EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and between
OAK FINANCE INVESTMENTS LIMITED
(a British Virgin Islands company)
and
THE A CONSULTING TEAM, INC.
(A New York Corporation)
Dated as of
January 21, 2005
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND USAGE......................................................................2
Section 1.1 Definitions.......................................................................2
Section 1.2 Other Defined Terms..............................................................10
Section 1.3 Usage............................................................................10
ARTICLE 2 SALE AND TRANSFER OF THE SHARES...........................................................11
Section 2.1 Sale of the Firm Shares..........................................................11
Section 2.2 Purchase Price...................................................................11
Section 2.3 Closing..........................................................................12
Section 2.4 Closing Obligations..............................................................12
Section 2.5 Sale of the Additional Shares; Delivery of the Additional Shares and
Payment Therefor.................................................................12
Section 2.6 Restrictive Legends..............................................................13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................15
Section 3.1 Organization and Good Standing...................................................15
Section 3.2 No Conflict; No Consent..........................................................15
Section 3.3 Books and Records................................................................16
Section 3.4 Capitalization...................................................................16
Section 3.5 SEC Reports......................................................................17
Section 3.6 No Material Adverse Change.......................................................17
Section 3.7 Absence of Certain Changes or Events.............................................17
Section 3.8 Legal Proceedings; Orders........................................................19
Section 3.9 Brokers or Finders...............................................................19
Section 3.10 Issuance of Shares; No Agreements................................................20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................................20
Section 4.1 Organization and Good Standing...................................................20
Section 4.2 Enforceability; Authority; No Conflict...........................................20
Section 4.3 Brokers or Finders...............................................................20
Section 4.4 Disclosure.......................................................................21
Section 4.5 Investment Representation........................................................21
Section 4.6 Certain United States Laws.......................................................22
Section 4.7 Questionnaire....................................................................23
Section 4.8 Representation by Legal Counsel; Review of Agreement.............................23
ARTICLE 5 COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE............................................23
Section 5.1 Access and Investigation.........................................................23
Section 5.2 Required Approvals...............................................................23
Section 5.3 Business Operations of the Company and its Subsidiaries..........................24
Section 5.4 Negative Covenant................................................................24
Section 5.5 Notification.....................................................................24
-i-
PAGE
Section 5.6 Payment of Indebtedness by Related Persons.......................................25
Section 5.7 Best Efforts.....................................................................25
Section 5.8 Form D...........................................................................25
Section 5.9 NASDAQ Listing; Reporting Status.................................................25
Section 5.10 Use of Proceeds..................................................................25
Section 5.11 State Securities Laws............................................................25
Section 5.12 Limitation on Certain Actions....................................................25
ARTICLE 6 COVENANTS OF THE BUYER PRIOR TO CLOSING DATE..............................................26
Section 6.1 Approvals of Governmental Bodies.................................................26
Section 6.2 Best Efforts.....................................................................26
Section 6.3 Notification.....................................................................26
ARTICLE 7 ADDITIONAL COVENANTS......................................................................26
Section 7.1 Public Announcements.............................................................26
Section 7.2 Confidentiality..................................................................27
ARTICLE 8 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE...................................27
Section 8.1 Accuracy of Representations......................................................27
Section 8.2 Company's Performance............................................................27
Section 8.3 Consents.........................................................................27
Section 8.4 Additional Documents.............................................................28
Section 8.5 No Proceedings...................................................................28
Section 8.6 No Material Adverse Change.......................................................28
Section 8.7 Consummation of Other Transactions...............................................28
ARTICLE 9 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE.................................28
Section 9.1 Accuracy of Representations......................................................28
Section 9.2 The Buyer's Performance..........................................................28
Section 9.3 Consents.........................................................................29
Section 9.4 Additional Documents.............................................................29
Section 9.5 No Proceedings...................................................................29
ARTICLE 10 REGISTRATION RIGHTS.......................................................................29
Section 10.1 Mandatory Registration...........................................................29
Section 10.2 Obligations of the Company.......................................................31
Section 10.3 Obligations of the Investors.....................................................34
Section 10.4 Rule 144.........................................................................35
-ii-
PAGE
ARTICLE 11 TERMINATION...............................................................................36
Section 11.1 Termination Events...............................................................36
Section 11.2 Effect of Termination............................................................36
Section 11.3 Extension; Waiver................................................................37
ARTICLE 12 MISCELLANEOUS PROVISIONS..................................................................37
Section 12.1 No Survival......................................................................37
Section 12.2 Expenses.........................................................................37
Section 12.3 Notices..........................................................................37
Section 12.4 Entire Agreement; Modifications..................................................38
Section 12.5 Governing Law....................................................................39
Section 12.6 Assignment; Successors; No Third Party Rights....................................39
Section 12.7 Severability.....................................................................39
Section 12.8 No Waiver........................................................................39
Section 12.9 Jurisdiction; Service of Process.................................................39
Section 12.10 Further Assurances...............................................................39
Section 12.11 Counterparts.....................................................................40
-iii-
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of January
21, 2005, between Oak Finance Investments Limited, a British Virgin Islands
company (the "Buyer"), and The A Consulting Team, Inc., a New York corporation
(the "Company").
THE RECITALS
A. The Company desires to issue and sell to the Buyer, and the Buyer
desires to purchase from the Company, 625,000 shares (the "Firm Shares") of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"), pursuant
to the terms and conditions of this Agreement;
B. In addition, the Company has agreed to sell to the Buyer, or, at
the option of the Buyer, the Additional Shares Buyer, upon the terms and
conditions stated herein, up to an additional 625,000 shares of the Common Stock
(the "Additional Shares"). The Firm Shares and the Additional Shares are
collectively referred to in this Agreement as the "Shares."
C. Simultaneously herewith the Buyer has entered into a Stock
Purchase Agreement, dated the date hereof (the "Shareholder Stock Purchase
Agreement"), with the sellers identified therein (the "Selling Shareholder"),
pursuant to which the Buyer has agreed to purchase and the Selling Shareholder
has agreed to sell 1,024,697 Shares of the Common Stock;
D. Simultaneously herewith the Company has entered into a Share
Exchange Agreement, dated the date hereof, (the "Company Share Exchange
Agreement") with Vanguard Info-Solutions Corporation, a New Jersey corporation
formerly known as B2B Solutions, Inc. ("B2B"), each of the stockholders of B2B
(the "B2B Stockholders"), and the Authorized Representative identified therein,
pursuant to which the Company will issue 7,312,796 shares of Common Stock to the
B2B Stockholders in exchange for 100% of the issued and outstanding shares of
all classes of capital stock of B2B;
E. In order to induce the Buyer to enter into the Shareholder Stock
Purchase Agreement, simultaneously herewith the Selling Shareholder has entered
into an agreement with the Buyer, dated the date hereof (the "Principal
Shareholder's Agreement"), pursuant to which the Selling Shareholder has agreed
to vote the shares of Common Stock that he owns in favor of the transactions
contemplated hereby and by the Company Share Exchange Agreement and to refrain
from taking certain actions regarding other potential transactions involving the
Company;
F. The Company's Board of Directors has approved the transactions
contemplated by each of this Agreement, the Company Share Exchange Agreement and
the Shareholder Stock Purchase Agreement and has agreed to recommend to its
shareholders that they approve the transactions contemplated by this Agreement
and the Company Share Exchange Agreement; and
G. The approval of the shareholders of the Company is necessary to
consummate the transactions contained in this Agreement and the Company Share
Exchange Agreement.
THE AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS AND USAGE
Section 1.1 Definitions. For purposes of this Agreement, the following
terms have the respective meanings set forth below:
"Additional Registrable Securities" means any Shares which are
included within the definition of Registrable Securities but not
included in any Registration Statement pursuant to Section 10.1.
"Additional Shares Buyer" means Clariden Bank, Switzerland (a
unit of Credit Suisse) or any other Person to whom the Buyer assigns
its right to purchase the Additional Shares pursuant to Section 2.5.
"Agreement" means this Stock Purchase Agreement, as amended
from time to time pursuant to the terms hereof.
"Approved Market" means the AMEX, the NASDAQ National Market,
the NASDAQ Small Cap Market or the New York Stock Exchange, Inc.
"Best Efforts" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to
achieve that result as expeditiously as possible, provided, however,
that a Person required to use Best Efforts under this Agreement will
not thereby be required to take actions that would result in a material
adverse change in the benefits to such Person of this Agreement and the
Contemplated Transactions or to dispose of or make any change to its
business, expend any material funds or incur any other material burden.
"Blackout Period" means the period of up to an aggregate of
twenty (20) Trading Days in any period of three hundred sixty-five
(365) consecutive days, in each case commencing on the day immediately
after the date the Company notifies the Investors that they are
required, pursuant to Section 10.3(d), to suspend offers and sales of
Registrable Securities pursuant to the Registration Statement as a
result of an event or circumstance described in Section 10.2(e)(i)
during which period, by reason of Section 10.2(e)(ii), the Company is
not required to amend the Registration Statement or to supplement the
Prospectus; provided, that (1) no Blackout Period may exceed ten
consecutive Trading Days in any period of one hundred twenty (120)
consecutive days and (2) no Blackout Period may commence sooner than
sixty (60) days after the end of a prior Blackout Period.
"Breach" means any breach of, or any inaccuracy in, any
representation or warranty or any breach of, or failure to perform or
comply with, any covenant or obligation, in or of this Agreement or any
other Contract, or any event which with the passing of time or the
giving of notice, or both, would constitute such a breach, inaccuracy
or failure.
-2-
"Business Day" means any day except Saturday, Sunday or any
other day on which commercial banks located in New York, New York are
authorized by law to be closed for business.
"Buyer's Disclosure Schedule" means the Disclosure Schedule
provided by the Buyer to the Company pursuant to this Agreement.
"Code" means the Internal Revenue Code of 1986.
"Commission" means the U.S. Securities and Exchange
Commission.
"Common Stock Equivalent" means any warrant, option,
subscription or purchase right with respect to shares of Common Stock,
any security convertible into, exchangeable for, or otherwise entitling
the holder thereof to acquire, shares of Common Stock or any warrant,
option, subscription or purchase right with respect to any such
convertible, exchangeable or other security.
"Company's Disclosure Schedule" means the Disclosure Schedule
provided by the Company to the Buyer pursuant to this Agreement.
"Consent" means any approval, consent, ratification, waiver or
other authorization.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement and by the Shareholder Stock Purchase
Agreement and the Company Exchange Agreement.
"Contract" means any agreement, contract, obligation, promise
or undertaking (whether written or oral and whether express or implied)
that is legally binding.
