company incorporated under the laws of Hong Kong ("HK Holding Company"), Xxxx
Xxxxxxx, an individual, and Anders Furehed, an individual, each holding through
the nominees listed on Schedule A hereto (individually a "Seller" and
collectively the "Sellers") and, for the purpose of making certain
representations, warranties and covenants hereunder, Korrogo Technologies Ltd.,
a company incorporated under the laws of England and Wales and a wholly-owned
subsidiary of HK Holding Company ("UK Holding Company") and mi4e Device
Management AB, a company incorporated under the laws of Sweden and a
wholly-owned subsidiary of UK Holding Company (the "Company" or "mi4e").
RECITALS
A. The Sellers, through the nominees listed on Schedule A, own all of the
shares of capital stock of HK Holding Company. HK Holding Company, through its
nominee Midland Investments Limited, owns all the shares of capital stock of UK
Holding Company. UK Holding Company owns all the shares of capital stock of the
Company. There are two (2) shares of capital stock of HK Holding Company
registered and outstanding, each with a par value of HK$1.00 (the "Shares"). The
Shares are owned by the Sellers as set forth in Schedule A to this Agreement.
Each of Company, UK Holding Company and HK Holding Company is a "Group Company"
and collectively, the "Group Companies."
B. The Sellers desire to sell to Buyer, and Buyer desires to purchase from
the Sellers, all of the Shares upon the terms and conditions set forth herein.
C. Each of the Sellers has executed and delivered employment agreements
with the Buyer, which employment agreements shall be effective and contingent on
the Closing of the sale and the purchase of the Shares.
D. Each of the Sellers, HK Holding Company and Buyer have taken all
corporate (Board of Director and stockholder) action necessary to approve the
execution of this Agreement.
E. Each of the persons listed on Schedule B1 hereto has executed and
delivered releases of Company and Buyer in the form attached as Schedule B2.
F. The Company has delivered a schedule showing the cash balance, the
accounts receivable balance and the accounts payable and other short term
liabilities balance as of the signing date (the "Signing Balance Sheet"), which
shall be attached as Schedule C.
G. The Sellers, the nominees for the Sellers, HK Holding Company and the
nominee for HK Holding Company have executed and delivered Confirmations of
Title in the form attached as Schedule D.
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NOW, THEREFORE, in consideration of the premises and of the mutual covenants of
the parties hereinafter expressed, it is hereby agreed as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of Shares. Subject to the terms and conditions
hereof, the Sellers shall sell, assign, transfer and deliver to Buyer and Buyer
shall purchase from the Sellers, on the Closing Date (as hereinafter defined),
all of the Shares for the Stock Consideration set forth in Schedule A.
1.2 Purchase Price. The aggregate consideration to be paid by Buyer for
the sale, assignment, transfer and delivery of the Shares by the Sellers to
Buyer as provided herein shall be as follows:
(a) Two Million Euros (Euros 2,000,000) (the "Stock Consideration")
shall be paid to the Sellers in American depository shares representing ordinary
shares, 0.20 xxxxx par value, of Buyer ("Insignia Common Stock"). The aggregate
number of shares of Insignia Common Stock to be issued to the Sellers hereunder
shall equal the Stock Consideration divided by the Signing Average Price (as
defined below) of a share of Insignia Common Stock. For purposes of this
Agreement, such resulting number of shares of Insignia Common Stock shall be
deemed the "Total Buyer Shares." The "Signing Average Price" of a share of
Insignia Common Stock shall be $0.652, which represents the average of the
closing sales prices thereof on The Nasdaq Small Cap Market over the five (5)
consecutive trading days ending on the trading date immediately prior to the
date of this Agreement set out above. The exchange rate Euros/dollars shall be
$1.290826, which represents the average exchange rate during the five (5)
consecutive business days ending on the business day immediately prior to the
date of this Agreement. The shares of Insignia Common Stock issued pursuant to
this Agreement shall be "restricted securities" as defined in Rule 144(a)(3)
promulgated under the Securities Act of 1933, as amended, until such securities
are registered with the Securities and Exchange Commission pursuant to the
Registration Rights Agreement (as defined herein).
(b) No certificates or scrip representing fractional shares of
Insignia Common Stock will be issued pursuant to this Agreement, but in lieu
thereof each Seller otherwise entitled to a fractional share of Insignia Common
Stock will be entitled to receive a cash payment in lieu of such fractional
share of Insignia Common Stock in an amount equal to the product of such
fractional part of a share of Insignia Common Stock multiplied by the Signing
Average Price, which product shall be rounded up to the next highest cent,
without any interest thereon.
1.3 Holdback Shares. At the Closing, Buyer shall refrain from issuing such
number of the Total Buyer Shares that would otherwise have been issued to the
Sellers as shall be equal to the product of (a) Euros 500,000 divided by (b) the
Signing Average Price (the "Holdback Shares"), as security for any breach of any
representation, warranty or covenant of the Company or Sellers contained herein
or failure to collect in full the Unconfirmed Accounts Receivable (as defined in
Section 7.2). The portion of the Holdback Shares allocated to each Seller shall
equal a fraction the numerator of which being the number of Total Buyer Shares
to be delivered to such Seller at Closing, and the denominator of which being
the total number of Total Buyer Shares to be delivered to all of the Sellers at
Closing. An amount equal to the amount of any cash
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dividends or distributions of Insignia Common Stock, which would have been paid
or made to a Seller with respect to the Holdback Shares had the Holdback Shares
been issued at Closing shall be paid by Buyer to such Seller simultaneously and
proportionately with the issue of the corresponding Holdback Shares, if any,
hereunder.
1.4 Consideration to each Seller. The Buyer shall deliver to each Seller,
at the time and in the manner described in Schedule A the number of Total Buyer
Shares set forth opposite the name of the Seller on Schedule A, as reduced by
the Holdback Shares, as set forth on Schedule A (the "Closing Delivered
Shares").
1.5 Earnout. Subject to the terms set forth below, the Sellers shall have
the opportunity to receive an additional cash payment beginning at the
completion of the Holdback Period (the "Earnout Payment"):
(a) Definitions. For the purpose of this Section 1.5 the following
terms shall have the meanings indicated below:
"Affiliate" means any entity directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company
or Buyer, as applicable.
"Holdback Period" means the period commencing on the Closing Date
and ending on March 31, 2006.
"Collections" means the cash collected by and for the account of the
Buyer during the applicable Earnout Period from revenues from worldwide
sales of Company Products by the Company and its Affiliates (including
Buyer) (which sales occur after the Closing Date) determined with
reference to Buyer's audited consolidated financial statements, determined
in accordance with United States generally accepted accounting principles
applied on a consistent basis with the Buyer's past practices. Buyer shall
eliminate from the calculation of revenues intercompany sales (i.e., sales
by the Company to Buyer or an Affiliate of Buyer). In the event that
Company Products are combined with Buyer or third party products or
otherwise improved or modified (the "Combined Product"), the Earnout
Payment will equal 20% of such Collections related to the Combined
Product.
"Company Know-How" means the designs, methods, tooling, fixtures,
drawings, specifications, technology, engineering data, computer programs,
compositions, compounds, and test results in which the Company now has, or
hereafter obtains, any right and which are useful in making or using
products.
"Company Patents" means (i) the U.S. and foreign patents and patent
applications listed in Schedule 2.19(b), and (ii) all other U.S. and
foreign patents and patent applications (a) in which the Company now has,
or hereafter obtains, any right or (b) which covers or is based upon an
invention now or hereafter made or conceived by an employee of the Company
or a person working at a Company facility.
"Company Products" means any device or other product which is (i)
covered by, or made by a process which is covered by one or more claims of
Company Patents, or (ii) incorporates, uses or is made in accordance with
Company Know-How, in each case
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whether sold by the Company or one of its Affiliates (including Buyer) and
whether such Company Products are sold under the Company name or another
name. Products that in all material respects conform to the Open Mobile
Alliance Client Provisioning (OMA CP) Standard and/or confirming to Nokia
Ericsson Over the Air 7.0 and 7.1 (OTA 7.0/7.1) shall always be considered
as Company Products.
"Earnout Period" means, with regard to the Initial Earnout Payment
(the "Initial Earnout Payment"), the Holdback Period, and with regard to
each subsequent Earnout Payment, each Quarter after the expiration of the
Holdback Period, subject to the limitations in subsection (b) below.
(b) Terms of Earnout Payment. The Earnout Payment for each
applicable Earnout Period will be forty percent (40%) of the Collections for
such Earnout Period, provided that no additional Earnout Payment will be made
after the earlier of: (i) five (5) years after the Closing Date, or (ii) the
date on which the Buyer has made Earnout Payments in an aggregate amount of
Euros 700,000, subject to required tax withholdings. The Earnout Payments will
be made to the Sellers on a pro rata basis (based on the number of Shares held
as a percentage of the total Shares). The Initial Earnout Payment will be made
within sixty (60) days after the end of the Holdback Period, and the applicable
Earnout Payment will equal forty percent (40%) of the Collections made during
the Holdback Period, subject only to tax withholdings and offset as described in
Section 7.4. Earnout Payments made after this Initial Earnout Payment will be
made within sixty (60) days after each calendar quarter (a "Quarter") following
the expiration of the Holdback Period, and the applicable Earnout Payment will
equal forty percent (40%) of the Collections made during such Quarter, subject
to required tax withholdings, but not subject to any offset for Claims.
(c) Determination of Earnout Payment. As promptly as practicable
after the end of an Earnout Period, but in any event within thirty (30) days
after the end of the applicable Earnout Period (the "Determination Date"), Buyer
shall determine the amount of the Earnout Payment that shall be payable, if any,
in respect of such Earnout Period and shall deliver in accordance with Section
9.1 hereof to each of Anders Furehed and Xxxx Xxxxxxx (the "Sellers
Representatives"), on behalf of the Sellers, a notice (the "Earnout Notice"),
setting forth in reasonable detail the calculation of such Earnout Payment. The
Earnout Notice shall include a statement from the Chief Financial Officer of
Buyer setting forth the calculation of Collections for such Earnout Period
determined in accordance with this Agreement, certifying as to the accuracy
thereof.
(d) Disputes Regarding Earnout Payment. The Sellers Representatives
shall within thirty (30) days of receipt of the Earnout Notice (the "Receipt
Date"), provide written notice to Buyer of any dispute Sellers may have over the
calculation of Collections for such Earnout Period (the "Earnout Dispute
Notice"). If the Sellers Representatives, on behalf of the Sellers, dispute any
aspect of the calculations, the Sellers Representatives must set forth in
reasonable detail the basis for such dispute. Buyer and its independent
accountants will provide the Sellers Representatives and their independent
accountants and other designated representatives with reasonable access to the
necessary books, records and work papers of Buyer and its Subsidiaries to enable
the Sellers Representatives to review and evaluate the basis for Buyer's
calculations for such Earnout Period, and the Sellers Representatives and their
independent accountants shall have the right to make copies of all such books,
records and work
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papers. Fees and expenses of the independent accountants shall be paid as
provided for fees and expenses of the Accounting Firm in Section 1.5(f). During
the thirty (30) day period following Buyer's receipt of the Earnout Dispute
Notice, the parties shall attempt in good faith to settle any dispute through
negotiation, and shall instruct their respective independent accountants and
other designated representatives to seek to resolve the points of disagreement
and agree upon the Collections for such Earnout Period.
