SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 30, 1999
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(Date of Report)
AREMISSOFT CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 7372 68-0413929
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200 Central Park South, #23-A, New York, NY 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 765-7383
<PAGE>2
Item 2. Acquisition or Dispositions of Assets
On December 29, 1999, pursuant to a Share Purchase Agreement
("Agreement') dated December 17, 1999, AremisSoft Corporation ("AremisSoft"),
through its wholly owned subsidiary AremisSoft (E.E. M.E. A.), a Cyprus
corporation, acquired all of the outstanding capital stock of e-nnovations.com,
an India corporation ("e-nnovations"). As a result of the acquisition,
e-nnovations has become a wholly-owned subsidiary of AremisSoft.
Under the terms of the Agreement, AremisSoft acquired all of the
outstanding shares of e-nnovations for approximately $14.5 million in an all
cash transaction. AremisSoft funded the acquisition utilizing working capital. A
copy of the Agreement is included herein as Exhibit 10.5 and is incorporated by
reference into this Item 2. The foregoing description is qualified in its
entirety by reference to the exhibit.
The consideration paid by AremisSoft for the outstanding capital stock
of e-nnovations pursuant to the Agreement was determined through negotiations
that took into account various factors concerning the business of e-nnovations
including, among other things, the market value of comparable companies.
As a supplier of internet, workflow and other advanced technology
software, applications and services, e-nnovations has assisted AremisSoft during
the past two years in the modernization of certain enterprise applications.
Through this acquisition, AremisSoft intends to combine e-nnovations technology
and application skills with AremisSoft's enterprise applications to help enable
AremisSoft to offer a broader array of products and services, including
internet-based applications. The principal offices of e-nnovations are located
in Banglador, India.
Item 7. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF E-NNOVATIONS.COM.
1. The Financial Information required to be filed pursuant to
Item 7(a) of Form 8-K will be filed on a Form 8-K/A as soon as practicable, but
in no event later than 60 days from the filing date of this Form 8-K.
(b) PRO FORMA FINANCIAL INFORMATION.
1. The Pro Forma Financial Information required to be filed
pursuant to Item 7(b) of Form 8-K will be filed on a Form 8-K/A as soon as
practicable, but in no event later than 60 days from the filing date of this
Form 8-K.
(c) EXHIBITS.
10.5 Share Purchase Agreement dated as of December 17, 1999.
<PAGE>3
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 29, 1999 AREMISSOFT CORPORATION
By: /s/ DR. LYCOURGOS K. KYPRIANOU
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Dr. Lycourgos K. Kyprianou
Chairman & Chief Executive Officer
SHARE PURCHASE AGREEMENT
BETWEEN
AREMISSOFT CORPORATION,
a Delaware corporation
AREMISSOFT (E.E. M.E. A.) LIMITED,
a Cyprus corporation
AND
E-NNOVATIONS.COM
AND
SPAHN & PARTNERS FINANZ CONSULT GMBH
December 17, 1999
<PAGE>2
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of December 17, 1999, by and between AremisSoft Corporation, a Delaware USA
corporation, on behalf of AremisSoft (E.E. M.E. A.) Limited, a corporation
wholly owned by AremisSoft Corporation and organized under the laws of Cyprus
(collectively "AremisSoft"), e-nnovations.com, , a corporation organized under
the laws of India (the "Company") and the shareholders of the Company listed on
the signature page hereof (collectively, the "Company Shareholders).
W I T N E S S E T H:
A. The Company is the legal successor to all the right, title and
interest in five internet related service companies known as Cascade,
Athene, Baron Multimedia, Bay Internet, and Topsys (hereinafter
referred to as the "Acquired Businesses")
B. The Company Shareholders are the owners of all the outstanding shares
of the Capital Stock of the Company (the "Shares"); and
C. AremisSoft, by and through its wholly-owned subsidiary AremisSoft
(E.E. M.E. A.) Limited, desires to acquire the Acquired Businesses by
purchasing all of the issued and outstanding Shares of the Company
from the Company Shareholders, on the terms and subject to the
conditions set forth herein;
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, AremisSoft, the
Company and the Company Shareholders agree as follows:
1. Purchase and Sale of the Shares.
1.1 Agreements to Sell and Purchase; Closing. Subject to the terms and
conditions of this Agreement, the Company Shareholders agree to sell to one
hundred percent (100%) of the issued and outstanding Shares of Capital
Stock of the Company, and AremisSoft agrees to purchase such Shares from
the Company Shareholders for the aggregate purchase price set forth in
Paragraph 1.2. The exact number of Shares held by each of the Company
Shareholders is set forth below:
Spahn & Partner Finanz Consult 100
Nominee for Spahn & Partner Finanz Consult 5
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TOTAL 105
<PAGE>3
1.2 Purchase Price.
(a) Subject to the terms and conditions set forth in this
Agreement, AremisSoft shall pay to the Company Shareholders
an aggregate purchase price for all of the issued and
outstanding Shares equal to fourteen million five hundred
thirty nine thousand United States Dollars ($14,539,000) as
the purchase price (the "Purchase Price") for the Shares in
the following amounts to the Company Shareholders:
Spahn & Partner Finanz Consult $13,846,666.67
Nominee for Spahn & Partner Finanz Consult 692,233.33
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TOTAL $14,539,000.00
(b) Ninety percent (90%) of the Purchase Price shall be paid in
cash by wire transfer at the Closing pursuant to written
wire transfer instructions provided by the Company
Shareholders, and ten percent (10%) of the Purchase Price
shall be withheld (the "Hold Back Amount") paid on or before
June 30, 1999, in cash by wire transfer pursuant to written
wire transfer instructions provided by the Company
Shareholders. The Hold Back Amount shall be subject to the
Indemnity Provisions of Section 7 of this Agreement.
1.3. The Closing; Closing Date.
1.3.1. Time shall be of the essence for the obligations of
AremisSoft and the Company Shareholders under this Agreement. The
purchase and sale of the Shares shall take place at a closing (the
"Closing") to be held at the offices of AremisSoft, 123 Strovolos
Avenue, Nicosia, Cyprus, at 11:00 A.M., Cyprus time, on December 29,
1999, or on such other date and time as may be agreed upon in writing
by AremisSoft, the Company and the Company Shareholders (the "Closing
Date").
1.3.2. At the Closing, each of the Company Shareholder shall
deliver to AremisSoft (i) a certificate or certificates representing
the number of shares of Capital Stock set forth beside such Company
Shareholder's name in Section 1.1 above, (ii) stock powers executed in
favor of AremisSoft (or in favor of such Affiliate of the AremisSoft
as the AremisSoft may in writing at the Closing direct) sufficient to
validly transfer title to the Shares, and ownership thereof, to
AremisSoft , (iii) a Certificate from the chief executive of the
Company stating that all of the representations and warranties of the
Company provided for in this Agreement are true and correct as of the
Closing Date and that all conditions to the Company's performance
under this Agreement have been satisfied or waived as of the Closing
Date; (iv) a duly executed Confidentiality Agreement as provided for
in Section 9 of this Agreement and (v) a Certificate from each of the
Company Shareholders stating that all of the representations and
warranties of the Company Shareholders provided for in this Agreement
are true and Correct as of the Closing Date and that all conditions to
the Company Shareholder's performance under this Agreement have been
satisfied or waived as of the Closing Date.
1.3.3. At the Closing, AremisSoft shall deliver to the Company
Shareholders (i) irrevocable wire transfer instructions transferring a
total of thirteen million eighty five thousand one hundred United
<PAGE>4
States Dollars ($13,085,100) with twelve million four hundred sixty
two thousand United States Dollars ($12,462,000) to be transferred to
Spahn & Partner Finanz Consult and the remaining six hundred twenty
three thousand one hundred United States Dollars ($623,100) to be
transferred to the Nominee for Spahn & Partner Finanz Consult and (ii)
a Certificate from the chief executive of AremisSoft Corporation
stating that all of the representations and warranties of AremisSoft
provided for in this Agreement are true and correct as of the Closing
Date and that all conditions to AremisSoft's performance under this
Agreement have been satisfied or waived as of the Closing Date.
1.3.4. At the Closing, for each of the employees set forth on
Schedule 1.1.4, the Company shall deliver fully executed employment
agreements on terms and conditions acceptable to AremisSoft and in
substantially similar form to the form of employment agreement
attached to the Closing Memorandum as an exhibit. The salary and
benefits of the employees set forth in Schedule 1.1.4 shall be no
greater than the salary and benefits received by the employees during
the year 1999, unless otherwise agreed to by AremisSoft.
2. Representations and Warranties of the Company Shareholders. Each of the
Company Shareholders represents and warrants to AremisSoft that, as applied
solely itself, all of the following representations and warranties in this
Section 2 are true and correct as of the date of this Agreement, and will be
true and correct, as amended or supplemented pursuant to this Agreement, on and
immediately prior to the Closing Date:
2.1. Ownership and Status of the Company Shares. The Company
Shareholder is the record and beneficial owner (or, if the Company
Shareholder is a trust or estate or a deceased natural person, the legal
owner) of the number of Company sets opposite the Company Shareholder's
name in Section 1.1 above, free and clear of all liens, encumbrances, and
charges except as set forth in the Disclosure Memorandum all of which shall
be released on or before the Closing Date.
2.2 Power and Authority of the Company Shareholder. The Company
Shareholder has the full power, legal capacity and authority to execute and
deliver this Agreement and any other document to which the Company
Shareholder is a party and to perform the Company Shareholder's obligation
under this Agreement and in all other documents to which the Company
Shareholder is a party. This Agreement constitutes the legal, valid and
binding obligation of the Company Shareholder, enforceable against the
Company Shareholder in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of
equity (regardless of whether that enforceability is considered in a
proceeding in equity or at law). If the Company Shareholder is an Entity,
the Company Shareholder has obtained, in accordance with all applicable
Laws and its Charter Documents, all approvals and the taking of all actions
necessary for the authorization, execution, delivery and performance by the
Company Shareholder of this Agreement and any other document to which the
Company Shareholder is a party. If the Company Shareholder is acting
otherwise than in an individual capacity (whether as an executor or a
guardian or in any other fiduciary or representative capacity), all actions
on the part of the Company Shareholder and all other Persons (including any
court) necessary for the authorization, execution, delivery and performance
by the Company Shareholder of this Agreement and the any other documents to
<PAGE>5
which the Company Shareholder is a party have been duly taken.