"Disclosure Schedule" means a schedule delivered by one party
to the other party concurrently with the execution and delivery of this
Agreement, setting forth certain disclosure information arranged in
numbered Items each of which corresponds to a section of this Agreement
and provides (i) additional disclosure in response to an express
disclosure requirement in such section or (ii) an exception or
qualification to a representation or warranty contained in such
section.
"Employee Plan" means, with respect to an employer, all
"employee benefit plans" as defined by Section 3(3) of ERISA, all
specified fringe benefit plans as defined in Section 6039D of the Code,
and all other bonus, incentive compensation, deferred compensation,
profit sharing, stock option, stock appreciation right, stock bonus,
stock purchase, employee stock ownership, savings, severance, change in
control, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, disability, accident,
group insurance, vacation, holiday, sick leave, fringe benefit or
-3-
welfare plan, and any other employee compensation or benefit plan,
agreement, policy, practice, commitment, contract or understanding
(whether qualified or nonqualified, currently effective or terminated,
written or unwritten) and any trust, escrow or other agreement related
thereto that (i) is maintained or contributed to by any such employer
or any ERISA Affiliate or has been maintained or contributed to in the
last six (6) years by any such employer or any ERISA Affiliate, or with
respect to which any such employer or any ERISA Affiliate has or may
have any liability, and (ii) provides benefits, or describes policies
or procedures applicable to any current or former director, officer,
employee or service provider of any such employer or any ERISA
Affiliate, or the dependents of any thereof, regardless of how (or
whether) liabilities for the provision of benefits are accrued or
assets are acquired or dedicated with respect to the funding thereof.
"Encumbrance" means any charge, claim, community or other
marital property interest, condition, equitable interest, lien, option,
pledge, security interest, mortgage, right of way, easement,
encroachment, servitude, right of first option, right of first refusal
or similar restriction, including any restriction on use, voting (in
the case of security or equity interests), transfer, receipt of income
or exercise of any other attribute of ownership.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" means, with respect to an employer, any
other corporation or trade or business controlled by, controlling or
under common control with such employer (within the meaning of Section
414, Section 4001(a)(14) or Section 4001(b) of ERISA).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting
principles applied on a consistent basis.
"Governmental Authorization" means any Consent, license,
registration or permit issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"Governmental Body" means any (i) nation, state, county, city,
town, borough, village, district or other jurisdiction; (ii) federal,
state, local, municipal, foreign or other government; (iii)
governmental or quasi-governmental authority of any nature (including
any self-regulatory organization, agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers); (iv) multinational organization or body;
(v) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; or (vi) any official of any of the
foregoing.
"Investor" means any of the Buyer, the Additional Shares Buyer
and any permitted transferee or assignee who agrees to become bound by
terms and conditions of this Agreement.
-4-
"Item" means, with respect to a party, a section of that
party's Disclosure Schedule.
"Knowledge" means, with respect to a particular fact or other
matter:
(i) in the case of an individual, either that
individual is actually aware of that fact or matter, or a
prudent individual could be expected to discover or otherwise
become aware of that fact or matter in the course of
conducting a reasonably comprehensive investigation regarding
the accuracy of any representation or warranty contained in
this Agreement;
(ii) in the case of a Person (other than an
individual), any individual who is serving, or who has at any
time served, as a director, officer, executor or trustee of
that Person (or in any similar capacity) has, or at any time
had, Knowledge of that fact or other matter (as set forth in
clause (i) above); and
(iii) any such individual (referred to in clause (ii)
above) and any individual party to this Agreement will be
deemed to have conducted a reasonably comprehensive
investigation regarding the accuracy of any representation or
warranty made herein by that Person or individual.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other constitution,
law, ordinance, principle of common law, code, regulation, rule, Order,
Governmental Authorization, statute or treaty, including any rule or
regulation of the NASDAQ Small Cap Market and further including the
Sarbanes-Oxley Act of 2002.
"Liability" means, with respect to any Person, any liability
or obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, accrued or unaccrued,
disputed or undisputed, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise, and whether or not
the same is required to be accrued on the financial statements of such
Person.
"Lien" means, with respect to any asset, any deed of trust
mortgage, lien, pledge, charge, security interest or encumbrance of any
kind in respect of that asset.
"Material Adverse Effect" means a material adverse effect on
the business, condition (financial or otherwise), assets, properties,
operations, results of operations, prospects, affairs or Liabilities of
the relevant Organization and its Subsidiaries taken as a whole.
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Body, arbitrator or
NASDAQ, Inc. (including without limitation any notice or letter
threatening or warning of possible delisting of the Common Stock).
-5-
"Ordinary Course of Business" means, with respect to any
action, the action taken by a Person only if that action:
(i) is consistent in nature, scope and magnitude with
the past practices of such Person and is taken in the ordinary
course of the normal, day-to-day operations of such Person;
(ii) does not require authorization by the board of
directors or stockholders of such Person (or by any Person or
group of Persons exercising similar authority) and does not
require any other separate or special authorization of any
nature; and
(iii) is similar in nature, scope and magnitude to
actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organization" shall be construed as broadly as possible and
shall include any entity, including a corporation (either non-profit or
other), partnership (either limited or general), joint venture, joint
stock company, limited liability company, trust, estate or other
unincorporated association, whether or not a legal entity.
"Organizational Documents" means (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) the articles of
organization or certificate of formation and any operating or limited
liability company agreement of a limited liability company; (e) any
charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person, and (f) any amendment
to any of the foregoing.
"Person" means an individual or an Organization.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal,
whether public or private) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Prospectus" means the prospectus forming part of the
Registration Statement at the time the Registration Statement is
declared effective and any amendment or supplement thereto, including
any documents or information incorporated therein by reference.
"Questionnaire" means the Selling Security Holder
Questionnaire in the form attached hereto as Annex B and completed by
the Investor and furnished to the Company in connection with this
Agreement.
-6-
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing with the Commission of a
Registration Statement or Statements in compliance with the Securities
Act and pursuant to Rule 415, and the declaration or ordering of
effectiveness of such Registration Statement by the Commission.
"Registrable Securities" means (1) the Shares (including the
Additional Shares, to the extent purchased under this Agreement), (2)
if the Shares are changed, converted or exchanged by the Company or its
successor, as the case may be, into any other stock or other securities
after the Closing, such other stock or other securities which are
issued or issuable in respect of or in lieu of the Shares and (3) if
any other securities are issued to holders of the Shares (or such other
shares or other securities into which or for which the Shares is so
changed, converted or exchanged as described in the immediately
preceding clause (2)) upon any reclassification, share combination,
share subdivision, share dividend, merger, consolidation or similar
transaction or event, such other securities which are issued or
issuable in respect of or in lieu of the Shares.
"Registration Default" means the period following the
occurrence of a Registration Event for so long as such Registration
Event is continuing.
"Registration Event" means the occurrence of any of the
following events:
(i) the Company fails to file with the Commission the
Registration Statement on or before the date by which the
Company is required to file the Registration Statement
pursuant to Section 10.1;
(ii) the Registration Statement covering Registrable
Securities does not become effective within one hundred twenty
(120) days following the Closing Date; provided, that if the
Registration Statement is subject to review by the Commission
staff, such date of effectiveness shall be within one hundred
fifty (150) days following the Closing Date;
(iii) after the SEC Effective Date, sales cannot be
made pursuant to the Registration Statement for any reason
(including without limitation by reason of a stop order, or
the Company's failure to update the Registration Statement)
but except as excused pursuant to Section 10.2(e), other than
a failure by any Investor to comply with the legal
requirements applicable to such sale; or
(iv) the Common Stock generally or the Registrable
Securities specifically are not listed or included for
quotation on an Approved Market, or trading of the Common
Stock is suspended or halted on the Approved Market which at
the time constitutes the principal market for the Common
Stock.
"Registration Period" means the period from the SEC Effective
Date to the earliest of:
(i) the date which is two years after the Closing
Date; and
-7-
(ii) the date on which the Investors no longer own or
have any right to acquire any Registrable Securities.
"Registration Statement" means a registration statement on
Form S-3 (or if Form S-3 is then not available to the Company, on Form
S-1 or such other form of registration statement as is then available
to effect a registration for resale of the Registrable Securities) of
the Company under the Securities Act, including any amendment thereto,
which names the Investors as selling stockholders (including any
documents or information incorporated therein by reference, whether
before or after the SEC Effective Date) filed into order to register
with the Commission the Firm Shares and, to the extent sold under this
Agreement, the Additional Shares.
"Regulation D" means Regulation D under the Securities Act.
"Required Information" means, with respect to any Investor
(including the Additional Shares Buyer), all information regarding such
Investor, the Registrable Securities held by such Investor or which
such Investor has the right to acquire and the intended method of
disposition of the Registrable Securities held by such Investor or
which such Investor has the right to acquire as shall be required by
the Securities Act to effect the registration of the resale by such
Investor of such Registrable Securities.
"Rule 144" means Rule 144 under the Securities Act or any
other similar rule or regulation of the Commission that may at any time
provide a "safe harbor" exemption from registration under the
Securities Act so as to permit a holder of securities to sell such
securities to the public without registration under the Securities Act.
"Rule 415" means Rule 415 under the Securities Act or any
successor rule providing for offering securities on a delayed or
continuous basis.
"Related Person" means:
(a) with respect to a particular individual,
(i) each other member of such individual's Family;
(ii) any Person that is directly or indirectly
controlled by any one or more members of such
individual's Family; (iii) any Person in which
members of such individual's Family hold
(individually or in the aggregate) a Material
Interest; and (iv) any Person with respect to which
one or more members of such individual's Family
serves as a director, officer, partner, executor or
trustee (or in a similar capacity); and
(b) with respect to a specified Person other
than an individual, (i) any Person that directly or
indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under
common control with such specified Person; (ii) any
Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a
director, officer, partner, executor or trustee of
such specified Person (or in a similar capacity);
(iv) any Person in which such specified Person holds
a Material Interest; and (v) any Person with respect
to which such specified Person serves as a general
partner or a trustee (or in a similar capacity).
-8-
For purposes of this definition:
(i) "control" (including
"controlling," "controlled by," and "under
common control with") means the possession,
direct or indirect, of the power to direct
or cause the direction of the management and
policies of a Person, whether through the
ownership of voting securities, by contract
or otherwise, and shall be construed as such
term is used in the rules promulgated under
the Securities Act;
(ii) the "Family" of an individual
includes (i) the individual, (ii) the
individual's spouse, (iii) any other natural
person who is related to the individual or
the individual's spouse within the second
degree and (iv) any other natural person who
resides with such individual; and
(iii) "Material Interest" means
direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange
Act) of voting securities or other voting
interests representing at least ten percent
(10%) of the outstanding voting power of a
Person or equity securities or other equity
interests representing at least ten percent
(10%) of the outstanding equity securities
or equity interests in a Person.