(e) Absence of Dispute. If the Sellers Representatives, on behalf of
the Sellers, do not dispute any aspect of Buyer's calculation of Collections for
such Earnout Period within sixty (60) days of the Determination Date, or if
Buyer and the Sellers Representatives, on behalf of the Sellers, reach agreement
upon the items initially in dispute (with such further adjustments as to which
they may agree) within thirty (30) days following Buyer's receipt of the Earnout
Dispute Notice, the Collections so accepted or agreed upon shall be final,
conclusive and binding on the parties hereto and not subject to collateral
attack.
(f) Resolution of Disputes; Accounting Firm. If the Sellers
Representatives, on behalf of the Sellers, do not accept Buyer's calculation of
Collections, and Buyer and the Sellers Representatives, on behalf of the
Sellers, do not agree upon the items in dispute pursuant to the procedures set
forth above, Buyer and the Sellers Representatives shall promptly refer the
items in dispute to a mutually agreed firm of recognized independent public
accountants (the "Accounting Firm") to act as an arbitrator to resolve all
matters in dispute and determine the disputed calculations. Unless otherwise
agreed by Buyer and the Sellers Representatives, the initial Accounting Firm
shall be Xxxx, Pilger & Xxxxx LLP. The Accounting Firm shall, within forty-five
(45) days after such submission, determine and report to Buyer and the Sellers
Representatives upon any disputed items. Each of the parties shall furnish, at
its own expense, the Accounting Firm and the other parties with (i) a statement
as to the matters in dispute and such party's calculations based on its
interpretation of such disputed matters and (ii) such other documents and
information as the Accounting Firm may request. Each party may also furnish to
the Accounting Firm such other information and documents as it deems relevant
with appropriate copies or notification being given to the other parties. The
Accounting Firm may conduct a conference concerning the disagreement between the
Sellers, on the one hand, and Buyer, on the other, at which conference each
party shall have the right to present additional documents, materials and other
evidence and to have present its or their advisors, counsel or accountants. The
Accounting Firm shall promptly render its decision on the matters in dispute in
writing, which decision will include the Accounting Firm's own statement as to
the disputed calculations based on the matters not in dispute and the Accounting
Firm's determination regarding matters in dispute. All determinations made by
the Accounting Firm shall be final, conclusive and binding with respect to the
disputed calculations and shall not be subject to collateral attack. Fees and
expenses of the Accounting Firm shall be borne by the Sellers unless the Buyer's
calculations as set forth its initial submission to the Accounting Firm differ
by greater than ten percent (10%) from the calculations by the Accounting Firm,
as determined by the Accounting Firm, in which case the fees and expenses will
be paid by Buyer.
(g) Delivery of Earnout Payment. As promptly as practicable after
the resolution of any dispute, the Buyer shall pay to the Sellers the
Earnout Payment payable with respect to such Earnout Period. A letter from
the Chief Financial Officer of Buyer shall
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accompany each payment, or if no Earnout Payment is made, such letter
shall be sent alone, describing the calculations made in determining that
no Earnout Payment is due.
1.6 Closing.
(a) The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Buyer, 00000 Xxxxxxx Xxxxxx,
Xxxxxxx, XX 00000-0000, at 10:00 a.m. local time within two business days
after the satisfaction or waiver of all conditions to Closing, provided
however that without the prior written consent of the Sellers the Closing
will not occur earlier than: (i) the date on which Buyer has received
Receivables Acknowledgments from each of the customers listed on Exhibit
5.14(B), or (ii) March 1, 2005.
(b) At the Closing, the Sellers shall deliver to Buyer the
instruments and documents specified in Article VI hereof.
(c) At the Closing, Buyer shall give its transfer agent irrevocable
transfer instructions to deliver certificates representing the Closing
Delivered Shares to be delivered to each Seller as set forth on Schedule A
hereto, and such stock certificates will be delivered as soon as
reasonably practicable following Closing. Buyer shall also deliver all
instruments and documents specified in Article VI hereof.
1.7 Certain Adjustments. If at anytime following the date hereof the
issued and outstanding shares of capital stock of the Company or Buyer shall be
changed into a different number or class of shares by reason of any stock split,
stock dividend, reverse stock split, reclassification, recapitalization or other
transaction with similar effect, then all calculations under this Agreement
shall be appropriately adjusted to take into account such action or transaction.
1.8 Decrease in Closing Delivered Shares. To the extent that the
consideration paid pursuant to the Landlord Settlement (as defined in Section
6.3(k)) exceeds SEK 60,000, the number of Closing Delivered Shares will be
reduced on a euro-by-euro basis by the amount of consideration paid in excess of
SEK 60,000.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at or prior to
the execution hereof to the Buyer (the "Schedules"), each Seller, each Group
Company hereby makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof and will be true and correct on
the Closing Date.
2.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
The statements set forth in the Recitals to this Agreement are true and correct.
Each of the Group Companies is a corporation duly incorporated and validly
existing under the laws of its incorporation. Each of the Group Companies is
duly licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing
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would not have a material adverse effect on the business, results of operations
or financial condition of the Company (a "Company Material Adverse Effect").
Each of the Group Companies has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now
conducted. None of the Group Companies is in violation in any material respect
of any order of any court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation to which such
Group Company or any of its properties or assets is subject. Each of the Group
Companies has obtained all licenses, permits and other authorizations and have
taken all actions required by applicable law or governmental regulations in
connection with its business as now conducted. Attached as Schedule 2.1 are true
and complete copies of all charter documents of each of the Group Companies as
currently in force. No applications have been filed to the Swedish Companies
Registration Office (Sw. Bolagsverket) to amend the articles of association of
the Company.
2.2 Capitalization.
(a) The Company has 1000 shares of capital stock (the "Company
Shares"), each of which is validly issued, registered, fully paid and
non-assessable. The Company Shares constitute 100% of the issued capital stock
of the Company. All of the Company Shares are owned by UK Holding Company. There
are no outstanding rights, options, warrants, convertible or exchangeable
securities or other agreements, commitments or understandings of any kind (oral
or written) entitling any person or entity to acquire from the Company or UK
Holding Company or any other person or entity any shares of capital stock of the
Company or any securities convertible into or exchangeable for shares of such
capital stock. No person or entity has any claim or right to any equity interest
in the Company.
(b) UK Holding Company has two (2) shares of capital stock (the "UK
Holding Company Shares"), each of which is validly issued, registered, fully
paid and non-assessable. The UK Holding Company Shares constitute 100% of the
issued capital stock of UK Holding Company. All of the UK Holding Company Shares
are owned by HK Holding Company, through a nominee. There are no outstanding
rights, options, warrants, convertible or exchangeable securities or other
agreements, commitments or understandings of any kind (oral or written)
entitling any person or entity to acquire from UK Holding Company, HK Holding
Company or any other person or entity any shares of capital stock of the UK
Holding Company or any securities convertible into or exchangeable for shares of
such capital stock. No person or entity (other than HK Holding Company as
beneficial owner, and Midland Investments Limited, as its registered nominee)
has any claim or right to any equity interest in UK Holding Company. UK Holding
Company does not have any assets other than the Company Shares. UK Holding
Company conducts no trading operations, has no employees, has no contracts,
agreements, understandings or commitments with any person or entity (whether
oral or written). UK Holding Company has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) and will not incur
any liabilities or obligations, including but not limited to tax obligations, as
a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
(c) HK Holding Company has two (2) shares of capital stock (the
"Shares"), each of which is validly issued, registered, fully paid and
non-assessable. The Shares constitute 100% of the issued capital stock of HK
Holding Company. All of the Shares are owned by the Sellers, through their
nominees, as listed on Schedule A. There are no outstanding rights,
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options, warrants, convertible or exchangeable securities or other agreements,
commitments or understandings of any kind (oral or written) entitling any person
or entity to acquire from HK Holding Company, any of the Sellers or any other
person or entity any shares of capital stock of HK Holding Company or any
securities convertible into or exchangeable for shares of such capital stock. No
person or entity has any claim or right to any equity interest in HK Holding
Company. HK Holding Company does not have any assets other than the UK Holding
Company Shares. HK Holding Company conducts no trading operations, has no
employees, has no contracts, agreements, understandings or commitments with any
person or entity (whether oral or written). HK Holding Company has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) and will not incur any liabilities or obligations, including but
not limited to tax obligations, as a result of the execution of this Agreement
or the consummation of the transactions contemplated hereby.
(d) The Title Documents (as defined in Section 6.3(l)) are complete,
correct and fully registered with the appropriate authorities.
2.3 Approval of Agreement; No Violation. The Sellers and HK Holding
Company have full power and authority to enter into this Agreement and to
perform their obligations hereunder. Neither the sale, transfer, assignment and
delivery of the HK Holding Company Shares by the Sellers to Buyer as
contemplated by this Agreement, the execution and delivery by the Sellers and HK
Holding Company of this Agreement nor the performance by the Sellers and HK
Holding Company of their obligations hereunder does or will (i) conflict with or
result in any violation of, or constitute a breach of any provision of the
charter documents of any Group Company, (ii) conflict with or result in any
violation of, or constitute a breach of any provision of any of the franchises,
licenses, rights of way, permits, or certifications, of any Group Company, or
any indenture, evidence of indebtedness or other agreement to which any Group
Company is a party or by which any Group Company is bound, (iii) result in the
creation of any lien or other encumbrance upon any of the assets of any Group
Company or any shares of capital stock of any Group Company, (iv) violate any
judgment, order, injunction, decree or award of any court, administrative agency
or governmental body against or binding upon any Group Company, (v) constitute a
violation by any Group Company of any applicable law, statute, ordinance, rule
or regulation or (vi) other than the applicable federal, state and local
regulatory filings (collectively, the "Regulatory Filings"), require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority.
2.4 Subsidiaries. The Company has no subsidiaries. The Company is a
wholly-owned subsidiary of UK Holding Company. UK Holding Company is a
wholly-owned subsidiary of HK Holding Company. The shares of capital stock of
each Group Company are free and clear of all liens, pledges, security interests,
claims or other encumbrances other than liens imposed by local law which are not
material. Schedule 2.4 contains the following information for each of the Group
Companies: (i) its name and jurisdiction of incorporation or organization; (ii)
its authorized capital stock or share capital; and (iii) the number of issued
and outstanding shares of capital stock or share capital
2.5 Other Interests. Except as described in Section 2.4, no Group Company
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business, trust or entity (other
than investments in short-term
-8-
investment securities and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into in the ordinary
course of business).
2.6 Financial Statements. Schedule 2.6(a) contains true and complete
copies of the following financial statements of the Company, and the Sellers
will deliver prior to closing the following financial statements for HK Holding
Company and UK Holding Company: (i) unaudited balance sheets, profit and loss
statements and cash flow statement as of January 31, 2005 and for the
seven-months then ended (the "Interim Accounts") and (ii) the audited statutory
balance sheet and the audited profit and loss accounts of the Company for the
financial year ended June 30, 2004 (and in the case of HK Holding Company and UK
Holding Company, December 31, 2004) (the "Annual Accounts"). The Annual
Accounts, the Interim Accounts and the Signing Balance Sheet have been, or will
be (in the case of HK Holding Company and UK Holding Company), prepared in
accordance with (iii) Swedish statutory provisions and generally accepted
accounting and valuation principles in the case of the Company, (iv) English
statutory provisions and generally accepted accounting and valuation principles
in the case of the UK Holding Company and (v) HongKong statutory provisions and
generally accepted accounting and valuation principles in the case of the HK
Holding Company ("Applicable GAAP") using accounting practices consistent with
past accounting practices of the Group Company. The Interim Accounts and Signing
Balance Sheet have been, or will be (in the case of HK Holding Company and UK
Holding Company), prepared as if those were normal year end balance sheets
(except that they do not have the necessary footnote disclosures and they are
subject to normal year end adjustments which would not be material in amount or
effect). Each of the Annual Accounts, the Interim Accounts and the Signing
Balance Sheet (together with the related notes and schedules) presents a true
and fair view of the net worth as well as of the assets and liabilities, the
financial condition and earnings position of the Group Company, in each case as
of the date of and for the period referred to in the Annual Accounts, the
Interim Accounts and the Signing Balance Sheet.