2.3 No Conflicts or Litigation. The Company Shareholder's execution,
delivery and performance in accordance with the respective terms of this
Agreement and any other document to which the Company Shareholder is a
party do not and will not (i) violate or conflict with any Laws, (ii)
breach or constitute a default under (A) any agreement or instrument to
which the Company Shareholder is a party or by which the Company
Shareholder or any Company Shares the Company Shareholder owns is bound, or
(B) any Company Contract (except as the Disclosure Memorandum sets forth),
(iii) result in the creation or imposition of, or afford any Person the
right to obtain any Lien upon any Company Shares the Company Shareholder
owns (or upon any revenues, income or profits of the Company Shareholder
therefrom), or (iv) if the Company Shareholder is an Entity, violate the
Company Shareholder's Charter Documents. No Litigation is pending or
threatened to which the Company Shareholder is or may become a party which
(i) questions or involves the validity or enforceability of any of the
Company Shareholders' obligations under this Agreement or other documents
under this Agreement, or (ii) seeks (or reasonably may be expected to seek)
(A) to prevent or delay the consummation by the Company Shareholder of the
transactions this Agreement contemplates, or (B) damages in connection with
any such consummation.
2.4 No Brokers. Except as the Disclosure Memorandum sets forth, the
Company Shareholder has not, directly or indirectly, in connection with
this Agreement or the transactions contemplated hereby (i) employed any
broker, finder or agent, or (ii) agreed to pay or incurred any obligation
to pay any broker's or finder's fee, any sales commission or any similar
fee or compensation.
2.5 Preemptive and Other Rights; Waiver. The Company Shareholder
either (i) does not own or otherwise have any statutory or contractual
preemptive or other right of any kind (including any right of first offer
or refusal) to acquire any Company Shares, or (ii) hereby irrevocably
waives each right of that type the Company Shareholder does own or
otherwise has.
2.6 Control of Related Businesses. Except as the Disclosure Memorandum
sets forth, the Company Shareholder is not, alone or with one or more other
Persons, the controlling Affiliate of any Entity, business or trade (other
than the Company or any Entity the Company includes, if the Company
Shareholder is an Affiliate of any thereof) that (i) is engaged in any line
of business which is the same as or similar to any line of business in
which the Company or any Entity the Company includes is engaged, or (ii)
is, or has within the three (3) year period ending on the date of this
Agreement, engaged in any transaction with an Entity the Company includes,
except for transactions in the ordinary course of business of that Entity.
3.0 Representations and Warranties of the Company Shareholders. The Company
and each Company Shareholder jointly and severally represent and warrant to, and
agree with, AremisSoft that all of the following representations and warranties
in this Section 3 of this Agreement are as of the date of this Agreement, and
will be, on and immediately prior to the Closing Date, true and correct.
<PAGE>6
3.1 Organization, Authority and Qualification.
3.1.1 The Company is duly organized and validly existing under
the laws India. The Company and each of the Company Subsidiaries has
full corporate power and authority and is entitled to own or lease its
properties and to carry on its business as and in all places where
such business is conducted and such properties are owned or leased.
The Company and the Company Subsidiaries are qualified as a foreign
corporation in all jurisdictions it is required to register as such.
The Company Shareholders have attached true, correct and complete
copies of the Charter Documents and bylaws of the Company and each of
the Company Subsidiaries, as amended to date, to the Disclosure
Memorandum. The Company Shareholders have attached to the Disclosure
Memorandum true, correct and complete copies of: (i) the minutes and
other similar records of meetings of the shareholders of the Company
and its board of directors, which contain all records of meetings and
actions taken in lieu thereof by the Company's shareholders and show
all corporate actions taken by the Company's shareholders, the
Company's Directors, or any committees thereof, and (ii) the share
transfer records, which fully reflect all issuances, transfers and
redemptions of the Company's shares since the date of its
incorporation. The Company Shareholders have attached to the
Disclosure Memorandum true, correct and complete copies of: (i) the
minutes and other similar records of meetings of the shareholders of
the Acquired Businesses and their respective board of directors, which
contain all records of meetings and actions taken in lieu thereof by
the Acquired Businesses' shareholders and show all corporate actions
taken by the Acquired Businesses' shareholders, the Acquired
Businesses' Directors, or any committees thereof, and (ii) the share
transfer records, which fully reflect all issuances, transfers and
redemptions of the Acquired Businesses shares since the date of their
respective incorporation.
3.1.2 The Company has the full corporate power and authority to
execute, deliver and perform this Agreement and any other documents
hereunder to which it is a party. . This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
3.2 Capitalization of the Company; Ownership of Shares; Subsidiaries.
3.2.1 The authorized equity capital of the Company consists of
15,000 equity shares of Rs 100 per share, of which 105 shares are
issued and outstanding as of the date of this Agreement and as of the
Closing Date.
3.2.2 All of the issued and outstanding shares of the Company are
owned of record and beneficially by the Company Shareholders as set
forth in Section 1.1 of this Agreement.
3.2.3 All of the issued and outstanding Shares of the Company are
duly authorized, validly issued, fully paid and non-assessable and
were authorized, offered, issued and sold in accordance with all
applicable securities and other Laws and all rights of the Company's
<PAGE>7
shareholders. No Person has any preemptive rights with respect to
shares of the Company. There are no outstanding securities convertible
into the equity capital of he Company or rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements or
arrangements providing for the issuance (contingent or otherwise) of,
or any Actions relating to, the capital stock of the Company. There
are no voting trusts, proxies or other agreements or understandings
with respect to the voting of the Capital Stock of the Company. The
Company is not subject to any obligation to repurchase or otherwise
acquire or retire any of its capital stock, and the Company has no
Liability for dividends declared or accrued, but unpaid, with respect
to its capital stock. Neither the Company nor any Acquired Business
have purchased or redeemed any of its capital stock, and except as set
forth in the Disclosure Memorandum, has not paid any dividend or made
any other payment to any of the Company Shareholders or other Related
Parties within the past two (2) years.
3.2.4 The Company does not own or have an interest, direct or
indirect, or any commitment to purchase or otherwise acquire, any
capital stock or other equity interest, direct or indirect, in any
other Person, except as set forth in the Disclosure Memorandum. All
such interests so set forth are owned of record and beneficially by
the Company as set forth in the Disclosure Memorandum and are duly
authorized, validly issued, fully paid and non-assessable, and were
authorized, offered, issued and sold in accordance with all applicable
securities and other Laws.
3.2.5 Each Company Shareholder is the legal and beneficial owner
of the Company Shares as set forth in Section 1.1 of this Agreement,
free and clear of any and all Liens. There are no outstanding
contracts, demands, commitments or other agreements or arrangements
under which the Company Shareholders (or any of them) or the Company
are or may become obligated to sell, transfer or assign any of the
Company Shares to any Person.
3.2.6 The Disclosure Memorandum either (i) sets forth the form of
organization, legal name, each assumed name and Organization State of
each Company Subsidiary, or (ii) correctly states no Entity is a
Company Subsidiary. Except as set forth in the Disclosure Memorandum,
each Company Subsidiary is a Wholly Owned Subsidiary. In the case of
any Company Subsidiary that is not a Wholly Owned Subsidiary, the
Disclosure Memorandum sets forth, by each class and each series within
each class, the number of outstanding shares (or other percentage of
ownership interest) of Capital Stock of the Company Subsidiary, (i)
the Company's aggregate direct and indirect ownership of those shares
(or interests), and (ii) the name and address of record and percentage
ownership of those shares (or interests) of each holder of record
thereof other than the Company or a Company Subsidiary. No Lien exists
upon any outstanding share (or other percentage ownership interests)
of Capital Stock of any Company Subsidiary which the Company, directly
or indirectly, owns other than the Liens, if any, the Disclosure
Memorandum describes, all of which will be released at or before the
Closing Date.
3.3 Capacity; Inconsistent Obligations. Except as set forth in the
Disclosure Memorandum, the execution, delivery and performance of this
Agreement and each of the documents hereunder to which any Company
Shareholder or the Company is a party will not (i) result in a violation of
the Company's Charter Documents or bylaws, or any Law, or (ii) result in a
breach of, conflict with or default under any term or provision of any
indenture, note, mortgage, bond, security agreement, loan agreement,
<PAGE>8
guaranty, pledge, or other instrument, contract, agreement or commitment or
any Order, to which the Company or any Company Shareholder is a party or by
which any of them or any of their respective assets and properties,
including, without limitation, the Company Shares, is subject or bound; nor
will such actions result in (A) the creation of any Lien on any of the
Company Shares or any of the Company's assets or properties, (B) the
acceleration or creation of any Liability of the Company, (C) the
forfeiture of any right or privilege of the Company, or (D) the forfeiture
of any right or privilege of any Company Shareholder which may affect such
Company Shareholder's ability to perform under this Agreement.
3.4 Consents. Except as set forth in the Disclosure Memorandum, the
execution, delivery and performance by each Company Shareholder and the
Company of this Agreement and each of the documents hereunder to which he,
she or it is a party, and the consummation of the transactions contemplated
herein and therein does not (a) require the consent, approval or action of,
or any filing with or notice to, any Government or other Person, or (b)
impose any other term, condition or restriction on AremisSoft or the
Company (or any successor thereto) pursuant to any business combination or
takeover Law.
3.5 No Violation; Compliance with Laws. Except as set forth in the
Disclosure Memorandum, the Company and the Company Subsidiaries are not in
default under or in violation of (a) its Charter Documents or bylaws, or
(b) any Order. Except as set forth in the Disclosure Memorandum, the
operations of the Company and its predecessors have been conducted in all
material respects in compliance with all applicable Laws. (For purposes of
this paragraph, any violation of applicable Law that could result in
imposition of a fine or other monetary penalty upon the Company shall be
deemed to be a Material non-compliance). Neither the Company nor any
Company Shareholder has received any notification of any asserted past or
present failure by the Company to comply with any applicable Law.
3.6 Possession of Licenses. Except as set forth in the Disclosure
Memorandum, the Company and the Company Subsidiaries possess all
franchises, certificates, licenses, permits and other authorizations from
Governments and all other Persons, free from burdensome restrictions, that
are necessary for the ownership, maintenance and operation of its
properties and assets and the conduct of its business, and the Company and
the Company Subsidiaries are not in violation thereof.
3.7 Financial Statements; Financial Condition. The Company and the
Company Shareholders have to the Disclosure Memorandum copies of the
Company's financial statements which include the historical financial
statements of the Acquired Businesses and related documents as identified
in the Disclosure Memorandum (collectively, the "Financial Statements").
