EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of December
8, 2003, is by and among LION, Inc., a corporation organized under the laws of
the State of Washington ("PURCHASER"), the Federal Home Loan Mortgage
Corporation, a shareholder-owned, government-sponsored corporation organized
under the laws of the United States ("XXXXXXX MAC"), and Ignition Mortgage
Technology Solutions, Inc., a corporation organized under the laws of the State
of Delaware ("IGNITION"), and a wholly owned subsidiary of Xxxxxxx Mac. Each of
the foregoing parties is referred to herein individually as a "PARTY" and
together as the "PARTIES." Each of Xxxxxxx Mac and Ignition is referred to
herein individually as an "FRE PARTY" and together as the "FRE PARTIES."
RECITALS:
WHEREAS, Ignition is an application service provider engaged in the
business of providing technology and business solutions designed to enable
residential mortgage lenders to lower the cost of acquiring, fulfilling and
delivering loans (through the LockPoint Xtra(R) product offering) and to manage
the risk associated with their mortgage loan pipelines (through the Pipeline
Tools product offering) and also produces the point-of-sale product for
originating mortgage loans referred to as Loan Officer Plus(R) and the
multi-lender, automated application capture and price locking mortgage product
referred to as Loan Finder/Loan WorkBench/Optimum Controller (the "BUSINESS");
WHEREAS, on the Closing Date (as defined below), Ignition desires to
sell, transfer, assign, deliver and otherwise convey to Purchaser, and Purchaser
desires to purchase from Ignition, all of the right, title and interest of
Ignition in, to and under all of the Purchased Assets (as defined below), and,
as part of such sale, transfer, assignment, delivery and conveyance, Purchaser
shall assume no Liabilities (as defined below) other than the Assumed
Liabilities (as defined below), all on the terms and subject to the conditions
set forth in this Agreement (the "ACQUISITION"); and
WHEREAS, Purchaser and the FRE Parties desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated herein.
NOW, THEREFORE, in consideration of the respective premises, mutual
covenants and agreements of the Parties, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
"ACCOUNTS RECEIVABLE" means all accounts receivable and other rights
to payment from customers and licensees of Ignition, including any claims,
credits, refunds, offsets, back
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charges or similar other amounts owing to Ignition, and the full benefit of all
security for such accounts or rights to payment.
"ACQUISITION" has the meaning set forth in the Recitals.
"AFFILIATE" means a Person that, directly or indirectly, controls, is
controlled by, or is under common control with the specified Person. For
purposes of this definition, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" has the meaning set forth in the Preamble.
"ASSIGNED CONTRACTS" has the meaning set forth in Section 2.01(c).
"ASSIGNED COPYRIGHTS" means all of Ignition's right, title and
interest in and to the copyrights in the software programs and systems listed on
SCHEDULE 2.01(B).
"ASSIGNED INTELLECTUAL PROPERTY" has the meaning set forth in Section
2.01(b).
"ASSIGNED PERSONAL PROPERTY" has the meaning set forth in Section
2.01(a).
"ASSIGNED TRADEMARKS" means the trademarks and trademark applications
set forth on SCHEDULE 2.01(B).
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an assignment and
assumption agreement substantially in the form of EXHIBIT A, pursuant to which
Ignition will assign to Purchaser, and Purchaser will accept and assume, all of
Ignition's rights and obligations under the Assumed Liabilities as of the
Closing.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.03(a).
"AUTHORIZATIONS" means any and all permits, licenses, franchises,
concessions, grants, consents, exemptions, approvals, orders, authorizations,
waivers or other approvals, variances or clearances from, or filings or
registrations with Governmental Authorities.
"XXXX OF SALE" means one or more bills of sale, consistent with the
terms of this Agreement and otherwise reasonably satisfactory in form and
substance to Purchaser, effectuating the sale, transfer, assignment, delivery
and conveyance by Ignition of the Purchased Assets to Purchaser at the Closing.
"BUSINESS" has the meaning set forth in the Recitals.
"CHASE AMOUNT" has the meaning set forth in Section 8.01(d).
"CLAIM NOTICE" has the meaning set forth in Section 10.03(c)(i).
"CLOSING" has the meaning set forth in Section 2.07.
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"CLOSING DATE" has the meaning set forth in Section 2.07.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
12.02.
"CONTRACTS" means all contracts, agreements, licenses, leases,
instruments, commitments and undertakings entered into or made in connection
with the Business (together with all amendments, waivers of rights under,
modifications or supplements thereto and all side letters affecting the
obligations of any party thereunder), including all rights of setoff, recovery,
credit or other similar rights, to which Ignition is a party, and all rights
under any express or implied warranties from vendors, suppliers or other service
providers to the Business.
"COPYRIGHT ASSIGNMENT" means the copyright assignment agreement to be
entered into between Ignition and Purchaser, dated as of the Closing Date,
substantially in the form of EXHIBIT B.
"DIRECT CLAIM" has the meaning set forth in Section 10.03(c)(i).
"DISCLOSURE SCHEDULE" has the meaning set forth in Article III.
"DOMAIN NAME ASSIGNMENT" means the domain name assignment agreement to
be entered into between Ignition and Purchaser, dated as of the Closing Date,
substantially in the form of EXHIBIT C.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder,
as in effect from time to time.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.02.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.04.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.10.
"FRE PARTY" and "FRE PARTIES" have the meanings set forth in the
Preamble.
"XXXXXXX MAC" has the meaning set forth in the Preamble.
"XXXXXXX MAC AGREEMENTS" means the following agreements between
Ignition and Xxxxxxx Mac: Global Mutual Confidentiality Agreement effective May
21, 2001; LockPoint Xtra Software License and Services Agreement effective
January 1, 2003; Pipeline Tools Software License and Services Agreement
effective November 1, 2001; Source Code License Agreement effective May 21,
2001.
"XXXXXXX MAC TRADEMARKS" has the meaning set forth in Section
11.03(a).
"GLOBAL CONFIDENTIALITY AGREEMENT" has the meaning set forth in
Section 11.01.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or foreign
government, governmental regulator or administrative authority (or subdivision
thereof) and any agency or commission or any court, tribunal or judicial or
arbitral body that has jurisdiction over a Party, its business or its assets.
"IGNITION" has the meaning set forth in the Preamble.
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"IGNITION EMPLOYEES" has the meaning set forth in Section 6.01(b).
"IGNITION TRADEMARKS" has the meaning set forth in Section 11.03(b).
"INDEMNIFICATION BASKET" has the meaning set forth in Section
10.03(a).
"INDEMNIFICATION CAP" has the meaning set forth in Section 10.03(a).
"INDEMNIFIED FRE PARTIES" has the meaning set forth in Section
10.03(b).
"INDEMNIFIED PARTY" has the meaning set forth in Section 10.03(c).
"INDEMNIFIED PURCHASER PARTIES" has the meaning set forth in Section
10.03(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 10.03(c).
"INSURANCE" has the meaning set forth in Section 5.02(b).
"INTERIM BALANCE SHEET" has the meaning set forth in Section 3.10.
"KNOWLEDGE" means, with respect to the FRE Parties, the actual
knowledge of the individuals identified on SCHEDULE 1.01 and, with respect to
Purchaser, the actual knowledge of the individuals identified on SCHEDULE 1.02.
"LIABILITY" means all debts, claims, liabilities, obligations,
interests, damages and expenses of every kind and nature, whether liquidated or
unliquidated, direct or indirect, absolute, accrued, contingent or otherwise,
regardless of when such debt, claim, liability, obligation, interest, damage or
expense arose or might arise.
"LIEN" means any mortgage, security interest, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, easement, lease, third-party
interest, lien (statutory or otherwise), charge, preference, priority or
security agreement, any option, warrant, attachment or right of first refusal
and any preemptive, conversion, put, call, claim or right or restriction on
transfer (other than restrictions imposed by applicable securities laws).
"LPX AGREEMENT" has the meaning set forth in Section 5.02(b).
"LOSSES" has the meaning set forth in Section 10.03(a).
"MATERIAL ADVERSE EFFECT" means (i) a deterioration in the condition
or quality of the Purchased Assets (or the ability of Purchaser to lawfully use
such Purchased Assets) or an increase or expansion of the Assumed Liabilities
that results in or causes a material adverse impact on the Business, taken as a
whole, as it is currently conducted or (ii) a material adverse effect on either
FRE Party's ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby.
"PARTY" and "PARTIES" have the meanings set forth in the Preamble.
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"PATENT APPLICATION ASSIGNMENT" means the patent application
assignment agreement to be entered into between Ignition and Purchaser, dated as
of the Closing Date, substantially in the form of EXHIBIT D.
"PERMITTED LIENS" means (i) statutory liens for current Taxes,
assessments or other governmental charges not yet delinquent or the amount or
validity of which is being contested in good faith by appropriate proceedings,
(ii) zoning, entitlement and other land use regulations by Governmental
Authorities and (iii) the security interest granted to IOS Capital, Inc.
pursuant to the IKON IOS Capital, Inc. Image Management Agreement, dated July
24, 2003, with respect to the Canon digital copier in Gig Harbor, Washington and
the UCC Financing Statement filed by Lucent Technologies Inc. on Xxxxxx Decision
Systems, Inc. on Sept. 29, 1999 regarding one Definity Telephone System in
Sausalito, California.
"PERSON" means any individual, corporation, company, association,
partnership, limited liability company, joint venture, trust, unincorporated
organization or Governmental Authority.
"PIPELINE TOOLS AGREEMENT" has the meaning set forth in Section
5.02(b).
"PLAN" means any "employee benefit plan", within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, any pension, profit
sharing, retirement, stock purchase, severance, deferred or incentive
compensation, bonus, stock appreciation right, stock option or other equity
based, vacation, disability, hospitalization, medical insurance or other fringe
benefit plan, program, policy, arrangement, agreement or commitment and any
employment agreement.
"PURCHASE PRICE" has the meaning set forth in Section 2.06.
"PURCHASED ASSETS" has the meaning set forth in Section 2.01.
"PURCHASER" has the meaning set forth in the Preamble.
"PURCHASER PLANS" has the meaning set forth in Section 6.01(d).
"REPRESENTATIVES" means, with respect to any Party, its officers,
directors, employees, attorneys and other representatives, together with its
Affiliates and their respective officers, directors, employees, attorneys and
other representatives.
"RETAINED IP" has the meaning set forth in Section 11.02.
"RETAINED IP LICENSE" has the meaning set forth in Section 11.02.
"TAX" or "TAXES" means all taxes, including any interest, liabilities,
fines, penalties or additions to tax that may become payable in respect thereof,
imposed by any Governmental Authority, which taxes shall include income taxes
(including U.S. federal income taxes and state and local income taxes), payroll
and employee withholding taxes, unemployment insurance, social security, sales
and use taxes, excise taxes, franchise taxes, gross or net receipts taxes,
occupation taxes, real and personal property taxes, AD VALOREM taxes, stamp
taxes, transfer taxes, capital taxes, import duties, withholding taxes, workers'
compensation, and other obligations of the same or of a similar nature whether
arising before, on or after the Closing Date.
