This settlement will not affect the merger consideration to be paid to stockholders of Insignia in connection with the proposed merger between Insignia and CB Richard Ellis, an affiliate of CBRE Holding, or the timing of the special meeting of stockholders of Insignia scheduled for July 22 to vote upon a proposal to adopt the merger agreement. If the merger is approved, the closing of the merger is expected to occur on July 23.If the sale to Island Fund is completed prior to the merger and certain conditions in the merger agreement are satisfied, the consideration in the merger will be increased from $11 to $11.156 per share of common stock of Insignia.
The parties expect to enter into a memorandum of understanding reflecting their agreement in principle within the next few days.
"It was all very amicable and relatively easy to resolve," an Insignia spokesperson tells GlobeSt.com. He notes that the SEC was satisfied with the level of disclosure, but the stockholders expressed a need for more.
In connection with this settlement, Insignia agreed to provide additional information to its stockholders. In return, the plaintiffs agreed to the dismissal of the amended consolidated complaint, filed June 30, and to withdraw all motions filed in connection with the complaint. In addition, Insignia agreed to pay the legal fees and expenses of plaintiffs' counsel in an amount to be approved by the court. This payment will not affect the amount of merger consideration to be paid in the merger. The settlement is subject to the approval of the Court of Chancery of the State of Delaware, New Castle County.
Insignia and CBRE Holding deny the allegations in the complaint and have agreed to settle in order to avoid costly litigation and eliminate the risk of any delay to the closing of the merger. Those allegations included that the special committee of the board of directors of Insignia failed to meaningfully represent the interests of the public stockholders of Insignia by agreeing to the terms of the purchase agreement with Island Fund without having an independent third party appraisal. They also claimed that the impact of Farkas' employment agreement and benefits on the merger consideration were not appropriately discussed or considered. Plaintiffs also alleged that the proxy statement was materially false and misleading for various reasons, including the failure to disclose any meaningful information concerning the real estate investment assets being sold, the failure to provide sufficient information regarding the other industry participant with whom Insignia has had contacts concerning a potential business combination, and the failure to disclose in meaningful fashion the facts surrounding the extension of Farkas' employment agreement signed in December 2002.
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