The Financial Statements include the Company's most recent Balance Sheet
(the "Reference Date Balance Sheet"). The date of the Reference Date
Balance Sheet is referred to herein as the "Reference Date". The Financial
Statements include the balance sheet of each of the Acquired Businesses for
the prior two fiscal years and a profit and loss statement for each of the
Acquired Businesses for the last three full fiscal years. Except as set
forth in the Disclosure Memorandum, the Financial Statements are true and
correct, in all Material respects, have been prepared in accordance with
Indian GAAP consistently applied, present fairly the financial condition of
the Company as at the respective dates thereof and the results of the
Company's operations and cash flows for the periods then ended, and are
<PAGE>9
consistent with the books and records of the Company and the Acquired
Businesses. The books and records of the Company and the Acquired
Businesses are true, correct and complete in all Material respects and,
except as set forth in the Disclosure Memorandum, are maintained in
accordance with Indian GAAP.
3.8 Liabilities. Set forth in the Disclosure Memorandum is a complete,
true and correct listing of all Liabilities of the Company as of the
Closing Date. The Company has no Liability, except as may be set forth in
the Disclosure Memorandum.
3.9 Title to Properties. Except as set forth in the Disclosure
Memorandum, the Company has good and marketable title to all properties and
assets reflected in the Reference Date Balance Sheet, except inventories
and other immaterial assets which have been disposed of in the ordinary
course of business since the Reference Date, and all other properties and
assets necessary to conduct its business as currently being conducted and
as conducted during the periods covered by the Financial Statements (other
than any leased property), free and clear of Liens, except as may be set
forth in the notes to the Reference Date Balance Sheet.
3.10 Receivables; Debtors. Except as set forth in the Disclosure
Memorandum, all notes and accounts receivable shown on the Reference Date
Balance Sheet and all such receivables now held by the Company are valid
and collectible obligations and were not and are not subject to any offset
or counterclaim, except for amounts reserved against such receivables which
are reflected on the Reference Date Balance Sheet or otherwise set forth in
the Disclosure Memorandum and, with respect to notes and accounts
receivable arising after the Reference Date and now outstanding, except for
a percentage thereof equal to the percentage which said reserved amounts on
the Reference Date Balance Sheet or in the Disclosure Memorandum
constituted of the aggregate of notes and accounts receivable on such
Reference Date Balance Sheet.
3.11 Personal Property.
3.11.1 Except as set forth in the Disclosure Memorandum, all
machinery, equipment, vehicles, and other items of tangible personal
property which are owned or leased by the Company are in good
condition and repair, subject to normal wear and tear, suited for the
use intended and are and have been operated in conformity with all
applicable Laws. To the knowledge of the Company and the Company
Shareholders, except as set forth in the Disclosure Memorandum, there
are no defects or conditions which would cause such tangible personal
property to be or become inoperable or unsafe.
3.11.2 To the knowledge of the Company and the Company
Shareholders, except as set forth in the Disclosure Memorandum, all
lessors of machinery, equipment or other tangible personal property
leased by the Company have performed and satisfied their respective
duties and obligations under such leases. The Company has not brought
or threatened any Action against any such lessor for failure to
perform and satisfy its duties and obligations thereunder.
<PAGE>10
3.12 Real Property.
3.12.1 The Company has good and marketable title to all of the
real property reflected on the Reference Date Balance Sheet as owned
by the Company (collectively, the "Owned Real Property"), free and
clear from all defects and Liens, except as may be set forth in the
notes to the Reference Date Balance Sheet or in the Disclosure
Memorandum. The Disclosure Memorandum lists all Real Property, whether
owned or leased by the Company, listing with respect to each parcel
the street address and the owner or lessor.
3.12.2 Except as set forth in the Disclosure Memorandum, each
parcel or tract of real property which is used by the Company in its
business and that is not Owned Real Property (the "Leased Real
Property," and collectively with the Owned Real Property, the "Real
Property") is subject to a written lease or sublease to which the
Company is a party as lessee or sublessee (individually a "Real
Property Lease"). All such Real Property Leases are valid and in full
force and effect in accordance with their terms. The Company
Shareholders have attached to the Disclosure Memorandum true, correct
and complete copies of all Real Property Leases. There is not, with
respect to any Real Property Lease (i) any default by the Company, or
any event of default or event which with notice or lapse of time, or
both, would constitute a default by the Company, or (ii) to the
knowledge of the Company and the Company Shareholders, any existing
default by any other party to any Real Property Lease, or event of
default or event which with notice or lapse of time, or both, would
constitute a default by any other party to any Real Property Lease.
3.12.3 All of the Real Property is free from development, use or
occupancy restrictions, (except those imposed by applicable Law), and
from special taxes or assessments, (except those generally applicable
to other properties in the tax districts in which the Real Property is
located or as otherwise described in the Disclosure Memorandum). No
options have been granted to others to purchase, lease or otherwise
acquire any interest in the Real Property. The Company has the
exclusive right of possession of each tract or parcel comprising its
Real Property.
3.12.4 Except as set forth in the Disclosure Memorandum, the
present use, occupancy and operation of the Real Property, and all
aspects of the Improvements to the Real Property are in compliance
with all Laws and private restrictive covenants, and to the Company's
and the Company Shareholders' knowledge there has not been any
proposed change thereto that would affect any of the Real Property or
its use, occupancy or operation. There exists no conflict or dispute
with any Government or other Person relating to any Real Property or
the activities thereon. No portion of the Real Property is subject to
any classification, designation or preliminary determination of any
Government or pursuant to any Law which would restrict its use,
development, occupancy or operation in connection with the Company's
business. Except as set forth in the Disclosure Memorandum, all
Improvements are in good condition and repair, and are suited for the
operation of the Company's business.
3.12.5 Neither the Company nor any other Person has caused any
work or improvements to be performed upon or made to any of the Real
Property for which there remains outstanding any payment obligation
that would or might serve as the basis for any Lien in favor of the
Person who performed the work.
<PAGE>11
3.12.6 Except as set forth in the Disclosure Memorandum, all
requisite certificates of occupancy and other permits and approvals
required with respect to the Real Property or the Improvements and the
use, occupancy and operation thereof have been obtained and paid for
and are currently in effect and free of restrictions.
3.13 Intellectual Property.
3.13.1 All Intellectual Property belonging to the Acquired
Businesses have been transferred to the Company. The Company and the
Company Shareholders have attached to the Disclosure Memorandum true
and correct copies of all transfer documents and deeds reflecting the
transfer of the Intellectual Property of the Acquired Businesses to
the Company. No Company Intellectual Property or product or service of
the Company is subject to any proceeding or outstanding decree, Order,
judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by the Company, or which may affect the
validity, use or enforceability of such Company Intellectual Property,
which in any such case would be reasonably likely to have a Material
Adverse Effect on the Company.
3.13.2 Each Material item of Company Registered Intellectual
Property is valid and subsisting. All necessary registration,
maintenance and renewal fees currently due in connection with such
Registered Intellectual Property have been made and all necessary
documents, recordations and certificates in connection with such
Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property, except where the
failure to do so would not be reasonably likely to have a Material
Adverse Effect on the Company.
3.13.3 The Disclosure Memorandum lists all of the Company's
Intellectual Property. The Company or the Company Subsidiaries own and
have good and exclusive title to, or have licenses (sufficient for the
conduct of its business as currently conducted and as proposed to be
conducted) to, each Material item of Company Intellectual Property
used in connection with the conduct of its business as currently
conducted and as proposed to be conducted free and clear of any Lien
or encumbrance (excluding licenses and related restrictions); and the
Company or the Company Subsidiaries are the exclusive owners of all
trademarks and trade names used in connection with and Material to the
operation or conduct of the business of the Company and the Company
Subsidiaries, including the sale of any products or the provision of
any services by the Company and the Company Subsidiaries.
3.13.4 The Company or the Company Subsidiaries own exclusively,
and have good and marketable title to, all copyrighted works that are
the Company's products or which the Company otherwise expressly
purports to own.
3.13.5 To the extent that any Material Intellectual Property has
been developed or created by a third party for the Company or the
Company Subsidiaries, as the case may be, the Company has a written
agreement with such third party with respect thereto and the Company
or the Company Subsidiary thereby either (i) have obtained ownership
of and are the exclusive owners of, or (ii) have obtained a license
(sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual
<PAGE>12
Property in such work, material or invention by operation of law or by
valid assignment, to the fullest extent it is legally possible to do
so.
3.13.6 The Disclosure Memorandum lists all Company Contracts,
licenses and agreements to which the Company is a party (i) with
respect to Company Intellectual Property licensed or transferred to
any third party (other than end-user licenses in the ordinary course),
or (ii) pursuant to which a third party has licensed or transferred
any Material Intellectual Property to the Company.
3.13.7 All Material contracts, licenses and agreements relating
to Company Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this Agreement will
neither violate nor result in the breach, modification, cancellation,
termination, or suspension of such contracts, licenses and agreements
in accordance with its terms, the effect of which would have a
Material Adverse Effect on the Company. The Company is in Material
compliance with, and has not materially breached any term of any of
such contracts, licenses and agreements and, to the knowledge of the
Company and the Company Shareholders, all other parties to such
contracts, licenses and agreements are in compliance in all Material
respects with, and have not materially breached any term of, such
contracts, licenses and agreements. Following the Closing Date,
AremisSoft will be permitted to exercise all of the Company's rights
under such contracts, licenses and agreements to the same extent the
Company would have been able to had the transactions contemplated by
this Agreement not occurred and without the payment of any additional
amounts or consideration other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
3.13.8 The operation of the business of the Company as such
business currently is conducted and has been historically conducted by
the Acquired Businesses, including the Company's design, development,
marketing and sale of the products or services of the Company and
including with respect to products currently under development has
not, does not and will not infringe or misappropriate in any Material
manner the Intellectual Property of any third party or, to the
knowledge of the Company and the Company Shareholders, constitute
unfair competition or trade practices under the laws of any
jurisdiction.
3.13.9 The Company has not received written notice from any third
party, and to the knowledge of the Company and the Company
Shareholders, no other pending overt threat from any third party, that
the operation of the business of the Company or any act, product or
service of the Company, infringes or misappropriates the Intellectual
Property of any third party or constitutes unfair competition or trade
practices under the laws of any jurisdiction.
3.13.10 To the knowledge of the Company and the Company
Shareholders, no person has or is infringing or misappropriating any
Company Intellectual Property.
3.13.11 The Company and the Company Subsidiaries have taken
reasonable steps to protect the its rights in its confidential
information and trade secrets that they wish to protect or any trade
secrets or confidential information of third parties provided them.