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"TEMPORARY EMPLOYEES" has the meaning set forth in Section 6.01(f).
"THIRD PARTY CLAIM" has the meaning set forth in Section 10.03(c)(i).
"TRADEMARK ASSIGNMENT" means the trademark assignment agreement to be
entered into between Ignition and Purchaser, dated as of the Closing Date,
substantially in the form of EXHIBIT E.
"TRANSFER TAX" means applicable excise, sales, goods and services,
harmonized sales, value added transfer, land transfer, documentary, filing,
recordation, real estate conveyance, stamp, use and other similar taxes, levies,
fees and charges due in connection with the transactions contemplated by this
Agreement.
"TRANSFERRING EMPLOYEE" has the meaning set forth in Section 6.01(d).
"TRMS AGREEMENT" has the meaning set forth in Section 6.02(b).
"WELFARE PLAN" has the meaning set forth in Section 6.01(e).
ARTICLE II
TRANSFER OF THE PURCHASED ASSETS
Section 2.01. ACQUISITION AND TRANSFER OF ASSETS. Upon the terms and
subject to the conditions of this Agreement and except as set forth in Section
2.02 and subject to Section 11.02 hereto, at the Closing Ignition shall sell,
transfer, assign, deliver and otherwise convey to Purchaser, and Purchaser shall
purchase, acquire and accept from Ignition, all of Ignition's right, title and
interest in, to and under, and all obligations under or relating to, all of the
following assets and properties wherever located, as the same shall exist as of
the Closing (the "PURCHASED ASSETS"):
(a) The tangible personal property listed on SCHEDULE 2.01(A) (the
"ASSIGNED PERSONAL PROPERTY");
(b) The items of intellectual property listed on SCHEDULE 2.01(B)
(the "ASSIGNED INTELLECTUAL PROPERTY");
(c) The Contracts listed on SCHEDULE 2.01(C), which list includes the
Xxxxxxx Mac Agreements (the "ASSIGNED CONTRACTS");
(d) All books, records, files, reports, plans, legal records,
accounting records, consultants' reports and other data relating to the
Purchased Assets or operation of the Business by Ignition and set forth on
SCHEDULE 2.01(D); PROVIDED, HOWEVER, if any items set forth on Schedule 2.01(d)
contain material information about (i) Xxxxxxx Mac or any of its Affiliates
(other than Ignition) or any of their respective business activities, (ii) a
business other than the Business, or (iii) any assets, properties and rights
other than the Purchased Assets, Ignition shall retain such books and records
and provide to Purchaser as soon as reasonably practicable
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following Closing an accurate and complete copy of the portions of such books
and records related to the Business or any other Purchased Assets;
(e) All rights related to the prepaid expenses as of November 30,
2003 and listed on SCHEDULE 2.01(E) and the proceeds of any insurance coverage
in respect of a Purchased Asset or an Assumed Liability;
(f) All Accounts Receivable existing on November 30, 2003, subject to
SCHEDULE 8.01(D); and
(g) Any rights, claims, causes of action or rights of set-off
relating to any of the foregoing.
Section 2.02. EXCLUDED ASSETS. Notwithstanding Section 2.01, the
Purchased Assets shall exclude any assets (the "EXCLUDED ASSETS") not
specifically set forth in Section 2.01, including those specified on SCHEDULE
2.02. Notwithstanding anything to the contrary herein, except for the express
licenses and assignments granted in this Agreement, nothing herein shall be
deemed to transfer any rights in any intellectual property owned, licensed to,
conceived, reduced to practice or otherwise developed by Xxxxxxx Mac or Xxxxxxx
Mac's Affiliates (other than Ignition) by virtue of its reference, incorporation
or use within any of the Purchased Assets.
Section 2.03. ASSUMED LIABILITIES. (a) As of the Closing Date,
Purchaser shall assume and be liable only for (i) all accounts payable of
Ignition existing as of November 30, 2003, excluding the "intercompany payable"
to Xxxxxxx Mac set forth on the Interim Balance Sheet and existing as of
November 30, 2003, (ii) all Liabilities arising from the Purchased Assets after
Closing, including all post-Closing Liabilities for performance under each of
the Assigned Contracts except Liabilities, even if arising post-Closing, for
performance under the Assigned Contracts prior to Closing and (iii) subject to
and including the severence, retention and other similar payments set forth in
Section 6.01(e), all Liabilities relating to the employment by Purchaser after
Closing of the Transferring Employees (collectively, the "ASSUMED LIABILITIES").
(b) Purchaser agrees to promptly pay, perform, honor and discharge,
or cause to be paid or otherwise promptly performed, honored and discharged,
from and after the Closing all Assumed Liabilities as they become due and
payable and in accordance with the terms thereof. Xxxxxxx Mac's rights in the
event of a breach of this Section 2.03(b) shall be in addition to any rights
Xxxxxxx Mac may have arising out of or as a result of a breach by Purchaser of
any Assigned Contract (including any Assigned Contract to which Xxxxxxx Mac is a
counterparty).
Section 2.04. EXCLUDED LIABILITIES. Notwithstanding anything to the
contrary herein, Purchaser is not assuming and shall not become responsible for
any Liability of any FRE Party of whatever nature, whether presently in
existence or arising hereafter, including any Liability incurred in connection
with, arising out of, or related to the ownership or use of any of the Purchased
Assets or the conduct of the Business on or prior to the Closing Date, except
the Assumed Liabilities. All such Liabilities other than the Assumed Liabilities
are referred to herein as the "EXCLUDED LIABILITIES" and shall be retained by
and remain Liabilities of Ignition.
Section 2.05. EMPLOYEE BENEFIT PLANS. There shall be no transfer of
assets or Liabilities of the FRE Parties' respective Plans to Purchaser or to
any Plan of Purchaser. Ignition
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and Xxxxxxx Mac shall remain liable for all, and Purchaser shall have no
obligation or responsibility for any, Liabilities relating to (a) benefits under
any Plan of Ignition or Xxxxxxx Mac, or under any multiemployer plan (as defined
under section 4001(a)(3) of ERISA) to which Ignition, Xxxxxxx Mac or any member
of the same controlled group (as defined under Code section 414(b) or (c)) that
includes Ignition or Xxxxxxx Mac; (b) any Transferring Employee for any period
prior to such Transferring Employee becoming an employee of Purchaser; and (c)
any employee, consultant, officer, director or former employee of Ignition or
Xxxxxxx Mac who is not a Transferring Employee.
Section 2.06. PURCHASE PRICE. The aggregate consideration to be paid
by Purchaser to Ignition in respect of the Acquisition and the consummation of
the other transactions contemplated hereby shall be (a) $1,000 and (b) the
assumption of the Assumed Liabilities (such consideration collectively, the
"PURCHASE PRICE").
Section 2.07. CLOSING. The closing of the Acquisition and the other
transactions contemplated hereby (the "CLOSING") shall take place at the offices
of Xxxxxxx Mac, 0000 Xxxxx Xxxxxx Xxxxx, XxXxxx, Xxxxxxxx, at a mutually
acceptable time on the second business day after the date on which all of the
conditions set forth in Article VII have been satisfied or waived, or at such
other time or place as the Parties may agree (the "CLOSING DATE").
Section 2.08. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall
be allocated among the Purchased Assets in the manner required by the Code. In
making such allocation, the Parties shall mutually agree on the fair market
values. The Parties agree (a) to file in a timely manner U.S. Internal Revenue
Service Form 8594 based on such fair market values, (b) that all Tax returns
filed by the Parties shall be filed consistent with such allocation and (c) to
take no position, unless otherwise required by applicable law, with respect to
any Taxes inconsistent with such allocation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE FRE PARTIES
Except as disclosed in the DISCLOSURE SCHEDULE, a copy of which is
being delivered by the FRE Parties to Purchaser concurrently with the execution
of this Agreement, each of Xxxxxxx Mac and Ignition hereby jointly and severally
represents and warrants to Purchaser as follows:
Section 3.01. ORGANIZATION. Ignition is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has full
corporate power and authority to carry on its business as it is presently being
conducted. SCHEDULE 3.01 contains a list of each state in which Ignition is
qualified to do business as a foreign corporation. Xxxxxxx Mac is a
shareholder-owned, government-sponsored corporation organized under the laws of
the United States pursuant to an Act of Congress of July 24, 1970 (Title III of
the Emergency Home Finance Act of 1970, as amended, 12 U.S.C. xx.xx. 1451-1459),
with full power and authority to conduct its businesS as it is presently being
conducted.
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Section 3.02. CORPORATE AUTHORIZATION. Each of the FRE Parties has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance by
each of the FRE Parties of this Agreement has been duly authorized by all
necessary corporate action on the part of such FRE Party. This Agreement has
been duly executed and delivered by each of the FRE Parties and (assuming the
due authorization, execution and delivery by Purchaser) constitutes the valid
and binding obligation of each of the FRE Parties, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights generally and to general principles of equity
(regardless whether enforcement is in a proceeding in equity or at law).
Section 3.03. NO CONFLICTS. Except as set forth on SCHEDULE 3.03, the
execution, delivery and performance by each FRE Party of this Agreement, the
consummation by each FRE Party of the transactions contemplated by this
Agreement and the compliance by each FRE Party with its obligations under this
Agreement do not and will not directly or indirectly (with or without notice,
lapse of time or both):
(a) conflict with, or result in the breach of, any provision of such
FRE Party's constitutive documents or any resolution adopted by the board of
directors or stockholders of such FRE Party;
(b) violate any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any Governmental Authority having jurisdiction over
such FRE Party or any of its properties, assets or operations;
(c) conflict with, violate, result in the material breach or
termination of, constitute a material default under, or give rise to any right
of termination or acceleration or right to increase the obligations or otherwise
adversely modify the terms under, or require any consent, approval or waiver by
any party under, any of the Assigned Contracts, other than consents, approvals
and waivers that have been obtained on or before the Closing Date and those the
failure of which to obtain, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; or
(d) result in the creation of any Lien (other than Permitted Liens or
any Lien in favor of Purchaser) upon any of the Purchased Assets.
Section 3.04. GOVERNMENTAL CONSENTS. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
Governmental Authority is necessary or required in connection with the due
authorization, execution and delivery of this Agreement by either FRE Party or
the consummation by either FRE Party of the transactions contemplated by this
Agreement.
Section 3.05. LITIGATION; COMPLIANCE WITH LAWS. Except as set forth on
SCHEDULE 3.05, there are no actions, suits or proceedings pending or, to the
Knowledge of the FRE Parties, threatened (a) against or affecting the Purchased
Assets or (b) that would challenge, prevent, delay, or make illegal any of the
transactions contemplated by this Agreement, in each case before any
Governmental Authority other than any actions, suits or proceedings that,
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individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Each FRE Party is and at all times has been in
compliance, in all material respects, with all material laws or regulations
applicable to the operation of the Business or the ownership or use of the
Purchased Assets. Neither FRE Party has received, and does not have Knowledge of
the issuance of, any notice of violation or alleged violation of any such laws
or regulations by any Governmental Authority applicable to the operation of the
Business or the ownership or use of the Purchased Assets. Neither Ignition nor
the Purchased Assets is subject to any outstanding judgment, order or decree of
any Governmental Authority.