2.7 Litigation. There are no actions, suits or proceedings pending against
any Group Company, or, to the knowledge of the Sellers, threatened against any
Group Company, at law or in equity, or before or by any federal, state or
foreign court, commission, board, bureau, agency or instrumentality. As used in
this Agreement, the phrase "to the knowledge of the Company or any Group
Company" (and any similar construction of the phrase, e.g., "known to the
Company") shall be deemed to refer to the knowledge after reasonable inquiry of
each of the Sellers, and each member of the Board of Directors of the Group
Companies and shall include any information provided to the Group Company in
writing.
2.8 Absence of Certain Changes. Since September 30, 2003, the Company has
conducted its business only in the ordinary course of such business, and there
has not been (i) any Company Material Adverse Effect; (ii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock; (iii) any direct or indirect redemption, purchase or other
acquisition of any shares of its capital stock or capital stock of any Group
Company, or any commitment for any such action, or any other hidden or open
distribution of profit to the shareholders of any Group Company; (iv) any
issuance of shares, or commitment to issue shares, in any Group Company; (v) any
material change in its accounting principles, practices or methods; (vi) any
bonus payments, any increase in any compensation or new or amended employment
agreement with any of the Company's present or future officers or
-9-
members of the Board of Directors; (vii) any sale, lease or other disposition of
any of assets of a Group Company (including capital stock of any subsidiary)
which are material, individually or in the aggregate, except in the ordinary
course of business; or (viii) any payment by the Company with respect to
transaction expenses related to the transactions contemplated by this Agreement.
2.9 No Undisclosed Liabilities. Except as and to the extent set forth on
the balance sheet of the Company as of January 31, 2005, the Company has no
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of the Company, prepared in accordance with Swedish
GAAP consistently applied, except liabilities arising in the ordinary course of
business since such date and liabilities disclosed in the Schedules hereto, none
of which liabilities or obligations will, or would be reasonably likely to, have
a Company Material Adverse Effect. Neither the Company nor any of the Sellers
has incurred any fees or expenses in connection with the negotiation or
execution of this Agreement, including but not limited to any legal, accounting,
consulting or brokers fees.
2.10 Taxes. Each of the Group Companies has timely filed all federal,
state and foreign tax and social security declarations, returns and reports
required to be filed by any of them prior to the date of this Agreement
(including, without limitation, corporate income tax, trade tax, wage
withholding tax and VAT returns), and all such declarations, returns and reports
are complete in all material respects. Any and all taxes and social charges
(including, without limitation, wage withholding tax and social charges on
remuneration in kind paid to any of the employees of the Company), public
impositions and levies (including, without limitation, custom taxes and duties),
for which any of the Group Companies is or may become liable and which relate to
any time period prior to January 31, 2005 have either completely been paid prior
to that date or are sufficiently accrued for and reflected in the Interim
Accounts. None of the Group Companies will incur any tax liability as a result
of the Closing of this Agreement or the transactions contemplated hereby.
2.11 Contracts and Other Obligations. Each of the agreements, contracts,
commitments and other obligations of the Company are listed on the Schedules to
this Agreement ("Contracts") and the material terms of each of the oral
Contracts are summarized on Schedule 2.11. Each of the Contracts is a valid and
binding obligation of the Company in accordance with its terms and is in full
force and effect, and none of the Company or any other party thereto is in
default with respect to any term or condition thereof, nor has any event
occurred which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto or would give any party thereto an affirmative
defense against the Company. No termination or other penalty will result under,
and no consent is required under, any Contract for the consummation of the sale
of the Shares to Buyer pursuant to this Agreement. The Company has delivered or
otherwise made available to Buyer true, correct and complete copies of the
instruments, agreements or other documents creating or evidencing each of the
Contracts.
2.12 Contracts and Commitments. Except as set forth in Schedule 2.12
hereto and any other Schedule delivered by the Company pursuant hereto, there is
not in effect on the date hereof:
-10-
(a) any single Contract or purchase order providing for an
expenditure by the Company in excess of $5,000, Contracts or purchase orders
with the same or affiliated vendor(s) providing for an expenditure by the
Company in excess of $5,000, or Contracts or purchase offers in the aggregate
providing for expenditures by the Company in excess of $5,000 for the purchase
of any real property, machinery, equipment or other items which are in the
nature of capital investment or for the purchase of materials, supplies,
component parts or any other items or services;
(b) any Contract, bid or offer to which the Company is a party or by
which the Company is bound to provide services to third parties which (1) the
Company knows or has reason to believe is at a price which would result in a net
loss on the providing of such services, (2) which is pursuant to terms or
conditions that the Company cannot reasonably expect to satisfy or fulfill in
their entirety, or (3) which involves potential monthly revenues of more than
$5,000 or which, together with all other contracts, bids or offers to or with
the same party or any affiliated parties, involves potential monthly revenues of
more than $5,000;
(c) any purchase commitment by the Company for materials, supplies,
component parts or other items or services in excess of the normal, ordinary,
usual and current requirements of its business or at a price materially in
excess of the current reasonable market price;
(d) any revocable or irrevocable power of attorney granted by the
Company to any person, firm or corporation for any purpose whatsoever;
(e) any loan agreement, indenture, promissory note, conditional
sales agreement or other similar type of agreement to which the Company is a
party or by which the Company is bound;
(f) any arrangement or other agreement to which the Company is a
party, or by which the Company is bound which involves (1) a sharing of profits,
or (2) any joint venture or similar contract or arrangement to which it is a
party;
(g) any sales agency, sales representation, distributorship or
franchise agreement, oral or written, to which the Company is a party or by
which the Company or its business is bound;
(h) any contract containing covenants limiting the freedom of the
Company to compete in any line of business or with any person or in any area;
(i) any contract requiring the Company to keep confidential any
information disclosed to it by any other party;
(j) any contract relating to the lease by the Company of real
estate;
(k) any material contract or commitment to which the Company is a
party which is or was not made in the ordinary course of its business; or
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(l) any other material contract or commitment to which the Company
is a party which is not cancelable without penalty on 30 days notice or less and
which is not specifically described on any other Schedule hereto.
2.13 Employee Benefit Plans. The Company has no pension plans, employee
benefit plans and other benefit arrangements or commitments, whether of an
individual or collective nature, regarding pensions and employee benefits (such
as anniversary, holiday or jubilee payments, bonus, profit participation or
other variable remuneration elements) as well as stock option, stock
appreciation rights or similar rights and covering any employees of the Company
(the "Company Benefit Plans"). Except as required by law, the Company does not
maintain or contribute to any plan or arrangement which provides or has any
liability to provide life insurance or medical benefits to any employee or
former employee upon his retirement or termination of employment other than as
required by applicable law, and the Company has never represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided other than as required by applicable law.
The Company does not have any pension or benefit plan, policy, arrangement or
agreement or any 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 employee.
2.14 Employees. All persons employed by the Company on the date hereof as
employees (collectively the "Employees") or subcontractors are correctly listed
(including for each employee or subcontractor the department, function/position,
start of employment, fixed monthly gross salary and other material remuneration
entitlements, termination period, payment entitlements in case of termination
(to the extent individually agreed with the relevant employee)) and accrued
vacation or holiday pay on Schedule 2.14. The Company has at all times timely
made all filings required to be made and have taken all actions required to be
taken under any social security, welfare and labor laws and regulations
applicable with respect to the Employees. All salaries and other remunerations
relating to the time period up to and including January 31, 2005 have been paid
prior to that date or are sufficiently accrued for in the Interim Accounts, and
all salaries and other remunerations relating to the time period from January
31, 2005 through the date of this Agreement have been paid or are sufficiently
accrued for on the Signing Balance Sheet. The Company did not at any time employ
any de-facto employees.
2.15 Labor Matters. The Company is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of the Company,
threatened against the Company relating to its business.
2.16 Overtime, Back Wages, Vacation and Minimum Wages. No present or
former employee or subcontractor of the Company has any claim against the
Company (whether under U.S., federal, state or local law, foreign law, any
employment agreement, or otherwise) on account of or for (a) overtime pay, other
than overtime pay for the current payroll period, (b) wages or salary (excluding
current bonus accruals and amounts accruing under pension and profit-sharing
plans) for any period other than the current payroll period, (c) vacation, time
off or pay in lieu of vacation or time off, other than that earned in respect of
the current fiscal year, or (d) any violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work.
-12-
2.17 Necessary Property. The tangible and intangible property owned,
licensed or leased by the Company and set forth on the schedules hereto
constitute all of the property and property rights owned, licensed or leased by
the Company and all of the property and property rights which in any way relate
to or are used in or necessary for the conduct of the businesses of the Company
in the manner and to the extent presently conducted.
2.18 No Brokers. Neither the Company nor any of the Sellers has entered
into any contract, arrangement or understanding with any person or firm which
may result in the obligation of the Company or Buyer to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby. None of the Sellers is aware of any claim for payment by
the Company or any of the Sellers of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
2.19 Intellectual Property.
(a) For the purposes of this Agreement, "Intellectual Property" means
any or all of the following and all rights in, arising out of, or associated
therewith: (1) United States, international and non-U.S. patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisional patents, continuations and continuations-in-part thereof; (2) all
inventions (whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know-how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing; (3) all
copyrights (whether registered or unregistered), mask work rights, copyright
registrations and applications therefor throughout the world; (4) all industrial
designs and any registrations and applications therefor throughout the world;
(5) all trade names, logos, trademarks and service marks, trademark and service
xxxx registrations and applications therefor throughout the world; (6) all
databases and data collections and all rights therein throughout the world; (7)
all web pages, web sites, domain names and URLs; (8) all software and other
computer code, including source code and object code and any programmer's notes
relating thereto; and (9) any similar, corresponding or equivalent rights to any
of the foregoing.
(b) Schedule 2.19(b) sets forth a list or description of all
Intellectual Property owned by or licensed to or otherwise used by the Company
(the "Company Intellectual Property Assets"). The Company owns all right, title
and interest in and to the Company Intellectual Property Assets free and clear
of any encumbrances and has the sole and exclusive right to use all such Company
Intellectual Property Assets.
(c) The Company owns, or has a valid license pursuant to a contract
listed on Schedule 2.19(c) for, all computer software used by them, except for
generally available off-the-shelf software products that do not require
customization or third party implementation assistance (e.g. Microsoft Word,
Adobe Acrobat, etc.), for which the Company has a valid license but which is not
listed on Schedule 2.19(c). Each such license is valid and in full force and
effect.
- 13 -
(d) Except as set forth on Schedule 2.19(d) or Schedule 2.20(a), the
Company is not a party to any license, sublicense or agreement relating to the
use by any third party of any Company Intellectual Property Assets which is now
in effect.
(e) The Company Intellectual Property Assets do not infringe, and are
not based on a misappropriation of, any Intellectual Property of any other
person. No action or proceeding is pending or, to the knowledge of the Company,
threatened, to the effect that the operations of the Company or the sale of its
products or services infringes upon, misappropriates or conflicts with any
Intellectual Property right owned or held by any third party.
(f) To the knowledge of the Company, no third party is infringing upon
any of the Company Intellectual Property Assets.
(g) The Company has secured valid written assignments from all
consultants and employees who have contributed to the creation or development of
any Company Intellectual Property Assets. The Company has taken strict measures
to maintain and protect each item of Intellectual Property that it owns or uses.