<PAGE>14
3.14 Contracts.
3.14.1 Except as set forth in the Disclosure Memorandum, all
Company Contracts have been entered into in the ordinary course of the
Company's business on commercially reasonable terms, are valid and
enforceable in all Material respects in accordance with their terms,
are in full force and effect, and will continue to be valid and
enforceable and in full force and effect on identical terms following
the Closing Date. Except as set forth in the Disclosure Memorandum, no
Company Contract is likely to result in a loss to the Company upon
completion of performance, and all Company Contracts can be fulfilled
or performed by the Company in accordance with their respective terms
without undue or unusual expenditures of money or effort. All Company
Contracts are listed in the Disclosure Memorandum, and true, correct
and complete copies of all Company Contracts in excess of $250,000 USD
have been attached to the Disclosure Memorandum.
3.14.2 There are no existing Material defaults, events of default
or events which, with the giving of notice or lapse of time, or both,
would constitute a Material default by the Company under any Company
Contract. No event has occurred which may hereafter give rise to any
right of termination, acceleration, Damages or any other remedy under
any Company Contract.
3.14.3 To the knowledge of the Company and the Company
Shareholders, neither this Agreement, the Closing or the relationship
between the Company and AremisSoft has caused or is likely to cause
the termination or non-renewal of any Company Contract.
3.15 Insurance. The Company has obtained and maintains insurance
policies which provide adequate coverage to insure its assets, properties
and business against such risks and in such amounts as are prudent and
customary in the industry in which the Company operates, and all such
policies are in full force and effect. All premiums due on such policies
have been paid, and the Company has not received any notice of cancellation
with respect thereto. The Company has no Liability for premiums or for
retrospective premium adjustments for any period. The Disclosure Memorandum
lists the types, amounts of coverage and deductibles of all such insurance
policies, and true, correct and complete copies thereof have been attached
thereto.
3.16 Litigation; Contingencies. Except as set forth in the Disclosure
Memorandum, no Action is pending or, to the knowledge of the Company
Shareholders and the Company, threatened against, by or affecting the
Company or the Company Shares. There are no unsatisfied judgments or Orders
against the Company or any Company Shareholder to which any of them or
their assets and properties are subject.
3.17 Taxes. Except as set forth in the Disclosure Memorandum, the
Company and any entity at any time eligible or required to file a
consolidated or combined Tax Return with the Company, including the
Acquired Businesses (individually, an "Affiliated Entity" and collectively,
the "Affiliated Entities"), has duly and timely filed all federal, state,
municipal, local and foreign, if any, Tax Returns and reports (including
returns for estimated tax), and all reports and returns of all other
Governments having jurisdiction (collectively, "Returns") with respect to
all Taxes (including, without limitation, consolidated or combined Tax
Returns of some or all of the Company and the Affiliated Entities); all
<PAGE>14
such Tax Returns and reports show the correct and proper amount due; and
the Taxes shown on all Tax Returns and reports and all Tax assessments
received by the Company or any Affiliated Entity have been paid to the
extent that such Taxes or estimates are due. The Company has attached to
the Disclosure Memorandum true, correct and complete copies of all Returns
filed with respect to the five (5) tax years preceding the date hereof.
Except as set forth in the Disclosure Memorandum, all Taxes imposed on the
Company and its Affiliated Entities by any Government (including all
deposits in connection therewith required by applicable Law, and all
interest and penalties thereon) which have become due and payable by the
Company for all periods through the date hereof have been paid in full, and
adequate reserves for all other Taxes, whether or not due and payable, and
whether or not disputed, have been set up on the books of the Company, and
such reserves will be adequate to pay all Taxes of the Company for all
periods through the Closing. There is not now any proposed assessment
against the Company or any Affiliated Entity of additional Taxes of any
kind. The Company is not a party to any Tax sharing or Tax allocation
agreement, understanding, arrangement or commitment. There is no dispute or
Action concerning any Tax Liability of the Company raised by a Government
in writing.
3.18 Employment and Labor Matters. Except as set forth in the
Disclosure Memorandum, to the Company's and the Company Shareholders'
knowledge, no employee, agent, consultant or independent contractor who
performs services on a regular basis for the Company plans to discontinue
such relationship with the Company after the Closing.
3.18.1 The Company is not a party to any agreement of any kind
which deals with wages, conditions of employment, benefits or other
matters affecting the employer/employee relationship with any union,
labor organization or employee group. There are no controversies
pending, or to the Company's and the Company Shareholders' knowledge
threatened, between the Company and any union, labor organization or
employee group representing, or seeking to represent, any of its
employees, and there has been no attempt by any union, labor
organization or employee group to organize any of the Company's
employees at any time in the past five (5) years. The Company has
substantially complied with all applicable Laws relating to wages,
hours, health and safety, payment of Social Security withholding and
other taxes, maintenance of workers' compensation insurance, labor and
employment relations and employment discrimination.
3.18.2 The Disclosure Memorandum lists all contracts, agreements
or arrangements (written or oral) concerning the employment of any
individual by the Company, including each such individual's title,
compensation and duties.
3.19 Employee Benefit Matters
3.19.1 The Disclosure Memorandum lists all "employee benefit
plans" (the "Employee Plans") to which the Company contributes or is
required to contribute and all other practices, commitments,
arrangements and agreements pursuant to which the Company provides,
directly or indirectly, any benefits for employees. True, correct and
complete copies of all Employee Plans, together with related trusts,
insurance contracts, summary plan descriptions, and annual reports for
the past three (3) years, have been attached to the Disclosure
Memorandum.
<PAGE>15
3.19.2 Each Employee Plan has been operated and administered in
all Material respects in accordance with all applicable Laws. There
are no pending claims or, to the Company's and the Company
Shareholders' knowledge threatened claims, by or against any of the
Employee Plans by any employee or beneficiary covered under such
Employee Plan, or by any Government or otherwise involving such
Employee Plan or any of its fiduciaries (other than for routine claims
for benefits).
3.19.3 The Company is not bound to provide, and the Company does
not provide, benefits, including, without limitation, death, health or
medical benefits (whether or not insured), with respect to current or
former employees of the Company other than as required by applicable
Law. Neither this Agreement nor any transaction contemplated hereby
will entitle any current or former employee, officer or director of
the Company to severance pay, unemployment compensation, "change of
control" compensation or any similar payment.
3.20 Environmental Matters. Except as set forth in the Disclosure
Memorandum, the Company holds all Environmental Permits necessary for
conducting its business and operations and has conducted, and is presently
conducting, its business and operations in full compliance with all
applicable Environmental Laws and Environmental Permits, including, without
limitation, all record keeping and filing requirements. There is no
existing or, to the knowledge of the Company or Company Shareholders,
pending Environmental Law with a future compliance date that will require
Material operational changes, business practice modifications or capital
expenditures at any Real Property (or any other property presently or
formerly owned, operated or controlled by the Company or as to which the
Company may bear responsibility or Liability), or any of the Improvements
thereon. There are no presently pending, or to the Company's and the
Company Shareholders' knowledge, threatened Actions or Orders against or
involving the Company (including any Person for whose acts or omissions the
Company is responsible) relating to any alleged, past or ongoing violation.
3.21 Absence of Certain Business Practices. Neither the Company nor
any officer, employee or agent of the Company, nor any other person acting
on behalf of the Company, has, directly or indirectly, within the past five
(5) years, given or agreed to give any gift or similar benefit to any
Person who is or may be in a position to help or hinder the Company's
business (or assist the Company in connection with any actual or proposed
transaction) which (a) might subject the Company to any Material Damage in
any Action or which might have an effect on the Company or its assets and
properties, (b) if not given in the past, might have had an effect on the
Company's business or its assets and properties, or (c) if not continued in
the future, might have an effect on the Company or which might subject the
Company to suit or penalty in any Action.
3.22 Agreements and Transactions with Related Parties. Except as set
forth in the Disclosure Memorandum, the Company is not, directly or
indirectly, a party to any contract, agreement or lease with, or any other
commitment to, (a) any Person owning, or formerly owning, beneficially or
of record, directly or indirectly, any of the Company Shares of or other
equity interest in the Company, (b) any Affiliate of such Person, (c) any
director or officer of the Company, (d) any Person in which any of the
foregoing Persons has, directly or indirectly, at least a three percent
(3.0%) beneficial interest in the Capital Stock or other type of equity
interest of such Person, or (e) any partnership in which any of the
<PAGE>16
foregoing Persons is a general partner or has at least a three percent
(3.0%) beneficial interest (any or all of the foregoing being referred to
herein as "Related Parties"). Without limiting the generality of the
foregoing, (i) no Related Party, directly or indirectly, owns or controls
any assets or properties which are or have been used in the Company's
business, and (ii) no Related Party, directly or indirectly, engages in or
has any significant interest in or connection with any business (A) which
is or which within the last three (3) years has been a competitor, customer
or supplier of the Company or has done business with the Company, or (B)
which as of the date hereof sells or distributes products or services which
are similar or related to the Company's products or services.
3.23 Absence of Changes. Except as expressly provided for in this
Agreement, or as set forth in the Disclosure Memorandum, since the
Reference Date:
3.23.1 There has been no change in the business, assets,
properties, Liabilities, affairs, results of operations, condition
(financial or otherwise), cash flows or prospects of the Company or in
its respective relationships with suppliers, customers, employees,
lessors or others, other than changes in the ordinary course of
business, none of which have had or will have a Material Adverse
Effect on the Company, in the aggregate.
3.23.2 There has been no Material damage, destruction or loss to
the assets, properties, or business of the Company, whether or not
covered by insurance.
3.23.3 The business of the Company has been operated in the
ordinary course and consistent with its prior practices.
3.23.4 The books, accounts and records of the Company have been
maintained in the usual, regular and ordinary manner on a basis
consistent with prior years and with the basis in which the Financial
Statements were prepared.
3.23.5 There has been no declaration, setting aside or payment of
any dividend or other distribution on or in respect of the Capital
Stock of the Company, nor has there been any direct or indirect
redemption, retirement, purchase or other acquisition of any of the
Capital Stock or other securities of the Company.
3.23.6 The Company has not discontinued or determined to
discontinue selling any products or services previously sold by the
Company, the sales of which have been Material to the Company.
3.23.7 There has been no Lien (other than Liens for current Taxes
which are not yet due and payable) created on or in the assets of the
Company.
3.23.8 There has been no sale, transfer, lease or other
disposition of any asset of the Company to any Related Party or,
except in the ordinary course of the Company's business, to any other
Person, and no debt to, or Material claim or right of, the Company has
been canceled, compromised, waived or released.
3.23.9 There has been no amendment, termination or waiver of, or
any notice of any amendment, termination or waiver of, any right of
<PAGE>17
the Company under any Company Contract or under any franchise,
certificate, license, permit or authorization from any Government, and
there has been no amendment to the Charter Documents or bylaws of the
Company.
3.23.10 The Company has not delayed or postponed the payment of
any accounts payable or other Liabilities outside the ordinary course
of business.