Section 3.06. TITLE TO PERSONAL PROPERTY. Ignition has good and
marketable title, free and clear of all title defects, options and Liens, to,
or, in the case of leased Assigned Personal Property, a valid leasehold interest
in, its Assigned Personal Property, other than Permitted Liens and such defects
in title that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.07. ASSIGNED CONTRACTS. An accurate and complete copy of
each Assigned Contract has been furnished or made available to Purchaser. Each
of the Assigned Contracts is valid, binding and enforceable in accordance with
its terms as to Ignition and, to the Knowledge of the FRE Parties, as to the
other parties thereto, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in an action in law or at equity).
Except as set forth on SCHEDULE 3.07, there is no breach or default in any
material respect under any of the Assigned Contracts either by Ignition or, to
the Knowledge of the FRE Parties, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a breach or default thereunder by Ignition or, to the Knowledge of
the FRE Parties, any other party thereto. Except as set forth on SCHEDULE 3.07,
Ignition has not received any written notice that any party to an Assigned
Contract intends to cancel, terminate or amend any such Assigned Contract or to
exercise or fail to exercise any options thereunder.
Section 3.08. INTELLECTUAL PROPERTY. (a) To the Knowledge of the FRE
Parties, the patent applications listed in SCHEDULE 2.01(B) are currently
pending in the U.S. Patent Office.
(b) To the Knowledge of the FRE Parties, there is no claim pending or
threatened that any of the Assigned Software Code infringes the rights of a
third party.
(c) To the Knowledge of the FRE Parties, with the exception of the No
Consent Contracts, as defined in SCHEDULE 2.02, and the Retained IP, none of the
Excluded Assets is necessary to use, maintain, and license the versions of the
material Ignition software products listed on SCHEDULE 2.01(B) that are used by
Ignition on the Closing Date.
(d) To the Knowledge of the FRE Parties, the FRE Parties own or
license all of the Assigned Intellectual Property except for such elements that
may be in the public domain or otherwise constitute open-source code, shareware
code or other materials that may be available for use by the FRE Parties without
a license or execution of a written agreement. The parties acknowledge that the
foregoing representation is not a legal opinion as to title or the adequacy of
the rights being transferred hereunder for any purpose. For example, the FRE
Parties make no
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representation as to the scope of any claim that may be allowed based on the
applications that constitute the Assigned Patents or whether any patents will
issue based on such applications.
Section 3.09. EMPLOYEES. (a) SCHEDULE 6.01(B) contains a complete and
accurate list of all directors, officers and employees of Ignition that are
Transferring Employees and the position, title and current remuneration
(including salary and bonus) provided to each such employee as of the date
indicated. None of such employees is represented by any labor organization and,
to the Knowledge of the FRE Parties, there is no organizing activity involving
such employees pending or threatened by any labor organization or group of such
employees. Ignition is not a party to or otherwise subject to any collective
bargaining agreement governing the wages, hours or terms of employment of
Ignition.
(b) Except as set forth on SCHEDULE 3.09(B), there are no pending
claims and, to the Knowledge of the FRE Parties, no threatened claims by or on
behalf of any of the Ignition Employees under any federal, state or local labor
or employment laws or regulations. Except as set forth on SCHEDULE 3.09(B), the
FRE Parties warrant that, to their Knowledge, since May 21, 2001 Ignition has
complied with all applicable laws, rules and regulations related to their
employment.
Section 3.10. FINANCIAL STATEMENTS. The FRE Parties have delivered to
Purchaser the following financial statements (the "FINANCIAL STATEMENTS"): (a)
an unaudited balance sheet of Ignition as of December 31, 2002, and the related
unaudited statements of income and cash flows for the fiscal year then ended, in
each case certified by Ignition's chief financial officer as set forth on
SCHEDULE 3.10; and (b) an unaudited balance sheet of Ignition as of October 31,
2003 (the "INTERIM BALANCE SHEET") and the related unaudited statements of
income and cash flows for the ten (10) months then ended, in each case certified
by Ignition's chief financial officer as set forth on SCHEDULE 3.10. To the
knowledge of the chief financial officer of Ignition, such Financial Statements
are accurate in all material respects, have been prepared in accordance with
Ignition's accounting practices, policies and procedures, and were derived from
the accounting records of Ignition; PROVIDED that no FRE Party makes any
representation and warranty that the Financial Statements have been wholly
prepared in accordance with generally accepted accounting principles.
Section 3.11. FINANCIAL BOOKS AND RECORDS. The books of account and
other financial records of Ignition for the period related to the Financial
Statements, all of which have been made available to Purchaser, are complete and
correct and represent actual, bona fide transactions and have been maintained in
accordance with Ignition's business practices.
Section 3.12. TAXES. There are no Liens, except Permitted Liens, on
any of the Purchased Assets that arose in connection with any failure (or
alleged failure) to pay any Tax, and the FRE Parties have no Knowledge of any
basis for the assertion of any claims attributable to Taxes that, if adversely
determined, would result in any such Lien.
Section 3.13. INSURANCE. SCHEDULE 3.13 contains a complete and
accurate list (setting forth the applicable deductible amounts) of all insurance
policies insuring Ignition or the Purchased Assets.
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Section 3.14. AUTHORIZATIONS. To the Knowledge of the FRE Parties,
SCHEDULE 3.14 contains a complete and accurate list of all Authorizations from
Governmental Authorities that Ignition possesses as of the Closing Date that
relate to the Purchased Assets or the Business.
Section 3.15. LEASED REAL PROPERTY. To the Knowledge of the FRE
Parties, the operations of Ignition on any real property subject to a lease
agreement included among the Assigned Contracts do not violate any applicable
building code, zoning requirement, pollution control ordinance or any statute
applicable to such real property. Neither FRE Party has commenced, nor has
either FRE Party received written notice of the commencement of, any proceeding
that would affect the present zoning classification of such leased real
property.
Section 3.16. ACCOUNTS RECEIVABLE. SCHEDULE 3.16 provides a complete
and accurate schedule of the accounts receivable of Ignition as of November 30,
2003, together with an accurate aging of these accounts. These accounts
receivable arose from valid sales made or services performed in the ordinary
course of business and to the Knowledge of the FRE Parties, at November 30,
2003, were collectible at their full amount and were not subject to any
counterclaim or setoff except to the extent reserved against in the Interim
Balance Sheet (which reserves are, to the Knowledge of the FRE Parties, adequate
and calculated consistent with the past practices of Ignition).
Section 3.17. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in SCHEDULE 3.17, since November 30, 2003, Ignition has conducted the
Business only in a reasonable and prudent manner in accordance with past
practices and there has been:
(a) no change in the Accounts Receivable or accounts payable of
Ignition other than changes incurred in the ordinary course of the Business in
accordance with past practices, except with respect to those intercompany
transfers from Xxxxxxx Mac to Ignition;
(b) no cancellation, waiver, settlement or release of any claims,
rights, causes of action or rights of set-off relating to any of the Purchased
Assets, except with respect to those intercompany transfers from Xxxxxxx Mac to
Ignition; and
(c) no occurrence of a fact or condition that has had, or that would
reasonably be expected to have, a Material Adverse Effect; PROVIDED that,
notwithstanding the foregoing, it is understood by the Parties that since
November 30, 2003, Ignition may have ceased to enter into new customer
relationships;
Section 3.18. NO BROKERS. No Person has acted directly or indirectly
as a broker, finder or financial advisor for either FRE Party in connection with
the transactions contemplated by this Agreement, and no Person is entitled to
any fee or commission as a result of the consummation of the transactions
contemplated by this Agreement based on any agreement, arrangement or
understanding made by or on behalf of either FRE Party.
Section 3.19. WARRANTIES. There are no warranties applicable to
products sold or licensed by Ignition except as included in the Assigned
Contracts. There is no action, suit, proceeding or claim of any kind pending or,
to the Knowledge of either FRE Party, threatened under any such warranty,
expressed or implied.
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Section 3.20. FRAUDULENT TRANSFERS. The transactions contemplated by
this Agreement are not intended to hinder, delay or defraud any entity to which
either of the FRE Parties are or become, on or after the Closing Date, indebted.
Each FRE Party (a) is solvent, and will remain solvent after giving effect to
the transactions contemplated hereby, (b) is not, and after giving effect to the
transactions contemplated hereby will not be, engaged in a business for which
its remaining property constitutes or will constitute an unreasonably small
capital; and (c) does not have or intend to incur, or have reason to believe
that it will incur, Liabilities that are or after giving effect to the
transactions contemplated hereby will be beyond its ability to pay as they
become due in the ordinary course of business.
Section 3.21. DISCLOSURE. To the Knowledge of the FRE Parties, no
representation or warranty made by either FRE Party in this Agreement (including
the Schedules related thereto) contains any untrue statement of a material fact
or omits to state a material fact necessary to make any such representation or
warranty, in light of the circumstances in which it was made, not misleading.
Section 3.22. LIMITATION OF REPRESENTATIONS. Except for the
representations and warranties contained in this Article III, (a) neither of the
FRE Parties nor any other Person has made any representation or warranty,
express or implied, at law or in equity, on behalf of either of the FRE Parties
or any of their respective Representatives regarding Ignition, the Purchased
Assets or the Business (or the value of any of them) or the transactions
contemplated by this Agreement and (b) each of the FRE Parties hereby disclaims
any such representation or warranty, notwithstanding the delivery or disclosure
to Purchaser, its Representatives or any other Person of any information,
documentation or other materials, including any projections, budgets or
estimates.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE III, THE PURCHASED
ASSETS AND THE ASSUMED LIABILITIES ARE TRANSFERRED "AS IS," "WHERE IS" AND,
SUBJECT TO THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III,
WITH ALL FAULTS AND WITHOUT ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR
NATURE WHATSOEVER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AND IN PARTICULAR,
WITHOUT ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, VALUE,
MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE OR WARRANTY
REGARDING THE USE OF ANY OF THE PURCHASED ASSETS, OR THAT THEIR AVAILABILITY
WILL BE UNINTERRUPTED, THAT THEY WILL BE ERROR FREE OR THAT CERTAIN RESULTS MAY
BE OBTAINED FROM THEIR USE, OR THAT THE PURCHASED ASSETS WILL CONFORM TO ANY
DESCRIPTION THEREOF PROVIDED BY EITHER FRE PARTY.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to each of the FRE Parties as
follows:
Section 4.01. ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Washington
and has full corporate power and authority to carry on its business as it is
presently being conducted.
Section 4.02. CORPORATE AUTHORIZATION. Purchaser has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Purchaser of
this Agreement has been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and (assuming the due authorization, execution and delivery by the FRE
Parties) constitutes the valid and binding obligation of Purchaser, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity (regardless whether enforcement is in a proceeding in
equity or at law).