"Representative" means, with respect to a Person, any
director, officer, manager, employee, agent, consultant, advisor,
accountant, financial advisor, legal counsel or other representative of
that Person.
"SEC Effective Date" means the date the Registration Statement
is declared effective by the SEC.
"SEC Filing Date" means the date the Registration Statement is
first filed with the Commission pursuant to Section 10.1.
"SEC Reports" means all forms, reports, schedules, statements
and other documents, and amendments thereto, required to be filed by
the Company under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to an Organization (the
"Owner"), any Organization of which securities or other interests
having the power to elect a majority of that Organization's board of
directors or similar governing body, or otherwise having the power to
direct the business and policies of that Organization (other than
securities or other interests having such power only upon the happening
of a contingency that has not occurred) are held by the Owner or one or
more of its Subsidiaries; when used without reference to a particular
Person, "Subsidiary" means a Subsidiary of the Company as of the date
of this Agreement.
-9-
"Trading Day" means any day (other than a Saturday or Sunday)
on which the NASDAQ Small Cap Market is open for business.
"Transfer Agent" means Mellon Shareholder Services, or any
successor thereof duly appointed by the Company, serving as transfer
agent and registrar for the Common Stock.
Section 1.2 Other Defined Terms. For purposes of this Agreement, the
following terms have the respective meanings set forth in the section and at the
page referred to opposite each such term:
Defined Term Section Page
------------ ------- ----
Additional Shares Recitals 1
Additional Shares Notice Section 2.5 12
Agreement Heading 1
Buyer Heading 1
Buyer's Advisors Section 6.1 23
Closing Section 2.3 12
Closing Date Section 2.3 12
Company Recitals 1
Company Share Exchange Agreement Recitals 1
Company Stock Purchase Agreement Recitals 1
Firm Shares Recitals 1
Owner Section 1.1 1
Principal Shareholder's Agreement Recitals 1
Purchase Price Section 2.2 11
Restricted Securities Section 2.6 13
Selling Shareholder Recitals 1
Shares Recitals 1
Transfer Section 2.6 13
Section 1.3 Usage.
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears:
(1) a reference herein to days shall mean calendar
days unless otherwise specified. Any day or deadline or end of
a time period hereunder which falls on a day other than a
Business Day shall be deemed to refer to the first Business
Day following such day or deadline or end of the time period,
as the case may be;
-10-
(2) a reference in this Agreement to an article,
section, exhibit or schedule shall mean an article or section
of, or exhibit or schedule attached to, this Agreement, as the
case may be. Article and section headings in this Agreement
are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement;
(3) a reference to any Legal Requirement means such
Legal Requirement as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder,
and reference to any section or other provision of any Legal
Requirement means that provision of such Legal Requirement
from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or
reenactment of such section or other provision;
(4) the word "including" means without limitation;
the word "or" is not exclusive and is used in the inclusive
sense of "and/or"; and the words "herein", "hereof", "hereby",
"hereto" and "hereunder" refer to this Agreement as a whole;
(5) a reference to document, instrument or agreement
shall be deemed to refer as well to all addenda, exhibits,
schedules or amendments thereto; and
(6) all words used in this Agreement will be
construed to be of such gender or number as the circumstances
require.
(b) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted
and all accounting determinations hereunder shall be made in accordance
with GAAP.
(c) Legal Representation of the Parties. This Agreement was
negotiated by the parties with the benefit of legal representation, and
any rule of construction or interpretation otherwise requiring this
Agreement to be construed or interpreted against a party shall not
apply to any construction or interpretation hereof.
ARTICLE 2
SALE AND TRANSFER OF THE SHARES
Section 2.1 Sale of the Firm Shares. Subject to the terms and
conditions of this Agreement, at the Closing the Company will issue and sell the
Firm Shares to the Buyer, and the Buyer will purchase the Firm Shares from the
Company.
Section 2.2 Purchase Price. The purchase price (the "Purchase Price")
for the Firm Shares will be $8.00 per share, or an aggregate Purchase Price of
$5,000,000.
-11-
Section 2.3 Closing. The purchase and sale (the "Closing") provided for
in this Agreement will take place (a) at the offices of McGuireWoods LLP, 1345
Avenue of the Americas, 7th Floor, New York, NY 10105, at 10:00 a.m. (local
time) on the day on which the closing of the Exchange (as defined in the Company
Share Exchange Agreement) occurs (the "Closing Date").
Section 2.4 Closing Obligations. At the Closing:
(a) The Company will deliver to the Buyer:
(1) certificates representing the Firm Shares,
registered in the name of the Buyer; and
(2) a certificate executed by the Chief Executive
Officer or President of the Company to the effect that each of
the Company's representations and warranties in this Agreement
was accurate in all material respects as of the date of this
Agreement and is accurate in all material respects as of the
Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Company's Disclosure Schedule
that was delivered by the Company to the Buyer prior to the
Closing Date in accordance with Section 5.5).
(b) the Buyer will deliver to the Company:
(1) the Purchase Price in immediately available funds
by wire transfer of U.S. $5,000,000.00 to the Company to a
bank account specified in writing by the Company not less than
three Business Days prior to the Closing; and
(2) a certificate executed by an authorized officer
of the Buyer to the effect that each of the Buyer's
representations and warranties in this Agreement was accurate
in all material respects as of the date of this Agreement and
is accurate in all materials respects as of the Closing Date
as if made on the Closing Date.
Section 2.5 Sale of the Additional Shares; Delivery of the Additional
Shares and Payment Therefor. The Buyer and, to the extent assigned by the Buyer
pursuant to this Section 2.5, the Additional Shares Buyer, shall have the right
for 120 days from the Closing Date to purchase from the Company up to 625,000
Additional Shares at the purchase price of $8.00 per Share. Delivery to the
Buyer or, as the case shall be, the Additional Shares Buyer, of a certificate or
certificates representing the Additional Shares and the payment therefor shall
take place at the offices of the Company on such date (the "Additional Closing
Date"), which may be the same as the Closing Date, but shall in no event be
earlier than the Closing Date nor earlier than two nor later than ten Business
Days after the giving of the notice hereinafter referred to. The Buyer shall
specify in a written notice to the Company (the "Additional Shares Notice") the
determination of the Buyer to purchase a number, specified in such notice, of
Additional Shares, and/or the Buyer's election to assign its right to purchase
the Additional Shares to the Additional Shares Buyer, in which case the
Additional Shares Notice shall specify the number of Additional Shares to be
purchased by the Additional Shares Buyer and/or the Buyer. The Additional Shares
Notice may be given at any time within 120 days of the Closing Date and must set
forth (i) the
-12-
aggregate number of Additional Shares as to which the Buyer is exercising the
option and (ii) the names and denominations in which the certificates for the
Additional Shares are to be registered. Payment for the Additional Shares shall
be made by the Buyer or, as the case shall be, the Additional Shares Buyer, in
the manner set forth in Section 2.4(b)(1). The place of closing for the purchase
and sale of the Additional Shares and the Additional Closing Date may be varied
by agreement between the Buyer or, as the case shall be, the Additional Shares
Buyer, and the Company. The Buyer shall have the right to assign to the
Additional Shares Buyer the right to purchase all or a part of the Additional
Shares by the Additional Shares Notice in accordance with this Section 2.5;
provided, that (i) the Buyer's assignment of its right to purchase the
Additional Shares shall not be effective unless the Additional Shares Buyer
shall have executed the Additional Shares Notice jointly with the Buyer and (ii)
the Additional Shares Notice shall state that by executing such notice the
Additional Shares Buyer is making, on its own behalf, each of the
representations and warranties set forth in ARTICLE 4 and is agreeing to perform
each of the covenants set forth in ARTICLE 6, ARTICLE 7, ARTICLE 10, ARTICLE 12.
Section 2.6 Restrictive Legends.
(a) The Shares to be issued under this Agreement and any
shares of capital stock or other securities received with respect
thereto (collectively, the "Restricted Securities") shall not be sold,
transferred, assigned, pledged, encumbered or otherwise disposed of
(each, a "Transfer") except upon the conditions specified in this
Section 2.6, which conditions are intended to insure compliance with
the provisions of the Securities Act. Each Investor shall observe and
comply with the Securities Act and the rules and regulations
promulgated by the Commission thereunder as now in effect or hereafter
enacted or promulgated, and as from time to time amended, in connection
with any Transfer of Restricted Securities beneficially owned by the
Investor.
(b) Each certificate representing Restricted Securities issued
to a Investor and each certificate for such securities issued to
subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions of Section 2.6(c) and Section 2.6(d)
hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR
"BLUE-SKY" LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SECTION 2.6 OF THE STOCK PURCHASE
AGREEMENT DATED AS OF JANUARY 21, 2005, BETWEEN CICADA, INC. AND
OAK FINANCE INVESTMENTS LIMITED, AND NO TRANSFER OF THESE
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. UPON THE FULFILLMENT OF CERTAIN OF SUCH
CONDITIONS, CICADA, INC. HAS AGREED TO DELIVER TO THE HOLDER
HEREOF A CICADA, INC. CERTIFICATE NOT BEARING THIS LEGEND, FOR THE
SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER
HEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE COMPANY."
-13-
(c) Prior to any Transfer of Restricted Securities that occurs
subsequent to the Closing, each Investor will give written notice to
the Company of the Investor's intention to effect such Transfer and to
comply in all other respects with the provisions of this Section 2.6.
Each such notice shall describe the manner and circumstances of the
proposed Transfer and, if requested by the Company, shall be
accompanied by the written opinion, addressed to the Company, of
counsel for the holder of such Restricted Securities, stating that in
the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to the Company) such proposed transfer does not
involve a transaction requiring registration or qualification of such
Restricted Securities under the Securities Act or the securities or
"blue-sky" laws of any relevant state of the United States. The holder
thereof shall thereupon be entitled to Transfer such Restricted
Securities in accordance with the terms of the notice delivered by it
to the Company. Each certificate or other instrument evidencing the
securities issued upon the Transfer of any such Restricted Securities
(and each certificate or other instrument evidencing any untransferred
balance of such Restricted Securities) shall bear the legend set forth
in Section 2.6(b) unless (x) in such opinion of counsel of the Company
registration of any future Transfer is not required by the applicable
provisions of the Securities Act or (y) the Company shall have waived
the requirement of such legends. No Investor shall Transfer any
Restricted Securities until such opinion of counsel has been given
(unless waived by the Company or unless such opinion is not required in
accordance with the provisions of this Section 2.6(c)).