3.23.11 The Company has not paid or committed to pay any bonus,
profit-share or other extraordinary compensation payment or other
arrangement (except in the ordinary course of business and consistent
with past practices), nor has the Company entered into any agreement,
contract or commitment with any Company Shareholder or any Related
Party or amended the terms of any existing agreement, contract or
commitment with any Company Shareholder or any Related Party.
3.23.12 There has been no change in the authorized, issued or
outstanding Capital Stock or other securities of the Company.
3.24 Bank Accounts and Safe Deposit Boxes. The Disclosure Memorandum
lists each bank in which the Company maintains an account or safe deposit
box, the account numbers, and the names of all persons authorized to draw
thereon or have access thereto.
4. Representations and Warranties of AremisSoft Corporation. As an
inducement to the Company and the Company Shareholders to enter into and perform
this Agreement, AremisSoft Corporation on behalf of itself and its wholly owned
subsidiary, AremisSoft (E.E. M.E. A.) Limited, hereby represents and warrants as
follows:
4.1. Organization. AremisSoft Corporation is a corporation duly
organized and validly existing under the Laws of Delaware, USA. AremisSoft
(E.E. M.E. A.) Limited is a corporation wholly-owned by AremisSoft
Corporation, directly or indirectly, duly organized and validly existing
under the laws of Cyprus.
4.2. Authorization. No Inconsistent Agreements. AremisSoft Corporation
has full corporate power and authority to execute and deliver this
Agreement and to its obligations thereunder. This Agreement constitutes the
legal, valid and binding obligation of AremisSoft Corporation, enforceable
against AremisSoft Corporation in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of
equity (regardless of whether that enforceability is considered in a
proceeding in equity or at law).
4.3. Consents. The execution, delivery and performance by AremisSoft
Corporation of this Agreement and the consummation of the transactions
contemplated herein does not require the consent, approval or action of, or
any filing with or notice to, any Government or other Person.
<PAGE>18
5. Covenants Extending to the Closing Date.
5.1. Access and Cooperation; Due Diligence.
5.1.1. From the date hereof and until the Closing Date, the
Company will (i) afford to the Representatives of AremisSoft
reasonable access to all the key employees, sites, properties, books
and records of the Company and the Company Subsidiaries, (ii)
AremisSoft with such additional financial and operating data and other
information relating to the business and properties of each of the
Company and the Company Subsidiaries as AremisSoft may from time to
time reasonably request, and (iii) cooperate with AremisSoft and its
Representatives in the preparation of any documents or other material
that may be required in order to consummate the transactions
contemplated by the Agreement.
5.1.2. Each of the Company and the Company Shareholders will use
their best efforts to secure, as soon as practicable after the date
hereof, all approvals or consents of third persons as may be necessary
to enable them to consummate the transactions contemplated hereby.
AremisSoft will use its best efforts to secure, as soon as practicable
after the date hereof, all approvals or consents of third persons as
may be necessary to enable AremisSoft to consummate the transactions
contemplated hereby.
5.1.3. If this Agreement is terminated pursuant to Section 8 of
this Agreement, AremisSoft will promptly return all written
Confidential Information of Company it possess to the Company.
5.2 Conduct of Business Pending the Closing Date . Except as and only
to the extent set forth in Disclosure Memorandum, from the date hereof and
until the Closing Date, the Company will, and will cause each Company
Subsidiary to:
5.2.1 carry on its business in substantially the same manner as
it has heretofore and not introduce any new methods of management,
operation or accounting that in the aggregate are Material to the
Company or the Company Shares;
5.2.2 maintain its properties and facilities, including those
held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
5.2.3 promptly perform all its obligations under agreements
relating to or affecting its business, assets, properties and other
rights;
5.2.4 keep in full force and effect without interruption all of
its present insurance policies or other comparable insurance coverage;
5.2.5 use reasonable commercial efforts to (i) maintain and
preserve its business organization intact; (ii) retain its present
employees; and (iii) maintain its relationships with suppliers,
customers and others having business relations with it; and
5.2.6 comply with all applicable Laws.
<PAGE>19
5.3 Prohibited Activities. Except as and only to the extent set forth
in the Disclosure Memorandum, from the date hereof and until the Closing
Date , without the prior written consent of AremisSoft, the Company will
not, and will not permit any Company Subsidiary to,:
5.3.1 make any change in its Charter Documents;
5.3.2 issue any of its Company Shares or issue or otherwise
create any of its Derivative Securities;
5.3.3 make any Restricted Payment;
5.3.4 make any investments in the Company Shares, Derivative
Securities or Indebtedness of any Person;
5.3.5 enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in a single
transaction or a series of related transactions involving an aggregate
amount of more than Twenty-Five Thousand Dollars ($25,000) otherwise
than in the ordinary course of its business and consistent with its
past practice;
5.3.6 increase or commit or promise to increase the Cash
Compensation payable or to become payable to any officer, director,
shareholder, employee or agent, consultant or independent contractor
of the Company and the Company Subsidiaries or make any discretionary
bonus or management fee payment to any such Person, except bonuses or
salary increases to employees (other than the Company Shareholders or
their Immediate Family Members) at the times and in the amounts
consistent with its past practice;
5.3.7 create, assume or permit to be created or imposed any Liens
upon any of its assets or properties, whether now owned or hereafter
acquired, except for purchase money Liens incurred in connection with
the acquisition of equipment with an aggregate cost not in excess of
Twenty-Five Thousand Dollars ($25,000) and necessary or desirable for
the conduct of the business of the Company and the Company
Subsidiaries;
5.3.8 (i) adopt, establish or terminate any Employee Plan; or
(ii) take any discretionary action, or omit to take any contractually
required action, if that action or omission could either (A) deplete
the assets of any Employee Plan, or (B) increase the liabilities or
obligations under any such Employee Plan;
5.3.9 sell, assign, lease or otherwise transfer or dispose of any
of its owned or leased property or equipment otherwise than in the
ordinary course of its business and consistent with its past practice;
5.3.10 negotiate for the acquisition of any business or the
start-up of any new business;
<PAGE>20
5.3.11 merge, consolidate or effect a share exchange with, or
agree to merge, consolidate or effect a share exchange with, any other
Entity;
5.3.12 waive any of its rights or claims that in the aggregate
are Material to the Company, provided that it may negotiate and adjust
invoices in the course of good faith disputes with customers in a
manner consistent with past practice;
5.3.13 commit breaches that in the aggregate are Material to the
Company or amend or terminate any Company Contract or any of its
Governmental Approval; or
5.3.14 enter into any other transaction (i) outside the ordinary
course of business and consistent with its past practice, or (ii)
prohibited hereby.
5.4 No Shop. Each of the Company and the Company Shareholders agree
that, from the date hereof and until the first to occur of the Closing Date
or the termination of this Agreement in accordance with Section 8 below,
neither the Company nor any Company Shareholder, nor any of their
respective officers, directors or shareholders will, and the Company and
each Company Shareholder will direct and use their reasonable best efforts
to cause each of their respective Representatives not to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including any proposal or offer to
the Company Shareholders) with respect to a merger, acquisition,
consolidation or similar transaction involving the Company Shares, or any
purchase of all or any significant portion of the assets or any equity
securities of, the Company (any such proposal or offer being an
"Acquisition Proposal") or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information
respecting, the Company, or a Company Subsidiary, or have any discussions
with, any Person relating to an Acquisition Proposal or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal. The Company and each Company Shareholder will: (i) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of
the foregoing, and each will take the steps necessary to inform the Persons
referred to in the first sentence of this Section of the obligations
undertaken in this Section, and (ii) notify AremisSoft immediately if any
such inquiries or proposals are received by, any such information is
requested from or any such discussions or negotiations are sought to be
initiated or continued with the Company or any Company Shareholder.
5.5 Notification of Certain Matters. The Company Shareholders and the
Company will give prompt notice to AremisSoft of (i) the existence or
occurrence of each condition or state of facts which will or reasonably
could be expected to cause any representation or warranty of the Company or
any Company Shareholder contained herein to be untrue or incorrect in any
Material respect on or prior to the Closing Date, and (ii) any Material
failure of any Company Shareholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by
that Person hereunder. AremisSoft will give prompt notice to the Company of
(i) the existence or occurrence of each condition or state of facts which
will or reasonably could be expected to cause any representation or
warranty of AremisSoft contained herein to be untrue or inaccurate on or
prior to the Closing Date, and (ii) any Material failure of AremisSoft to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. The delivery of any notice pursuant to
<PAGE>21
this Section will not be deemed to (i) modify the representations or
warranties herein of the party delivering that notice, or any other party,
which modification may be made only pursuant to Section 11.7 of this
Agreement, or (ii) limit or otherwise affect the remedies available
hereunder to the party receiving that notice.
5.6 Supplemental Information. Each of the Company and the Company
Shareholders agree that, with respect to the representations and warranties
of that party contained in this Agreement, that party will have the
continuing obligation until the Closing to provide AremisSoft promptly with
such additional supplemental information (collectively, the "Supplemental
Information"), in the form of (i) amendments to then existing Disclosure
Memorandum, or (ii) additional Schedules, as would be necessary, in light
of the circumstances, conditions, events and state of facts then known to
the Company or any Company Shareholder, to make each of those
representations and warranties true and correct as of the Effective Date.
For the purpose only of determining whether the conditions to the
obligations of AremisSoft which are specified in Section 6.3 have been
satisfied, the Disclosure Memorandum as of the Closing Date will be deemed
to be the Disclosure Memorandum as of the date hereof as amended or
supplemented by the Supplemental Information provided to AremisSoft prior
to the Closing pursuant to this Section; provided, however, that if the
Supplemental Information so provided discloses the existence of
circumstances, conditions, events or state of facts which, in any
combination thereof, (i) have had a Material Adverse Effect in the sole
judgment of AremisSoft (which will be conclusive for purposes of this
Section), or (ii) are having or will have a Material Adverse Effect,
AremisSoft will be entitled to terminate this Agreement pursuant to Section
8.14); and provided, further, that if AremisSoft is entitled to terminate
this Agreement pursuant to Section 8.14. but elects not to do so, it will
be entitled to treat as Indemnified Losses (which treatment will not
prejudice the right of any Company Shareholder to contest the Indemnified
Losses), as applicable, all which are attributable to the circumstances,
conditions, events and state of facts first disclosed herein after the date
hereof in the Supplemental Information.
6. Conditions to the Closing and the Consummation of the Transactions
Contemplated Hereby.