(h) The Company has followed reasonable commercial practices to protect
and preserve the cIonfidentiality of non-public Company Intellectual Property
Assets. To the knowledge of the Company, no third party (including any present
or former employee or consultant of the Company) is in violation of any written
agreement with the Company relating to confidentiality.
(i) The Company Intellectual Property Assets are sufficient for the
operation of the business of the Company as currently conducted.
2.20 Software
(a) The Company has the irrevocable, exclusive and transferable right
in and to the software listed in Schedule 2.20(a) hereto in its object code and
the source code version and in all data belonging to the software including all
written or machine readable documentation, instruction manual, data plans, data
bases, works of data bases, program- and data structure, screen commands,
structure of data progression and all work resulting to be produced within the
scope of the use of the software (collectively hereinafter referred to as
"Software"), to use the same for all purposes connected with the business
purposes of the Company in any way and form and without temporal or geographic
limitation.
(b) Without limiting the generality of the foregoing the Company has
the right to copy the Software using all known storage media and in particular,
DVD and CD-ROM, to publish and to distribute the Software under any name and to
adapt it, to create derivative works of the Software, to translate the Software
and to publish these adaptations, derivative works and/or translations of the
Software, to transmit, to broadcast and to make the Software available also in
an interactive way and in any form of network and to license the Software to
third parties. In addition, the Company is the manufacturer of all databases
connected to the Software and the Company has the right to reproduce, distribute
and to communicate to the public any database contained in the Software or
qualitatively or quantitatively substantial part thereof as well as all rights
deemed equivalent to the aforementioned rights.
- 14 -
(c) The Company is entitled to grant sublicenses in all of the above
mentioned rights and is not restricted in any manner in disposing of the rights
in and to the Software.
(d) The Company is entitled to the undisturbed use of the Software and
is, in particular and without limitation hereto, entitled to exercise for the
relevant author the right of dissemination, the right of recognition of
authorship, the right to decide whether the work should bear the authors
designation, the right to prevent distortions of the work, the right of access
to copies of the work and the revocation rights in the Software.
(e) The Software and the use of it in the business of the Company does
not infringe any copyrights or other rights of third parties. This warranty
shall comprise all parts of the Software.
(f) The Company has paid to the authors who have participated in the
creation of the Software a compensation which corresponds to a customary and
reasonable compensation within the industry at the time of creation of the
Software and taking into account all circumstances with regard to the kind and
scope of the economic exploitation possibilities granted.
(g) No judicial or extra-judicial proceedings have been commenced or
threatened in respect of any copyright or other intellectual property rights or
any other rights connected with the Software.
(h) To the knowledge of the Company, the Software is complete and that
it functions in accordance with the written and the graphic documentation
contained in the relevant documentation and that it will in particular comply
with the functional description in the applicable product documentation.
(i) The source code of the Software has never been deposited with any
third party or any customer of the Company and no third party or customer of the
Company have asked for the delivery of the source code.
2.21 Environmental Matters.
(a) There is no investigation, inquiry and other proceeding now pending
or, to the knowledge of the Company, threatened by any U.S. federal, state or
local governmental entity or any foreign governmental entity with respect to the
properties, assets or businesses of the Company in connection with the actual or
alleged failure to comply with any requirement of any law, regulation or
ordinance relating to air or water quality, waste management, hazardous or toxic
substances, or the protection of health or the environment.
(b) There is no waste disposal, treatment or storage site used by the
Company.
(c) The Company has not engaged any person, firm, corporation or other
entity to handle, transport or dispose of waste materials for the Company.
(d) The Company has maintained all documents and records and made all
filings required by, and has otherwise fully complied with, all applicable laws,
regulations and
- 15 -
ordinances relating to air or water quality, waste management, hazardous or
toxic substances, and the protection of health or the environment. To the
knowledge of the Company, none of the properties leased by the Company or
otherwise used in connection with their respective businesses is contaminated
with any hazardous waste or substance.
2.22 Title to Assets. The Annual Accounts, Interim Accounts and Signing
Balance Sheet reflect all of the material assets of the Company relating to its
business as of the date thereof that are required to be set forth thereon by
Swedish GAAP (the "Assets"). The Company has good and marketable title to all of
the Assets free and clear of all claims, assessments, security interests, liens,
restrictions and encumbrances. No person other than the Company owns or leases
(as lessee) any of the Assets.
2.23 Quality and Condition of Assets. All equipment and other material
items of tangible property and assets included in the Assets are free from
material defects and in good operating condition and repair, reasonable wear and
tear excepted, and are usable in the regular and ordinary course of business,
and to the knowledge of the Company, conform in all material respects to all
applicable laws, ordinances, codes, rules and regulations relating to their use
and operation by the Company.
2.24 Related Party Transactions. None of the Group Companies is indebted
to any of its stockholders, officers, members of Board of Directors, employees
or agents except for, in the case of the Company, amounts due as normal
salaries, wages and bonuses and in reimbursement of ordinary expenses on a
current basis, and no stockholder, officer, member of the Board of Directors,
employee or agent of any of the Group Companies is indebted to such Group
Company except for advancements for ordinary business expenses in a nominal
amount. No employee, officer, director or shareholder of a Group Company (a
"Related Party") or member of such Related Party's immediate family, or any
corporation, partnership or other entity in which such Related Party is an
officer, director or partner, or in which such Related Party has an ownership
interest or otherwise controls, has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company. No Related Party or member of their immediate families is
directly or indirectly interested in any material contract with the Company. The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
2.25 Real Property. The Company owns no real property. Schedule 2.25 sets
forth a complete and accurate list of all real property leased by the Company
(the "Real Property"). The Company has good and valid title to the leasehold
estates in the Real Property, free and clear of all mortgages, liens, security
interest, pledges, leases, subleases, encumbrances, charges, assignments and
claims of other restrictions (other than the lessor's interest).
2.26 Accounts Receivable. The accounts receivable of the Company reflected
on the Company's unaudited balance sheet dated January 31, 2005 and all accounts
receivable arising since such date until the Closing Date, arose from bona fide
transactions in the ordinary course of business and adequate provisions have
been made for those accounts receivable which are not current (according to
Swedish GAAP), less the allowance for doubtful accounts reflected therein and
assuming the use of collection efforts consistent with the Company's past
practice. The accounts receivable are valid and subject to no counterclaims or
setoffs. The Company has no
- 16 -
knowledge of any facts that would be reasonably likely to render uncollectible
any of the accounts receivable listed on Schedule 2.26 (the "Listed
Receivables").
2.27 Insurance. The Assets and the conduct of the business of the Company
is adequately insured (in the manner and to the extent customary for
corporations engaged in the same or similar business in Sweden) by insurers
reasonably believed by the Company to be financially sound and reputable
insurers, all of which are unaffiliated with the Company. The relevant insurance
policies are set forth on Schedule 2.27 hereto. Such policies will not terminate
or lapse by reason of the transactions contemplated by this Agreement.
2.28 Permits, Authorizations, Etc. The Company has all material approvals,
authorizations, consents, licenses, orders and other permits of all governmental
agencies and authorities, whether federal, state, local or foreign, required to
permit the operation of the business of the Company as presently conducted, all
of which are valid and in good standing with the issuing agencies and not
subject to any proceedings for suspension, modification or revocation.
2.29 Books and Records. The books and records of the Company have been
maintained in accordance with good business practices and fairly present, in all
material respects, the basis for the financial position and results of
operations of the Company set forth in the Annual Reports, Interim Reports and
Signing Balance Sheet provided to Buyer.
2.30 Customers. Schedule 2.30 lists all of the Company's agreements with
customers (the "Customer Agreements"). The Company currently maintains good
working relationships with all of the customers and suppliers of its business,
and no current customer or supplier of the Company's business has given the
Company notice terminating, canceling or threatening to terminate or cancel any
commitments, contracts or arrangements with the Company.
2.31 Regulatory Compliance. Each of the Group Companies is in compliance
in all material respects with all applicable statutes, rules, regulations, and
requirements of the Government Entities having jurisdiction over such Group
Company, and the operations of its business. As used herein, "Government Entity"
means any government or any agency, bureau, board, directorate, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, local or foreign.
Each of the Group Companies has timely filed all material reports, data, and
other information required to be filed with the Government Entities.
2.32 Full Disclosure. This Agreement and all exhibits, schedules and all
agreements and instruments required to be delivered at Closing pursuant to
Article VI hereof do not and will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
and to be made not misleading. To the knowledge of the Company, all other
information furnished or to be furnished to Buyer and its representatives
pursuant to or in connection with this Agreement does not and will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements made and to be made not misleading. Copies of
all documents referred to in the schedules hereto have been delivered or made
available to Buyer and its representatives and are true, correct and complete in
all material respects.
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2.33 Purchase of Assets from mi4e Global AB. With regard to the Company's
purchase of the assets and business of mi4e Global AB ("mi4e Global") pursuant
to an agreement with the bankruptcy estate of mi4e Global under Swedish law (the
"Asset Purchase"), the Sellers represent and warrant that the Company owns all
right, title and interest in the assets, including intellectual property, of
mi4e Global AB, and that there is no reasonable basis for a third party claim
relating to any of the assets, including intellectual property, of mi4e Global.
The Sellers represent and warrant that the agreement with the bankruptcy estate
of mi4e Global was submitted to and approved by the shareholders of the Company
in a shareholders' meeting held on September 15, 2003.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, as to itself and only as to itself, but not as to any other
Seller, hereby makes the following representations and warranties to the Buyer,
each of which is true and correct on the date hereof and will be true and
correct on the Closing Date:
3.1 Ownership of Shares. Such Seller (i) is the legal and beneficial owner
of such number of Shares as is set forth opposite such Seller's name on Schedule
A hereto and (ii) has full legal right and capacity to sell, assign, transfer
and deliver such Shares (or cause its nominee to sell, assign, transfer and
deliver) to Buyer as contemplated hereby, and has, and the transfer of such
Shares to Buyer will convey to Buyer, valid title to such Shares free and clear
of any claim, lien, pledge, charge, option, security interest or other
encumbrance, or any legal, contractual or other limitation or restriction
including, without limitation, any restriction on transfer or the right to vote.
Except for the Shares, such Seller does not have any claim or right to any
equity interest in any of the Group Companies.
3.2 Approval of Agreement; No Violation. Such Seller has full power and
authority to enter into this Agreement and to perform such Seller's obligations
hereunder. Neither the sale, transfer, assignment and delivery of the Shares by
such Seller to Buyer as contemplated by this Agreement, the execution and
delivery by such Seller of this Agreement nor the performance by such Seller of
its obligations hereunder does or will (i) conflict with or result in any
violation of, or constitute a breach of any provision of the articles of
association of the HK Holding Company, (ii) conflict with or result in any
violation of, or constitute a breach of any provision of any indenture, evidence
of indebtedness or other agreement to which such Seller is a party or by which
such Seller is bound, (iii) result in the creation of any lien or other
encumbrance upon such Seller's Shares, (iv) violate any judgment, order,
injunction, decree or award of any court, administrative agency or governmental
body against or binding upon such Seller, (v) constitute a violation by such
Seller of any applicable law, statute, ordinance, rule or regulation or (vi)
require any material consent, approval or authorization of, or declaration,
filing or registration with, any domestic governmental or regulatory authority.
