EXHIBIT 2
ASSET PURCHASE AGREEMENT
------------------------
Parties: Xxxx X. Xxxxxxxx, Inc., 00 Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx
00000 ("Seller")
Xxxx X. Xxxxxxxx, 00 Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000
("Shareholder")
Insignia Systems, Inc., 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxx 00000 ("Buyer")
Date: December 23, 2002
RECITALS
Buyer desires to buy, and Seller is willing to sell, substantially all
of Seller's assets relating to its ValuStix(R) system, which is comprised of a
patent application, service marks, and related equipment, supplies and methods
for the affixing of coupons and other promotional materials to retail products
(the "ValuStix Business").
AGREEMENT
The parties agree as follows:
1. PURCHASE OF ASSETS. At the Closing, Buyer will purchase, and Seller
shall sell and deliver to Buyer, all of the following assets of Seller (the
"Assets"):
(a) All furniture, fixtures, machinery, computers and loaded
software, equipment, supplies and other tangible personal property relating to
the ValuStix Business, including but not limited to the items described in
Exhibit A;
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(b) All trade secrets and other confidential and/or proprietary
information relating to the ValuStix Business, including plans, designs,
specifications, drawings and similar or related data of every kind;
(c) All illustrations, art work, catalog sheets, marketing reports
and studies, advertising and promotion materials, catalog plates, color
positives and similar or related items used in the ValuStix Business;
(d) All trademarks, service marks, logos and other commercial
symbols used in the ValuStix Business, including ValuStix and Novel Promotion
Manager, together with all related trademark and service xxxx registrations and
applications, including those items described on Exhibit B-1;
(e) All patents and patent applications used in the ValuStix
Business, including U.S. Patent Application Serial No. 09/552,844 for the "Novel
Promotion Manager" invention, and any other items described on Exhibit B-2;
(f) All customer agreements with retailers and manufacturers for
ValuStix programs to be delivered to retailers after the Closing, and other
contract rights of Seller relating to the ValuStix Business, including those
items described on Exhibit B-3;
(g) All leases and licenses of furniture, equipment, software, and
other personal property used in the ValuStix Business, including those items
described on Exhibit B-4; and
(h) All other tangible and intangible personal property of every
kind and nature whatsoever used or useable in connection with the ValuStix
Business wherever located, whether owned by Seller or Shareholder.
2. EXCLUDED ASSETS. The following shall be excluded from the Assets:
(a) All tax refunds and tax benefits receivable by Seller whether
or not received
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by Seller at the Closing date and whether or not a claim for refund has been
filed by Seller with regard thereto;
(b) All minute books, stock ledgers, stock certificate books and
the corporate seal of Seller;
(c) All accounts, claims or rights arising under this Agreement;
and
(d) The following specific items: (i) cash; (ii) accounts
receivable; (iii) bank accounts and other deposit accounts; (iv) insurance
policies; (v) employee benefit plans; (vi) Shareholder's personal effects in the
Port Xxxxxxx office (including mahogany desk and credenza); (vii) all claims,
rights or causes of action relating to any excluded assets and retained
liabilities; and (viii) all rights of Seller in, to and under all contracts of
any nature, the obligations under which are not being expressly assumed by Buyer
hereunder, except those contract rights described in Section 1 and being sold to
Buyer.
3. PURCHASE PRICE. The purchase price shall be $3,000,000, of which
$75,000 has already been paid by Buyer to Seller for the reimbursement of
certain expenses. The balance of $2,925,000 shall be payable by wire transfer of
immediately available funds on the Closing date as follows: $2,602,304.39 to
Seller and $332,695.61 to the Bank of New York.
The manner in which the purchase price shall be allocated among
the Assets is set forth on Exhibit C. Seller and Buyer each acknowledge that the
terms of this Agreement, including the allocation of the total purchase price
among the Assets, have been established by arms-length negotiations between
them; and that, accordingly, each will file its income tax returns and maintain
its income tax records in a manner consistent with the terms hereof and will not
assert or defend a position in connection with any income tax examination,
administrative proceeding or court proceeding which is inconsistent with the
terms hereof. Seller and Buyer agree to cooperate with
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each other to the extent required to comply with all applicable federal and
state informational reporting requirements regarding the transactions
contemplated hereby, including without limitation, reporting requirements
arising out of Section 1060 of the Internal Revenue Code of 1986.