6.1. Conditions to the Obligations of Each Party. The obligation of
each party hereto to take the actions contemplated to be taken by that
party at the Closing is subject to the satisfaction on or before the
Closing Date or written waiver pursuant to the provisions of this Agreement
of each of the following conditions:
6.1.1. No Litigation shall be pending on the Closing Date to
restrain, prohibit or otherwise interfere with, or to obtain Material
Damages or other relief from AremisSoft in connection with the
consummation of the transactions contemplated by this Agreement; and
6.1.2. All Governmental Approvals required to be obtained by any
of the Company Shareholders, the Company, and AremisSoft as a result
of this Agreement shall have been obtained.
<PAGE>22
6.2 Conditions to the Obligations of the Company and the Company
Shareholders. The obligations of the Company and each Company Shareholder
with respect to actions to be taken by them on or before the Closing Date
are subject to the satisfaction on or before the Closing Date, or the
written waiver by the Company on behalf of itself and each Company
Shareholder pursuant to the provisions of this Agreement of (i) all the
conditions of Section 6.1 set forth, and (ii) all the following conditions:
6.2.1 All the representations and warranties of AremisSoft in
this Agreement shall be true and correct as of the Closing Date as
though made at that time.
6.2.2 AremisSoft shall have delivered to the Company Shareholders
executed copies of the officer's certificate respecting the
representations and warranties of AremisSoft in this Agreement and
compliance with the covenants of AremisSoft in Section 5 of this
Agreement and in a form substantially similar to the form thereof
attached as an exhibit to the Closing Memorandum.
6.2.3 AremisSoft shall have delivered the Purchase Price it is
obligated to deliver pursuant to Section 1.2 of this Agreement.
6.3 Conditions to the Obligations of AremisSoft. The obligations of
AremisSoft with respect to actions to be taken by it on or before the
Closing Date are subject to the satisfaction on or before the Closing Date,
or the written waiver by AremisSoft pursuant to the terms of this
Agreement, of (i) all the conditions of Section 6.1 above set forth, and
(ii) all the following conditions: 6.3.1 All the representations and
warranties of the Company Shareholders and the Company in this Agreement
shall be true and correct as of the Closing Date as though made at that
time.
6.3.2 The Company Shareholders and the Company shall have
delivered to AremisSoft:
(i) a certificate, signed by an authorized officer of the
Company Shareholders, or individually signed if the Company
Shareholder is not an Entity, respecting the representations and
warranties of the Company Shareholders and the Company in this
Agreement and compliance with the covenants of the Company
Shareholders and the Company in Section 5 of this Agreement and
in a form substantially similar to the form thereof attached as
an exhibit to the Closing Memorandum;
(ii) a certificate, signed by an authorized officer of the
Company respecting the representations and warranties of the
Company Shareholders and the Company in this Agreement and
compliance with the covenants of the Company Shareholders and the
Company in Section 5 of this Agreement and in a form
substantially similar to the form thereof attached as an exhibit
to the Closing Memorandum;
(iii) with respect to the Company and any Company
Subsidiaries, a certificate, dated as of a current date, duly
issued by the appropriate Government in its Organization State
and, in each other jurisdiction the Disclosure Memorandum lists
<PAGE>23
for it, showing it to be in good standing and authorized to do
business in its Organization State and those other jurisdictions
set forth in the Disclosure Memorandum; and
(iv) the Company Shares, duly endorsed with signature
guarantees acceptable to AremisSoft, together with a any other
document reasonably necessary to complete the transfer of the
Company Shares to AremisSoft.
7. Indemnities.
7.1. Indemnification by the Company Shareholders.
7.1.1. In accordance with and subject to the provisions of this
Section 7, the Company Shareholders shall indemnify and hold harmless
the Company, AremisSoft, their respective Affiliates, and the
officers, directors, agents and employees of the Company, AremisSoft
and their Affiliates (collectively, the "Indemnitees") from and
against and in respect of any and all loss, damage, diminution in
value, Liability, cost and expense, including reasonable attorneys'
fees and amounts paid in settlement (collectively, the Indemnified
Losses"), suffered or incurred by any one or more of the Indemnitees
by reason of, or arising out of:
(i) any misrepresentation or breach of representation or
warranty contained in this Agreement, any other document
delivered by the Company Shareholders to the Indemnitees under
this Agreement, the Disclosure Memorandum or any certificate,
instrument, schedule, agreement or other writing delivered by or
on behalf of any Company Shareholder or the Company pursuant to
this Agreement or in connection with the transactions
contemplated herein, or the breach of any covenant or agreement
of any Company Shareholder or the Company contained in this
Agreement or any certificate, instrument, schedule, agreement or
other writing delivered to the Indemnitees by or on behalf of any
Company Shareholder or the Company pursuant to this Agreement or
in connection with the transactions contemplated herein;
(ii) any and all Liabilities of the Company arising or
incurred prior to the Closing Date except for any Liability
arising from those matters described in the Disclosure
Memorandum;
(iii) any and all Actions, Orders, assessments, fees and
expenses incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnification.
7.1.2 The Company Shareholders shall reimburse Indemnitees on
demand for any Indemnified Losses suffered by the Indemnitees, based
on the judgment of any court of competent jurisdiction or pursuant to
a bona fide compromise or settlement of claims, demands, or actions in
respect of any Indemnified Losses. The Company Shareholders shall have
the opportunity to defend at their expense any claim, action or demand
for which the Indemnitees claim indemnity against the Company
Shareholders; provided that (i) the defense is conducted by reputable
counsel approved by the Indemnitees, which approval shall not be
unreasonably withheld or delayed, (ii) the defense is expressly
assumed in writing within ten (10) days after written notice of the
<PAGE>24
claim, action or demand is given to the Company Shareholders, and
(iii) counsel for the Indemnitees may participate at all times and in
all proceedings (formal and informal) relating to the defense,
compromise and settlement of the claim, action or demand at the
expense of the Indemnitees.
7.2 Limitations and Payment on Claims. No claim shall be brought by
any Indemnitee under this Section 7 for breach of any representation or
warranty, and none of them shall be entitled to receive any payment with
respect thereto, unless and until the aggregate amount of such claim(s)
equals or exceeds Twenty Five Thousand Dollars ($25,000), and after such
time as the amount of such claim(s) equals or exceeds Twenty Five Thousand
Dollars ($25,000), the Indemnitees may assert all such prior and all future
claims against the Company Shareholders hereunder, and any such delay in
asserting a claim or claims against the Company Shareholders pursuant to
this Section shall in no way prejudice the Indemnitees under any statute or
period of limitations or similar Law or under any principle of equity.
7.3 No Liability or Contribution by the Company. The Company shall not
have any Liability to any Company Shareholder as a result of any
misrepresentation or breach of representation or warranty by the Company
contained in this Agreement, any other document delivered pursuant to this
Agreement, the Disclosure Memorandum or any certificate, instrument,
agreement or other writing delivered by or on behalf of any Company
Shareholder or the Company pursuant to this Agreement or in connection with
the transactions contemplated herein, or the breach of any covenant or
agreement of any Company Shareholder or the Company contained in this
Agreement, any other document delivered pursuant to this Agreement, or the
Disclosure Memorandum or any certificate, instrument, agreement or other
writing by or on behalf of any Company Shareholder or the Company pursuant
to the provisions of this Agreement or in connection with the transactions
contemplated herein, and no Company Shareholder shall have any right of
indemnification or contribution against the Company on account of any event
or condition occurring or existing prior to or on the date hereof or prior
to the Closing Date.
7.4 Survival. The representations and warranties of each Company
Shareholder and the Company contained in this Agreement, any other document
delivered pursuant to this Agreement, the Disclosure Memorandum or in any
certificate, instrument, agreement or other writing delivered by or on
behalf of any Company Shareholder or the Company pursuant to this Agreement
or in connection with the transactions contemplated herein shall survive
any investigation heretofore or hereafter made by or on behalf of
AremisSoft and the consummation of the transactions contemplated herein and
all such representations and warranties shall be of no further force and
effect after the expiration of five (5) years from the date of the Closing
Date ("Survival Period"). Anything to the contrary notwithstanding, a claim
for indemnification which is made but not resolved prior to the expiration
of the Survival Period may be pursued and resolved after such expiration.
7.5 Hold Back Amount. Each of the Company Shareholders agrees that
AremisSoft shall have the right to off set all or a portion of the Hold
Back Amount approximately equal in value to the total amount of any
Indemnified Losses which are discovered prior to June 30, 2000. To the
extent that the Indemnified Losses exceed the value of the Hold Back
<PAGE>25
Amount, or in the event the Indemnified Losses are discovered after the
Hold Back Amount has been paid to the Company Shareholders, the Company
Shareholders shall make payment for Indemnified Losses under this Section 7
in cash legal tender of the United States of America to the extent
sufficient to satisfy all Indemnified Losses.
8. Termination of the Agreement.
8.1. Termination. This Agreement may be terminated at any time prior
to the Closing solely:
8.1.1. by the mutual consent of AremisSoft and the Company
Shareholders;
8.1.2. by the Company Shareholders or the Company, on one hand,
or by AremisSoft on the other hand, if the transactions contemplated
by this Agreement to take place at the Closing shall not have been
consummated by January 31, 2000, unless the parties shall have agreed
in writing to a different date;
8.1.3. by the Company Shareholders or the Company, on the one
hand, or by AremisSoft, on the other hand, if a Material breach or
default is made by the other party (or in the case of the Company
Shareholder and the Company, any of them ) in the observance or in the
due and timely performance of any of the covenants, agreements or
conditions contained herein; or
8.1.4. by AremisSoft if the Company has suffered a Material
Adverse Effect not disclosed in the Disclosure Memorandum as of the
date of this Agreement.
8.2. Liabilities in Event of Termination. If this Agreement is
terminated pursuant to Section 8.1, there shall be no Liability or
obligation on the part of any party hereto except to the extent that such
Liability is based on the breach by that party of any of its
representations, warranties or covenants set forth in this Agreement.
9. Confidentiality Agreements; Prohibited Activities.
9.1. In order to induce AremisSoft to enter into this Agreement and
make payments as provided herein, each Company Shareholder agrees that, for
the period of five (5) years immediately following the date of the Closing,
he will not, without the prior written consent of AremisSoft, for his own
account or jointly with another, directly or indirectly, for or on behalf
of any Person, as principal, agent or otherwise:
9.1.1. own, control, manage or otherwise participate in the
ownership, control or management of a business engaged in the business
of selling any product or providing any services in competition with
the Company, AremisSoft or any of its subsidiaries within any
Territory in which the Company was engaged in business on the date of
the Closing (for purposes of this Section 9, Territory will be the
online cyber community of businesses which the Company is a part of
that are web enabled through the Internet);
<PAGE>26
9.1.2. solicit, call upon or attempt to solicit the patronage of
any person having an office or place of business within the Territory
and to whom the Company has sold or has provided services on, or
during the two (2) year period prior to, the date of the Closing, for
the purpose of obtaining the patronage of any such person for the
purchase of such services, except as an employee or on behalf of
AremisSoft or the Company or their respective Affiliates; or
9.1.3. solicit or induce, or in any manner attempt to solicit or
induce, any person employed or engaged by AremisSoft or the Company in
any capacity (including, without limitation, as an employee,
distributor, independent contractor or agent), to leave such
employment or engagement, whether or not such employment or engagement
is pursuant to a contract or is at will.