3.3 No Brokers. Such Seller has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
the Company or Buyer to pay any finder's fees, brokerage or agent's commissions
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby. Such
Seller is not aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
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negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to the
Sellers, each of which is true and correct on the date hereof and will be true
and correct on the Closing Date:
4.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Buyer is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a material adverse effect on the
business, results of operations or financial condition of Buyer and its
Subsidiaries taken as a whole (a "Buyer Material Adverse Effect"). Buyer has all
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now conducted. Each of Buyer's Subsidiaries is a
corporation, partnership, limited liability company or other similar foreign
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not have a Buyer Material Adverse Effect. Neither Buyer nor any Buyer
Subsidiary is in violation in any material respect of any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which Buyer or any of its Subsidiaries or any
of their respective properties or assets is subject. Buyer and its Subsidiaries
have obtained all licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted. The copies of Buyer's Articles of
Association and Memorandum of Association previously delivered to the Company
and the Sellers are true and correct. The execution and delivery of this
Agreement will not conflict with or result in a breach of any Nasdaq listing
agreements, rules or standards.
4.2 Authorization, Validity and Effect of Agreements. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder. The consummation by Buyer of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of Buyer,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
4.3 Capitalization. The authorized capital stock of Buyer consists of
75,000,000 ordinary shares, 0.20 xxxxx par value ("Insignia Common Stock"), and
3,000,000 preferred
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shares, 0.20 xxxxx par value ("Insignia Preferred Stock"). As of the date of
this Agreement, there were 36,028,212 shares of Insignia Common Stock and no
shares of Insignia Preferred Stock, issued and outstanding. As of the date of
this Agreement, there were 9,772,071 shares of Insignia Common Stock reserved
for issuance under stock option and stock plans of Insignia ("Buyer Option
Plans"), and there were issued and outstanding options to acquire a total of
7,698,750 shares of Insignia Common Stock under such Buyer Option Plans. Since
such date, no additional shares of capital stock of Buyer have been issued
except pursuant to Buyer's 401K plan and the exercise of options outstanding
under the Buyer Stock Option Plans. Buyer has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of Buyer on any matter. All issued and outstanding shares
of Insignia Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
4.4 No Violation. Neither the execution and delivery by Buyer of this
Agreement, nor the consummation by Buyer of the transactions contemplated hereby
in accordance with the terms hereof, will (i) conflict with or result in any
violation of, or constitute a breach of any provision of the Articles of
Association or Memorandum of Association of the Buyer, (ii) conflict with or
result in any violation of, or constitute a breach of any provision, except as
set forth in any of the Schedules hereto, of any of the franchises, licenses,
rights of way, permits, or certifications, of the Buyer or any indenture,
evidence of indebtedness or other agreement to which the Buyer is a party or by
which the Buyer is bound, (iii) result in the creation of any lien or other
encumbrance upon any of the assets of the Buyer, (iv) violate any judgment,
order, injunction, decree or award of any court, administrative agency or
governmental body against or binding upon Buyer, (v) constitute a violation by
any of the Buyer of any applicable law, statute, ordinance, rule or regulation,
or (vi) other than the Regulatory Filings, require any material consent,
approval or authorization of, or declaration, filing or registration with, any
domestic governmental or regulatory authority.
4.5 SEC Documents. Buyer has made available to Sellers each registration
statement, report, proxy statement or information statement prepared and filed
with the Securities and Exchange Commission by it since December 31, 2003, each
in the form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Buyer Reports"). As of their respective dates, the Buyer
Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder and (ii)
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
made therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the Buyer Reports (including the related notes and schedules)
fairly presents, in all material respects, the consolidated financial position
of Buyer and its Subsidiaries as of its date, and each of the consolidated
statements of income, retained earnings and cash flows included in or
incorporated by reference into the Buyer Reports (together with the related
notes and schedules) fairly presents, in all material respects, the results of
operations, retained earnings or cash flows, as the case may be, of Buyer and
its Subsidiaries for the periods set forth therein (subject to the lack of
footnote disclosure and normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with United States
generally accepted accounting principles consistently applied during the periods
involved, except
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as may be noted therein. Except as and to the extent set forth in the
consolidated balance sheet of Buyer and its Subsidiaries at September 30, 2004,
including all notes thereto, or as set forth in the Buyer Reports, neither Buyer
nor any of its Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of Buyer or
in the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since such date.
4.6 No Brokers. Buyer has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligations of
Buyer to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. Buyer is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
4.7 Full Disclosure. This Agreement and all exhibits, schedules and all
agreements and instruments required to be delivered at Closing pursuant to
Article VI hereof do not and will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
and to be made not misleading. To the knowledge of Buyer, all other information
furnished or to be furnished to the Company and the Sellers and their respective
representatives pursuant to or in connection with this Agreement does not and
will not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made and to be made not
misleading. Copies of all documents referred to in the schedules hereto have
been delivered or made available to the Company and the Sellers and their
respective representatives and are true, correct and complete in all material
respects.
4.8 Litigation. There are no actions, suits or proceedings pending against
Buyer or the Buyer's Subsidiaries or, to the actual knowledge of the executive
officers of Buyer, threatened against Buyer or the Buyer's Subsidiaries, at law
or in equity, or before or by any federal or state commission, board, bureau,
agency or instrumentality, that are reasonably likely to have a Buyer Material
Adverse Effect.
4.9 Insignia Common Stock. The issuance and delivery by Insignia of all
shares of Insignia Common Stock to be issued in connection with this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of Insignia and no shareholder approval is required in connection
therewith. The shares of Insignia Common Stock to be issued in connection with
this Agreement, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable, and issued without violation of
any preemptive right of any other person or entity.
ARTICLE V
COVENANTS
5.1 Operation of the Business. The Sellers covenant and agree that, from
and after the date of this Agreement and until the Closing Date, the Company
will conduct the business of the Company subject to the following provisions and
limitations. Except as set forth in the
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Schedules hereto or as contemplated by any other provision of this Agreement,
unless Buyer has consented in writing thereto, the Sellers:
(a) Shall cause each of the Group Companies to, conduct its operations
according to their usual, regular and ordinary course in substantially the same
manner as heretofore conducted;
(b) Shall cause each of the Group Companies to use its reasonable best
efforts, to preserve intact their business organizations and goodwill, keep
available the services of their respective officers and employees and maintain
satisfactory relationships with those persons having business relationships with
them;
(c) Shall not amend its articles of association (other than to change
its fiscal year as directed by Buyer);
(d) Shall promptly notify Buyer of any change in the Company's
condition (financial or otherwise), business or results of operations, any
litigation or governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach in
any respect of any representation or warranty contained herein;
(e) Shall not permit any Group Company to (1) issue any shares of its
capital stock, effect any stock split or otherwise change its capitalization as
it existed on the date hereof, (2) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock, (3) increase any compensation or enter into or
amend any employment agreement with any of its present or future officers or
directors, except for normal increases consistent with past practice, (4) adopt
any new Company benefit plan or amend any existing Company benefit plan in any
material respect, except for changes which are less favorable to participants in
such plans, (5) incur any expenses or obligations other than preexisting
obligations under payroll and lease obligations or (6) make any cash expenditure
or outlay;
(f) Shall not permit any Group Company to (1) declare, set aside or pay
any dividend or make any other distribution or payment with respect to any
shares of its capital stock or (2) directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or capital stock of any Group
Company, or make any commitment for any such action; and
(g) Shall not permit any Group Company to sell, lease or otherwise
dispose of any of its assets (including capital stock of any subsidiary).
Each Seller covenants and agrees that it will not take any action to cause the
Company to breach any of its agreements in this Section 5.1.
5.2 Insurance and Maintenance of Property. The Company will ensure that
all of the property owned or leased by the Company to be insured against all
ordinary and insurable risks (as determined in reference to similarly situated
companies in Sweden) pursuant to the policies listed on Schedule 2.27 hereto or
replacement policies (except in respect of any leased property where the terms
of the lease do not impose on lessee the obligation to maintain insurance and
where the loss of such property would not materially adversely affect the
conduct of its business)
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and the Company will operate, maintain and repair all of their properties in a
careful, prudent and efficient manner.
5.3 Full Access. To the extent permitted by Swedish law, representatives
of Buyer shall have full access at all reasonable times and upon reasonable
notice to all premises, properties, books, records, contracts, tax records and
documents of the Company and the Company will furnish to Buyer any information
with respect thereto as Buyer may from time to time reasonably request. Such
examination and investigation by Buyer shall not affect the warranties and
representations of the Company contained in this Agreement.
5.4 Books, Records and Accounts. The Company will maintain its books and
financial records in accordance with Swedish GAAP consistently applied, and on a
basis consistent with its past practices. Said books and financial records shall
fairly and accurately reflect the operations of the business of the Company.
5.5 Filings; Other Action. Subject to the terms and conditions herein
provided, the Company and Buyer shall: (a) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Closing Date and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing Date from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (b) use all reasonable efforts to take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the Closing
Date, any further action is reasonably necessary or desirable to carry out the
purpose of this Agreement, the Buyer and the Sellers Representatives (to the
extent reasonably practicable) shall take all such necessary action.
5.6 Third Party Offers and Negotiations. Until the Closing or earlier
termination of this Agreement, neither the Sellers nor any Group Company shall
entertain any offer from or negotiate with any other party with respect to the
sale or acquisition of any of the Shares or any material asset of the Company.
5.7 Tax Matters. All liabilities for income tax attributable to the sale
of the Shares by the Sellers to Buyer pursuant to this Agreement shall be and
remain the sole liability of the Sellers and neither Buyer nor any Group Company
shall have any responsibility therefor.
5.8 Notification of Certain Matters.
(a) The Company and the Sellers shall give prompt written notice to
Buyer of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of the
Company and/or Sellers contained in this Agreement to be untrue or inaccurate in
any material respect at any time from the date hereof to the Closing Date, (ii)
any failure of the Company and/or Sellers to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by them under
this Agreement, (iii) any material claims, actions, proceedings or
investigations commenced or threatened, involving or affecting the Company or
any of its properties or assets, and (iv) any material adverse change in
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the business condition of the Company or the occurrence of an event known to the
Sellers which, so far as reasonably can be foreseen at the time of its
occurrence, would result in any such change.
(b) In addition to, and not in lieu of, the foregoing, the Company and
the Sellers shall deliver to Buyer a true and complete schedule of changes (the
"Update Schedule") to any of the information contained in the Schedules to this
Agreement (including changes to any other representations or warranties of the
Company in Article II hereof and to any other representations or warranties of
the Sellers in Article III hereof for which no Schedules have been created as of
the date hereof but as to which a Schedule would have been required hereunder to
have been created on or before the date hereof if such changes had existed on
the date hereof) in writing to Buyer, dated on or prior to the Closing Date.
(c) Buyer shall give prompt written notice to the Sellers of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty of Buyer contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the Closing Date, (ii) any failure of Buyer to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, (iii) any material claims, actions, proceedings or
investigations commenced or threatened, involving or affecting Buyer or any of
its properties or assets, and (iv) any material adverse change in the business
condition of Buyer or the occurrence of an event known to Buyer which, so far as
reasonably can be foreseen at the time of its occurrence, would result in any
such change.
(d) The Company shall inform the Buyer without undue delay of any
judicial or extra-judicial proceedings that have been commenced or threatened in
respect of any copyright or other intellectual property rights or any other
rights connected with the Software of which it becomes aware and shall
co-operate fully with the Buyer in the defense of such rights, at the request of
and to the extent required by Buyer.
5.9 Restrictions on Certain Transactions. From the period from the date of
this Agreement through the conclusion of the Holdback Period, no Seller shall
engage in any activities such as short sales, "sales against the box," hedging
transactions or any other derivative activities which create a "put equivalent
position" in Buyer's Common Stock under regulations adopted under Section 16 of
the Securities Exchange Act of 1934, as amended.
5.10 Non-Competition
(a) Each of the Sellers agrees that for the period of two years
following the Closing Date (such period, the "Non-competition Period"), the
Seller shall not have any Relationship (as defined below) with any entity,
including but not limited to any corporation, partnership, limited liability
company, sole proprietorship or unincorporated business (whether or not for
profit) (such entity, a "Business") in the course of which Relationship the
Seller engages in or assists such Business in the area of mobile device
management infrastructure software and related solutions (the "Business Area"),
provided however, that the Seller may have a Relationship with a Business that
engages in, or is otherwise associated with a Business in, the Business Area so
long as the Seller does not have a Relationship with the portion of the Business
engaged in the Business Area.
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(b) Each of the Sellers will be deemed to have a relationship (a
"Relationship") with a Business if such Seller (i) owns, manages, operates,
joins or is employed by such Business, (ii) is a director, member, agent,
stockholder, owner or general partner of such Business, (iii) acts as a
consultant or advisor to such Business or (iv) controls or participates in the
ownership, management or operation of such Business; provided, however, that
nothing herein shall prevent the Seller from acquiring, solely as a passive
investment and through market purchases, less than 5% of the outstanding equity
securities of any corporations that are publicly traded so long as the Seller is
not part of any control group of such corporation, and provided further that
nothing herein shall prevent the Seller from investing in any Business, whether
or not such Business shall engage in the Business Area, through (i) a mutual
fund or (ii) a private equity fund using commingled funds (so long as the Seller
is a passive investor and does not participate in any decision to make any such
investment).
(c) The Sellers' monetary liability for damages to the Buyer resulting
from breach of the provisions of this Section 5.10 will not exceed the value of
the Stock Consideration and Earnout received hereunder.
5.11 Solicitation of Employees and Consultants. During the Non-competition
Period, such Seller agrees not to directly or indirectly solicit, influence,
entice or encourage any person who at such time is, or who at any time in the
three (3) month period prior to such time had been, an employee of or consultant
to the Company or Buyer to cease or curtail his or her relationship therewith.
The foregoing shall not prohibit the Seller from soliciting (i) another
stockholder who has been terminated by Buyer (or any subsidiary of Buyer)
without cause or (ii) a consultant to Buyer (or any subsidiary of Buyer),
provided that such other stockholder or consultant is not solicited to engage in
the Business Area.
5.12 Non-disruption; Other Matters. During the Non-competition Period,
such Seller agrees that it will not, directly or indirectly, interfere with,
disrupt or attempt to disrupt any past, present or prospective relationship,
contractual or otherwise, between the Company or the Buyer, on the one hand, and
any of their respective customers, suppliers employees or stockholders, on the
other hand.
5.13 Equitable Relief. Such Seller acknowledges and agrees that Buyer's
remedies at law for breach of any of the provisions of this Agreement would be
inadequate and, in recognition of this fact, the Seller agrees that, in the
event of such breach, in addition to any remedies at law it may have, Buyer,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy that may be available. The
Seller further acknowledges that should the Seller violate any of the provisions
of this Agreement, it will be difficult to determine the amount of damages
resulting to Buyer or its affiliates and that in addition to any other remedies
Buyer may have, Buyer shall be entitled to temporary and permanent injunctive
relief.
5.14 Listed Accounts Receivable Collection. Sellers will use their best
efforts to deliver to Buyer prior to Closing: (A) executed copies of the form of
receivables acknowledgment attached hereto as Schedule 5.14(A) (the "Written
Receivables
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Acknowledgments") signed by each of the customers listed on Schedule 5.14(B),
from which the Listed Accounts Receivables are due, acknowledging in each case
that the amount of the accounts receivable listed opposite such customer's name
on Schedule 5.14(A) is valid and not disputed and that the customer intends to
pay such accounts receivable in accordance with the terms of the applicable
invoice or (B) verbal confirmation to the Chief Financial Officer of Buyer from
an appropriate person at the customer to the same effect and to Buyer's
reasonable satisfaction (the "Oral Receivables Acknowledgements" and together
with the Written Receivables Acknowledgments, the "Receivables
Acknowledgments"). The Sellers Representatives may assist in the collection
activities for the Listed Accounts Receivable. Prior to the expiration of the
Receivables Collection Deadline, Buyer shall not offer customers discounts on
any of the Listed Accounts Receivable without the permission of the Sellers
Representatives.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Closing. The
respective obligation of each party to effect the Closing shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) None of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(b) All material approvals required under foreign, federal or state
securities laws relating to the issuance of the Insignia Common Stock to be
issued to Sellers in connection with the transactions contemplated by this
Agreement shall have been received.
(c) All material consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings required to be filed after the Closing Date.
(d) Buyer shall have closed an equity financing in which it raises
aggregate gross proceeds of between US $1 million and US $4 million.
(e) The Insignia Common Stock shall be listed on The Nasdaq Small
Cap Market at Closing.
(f) The Company shall deliver to Buyer executed consents and waivers
from each Skandinaviska Enskilda Banken and ALMI Foretagspartner (the "Company
Lenders"), providing for a release of the Sellers from their personal guarantees
and otherwise in a form acceptable to the Buyer.
6.2 Conditions to Obligation of Sellers to Effect the Closing. The
obligation of each of the Sellers to effect the Closing shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
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(a) Buyer shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date in all
material respects, the representations and warranties of Buyer contained in this
Agreement and in any other agreements or instruments required to be delivered at
Closing pursuant to this Article VI hereof shall be true and correct in all
material respects as of the Closing Date, and Sellers shall have received a
certificate of the President or a Vice President of Buyer, dated the Closing
Date, certifying to such effect.
(b) From the date of this Agreement through the Closing Date, there
shall not have occurred any change in the financial condition, business or
operations of Buyer and its Subsidiaries, taken as a whole, that would have or
would be reasonably likely to have a Buyer Material Adverse Effect.
(c) Buyer shall execute a Registration Rights Agreement,
substantially in the form attached hereto as Schedule 6.2(c) (the "Registration
Rights Agreement"), and offer each of the Sellers the opportunity to execute the
Registration Rights Agreement.
(d) Buyer shall have instructed the Buyer's transfer agent to
deliver the Closing Delivered Shares, which shall be delivered to Sellers as
soon as reasonably practicable following Closing.
6.3 Conditions to Obligation of Buyer to Effect the Closing. The
obligations of Buyer to effect the Closing shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) (1) The Company shall have performed the agreements contained in
this Agreement required to be performed by it on or prior to the Closing Date in
all material respects and the representations and warranties of the Company
contained in this Agreement and any other agreements or instruments required to
be delivered at Closing pursuant to this Article VI shall be true and correct in
all material respects as of the Closing Date, and Buyer shall have received a
certificate of the Chief Executive Officer of the Company certifying to such
effect, and (2) the Sellers shall have performed the agreements contained in
this Agreement required to be performed by them on or prior to the Closing Date
in all material respects and the representations and warranties of the Sellers
contained in this Agreement and any other agreements or instruments required to
be delivered at Closing pursuant to this Article VI shall be true and correct in
all material respects as of the Closing Date.
(b) From the date of this Agreement through the Closing Date, there
shall not have occurred any change in the financial condition, business or
operations of the Group Companies, taken as a whole, that would have or would be
reasonably likely to have a Company Material Adverse Effect.
(c) The Company shall have obtained the consent, approval, amendment
or waiver of each person whose consent, approval, amendment or waiver shall be
required under the contracts listed on Schedule 6.3(c) (the "Material
Consents"), and such consents, approvals, amendments or waivers shall be on
terms reasonably satisfactory to Buyer.
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(d) The following persons designated by the Buyer shall have been
appointed as members of the Board of Directors of the Company: Xxxx XxXxxxxx and
Xxxxxx Xxxxxxx. Buyer shall have received the resignation of the preexisting
members of the Board of Directors of the Company.
(e) The Buyer shall have received from Swedish corporate counsel to
the Sellers a legal opinion in the form attached as Schedule 6.3(e) and shall
have received from English and HongKong counsel legal opinions in the form
satisfactory to counsel for the Buyer.
(f) The loan agreements evidencing loans in an aggregate amount of
300,000 SEK from the Sellers to the Company will have been cancelled and
contributed as capital to the Company.
(g) Each of the current employees and subcontractors of the Company
shall have executed a Confidentiality and Invention Assignment Agreement in the
form attached as Schedule 6.3(g).
(h) Caritas will execute a waiver and termination of that certain
agreement between the Company and Caritas in a form satisfactory to Buyer.
(i) The Sellers shall have delivered the Annual and Interim Accounts
of the HK Holding Company and UK Holding Company as specified in Section 2.6.
(j) The Sellers shall have delivered the original stock certificates
representing the Shares, along with originally executed Assignments Separate
from Certificates in the form attached hereto as Exhibit 6.3(j).
(k) The Company shall have executed with Xxxxx Xxxxxx Fastigheter a
full release and settlement with regard to past due rent and any other claims
(the "Landlord Settlement"), the form and consideration for which will be at
Buyer's sole discretion.
(l) The Sellers shall have delivered all original share
certificates, certifications and any other documents evidencing the entire chain
of title from the Sellers to HongKong Holding Company to UK Holding Company to
the Company described in Section 2.2 (the "Title Documents"), in form and
substance satisfactory to Buyer's counsel
(m) The Sellers shall have delivered to Buyers good standing
certificates dated as of the Closing (both as to corporate good standing and tax
good standing) from each of the jurisdictions of incorporation for each of the
Group Companies.
ARTICLE VII
INDEMNIFICATION
7.1 Survival of Representations, Warranties and Covenants. Except as
otherwise provided herein, all representations and warranties of the Company and
the Sellers made in this Agreement or in any exhibit, statement, Schedule,
certificate, instrument or any document delivered pursuant hereto shall survive
the Closing and shall remain in effect until the expiration of the Holdback
Period and shall thereupon terminate and be of no further force or effect,
except
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that the representations and warranties of the Sellers contained in Section 3.1
(Ownership of Shares) and Section 3.2 (Approval of Agreement; No Violation), the
representations and warranties of the Company contained in Section 2.2
(Capitalization) and Section 2.3 (Approval of Agreement; No Violation) shall not
terminate. All representations and warranties hereunder (including each
statement or other item of information set forth in the Disclosure Schedule)
shall be deemed to be material and relied upon by the parties with or to whom
the same were made, notwithstanding any investigation or inspection made by or
on behalf of such party or parties. All covenants in this Agreement not fully
performed as the Closing Date shall survive the Closing Date and continue
thereafter until fully performed. Notwithstanding anything to the contrary
herein, if at any time prior to the expiration of the Holdback Period, the Buyer
delivers to the Sellers Representatives a Claim Notice alleging the existence of
a Claim under Section 7.2(a)(1), (2), (3) or (4) and asserting a claim for
recovery under this Article VII, then the Claim asserted in such Claim notice
will survive the expiration of the Holdback Period until such time as such Claim
is fully and finally resolved. The representations and warranties made by the
Buyer in this Agreement shall terminate and expire as of the Closing Date, and
any liability of the Buyer with respect to such representations and warranties
shall thereupon cease.