4. ASSUMPTION OF LIABILITIES. Buyer shall not assume any obligations,
commitments or liabilities of Seller, except that Buyer hereby assumes the
following: the leases and licenses described on Exhibit B-4, and the COBRA
obligations described in Section 14.
5. CLOSING. The closing shall occur as soon as possible after the
satisfaction or waiver of all of the conditions described in Sections 9 and 10
(the "Closing"). The Closing shall take place at the offices of Best & Xxxxxxxx
LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000. At
the Closing, Seller shall deliver to Buyer:
(a) A Xxxx of Sale in the form attached as Exhibit D;
(b) Assignment of Patent Application and Invention Rights in the
form attached as Exhibit E;
(c) Assignment of Service Xxxx in the form attached as Exhibit F;
(d) Physical possession of all included tangible Assets;
(e) All documents representing intangible Assets;
(f) Consent Agreement attached as Exhibit G;
(g) An opinion of Seller's counsel in the form attached as Exhibit
H; and
(h) Any other documents necessary or desirable to transfer the
Assets.
At the Closing, Buyer shall pay Seller the Purchase Price, and
deliver an opinion of Buyer's counsel in the form attached as Exhibit I. The
parties shall also execute and deliver the Employment Agreement attached as
Exhibit J, the Royalty Agreement attached as Exhibit K, and
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such further documents, certificates and opinions as may be required by any
other provision of this Agreement. Delivery of the Assets shall be at the
Seller's Port Chester, New York location.
6. RISK OF LOSS; ACCOUNTING. All risk of loss of the Assets shall pass
to Buyer at the Closing. For tax and accounting purposes, all transactions at
the Closing shall be deemed to have taken place simultaneously. All earnings and
losses on the Assets will after that date inure to, or be borne by, Buyer.
7. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. As a
material inducement to Buyer to enter into this Agreement and with the
understanding that Buyer will be relying thereon in purchasing the Assets,
Seller and Shareholder hereby jointly and severally represent and warrant to
Buyer as follows:
(a) ORGANIZATION AND STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and has all requisite corporate power and authority to own its assets
and properties and to carry on its business as it is now being conducted, and to
enter into this Agreement and consummate the transactions contemplated by this
Agreement.
(b) DUE AUTHORIZATION AND BINDING EFFECT. This Agreement and the
transactions contemplated by this Agreement have been duly authorized by all
requisite corporate action of Seller. This Agreement constitutes, and any
documents or instruments executed at the Closing shall constitute, the legal,
valid and binding obligations of Seller and Shareholder, enforceable against
them in accordance with their terms.
(c) TAXES. Seller has filed all income, excise, corporate
franchise, property, payroll, withholding, unemployment, sales, and other tax
returns or reports required to be filed by it, as of the date hereof, by the
United States of America and any state or other political subdivision
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hereof, and has paid all taxes or assessments relating to the time periods
covered by such returns or reports. Seller has not paid New York sales tax on
its prior sale of ValuStix programs.
(d) NO ACTION, PROCEEDING, ETC. There is no action or proceeding
(whether or not purportedly on behalf of Seller) pending or, to the best of
Seller's and Shareholder's knowledge, threatened against Seller, which might
result in any material adverse change in the condition, financial or otherwise,
of the ValuStix Business. No order, writ or injunction or decree has been issued
by, or requested of, any court or governmental agency which does or may result
in any material adverse change in the condition, financial or otherwise, of the
ValuStix Business.
(e) LEGAL COMPLIANCE. To the best of Seller's and Shareholder's
knowledge, Seller is not operating the ValuStix Business in violation of any
applicable state, federal or municipal laws, regulations or ordinances. Seller
has previously delivered to Buyer a true and complete list of all licenses and
permits necessary to operate the ValuStix Business. To the best of Seller's and
Shareholder's knowledge, all of such licenses and permits are currently in good
standing.