(d) Notwithstanding the foregoing provisions of this Section
2.6, the restrictions imposed by this Section 2.6 upon the
transferability of Restricted Securities shall cease and terminate when
(i) any such shares are sold or otherwise disposed of pursuant to an
effective registration statement under the Securities Act or as
otherwise contemplated by Section 2.6(c), (ii) pursuant to Section
2.6(c), the shares so transferred are not required to bear the legend
set forth in Section 2.6(b), or (iii) the holder of such Restricted
Securities has met the requirements for Transfer of such Restricted
Securities pursuant to Rule 144(k). Whenever the restrictions imposed
by this Section 2.6 shall terminate, as herein provided, the holder of
Restricted Securities as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in Section
2.6(b) and not containing any other reference to the restrictions
imposed by this Section 2.6.
-14-
(e) Each Investor understands and agrees that the Company, at
its discretion, may cause stop transfer orders to be placed with its
transfer agent with respect to certificates for Restricted Securities
owned by the Investor, but not as to certificates for such shares of
the Company Common Stock as to which the legend set forth in paragraph
(b) of this Section 2.6 is no longer required because one or more of
the conditions set forth in Section 2.6(d) shall have been satisfied,
in the event of a proposed Transfer in violation or breach of this
Section 2.6.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer as follows:
Section 3.1 Organization and Good Standing. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all of its obligations hereunder. The Company and each of
its Subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification, except for
jurisdictions where the failure to qualify would not have a Material Adverse
Effect.
Section 3.2 No Conflict; No Consent. (a) Except as set forth in Item
3.2 of the Company's Disclosure Schedule, neither the execution and delivery of
this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time or both):
(1) Breach (A) any provision of the Organizational
Documents of the Company or its Subsidiaries, or (B) any
resolution adopted by the board of directors or the
stockholders of the Company or any of its Subsidiaries;
(2) Breach or give any Governmental Body or other
Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to the Company or
any of its Subsidiaries, or any of the assets owned or used by
the Company or any of its Subsidiaries may be subject;
(3) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by the Company or any of its Subsidiaries or that
otherwise relates to the business of, or any of the assets
owned or used by, the Company or any of its Subsidiaries;
(4) cause the Company or any of its Subsidiaries to
become subject to, or to become liable for the payment of, any
Tax;
-15-
(5) cause any of the assets owned by the Company or
any of its Subsidiaries to be reassessed or revalued by any
taxing authority or other Governmental Body;
(6) Breach any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract to which the Company or any
of its Subsidiaries is a party or is subject; or
(7) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or
used by the Company or any of its Subsidiaries.
(b) Intentionally omitted.
Section 3.3 Books and Records. The books of account, minute books,
stock record books and other records of the Company and each of its
Subsidiaries, all of which have been made available to the Buyer, are complete
and correct and have been maintained in accordance with sound business practices
and the requirements of Section 13(b)(2) of the Exchange Act, including the
maintenance of an adequate system of internal controls. The minute books of the
Company and its Subsidiaries contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the boards of
directors and committees of the board of directors of the Company and its
Subsidiaries, and no meeting of any such stockholders, board of directors or
committee has been held for which minutes have not been prepared and are not
contained in such minute books.
Section 3.4 Capitalization.
(a) No legend or other reference to any purported Encumbrance
appears on any certificate representing equity securities of any
Subsidiary.
(b) All of the outstanding equity securities of each of the
Company and its Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in the
SEC Reports, there are no options, warrants or other Contracts relating
to the issuance, sale, or transfer of any equity securities or other
securities of the Company or any of its Subsidiaries. None of the
outstanding equity securities or other securities of the Company or any
of its Subsidiaries was issued in violation of the Securities Act or
any other Legal Requirement.
(c) Neither the Company nor any of its Subsidiaries owns, or
has any right or Contract to acquire, any equity securities or other
securities of any Person (other than the Company or a Subsidiary) or
any direct or indirect equity or ownership interest in any other
business.
(d) The Common Stock is listed for trading on the NASDAQ Small
Cap Market, the Company and the Common Stock meet the criteria for
continued listing on the NASDAQ Small Cap Market (without giving effect
to the transactions contemplated by the Shareholder Stock Purchase
Agreement or the Company Share Exchange Agreement) and no delisting or
suspension of trading of the Common Stock has been threatened by the
NASDAQ Stock Market, Inc. and not addressed by the Company to the
satisfaction of the NASDAQ National Stock Market, Inc. or is otherwise
currently in effect.
-16-
Section 3.5 SEC Reports. The Company has previously made available to
the Buyer each communication sent by the Company to its stockholders generally
since January 1, 2001, and will continue to make such filings and communications
available to the Buyer until the Closing. Since January 1, 2001, the Company has
timely filed all SEC Reports required to the filed by it under the Exchange Act
and any other reports or documents required to be filed with the Commission. At
the time of filing, mailing, or delivery thereof, the SEC Reports were prepared
in accordance with the applicable requirements of the Exchange Act and the
regulations promulgated hereunder, and none of such documents or information
contained or will contain an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, except for such statements, if any, as have been modified by
subsequent filings with the Commission prior to the date hereof. Each of the
consolidated balance sheets included in or incorporated by reference into the
SEC Reports (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the date thereof, and each of the consolidated statements of
income, cash flows and stockholders' equity included in or incorporated by
reference into the SEC Reports (including any related notes and schedules),
fairly presents in all material respects the results of operations, changes in
stockholders' equity and cash flows of the Acquired Companies as at the
respective dates or for the periods set forth therein (subject, in the case of
unaudited statements, to such exceptions as may be permitted by Form 10-Q under
the Exchange Act, in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein. Upon written
request of the Buyer, the Company will furnish to the Buyer copies of (i) all
correspondence received from the Commission and (ii) any of the agreements and
instruments filed as exhibits to the SEC Reports. The Company has furnished to
the Buyer a complete and accurate copy of any amendments or modifications, which
have not yet been filed with the Commission, but which are required to be filed,
to agreements, documents or other instruments which previously had been filed by
the Company with the Commission pursuant to the Securities Act or Exchange Act.
Section 3.6 No Material Adverse Change. Except as set forth in Item 3.6
of the Company's Disclosure Schedule or in the SEC Reports, since September 30,
2004, there has not been any material adverse change in the business,
operations, properties, prospects, results of operations or condition (financial
or otherwise) of the Company and any of its Subsidiaries, and no event has
occurred or circumstance exists that may have a Material Adverse Effect.
Section 3.7 Absence of Certain Changes or Events. Except as set forth
in Item 3.7 of the Company's Disclosure Schedule or in the SEC Reports, since
September 30, 2004 the Company and its Subsidiaries have conducted their
businesses only in the Ordinary Course of Business and there has not been any:
-17-
(a) change in any of the Company's or any of its Subsidiaries'
authorized or issued capital stock; grant of any stock option or right
to purchase shares of capital stock of the Company or any of its
Subsidiaries; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Company or any of its
Subsidiaries of any shares of any such capital stock; or declaration of
payment of any dividend or other distribution or payment in respect of
shares of capital stock;
(b) amendment to the Organizational Documents of the Company
or any of its Subsidiaries;
(c) payment or increase by the Company or any of its
Subsidiaries of any bonuses, salaries, or other compensation to the
Selling Shareholder or to any other stockholder, director, officer, or
employee or entry into any employment, severance, or similar Contract
with the Selling Shareholder or any other director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Company or any of its Subsidiaries;
(e) damage to or destruction or loss of any asset or property
of any the Company or any of its Subsidiaries, whether or not covered
by insurance, materially and adversely affecting the properties,
assets, business, financial condition, or prospects of the Company or
any of its Subsidiaries, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii)
any Contract or transaction involving a total remaining commitment by
or to the Company or any of its Subsidiaries of at least $100,000;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of
the Company or any of its Subsidiaries, or mortgage, pledge, or
imposition of any lien or other encumbrance on any material asset or
property of the Company or any of its Subsidiaries;
(h) cancellation or waiver of any claims or rights with a
value to the Company or any of its Subsidiaries in excess of $100,000;
(i) except as required by GAAP, a revaluation of any of the
assets or material change in the accounting methods, principles or
practices used by the Company or any of its Subsidiaries; or
(j) agreement, whether oral or written, by the Company or any
of its Subsidiaries to do any of the foregoing.
-18-
Section 3.8 Legal Proceedings; Orders.
(a) Except as set forth in Item 3.8(a) of the Company's
Disclosure Schedule or in the SEC Reports, (i) there is no pending or,
to the Company's Knowledge, threatened Proceeding, that has been
commenced by or against the Company or any of its Subsidiaries, or any
of its stockholders that own more than 10% of the Common Stock, or that
otherwise relates to or may affect the business of, or any of the
assets owned or used by, the Company or any of its Subsidiaries; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Knowledge of the Company and the
Knowledge of its Subsidiaries, no event has occurred or circumstance
exits that is reasonably likely to give rise to or serve as a basis for
the commencement of any such Proceeding. The Company has delivered to
the Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Item 3.8(a) of the Company's
Disclosure Schedule. The Proceedings listed in Item 3.8(a) of the
Company's Disclosure Schedule will not have a material adverse effect
on the business, operations, assets, condition, or prospects of the
Company or any of its Subsidiaries.
(b) Except as set forth in Item 3.8(b) of the Company's
Disclosure Schedule or in the SEC Reports, (i) there is no Order to
which the Company or any of its Subsidiaries, or any of the assets
owned or used by the Company or any of its Subsidiaries, is subject;
(ii) the Company is not subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company or any
of its Subsidiaries; and (iii) to the Knowledge of the Company and the
Knowledge of its Subsidiaries, no officer, director, agent, or employee
of the Company or any of its Subsidiaries is subject to any Order that
prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the
business of the Company or any of its Subsidiaries.
(c) Except as set forth in Item 3.8(c) of the Company's
Disclosure Schedule or in the SEC Reports, (i) each of the Company and
its Subsidiaries is, and at all times since January 1, 2004, has been,
in full compliance with all of the terms and requirements of each Order
to which it, or any of the assets owned or used by it, is or has been
subject; (ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which the Company or any of its Subsidiaries, or any of the
assets owned or used by the Company or any of its Subsidiaries, is
subject; and neither the Company nor any Subsidiary has received, at
any time since January 1, 2004, any notice or other communication
(whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation
of, or failure to comply with, any term or requirement of any Order to
which the Company or any of its Subsidiaries, or any of the assets
owned or used by the Company or any of its Subsidiaries, is or has been
subject.