7.2 Indemnification of the Sellers and the Company.
(a) The Sellers, severally, based on the percentage of the Stock
Consideration attributable to each Seller as set forth on Schedule A, shall
indemnify, defend and hold harmless each of Buyer, the Company, any corporation,
partnership, limited liability company or other legal entity affiliated with
Buyer, and any stockholder, partner, member, director, officer, employee or
agent of any of them (each, an "Indemnitee"), from and against, and waive any
claim for contribution or indemnity from such parties with respect to, all
claims, damages, liabilities, losses, costs, deficiencies or expenses, including
reasonable attorneys' fees, interest and penalties in connection therewith and
including those incurred in connection with enforcement of this Article VII
("Claims"), which may be sustained by such Indemnitee and which arise from:
(1) the inaccuracy in or breach of any agreement, covenant,
representation, warranty, or other obligation of a Seller (other than as
described in Section 7.2(b) or the Company made or incurred under or pursuant to
this Agreement or any document delivered pursuant hereto and identified in
Article VI hereof as of the date of this Agreement or as of the Closing Date;
(2) the liability of the Company or the Buyer, if any,
resulting from the assertion by any party of any right or claim to an equity
interest in the Company other than the right to receive the Stock Consideration
pursuant to the terms of this Agreement in the amounts set forth on Schedule A
hereto;
(3) the failure of the Buyer to collect the full amount of the
Listed Accounts Receivable on or before the date that is eleven (11) months
after the Closing Date (the "Receivables Collection Deadline"). To the extent
that Buyer has not collected in full on or before the Receivables Collection
Deadline the Listed Accounts Receivable for which Buyer did not receive, prior
to Closing, Receivables Acknowledgments pursuant to Section 5.14 (the
"Unconfirmed Receivables"), the Sellers agree that Buyer will incur a Claim in
the amount of the uncollected amount of the Unconfirmed Receivables and Buyer
will refrain from issuing
- 29 -
Holdback Shares or offset the Initial Earnout Payment (or some combination
thereof) in the amount of such Claim pursuant to Section 7.4. To the extent that
Buyer has not collected the Listed Accounts Receivable for which Buyer did
receive prior to Closing Receivables Acknowledgments (the "Confirmed
Receivables") in full on or before the Receivables Collection Deadline, the
parties agree that Buyer will incur a Claim in the amount of the uncollected
Confirmed Receivables and will deduct from the Initial Earnout Payment the
amount of such Claim pursuant to Section 7.4; or
(4) any Claim by or on behalf of MKT for sales commissions
("MKT Sales Commissions") or brokerage commissions or other fees ("MKT Brokerage
Commissions"), provided however that a Claim relating to an MKT Brokerage
Commission may be satisfied by the Buyer either refraining from issuing Holdback
Shares or offsetting the Initial Earnout Payment (or some combination thereof)
in the amount of such Claim pursuant to Section 7.4, whereas a Claim relating to
an MKT Sales Commission may only be satisfied by the Buyer offsetting the
Initial Earnout Payment.
(b) Each Seller, as to such Seller and not as to any other Seller,
shall indemnify, defend and hold harmless each of the Indemnitees, from and
against, and waive any claim for contribution or indemnity from such parties
with respect to, all Claims which may be sustained by such Buyer and which arise
from the breach of any agreement, covenant, representation, warranty, or other
obligation of such Seller made or incurred under or pursuant to Section 3 of
this Agreement or any document delivered pursuant thereto.
(c) The indemnification permitted pursuant to this Section 7.2 is
intended to induce Buyer to enter into this Agreement and to provide a means of
compensating the indemnified parties for Claims incurred after the Closing.
Therefore, the Sellers hereby agree that they shall have no rights of any nature
whatsoever against the Company, whether by contribution or otherwise, and
forever release the Company from any and all Claims in connection with or
arising out of the assertion by a claimant of a right to indemnification (other
than statutory rights to indemnification from the Company in their capacities as
officers or directors of the Company). Buyer agrees that all Claims by Buyer and
its Affiliates for indemnification under this Agreement shall be made against
the Sellers pursuant to this Section 7.2, and shall not be made against the
Company or any of its officers and directors in their capacity as such.
7.3 Limitation on Indemnification.
(a) Pro Rata. Notwithstanding any other provision of this Article
VII, except for indemnification pursuant to Section 7.2(a)(2), claims for
indemnification pursuant to the representations and warranties contained in
Sections 3.1, 3.2, 2.2 and 2.3 (the "Specified Representations") and in cases of
fraud or willful misconduct, the total amount in respect of which any Seller
shall be liable under this Agreement to indemnify an Indemnitee shall not exceed
such Seller's pro rata portion of the Holdback Shares and the Initial Earnout
Payment made for the Holdback Period.
(b) Exclusive Remedy. Except for the covenants contained in Sections
5.9, 5.10, 5.11 and 5.12 (the "Sellers Post-Closing Covenants") and actions
grounded in fraud or willful misconduct, the parties hereto acknowledge and
agree that in the event the Closing
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occurs, the indemnification provisions in this Article VII shall be the
exclusive remedy of Buyer with respect to the transactions contemplated by this
Agreement and that the Holdback Shares and Initial Earnout Payment will be the
sole recourse of the Buyer. With respect to the Sellers Post-Closing Covenants
and actions grounded in fraud and willful misconduct, (i) the right of an
Indemnitee to be indemnified and held harmless pursuant to the indemnification
provisions in this Agreement shall be in addition to and cumulative of any other
remedy of such party at law or in equity and (ii) no such Indemnitee shall, by
exercising any remedy available to it under this Article VII, be deemed to have
elected such remedy exclusively or to have waived any other remedy, whether at
law or in equity, available to it.
(c) Basket. Except for Claims arising: (i) under Section 7.2(a)(2),
(ii) under Section 7.2(a)(3), (iii) under Section 7.5, (iv) as a result of an
inaccuracy in or breach of a Specified Representation, or (v) in the event of
willful misconduct or fraud, the Indemnitees shall not be entitled to
indemnification until such time as the total amount of Claims that have been
suffered or incurred by one or more of the Indemnitees, or to which any or more
of the Indemnitees has or have otherwise become subject, exceeds $25,000 in the
aggregate. If the total amount of Claims exceeds $25,000, then the Indemnitees
will be entitled to be indemnified against and compensated and reimbursed for
the total amount of the Claims, and not just the amount in excess of $25,000.
7.4 Satisfaction of Indemnification through Either Non-Issuance of
Holdback Shares or offset of Initial Earnout Payment. In order to satisfy a
Claim Buyer may at its discretion (1) refrain from issuing an appropriate number
of Holdback Shares (valued at the Signing Average Price) as an offset against a
validly made Claim, (2) offset the Initial Earnout Payment that would otherwise
be payable for the Holdback Period (if any) on a dollar for dollar basis or (3)
refrain from issuing some portion of Holdback Shares and offset some portion of
the Initial Earnout Payment in an aggregate amount equal to the Claim. For the
purpose of this Article VII, the Holdback Shares shall be valued at the Signing
Average Price. All shares of Insignia Common Stock issued as part of the
aggregate Stock Consideration under this Agreement shall be valued at the
Signing Average Price for purposes of applying the limitations set forth in this
Section 7.4 and Section 7.3. Notwithstanding the above, if the Claim is less
than the value of the Holdback Shares (as determined under this subsection) and
the Initial Earnout Payment that has been collected by the Buyer as of the date
the Claim notice is submitted, then the Seller Representatives have the right to
instruct the Buyer as to whether to satisfy the Claim by withholding the Initial
Earnout Payment or refraining from issuing the Holdback Shares or by effecting a
combination thereof.
7.5 Indemnification Regarding Brokerage Fees. Buyer shall indemnify and
hold harmless the Sellers, and the Sellers shall indemnify and hold harmless
Buyer, from and against any and all liabilities and costs incurred resulting
from or arising out of any Claim relating to any broker, finder or agent or
agreement to pay any brokerage fees, finder's fees or commission with respect to
the transactions contemplated by this Agreement on behalf of Buyer, on the one
hand, and any Seller or the Company on the other hand, respectively.
7.6 Notice and Defense of Third-Party Actions. Buyer shall give prompt
written notice to the Sellers Representatives of the commencement or assertion
of any Claim by a third- party (collectively, a "third-party action") in respect
of which the Buyer will seek indemnification hereunder, which notice shall
state, to the extent known to the Buyer, the basis
- 31 -
on which the claim for indemnification is made, the facts giving rise to or the
alleged basis of the third-party action, and the amount (to the extent that it
may be estimated) of liability asserted by reason of the Claim; such notice
shall also include a copy of the document (if any) by or in which the
third-party action is commenced or asserted. Any failure so to notify the
Sellers Representatives shall not relieve the Sellers from any liability that
they may have to the Buyer under this Article VII except to the extent that the
failure to give such notice materially and adversely prejudices the Sellers.
Within 60 days after receipt of such notice, the Sellers may (a) by giving
written notice thereof to the Buyer, acknowledge liability for and at its option
elect to assume the defense of such third-party action at its sole cost and
expense or (b) object to the claim of indemnification set forth in the notice
delivered by the Buyer pursuant to the first sentence of this Section 7.6;
provided that the Buyer shall have the right to participate in such proceeding
and be represented by counsel of its own choice at the Buyer's sole expense. If
the Sellers Representatives do not within the same 60-day period give the Buyer
written notice objecting to such claim and setting forth the grounds therefor,
the Sellers shall be deemed to have acknowledged its liability for such
third-party action. The Sellers shall have the right to assume control of the
defense of or settle or otherwise dispose of such third-party action on such
terms as the Sellers deems appropriate; provided, however, that:
(a) the Buyer shall be entitled, at its own expense, and without
unreasonable interference with the actions of the Sellers, to participate in the
defense of third-party actions;
(b) the Sellers shall obtain the prior written consent of the Buyer
before entering into any settlement, compromise, admission or any acknowledgment
of the validity of a third-party action or any liability in respect thereof,
which consent shall not be unreasonably withheld;
(c) no Seller shall consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to the Buyer of a release from all
liability in respect of such third-party action; and
(d) the Sellers shall not be entitled to control (but shall be
entitled to participate at its own expense in the defense of) and the Buyer
shall be entitled to have sole control over, the defense or settlement,
compromise, admission or other acknowledgment of any third-party action (A) as
to which the Sellers fail to assume the defense as required hereunder or (B) to
the extent the third-party action seeks an order, injunction or other equitable
relief against the Buyer which, if successful, would have a material adverse
effect on the business condition of the Buyer; provided, however, that the Buyer
shall make no settlement, compromise, admission or other acknowledgment which
would give rise to liability on the part of the Sellers without the prior
written consent of the Sellers, which consent shall not be unreasonably
withheld.
7.7 Notice of Direct Claims. In any case in which an Indemnitee seeks
indemnification hereunder which is not subject to Section 7.6 hereof because no
third-party action is involved, the Buyer shall deliver to the Sellers
Representatives a written notice specifying in reasonable detail the basis for
its claim for indemnification and the amount for which the Buyer believes it is
entitled to be indemnified (a "Claim Notice").
(a) After the Sellers Representatives shall have been notified of
the amount for which the Buyer seeks indemnification, if the Sellers
Representatives dispute the amount of
- 32 -
the Claim, they shall deliver to the Buyer a written notice of dispute (the
"Dispute Notice") within sixty (60) days of Buyer's delivery of the Claim
Notice. If the Sellers Representatives do not deliver a Dispute Notice within
such sixty (60) day period, Buyer shall refrain from issuing Holdback Shares or
refrain from making the Initial Earnout Payment (or some combination thereof) to
satisfy the Claim. If Buyer receives a Dispute Notice within the requisite sixty
(60) day period, the Sellers Representatives and the Chief Executive Officer of
Buyer will meet and attempt in good faith to resolve such dispute within thirty
(30) days. If such dispute is not so resolved within such thirty (30) day
period, either the Sellers Representatives or the Buyer may initiate mandatory
arbitration pursuant to Section 9.14, provided however that no such mandatory
arbitration may be brought more than six months after the receipt by the Sellers
Representatives of the applicable Claim Notice. If all or any part of such
timely disputed Claim is determined in any settlement to be owing to the
Sellers, Buyer will promptly, upon such settlement or resolution, issue such
Holdback Shares or make such Earnout Payment to such accounts of the Sellers as
shall be instructed by the Sellers Representatives.
7.8 Cooperation. The parties and their Affiliates shall cooperate with
each other in the defense of any third-party action that is the subject of
Section 7.6 and, during normal business hours, shall afford each other access to
their respective books and records and available employees relating to such
third-party action and shall furnish each other all such further information
that they have the right and power to furnish as may reasonably be necessary to
defend such third-party action.
7.9 Continued Employment of Sellers as a Condition to Receipt of Holdback
Shares. Notwithstanding any other provision of this Agreement, no Holdback
Shares will be issued to a Seller who is not an employee of Buyer or the Company
on the date on which the Holdback Period expires unless such Seller has ceased
employment prior to the expiration of the Holdback Period because the Company
terminated him other than for Cause. Such Holdback Shares shall be retained by
the Buyer. "Cause" means (A) willful and repeated failure to comply with the
lawful written directions of the Chief Executive Officer of Buyer (but not as a
result of a permanent disability), (B) gross negligence or willful misconduct in
the performance of duties to the Company, Buyer or any subsidiary of Buyer (but
not as a result of a permanent disability), (C) commission of any act of fraud
with respect to the Company, Buyer or any subsidiary of Buyer, (D) commission of
a felony or crime involving moral turpitude causing material harm to the
standing and reputation of the Company, Buyer or any subsidiary of Buyer, in
each case as determined in good faith by the Buyer's Board of Directors.
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated at any
time prior to the Closing Date by the mutual consent of Buyer and Sellers.
8.2 Termination by Either Buyer or Sellers. This Agreement may be
terminated by action of the Board of Directors of Buyer or by unanimous
agreement of the Sellers Representatives if a United States federal, state court
or foreign court of competent jurisdiction or United States federal, state or
foreign governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action permanently
- 33 -
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.
8.3 Termination by Sellers. This Agreement may be terminated at any time
prior to the Closing Date, by unanimous vote of the Sellers Representatives, if
(a) there has been a material breach by Buyer of any representation or warranty
contained in this Agreement, or (b) there has been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of Buyer.
8.4 Termination by Buyer. This Agreement may be terminated at any time
prior to the Closing Date, by action of the Board of Directors of Buyer, if (a)
there has been a material breach by the Company or the Sellers of any
representation or warranty contained in this Agreement, or (b) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the Company or the Sellers.
8.5 Termination by either Buyer or Sellers. This Agreement may be
terminated by action of the Board of Directors of Buyer or by unanimous vote of
the Sellers Representatives if the Closing shall not have been consummated by
May 1, 2005, provided that the terminating party shall not have breached in any
material respect its obligations under this Agreement in any manner that shall
have contributed to the failure to consummate the Closing by May 1, 2005.
8.6 Effect of Termination and Abandonment. In the event of termination of
this Agreement pursuant to this Article VIII, all obligations of the parties
hereto shall terminate, except the obligations of the parties pursuant to this
Section 8.5, and except for the provisions of Sections 9.1, 9.2, 9.3, 9.5, 9.7,
9.8, 9.9, 9.10, 9.11, 9.14, 9.15 and 9.16. Moreover, in the event of termination
of this Agreement pursuant to Section 8.3 or Section 8.4, nothing herein shall
prejudice the ability of the non-breaching party from seeking damages from any
other party for any intentional or willful breach of this Agreement, including
without limitation, attorneys' fees and the right to pursue any remedy at law or
in equity.
8.7 Extension; Waiver. At any time prior to the Closing Date, any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
- 34 -
If to Company:
Anders Furehed, Chief Executive Officer
mi4e Device Mangement AB
Xxxxxxxxxx 0
X-000 00
Xxxxxxxxx, Xxxxxx
fax x00 (0)0 000 00 000
With a copy to:
Advokatfirman Sodermark
Xxx 00000, XX-000 00
Xxxxxxxxx, Xxxxxx
fax x00 (0)0 000 00 00
Attn: Xxxxxx Xxxxxx
If to the Buyer:
Xxxx XxXxxxxx, Chief Executive Officer
Insignia Solutions, plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
fax: 000-000-0000
Attn: Xxxxxx Xxxxx
If to the Sellers Representatives, to each of:
Anders Furehed
mi4e Device Mangement AB
Xxxxxxxxxx 0
X-000 00
Xxxxxxxxx, Xxxxxx
fax x00 (0)0 000 00 000
Xxxx Xxxxxxx
mi4e Device Mangement AB
Xxxxxxxxxx 0
X-000 00
Xxxxxxxxx, Xxxxxx
fax x00 (0)0 000 00 000
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If to a Seller, to the address set forth on the
signature page hereto for such Seller
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.2 Assignments; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
9.3 Entire Agreement. This Agreement, the schedules hereto, the Mutual
Non-Disclosure Agreement between Buyer and the Company dated December 16, 2004,
the Registration Rights Agreement and any other agreements or instruments
required to be delivered at Closing pursuant to Article VI hereof constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto.
9.4 Amendment. This Agreement may be amended by the parties hereto at any
time in writing signed on behalf of Buyer and the Sellers Representatives, on
behalf of the Sellers but subject to Section 9.16.
9.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its rules
of conflict of laws.
9.6 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.7 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
9.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations
- 36 -
and partnerships and vice versa. All references in this Agreement to "dollars"
and "$" shall be deemed to be references to United States dollars.
9.9 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
9.10 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.11 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.12 Subsidiaries. As used in this Agreement, the word "subsidiary" when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner or managing member.
9.13 Further Assurances. From time to time, as and when requested by
either party (whether before or after the Closing Date), the other party shall
execute and deliver, or cause to be executed and delivered, all such documents
and instruments and shall take, or cause to be taken, all such further and other
action as the requesting party may reasonably deem necessary, proper or
desirable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
9.14 Dispute Resolution Procedures. If any question shall arise in regard
to the interpretation of any provision of this Agreement or as to the rights and
obligations of any of the parties hereunder, the Sellers Representatives, as
representatives of the Sellers, and Xxxx XxXxxxxx, as chief executive officer of
Buyer (or any successor to Xx. XxXxxxxx in such position), shall meet with each
other to negotiate and attempt to resolve such question in good faith. Such
representatives may, if they so desire, consult outside experts for assistance
in arriving at a resolution. In the event that a resolution is not achieved
within thirty (30) days after their first meeting, then the question shall be
finally resolved by binding arbitration in
- 37 -
accordance with the rules and procedures of the International Chamber of
Commerce, Paris applicable to commercial transactions, and judgment upon any
award thereon may be entered in any court having jurisdiction thereof. Any
arbitration shall be held in San Francisco, California. In the event of any
arbitration, one mutually agreed arbitrator shall make the necessary
determinations. Other than attorneys' fees and expenses (which shall be borne by
the party incurring the same), all out of pocket costs and expenses of Buyer and
the Sellers in connection with such arbitration, including, without limitation,
the fees of the arbitrators and any administration fees, shall be borne by Buyer
and the Sellers in such proportions as the arbitrator shall decide that such
expenses should, in equity, be apportioned. The language used in arbitration
shall be English.
9.15 Payment of Fees and Expenses. The Sellers shall pay at Closing (i)
all fees and expenses of counsel, accountants and other advisors of the Sellers,
(ii) all fees and expenses of counsel, accountants and other advisors of the
Company (except for legal fees of the Company not in excess of US $10,000) and
(iii) all other expenses incurred by Sellers or the Company incident to the
negotiation, preparation and execution of this Agreement and the consummation of
the transactions contemplated hereby, including any finder's or brokerage fees.
9.16 Appointment and Powers of the Sellers Representatives.
(a) Each Seller, by the execution and delivery of this Agreement,
hereby consents and agrees to the appointment, effective as of the Closing Date,
of each of Anders Furehed and Xxxx Xxxxxxx, who shall constitute the Sellers
Representatives for purposes of this Agreement, and each of such persons hereby
consents and agrees to such appointment. Any Seller Representative may be
removed at any time upon the written election of Sellers who held prior to the
Closing at least 66 2/3rds of the Shares; provided that such Sellers elect a
different Seller to replace such Seller Representative and Buyer is given prompt
written notice of such replacement by the Sellers Representatives. Each Seller
hereby constitutes and appoints each Seller Representative, including any
replacement of any such Seller Representative, as attorney-in-fact for such
Seller with full power of substitution and authority to execute any amendment or
waiver of this Agreement and any other document or instrument necessary or
advisable in order to carry out the provisions of this Agreement, to administer,
investigate, settle and resolve the rights of the Sellers with respect to
Holdback Shares set forth in Section 1.3 and the Earnout Payment set forth in
Section 1.5, to give and receive notices and communications under this Agreement
on behalf of the Sellers, to dispute any Claims made by Buyer hereunder, to
agree to, negotiate, enter into settlements and compromises of, and to comply
with orders of courts or arbitrators with respect to any dispute or Claims, and
to take all actions necessary or appropriate in the judgment of the Sellers
Representatives for the accomplishment of the foregoing; provided, however, that
the Sellers Representatives (i) shall give Buyer prompt written notice of the
replacement of any Seller Representative and (ii) shall not have the power or
authority to execute an amendment, waiver, document or other instrument that,
notwithstanding any other provision to the contrary, increases in any material
respect the obligations or liabilities of any Seller without the prior written
consent of that Seller. The Sellers Representatives shall be provided reasonable
access to information regarding Buyer and the Company for purposes of performing
their duties hereunder, provided that the Sellers Representatives shall treat
confidentially any non-public information.
- 38 -
(b) All decisions of the Sellers Representatives may be relied upon
by any third person, and shall be binding and conclusive upon each Seller. Any
decision of the Sellers Representatives shall require the consent of both
Sellers Representatives, or if there is only one Sellers Representative, the
consent of such Seller Representative.
(c) No Sellers Representatives shall be liable, responsible or
accountable in damages or otherwise to the Sellers for any loss or damage
incurred by reason of any act or failure to act by the Sellers Representatives,
and each Seller shall severally in accordance with their respective Pro Rata
Portion indemnify and hold harmless each Sellers Representatives against any
loss or damage except to the extent that such loss or damage shall have been the
result of the individual gross negligence or willful misconduct of any
particular Sellers Representatives, in which case such indemnity shall not
extend to such offending Seller Representative but the indemnity shall continue
for such non-offending Seller Representative or Representatives.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
BUYER
INSIGNIA SOLUTIONS PLC
By: /s/ Xxxx XxXxxxxx
--------------------------------------
Name: Xxxx XxXxxxxx
------------------------------------
Title: CEO
-----------------------------------
SELLERS:
/s/ Xxxx Xxxxx Xxxxxxx
------------------------------------------
XXXX XXXXX XXXXXXX
/s/ Anders Furehed
------------------------------------------
ANDERS FUREHED
KENORA LIMITED
By: /s/ X. Xxxxxx
--------------------------------------
Name: X. Xxxxxx
------------------------------------
Title: Authorised Signatory for
Granpian Managers Ltd.
-----------------------------------
KORROGO TECHNOLOGIES LIMITED
By: /s/ X. Xxxxxx
--------------------------------------
Name: X. Xxxxxx
------------------------------------
Title: Authorised Signatory for
Sovereign Directors (T&C) Ltd.
-----------------------------------
MI4E DEVICE MANAGEMENT AB
By: /s/ Anders Furehed
--------------------------------------
Name: Anders Furehed
------------------------------------
Title: CEO
-----------------------------------
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