AGREEMENT
FOR PURCHASE AND SALE OF ASSETS
BY AND AMONG
MOORE NORTH AMERICA, INC., SELLER
VISTA DMS, INC., PURCHASER AND
VISTA INFORMATION SOLUTIONS, INC., PARENT
TABLE OF CONTENTS PAGE
ARTICLE I THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . .
. .2
1.1. Purchase and Sale of Purchased Assets . . . . . . . . . . . . . .
. .2
1.2. Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . .
. .2
1.3. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . .
. .3
1.4. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . .
. .4
1.5. Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . .
. .5
1.6. Assignment of Contracts . . . . . . . . . . . . . . . . . . . . .
. .5
1.7. Bulk Transfer . . . . . . . . . . . . . . . . . . . . . . . . . .
. .6
ARTICLE II CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . .
. .6
2.1. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . .
. .6
2.2. Payment of Consideration. . . . . . . . . . . . . . . . . . . . .
. .6
2.3. Closing Price Protection. . . . . . . . . . . . . . . . . . . . .
. .7
2.4. Post-Closing Price Protection . . . . . . . . . . . . . . . . . .
. .7
2.5. Purchase Price Allocation . . . . . . . . . . . . . . . . . . . .
. .8
2.6. Signing Payment . . . . . . . . . . . . . . . . . . . . . . . . .
. .8
2.7. Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .9
2.8. Canadian Goods and Services Tax Elections . . . . . . . . . . . .
. .9
ARTICLE III THE CLOSING AND TRANSFER OF PURCHASED ASSETS. . . . . . . . . . .
. .9
3.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .9
3.2. Deliveries by Purchaser . . . . . . . . . . . . . . . . . . . . .
. .9
3.3. Deliveries by Seller. . . . . . . . . . . . . . . . . . . . . . .
. 10
3.4. Deliveries by Purchaser and Seller. . . . . . . . . . . . . . . .
. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . .
. 11
4.1. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 11
4.2. Validity; No Conflict . . . . . . . . . . . . . . . . . . . . . .
. 11
4.3. Due Organization. . . . . . . . . . . . . . . . . . . . . . . . .
. 12
4.4. Financial Information . . . . . . . . . . . . . . . . . . . . . .
. 12
4.5. Transactions with Affiliates. . . . . . . . . . . . . . . . . . .
. 12
4.6. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . .
. 13
4.7. Interim Change. . . . . . . . . . . . . . . . . . . . . . . . . .
. 13 -i-
TABLE OF CONTENTS (CONTINUED) PAGE
4.8. Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . .
. 13
4.9. Owned Real Estate . . . . . . . . . . . . . . . . . . . . . . . .
. 14
4.10. Real Estate Leases. . . . . . . . . . . . . . . . . . . . . . . .
. 14
4.11. Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . .
. 14
4.12. Material Contracts. . . . . . . . . . . . . . . . . . . . . . . .
. 14
4.13. Intellectual Property . . . . . . . . . . . . . . . . . . . . . .
. 15
4.14. Software and Information Systems. . . . . . . . . . . . . . . . .
. 15
4.15. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .
. 16
4.16. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . .
. 16
4.17. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 16
4.18. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 17
4.19. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 17
4.20. Environmental Matters . . . . . . . . . . . . . . . . . . . . . .
. 17
4.21. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 18
4.22. Investment Representations; Accredited Investor . . . . . . . . .
. 18
4.23. Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
. 19
4.24. Residency . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 19
4.25. Printing Business . . . . . . . . . . . . . . . . . . . . . . . .
. 19
4.26. Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT . . . . .
. 20
5.1. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 20
5.2. Validity; No Conflict . . . . . . . . . . . . . . . . . . . . . .
. 20
5.3. Due Organization and Purpose. . . . . . . . . . . . . . . . . . .
. 21
5.4. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . .
. 21
5.5. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 22
5.6. Financial Statements. . . . . . . . . . . . . . . . . . . . . . .
. 22
5.7. Transactions with Affiliates. . . . . . . . . . . . . . . . . . .
. 23
5.8. Interim Change. . . . . . . . . . . . . . . . . . . . . . . . . .
. 23
5.9. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . .
. 24 -ii-
TABLE OF CONTENTS (CONTINUED) PAGE
5.10. Material Contracts. . . . . . . . . . . . . . . . . . . . . . . .
. 24
5.11. Intellectual Property . . . . . . . . . . . . . . . . . . . . . .
. 24
5.12. Software and Information Systems. . . . . . . . . . . . . . . . .
. 24
5.13. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .
. 25
5.14. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . .
. 25
5.15. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 25
5.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 25
5.17. Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
. 25
ARTICLE VI COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . . . .
. 26
6.1. Interim Conduct of Business; Operating Board. . . . . . . . . . .
. 26
6.2. Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 26
6.3. Records and Documents . . . . . . . . . . . . . . . . . . . . . .
. 26
6.4. Consummation. . . . . . . . . . . . . . . . . . . . . . . . . . .
. 26
6.5. Hart-Scott-Rodino Consent . . . . . . . . . . . . . . . . . . . .
. 26
6.6. Noncompetition. . . . . . . . . . . . . . . . . . . . . . . . . .
. 27
6.7. Notification of Breach. . . . . . . . . . . . . . . . . . . . . .
. 27
6.8. Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 27
6.9. Interim Financial Statements. . . . . . . . . . . . . . . . . . .
. 27
ARTICLE VII COVENANTS OF PURCHASER AND PARENT . . . . . . . . . . . . . . . .
. 28
7.1. Interim Conduct of Business . . . . . . . . . . . . . . . . . . .
. 28
7.2. Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 28
7.3. Consummation. . . . . . . . . . . . . . . . . . . . . . . . . . .
. 28
7.4. Hart-Scott-Rodino Consent . . . . . . . . . . . . . . . . . . . .
. 29
7.5. Records and Documents . . . . . . . . . . . . . . . . . . . . . .
. 29
7.6. Notification of Breach. . . . . . . . . . . . . . . . . . . . . .
. 29
7.7. Investment Canada Notification. . . . . . . . . . . . . . . . . .
. 29
7.8. Board of Directors. . . . . . . . . . . . . . . . . . . . . . . .
. 29
ARTICLE VIII OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . .
. 30
8.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . .
. 30
8.2. Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . .
. 31 -iii-
TABLE OF CONTENTS (CONTINUED) PAGE
8.3. Cooperation and Records Retention with respect to Taxes . . . . .
. 31
8.4. Patent Infringement Claims. . . . . . . . . . . . . . . . . . . .
. 32
8.5. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 32
8.6. Tax Election. . . . . . . . . . . . . . . . . . . . . . . . . . .
. 32
ARTICLE IX EMPLOYEES AND EMPLOYEE BENEFIT MATTERS. . . . . . . . . . . . . .
. 33
9.1. Continued Association with Business . . . . . . . . . . . . . . .
. 33
9.2. Payroll Records . . . . . . . . . . . . . . . . . . . . . . . . .
. 33
9.3. WARN Act Compliance . . . . . . . . . . . . . . . . . . . . . . .
. 33
9.4. Canadian Personnel Matters. . . . . . . . . . . . . . . . . . . .
. 33
9.5. Canadian Employees. . . . . . . . . . . . . . . . . . . . . . . .
. 34
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND PARENT . . .
. 34
10.1. Accuracy of Warranties and Performance of Covenants . . . . . . .
. 34
10.2. No Pending Action . . . . . . . . . . . . . . . . . . . . . . . .
. 35
10.3. Condition of Purchased Assets . . . . . . . . . . . . . . . . . .
. 35
10.4. Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . .
. 35
10.5. ICA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 35
ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER . . . . . . . . . .
. 35
11.1. Accuracy of Warranties and Performance of Covenants . . . . . . .
. 35
11.2. No Pending Action . . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.3. Condition of Assets . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.4. Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.5. ICA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.6. Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.7. IBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 36
11.8. Other Consents and Approvals. . . . . . . . . . . . . . . . . . .
. 37
ARTICLE XII SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . .
. 37
12.1. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 37
12.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .
. 37
12.3. General Provisions Relating to Indemnification. . . . . . . . . .
. 37 -iv-
TABLE OF CONTENTS (CONTINUED) PAGE
ARTICLE XIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 39
13.1. Termination or Abandonment. . . . . . . . . . . . . . . . . . . .
. 39
13.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . .
. 40
ARTICLE XIV GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . .
. 40
14.1. Amendments and Waiver . . . . . . . . . . . . . . . . . . . . . .
. 40
14.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 40
14.3. Expenses; Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
. 42
14.4. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .
. 42
14.5. Successors and Assigns; Beneficiaries . . . . . . . . . . . . . .
. 42
14.6. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . .
. 42
14.7. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . .
. 42
14.8. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . .
. 42
14.9. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . .
. 43
14.10. Other Rules of Construction . . . . . . . . . . . . . . . . . . .
. 43
14.11. Authorship. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 43
14.12. Specific Performance. . . . . . . . . . . . . . . . . . . . . . .
. 43
14.13. Joint and Several Obligations . . . . . . . . . . . . . . . . . .
. 43 -v- SCHEDULES
1.0 Facilities
1.2(e) E-mail, Internet Sites
1.2(h) Computer Software Programs
1.2(i) Trademarks and Copyrights
1.2(p) Permits and Licenses
1.3(e) Infringers
1.3(f) Excluded Software and Information Systems
4.0 Knowledgeable Persons
4.4 Financial Statements
4.5 Transactions with Affiliates
4.6 Accounts Receivable
4.7 Interim Change
4.8 Purchased Assets
4.9 Owned Real Estate
4.10 Real Estate Leases
4.11 Employee Plans
4.12 Seller's Material Contracts
4.13 Intellectual Property
4.14 Software
4.15 Legal Proceedings; Seller
4.18 Tax Disputes
4.19 Employees
4.20 Environmental Matters
4.21 Insurance
5.2 Consents
5.4 Subsidiaries and Joint Ventures
5.8 Interim Change
5.9 Title to Assets
5.10 Parent's Material Contracts
5.11 Intellectual Property
5.12 Software and Information Systems
5.13 Legal Proceedings; Parent
7.1 Parent's Interim Conduct of Business
9.1 Continuing Association with Business -vi- EXHIBITS
A. Convertible Note
B. Additional Note
C. Legal Opinion of Counsel for Purchaser and Parent
D. Trademark Assignment
E. Copyright Assignment
F. Legal Opinion of Counsel for Seller
G. General Assignment, Bill of Sale and Assumption of Liabilities of
MooreNorth America, Inc.
H. General Conveyance and Assumption of Liabilities of Moore Corporation Limited
I. [Intentionally Left Blank]
J. Security Agreements
K. Pledge Agreements
L. Printing Services Agreement
M. Transition Services Agreement
N. Preferred Supplier Relationship Agreement
O. Canadian Security Documents -vii- AGREEMENT FOR
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is made and entered into this 28th day of July, 1999, by
and among VISTA Information Solutions, Inc., a Delaware corporation
("PARENT"), VISTA DMS, Inc., a Delaware corporation, and a wholly owned
Subsidiary of Parent ("PURCHASER"), and Moore North America, Inc., a Delaware
corporation ("SELLER").
WHEREAS, the Data Management Services Division of Seller in conjunction
with the Data Management Services Division of Moore Corporation Limited, an
Ontario corporation ("MOORE LIMITED"), is engaged in the business of
providing the following services and products primarily to the residential
real estate industry and to businesses and consumers engaged in real estate
related transactions (collectively, the "BUSINESS"):
(i) computer hardware and software to manage real estate
listings, including, in certain instances, integrated data regarding
tax and school information;
(ii) printed catalogues containing real estate listings;
(iii) computer software specifically targeted at real estate
brokers and agents to help manage prospects and to automate various
daily tasks;
(iv) an internet site under the CYBERHOMES-Registered Trademark-
name which provides a public view of non-commercial properties listed
for sale by real estate brokers;
(v) non-real estate related computer directed printing services,
primarily in Canada (the "CDS BUSINESS");
(vi) access and use of databases compiled by the Seller and
Moore Limited of publicly available information related to ownership
and sales prices of properties; and
(vii) an on demand custom search service of Canadian title,
and government registered documents;
with all of such activities being conducted from the facilities set forth on
SCHEDULE 1.0, (collectively, the "FACILITIES");
WHEREAS, on the terms and subject to the conditions hereinafter set
forth, Purchaser desires to purchase from Seller and Moore Limited and Seller
and Moore Limited desire to sell to Purchaser, subject to the assumption of
the designated liabilities and obligations, certain of the assets, properties
and rights used in the Business;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1. PURCHASE AND SALE OF PURCHASED ASSETS. At the Closing (as
defined below), Seller shall sell, transfer, assign and deliver to Purchaser
(and shall cause Moore Limited to so sell, transfer, assign and deliver) and
Purchaser shall purchase, accept and receive, all of Seller's and Moore
Limited's right, title and interest in and to the Purchased Assets (as
defined below) as they exist at Closing. At Purchaser's election, it may
designate a Canadian subsidiary of Purchaser or Parent to be the assignee of
the Purchased Assets to be conveyed by Moore Limited; provided that Parent
and Purchaser shall be jointly and severally liable to Seller and Moore
Limited for all obligations to be fulfilled by such Canadian assignee in
connection herewith.
1.2. PURCHASED ASSETS. The "PURCHASED ASSETS" are all of Seller's and
Moore Limited's right, title and interest in and to the following, to the
extent employed solely in the Business:
(a) all accounts and notes receivable (subject to Section
1.3(i));
(b) all inventories;
(c) the office furnishings, equipment, fixtures, supplies and
computer equipment located at the Facilities and including any
computer and other equipment leased or provided by the Business to its customers;
(d) all Owned Real Estate (as defined below), including the
buildings, structures and improvements situated thereon;
(e) e-mail addresses, Internet user names, addresses and
sites, and telephone and fax numbers listed on SCHEDULE 1.2(e);
(f) all rights and claims under lease or sale contracts,
customer orders, residual rights under operating leases, maintenance
and support agreements, license agreements, dealer and distributor
agreements and other commitments of the Business;
(g) rights and claims under the Material Contracts (as defined
below) and Real Estate Leases (as defined below);
(h) all computer software programs, source codes (including
annotations), object codes, information systems, program
specifications and related materials and documentation used in the
products of the Business and listed on SCHEDULE 1.2(h);
(i) all patents (the "PATENTS") (subject to Section 1.3(e) and
Section 8.4), trade secrets, trademarks, copyrights, trade names,
corporate names, trade styles, -2-
logos, product designations and service marks and all applications
(pending or in process) and registrations therefor and licenses thereof
used in the Business and listed on SCHEDULE 1.2(i);
(j) all stock in Moore Public Records, Inc. owned by Seller (a
participant in a joint venture);
(k) all sales and promotional literature and art work;
(l) all rights under and pursuant to all warranties,
representations and guarantees made by suppliers of goods or services
to Seller, with respect to the goods and services sold by the Business;
(m) to the extent assignable to Purchaser, all rights under
agreements with employees and consultants of the Business concerning
confidentiality, noncompetition, nonsolicitation or the assignment of inventions;
(n) the customer files and all lists of customers, prospects
and vendors;
(o) all business records with respect to the operation of the
Business; and
(p) to the extent assignable to Purchaser, permits and
licenses (and pending applications for any thereof) listed on SCHEDULE 1.2(p);
provided, however, that the definition of Purchased Assets shall not include any
items defined as Excluded Assets in Section 1.3.
1.3. EXCLUDED ASSETS. Notwithstanding anything contained herein to the
contrary, Seller will retain and not transfer, and Purchaser will not acquire
any assets of Seller, other than the Purchased Assets (collectively, the
"EXCLUDED ASSETS"), including the following assets which shall not be sold or
transferred to Purchaser:
(a) all cash and cash equivalents, including cash on hand and
cash in transit (i.e., bank deposits being made by Seller), deposits
and prepaids, other than the Arizona Prepaid Revenue. "ARIZONA
PREPAID REVENUE" shall equal (i) the amount received by the Business
pursuant to Exhibit D to the Moore Lease and License Agreement between
the Business and Arizona Regional Multiple Listing Service, Inc.
("ARIZONA REGIONAL MLS") dated August 10, 1998 (the "ARIZONA
CONTRACT") through the Closing Date, less (ii) any amount paid or
rebated to the Arizona Regional MLS, any state taxing authority and
any other amount expended by the Business under the Arizona Contract
through the Closing Date, less (iii) any amount under clause (i)
recognized as revenue under GAAP (as defined below) through the
Closing Date;
(b) accounting and other records not relating to the operation
of the Business; -3-
(c) the "MOORE" name, including any derivations thereof or
names confusingly similar thereto, and any logos, marks, taglines and
other uses based on any of the foregoing;
(d) refunds pertaining to any Federal, foreign, state,
provincial or local tax obligations of Seller to the extent such
refunds do not give rise to an increase in any Assumed Liabilities;
(e) subject to Section 8.4 and Section 8.5, rights in, to or
relating to any actual or potential infringement claims with respect
to the Patents against (i) those parties listed on SCHEDULE 1.3(e) and
their Affiliates, and (ii) such other parties which Purchaser
approves, such approval not to be unreasonably withheld (the "PATENT
INFRINGEMENT CLAIMS");
(f) all computers, software and information systems set forth
on SCHEDULE 1.3(f);
(g) all claims against other portions of Seller, Moore Limited
or their subsidiaries and Affiliates;
(h) all rights to indemnification for, or claims against,
third parties related to the Litigation Matters (as defined below),
including, but not limited to, the indemnification provisions of the
September 24, 1996 Agreement with GeoSystems Global Corporation, as
such provisions relate to the period through Closing;
(i) all intra or intercompany accounts receivable owed by
other units of Seller or Moore Limited; and
(j) items, sold, transferred, disposed of or consumed in the
ordinary course of the operation of the Business prior to Closing.
1.4. ASSUMED LIABILITIES. Except as set forth in Section 1.5, at the
Closing, Purchaser shall assume and agree to discharge promptly as they
become due any and all liabilities and obligations (a) related to or arising
from the operation of the Business or the ownership of the Purchased Assets
in the ordinary course of business, including without limitation all
contracts and obligations which constitute or arise from the Purchased Assets
or to which the Purchased Assets are subject or by which they are bound, as
well as the pending administrative proceeding regarding the sales tax audit
in Arizona described on SCHEDULE 4.15, (b) reflected or disclosed on, or in
the notes to, the 1998 Financial Statements (as defined below), (c) of the
type referred to in (b) but incurred subsequent to December 31, 1998, and (d)
related to or arising from Post-Closing Use (as defined below) (collectively,
the "ASSUMED LIABILITIES"); provided, however, that notwithstanding the
foregoing, none of the Excluded Liabilities (as defined below) shall be
included as Assumed Liabilities. Purchaser and Parent shall jointly and
severally forever defend, indemnify and hold harmless Seller and Moore
Limited from and against any and all liabilities, obligations, claims,
damages (including incidental and consequential damages), costs and expenses
(including court costs and reasonable attorneys' fees) related to or arisingfrom -4-
Purchaser's failure to fully perform and discharge the Assumed Liabilities.
Purchaser does not in any way or manner assume or agree to satisfy any
liability of Seller, the Business or Moore Limited other than the AssumedLiabilities.
1.5. EXCLUDED LIABILITIES.
(a) Notwithstanding anything to the contrary in Section 1.4,
Purchaser shall not assume any liabilities or obligations of Seller or Moore
Limited (i) for Federal, foreign, state, provincial or local taxes accruing
prior to Closing, (ii) arising under benefit plans of Seller or Moore
Limited, other than (except for liabilities under defined benefit plans which
are excluded liabilities hereunder) those liabilities and obligations of the
type which are accrued on the 1998 Financial Statements, such as those
relating to vacation and sick pay, (iii) for intra or intercompany accounts
payable owing to other units of Seller or to Moore Limited, (iv) for
indebtedness for borrowed money, (v) as set forth in Section 1.7, (vi) under
the retention bonus agreements referenced on SCHEDULE 4.19, and (vii) for the
Litigation Matters (as defined below) (the "EXCLUDED LIABILITIES"); provided
that Purchaser shall provide reasonable assistance to Seller at Purchaser's
cost with respect to the administration of any sales tax refunds received by
Seller from the State of Arizona. Seller shall forever defend, indemnify and
hold harmless Purchaser and Parent from and against any and all liabilities,
obligations, claims, damages (including incidental and consequential
damages), costs and expenses (including court costs and reasonable attorneys'
fees) related to or arising from Seller's failure to fully perform and
discharge the Excluded Liabilities. Seller further agrees to pay and
discharge all such liabilities and obligations as they become due.
(b) For purposes of this Agreement, "LITIGATION MATTERS" shall
mean the pending lawsuits and threatened legal proceedings, specifically set
forth in SCHEDULE 4.15, other than the pending administrative proceeding
regarding the sales tax audit in Arizona. For purposes of this Agreement,
"POST-CLOSING USE" shall mean the use, distribution or sale, directly or
indirectly, by the Business, Purchaser, Parent or any of their Affiliates
after the Closing, of the patent and other intellectual property which is the
subject matter of the claims brought by Mark A. Tornetta, as described in
SCHEDULE 4.15.
1.6. ASSIGNMENT OF CONTRACTS. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign the right, title or interest of Seller in, to or under any contract or
any claim or right of any benefit arising thereunder or resulting therefrom if
any attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or adversely affect the rights of Purchaser or
Seller thereunder or if by its nature such contract cannot be assigned. Seller
shall use reasonable commercial efforts to obtain, and Purchaser agrees to
cooperate with Seller in its efforts to obtain, the consent of such third party
to the assignment or transfer thereof to Purchaser where required. If such
consent is not obtained, Seller and Purchaser shall cooperate in any reasonable
arrangements designed to provide Purchaser the obligations and benefits
thereunder such as, by example, entering into a subcontract relationship.
Notwithstanding the foregoing, the obligations of Seller under this
Section shall not include any obligation to make any payment (other than to make
any past due rent or similar payment) or incur any economic burden, other than
its own reasonable legal and administrative costs associated with its
obligations under this Section 1.6, in -5-
obtaining the consent of such third parties, except for such economic burdens
which Purchaser and Parent agree to discharge.
1.7. BULK TRANSFER. Purchaser hereby waives compliance by Seller with
all applicable bulk transfer, bulk sales and similar laws and requirements of
all jurisdictions in connection with the transactions contemplated hereby,
and Seller shall indemnify Purchaser and Parent for any loss or damage
suffered by Purchaser or Parent as a result of such non-compliance.
ARTICLE II CONSIDERATION
2.1. CONSIDERATION. The aggregate consideration for the Purchased
Assets shall be a combination of cash, one or more promissory notes of Parent
and shares of common stock, par value $.001 per share, of Parent ("COMMON
STOCK"), payable as set forth in Section 2.2 and the assumption by Purchaser
of the Assumed Liabilities.
2.2. PAYMENT OF CONSIDERATION. At Closing, Purchaser shall:
(a) pay to Seller and Moore Limited, as provided in Section
2.5 below, Twenty-Six Million Dollars ($26,000,000) (the cash payment
being referred to as the "CASH CONSIDERATION");
(b) deliver to Seller Parent's convertible promissory note in
the original aggregate principal amount of Sixteen Million Five
Hundred Thousand Dollars ($16,500,000), subject to possible adjustment
as set forth in Section 2.3, in the form attached hereto as EXHIBIT A
(the "CONVERTIBLE NOTE"); and
(c) deliver to Seller that number of shares of Common Stock
determined by dividing (i) Ten Million Dollars ($10,000,000) (the
"COMMON STOCK AMOUNT"), by (ii) the average of the Average Daily
Prices (as defined below) of the Common Stock for the thirty (30)
consecutive trading days immediately preceding the third trading day
prior to the Closing Date (as defined below) (the "AVERAGE CLOSING
PRICE"); provided, however, that for purposes of the computation in
this Section 2.2(c), Section 2.4, and the Convertible Note, (but not
for other provisions in this Article II) in no event shall the Average
Closing Price be greater than $14.00 or less than $10.00. "AVERAGE
DAILY PRICE" shall mean the average of the closing bid and ask, as
applicable on a given day on the Nasdaq Stock Market, or if the Common
Stock does not trade on the Nasdaq Stock Market, on the primary
exchange or market (including the OTC Bulletin Board) on which the
Common Stock so trades.
Seller shall provide wire transfer instructions to Purchaser not less
than twenty-four (24) hours prior to the Closing. All payments hereunder
shall be made in U.S. dollars by wire transfer or other immediately available
funds, and all currency amounts referred to throughout this Agreement are to
U.S. dollars. -6-
2.3. CLOSING PRICE PROTECTION. In the event that the Average Closing
Price is less than $10.00, in addition to the rights of Seller set forth in
Section 13.1(d) Seller shall have the option, in its sole and absolute
discretion, to cause the Cash Consideration or the principal amount of the
Convertible Note (or a combination thereof) to be increased by an amount
equal to (A) the difference between $10.00 and the Average Closing Price,
multiplied by (B) the number of shares of Common Stock to be issued pursuant
to Section 2.2(c).
2.4. POST-CLOSING PRICE PROTECTION.
(a) If the average of the Average Daily Prices of the Common
Stock for the thirty (30) consecutive trading days immediately preceding the
third trading day prior to the date which is eighteen (18) months from the
Closing Date (the "SUBSEQUENT AVERAGE PRICE" and the "SUBSEQUENT DATE"), is
less than the Average Closing Price, Seller shall have the option, in its
sole and absolute discretion, to either: (i) cause Parent to pay Seller in
cash, an amount equal to the difference (subject to a maximum of 50% of the
Average Closing Price) between the Average Closing Price and the Subsequent
Average Price, multiplied by the aggregate of the number of shares of Common
Stock issued pursuant to Sections 2.2(c) and 2.6 and held by Seller on the
Subsequent Date (the "ADDITIONAL CASH CONSIDERATION"); (ii) cause Parent to
issue to Seller that number of additional shares of Common Stock determined
by dividing the Additional Cash Consideration by the Subsequent Average
Price; or (iii) cause Parent to pay cash and issue additional shares of
Common Stock as provided in the preceding clauses with a combined value
equivalent to the Additional Cash Consideration; provided, however, in no
event shall the additional shares of Common Stock so issued, when added to
the other securities acquired or issuable pursuant to this Agreement
(including the Convertible Note) by Seller, equal or exceed 20% of the number
of outstanding shares of Common Stock, computed consistent with the rules of
the Nasdaq Stock Market (the "NASDAQ LIMITATION"). Any fractional shares
resulting from the calculation set forth in clauses (ii) and (iii) shall be
rounded to the nearest whole number. In lieu of paying cash to Seller as
provided in this Section 2.4(a), Parent shall have the option, in its sole
discretion (subject to compliance with the Nasdaq Limitation), to deliver to
Seller Parent's convertible promissory note in the original aggregate
principal amount of the Additional Cash Consideration, in the form attached
hereto as EXHIBIT B (the "ADDITIONAL NOTE").
(b) All amounts to be paid, the Additional Note to be issued or
certificates for shares of Common Stock to be issued pursuant to this Section
2.4 shall be paid in immediately available funds or delivered by Purchaser,
as the case may be, within five (5) business days from the Subsequent Date.
(c) Notwithstanding the foregoing, this Section 2.4 shall be of
no further force or effect, if prior to the Subsequent Date: (i) Parent
provides Seller with thirty days notice (the "INITIAL NOTICE") of the filing
of a registration statement for a public offering of Common Stock to be
firmly underwritten by an investment banking firm which has routinely
completed transactions of similar size or greater (all of the expenses for
which, other than underwriting discounts and fees of any counsel for Seller,
being paid for by Parent); (ii) the Initial Notice provides an option in
favor of Seller to dispose of up to all of the Common Stock acquired by
Seller pursuant to Article II hereof, and in the event Seller elects to
participate in such offering, the number of shares of Common Stock Seller
decides to sell is not reduced by the investment -7-
banking firm underwriting the offering prior to the execution of the
underwriting agreement establishing the terms of the offering (which
underwriting agreement, in customary form, Seller is permitted to enter
into); (iii) such offering closes within one hundred twenty (120) days of the
Initial Notice at a net price to Seller (i.e., after underwriting discounts)
of $14.00 per share; and (iv) if Seller elects to participate in such
offering, it receives the proceeds from the sale of the Common Stock in
conformance with clause (iii) above.
2.5. PURCHASE PRICE ALLOCATION.
(a) Immediately following the date hereof and prior to Closing,
Seller shall cause an analysis to be prepared by a qualified third party to
determine the portion of the Purchase Price attributable to the Purchased
Assets owned by Seller on the one hand and Moore Limited on the other hand
and among classes of Canadian assets, as needed for Canadian tax purposes.
The allocable percentage attributable to Moore Limited shall be paid by
Purchaser (or its assignee) directly to Moore Limited out of the Cash
Consideration. The parties shall report the transaction to all taxing
authorities consistent with such third party analysis. The cost of the
analysis shall be shared equally by Seller and Purchaser.
(b) Within 60 days after the Closing Date, Purchaser will
provide to Seller copies of IRS Form 8594 and any required exhibits thereto
with Purchaser's proposed allocation of the purchase price, set forth in
Section 2.2 that is allocable to the United States Purchased Assets and
Assumed Liabilities. Within 15 days after the receipt of such form, Seller
will propose to Purchaser any changes to such form (and in the event no such
changes are proposed to Purchaser within such time period, the Seller will be
deemed to have agreed to, and accepted, the draft of such form). Purchaser
and Seller will endeavor in good faith to resolve any differences with
respect to the allocation within 15 days after Purchaser's receipt of written
notice of objection from Seller.
2.6. SIGNING PAYMENT.
(a) On or promptly following the date hereof, as an inducement
to Seller to enter into this Agreement, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, Purchaser has
caused to be issued to Seller 501,505 shares of Common Stock, which amount
has been fully earned (the "SIGNING PAYMENT"). Notwithstanding anything
contained herein to the contrary, if this Agreement is terminated pursuant to
Section 13.1(a), (b) or (d) (other than, with respect to Section 13.1(b), as
a result of actions of Purchaser or Parent) or Section 10.1, Seller promptly
shall return the Signing Payment to Purchaser. In all other cases, the
Signing Payment shall be retained by Seller.
(b) Contemporaneously with the execution of this Agreement (i)
Purchaser is causing its legal counsel to deliver an opinion as to the
execution and delivery of the Agreement, the Signing Payment and other
matters set forth therein, and (ii) Parent and Seller are entering into a
Registration Rights Agreement with respect to the Signing Payment and all
other Common Stock to be issued as provided herein and the Test Marketing
Agreement. Parent is also delivering a certified copy of the Credit
Agreement with IBJ Whitehall Bank & Trust. -8-
2.7. ADJUSTMENT. The numbers of shares of Common Stock and the prices
referred to in Article II shall be equitably adjusted for stock splits, stock
dividends, recapitalization and the like occurring after the date hereof.
2.8. CANADIAN GOODS AND SERVICES TAX ELECTIONS.
(a) Seller hereby represents and warrants to Parent and
Purchaser that Moore Limited is registered for purposes of Part IX of the
Excise Tax Act (Canada);
(b) Purchaser hereby represents and warrants to Seller that
Purchaser is registered, and its assignee will be registered, for purposes of
Part IX of the Excise Tax Act (Canada); and
(c) Seller shall cause Moore Limited to execute jointly with
Purchaser or with Purchaser's Canadian assignee, as the case may be, in
prescribed form, and Purchaser or its Canadian assignee shall file within the
time stipulated and in the manner prescribed by the Excise Tax Act (Canada),
the necessary elections under the Excise Tax Act (Canada) that no tax be
payable pursuant to the Excise Tax Act (Canada) with respect to the purchase
and sale of the Purchased Assets. Purchaser, Parent and Canadian assignee
shall indemnify and hold harmless Moore Limited in respect of any goods and
services tax or penalties and interest that may be assessed against Moore
Limited under the Excise Tax Act (Canada) as a result of the transactions
under this Agreement not being eligible for such elections.
ARTICLE III
THE CLOSING AND TRANSFER OF PURCHASED ASSETS
3.1. CLOSING. Subject to the terms hereof, the transactions
contemplated by this Agreement (the "CLOSE" or "CLOSING") shall occur at the
offices of Gray, Cary Ware Freidenrich LLP, San Diego, California, at 10:00
A.M. on September 30, 1999, or at such other time or place as may be mutually
agreed upon by the parties (the "CLOSING DATE"). The Closing shall be deemed
to take place as of the close of business on the Closing Date.
3.2. DELIVERIES BY PURCHASER. At the Closing, Purchaser shall deliver
the following:
(a) the Cash Consideration by wire transfer of immediately
available funds;
(b) the Convertible Note;
(c) certificates evidencing the number of shares of Common
Stock to be issued to Seller pursuant to Section 2.2(c);
(d) an officer's certificate to the effect set forth in
Section 11.1;
(e) any resale exemption certificates or other similar items
as may be reasonably requested by Seller; -9-
(f) a legal opinion of counsel for Purchaser and Parent as to
the matters described on EXHIBIT C; and
(g) such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated hereby.
3.3. DELIVERIES BY SELLER. At the Closing, Seller shall deliver or
cause to be delivered the following:
(a) Transfer/Deed of Land for the parcel of Owned Real Estate;
(b) Trademark Assignments in substantially the form attached
hereto as EXHIBIT D;
(c) Copyright Assignments in substantially the form attached
hereto as EXHIBIT E;
(d) Patent assignments in forms to be mutually agreed upon by
the parties;
(e) an officer's certificate to the effect set forth in
Section 10.1;
(f) a legal opinion of counsel for Seller as to the matters
described on EXHIBIT F; and
(g) such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated by
this Agreement.
3.4. DELIVERIES BY PURCHASER AND SELLER. At the Closing, Purchaser
and Seller shall deliver the following:
(a) General Assignment, Bill of Sale and Assumption of
Liabilities between Purchaser and Seller in substantially the form
attached hereto as EXHIBIT G;
(b) General Conveyance and Assumption of Liabilities between
Parent, Purchaser and its Canadian assignee and Moore Limited in
substantially the form attached hereto as EXHIBIT H (to include an
unconditional guaranty of Purchaser and Parent of the obligations of
the Canadian assignee and any transfer documents related to
intellectual property included in the Purchased Assets and owned by
Moore Limited) (the "CANADIAN TRANSFER AGREEMENT");
(c) Assignment of Patent Infringement Claims between Purchaser
and Seller reflecting Section 1.3(e), Section 8.4 and Section 8.5 in
the form to be mutually agreed upon by the parties;
(d) Security Agreements in substantially the forms attached
hereto as EXHIBIT J; -10-
(e) Pledge Agreements in substantially the forms attached
hereto as EXHIBIT K;
(f) Printing Services Agreement in substantially the form
attached hereto as EXHIBIT L;
(g) Transition Services Agreement in substantially the form
attached hereto as EXHIBIT M, if desired by the Purchaser;
(h) A Preferred Supplier Relationship Agreement in
substantially the form attached hereto as EXHIBIT N; and
(i) Charge/Mortgage of Land, General Security Agreement and
Hypothec on the Universality of Movable Property in substantially the
forms attached hereto as EXHIBIT O (the "CANADIAN SECURITY DOCUMENTS")
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as set forth below.
For purposes of this Agreement, a "MATERIAL ADVERSE EFFECT" shall mean any
effect which is materially adverse to the Business and the Purchased Assets
when taken as a whole. For purposes of this Agreement, the phrase "TO THE
KNOWLEDGE OF SELLER," or other language of similar effect, shall mean to the
actual knowledge at the time of execution of this Agreement of the persons
listed on SCHEDULE 4.0. The exceptions, modifications, descriptions and
disclosures in any Schedule prepared by Seller and attached hereto are made
for all purposes of this Agreement and are exceptions to all representations
and warranties set forth in this Agreement or in any agreement or instrument
delivered pursuant to or in connection with this Agreement in all cases as to
which a reasonably knowledgeable business person would expect. Disclosure of
any items not otherwise required to be disclosed shall not create any
inference of materiality.
4.1. AUTHORITY. Each of Seller and Moore Limited has the full right,
power and authority, without the consent of any other person, to execute and
deliver this Agreement and the agreements contemplated hereby to which it is
a party and to consummate the transactions contemplated on its part hereby
and thereby. All corporate acts required to be taken by Seller to authorize
the execution and delivery of this Agreement and all agreements and
transactions contemplated hereby have been duly and properly taken. All
corporate acts required to be taken by Moore Limited to authorize the
execution and delivery of the Canadian Transfer Agreement, the other specific
conveyance documents to be executed by Moore Limited and all transactions
contemplated thereby have been duly and properly taken.
4.2. VALIDITY; NO CONFLICT. This Agreement has been, and the
agreements and other documents to be delivered by Seller and Moore Limited at
Closing will be, duly executed and delivered and constitute the valid and
legally binding obligations of Seller and Moore Limited enforceable against
each in accordance with their respective terms. The execution and delivery
by such parties of such documents to which each is a party and the
consummation of the -11-
transactions contemplated hereby and thereby will not (immediately, with
notice, the passage of time or any combination thereof) result in the
creation of any lien, charge or encumbrance or the acceleration of any
indebtedness or other obligation of Seller or Moore Limited and are not
prohibited by, do not violate or conflict with any provision of, and do not
and will not (immediately, with notice, the passage of time or any
combination thereof) constitute a default under or a breach of (i) the
charter or by-laws of each of Seller and Moore Limited, (ii) any note, bond,
indenture, contract, agreement, permit, license or other instrument to which
either of Seller or Moore Limited is a party or by which either of Seller or
Moore Limited is bound, (iii) any order, writ, injunction, decree or judgment
of any court or governmental agency applicable to such parties, or (iv) any
law, rule or regulation applicable to such parties, except in each of the
foregoing cases for such creations, accelerations, terminations, violations,
conflicts, breaches, defaults, charges or encumbrances which in the aggregate
will not have a Material Adverse Effect on the Purchased Assets, Assumed
Liabilities or Seller's ability to consummate the transactions contemplatedhereby.
4.3. DUE ORGANIZATION. Seller is a corporation duly organized, in
good standing and validly existing under the laws of Delaware. Moore Limited
is a corporation duly incorporated, in good standing and validly existing
under the laws of Ontario, Canada.
4.4. FINANCIAL INFORMATION.
(a) The financial statements of the Business for the three years
ended December 31, 1998 and attached hereto as SCHEDULE 4.4 (the "FINANCIAL
STATEMENTS") present the financial position and results of operations of the
Business in conformity with United States generally accepted accounting
principles subject to the disclosures, if any, contained therein ("GAAP").
(b) The Financial Statements are in compliance in all material
respects with the requirements of Regulation S-X of the Securities Act of1933.
4.5. TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE
4.5, no Affiliate of Seller:
(a) owns, directly or indirectly, any material debt, equity or
other interest or investment in any corporation, association or other
entity which is a competitor, customer, contractor or supplier of the Business;
(b) has any cause of action against the Business;
(c) has any material interest in or owns any material property
or right used in the conduct of the Business; or
(d) is a party to any material contract, lease, agreement,
arrangement or commitment used in the Business.
"AFFILIATE" shall mean any corporation, partnership, trust, limited liability
company or other entity which, directly or indirectly, controls, is
controlled by, or is under common control with -12-
any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity.
4.6. ACCOUNTS RECEIVABLE. SCHEDULE 4.6 sets forth an accurate,
correct and complete aging in all material respects as of the date indicated
thereon of all accounts receivable included in the Purchased Assets (the
"ACCOUNTS RECEIVABLE"). All Accounts Receivable arose in the ordinary course
of business. No Accounts Receivable are subject to prior assignment, claim,
lien or security interest.
4.7. INTERIM CHANGE. Except as set forth in SCHEDULE 4.7, since
December 31, 1998, the Business has been operated in the ordinary course of
business, consistent with past practice and, without limiting the foregoing,
there has not been:
(a) any material damage to, destruction of or claim against
material assets of the Business, or any disposition of any material
assets of the Business, other than sales in the ordinary course of
business on terms consistent with past practice;
(b) the incurrence of any material Assumed Liability,
including without limitation, with respect to prepaid revenue, other
than in the ordinary course of business;
(c) any new or revised arrangement relating to the employment,
compensation or benefits of an employee of the Business, other than
normal salary adjustments or otherwise in the ordinary course of business;
(d) the sale, lease or license of any Intellectual Property or
Software (as defined below) other than in the ordinary course of business;
(e) any material change in the status of any Material
Contract, other than in the ordinary course of business; or
(f) any agreement to take any of the foregoing actions.
4.8. PURCHASED ASSETS. Seller and Moore Limited have good title to
the personal property included in the Purchased Assets which each purports to
own (except such property as has been disposed of in the ordinary course of
business); and at the Closing, Purchaser will receive the Purchased Assets
free and clear of any liens, claims or encumbrances, except for (a) liens,
claims or encumbrances which will be discharged upon payment by Purchaser of
the associated Assumed Liabilities, (b) liens, claims and encumbrances set
forth on SCHEDULE 4.8, or (c) liens, claims or encumbrances which arise by
operation of law ("PERMITTED LIENS"). The Purchased Assets constitute all of
the assets owned by Seller and Moore Limited which are material to and
employed in the operation of the Business, other than with respect to the
matters contemplated by the Transition Services Agreement and the following
activities: (i) payroll; (ii) fixed asset record keeping and management
systems; (iii) Tax matters; (iv) Lotus Notes software; (v) general and
administrative support provided by or at the direction of Corporate; and (vi)
telecommunications systems. -13-
4.9. OWNED REAL ESTATE. SCHEDULE 4.9 sets forth an accurate, correct
and complete list of each parcel of real property owned by Seller or Moore
Limited and employed primarily in the Business (the "OWNED REAL ESTATE"),
including the street address. Except as provided on SCHEDULE 4.9, Seller or
Moore Limited is the legal and beneficial owner of all right, title and
interest in and has good and marketable title to all Owned Real Estate,
including the buildings, structures and improvements situated thereon and
appurtenances thereto, in each case free and clear of all liens, other than
Permitted Liens and the "PERMITTED ENCUMBRANCES" listed on SCHEDULE 4.9.
4.10. REAL ESTATE LEASES. SCHEDULE 4.10 lists all real property leased
or subleased by Seller or Moore Limited (as lessee or lessor) and used in the
Business (the "LEASED REAL ESTATE"), including identification of the lease or
sublease (the "REAL ESTATE LEASES") and the street address of the Leased Real
Estate. Seller or Moore Limited (as lessee), as the case may be, have been
in peaceable possession of the premises covered by each Real Estate Lease
since the commencement of the original term of such Real Estate Lease. True
and correct copies of each Real Estate Lease have been made available toPurchaser.
4.11. EMPLOYEE PLANS. SCHEDULE 4.11 lists all of the material employee
benefit plans which are sponsored, maintained or contributed to by Seller or
Moore Limited for the benefit of the employees of the Business currently
performing services (collectively, the "EMPLOYEE PLANS"). The Employee Plans
have been operated in conformance with applicable laws in all materialrespects.
4.12. MATERIAL CONTRACTS. SCHEDULE 4.12 lists all written contracts
and agreements primarily related to the Business, the Purchased Assets or the
Assumed Liabilities meeting any of the descriptions set forth below (the
"MATERIAL CONTRACTS"):
(a) all Real Estate Leases;
(b) all agreements for the borrowing of money;
(c) any joint venture or partnership agreements;
(d) all purchase orders, agreements or commitments obligating
the Business to sell, deliver, license or support any product with an
annual revenue in excess of $70,000;
(e) all purchase orders and other contracts for the purchase
of materials or services requiring annual payments in excess of $70,000;
(f) all equipment leases and other personal property leases
requiring annual payments in excess of $70,000;
(g) any agreement not to compete or otherwise restricting
activities of the Business; -14-
(h) all written employment contracts that cannot be terminated
on not less than 90 days' notice; and
(i) all other contracts, commitments, agreements, arrangements
and understandings which provide for annual payment of $70,000 or more
to or from the Business.
Except as set forth on SCHEDULE 4.12, each Material Contract is valid and
binding and is in full force and effect as to Seller and is assignable
hereunder without notice to or consent of a third party. No event has
occurred which is or, after the giving of notice or passage of time, or both,
would constitute a default under or a breach of any Material Contract by the
Business or, to the knowledge of Seller, by any other party thereto, which
could reasonably be expected to result in a Material Adverse Effect. True
and correct copies of each Material Contract have been made available toPurchaser.
4.13. INTELLECTUAL PROPERTY. SCHEDULE 4.13 sets forth a correct and
complete list of all material patents, trademarks, trade names, trade styles,
service marks, registered copyrights and applications for any of the
foregoing owned by or utilized in the Business other than Software (the
"INTELLECTUAL PROPERTY"). Except as set forth in SCHEDULE 4.13, with respect
to the Intellectual Property, (a) Seller is the owner and has adequate rights
to use the Intellectual Property; (b) no action, suit, proceeding or
investigation is pending or, to knowledge of Seller, threatened; (c) none of
the Intellectual Property interferes with, infringes upon, conflicts with or
otherwise violates the rights of others or to Seller's knowledge, is being
interfered with or infringed upon by others in a manner which would have a
Material Adverse Effect; (d) none of the Intellectual Property is subject to
any outstanding order, decree, judgment, stipulation or charge; (e) there are
no royalty, commission or similar arrangements, and no licenses, sublicenses
or agreements, pertaining to any of the Intellectual Property; and (f) to the
knowledge of Seller, no third party is infringing upon the Intellectual
Property in a manner which could reasonably be expected to have a Material
Adverse Effect.
4.14. SOFTWARE AND INFORMATION SYSTEMS.
(a) For purposes of this Section, the term "SOFTWARE" means all
computer software programs, program specifications, charts, procedures,
source codes (including annotations), object codes, input data, diagnostic
and other routines, data bases and report layouts and formats, record file
layouts, diagrams, functional specifications and narrative descriptions and
flow charts material to and owned or used in the Business, other than for
financial, general or administrative activities. For purposes of this
Section 4.14, the term "COMPUTER SOFTWARE PROGRAMS" includes any set of
arithmetic, algorithmic and/or logical instructions meant to run on, or to
control the operation of, any computer (i) whether those instructions are a
complete program, a collection of programs making up a subsystem or system,
or are merely subroutines or meant to operate in conjunction with other
software, and (ii) whether such instructions must be run through another
computer program before being useable on a computer, whether such
instructions can be used at execution time only in conjunction with another
computer program (i.e., an "INTERPRETER") or whether such instructions are in
a form that can be run on a computer -15-
"AS IS," except for any necessary interfaces with the computer's microcode,
operating system or reference-resolving routines.
(b) SCHEDULE 4.14 sets forth a correct and complete list of all
Software and identifies specifically (i) Software as to which the source code
is owned by Seller ("OWNED SOFTWARE"); (ii) Software which is licensed to
Seller by third parties other than so called "SHRINK WRAP" software; and
(iii) Software purchased by or licensed to Seller solely for resale or
sublicense to its customers (Software described in the foregoing subsections
(ii) and (iii) being referred to collectively as the "THIRD PARTY SOFTWARE").
(c) Except as provided on SCHEDULE 4.14 or SCHEDULE 4.15, with
respect to the Software:
(i) Seller is the owner of, and has the exclusive
right to use the Owned Software free and clear of any claims of
ownership of others, except rights to use the Software granted
to customers of the Business in the ordinary course of business;
(ii) the Owned Software and the licensing or
sublicensing thereof does not violate or infringe any trade
secret rights, copyrights, mask copyrights, patents or other
rights of others in a manner which would result in a Material
Adverse Effect and, to Seller's knowledge, no assertion to the
contrary has been made by any third party to Seller which could
reasonably be expected to result in a Material Adverse Effect; and
(iii) to the knowledge of Seller, the Business has not
copied or used any of the Third Party Software in violation of
the applicable license or otherwise violated any of its
agreements or the rights of others with respect thereto.
4.15. LEGAL PROCEEDINGS. Except as set forth in SCHEDULE 4.15, (a) the
Business is not engaged in or a party to or, to the knowledge of Seller,
threatened with any material action, suit or other legal proceeding, (b)
Seller has no knowledge of any investigation threatened by any governmental
or regulatory authority with respect to the Purchased Assets or Assumed
Liabilities, and (c) the Purchased Assets and Assumed Liabilities are not
subject to any judgment, order, writ, injunction, stipulation or decree of
any court or any governmental agency directly applicable thereto.
4.16. COMPLIANCE WITH LAW. To Seller's knowledge, the operation of the
Business complies with all applicable statutes, codes, laws, ordinances,
rules and regulations, except where non-compliance could not reasonably be
expected to result in a Material Adverse Effect.
4.17. PERMITS. To Seller's knowledge, Seller or Moore Limited have all
the permits from all Federal, state and local authorities as are necessary
for the conduct of the Business as conducted on the date hereof, except where
the failure to have any permit could not reasonably be expected to result in
a Material Adverse Effect. -16-
4.18. TAXES. Seller and Moore Limited have filed, or will file when
due, all reports and returns ("TAX RETURNS") of all Federal, state, local,
provincial and other foreign income, gross receipts, sales, use, ad valorem,
value added, franchise, withholding, payroll, employment, excise, property,
goods and services, capital or other tax returns, and paid when due all taxes
together with any penalties, additions to or additional amounts with respect
thereto and any interest (collectively referred to as "TAXES" and
individually as a "TAX") required to be filed or paid except, to the extent
Seller or Moore Limited is reasonably disputing any such Taxes (none of which
disputes could reasonably be expected to result in a Material Adverse
Effect), relating to the Business or the Purchased Assets for the periods
ending on or before the Closing. When filed, all Tax Returns were correct
and complete in all material respects. No Taxing authority is asserting any
claim to additional payments or has notified Seller or Moore Limited of any
dispute which could reasonably be expected to be material to the Business. 4.19. EMPLOYEES.
(a) The Business has paid or properly accrued in accordance with
GAAP for all wages, salaries, commissions, bonuses and other cash
compensation (other than accrued holiday and sick pay) to which employees and
former employees of the Business are entitled.
(b) Except as set forth on SCHEDULE 4.19 with respect to the
Business, (i) to the knowled