Section 4.03. NO CONFLICTS. The execution, delivery and performance by
Purchaser of this Agreement, the consummation by Purchaser of the transactions
contemplated by this Agreement and the compliance by Purchaser with its
obligations under this Agreement do not and will not directly or indirectly
(with or without notice, lapse of time or both):
(a) conflict with, or result in the breach of, any provision of
Purchaser's constitutive documents or any resolution adopted by the board of
directors or stockholders of Purchaser;
(b) violate any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any Governmental Authority having jurisdiction over
Purchaser or any of its properties, assets or operations; or
(c) conflict with, violate, result in the material breach or
termination, constitute a material default under, or give rise to any right of
termination or acceleration or right to increase the obligations or otherwise
modify the terms, or require any consent, approval or waiver by any party under,
any agreement or instrument to which Purchaser is a party or by which its assets
are bound, other than consents, approvals and waivers that have been obtained on
or before the Closing Date and those the failure of which to obtain,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
Section 4.04. GOVERNMENTAL CONSENTS. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
Governmental Authority is necessary or required in connection with the due
authorization, execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated by this Agreement.
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Section 4.05. LITIGATION. There are no actions, suits or proceedings
pending or, to the Knowledge of Purchaser, threatened that would challenge,
prevent, delay or make illegal any of the transactions contemplated by this
Agreement before any Governmental Authority other than any actions, suits or
proceedings that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on Purchaser's ability to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
Section 4.06. NO BROKERS. No Person has acted directly or indirectly
as a broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement, and no Person is entitled to any
fee or commission as a result of the consummation of the transactions
contemplated by this Agreement based on any agreement, arrangement or
understanding made by or on behalf of Purchaser, other than SCM Capital Group
LLC, the fees, commissions and expenses of which shall be paid by Purchaser.
Section 4.07. TAX WITHHOLDING. Purchaser will not withhold Tax from or
in respect of any sum payable by Purchaser under this Agreement.
Section 4.08. ACKNOWLEDGEMENT OF LIMITATION OF WARRANTIES. Purchaser
is experienced and sophisticated with respect to the transactions contemplated
by this Agreement and has undertaken such investigation, and has been provided
with and has evaluated such documents and information, as it has deemed
necessary in connection with the execution, delivery and performance of this
Agreement. In entering into this Agreement, Purchaser is not relying on the
accuracy or completeness of any information or materials provided (whether in
writing or orally) by or on behalf of either of the FRE Parties or any of their
respective Representatives, except for the information and statements contained
in this Agreement (including the Schedules and Exhibits hereto). Without
limiting the generality of the foregoing, Purchaser acknowledges that, except to
the extent expressly set forth in Article III of this Agreement, no
representation or warranty has been made by or on behalf of either of the FRE
Parties or any of their respective Representatives with respect to any
information, documents or material provided or made available by either of the
FRE Parties or any of their respective Representatives to Purchaser or any of
its Representatives relating to Ignition, the Purchased Assets or the Business,
including any projections, estimates or budgets.
ARTICLE V
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 5.01. COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES.
Each of the Parties shall take or cause to be taken all actions and shall do or
cause to be done all things necessary under such Party's constitutive documents,
applicable law and regulations and under the Assigned Contracts to consummate
and make effective the transactions contemplated by this Agreement, and none of
the Parties shall take any action to hinder or prevent the consummation of the
transactions contemplated by this Agreement. Without limiting the foregoing,
each Party shall use its commercially reasonable efforts to obtain all
Authorizations necessary to permit the consummation of the transactions
contemplated by this Agreement.
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Section 5.02. CONSENTS FOR ASSIGNED CONTRACTS. (a) The FRE Parties
shall give notice to any third party, and the FRE Parties shall use their
commercially reasonable efforts to obtain the consent of any third party that is
required to assign or transfer to Purchaser, in accordance with the terms of
this Agreement, any Assigned Contract and any claim, right or benefit arising
thereunder or resulting therefrom. If a FRE Party is unable to obtain any such
consent after using commercially reasonable efforts to do so, such Assigned
Contract shall be excluded from the Purchased Assets being conveyed to Purchaser
hereunder, shall be deemed an Excluded Asset for purposes of this Agreement and
shall be set forth on SCHEDULE 5.02(A); PROVIDED, HOWEVER, that from the Closing
Date until January 31, 2004, the FRE Parties shall use their commercially
reasonable efforts to assist Purchaser in obtaining the consent to assignment or
transfer of any such Contract and, if such consent is obtained, such Contract
shall thereafter be deemed to be an Assigned Contract and a Purchased Asset.
Nothing in this Agreement shall be construed as an attempt to assign any
Contract that is by its terms non-assignable without the consent of the other
party thereto, unless and until such consent has been obtained.
(b) Xxxxxxx Mac expressly consents to the assignment to Purchaser of
the Xxxxxxx Mac Agreements. Xxxxxxx Mac agrees that (i) the Acquisition will not
constitute (A) a "Trigger Event" under the Source Code License Agreement
effective May 21, 2001 between Ignition and Xxxxxxx Mac, (B) an event of default
under the Pipeline Tools Software License and Services Agreement, effective
November 1, 2001, between Ignition and Xxxxxxx Mac (the "PIPELINE TOOLS
AGREEMENT") or (C) an event of default, "Structure Change" or other adverse
event under the LockPoint Xtra Software License and Services Agreement,
effective January 1, 2003, between Ignition and Xxxxxxx Mac (the "LPX
AGREEMENT") and (ii) it will not require Purchaser to procure insurance with
respect to its performance under the FRE Agreements in type or amounts exceeding
the requirements set forth in Section 10(c) of the LPX Agreement (the
"INSURANCE") and Purchaser shall have forty-five (45) days from the Closing to
obtain the Insurance, PROVIDED that, with respect to clauses (i) and (ii) of
this Section 5.02(b), Purchaser shall use its commercially reasonable efforts to
procure the Insurance within such period. The Parties agree that on or as
promptly as practicable after the Closing Date, Section 9(c) of the Pipeline
Tools Agreement shall be amended to provide that Purchaser shall be required to
procure the Insurance.
Section 5.03. PUBLIC ANNOUNCEMENTS. (a) Except as required by
applicable law or regulation, any Governmental Authority in connection with a
proceeding, or briefings with or before the United States Congress (or any
committee or subcommittee thereof) or any other Governmental Authority, neither
of the FRE Parties or any of their respective Affiliates shall, without the
prior written consent of Purchaser, nor Purchaser or its Affiliates shall,
without the prior written consent of Xxxxxxx Mac, in each case which consent
shall not be unreasonably withheld or delayed, make any public announcement or
issue any press release with respect to the transactions contemplated by this
Agreement. Prior to making any public disclosure required by applicable law, the
disclosing party shall consult with the other Parties, to the extent feasible,
as to the content and timing of such public announcement or press release.
(b) Notwithstanding anything to the contrary, the Parties (including
their respective Representatives) may disclose to any and all Persons, without
limitation of any kind, the "tax treatment" and "tax structure" of the
transaction (as defined under Treasury Regulation ss.ss.1.6011-4 and 301.6112-1)
and all materials of any kind (including opinions or other federal
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income Tax analyses) that are provided to the Parties relating to such tax
treatment or tax structure, other than information the disclosure of which would
violate applicable securities laws.
ARTICLE VI
EMPLOYEE MATTERS; TRANSITION SERVICES
Section 6.01. EMPLOYEE MATTERS. (a) Ignition shall, on or before the
Closing Date, terminate all Ignition Employees (as defined below) and their
participation in any employee benefit plans of any FRE Party. Except as set
forth in this Section 6.01, the FRE Parties shall be solely responsible for any
Liabilities arising from any act, omission, contractual obligation or other
legal obligation alleged by any current or former Ignition Employee to arise out
of his or her employment with, or termination from, Ignition.
(b) Purchaser shall offer to employ those Ignition Employees
identified on SCHEDULE 6.01(B) and may (but shall not be obligated to) offer
employment, effective as of the Closing, to any and all non-salaried and
salaried employees of Ignition (but not of Xxxxxxx Mac) in active employment at
the Closing (the "IGNITION EMPLOYEES").
The names and the material terms of the employment (including the
facility where employed and the original hire date) of all Transferring
Employees (as defined below) are set forth on SCHEDULE 6.01(B). Each of the FRE
Parties shall cooperate with Purchaser in communicating any offers of employment
to such Ignition Employees and in no case will either of the FRE Parties
interfere with the hiring of any such Ignition Employees.
(c) Each of the FRE Parties waives as of the Closing Date any
noncompetition restriction to which any Ignition Employee may be subject only to
the extent that it would prevent any such Ignition Employee from accepting
Purchaser's offer of employment as provided herein.
(d) As soon as practicable after the Closing, and subject to
compliance with all applicable laws and regulations, Purchaser will use its
commercially reasonable efforts to permit all Ignition Employees to whom offers
of employment are made and who accept such offers and commence employment with
Purchaser or its subsidiaries effective as of the Closing Date (collectively,
the "TRANSFERRING EMPLOYEES") to participate in the Plans of Purchaser or its
subsidiaries that are designated by Purchaser (the "PURCHASER PLANS") as
applicable to the Transferring Employees at the level of participation
designated by Purchaser, which designations of the Purchaser Plans and level of
participation shall be made by Purchaser in its discretion based on the criteria
Purchaser would apply to similarly-situated employees of Purchaser or its
subsidiaries and otherwise in accordance with this Section 6.01(d). Purchaser
shall, or shall cause the applicable subsidiary to: (i) give credit to
Transferring Employees for purposes of eligibility to participate and vesting
(but not necessarily for benefit accrual purposes) in the Purchaser Plans for
all service by Transferring Employees with the FRE Parties prior to the Closing,
to the extent such service was taken into account for each such purpose by the
FRE Parties under the corresponding FRE Party Plan in which such Transferring
Employee was an active participant immediately prior to the Closing; (ii) waive
any exclusions for pre-existing conditions under the Purchaser Plans that are
group health plans to the extent required by the
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Health Insurance Portability and Accountability Act; (iii) waive any waiting
period under each Purchaser Plan to the extent that such period exceeds the
corresponding waiting period under the corresponding FRE Party Plan in which
such Transferring Employee was an active participant immediately prior to the
Closing (after taking into account the service credit provided for herein for
purposes of satisfying such waiting period); and (iv) to the extent permitted by
the insurance company providing health coverage under the applicable Purchaser
Plan, provide such Transferring Employee with credit under any group health plan
for any deductibles paid by such Transferring Employee prior to the Closing (to
the same extent such credit was given under the applicable FRE Party Plan in
which he or she participated prior to the Closing for the coverage period under
the Purchaser Plan in which he or she is hired by Purchaser) and PROVIDED that
the FRE Parties provide a listing of such deductibles as promptly as practicable
after Purchaser hires such Transferring Employee) in satisfying any applicable
deductible requirements under each Purchaser Plan for the Plan year that
includes such transfer; PROVIDED that the foregoing shall not apply to the
extent it would result in duplication of benefits.
(e) Effective as of the Closing, all Transferring Employees shall
cease to be covered by the welfare plans maintained by or for the benefit of
employees of either of the FRE Parties, including plans, programs, policies and
arrangements that provide medical and dental coverage, life and accident
insurance, disability coverage and vacation and severance pay (collectively,
"WELFARE PLANS"), except to the extent otherwise provided in the applicable
Welfare Plan or required by applicable law. The respective FRE Party shall
retain responsibility for all Welfare Plan claims incurred by Transferring
Employees (i) under any medical, dental or health plans for treatment or service
rendered prior to the Closing; (ii) under any life insurance plans with respect
to deaths occurring prior to the Closing; and (iii) any other payments or
benefits due and payable but not paid on or prior to the Closing under any other
Welfare Plans. For purposes of this paragraph, a claim shall be deemed to have
been incurred on the date on which medical or other treatment was rendered and
not the date of the inception of a related illness or injury or the date of
submission of a claim therefor.
(f) The Assumed Liabilities shall include Liabilities to those
Transferring Employees set forth on SCHEDULE 6.01(F) (the "TEMPORARY EMPLOYEES")
pursuant to any contract or agreement between such Temporary Employee and a FRE
Party that provides for severance or other similar payments; PROVIDED that
Liability for such payments shall not be deemed an Assumed Liability unless and
until the FRE Parties provide to Purchaser immediately available funds in the
amount of such payments within ten (10) business days of the FRE Parties'
receipt of notice from Purchaser that such a payment has become due and payable.
Purchaser shall pay, or shall cause its subsidiary to pay, severance equivalent
to (i) two weeks' pay for each year or fraction thereof of continuous service to
any of the Transferring Employees set forth on SCHEDULE 6.01(F)(I) and (y) one
month pay for each year or fraction thereof of continuous service to any of the
Transferring Employees set forth on SCHEDULE 6.01(F)(II), in each case for any
such Transferring Employee whose employment Purchaser or its subsidiary
terminates prior to June 30, 2004, PROVIDED that no such severance shall be due
to any Transferring Employee who resigns or whose employment is terminated as a
result of poor work performance, misconduct, insubordination, neglect of job
duties or responsibilities, violation of applicable workplace rules or policies
or other similar "for cause" reasons. Except as set forth on SCHEDULE
6.01(F)(III), Purchaser agrees that prior to any severance or other similar
payments being paid to any Transferring Employee, it shall have received a
release in the form of EXHIBIT F executed by
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such Transferring Employee. The Assumed Liabilities shall include Liabilities to
those Transferring Employees set forth on SCHEDULE 6.01(F)(III) pursuant to any
contract or agreement between such Transferring Employee and a FRE Party that
provides for retention or other similar payments; PROVIDED that Liability for
such payments shall not be deemed an Assumed Liability unless and until the FRE
Parties provide to Purchaser immediately available funds in the amount of such
payments within ten (10) business days of the FRE Parties' receipt of notice
from Purchaser that such a payment has become due and payable. Any amounts
provided by the FRE Parties to Purchaser pursuant to this Section 6.01(f) shall
be transmitted on a gross basis (inclusive of Purchaser's employment tax
liability with respect to such payments) and Purchaser shall make the
appropriate Tax withholding from such amounts.
Section 6.02. TRANSITION SERVICES. (a) From the Closing Date until
April 1, 2004, Purchaser shall provide designated office space to the
individuals listed on SCHEDULE 6.02 in addition to permitting access to all
common areas available to Purchaser in such office facility. Purchaser shall
provide the following services: (a) telephone, DSL and fax connectivity through
Purchaser and associated technical support by way of providing one analog line
for a fax machine for use by all of such individuals and one digital line for
phone for each of such individuals; (b) basic hardware-related computer and
technical support; and (c) permitted access to a Bloomberg T-1 line, in each
case in a manner not to disrupt the business of Purchaser and not to exceed the
levels provided to such individuals by Ignition prior to the Closing Date.
(b) Until the earlier of (i) such time as the Master Commercial
Agreement between Xxxxxx Risk Management Services Inc. and Xxxxxx Decisions
Systems Inc., dated as of May 21, 2001, as amended (the "TRMS AGREEMENT"), is
assigned to Purchaser and (ii) the termination of the TRMS Agreement by either
party thereto pursuant to its terms, Purchaser agrees that Purchaser shall
provide services on behalf of Ignition to Xxxxxx Risk Management Services Inc.
as if the TRMS Agreement had been assigned to, and assumed by, Purchaser at no
expense to either FRE Party; PROVIDED that as long as Purchaser is providing
such services, all payments under the TRMS Agreement shall be made directly to
Purchaser or shall be remitted by the FRE Parties to Purchaser when received by
the FRE Parties.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
Section 7.01. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to complete the transactions contemplated by this
Agreement is subject to the satisfaction, at or before the Closing, of all of
the following conditions (subject to the right of Purchaser to waive any such
condition by notice to the FRE Parties in writing):
(a) CORPORATE APPROVALS. This Agreement and the transactions
contemplated hereby shall have been approved by the board of directors of
Purchaser.
(b) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of each of the FRE Parties set forth in Article III that are
qualified as to materiality shall have been true and correct in all respects,
and those that are not so qualified shall have been true and correct in all
material respects, on and as of the date hereof and as of the Closing as if
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made on the Closing Date (except where such representation and warranty speaks
by its terms as of a different date, in which case it shall be true and correct
as of such date). Each of the FRE Parties shall have performed in all material
respects all obligations and complied with all agreements, undertakings,
covenants and conditions required hereunder to be performed by it at or prior to
the Closing. Each of the FRE Parties shall have delivered to Purchaser at the
Closing a certificate in form and substance reasonably satisfactory to Purchaser
dated the Closing Date and signed by an officer of such FRE Party to the effect
that the conditions set forth in this Section 7.01(b) have been satisfied.
(c) COMPLIANCE WITH LAWS; NO ADVERSE ACTION OR DECISION. There shall
not be in effect any law, order, writ, injunction, decree, award, statute, rule
or regulation entered by a Governmental Authority of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement. No Governmental Authority shall
have instituted any suit or proceeding that seeks to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement or that affect adversely the right of Purchaser to own the Purchased
Assets.
(d) CONSENTS. All Authorizations from any Governmental Authority
necessary to the operation of the Business or required for or in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall have been obtained or made,
other than those the failure of which to receive or obtain would not reasonably
be expected to have a Material Adverse Effect.
(e) NO MATERIAL ADVERSE EFFECT. There shall not exist any fact or
condition that has had, or would reasonably be expected to have, a Material
Adverse Effect.
(f) CASH PAYMENT. In consideration for performing services and
otherwise satisfying its obligations under the Assigned Contracts identified as
Customer Agreements on Schedule 2.01(c), Purchaser shall have received from the
FRE Parties $1,000,000 by wire transfer in immediately available funds, to an
account designated at least two (2) business days before the Closing in writing
by Purchaser.
Section 7.02. CONDITIONS TO THE OBLIGATION OF THE FRE PARTIES. The
obligation of the FRE Parties to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, at or before the Closing, of the
following conditions (subject to the right of each FRE Party to waive any such
condition by notice to Purchaser in writing):
(a) CORPORATE APPROVALS. This Agreement and the transactions
contemplated hereby shall have been approved by the respective board of
directors of each FRE Party.
(b) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of Purchaser set forth in Article IV that are qualified as to
materiality shall have been true and correct in all respects, and those that are
not so qualified shall have been true and correct in all material respects, on
and as of the date hereof and as of the Closing as if made on the Closing Date
(except where such representation and warranty speaks by its terms as of a
different date, in which case it shall be true and correct as of such date).
Purchaser shall have performed in all material respects all obligations and
complied with all agreements,
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undertakings, covenants and conditions required by it to be performed at or
prior to the Closing. Purchaser shall have delivered to the FRE Parties at the
Closing a certificate in form and substance reasonably satisfactory to the FRE
Parties dated the Closing Date and signed by an officer of Purchaser to the
effect that the conditions set forth in this Section 7.02(b) have been
satisfied.
(c) COMPLIANCE WITH LAWS; NO ADVERSE ACTION OR DECISION. There shall
not be in effect any law, order, writ, injunction, decree, award, statute, rule
or regulation entered by a Governmental Authority of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement. No Governmental Authority shall
have instituted any suit or proceeding that seeks to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement.
(d) CONSENTS. All Authorizations from any Governmental Authority
required for or in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement shall
have been obtained or made, other than those the failure of which to receive or
obtain would not reasonably be expected to have a material adverse effect on
Purchaser's ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby.
ARTICLE VIII
CLOSING
Section 8.01. DELIVERIES BY THE FRE PARTIES TO PURCHASER. At the
Closing, the FRE Parties shall deliver, or shall cause to be delivered, to
Purchaser the following:
(a) The Xxxx of Sale, duly executed by Ignition;
(b) The Assignment and Assumption Agreement, Copyright Assignment,
Domain Name Assignment, Patent Application Assignment and Trademark Assignment,
duly executed by Ignition;
(c) All other documents or instruments of sale, assignment, transfer
or conveyance reasonably requested by Purchaser to evidence the conveyance by
Ignition of the Purchased Assets;
(d) Payment of an amount (the "CHASE AMOUNT") equal to $776,950.38,
relating to the amount prepaid by Chase Manhattan Mortgage Co. to Ignition
pursuant to the LockPoint Xtra License and Services Agreement, dated as of
September 14, 2001, as amended by Amendment No. 1 dated December 31, 2001 and
Amendment No. 2 dated December 4, 2002, with certain adjustments as set forth in
SCHEDULE 8.01(D);
(e) Payment of $1,000,000 by wire transfer in immediately available
funds, to an account designated at least two (2) business days before the
Closing in writing by Purchaser, in consideration for performing services and
otherwise satisfying its obligations under the Assigned Contracts identified as
Customer Agreements on Schedule 2.01(c);
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(f) Certified resolutions of each FRE Party's board of directors
authorizing the execution and performance of this Agreement and the transactions
contemplated hereby;
(g) Certified resolutions of Ignition's sole stockholder approving
the sale of the Purchased Assets on the terms subject to the conditions set
forth in this Agreement;
(h) An opinion letter of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, outside
counsel to Xxxxxxx Mac, dated as of the Closing Date, in the form of EXHIBIT G;
and
(i) Complete machine-readable copies of each of the Ignition
production code products listed in Schedule 2.01(b) under the heading "Assigned
Software Code" in both source and object form, the former including all embedded
comments.
Section 8.02. DELIVERIES BY PURCHASER TO THE FRE PARTIES. At the
Closing, Purchaser shall deliver, or shall cause to be delivered, to the FRE
Parties the following:
(a) $1000, by certified check or by wire transfer in immediately
available funds to an account designated in writing by Ignition at least two
business days before the Closing;
(b) The Assignment and Assumption Agreement, Copyright Assignment,
Domain Name Assignment, Patent Application Assignment and Trademark Assignment,
duly executed by Purchaser;
(c) All other documents or instruments of sale, assignment, transfer
or conveyance reasonably requested by the FRE Parties to evidence the assumption
by Purchaser of the Assumed Liabilities;
(d) Certified resolutions of Purchaser's board of directors
authorizing the execution and performance of this Agreement and the transactions
contemplated hereby; and
(e) An opinion letter of Stoel Rives LLP, outside counsel to
Purchaser, dated as of the Closing Date, in the form of EXHIBIT H.
On the Closing Date, each Party shall deliver to the other Parties on the
Closing Date such other documents, certificates, schedules, agreements and
instruments explicitly called for by this Agreement.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01. FEES AND EXPENSES. Whether or not the Closing occurs,
except as otherwise expressly provided in this Agreement, each of the Parties
shall bear its own costs and expenses (including fees and disbursements of its
counsel, accountants, financial advisors
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and other experts) incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, each of the
other documents and instruments executed in connection with or contemplated by
this Agreement and the consummation of the transactions contemplated by this
Agreement. Purchaser is obligated to and will pay SCM Capital Group LLC for its
services.
Section 10.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each
representation or warranty in this Agreement or in the Schedules, certificates
or ancillary agreements delivered pursuant to this Agreement shall survive the
Closing for a period of twelve (12) months. Subject to Section 10.07, any claim
for indemnification under this Article X arising out of the inaccuracy or breach
of any representation or warranty must be made prior to the termination of the
applicable survival period; PROVIDED that with respect to any matter as to which
a claim is made pursuant to this Article X, the indemnification rights provided
for hereby will remain in effect until the matter is finally resolved and all
required indemnification payments have been made with respect thereto; and
PROVIDED FURTHER that with respect to any claim made within the claims period
set forth above, this Article X shall survive and remain in full force and
effect.
Section 10.03. INDEMNIFICATION. (a) Each of the FRE Parties, jointly
and severally, agrees to indemnify and hold harmless Purchaser and each of its
Representatives (collectively, the "INDEMNIFIED PURCHASER PARTIES") from and
against any and all losses, penalties, judgments, suits, costs, claims, damages
or liabilities or other expenses (less any proceeds of any insurance collected
by such Party but including reasonable attorneys' fees and disbursements)
(collectively, "LOSSES") that may be asserted against or suffered by any of the
Indemnified Purchaser Parties arising out of, in connection with or based upon
(i) the breach of any representation or warranty made by either of the FRE
Parties in this Agreement; (ii) the breach of any agreement or covenant made by
either of the FRE Parties in this Agreement, the Assignment and Assumption
Agreement, the Copyright Assignment, the Domain Name Assignment, the Patent
Application Assignment or the Trademark Assignment, or (iii) any claim made
against Purchaser with respect to any Excluded Asset or any Excluded Liability.
Subject to Section 10.07 and notwithstanding any provision to the
contrary, the FRE Parties shall have no liability with respect to claims under
this Section 10.03(a) unless the total of all Losses with respect to such
matters exceeds $100,000 (the "INDEMNIFICATION BASKET") and then only for the
amount of the excess of the Losses over such amount and the FRE Parties together
shall have no liability (for indemnification or otherwise) for any Losses that
exceed $1,000,000 (the "INDEMNIFICATION CAP"); PROVIDED, HOWEVER, that the
Indemnification Basket and the Indemnification Cap shall not apply to claims
under this Section 10.03(a) relating to or arising from any Excluded Asset or
any Liabilities of either FRE Party other than the Assumed Liabilities.
(b) Purchaser agrees to indemnify and hold harmless each FRE Party
and each of its Representatives (collectively, the "INDEMNIFIED FRE PARTIES")
from and against any and all Losses asserted against or suffered by any of the
Indemnified FRE Parties arising out of, in connection with or based upon (i) the
breach of any representation or warranty made by Purchaser in this Agreement;
(ii) the breach of any agreement or covenant made by Purchaser in this
Agreement, the Assignment and Assumption Agreement, the Copyright Assignment,
the
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Domain Name Assignment, the Patent Application Assignment or the Trademark
Assignment, or (iii) any claims against either of the Indemnified FRE Parties
subsequent to the Closing with respect to any Assumed Liability.
Subject to Section 10.07 and notwithstanding any provision to the
contrary, Purchaser shall have no liability with respect to claims under this
Section 10.03(b) unless the total of all Losses with respect to such matters
exceeds the Indemnification Basket and then only for the amount of the excess of
the Losses over such amount and Purchaser shall have no liability (for
indemnification or otherwise) for any Losses that exceed the Indemnification
Cap; PROVIDED, HOWEVER, that the Indemnification Basket and the Indemnification
Cap shall not apply to claims under this Section 10.03(b) relating to or arising
from any Purchased Asset or any Assumed Liability after the Closing.
(c) The Party making a claim for indemnification under this
Article X is, for the purposes of this Agreement, referred to as the
"INDEMNIFIED PARTY" and the Party against whom such claims are asserted under
this Article X is, for the purposes of this Agreement, referred to as the
"INDEMNIFYING PARTY". All claims by any Indemnified Party under this Article X
shall be asserted and resolved as follows:
(i) In the event that (A) any claim, demand or proceeding is
asserted or instituted by any party other than the Parties and their
Affiliates which could give rise to Losses for which an Indemnifying Party
would be liable to an Indemnified Party hereunder (such claim, demand or
proceeding, a "THIRD PARTY CLAIM") or (B) any Indemnified Party hereunder
shall have a claim to be indemnified by any Indemnifying Party hereunder
which does not involve a Third Party Claim (such claim, a "DIRECT CLAIM"),
the Indemnified Party shall with reasonable promptness send to the
Indemnifying Party a written notice specifying the nature of such claim or
demand and the amount or estimated amount (which estimate shall not be
conclusive of the final amount of such claim and demand) (a "CLAIM
NOTICE"); PROVIDED, HOWEVER, that any failure to give such notice will not
waive any rights of the Indemnified Party except to the extent that the
rights of the Indemnifying Party are actually prejudiced.
(ii) In the event of a Third Party Claim, the Indemnifying Party
may, and upon request of the Indemnified Party shall, retain counsel of
its choice, reasonably acceptable to the Indemnified Party, to represent
the Indemnified Party and any others the Indemnifying Party may reasonably
designate in connection with such claim or demand and shall pay the
reasonable fees and disbursements of such counsel with regard thereto. In
the event that an Indemnifying Party shall retain such counsel, an
Indemnified Party shall have the right to retain its own counsel but the
reasonable fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (A) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel or (B) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one such firm for all such Indemnified
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Parties. If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel in
contesting any claim or demand which the Indemnifying Party defends, or,
if appropriate and related to the claim in question, in making any
counterclaim against the Person asserting the Third Party Claim or demand,
or any cross-complaint against any Person. No claim or demand may be
settled without the consent of the Indemnifying Party, which consent will
not be unreasonably withheld. Unless the Indemnifying Party shall have
agreed in writing that any and all Losses to the Indemnified Party related
to a claim or demand are fully covered by the indemnities provided herein,
no such claim or demand may be settled without the consent of the
Indemnified Party, which consent will not be unreasonably withheld.
(iii) In the event of a Direct Claim, unless the Indemnifying Party
notifies the Indemnified Party within thirty (30) days of receipt of a
Claim Notice that it disputes such claim, the amount of such claim shall
be conclusively deemed a liability of the Indemnifying Party hereunder and
shall be paid to the Indemnified Party promptly; PROVIDED, HOWEVER, that
if a final, non-appealable judicial determination is made that an
Indemnified Party is not entitled to any such payment, it shall promptly
repay the appropriate amounts to the Indemnifying Party.
Section 10.04. CERTAIN TAX MATTERS.
(a) TAXES. As between the FRE Parties, on the one hand, and
Purchaser, on the other hand, (i) the FRE Parties shall be responsible for and
shall pay, and shall indemnify and hold harmless Purchaser and its Affiliates
against, all Taxes of Ignition or applicable to the Business or Purchased Assets
to the extent attributable to taxable years or periods (or portions thereof)
ending on or prior to the Closing Date and (ii) Purchaser shall be responsible
for and shall pay, and shall indemnify and hold harmless the FRE Parties and
their respective Affiliates against, all Taxes of Purchaser applicable to the
Business or the Purchased Assets to the extent attributable to taxable years or
periods (or portions thereof) ending after the Closing Date. Each of the FRE
Parties and Purchaser shall be responsible for its own income and franchise
taxes, if any, arising from the transactions contemplated by this Agreement.
(b) TRANSFER TAX. Purchaser shall pay directly, or reimburse the
FRE Parties promptly upon demand and proof of payment for, any material Transfer
Taxes that may be imposed upon or payable or collectible or incurred in
connection with this Agreement and the transactions contemplated by this
Agreement, including the Acquisition.
SECTION 10.05. LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY PARTY
HAVE ANY LIABILITY TO ANOTHER PARTY OR ANY OTHER PERSON ENTITLED TO MAKE A CLAIM
UNDER THIS AGREEMENT FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY
OR PUNITIVE DAMAGES (INCLUDING SUCH DAMAGES FOR LOST PROFITS OR REVENUES, INJURY
TO PROPERTY OR REPUTATION, LOSS OF DATA, LOSS OF USE OR CLAIMS OF THIRD
PARTIES), ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR THE
PERFORMANCE OR BREACH HEREOF OR THE SUBJECT MATTER HEREOF, REGARDLESS OF THE
FORM OF ACTION, WHETHER BASED ON STATUTE OR
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ARISING IN CONTRACT, INDEMNITY, WARRANTY, STRICT LIABILITY OR TORT (INCLUDING
NEGLIGENCE), AND REGARDLESS OF WHETHER SUCH PARTY HAS REASON TO KNOW OR IN FACT
KNOWS OF THE POSSIBILITY OF SUCH DAMAGES.
Section 10.06. TREATMENT OF CLAIMS FOR INDEMNITY. The Parties agree
that any payment under Section 10.03 shall be treated by the Parties as an
adjustment to the Purchase Price.
Section 10.07. EXCLUSIVE REMEDY. The provisions of this Article X
shall constitute the sole and exclusive remedy of Purchaser, on the one hand,
and the FRE Parties, on the other, for any Losses suffered by either of them on
account of any breach by the other of any representation, warranty, agreement or
covenant set forth in this Agreement, except with respect to claims made within
24 months following the Closing Date based on the gross negligence or willful
breach of such Party, which claims shall not be subject to the limitations set
forth in Sections 10.02 and 10.03.
ARTICLE XI
INTELLECTUAL PROPERTY MATTERS
Upon Closing, the Parties agree that the following licenses, assignments
and covenants respecting intellectual property rights shall become effective and
binding on each of the respective Parties:
Section 11.01. LICENSE TO XXXXXXX MAC. The Parties acknowledge that,
pursuant to Section 2.01(c) hereto and the Assignment and Assumption Agreement
attached hereto as Exhibit A, at the Closing, Ignition will assign to Purchaser
and Purchaser will accept, among other things, subject to Section 11.02 hereto,
all of Ignition's rights and obligations under the Xxxxxxx Mac Agreements. For
the avoidance of doubt, Xxxxxxx Mac hereby consents to the assignment by
Ignition of the Xxxxxxx Mac Agreements to Purchaser to the extent such consent
is required under such agreements. Without limiting Purchaser's obligations as
assignee to the Xxxxxxx Mac Agreements or Xxxxxxx Mac's rights under the Xxxxxxx
Mac Agreements,
Purchaser hereby grants to Xxxxxxx Mac and Xxxxxxx Mac's Affiliates, effective
as of the Closing Date, a perpetual, non-exclusive, sublicensable, royalty-free,
fully paid-up, worldwide right and license to make, sell, offer for sale, import
and use (including, without limitation, the right to copy, modify, distribute,
display, enhance, and create derivative works from) any product, process or
service, including any software offerings and related maintenance, monitoring
and support functions, under any and all (i) Assigned Patents listed in Schedule
2.01(b), and (ii) copyrights and other intellectual property rights in any data
structures, user interfaces software or system design, and software or system
architecture included in the Assigned Copyrights, including the "look and feel"
of the foregoing items, provided that nothing herein shall be deemed to xxxxx
Xxxxxxx Mac the right to (a) use source code for the Assigned Software Code that
was not previously incorporated into a materially different Xxxxxxx Mac product;
or (b) sublicense any of the foregoing rights to any third party for use
independent of any product or service owned or licensed by Xxxxxxx Mac.
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Subject to the provisions of the Global Mutual Confidentiality Agreement
effective May 21, 2001 between Ignition and Xxxxxxx Mac ("Global Confidentiality
Agreement"), each Party agrees to maintain the confidentiality of the Assigned
Intellectual Property to the extent that the Assigned Intellectual Property
constitutes Confidential Information as defined in the Global Mutual
Confidentiality Agreement.
Notwithstanding anything to the contrary herein or in the Global Confidentiality
Agreement, Xxxxxxx Mac may use for any purpose any information retained in the
unaided memory of its employees who have had access to IMTS Information (as
defined in the Global Confidentiality Agreement) or other proprietary
information, software or technology of Ignition, provided, however, that the
foregoing right does not represent a license to use any patent, copyright, or
trademark right of Ignition. An employee's memory shall be deemed unaided if the
employee has not intentionally memorized the confidential or proprietary
information of the other Party for the purpose of subsequently using it. The
foregoing shall not be deemed to authorize Xxxxxxx Mac to disclose to third
parties the pricing, business, technical and strategic business plans of
Purchaser.
Notwithstanding anything to the contrary herein or in the Global Confidentiality
Agreement, Purchaser may use for any purpose any information retained in the
unaided memory of its employees who have had access to Xxxxxxx Mac Information
(as defined in the Global Confidentiality Agreement) or other proprietary
information, software or technology of Xxxxxxx Mac, provided that the preceding
provisions of this sentence (i) shall not apply to any Xxxxxxx Mac Information
that is the subject of Sections 3(a)(i) or 3(a)(iii) of the Global
Confidentiality Agreement, except to the extent that such information is
embedded in the Assigned Software Code in which case it will be used only in
connection with the use and modification of such code and in creating
derivatives thereof; and (ii) does not represent a license to use any patent,
copyright, or trademark right of Xxxxxxx Mac or its Affiliates. An employee's
memory shall be deemed unaided if the employee has not intentionally memorized
the confidential or proprietary information of the other Party for the purpose
of subsequently using it. The foregoing shall not be deemed to authorize
Purchaser to disclose to third parties the pricing, business, technical and
strategic business plans of Xxxxxxx Mac.
Section 11.02. LICENSE TO PURCHASER. Except for the assignment of
the Assigned Intellectual Property pursuant to Section 2.01(b) and subject to
the licenses expressly set forth herein, the Parties acknowledge that Xxxxxxx
Mac and its Affiliates retain title to all other intellectual property rights
that they possessed prior to the date hereof, including without limitation (i)
any intellectual property rights in any Xxxxxxx Mac Information that is the
subject of Sections 3(a)(i) or 3(a)(iii) of the Global Confidentiality
Agreement; (ii) any pre-existing copyrightable material owned by Xxxxxxx Mac
that is embedded in the Assigned Software Code; and (iii) any other ideas,
concepts and know-how used in the Business, including without limitation that
which is incorporated or reflected in the Assigned Software Code ("RETAINED
IP"). Ignition hereby assigns to Xxxxxxx Mac all right, title and interest in
and to the Retained IP effective as of the date hereof. Subject to and without
limiting Purchaser's obligations as assignee under the Xxxxxxx Mac Agreements
(except as set forth in the following sentence), Xxxxxxx Mac hereby grants to
Purchaser, effective as of the Closing Date, a perpetual, non-exclusive,
royalty-free, fully paid-up, worldwide right and license to use (including,
without limitation, the right to copy, modify, enhance, distribute, display and
create derivative works
27
from) the Retained IP to the extent incorporated into the software products
listed on Schedule 2.01(b) (the "RETAINED IP LICENSE"), subject to the
requirement to keep Xxxxxxx Mac Information that is the subject of Sections
3(a)(i) or 3(a)(iii) of the Global Confidentiality Agreement confidential in
accordance with the provisions of the Global Confidentiality Agreement. For
purposes of clarity, the parties hereby confirm that Purchaser will have the
right to use Retained IP to the extent permitted in the immediately preceding
sentence (and subject to the confidentiality provisions set forth in such
sentence), even if such Retained IP constitutes Xxxxxxx Mac Information under
the Global Confidentiality Agreement and such use would otherwise be prohibited
by the terms of the Global Confidentiality Agreement.
The Retained IP License shall be non-transferable and non-sublicenseable,
provided, however, that Purchaser shall have the right to (i) sublicense such
rights to its customers to the extent necessary to operate the Business,
provided that for the purpose of this sentence and Section 11.03(b) the Business
shall include future product offerings; and (ii) transfer or assign such rights
to any subsequent purchaser of substantially all of the Purchased Assets. In the
event of a corporate transaction involving a change of control, merger,
acquisition or statutory combination to which Purchaser is a party, the
surviving entity shall be entitled to use the Retained IP in the same manner as
the Purchaser under the Retained IP License.
Section 11.03. USE OF TRADEMARKS. (a) USE OF XXXXXXX MAC TRADEMARKS.
The Parties acknowledge that, prior to the date hereof and in addition to the
Assigned Trademarks, Ignition may from time to time have used certain trademarks
owned by or exclusively licensed to Xxxxxxx Mac or Xxxxxxx Mac's Affiliates
("XXXXXXX MAC TRADEMARKS") with or without any written license agreement
providing for such use. The Parties acknowledge that no rights in the Xxxxxxx
Mac Trademarks are being transferred to Purchaser hereunder and, as of the date
hereof, Purchaser shall have no right to further use any Xxxxxxx Mac Trademarks.
Notwithstanding the foregoing, to the extent that any of the Purchased Assets
that Purchaser acquires hereunder at the Closing display or contain any Xxxxxxx
Mac Trademarks, Purchaser hereby covenants that, within thirty (30) days from
the Closing Date, it will modify any such Purchased Assets so that they no
longer display or contain any Xxxxxxx Mac Trademarks and during such thirty day
period, Purchaser shall use its best reasonable efforts to include a disclaimer
on all such Purchased Assets acceptable to Xxxxxxx Mac that provides notice that
the products and services including the Xxxxxxx Mac Trademarks are no longer
affiliated with Xxxxxxx Mac or any of Xxxxxxx Mac's Affiliates. The Parties
further acknowledge that any past, present or future use of the Xxxxxxx Mac
Trademarks will inure to the sole and exclusive benefit of Xxxxxxx Mac (and the
Xxxxxxx Mac Affiliates).
(b) USE OF IGNITION TRADEMARKS. Ignition also may have certain
rights, including "common law" trademark rights, in the IGNITION, IGNITION
MORTGAGE TECHNOLOGY SOLUTIONS, IMTS, or other similar brands or names ("IGNITION
TRADEMARKS"). As between Purchaser and Xxxxxxx Mac, Purchaser shall have the
exclusive right to use the Ignition Trademarks after the Closing in connection
with the Business (as defined in Section 11.02 above); provided Xxxxxxx Mac and
Xxxxxxx Mac's Affiliates may continue to use the Ignition Trademarks as part of
the business name of any entity existing as of the Closing and for related
purposes. The parties agree that the Ignition Trademarks (and all associated
goodwill) will be assigned to Purchaser for $1.00 once Xxxxxxx Mac has completed
changing the names or has otherwise dissolved all entities that use any of the
Ignition Trademarks, which transition will
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occur no later than 180 days after the Closing. Until the longer period of (i)
six months, or (ii) three months after such time as Xxxxxxx Mac has completed
such transition, Purchaser shall include a disclaimer acceptable to Xxxxxxx Mac
on any and all products and services that use the Ignition Trademarks that
provides notice that the products, services and companies using the Ignition
Trademarks are not affiliated with Xxxxxxx Mac or any of Xxxxxxx Mac's
Affiliates.
ARTICLE XII
POST-CLOSING COVENANTS
Section 12.01. FURTHER ASSURANCES. Each Party shall, at the request
of the other Party, at any time and from time to time following the Closing,
promptly execute and deliver, or cause to be executed and delivered, to such
requesting Party all such further instruments and take all such further action
as may be reasonably necessary or appropriate to more effectively sell,
transfer, assign, deliver or otherwise convey, grant and confirm to Purchaser,
or to perfect or record Purchaser's title to or interest in, or to enable
Purchaser to possess and use, the Purchased Assets and to assume the Assumed
Liabilities or otherwise to confirm or carry out the provisions and intents of
this Agreement and the instruments delivered pursuant to this Agreement; in
furtherance thereof, the FRE Parties agree to make Xxxxxx Xxxx available until
January 31, 2004, during normal business hours, upon reasonable notice, and in a
manner not to disrupt the business of the FRE Parties, to assist Purchaser with
the transfer and assignment to Purchaser of the Accounts Receivable included in
the Purchased Assets and of payments received by Ignition after the Closing Date
to which Purchaser has the right to acquire pursuant to the terms of this
Agreement. The FRE Parties shall use their commercially reasonable efforts to
provide to Purchaser with copies of termination statements relating to the
termination of any and all Uniform Commercial Code financing statements filed
with respect to any of the Purchased Assets.
Section 12.02. COOPERATION. The FRE Parties and Purchaser jointly
covenant and agree that from and after the Closing Date, the FRE Parties and
Purchaser will cooperate with each other in defending or prosecuting any action,
suit, proceeding, investigation or audit of the other, including (a) the
preparation and audit of the FRE Parties' and Purchaser's Tax returns for all
periods, and (b) the preparation and audit of Ignition financial statements by
Purchaser's auditors, as and to the extent required by the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
and the completion of such audit in sufficient time to allow Purchaser to meet
its filing obligations thereunder; in furtherance thereof, the FRE Parties agree
to make Xx. Xxxx available until January 31, 2004, during normal business hours,
upon reasonable notice, and in a manner not to disrupt the business of the FRE
Parties, to assist with such preparation and audit, and the FRE Parties agree to
allocate a sufficient amount of Xx. Xxxx'x time to such preparation and audit;
PROVIDED, however, that in no event shall Xx. Xxxx be required to provide more
than 20 hours per week to such preparation and audit and PROVIDED, FURTHER, that
with respect to any of the actions in this sentence, the requesting Party shall
pay, or reimburse the other Party for, any out-of-pocket expenses incurred by
such other Party in providing such assistance and such assistance shall only be
given in a manner so as not to interfere with the normal conduct of the
assisting Party's business. In furtherance hereof, Purchaser and the FRE Parties
further covenant and agree to respond to all reasonable inquiries related to
such matters and to provide, to the extent possible, substantiation of
transactions and to
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make available and furnish appropriate documents and personnel in connection
therewith PROVIDED, HOWEVER, that such assistance shall only be given in a
manner so as not to interfere with the normal conduct of the assisting Party's
business. All information provided to Purchaser or the FRE Parties by the other
Party pursuant to Section 12.01 or Section 12.02 shall be treated in accordance
with the terms of the confidentiality agreement, dated as of August 15, 2003,
among Xxxxxxx Mac, Ignition and Purchaser (the "CONFIDENTIALITY AGREEMENT").
Section 12.03. NON-COMPETITION; NON-SOLICITATION. (a)
NON-COMPETITION. For a period of two years after the Closing Date, the FRE
Parties shall not, anywhere in the United States and its territories, directly
or indirectly license, sell, or transfer the pricing engine currently offered in
Xxxxxxx Mac's cash window to persons other than Affiliates of the FRE Parties
for the purpose of pricing mortgages; PROVIDED, HOWEVER, that nothing in this
paragraph shall prevent Xxxxxxx Mac from engaging in its business, which
includes but is not limited to providing pricing services to Xxxxxxx Mac or
Xxxxxxx Mac's customers through Loan Xxxxxxxxxx.Xxx, Project Enterprise and
Xxxxxxx Mac's cash window and such other platforms as Xxxxxxx Mac may develop
from time to time. For purposes of clarification, the Parties agree that the
foregoing sentence does not apply to a software system that is materially
different in purpose from the current purpose of such system.
(b) NON-SOLICITATION AND NON-HIRE. From the Closing Date until
December 31, 2004, the FRE Parties shall not solicit for employment any of the
Transferring Employees; PROVIDED that as used herein, the term "solicit" shall
not include (x) generalized searches not targeted at the Transferring Employees,
either, individually or as a group, for employees through (i) the publication of
an advertisement or other public announcement or (ii) the use of a recruiting or
employment agency to whom the name of an Transferring Employee has not been
provided, (y) responding to any Transferring Employee who contacts a FRE Party
on his or her own initiative without any direct solicitation by a FRE Party
other than pursuant to the generalized search referred to in clause(x) above;
PROVIDED, HOWEVER, that in no event will any FRE Party hire any Transferring
Employee prior to the 6 month anniversary of the Closing Date; and PROVIDED
FURTHER, HOWEVER, that the FRE Parties may solicit for employment and hire at
any time any Transferring Employee that has been terminated Without Cause (as
defined below) by Purchaser.
For purposes of this Section 12.03, Purchaser's decision to
terminate the employment of a Transferring Employee shall be deemed to be
"WITHOUT CAUSE" if it is unrelated to the Purchaser's enforcement of a generally
applicable standard of acceptable performance, attendance or conduct.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by facsimile or sent by first class mail, postage prepaid,
as follows:
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(i) If to Xxxxxxx Mac, to:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx, Xxxx Xxxx 000
XxXxxx, XX 00000
Attention: Vice President--Business Development
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx, Xxxx Xxxx 000
XxXxxx, XX 00000
Attention: Associate General Counsel-Strategic Initiatives
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
And a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(ii) If to Ignition, to:
Ignition Mortgage Technology Solutions, Inc.
c/o Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx, Xxxx Xxxx 000
XxXxxx, XX 00000
Attention: Assistant Secretary
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(iii) If to Purchaser, to:
LION, Inc.
0000 00xx Xxx. XX, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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With a copy to:
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
All notices shall be effective upon delivery.
Section 13.02. ENTIRE AGREEMENT. This Agreement (including the
Exhibits and Schedules hereto, which are incorporated herein and made a part
hereof), together with the Confidentiality Agreement, constitutes the entire
agreement and understanding between the Parties with respect to the Acquisition
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto, including the letter
agreement, dated September 24, 2003, between Purchaser and Xxxxxxx Mac.
Section 13.03. GOVERNING LAW. This Agreement shall be governed by,
and interpreted in accordance with, the laws of the State of New York applicable
to contracts made and to be performed entirely within that State, without
reference to its conflict of laws rules. Each of the Parties irrevocably
consents to the service of process in any action or proceeding hereunder by the
mailing of copies thereof by registered or certified airmail, postage prepaid,
to the address specified in Section 13.01. The foregoing shall not limit the
rights of any Party to serve process in any other manner permitted by applicable
law or regulation or to obtain execution of judgment in any other jurisdiction.
Section 13.04. WAIVER OF JURY TRIAL. EACH Party waives any right to
a trial by jury in any action or proceeding to enforce or defend any rights
under this Agreement, and agrees that any such action or proceeding shall be
tried before a court and not before a JURY.
Section 13.05. BINDING EFFECT; ASSIGNMENT; NO THIRD PARTY
BENEFICIARY. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, each of the Parties
hereto and its successors and assigns. Neither this Agreement nor any rights
hereunder shall be assignable by any Party without the prior written consent of
the other Parties. This Agreement is for the sole benefit of the Parties and
their respective successors and permitted assigns and nothing herein, express or
implied, is intended or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 13.06. COUNTERPARTS; EXECUTION. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to
constitute an original, but all of which together shall constitute one and the
same document.
Section 13.07. CONSTRUCTION AND REPRESENTATION BY COUNSEL. The
Parties acknowledge that in the negotiation and drafting of this Agreement they
have been represented by and relied upon the advice of counsel of their choice.
The parties affirm that their counsel have had a substantial role in the
drafting and negotiation of this Agreement and, therefore, the
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rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any Exhibit or Schedule attached hereto.
Section 13.08. WAIVERS AND AMENDMENTS. Any provision of this
Agreement may only be amended, modified, waived or supplemented in whole or in
part at any time by an agreement in writing among the Parties executed in the
same manner as this Agreement. No failure on the part of any Party to exercise,
and no delay in exercising, any right shall operate as waiver thereof, nor shall
any single or partial exercise by either Party of any right preclude any other
or future exercise thereof or the exercise of any other right.
Section 13.09. SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect, so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in a manner materially adverse to
any Party.
Section 13.10. ENFORCEMENT OF AGREEMENT. The Parties acknowledge and
agree that the other Parties would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their specific
terms and that any breach of this Agreement by any Party could not be adequately
compensated in all cases by monetary damages alone. Accordingly, in addition to
any other right or remedy to which a Party may be entitled, at law or in equity,
it shall be entitled to enforce any provision of this Agreement by a decree of
specific performance and to temporary, preliminary and permanent injunctive
relief to prevent breaches or threatened breaches of any of the provisions of
this Agreement, without posting any bond or other undertaking.
Section 13.11. DISCLOSURE SCHEDULE. Any disclosure made with
reference to one or more Sections of the Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant; PROVIDED that such relevance is reasonably apparent. In no event
shall the listing of such agreements or other matters in the Disclosure Schedule
be deemed or interpreted to broaden or otherwise amplify the FRE Parties'
representations or warranties, covenants or agreements contained in the Asset
Purchase Agreement. Disclosure of any matter in the Disclosure Schedule shall
not be deemed an admission that such matter is material or is required to be
disclosed. The inclusion of, or reference to, any item within any particular
section of the Disclosure Schedule does not constitute an admission by either
FRE Party that the item constitutes a violation of any order, writ, injunction,
decree, statue, rule or regulation of a Government Authority. The headings
contained in the Disclosure Schedule are for convenience of reference only and
shall not be deemed to modify or influence the interpretation of the information
contained in the Disclosure Schedule or this Agreement.
33
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the Parties by
their respective duly authorized officers, all as of the date first above
written.
FEDERAL HOME LOAN MORTGAGE CORPORATION
By: /s/ XXXXXX XXXXXXX
Name: Xxxxxx Xxxxxxx
Title: VP Change Management
IGNITION MORTGAGE TECHOLOGY SOLUTIONS, INC.
By: /s/ XXXXXX X. XXXXXX, XX.
-------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Operating Officer
LION, INC.
By: /s/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: President
34
LIST OF EXHIBITS*
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Assignment of Copyrights
Exhibit C Form of Assignment of Domain Names
Exhibit D Form of Assignment of Patent Applications
Exhibit E Assignment of Trademarks
Exhibit F Agreement and Release of Claims
Exhibit G Cleary, Gottlieb, Xxxxx & Xxxxxxxx Legal Opinion
Exhibit H Stoel Rives LLP Legal Opinion
* LION, Inc. agrees to furnish copies of these Exhibits to the Securities and
Exchange Commission upon request.
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LIST OF SCHEDULES*
Schedule 1.01 Knowledge of the FRE Parties
Schedule 1.02 Knowledge of Purchaser
Schedule 2.01(a) Assigned Personal Property
Schedule 2.01(b) Assigned Intellectual Property
Schedule 2.01(c) Assigned Contracts
Schedule 2.01(d) Books and Records Related to the Business
Schedule 2.01(e) Assigned Prepaid Expenses
Schedule 2.02 Excluded Assets
Schedule 3.01 Jurisdiction in which Ignition is Qualified as
a Foreign Corporation
Schedule 3.05 Litigation; Compliance with Laws
Schedule 3.07 Written Notices of Termination
Schedule 3.09(b) Employee Claims
Schedule 3.10 Form of Financial Statements Certification
Schedule 3.13 Ignition Insurance Policies
Schedule 3.14 Authorizations
Schedule 3.16 Accounts Receivable
Schedule 3.17 Absence of Certain Changes and Events
Schedule 5.02(a) Contracts Where Consent for Assignment Has Not Been
Obtained as of the Closing Date
Schedule 6.01(b) Transferring Employees
Schedule 6.01(f) Temporary Employees
Schedule 6.01(f)(i) Two Weeks of Severance for Each Year or Fraction of a Year
of Service
1
LIST OF SCHEDULES - CONTINUED
Schedule 6.01(f)(ii) One Month of Severance for Each Year or Fraction of a Year
of Service
Schedule 6.01(f)(iii) Retention Payments
Schedule 6.02(a) Transition Services
Schedule 8.01(d) Chase Amount and Adjustments
* LION, Inc. agrees to furnish copies of these Schedules to the Securities and
Exchange Commission upon request.
2