Section 3.9 Brokers or Finders. Neither the Company nor any agent of
the Company has incurred any liability or obligation for brokerage or finders'
fees or agents' commissions or other similar payments in connection with this
Agreement or the Contemplated Transactions.
Section 3.10 Issuance of Shares; No Agreements. Upon issuance pursuant
to the terms and conditions of this Agreement, the Shares shall be duly issued,
fully paid and non-assessable, and upon delivery of and payment for the Shares
as provided in this Agreement, the Buyer will acquire good and valid title
thereto, free of any Encumbrance. Except as set forth in Item 3.10 to the
Company's Disclosure Schedule, the Company is not a party to any agreement,
understanding or arrangement relating to the Shares other than this Agreement.
-19-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Company as follows:
Section 4.1 Organization and Good Standing. The Buyer is a company duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands, with full corporate power and authority to conduct its business
as it is now being conducted, to own and use the properties and assets that it
purports to own or use, and is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure to
qualify would not have a material adverse effect on its business or properties.
Section 4.2 Enforceability; Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Buyer, enforceable against the Buyer in accordance
with its terms. The Buyer has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement and
to perform its obligations hereunder.
(b) Except as set forth in Item 4.2(b) of the Buyer's
Disclosure Schedule, neither the execution and delivery of this
Agreement by the Buyer nor the consummation or performance of any of
the Contemplated Transactions by the Buyer will give any Person the
right to prevent, delay or otherwise interfere with any of the
Contemplated Transactions pursuant to (i) any provision of the Buyer's
Organizational Documents; (ii) any resolution adopted by the board of
directors or stockholders of the Buyer; (iii) any Legal Requirement or
any Order to which the Buyer may be subject: or (iv) any Contract to
which the Buyer is a party or by which the Buyer may be bound.
(c) Except as set forth in Item 4.2(c) of the Buyer's
Disclosure Schedule, the Buyer is not and will not be required to give
any notice to or obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
Section 4.3 Brokers or Finders. Except as set forth in Item 4.3 of the
Buyer's Disclosure Schedule, neither the Buyer nor any agent of the Buyer has
incurred any liability or obligation for brokerage or finders' fees or agents'
commissions or other similar payments in connection with this Agreement or the
Contemplated Transactions.
Section 4.4 Disclosure. No representation or warranty or other
statement made by the Buyer in this Agreement, the certificates delivered
pursuant to Section 2.4(b) or otherwise in connection with the Contemplated
Transactions contains any untrue statement or omits to state a material fact
necessary to make any of them, in light of the circumstances in which it was
made, not misleading.
-20-
Section 4.5 Investment Representation.
(a) The Buyer:
(i) is acquiring the Shares being issued for
investment and for the Buyer's own account and not as a
nominee or agent for any other Person and with no present
intention of distributing or reselling such shares or any part
thereof in any transactions that would be in violation of the
Securities Act or any state securities or "blue-sky" laws or,
if and to the extent that the Buyer is acquiring any of the
Shares being issued as a nominee or agent for any other
Person, the Buyer represents that such other Person is
acquiring the Shares being issued to it for investment and for
such Person's own account and that such Person has no
intention of distributing or reselling such shares or any part
thereof in any transaction that would be in violation of the
Securities Act or any state securities or "blue-sky" laws;
(ii) understands (A) that the Shares to be issued to
it have not been registered for sale under the Securities Act
or any state securities or "blue-sky" laws in reliance upon
exemptions therefrom, which exemptions depend upon, among
other things, the bona fide nature of the investment intent of
the Buyer as expressed herein, (B) that such Shares must be
held and not sold until such shares are registered under the
Securities Act and any applicable state securities or
"blue-sky" laws, unless an exemption from such registration is
available and (C) that the certificates evidencing such Shares
will be imprinted with a legend in the form set forth in
Section 2.6(b) that prohibits the transfer of such shares,
except as provided in Section 2.6.
(iii) has been furnished with, and has read and
reviewed, the SEC Reports;
(iv) has had an opportunity to ask questions of and
has received satisfactory answers from the officers of the
Company or Persons acting on the Company's behalf concerning
the Company and the terms and conditions of an investment in
the Company Common Stock;
(v) is aware of the Company's business affairs and
financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable
decision to acquire the Shares to be issued to it;
(vi) can afford to suffer a complete loss of his or
its investment in such Shares;
-21-
(vii) is familiar with the provisions of Rule 144
promulgated under the Securities Act which, in substance,
permits limited public resale of "restricted securities"
acquired, directly or indirectly, from the issuer thereof, in
a non-public offering subject to the satisfaction of certain
circumstances which require among other things: (A) the
availability of certain public information about the issuer,
(B) the resale occurring not less than one year after the
party has purchased, and made full payment for, within the
meaning of Rule 144, the securities to be sold; and, in the
case of an affiliate, or of a non-affiliate who has held the
securities less than two years, the amount of securities being
sold during any three month period not exceeding the specified
limitations stated therein, if applicable and (C) in the event
certain holding requirements have not yet been met, the sale
being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker
(as said term is defined under the Exchange Act);
(viii) understands that in the event all of the
applicable requirements of Rule 144 are not satisfied,
registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Commission has expressed its
opinion that Persons proposing to sell private placement
securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of
proof in establishing that an exemption from registration is
available for such offers or sales, and that such Persons and
their respective brokers who participate in such transactions
do so at their own risk; and
(ix) has such knowledge and experience in financial
and business matters that he or it is capable of evaluating
the merits and risks of acquiring and holding shares of the
Company Common Stock.
(b) The Buyer is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act.
Section 4.6 Certain United States Laws. The Buyer certifies that to its
Knowledge neither it nor any of its officers, directors, securityholders or
Related Persons has been designated as a "suspected terrorist" as defined in
Executive Order 13224. The Buyer certifies that, to its Knowledge, neither the
Buyer nor any Related Person of the Buyer has been designated as, or is not
owned or controlled by, a "suspected terrorist" as defined in Executive Order
13224. The Buyer hereby acknowledges that the Company seeks to comply with all
applicable laws covering money laundering and related activities. In furtherance
of those efforts, the Buyer hereby represents, warrants and agrees that: (i)
none of the cash or property that the Buyer will pay or will contribute to the
Company has been or shall be derived from, or related to, any activity that is
deemed criminal under United States law; and (ii) no contribution or payment by
the Buyer to the Company, to the extent that they are within the Buyer's
control, shall cause the Company to be in violation of the Untied States Bank
Secrecy Act, the United States Money Laundering Control Act of 1986 or the
Untied States International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001. The Buyer shall promptly notify the Company if any of
these representations ceases to be true and accurate regarding the Buyer. The
Buyer agrees to provide the Company with any additional information regarding
the Buyer that the Company deems necessary or convenient to ensure compliance
with all applicable laws concerning money laundering and similar activities. The
Buyer understands and agrees that if at any time it is discovered that any of
the foregoing representations are incorrect, or if otherwise required by
applicable law or regulation related to money laundering similar activities, the
Company may undertake appropriate actions to ensure compliance with applicable
law or regulation, including but not limited to segregation and/or redemption of
the Buyer's investment in the Company. The Buyer further understands that the
Company may release confidential information about the Buyer and, if applicable,
any underlying beneficial owners, to proper authorities if the Company, in its
sole discretion, determines that it is in the best interest of the Company in
light of relevant rules and regulations under the laws set forth above.
-22-
Section 4.7 Questionnaire. The Buyer has completed and provided to the
Company herewith the Investor Questionnaire attached hereto as Annex A, and all
information contained therein is complete and accurate in all material respects
with respect to the Buyer.
Section 4.8 Representation by Legal Counsel; Review of Agreement. The
Buyer has been advised by the Company to seek, and has sought, legal counsel in
connection with the negotiation and execution of this Agreement. The Buyer has
carefully read and reviewed this Agreement and, to the extent he or it believed
necessary, has discussed with his legal, accounting and other professional
advisors the representations, warranties and agreements which the Buyer is
making herein.
ARTICLE 5
COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE
Section 5.1 Access and Investigation. Between the date of this
Agreement and the Closing Date and upon reasonable advance notice received from
the Buyer, the Company will, and will cause each Subsidiary and its
Representatives to, (a) afford the Buyer and Representatives (collectively, "the
Buyer's Advisors") full and free access to personnel, properties, Contracts,
books and records and other documents and data of the Company and its
Subsidiaries, (b) furnish the Buyer and the Buyer's Advisors with copies of all
such Contracts, books and records, and other existing documents and data as the
Buyer may reasonably request, and (c) furnish the Buyer and the Buyer's Advisors
with such additional financial, operating, and other data and information as the
Buyer may reasonably request.
Section 5.2 Required Approvals. As promptly as practicable after the
date of this Agreement, the Company will, and will cause each of its
Subsidiaries to, make all filings required by Legal Requirements to be made by
them in order to consummate the Contemplated Transactions. Between the date of
this Agreement and the Closing Date, the Company will, and will cause its
Subsidiaries to, (a) cooperate with the Buyer with respect to all filings that
the Buyer elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions, and (b) cooperate with the Buyer
in obtaining all consents identified in Section 4.2(c) of the Buyer's Disclosure
Schedule.
Section 5.3 Business Operations of the Company and its Subsidiaries.
Between the date of this Agreement and the Closing Date, the Company will, and
will cause each of its Subsidiaries to:
(a) Conduct its business only in the Ordinary Course of
Business;
-23-
(b) Preserve intact the current business organization of such
company, keep available the services of the current officers,
employees, and agents of such company, and maintain its relations and
good will with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with such company;
(c) Confer with the Buyer prior to implementing operational
decisions of a material nature;
(d) Make no material changes in management personnel or
management compensation arrangements without prior consultation with
the Buyer;
(e) Except as required to comply with ERISA or to maintain
qualification under Section 401(a) of the Code, not amend, modify or
terminate any without the express written consent of the Buyer and,
except as required under the provisions of any Employee Plan, not make
any contribution to or with respect to any Employee Plan without the
express written consent of the Buyer, provided that such company shall
contribute that amount of cash to each Employee Plan necessary to fully
fund its obligations under such Employee Plan; and
(f) Otherwise report periodically to the Buyer concerning the
status of the business, operations, and finances of such company.