(f) NO BREACHES, ETC. Seller is not in violation of, and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, do not and will not result in any breach
of any of the terms or conditions of (i) Seller's Articles of Incorporation or
Bylaws, or (ii) to the best of Seller's and Shareholder's knowledge, any
mortgage, bond, indenture, agreement, contract, license or other instrument or
obligation to which Seller is a party or by which its assets are bound (other
than any real estate leases), or (iii) to the best of Seller's and Shareholder's
knowledge, any statute, regulation, judgment, writ, injunction or decree of any
court, threatened or entered in a proceeding or action in which Seller is, was
or may be bound, or to which any of its assets are subject.
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(g) CONDITION OF THE ASSETS. All of the tangible Assets are
currently in good and usable condition. The Assets constitute all of the Assets
being utilized by Seller in the conduct of the ValuStix Business.
(h) CHANGES IN SUPPLIERS AND CUSTOMERS. Seller has not been
notified that any of the suppliers supplying products, components or materials
which are material to the ValuStix Business intends to cease selling such
products to Seller, nor has Seller been notified that any of its major customers
intends to terminate its business relations with Seller.
(i) NO LIENS OR ENCUMBRANCES. Seller shall convey good and valid
title to the Assets to Buyer, free of any mortgages, security interests,
pledges, liens, easements, encumbrances or claims of any kind whatsoever, except
for the leases and licenses described in Exhibit B-4.
(j) CURRENT EMPLOYEES. Seller has not been notified that any key
employee intends to terminate his or her employment relationship with Seller or
Buyer following the Closing. There are no written or oral employment contracts
in effect between Seller and its employees. Seller is not liable for damages to
any employee or former employee as a result of any violation of any state or
federal laws directly or indirectly relating to such employee or former
employee. Seller is not, and will not become, liable for any retroactive
workers' compensation insurance premiums relating to the period of time prior to
the date of this Agreement.
(k) PERFORMANCE OF OBLIGATIONS. Seller is not in default in any
material respect under any material contract, agreement, lease or other
instrument relating to the ValuStix Business. True and correct copies of all
material agreements, contracts and other documents or instruments of Seller
relating to the ValuStix Business have heretofore been delivered to Buyer, and
all of such items are in full force and effect as of the date hereof and, to the
best of Seller's and Shareholder's knowledge, there are no material defaults by
any other parties existing thereunder.
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(l) INDUSTRIAL DEVELOPMENT BONDS. Seller is not a principal user
of any facility financed with tax exempt industrial development bonds.
(m) COLLECTIVE BARGAINING AGREEMENTS. Seller is not a party to any
collective bargaining or other labor Agreement with any party on behalf of its
employees, and, to the best of Seller's and Shareholder's knowledge, no petition
has been filed for recognition by any collective bargaining agent on behalf of
Seller's employees.
(n) ERISA. Seller has previously delivered to Buyer a true and
complete list of all of its material employee benefit plans. All contributions
required to be made to any such plans have been made, and there are no claims
pending or, to the best of Seller's and Shareholder's knowledge, threatened
against Seller relating to such plans.
(o) ENVIRONMENTAL MATTERS. To the best of Seller's and
Shareholder's knowledge, the operation by Seller of the ValuStix Business
conforms in all material respects to all applicable laws, ordinances,
regulations, permits, licenses and certificates relating to environmental
protection and employee health and safety.
(p) REAL ESTATE. Seller has previously delivered to Buyer a true
and complete list of all of the leases, subleases, and other Agreements under
which Seller is a lessee or occupant of real property (collectively, the "Real
Property Leases"). All buildings, warehouses, offices, and other improvements
used in the ValuStix Business are leased to Seller under such Real Property
Leases. Shareholder is the sole owner of the leasehold estate under each Real
Property Lease and currently holds the same, together with all rights, options
and privileges of the tenant or occupant thereunder, free and clear of any liens
or other encumbrances other than liens or encumbrances created by the owner.