9.2 Notwithstanding anything contained herein to the contrary, it
shall not be a breach of the covenants contained in this Section 9 for any
Company Shareholder to own not more than two percent (2%) of the equity
interests of any person described in Section 9.1.1 above whose equity
interests are publicly traded.
9.3 The parties hereto each agree that this Section 9 imposes a
reasonable restraint on the Company Shareholders in light of the activities
and business of AremisSoft on the date hereof, the current business plan of
AremisSoft and the consideration each Company Shareholder received as a
result of this acquisition.
9.4 The covenants in this Section 9 are severable and separate, and
the unenforceability of any specific covenant in this Section 9 is not
intended by any party hereto to, and will not, affect the provisions of any
other covenant in this Section 9. If any court of competent jurisdiction
determines that the scope, time or territorial restrictions Section 9.1
sets forth are unreasonable as applied to any Company Shareholder, the
parties hereto including that Company Shareholder, acknowledge their mutual
intentional and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby will be reformed to
that extent as applied to that Company Shareholder and any other Company
Shareholder similarly situated.
9.5 Each of the Company Shareholders, for themselves and their
successors and assigns, agree to execute a Confidentiality Agreement in
substantially similar form to the form attached as an exhibit to the
Closing Memorandum.
10. Arbitration of Disputes.
10.1. All disputes, controversies or claims between the parties
hereto, arising under, out of, or in any way relating to this Agreement
including without limitation, the execution, delivery, validity,
enforceability, performance, breach, discharge, interpretation or
construction of this Agreement, that are not settled within thirty (30)
days (or such longer period as may be mutually agreed upon) from the date
that either party notifies the other in writing that such dispute or
disagreement exists shall be finally settled by arbitration in a proceeding
conducted under the then existing UNCITRAL Arbitration Rules by three (3)
<PAGE>27
arbitrators appointed and acting in accordance with said rules and the
procedure set forth herein, whose award shall final and binding upon the
parties.
10.2. Each party may select one (1) arbitrator, and the two (2)
selected arbitrators shall choose a third arbitrator to serve as chairman
of the arbitration. If the party fails to select an arbitrator within ten
(10) days after the arbitration is sought, or the two (2) arbitrators fail
to select a third arbitrator within ten (10) days after they are both
appointed, the President of the Stockholm Chamber of Commerce shall make
the appointment.
10.3. The arbitrators to be appointed herein shall have no interest in
this Agreement or either of the parties, and need not be a resident of the
country of the parties or among those individuals on the list of any
commercial arbitration association. Any challenge to the suitability of an
arbitrator shall be decided by the President of the Stockholm Chamber of
Commerce whose decision on the matter shall be final.
10.4. The cost of any arbitration conducted pursuant to this Agreement
shall be borne equally by the parties, provided, however, that each party
shall pay its own attorney's fees. Notwithstanding the foregoing, as part
of the arbitration award, the arbitrators may include in the award the
reasonable attorneys' fees and cost of the arbitration to the prevailing
party.
10.5. The arbitrators shall endeavor to issue a decision in writing
suitable for enforcement under international law within six months from the
date the party seeking arbitration files its written claim under the
UNCITRAL Arbitration Rules. The decision of a majority of the arbitrators
shall be final and binding upon the parties and neither party shall seek
recourse to a court of law or to other authorities to appeal or request
revision of the award. Judgment upon the award returned by the arbitrators
may be entered and enforced in any court having jurisdiction over the
parties or the parties' assets.
10.6. The arbitration proceeding shall take place in Stockholm,
Sweden, at the premises of the Stockholm Chamber of Commerce Institute of
Arbitration and shall be conducted in the English language.
11. Miscellaneous Provisions.
11.1. Notices. All notices required or permitted hereunder must be made in
writing, in the English language, and will be deemed to be delivered and
received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom notice
is sent, or (ii) if delivered by mail (whether actually received or not), at the
close of business on the seventh London Business Day next following the day when
placed in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party or parties set forth
below (or at such other address as such party may designate by written notice to
all other parties in accordance herewith):
<PAGE>28
If to AremisSoft: AremisSoft Corporation
Goldsworth House
Denton Way
Goldsworth Park
Woking Surrey GU213LG
United Kingdom
Attn: Dr. Lycourgos K. Kyprianou
with a copy to (which will not constitute notice for purposes of this
Agreement):
Scott E. Bartel, Esq.
Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, California 95814
Facsimile: (916) 442-3442
If to the Company Shareholders:
[To Be Provided]
With a copy to (which will not constitute notice for purposes of this
Agreement):
[To Be Provided]
11.2 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Neither the Company nor any Company
Shareholder may assign, delegate or otherwise transfer any of their rights
or obligations under this Agreement without the written consent of
AremisSoft.
11.3 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only
to the extent that they do not violate any applicable Laws and are intended
to be limited to the extent necessary to render this Agreement legal, valid
and enforceable. If any term of this Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a Forum of competent jurisdiction, it
is the intention of the parties that the remaining terms hereof, or part
thereof, shall constitute their agreement with respect to the subject
matter hereof and all such remaining terms, or parts thereof, shall remain
in full force and effect. To the extent legally permissible, any illegal,
invalid or unenforceable provision of this Agreement shall be replaced by a
valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
11.4 Waiver. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on
the part of any party hereto to exercise, and no delay in exercising any
right, power or remedy created hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
remedy by either party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. No waiver by either party
<PAGE>29
hereto of any breach of or default in any term or condition of this
Agreement shall constitute a waiver of or assent to any succeeding breach
of or default in the same or any other term or condition hereof.
11.5 Headings. The headings of particular provisions of this Agreement
are inserted for convenience only and shall not be construed as a part of
this Agreement or serve as a limitation or expansion on the scope of any
term or provision of this Agreement.
11.6 Number and Gender. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
11.7 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter
hereof, and this Agreement contains the sole and entire agreement between
the parties with respect to the matters covered hereby. This Agreement
shall not be altered or amended except by an instrument in writing signed
by or on behalf of the party entitled to the benefit of the provision
against whom enforcement is sought.
11.8 Governing Law. The Agreement and the rights and obligations of
the parties hereto shall be governed by and construed and enforced in
accordance with the substantive laws of the State of California (U.S.A.),
without regard to its conflicts of laws provisions thereof.
11.9 Counterparts; Signatures. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement
may be signed by the parties in various locations and signatures sent to a
party via facsimile machine shall have equal dignity with the original
signature for all purposes.
11.10 Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified with respect thereto below:
"Action" shall mean any action, suit, Litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative
proceeding, whether at Law, in equity, in arbitration or otherwise,
and whether conducted by or before any Government or other Person.
"Affiliate" means, as to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries or
otherwise, Controls, is controlled by or is under common Control with
the specified Person.
"Affiliated Entity" or "Affiliated Entities" shall have the
meaning set forth in Section 3.17.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in the United States are required
or authorized to be closed.
<PAGE>30
"Capital Stock" means, with respect to: (i) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation, and (ii)
any other Entity, any share, membership or other percentage interest,
unit of participation or other equivalent (however designated) of an
equity interest in that entity.
"Cash Compensation" means, as applied to any employee,
non-employee director or officer of, or any natural person who
performs consulting or other independent contractor services for, the
Company or any Company Subsidiary, the wages, salaries, bonuses
(discretionary and formula), fees, and other cash compensation paid or
payable by the Company and each Company Subsidiary to that employee or
other natural person.
"Charter Documents" means, with respect to any Entity, in each
case as amended, modified and supplemented at that time, (i) the
articles or certificate of formation, incorporation or organization
(or the equivalent organizational documents) of that Entity, (ii) by
bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of that Entity, and (iii) each
document setting forth the designation, amount and relative rights,
limitations and preferences of any class or series of that Entity's
Capital Stock or of any rights in respect of that Entity's Capital
Stock.
"Company Contracts" means all existing written and oral Material
Agreements and commitments of the Company, including, without
limitation, all employment and consulting contracts, union contracts,
distributorship agreements, agreements with suppliers and customers
(except purchase or sale orders entered into in the ordinary course of
business involving the purchase or sale of goods or services for not
more than Ten Thousand Dollars ($10,000) and for a term of not more
than twelve (12) months), leases, licenses, employee benefit plans,
deferred compensation agreements, indentures, notes, bonds, mortgages,
security agreements, loan agreements, guarantees, franchise
agreements, agreements in respect of the issuance, sale, repurchase or
transfer of the Company's Capital Stock, bonds or other securities,
powers of attorney, and any contract which involves a payment by the
Company of more than Ten Thousand Dollars ($10,000) or has a term or
requires performance by the Company over a period of more than ninety
(90) days.
"Company Intellectual Property" shall mean any Intellectual
Property that is owned by, or exclusively licensed to the Company or
one of its subsidiaries and shall include all Intellectual Property of
the Acquired Businesses as defined in the recitals to this Agreement.
"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of the
Company or one of its subsidiaries.
"Company Subsidiary" means at any time any Entity that is a
Subsidiary of the Company at that time.
"Confidential Information" means, with respect to any Person, all
trade secrets and other confidential, non-public and/or proprietary
information of that Person, including information derived from
reports, investigations, research, work in progress, codes, marketing
and sales programs, capital expenditure projects, cost summaries,
pricing formulae, contract analyses, financial information,
projections, confidential filings with any Government and all other
<PAGE>31
confidential, non-public concepts, methods of doing business, ideas,
materials or information prepared or performed for, by or on behalf of
that Person.
"Control" means a Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies
of another Person, whether through the ownership of voting Capital
Stock, by contract or otherwise.
"Damages" to any Person means any cost, damage (including any
consequential, exemplary, punitive or treble damage) or expense
(including reasonable fees and actual disbursements by attorneys,
consultants, experts or other Representatives and Litigation costs)
to, any fine of or penalty on or any Liability (including loss of
earnings or profits) of any other nature of that Person.