Section 5.4 Negative Covenant. Except as otherwise expressly permitted
by this Agreement, between the date of this Agreement and the Closing Date, the
Company will not, and will cause each of its Subsidiaries not to, without the
prior consent of the Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events listed in Section 3.6 or Section 3.7 is likely to occur, or (b) make any
modification to any material Contract.
Section 5.5 Notification. Between the date of this Agreement and the
Closing Date, the Company will promptly notify the Buyer in writing if the
Company or any of its Subsidiaries becomes aware of any fact or condition that
causes or constitutes a Breach of any of the Company's representations and
warranties as of the date of this Agreement, or if the Company or any of its
Subsidiaries becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Company's Disclosure Schedule if the Company's Disclosure
Schedule were dated the date of the occurrence or discovery of any such fact or
condition, the Company will promptly deliver to the Buyer a supplement to the
Company's Disclosure Schedule specifying such change. Such delivery shall not
affect any rights of the Buyer under Section 8.1. During the same period, the
Company will promptly notify the Buyer of the occurrence of any event that may
make the satisfaction of the conditions in ARTICLE 8 impossible or unlikely.
Section 5.6 Payment of Indebtedness by Related Persons. Except as
expressly provided in this Agreement, the Company will cause all indebtedness
owed by any Related Person of the Company or any of its Subsidiaries to be paid
in full to the Company or such Subsidiary prior to Closing.
-24-
Section 5.7 Best Efforts. Between the date of this Agreement and the
Closing Date, the Company will use its Best Efforts to cause the conditions in
ARTICLE 8 to be satisfied.
Section 5.8 Form D. The Company agrees to file with the Commission on a
timely basis a Form D with respect to the Securities as required to claim the
exemption provided by Rule 506 of Regulation D and to provide a copy thereof to
the Buyer promptly after such filing.
Section 5.9 NASDAQ Listing; Reporting Status. Prior to the Closing
Date, the Company shall file with the NASDAQ an application or other document
required by the NASDAQ for the listing of the Shares with the NASDAQ Small Cap
Market and shall provide evidence of such filing to the Buyer. The Company shall
use its best efforts to obtain the listing, subject to official notice of
issuance, of the Common Shares on the NASDAQ Small Cap Market prior to the
Closing Date. So long as the Buyer beneficially owns any Shares the Company will
use its best efforts to maintain the listing of the Shares on the NASDAQ Small
Cap Market or a registered national securities exchange. During the Registration
Period, the Company shall timely file all reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, and the Company
shall not terminate its status as an issuer required to file reports under the
Exchange Act unless the Exchange Act or the rules and regulations thereunder
would permit such termination.
Section 5.10 Use of Proceeds. The Company shall use the proceeds of
sale of the Shares for general working capital purposes and in the operation of
the Company's business.
Section 5.11 State Securities Laws. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the offer and sale of the Shares to the Buyer as contemplated by
this Agreement under such of the securities laws of jurisdictions in the United
States as shall be applicable thereto. In connection with the foregoing
obligations of the Company in this Section 5.11, the Company shall not be
required (1) to qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section, (2) to subject itself to
general taxation in any such jurisdiction, (3) to file a general consent to
service of process in any such jurisdiction, (4) to provide any undertakings
that cause more than nominal expense or burden to the Company, or (5) to make
any change in its charter or by-laws which the Company determines to be contrary
to the best interests of the Company and its stockholders. The Company shall
furnish to the Buyer copies of all filings, applications, orders and grants or
confirmations of exemptions relating to such securities laws on or prior to the
Closing Date.
Section 5.12 Limitation on Certain Actions. From the date of execution
and delivery of this Agreement by the parties hereto through the Closing Date,
the Company shall not issue any shares of its capital stock or any securities
derivative of, convertible into or exchangeable for shares as its capital stock
other than (i) grants of options under an existing plan in the Ordinary Course
of Business, (ii) upon the exercise of options or warrants that are outstanding
as of the date of this Agreement or (iii) upon the conversion of shares of the
Company's Series A or Series B Preferred Shares issued and outstanding as of the
date of this Agreement.
-25-
ARTICLE 6
COVENANTS OF THE BUYER PRIOR TO CLOSING DATE
Section 6.1 Approvals of Governmental Bodies. As promptly as
practicable after the date of this Agreement, the Buyer will make all filings
required by Legal Requirements to be made by it to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, the Buyer
will (i) cooperate with the Company with respect to all filings that the Company
is required by Legal Requirements to make in connection with the Contemplated
Transactions.
Section 6.2 Best Efforts. Between the date of this Agreement and the
Closing Date, the Buyer will use its Best Efforts to cause the conditions in
ARTICLE 9 to be satisfied.
Section 6.3 Notification. Between the date of this Agreement and the
Closing Date, the Buyer will promptly notify the Company in writing if the Buyer
becomes aware of any fact or condition that causes or constitutes a Breach of
any of the Buyer's representations and warranties as of the date of this
Agreement, or if the Buyer becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Buyer's Disclosure Schedule if the
Buyer's Disclosure Schedule were dated the date of the occurrence or discovery
of any such fact or condition, the Buyer will promptly deliver to the Company a
supplement to the Buyer's Disclosure Schedule specifying such change. Such
delivery shall not affect any rights of the Company under Section 9.1. During
the same period, the Buyer will promptly notify the Company of the occurrence of
any event that may make the satisfaction of the conditions in ARTICLE 9
impossible or unlikely.
ARTICLE 7
ADDITIONAL COVENANTS
Section 7.1 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as the Company determines.
Unless consented to by the Company in advance or required by Legal Requirements,
prior to the Closing, the Investors shall keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
The Company and the Buyer will consult with each other concerning the means by
which the Company's or any of its Subsidiaries' employees, customers, and
suppliers and others having dealings with the Company or any of its Subsidiaries
will be informed of the Contemplated Transactions.
-26-
Section 7.2 Confidentiality.
(a) Between the date of this Agreement and the Closing Date,
the Buyer and the Company will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of the Buyer
and the Company and its Subsidiaries to maintain in confidence, and not
use to the detriment of another party any written, oral, or other
information obtained in confidence from another party in connection
with this Agreement or the Contemplated Transactions and the
transactions contemplated by the Company Share Exchange Agreement,
unless (i) such information is already known to such party or to others
not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (iii) the furnishing or use of such
information is required by or necessary or appropriate in connection
with legal proceedings.
(b) If the Contemplated Transactions are not consummated, each
party will return or destroy as much of such written information as the
other party may reasonably request.
ARTICLE 8
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE
The obligations of the Buyer to purchase the Firm Shares and to take
the other actions required to be taken by the Buyer at the Closing is subject to
the fulfillment or written waiver by the Buyer at or prior to the Closing of
each of the following conditions:
Section 8.1 Accuracy of Representations.
(a) All of the Company's representations and warranties in
this Agreement must have been accurate in all material respects as of
the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without
giving effect to any supplement to the Company's Disclosure Schedule.
Section 8.2 Company's Performance.
(a) All of the covenants and obligations that the Company is
required to perform or to comply with pursuant to this Agreement and
the Company Share Exchange Agreement, at or prior to the Closing, must
have been duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section
2.4 must have been delivered.
Section 8.3 Additional Documents. Each of the following documents must
have been delivered to the Buyer:
(a) An opinion of Orrick, Herrington & Sutcliffe, LLP, dated
the Closing Date, in the form of Exhibit 8.4(a); and
(b) Such other documents as the Buyer may reasonably request
for the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 9.3(a), (ii) evidencing the accuracy of any of
the Company's representations and warranties, (iii) evidencing the
performance by the Company of, or the compliance by the Company with,
any covenant or obligation required to be performed or complied with by
the Company under this Agreement, (iv) evidencing the satisfaction of
any condition referred to in this ARTICLE 8 or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
-27-
Section 8.4 No Proceedings. Since the date of this Agreement, there
must not have been commenced or threatened against the Buyer or any Related
Person of the Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated Transactions
or (b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
Section 8.5 No Material Adverse Change. Since the date of this
Agreement, there has not been any material adverse change in the business,
operations, properties, prospects, results of operations or condition (financial
or otherwise) of the Company and its Subsidiaries, taken as a whole, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
Section 8.6 Consummation of Other Transactions. The transactions
contemplated by each of the Company Share Exchange Agreement and the Shareholder
Stock Purchase Agreement shall have been consummated (subject to the
consummation of the transactions contemplated by this Agreement).
ARTICLE 9
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE
The obligation of the Company to issue and sell the Firm Shares and to
take the other actions required to be taken by the Company at the Closing is
subject to the fulfillment or written waiver by the Company at or prior to the
Closing of each of the following conditions:
Section 9.1 Accuracy of Representations. All of the Buyer's
representations and warranties in this Agreement must have been accurate in all
material respects as of the date of this Agreement and must be accurate in all
material respects as of the Closing Date as if made on the Closing Date.
Section 9.2 The Buyer's Performance.
(a) All of the covenants and obligations that the Buyer is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing must have been performed and complied with in all
material respects.
(b) The Buyer must have delivered each of the documents
required to be delivered by the Buyer pursuant to Section 2.4 and must
have paid the Purchase Price to be paid by the Buyer pursuant to
Section 2.4(b)(1).
Section 9.3 Additional Documents. The Buyer must have caused the
following documents to be delivered to the Company:
-28-
(a) An opinion of McGuireWoods LLP, dated the Closing Date, in
the form of Exhibit 9.4(a); and
(b) Such other documents as the Company may reasonably request
for the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.3(a), (ii) evidencing the accuracy of any
representation or warranty of the Buyer, (iii) evidencing the
performance by the Buyer of, or the compliance by the Buyer with, any
covenant or obligation required to be performed or complied with by the
Buyer under this Agreement or (iv) evidencing the satisfaction of any
condition referred to in this ARTICLE 9.
Section 9.4 No Proceedings. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits consummation of
the Contemplated Transactions or any of them and (b) has been adopted or issued,
or has otherwise become effective, since the date of this Agreement with
reference to the Contemplated Transactions.
ARTICLE 10
REGISTRATION RIGHTS
Section 10.1 Mandatory Registration.
(a) The Company shall prepare promptly and, on or prior to the
date that is ninety (90) days after the Closing Date, file with the
Commission the Registration Statement (i) for the resale by the Buyer
of a number of Registrable Securities equal to the number of shares of
Firm Shares issued and sold by the Company to the Buyer pursuant to
this Agreement and (ii) for resale by the Buyer or the Additional
Shares Buyer, as the case may be, a number of Registrable Securities
equal to the number of Additional Shares issued and sold by the Company
pursuant to this Agreement; provided, that if the purchase and sale of
the Additional Shares has not been consummated by the date which is
twenty (20) days after the Closing Date, then on or prior to the date
that is ninety (90) days after the Additional Closing Date, the Company
shall file with the Commission either a Registration Statement for the
resale by the Additional Shares Buyer of a number of Registrable
Securities equal to the number of Additional Shares issued and sold by
the Company pursuant to this Agreement or an amendment to the
Registration Statement theretofore filed that would register the
Additional Shares in addition to the Firm Shares. If for any reason the
Commission does not permit all of the Registrable Securities to be
included in such Registration Statement, then the Company shall prepare
and file with the Commission a separate Registration Statement with
respect to any such Registrable Securities not included with the
initial Registration Statement, as expeditiously as possible, but in no
event later than the date which is thirty (30) days after the date on
which the Commission shall indicate as being the first date such filing
may be made.
(b) If a Registration Event occurs, then the Company will make
payments to the Investors as partial liquidated damages for the minimum
amount of damages to the Investors by reason thereof, and not as a
penalty, at the rate of 2% per month of the aggregate purchase price
paid by the Investors for the Shares pursuant to this Agreement, for
each calendar month of the Registration Default Period (pro rated for
any period less
-29-
than thirty (30) days). Each such payment shall be due and payable
within five (5) days after the end of each calendar month of the
Registration Default Period until the termination of the Registration
Default Period and within five (5) days after such termination. Such
payments shall be in partial compensation to the Investors, and shall
not constitute the Investors' exclusive remedy for such events. The
Registration Default Period shall terminate upon:
(1) the filing of the Registration Statement in the
case of clause (i) of the definition of "Registration Event";
(2) the SEC Effective Date in the case of clause (ii)
of the definition of "Registration Event";
(3) the ability of the Investors to effect sales
pursuant to the Registration Statement in the case of clause
(iii) of the definition of "Registration Event";
(4) the listing or inclusion and/or trading of the
Shares on an Approved Market, as the case may be, in the case
of clause (iv) of the definition of "Registration Event," and
(5) in the case of the events described in clauses
(ii) and (iii) of the definition of "Registration Event", the
earlier termination of the Registration Period and in each
such case any Registration Default Period that commenced by
reason of the occurrence of such event shall terminate if at
the time no other Registration Event is continuing.
The amounts payable as liquidated damages pursuant to this
paragraph shall be payable in lawful money of the United States and
shall be paid pro rata to the Buyer and the Additional Shares Buyer in
proportion to the number of shares purchased by each of them. Amounts
payable as liquidated damages hereunder shall cease when the Investors
no longer hold Registrable Securities; provided, that in no event shall
the amount payable as liquidated damages pursuant to this Section
10.1(b) be in excess of 8% of the purchase price paid by each Investor
for the Shares purchased by it.
(c) At any time and from time to time, promptly following the
written demand from either of the Investors following the issuance of
any Additional Registrable Securities, and in any event within thirty
(30) days following such written demand, the Company shall prepare and
file with the Commission either a new Registration Statement or a
post-effective amendment to a previously filed Registration Statement,
to the extent permitted under the Securities Act, on Form S-3 (or, if
Form S-3 is not then available to the Company, on such form of
registration statements as is then available to effect a registration
for resale of the Additional Registrable Securities) covering the
resale of the Additional Registrable Securities in an amount equal to
the number of Additional Registrable Securities. Such Registration
Statement also shall cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule
416), as determined by the Company and its legal counsel, such
indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect
to the Additional Registrable Securities. The Registration Statement
(and each amendment or supplement thereto) shall be provided in
accordance with Section 10.2 to the Investor and its counsel prior to
its filing or other submission.
-30-
(d) In the event the Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the
Company shall (i) register the resale of the Registrable Securities on
another appropriate form and (ii) attempt to register the Registrable
Securities on Form S-3 as soon as such form is available, provided that
the Company shall maintain the effectiveness of the Registration
Statements then in effect until such time as a Registration Statement
on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.
Section 10.2 Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall:
(a) use commercially reasonable efforts to cause the
Registration Statement to become effective as promptly as practicable
after the Closing Date and to keep the Registration Statement effective
pursuant to Rule 415 at all times during the Registration Period. The
Company shall submit to the Commission, within three (3) Business Days
after the Company learns that no review of the Registration Statement
will be made by the staff of the Commission or that the staff of the
Commission has no further comments on the Registration Statement, as
the case may be, a request for acceleration of effectiveness of the
Registration Statement to a time and date not later than forty-eighty
(48) hours after the submission of such request. The Company shall
notify the Investors of the effectiveness of the Registration Statement
on the SEC Effective Date. The Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein),
at the time it is first filed with the Commission, at the time it is
ordered effective by the Commission and at all times during which it is
required to be effective hereunder (and each such amendment and
supplement at the time it is filed with the Commission and at all times
during which it is available for use in connection with the offer and
sale of the Registrable Securities) will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, at the time the Registration Statement
is declared effective by the Commission and at all times that the
Prospectus is required by this Agreement to be available for use by any
Investors, and, in accordance with Section 10.3(d), any Investor is
entitled to sell Registrable Securities pursuant to the Prospectus,
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading;
(b) subject to Section 10.2(e), prepare and file with the
Commission such amendments (including post-effective amendments) and
supplements to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective, and the
Prospectus current, at all times during the Registration Period, and,
during the Registration Period (other than during any Blackout Period
during which the provisions of Section 10.2(e)(ii) are applicable),
comply with the provisions of the Securities Act applicable to the
Company in order to permit the disposition by the Investors of all
Registrable Securities covered by the Registration Statement;
-31-
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel promptly
after the same is prepared and publicly distributed, filed with the
Commission or received by the Company, (A) five copies of the
Registration Statement and any amendment thereto and the Prospectus and
each amendment or supplement thereto, (B) one copy of each letter
written by or on behalf of the Company to the Commission or the staff
of the Commission and each item of correspondence from the Commission
or the staff of the Commission relating to the Registration Statement
(other than any portion of any thereof which contains information for
which the Company has sought confidential treatment), each of which the
Company hereby determines to be confidential information and which each
Investor hereby agrees to keep confidential as a confidential Record in
accordance with Section 10.2(i) and (C) such number of copies of the
Prospectus and all amendments and supplements thereto and such other
documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) subject to Section 10.2(e), use its commercially
reasonable efforts (A) to register and qualify the Registrable
Securities covered by the Registration Statement under the securities
or blue sky laws of such jurisdictions as any Investor who owns or
holds any Registrable Securities reasonably requests, (B) to prepare
and to file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof at all times during the Registration Period and (C) to take all
other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale by the Investors in such jurisdictions;
provided, that the Company shall not be required in connection
therewith or as a condition thereto (i) to qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 10.2(d), (ii) to subject itself to general
taxation in any such jurisdiction, (iii) to file a general consent to
service of process in any such jurisdiction, (iv) to provide any
undertakings that cause more than nominal expense or burden to the
Company or (v) to make any change in its charter or by-laws which the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders;
(e)(i) as promptly as practicable after becoming aware of such
event or circumstance, notify each Investor of the occurrence of an
event or circumstance of which the Company has knowledge (x) as a
result of which the Prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
or (y) which requires the Company to amend or supplement the
Registration Statement due to the receipt from an Investor or any other
selling shareholder named in the Prospectus of new or additional
information about such Investor or selling shareholder or its intended
plan of distribution of its Registrable Securities or other securities
caused by the Registration Statement, as the case may be, so that the
Prospectus does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and use its best efforts
promptly to prepare a supplement or amendment to the Registration
Statement and Prospectus to correct such untrue statement or omission
or to add any new or additional information, and deliver a number of
copies of such supplement or amendment to each Investor as such
Investor may reasonably request; and
-32-
(ii) notwithstanding Section 10.2(e)(i) above, if at any time
the Company notifies the Investors as contemplated by Section
10.2(e)(i) that the event giving rise to such notice relates to a
development involving the Company which occurred subsequent to the
later of (x) the SEC Effective Date and (y) the latest date prior to
such notice on which the Company has amended or supplemented the
Registration Statement, then the Company shall not be required to use
best efforts to make such amendment during a Blackout Period; provided,
that (A) the aggregate number of Trading Days on which any Blackout
Period is in effect may not exceed ten consecutive Trading Days in any
period of one hundred twenty days (120) consecutive days or twenty (20)
Trading Days (whether or not consecutive) in any period of three
hundred sixty five (365) consecutive days; (B) the Company shall not be
able to avail itself of its rights under this Section 10.2(e)(ii) with
respect to more than three Blackout Periods in any period of three
hundred sixty five (365) consecutive days; and (C) no Blackout Period
may commence sooner than sixty (60) days after the end of an earlier
Blackout Period;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being
offered or sold pursuant to the Registration Statement of the issuance
by the Commission of any stop order or other suspension of
effectiveness of the Registration Statement at the earliest possible
time;
(g) permit the Investors who hold Registrable Securities being
included in the Registration Statement and their legal counsel, at such
Investors' sole cost and expense, to review and have a reasonable
opportunity to comment on the Registration Statement and all amendments
and supplements thereto at least three Business Days prior to their
filing with the Commission and shall not file any such document to
which any Investor reasonably objects;
(h) make generally available to its security holders as soon
as practical, but not later than 90 days after the close of the period
covered thereby, an earning statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a 12-month
period beginning not later than the first day of the Company's fiscal
quarter next following the SEC Effective Date;
(i) use its best efforts to cause all the Registrable
Securities covered by the Registration Statement to be listed on the
NASDAQ Small Cap Market or such other principal securities market on
which securities of the same class or series issued by the Company are
then listed or traded;
(j) provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities at all times;
-33-
(k) cooperate with the Investors who hold Registrable
Securities being offered pursuant to the Registration Statement to
facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends, to the extent acceptable to the
Company's transfer agent) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts as the Investors
may reasonably request and registered in such names as the Investors
may request; and, not later than the SEC Effective Date, cause legal
counsel selected by the Company to deliver to the Investors whose
Registrable Securities are included in the Registration Statement and,
if required by the Transfer Agent, to the Transfer Agent an opinion of
counsel in customary and reasonable form;
(l) during the Registration Period, refrain from bidding for
or purchasing any Common Stock or any right to purchase Common Stock or
attempting to induce any Person to purchase any such security or right
if such bid, purchase or attempt would in any way limit the right of
the Investors to sell Registrable Securities by reason of the
limitations set forth in Regulation M under the Exchange Act; and
(m) take all other reasonable actions necessary to expedite
and facilitate disposition by the Investors of the Registrable
Securities pursuant to the Registration Statement.
Section 10.3 Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) it shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of any Investor that such
Investor shall furnish to the Company the Required Information and
shall execute such documents in connection with such registration as
the Company may reasonably request. Prior to or at the Closing, each of
the Investors shall have completed and delivered to the Company the
Questionnaire, which shall be deemed to provide all Required
Information for purposes of the preparation and filing of the
Registration Statement. Promptly after a request from the Company, each
Investor will confirm or update the Required Information previously
provided to the Company by the Investor;
(b) each Investor will cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement hereunder;
(c) each Investor agrees that it will not effect any
disposition of the Registrable Securities except as contemplated in the
Registration Statement or as shall otherwise be in compliance with the
registration requirements of applicable securities laws and that it
will promptly notify the Company of any material changes in the
information set forth in the Registration Statement regarding such
Investor or its plan of distribution, and each Investor agrees (a) to
notify the Company in the event that such Investor enters into any
material agreement with a broker or a dealer for the sale of the
Registrable Securities through a block trade, special offering,
exchange distribution or a purchase by a broker or dealer and (b) in
connection with such agreement, to provide to the Company in writing
the information necessary to prepare any supplemental prospectus
pursuant to Rule 424(c) under the Securities Act which is required with
respect to such transaction;
-34-
(d) each Investor acknowledges that there may occasionally be
times as specified in Section 10.2(e) or Section 10.2(f) when the
Company must suspend the use of the Prospectus until such time as an
amendment to the Registration Statement has been filed by the Company
and declared effective by the SEC, the Company has prepared a
supplement to the Prospectus or the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. Each Investor
hereby covenants that it will not sell any Registrable Securities
pursuant to the Prospectus during the period commencing at the time at
which the Company gives such Investor notice of the suspension of the
use of the Prospectus in accordance with Section 10.2(e) or Section
10.2(f) and ending at the time the Company gives such Investor notice
that such Investor may thereafter effect sales pursuant to the
Prospectus, or until the Company delivers to such Investor or files
with the Commission an amended or supplemented Prospectus;
(e) in connection with any sale of Registrable Securities
which is made by an Investor pursuant to the Registration Statement (A)
if such sale is made through a broker and such sale requires the
delivery of a prospectus under the applicable rules and regulations of
the Commission and/or NASDAQ, such Investor shall instruct such broker
to deliver the Prospectus to the purchaser or purchasers (or the broker
or brokers therefor) in connection with such sale and shall supply
copies of the Prospectus to such broker or brokers, and (B) if such
sale is made in a transaction directly with a purchaser and not through
the facilities of any securities exchange or market, such Investor
shall deliver, or cause to be delivered, the Prospectus to such
purchaser; and
(f) each Investor agrees to notify the Company promptly after
the event of the completion of the sale by such Investor of all
Registrable Securities to be sold by such Investor pursuant to the
Registration Statement.
Section 10.4 Rule 144. With a view to making available to each Investor
the benefits of Rule 144, the Company will:
(a) so long as any Investor owns Registrable Securities,
promptly upon request of such Investor, furnish to such Investor such
information as may be necessary, and otherwise reasonably to cooperate
with such Investor, to permit such Investor to sell its Registrable
Securities pursuant to Rule 144 without registration; and
(b) if at any time the Company is not required to file such
reports with the Commission under Sections 13 or 15(d) of the Exchange
Act, use its commercially reasonable efforts to, upon the request of an
Investor, to make publicly available other information so long as is
necessary to permit publication by brokers and dealers of quotations
for the Common Stock and sales of the Registrable Securities in
accordance with Rule 15c2-11 under the 1934 Act.
-35-
ARTICLE 11
TERMINATION
Section 11.1 Termination Events. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by mutual consent of the Buyer and the Company; or
(b) by either the Buyer or the Company if the Closing has not
occurred (other than through the failure of the party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before July 31, 2005, or such later date to which
the parties may agree; or
(c) by the Buyer or the Company if a material Breach of any
provision of this Agreement has been committed by the other party and
such Breach has not been waived; or
(d) by the Buyer if any of the conditions of ARTICLE 8 has not
been satisfied as of July 31, 2005 or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
the Buyer to comply with its obligations under this Agreement) and the
Buyer has not waived such condition on or before July 31, 2005; or
(e) by the Company if any of the conditions of ARTICLE 9 has
not been satisfied as of July 31, 2005 or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
the Company to comply with its obligations under this Agreement) and
the Company has not waived such condition on or before July 31, 2005;
or
(f) by either the Buyer or the Company if any Governmental
Body shall have issued a nonappealable final Order having the effect of
permanently restraining, enjoining or otherwise prohibiting the
Contemplated Transactions, except if the party relying on such Order
has not complied with its obligations under of this Agreement with
respect to such matter.
Section 11.2 Effect of Termination. Each party's right of termination
under Section 11.1 is in addition to any other rights such party may have under
this Agreement or otherwise, and the exercise of a right of termination will not
be an election of remedies. If this Agreement is terminated pursuant to Section
11.1, all further obligations of the parties under this Agreement will
terminate, except the obligations in Section 12.1 will survive; provided, that
if this Agreement is terminated by a party because of a Breach of the Agreement
by the other party or because one or more conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's rights to pursue all legal remedies will survive such
termination unimpaired.
Section 11.3 Extension; Waiver. At any time prior to the Closing, the
parties hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
-36-
ARTICLE 12
MISCELLANEOUS PROVISIONS
Section 12.1 No Survival. The representations and warranties contained
in ARTICLE 3 and ARTICLE 4 shall survive until the first anniversary of the
Closing Date.
Section 12.2 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective fees and
expenses incurred in connection with the preparation, negotiation, execution,
and performance of this Agreement and the Contemplated Transactions, including
all fees and expenses of its Representatives. If this Agreement is terminated,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a breach of this Agreement by another party.
Section 12.3 Notices.
(a) All notices, consents, waivers and other communications
hereunder must be in writing and either (i) delivered personally, (ii)
sent by facsimile transmission (with written confirmation of a
successful transmission), (iii) mailed by prepaid first class
registered or certified mail, return receipt requested, or (iv)
delivered by a nationally recognized prepaid overnight courier service
(receipt requested), in each case to the appropriate addresses or
facsimile numbers set forth below (or to such other addresses or
facsimile numbers as a party may designate by notice to the other
parties):
Company: The A Consulting Team, Inc.
77 Brant Avenue
Suite 320
Clark, NJ 07066
Attention: Chief Financial Officer
Telephone: (732) 499-8228
Facsimile: (732) 499-9310
with a copy (which shall not constitute notice) to:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10105
Attention: Lawrence B. Fisher, Esq.
Telephone: 212 506-5000
Facsimile: 212 506-5151
-37-
the Buyer and the Additional Shares Buyer:
Oak Finance Investments Limited
c/o Arias Fabrega & Fabrega Trust Company
BVI Ltd.
325 Waterfront Drive
Omar Hodge Building, 2nd Floor
Wickham's Cay
Road Town, Tortola,
British Virgin Islands
Telephone: _____________________
Facsimile Number: _______________
with a copy (which shall not constitute notice) to:
McGuireWoods LLP
1345 Avenue of the Americas
7th Floor
New York, NY 10105
Attention: William A. Newman, Esq.
Telephone: 212 548-2160
Facsimile: 212 548-2150
(b) All such notices, consents, waivers and other
communications will (i) if delivered personally in the manner and to
the address provided in this section, be deemed given upon delivery,
(ii) if delivered by facsimile transmission in the manner and to the
facsimile number provided in this section, be deemed given on the
earlier of receipt or the first business day after transmission, (iii)
if delivered by mail in the manner, and to the address provided in this
section, be deemed given on the earlier of the third business day
following mailing or upon receipt, if earlier, and (iv) if delivered by
overnight courier in the manner and to the address provided in this
section, be deemed given on the earlier of receipt or the first
business day following the date sent by such overnight courier.
Section 12.4 Entire Agreement; Modifications. This Agreement supersedes
all prior agreements and understandings between the parties with respect to its
subject matter (including the letter of intent, dated July 28, 2004) and
constitutes (along with the Company's Disclosure Schedule, the Buyer Disclosure
Schedule, the Shareholder Stock Purchase Agreement, the Company Share Exchange
Agreement, the Principal Shareholders Agreement and the Exhibits, annexures and
other documents referred to herein and therein) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
Section 12.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would require the
application of any other law.
-38-
Section 12.6 Assignment; Successors; No Third Party Rights. Except as
set forth in Section 2.5, neither any of the Investors nor the Company may
assign any of its rights or delegate any of its obligations under this Agreement
(whether by operation of law or otherwise) without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
Section 12.7 Severability. If any portion of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section 12.8 No Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement
will operate as a waiver thereof, and no single or partial exercise by a party
of its rights hereunder shall preclude any other or future exercise thereof or
the exercise of any other right, power or privilege.
Section 12.9 Jurisdiction; Service of Process. Any Proceeding arising
out of or relating to this Agreement may be brought in the federal courts
sitting in the County of New York, State of New York, and each of the parties
irrevocably submits to the exclusive jurisdiction of each such court in any such
Proceeding, waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the Proceeding shall
be heard and determined only in any such courts and agrees not to bring any
Proceeding arising out of or relating to this Agreement in any other court. The
parties agree that either or both of them may file a copy of this paragraph with
any court as written evidence of the knowing, voluntary and bargained agreement
between the parties irrevocably to waive any objections to venue or to
convenience of forum. Process in any Proceeding referred to in the first
sentence of this section may be served on any party anywhere in the world.
Section 12.10 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
Section 12.11 Counterparts. This Agreement may be executed in one or
more counterpart copies, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. The exchange of copies of this Agreement
and of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for all
purposes.
-39-
In Witness Whereof, the Buyer and the Company have executed this
Agreement as of the date first written above.
THE A CONSULTING TEAM, INC.
By: /s/ Richard D. Falcone
----------------------------------------
Name: Richard D. Falcone
Title: Chief Financial Officer
OAK FINANCE INVESTMENTS LIMITED
By: /s/ Brenda Patricia Cocksedge
---------------------------------------
Name: Brenda Patricia Cocksedge
Title: Director
-40-
EXHIBIT 9.3(A)
COMPANY'S COUNSEL'S OPINION
[Intentionally Omitted]
EXHIBIT 9.3(A)
BUYER'S COUNSEL'S OPINION
[Intentionally Omitted]