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All of such Real Property Leases are valid and binding on
Shareholder, and, as of the time immediately before the Closing, Shareholder is
not in material default under any of such Real Property Leases. To the best of
Seller's and Shareholder's knowledge, no other party to any lease is in default
thereunder in any material respect and, as of the time immediately before the
Closing, no condition exists that with notice or lapse of time or both would
constitute a material default. There are no liabilities due and owing to the
Landlord by Shareholder under the Real Property Leases.
(q) INTELLECTUAL PROPERTY. To the best of Seller's and
Shareholder's knowledge: (i) Seller has all right, title and interest in, has a
valid and binding license to use, or has the requisite permission and authority
to use all patent rights, copyrights and service marks, and any applications or
registrations therefor, and all other commercial symbols, trade secrets, and
proprietary information (collectively, the "Intellectual Property"), used in the
ValuStix Business as presently conducted; and (ii) the operation of the ValuStix
Business as presently conducted does not infringe upon or unlawfully or
wrongfully use any Intellectual Property owned by any other person or entity.
Seller has not received any threat, demand or similar notice claiming that the
operation of the ValuStix Business as presently conducted is infringing upon or
misappropriating any Intellectual Property rights of any other person or entity.
Seller has not expressly granted any license , franchise or permit in effect on
the date hereof to any person to use any of the Intellectual Property used by
Seller in the operation of the ValuStix Business. Neither Shareholder, nor any
entity owned or controlled by Shareholder, nor any present or former employee of
the Seller, owns or has any proprietary interest in any of the Intellectual
Property used by the Seller in the operation of the ValuStix Business. Seller
owns all right, title and interest in the patent application for Novel Promotion
Manager and the ValuStix service xxxx, and owns the same free of all security
interests, pledges, liens, or encumbrances.
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(r) PREPAYMENTS. Seller has not received any prepayments for
services to be rendered to clients or customers after the Closing.
8. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement to
Seller and Shareholder to enter into this Agreement, and with the understanding
that Seller and Shareholder will be relying thereon in selling the Assets, Buyer
hereby represents and warrants to Seller and Shareholder as follows:
(a) ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has all requisite corporate power and authority to enter into
this Agreement and the Royalty Agreement and to consummate the transactions
contemplated by this Agreement.
(b) DUE AUTHORIZATION. This Agreement and the Royalty Agreement
and the transactions contemplated by this Agreement have been duly authorized by
all requisite corporate action of Buyer. This Agreement constitutes, and any
documents or instruments executed at the Closing shall constitute, the legal,
valid and binding obligations of Buyer, enforceable against Buyer in accordance
with their terms.
(c) NO BREACHES, ETC. Buyer is not in violation of, and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, do not and will not result in any breach
of any of the terms or conditions of any corporate charter, bylaws, mortgage,
bond, indenture, agreement, contract, license or other instrument or obligation
to which Buyer is a party or by which its assets are bound, nor will they
violate any statute, regulation, judgment, writ, injunction or decree of any
court, threatened or entered in a proceeding or action in which Buyer is, was or
may be bound, or to which any of its assets are subject.
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(d) NO ACTION, PROCEEDING, ETC. There is no action, suit or
proceeding before any court or governmental body or authority, pending or, to
the best of Buyer's knowledge, threatened against Buyer, with respect to the
execution, delivery or performance of this Agreement or the Royalty Agreement or
any of the transactions contemplated hereby or thereby.
9. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
complete the purchase of the Assets in accordance with the terms set forth in
this Agreement is subject to the satisfaction (or waiver by Buyer) of each of
the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Seller and Shareholder in this Agreement
shall be correct in all material respects on and as of the Closing date with the
same force and effect as though such representations and warranties had been
made on the Closing date.
(b) COMPLIANCE WITH COVENANTS. All covenants which Seller is
required to perform or comply with on or before the Closing date shall have been
fully complied with or performed in all material respects.
(c) APPROVAL OF ACTIONS, ETC. All actions, proceedings,
instruments and documents required to carry out this Agreement by Seller, or
incidental thereto, and all other related legal matters, shall have been
approved by counsel for Buyer.
(d) DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered to
Buyer each of the Closing items listed in Section 5, and such items shall be
satisfactory in form to Buyer.
(e) NO LITIGATION. No action, suit or proceeding before any court
or governmental body or authority, pertaining to the transactions contemplated
by this Agreement, shall have been instituted or threatened on or before the
Closing date.
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(f) FINANCING. Buyer shall have closed a public or private
securities offering and received net proceeds of at least $7,000,000.
(g) TRANSFER OF PATENT RIGHTS AND OTHER ASSETS. Seller shall have
received a transfer from Shareholder of all of his rights to the patent
application filed on April 20, 2000 for NOVEL PROMOTION MANAGER, in a form
approved by Buyer, and any other assets owned by Shareholder and used by Seller
in the operation of its business.
(h) RAYPRESS AGREEMENT. Buyer has entered into a new agreement
with RayPress Corporation, with terms acceptable to Buyer in its sole
discretion.
10. CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
complete the sale of the Assets in accordance with the terms set forth in this
Agreement is subject to the satisfaction (or waiver by Seller) of each of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Buyer in this Agreement shall be correct
in all material respects on and as of the Closing date with the same force and
effect as though such representations and warranties had been made on the
Closing date.
(b) DELIVERY OF CLOSING DOCUMENTS. Buyer shall have delivered to
Seller each of the closing items listed in Section 5, and such items shall be
satisfactory in form to Seller.
(c) NO LITIGATION. No action, suit or proceeding before any court
or governmental body or authority, pertaining to the transactions contemplated
by this Agreement, shall have been instituted or threatened on or before the
Closing date.
11. SURVIVAL. Except for the representations and warranties of Seller
and Shareholder in Section 7(i) (No Liens), which shall continue for five years,
and 7(a) (Organization), 7(b) (Due Authorization) and 7(q) (Intellectual
Property), which shall continue for two years, the respective
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representations, warranties, indemnities, and covenants of Seller, Shareholder,
and Buyer contained herein or in any certificate or instrument delivered by or
on behalf of such party pursuant to this Agreement shall survive the Closing for
a period of one year and thereafter shall expire and terminate, except as to
claims for which notice has been given on or before such termination date.
12. INDEMNIFICATION. Subject to the limitations set forth in Sections
11 and 13, Seller and Shareholder jointly and severally agree to indemnify Buyer
with respect to, and hold Buyer harmless from, any out-of-pocket loss, cost,
liability or expense (including, but not limited to, reasonable legal fees)
which Buyer may incur or suffer by reason of, or which results, arises out of,
or is based upon the inaccuracy of any representation or warranty made by Seller
or Shareholder in this Agreement or the failure of Seller or Shareholder to
comply with any of their covenants under this Agreement. If any damages as
defined in this section shall result in any tax saving or other monetary benefit
to Buyer, the amount of such damages shall be reduced to reflect such benefit.
Seller and Shareholder shall also indemnify, defend and hold Buyer harmless
against any loss, cost, damage or expense, including reasonable attorney's fees,
arising from liabilities of Seller or Shareholder not assumed by Buyer. Subject
to the limitations set forth in Sections 11 and 13, Buyer agrees to indemnify
Seller and Shareholder with respect to, and hold Seller and Shareholder harmless
from, any out-of-pocket loss, cost, liability or expense (including, but not
limited to, reasonable legal fees) which either of them may incur or suffer by
reason of, or which results, arises out of, or is based upon the inaccuracy of
any representation or warranty made by Buyer in this Agreement, the failure of
Buyer to comply with any of its covenants under this Agreement, or from any
liabilities assumed by Buyer pursuant to Section 4. If any damages as defined in
this section shall result in any tax saving or other monetary benefit to Seller
or Shareholder , the amount of such damages shall be reduced to reflect such
benefit.
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A party required to provide indemnification hereunder is referred to as
the "Indemnifying Party." A party entitled to be indemnified hereunder is
referred to as the "Indemnified Party." An Indemnifying Party shall have no duty
to indemnify an Indemnified Party with respect to any loss, liability or
expense, including contingent liabilities, unless (a) the Indemnified Party has
notified the Indemnifying Party in writing of such liability or claimed
liability within the one-year, two-year or five-year period, respectively,
described in Section 11, and (b) the Indemnified Party's claims, in the
aggregate, exceed $50,000. An Indemnifying Party shall have no liability to an
Indemnified Party for claims below such amount. Buyer's maximum total liability
under this Section 12 shall be limited to $2,500,000. Seller's and Shareholder's
maximum total liability under this Section 12 shall be limited as follows:
(A) Seller's and Shareholder's maximum total liability under
this Section 12 for all obligations of Seller and Shareholder arising
other than as a result of a breach by Seller or Shareholder of Section
7(i) or Section 7(q) of this Agreement shall be limited to $2,500,000.
(B) In the event that Buyer notifies Seller and Shareholder
prior to the first anniversary of the Closing date of a breach by
Seller or Shareholder of the representations and warranties contained
in Section 7(i) and/or Section 7(q), then: (x) Seller's and
Shareholder's maximum total liability under this Section 12 for all
obligations of Seller and Shareholder arising other than as a result of
a breach of Section 7(i) or Section 7(q) of this Agreement shall be
limited to $2,500,000; and (y) Seller's and Shareholder's maximum total
liability under this Section 12 shall be limited to the sum of
$2,500,000 plus all royalty payments to which Seller would otherwise be
entitled under the Royalty Agreement;
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(C) In the event that Buyer notifies Seller and Shareholder
after the first anniversary of the Closing date of a breach by Seller
or Shareholder of the representations and warranties contained in
Section 7(i) and/or Section 7(q), then, subject to Section 11 above:
(x) Seller's and Shareholder's maximum total liability under this
Section 12 for all obligations of Seller and Shareholder arising other
than as a result of a breach by Seller or Shareholder of Section 7(i)
or Section 7(q) of this Agreement shall be limited to $2,500,000; and
(y) Seller's and Shareholder's maximum total liability under this
Section 12 shall be limited to the sum of all royalty payments to which
Seller would otherwise be entitled under the Royalty Agreement. At its
option, Buyer may reduce any amount payable to Seller under the Royalty
Agreement
referred to in Section 5 by any amount by which Seller and/or Shareholder are
required to indemnify Buyer under this Section 12. The Royalty Agreement shall
provide that if Buyer proposes to reduce any amount payable to Seller under the
Royalty Agreement, Buyer must first deposit such amount into escrow, to be held
therein until the issue is resolved by agreement of the parties or final,
nonappealable court order.
The rights of indemnification under this Section and the Royalty
Agreement shall be the exclusive method for recovery of any monetary loss and
shall preclude any other recovery by a party seeking indemnification on the
grounds of breach of warranty or misrepresentation. Nothing in this Section 12
shall prevent a party from enforcing the purchase and sale of the Assets in
accordance with the terms of this Agreement or, alternatively, seeking damage
for failure to complete such sale.
13. INDEMNIFICATION CLAIMS PROCEDURE. In case any claim is made by a
third party as to which a party may be entitled to seek indemnity from another
party under Section 12, the Indemnified Party shall give the Indemnifying Party
timely notice of such claim and the opportunity to defend or compromise such
claim. Such notice shall be given to the Indemnifying Party in writing
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and shall describe the claim or claims involved and the Indemnifying Party shall
have 15 days to elect in writing whether or not to assume the defense of such
claim. If the Indemnifying Party elects to defend such claim, the Indemnifying
Party shall have exclusive control over the defense and settlement of such claim
(including the designation of counsel) and the Indemnified Party will not
attempt to settle or compromise such claim without the consent of Indemnifying
Party. The Indemnifying Party shall pay all fees and costs of counsel selected
by it for the defense of any such claim. The Indemnified Party shall cooperate
in such defense by making the services of its officers and employees available
to the Indemnifying Party for the purpose of supplying information and
testimony, and by providing such other assistance and materials as the
Indemnifying Party may reasonably request, and the Indemnifying Party shall
reimburse the Indemnified Party for reasonable out-of-pocket expenses incurred
by it. Where the Indemnifying Party has elected to defend such claim, the
Indemnifying Party shall, subject to Section 12, pay in full the amount of any
final settlement or judgment payable by the Indemnified Party.
14. EMPLOYEES. Buyer agrees to offer employment on the Closing date to
all of the employees of Seller who are then currently employed on a regular
basis and not then on any kind of leave. Such employees shall become eligible
for coverage under Buyer's benefit plans, subject to the terms of such plans.
Buyer shall not adopt or assume any obligations of Seller to such employees,
except that Buyer shall provide COBRA coverage to the one employee currently
with COBRA coverage, and to any other employees of Seller who become eligible
for COBRA as a result of the Closing.
15. EXPENSES. Each party will pay its own legal, accounting, brokerage
and other expenses, and its own taxes, incurred in connection with this
Agreement, and indemnify the other party for any claims made for such expenses
or taxes.
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16. BINDING EFFECT AND GOVERNING LAW. This Agreement shall be binding
upon and inure to the benefit of and be enforceable against the parties hereto
and their respective successors and assigns and shall in all respects be
governed by, and enforced and interpreted in accordance with, the laws of the
State of Minnesota.
17. KNOWLEDGE DEFINED. Where any representation or warranty contained
in this Agreement is expressly qualified by reference to the best of Seller's or
Shareholder's knowledge or what is known to Seller or Shareholder or words of
similar import, such term(s) shall be limited to the actual knowledge of Xxxx X.
Xxxxxxxx.
18. NOTICES. All notices, consents, requests, instructions or other
communications provided for herein shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) three days after the date of
deposit in the mails, postage prepaid, if mailed by certified or registered
mail, or (c) the next business day if sent by a prepaid overnight courier
service:
If to Seller: Xxxx X. Xxxxxxxx, Inc.
Attention: Xxxx X. Xxxxxxxx, President
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
If to Shareholder: Xxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
with a copy in
either case to: Xxxxx & Xxxxxxx LLP
Attention: Xxxxx Xxxxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Buyer: Insignia Systems, Inc.
Attention: Xxxxx X. Drill, CEO
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
with a copy to: Best & Xxxxxxxx LLP
17
EXHIBIT 2
Attention: Xxxxx X. Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
19. ENTIRE AGREEMENT AND COUNTERPARTS. This Agreement and the exhibits
attached hereto set forth the entire Agreement between Seller, Shareholder, and
Buyer, superseding in all respects any and all prior oral or written agreements
or understandings between them pertaining to the transactions contemplated by
this Agreement, including without limitation, that certain letter of intent,
dated November 12, 2002. This Agreement shall be amended or modified only by
written instrument signed by Seller, Shareholder, and Buyer. This Agreement may
be executed in counterparts, each of which shall be deemed an original and all
of which, taken together, shall constitute one Agreement.
20. PUBLICITY. All notices to third parties and other publicity
relating to the matters contemplated by this Agreement shall be jointly planned
and coordinated between Seller and Buyer, and no party shall unilaterally
release such notices or publicity without the prior written approval of the
other party, except to the extent required of Buyer under federal or state
securities laws.
21. SEVERABILITY. In the event any provision of this Agreement is found
to be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall nevertheless be binding upon the parties with
the same effect as though the void or unenforceable part had been severed and
deleted.
18
EXHIBIT 2
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
XXXX X. XXXXXXXX, INC.
By /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx, President and CEO
/s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx
INSIGNIA SYSTEMS, INC.
By /s/ Xxxxx X. Drill
-----------------------------------
Xxxxx X. Drill, CEO
19
EXHIBIT 2
LIST OF EXHIBITS
----------------
A. Tangible Assets
B. Trademarks, Service Marks and Registrations; Patents and
Patent Applications; Customer Agreements; and Leases and
Licenses
C. Purchase Price Allocation
D. Xxxx of Sale
E. Assignment of Patent Application and Invention Rights
F. Assignment of Service Xxxx
X. Consent Agreement
H. Opinion of Seller's Counsel
I. Opinion of Buyer's Counsel
J. Employment Agreement
K. Royalty Agreement
20