"Derivative Securities" of a specified Entity means any Capital
Stock, debt security or other indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (i) any unissued Capital
Stock of the specified Entity, or (ii) any Capital Stock of the
specified Entity which has been issued and is being held by the
Entity, directly or indirectly, as treasury Capital Stock.
"Disclosure Memorandum" means certain information regarding the
Company and the Company Shareholders which have been delivered by the
Company Shareholders and the Company pursuant to this Agreement. The
Disclosure Memorandum shall be deemed to be part of and qualify those
sections in this Agreement which refer to in the sections of the
Disclosure Memorandum.
"Employee Plan" shall have the meaning set forth in Section 3.19.
"Entity" means any sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"Environmental Laws" shall mean all Laws, general or particular
conditions, requirements, decrees, and covenants relating to health,
safety and the environment, including, without limitation, Laws and
covenants relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic
or Hazardous Materials or wastes of every kind and nature into the
environment (including without limitation ambient air, surface water,
ground water, soil and subsoil), or otherwise relating to the
manufacture, generation, processing, distribution, application, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes, or to occupational or worker safety and health, and any and
all Laws, directives, guidelines, policies, plans, Orders,
stipulations, provisions and conditions of Environmental Permits,
licenses, stipulations, certificates of authorization, and other
operating authorizations, notices or demand letters issued, entered,
promulgated or approved thereunder.
"Environmental Permits" shall mean all permits, licenses,
certificates, approvals, authorizations, regulatory plans or
compliance schedules required by applicable Environmental Laws, or
<PAGE>32
issued by a Government pursuant to applicable Environmental Laws, or
entered into by agreement of the party to be bound, relating to
activities that affect human health or the environment, including,
without limitation, permits, licenses, certificates, approvals,
authorizations, regulatory plans and compliance schedules for air
emissions, water discharges, pesticide and herbicide or other
agricultural chemical storage, use or application, and Hazardous
Material or Solid Waste generation, use, storage, treatment and
disposal.
"Financial Statements" shall have the meaning set forth in
Section 3.07.
"Forum" shall mean any federal, national, state, local, municipal
or foreign court, governmental agency, administrative body or agency,
tribunal, private alternative dispute resolution system, or
arbitration panel.
"GAAP" shall mean generally accepted accounting principles,
consistently applied in India.
"Government" means (i) any national, state, county, municipal or
other government, domestic or foreign, or any agency, board, bureau,
commission, court, department or other instrumentality of any such
government, or (ii) any Person having the authority under applicable
Law to assess and collect Taxes for its own account.
"Governmental Approval" means at any time authorization, consent,
approval, permit, franchise, certificate, license, implementing order
or exemption of, or registration or filing with, any Government,
including any certification or licensing of a natural person to engage
in a profession or trade or a specific regulated activity, at that
time.
"Hazardous Material" shall mean any substance or material,
including without limitation raw materials, commercial products and
wastes or waste products that, because of its quantity, concentration,
or physical, chemical or infectious characteristics may cause or
significantly contribute to an increase in mortality or an increase in
serious, irreversible or incapacitating illness, or pose a substantial
hazard to human health or the environment, including without
limitation petroleum and all substances and materials designated as
hazardous or toxic under any applicable Environmental Law.
"Immediate Family Member" of a Company Shareholder means at any
time: (i) if that Company Shareholder is a natural person, any child
or grandchild (by blood or legal adoption) or spouse of that Company
Shareholder at that time, or any child of that spouse, and (ii) if
that Company Shareholder is an Entity whose ultimate beneficial owner
is a natural person, or a natural person and his spouse, any child or
grandchild (by blood or adoption) or spouse at that time (if not then
an ultimate beneficial owner of that Entity), or any child of that
spouse, of the ultimate beneficial owner or owners.
"Improvements" shall mean all buildings, structures and other
improvements of any and every nature located on the Real Property and
all fixtures attached or affixed, actually or constructively, to the
Real Property or to any such buildings, structures or other
improvements.
<PAGE>33
"Indemnified Losses" shall have the meaning set forth in Section
7.1.1.
"Indemnitees" shall have the meaning set forth in Section 6.1.1.
"Intellectual Property" shall mean any or all of the following
and all rights in, arising out of or associated therewith: (i) all
United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, (ii)
all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, software, source code, object code, technical data and
customer lists, and all documentation relating to any of the
foregoing, (iii) all copyrights, copyrights registrations and
applications therefor, and all other rights corresponding thereto
throughout the world, (iv) all industrial designs and any
registrations and applications therefor throughout the world, (v) all
trade names, logos, common law trademarks and service marks, trademark
and service mark registrations and applications therefor throughout
the world, (vi) all databases and data collections and all rights
therein throughout the world, (vii) all moral and economic rights of
authors and inventors, however denominated, throughout the world, and
(viii) any similar or equivalent rights to any of the foregoing
anywhere in the world.
"Known," "to the knowledge of," "aware" or words of similar
import employed in this Agreement with reference to any individual or
Entity shall be conclusively presumed to mean that the individual or
Entity has made reasonable efforts under the circumstances to become
knowledgeable; in the case of the Company, "knowledge" shall be deemed
to be the individual and collective knowledge (as defined above) of
its directors and senior officers and managers.
"Law" shall mean all federal, national, state, provincial, local,
municipal or foreign constitutions, statutes, rules, regulations,
norms, ordinances, acts, codes, legislation, treaties, conventions,
common law principles, judicial decisions and similar laws and legal
requirements, whether of the United States of America, India, or any
other jurisdiction as in effect from time to time.
"Leased Real Property" shall have the meaning set forth in
Section 3.12.
"Liability" shall mean any liability or obligation whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become
due.
"Lien" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, claim, restriction on use, lien or charge of
any kind, or any rights of others, however evidenced or created
(including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing
statement under the lien notice records or other similar legislation
of any jurisdiction).
<PAGE>34
"Litigation" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or
pending before any Government or any arbitration proceeding.
"Material" means, as applied to any Entity or the Company, of a
like or character affecting or effecting the business, operations,
property, property or assets, liabilities, financial condition or
result of operations of that Entity and its Subsidiaries considered as
a whole, as the case may be, which a reasonable person would like to
know as part of the total mix of information considered by such person
in making a decision to acquire the Company Shares.
"Material Adverse Effect" means, with respect to the consequences
of any fact or circumstance (including the occurrence or
non-occurrence of any event) to the Company, that such fact or
circumstance has caused, is causing or will cause, directly,
indirectly or consequentially, singly or in the aggregate with other
facts and circumstances, any Damages in excess of Twenty-Five Thousand
Dollars ($25,000).
"Material Agreement" of any Entity means any contract or
agreement (i) to which that Entity or any of its Subsidiaries is a
party, or by which that Entity or any of its Subsidiaries is bound or
to which any property or assets of that Entity or any of its
Subsidiaries is subject, and (ii) which is Material to that Entity.
"Orders" shall mean all applicable orders, writs, judgments,
injunctions, decrees, rulings, consent agreements, and awards of or by
any Forum or entered by consent of the party to be bound.
"Organization State" means, as applied to (i) any corporation,
its state or other jurisdiction of incorporation, (ii) any limited
liability company or limited partnership, the state or other
jurisdiction under whose laws it is formed, organized and existing in
that legal form, and (iii) any other Entity, the state or other
jurisdiction whose laws govern that Entity's internal affairs.
"Owned Real Property" shall have the meaning set forth in Section
3.12.
"Person" shall include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a Government.
"Real Property" shall have the meaning set forth in Section 3.12.
"Real Property Lease" shall have the meaning set forth in Section
3.12.
"Reference Date" shall have the meaning set forth in Section
3.07.
"Reference Date Balance Sheets" shall have the meaning set forth
in Section 3.07.
<PAGE>35
"Registered Intellectual Property" means all United States,
Indian, international and foreign (i) patents and patent applications
(including provisional applications), (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks, (iii)
registered copyrights and applications for copyright registration, and
(iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"Related Parties" shall have the meaning set forth in Section
3.22.
"Representatives" means, with respect to any Person, the
directors, officers, employees, affiliates, accountants (including
independent certified public accounts), advisors, attorneys,
consultants or other agents of that Person, or any other
representatives of that Person of any of those directors, officers,
employees, Affiliates, accountants, (including independent certified
accountants), advisors, attorneys, consultants, or other agents.
"Restricted Payment" means, with respect to any Entity at any
time, any of the following that Entity effects: (i) any declaration or
payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of that
Entity, or (ii) any direct or indirect redemption, retirement,
purchase or other acquisition for value of, or any direct or indirect
purchase, payment or sinking fund or similar deposit for the
redemption, retirement, purchase or other acquisition for value of, or
to obtain the surrender of, any then outstanding Capital Stock of that
Entity or any Affiliate of that Entity or any then outstanding
warrants, options, or other rights to acquire or subscribe for or
purchase unissued or treasury Capital Stock of that Entity or any
Affiliate of that Entity.
"Returns" shall have the meaning set forth in Section 3.17.
"Solid Waste" shall mean any garbage, refuse, sludge from a waste
treatment plant, water supply treatment plant, or air pollution
control facility and other discarded material, including solid,
liquid, semi-solid, or contained gaseous material resulting from
industrial, commercial, mining and agricultural operations, and from
community activities.
"Subsidiary" of any specified Person at any time, means any
Entity a majority of the Capital Stock of which is at that time owned
or controlled, directly or indirectly, by the specified Person.
"Supplemental Information" shall have the meaning set forth in
Section 5.6.
"Survival Period" shall have the meaning set forth in Section
7.4.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges
of whatever nature, including without limitation income, gross
receipts, excise, property, sales, use, customs, value added,
consumption, transfer, license, payroll, employee income, withholding,
Social Security, and franchise taxes, now or hereafter imposed or
levied by the United States of America, India, or any other Government
or by any department, agency or other political subdivision or taxing
<PAGE>36
authority thereof or therein, all deposits required in connection
therewith, and all interests, penalties, additions to tax, and other
similar Liabilities with respect thereto.
"Wholly Owned Subsidiary" means any corporation or other Entity,
all of whose outstanding Capital Stock on a fully diluted basis is
owned by another Person, directly or indirectly.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Agreement as of the date first above written.
"AREMISSOFT"
AremisSoft Corporation
By:
Lycourgos K. Kyprianou
Title: Chairman and CEO
AremisSoft (E.E. M.E. A.) Limited
By:
Lycourgos K. Kyprianou
Title: Managing Director
THE "COMPANY"
e-nnovations.com
By:
Title:
THE "COMPANY SHAREHOLDERS"
Spahn & Partner Finanz Consult
Gmbh
Name:
Title:
Nominee of Spahn & Partner Finanz
Consult Gmbh
Name:
Title:
