EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated
as of July 19th, 2002 (the "Agreement"),
among THE A CONSULTING TEAM, INC., a New
York corporation (the "Company") and
those persons listed on Schedule I
attached hereto who or which are or
become signatories hereto (the
"Stockholders").
Reference is made to the Stock Purchase Agreement (the "Purchase
Agreement") dated as of June 28, 2002, among the Company, International Object
Technology, Inc., a New Jersey corporation ("IOT'), and the Stockholders,
providing for, among other things, the purchase by the Company of all of the
outstanding capital stock of IOT pursuant to which the Stockholders are
receiving shares of common stock, $0.01 par value, of the Company ("Common
Stock"), and certain of the Stockholders are receiving Deferred Payments, in
consideration of all of the capital stock purchased by the Company. All
capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Purchase Agreement.
1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks are permitted to close in the City and State of New York.
(b) "Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
(d) "NASD" shall mean the National Association of Securities Dealers, Inc.
(e) "Other Shares" shall mean at any time those Shares that do not
constitute Primary Shares or Registrable Shares.
(f) "Primary Shares" shall mean at any time all authorized but unissued
Shares.
(g) "Public Offering" shall mean a public offering of shares of Common
Stock of the Company registered pursuant to the Securities Act.
(h) "Registrable Shares" shall mean the Shares received by the Stockholders
pursuant to the Purchase Agreement, and any securities of the Company that may
be issued or
distributed with respect to, or in exchange or substitution for, or conversion
of, such Shares and such other securities issued or issuable with respect to
such securities pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or otherwise.
(i) "Rule 144" shall mean Rule 144 promulgated under the Securities Act or
any successor or complementary rule thereto.
(j) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
(k) "Stockholders" shall mean any person or entity (i) that is receiving
Shares pursuant to the Purchase Agreement, and (ii) who or which executes and
delivers a counterpart signature page to this Agreement.
(l) "Shares" shall mean shares of the Company's Common Stock.
2. Registration.
(a) Subject to the terms and conditions set forth in this Agreement, the
Company shall use its reasonable commercial efforts to file a Registration
Statement on Form S-3 (or on such other form as may be available to the Company)
(the "Registration Statement") with the Commission for the public sale of the
Shares on or before the six (6) month anniversary of the date hereof, and shall
use its reasonable commercial efforts to have the Registration Statement
declared effective as soon as practicable thereafter.
With respect to the registration pursuant to this Section 2, the Company may
include in such registration any Primary Shares or Other Shares.
3. Right of Suspension. Notwithstanding any other provision of this
Agreement, the Purchase Agreement or any Related Agreement (other than this
Agreement) the Company shall have the right at any time to prohibit or suspend
offers and sales of Registrable Shares covered by a Registration Statement
contemplated by this Agreement whenever, and for so long as, in the sole
reasonable judgment of the Company (i) there exists a material development or a
potential material development with respect to or involving the Company that the
Company would be obligated to disclose in the prospectus or offering circular
used in connection with the Registration Statement, which disclosure would in
the judgment of the Company be premature or otherwise inadvisable at such time,
or (ii) an event has occurred that makes any statement made in the Registration
Statement or related prospectus or offering circular or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the Registration
Statement, prospectus or offering circular so that it will not contain any
untrue statement of a material fact required to be stated therein or necessary
to make the statements therein not misleading or omit to state any material fact
required to be stated therein or necessary to make the statement therein, in the
light of the circumstances under which they were made, not misleading. In the
event that the Company shall determine to so prohibit or suspend offers and
sales, the Company shall, in addition to performing those acts required to be
performed by the Securities Act and/or the Exchange Act, or
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as may be deemed advisable by the Company, deliver a certificate in writing to
each of the Stockholders signed by the Chief Financial Officer or Chief
Executive Officer of the Company and, upon receipt of such certificate, the use
of the Registration Statement and prospectus or offering circular, as the case
may be, will be deferred or suspended and will not recommence until, in addition
to those acts required to be performed by the Securities Act and/or the Exchange
Act, or as may be deemed advisable by the Company, (x) such Stockholders'
receipt from the Company of copies of the supplemented or amended prospectus or
offering circular or (y) the Stockholders are advised in writing by the Company
that the prospectus or offering circular may be used. The Company will exercise
reasonable commercial efforts to ensure that the use of the Registration
Statement and prospectus or offering circular may be resumed as quickly as
practicable, and will provide prompt notice to the Stockholders when such use
may be resumed.
4. Fi1ing Ob1igations of the Company. In connection with the registration
of the Registrable Shares effected pursuant to Section 2 the Company shall:
(a) prepare and file with the Commission the Registration Statement and
such amendments (including post effective amendments) and supplements to the
Registration Statement and the prospectus or offering circular used in
connection therewith as may be necessary to keep the Registration Statement
current and effective at all times until the earlier of (i) the date as of which
the Stockholders may sell or transfer all of the Registrable Shares covered by
the Registration Statement in a three-month period under Rule 144 or (ii) the
date on which the Stockholders shall have sold all the Registrable Securities
covered by the Registration Statement (the "Registration Period"), and to comply
with the provisions of the Securities Act and the rules and regulations
thereunder with respect to the disposition of all the Registrable Shares covered
by the Registration Statement for the period required to effect the distribution
thereof, to use reasonable commercial efforts to make any corrections or updates
to the Registration Statement or prospectus as promptly as practicable and to
exercise best efforts to cause the Commission to declare the Registration
Statement effective once filed;
(b) furnish to the Stockholders such number of copies of any prospectus or
offering circular, including a preliminary prospectus, and of a full
Registration Statement and exhibits in conformity with the requirements of the
Securities Act and rules and regulations thereunder, as each Stockholder may
reasonably request in order to facilitate the disposition of the Registrable
Shares;
(c) use its best efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or blue sky laws of
such state jurisdictions of the United States as the Stockholders may reasonably
request, and accomplish any and all other acts and things which may be necessary
or advisable to permit sales in such jurisdictions of such Registrable Shares
and to keep such registration or qualification in effect for so long as the
Registration Statement remains in effect; provided, however, that the Company
shall not be required to consent to general service of process for all purposes,
or to qualify as a foreign corporation, in any jurisdiction where it is not then
qualified or to register or qualify the Registrable Shares covered by the
Registration Statement in any jurisdiction which would require the Company to
amend its certificate of incorporation or by-laws or covenant or
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undertake to do any other act or make any other change regarding its
capitalization or share ownership prior to the effectiveness of such
registration or qualification;
(d) if such registration is an underwritten Public Offering, to enter into
an underwriting agreement in form and substance customary under the
circumstances; and
(e) notify each holder of Registrable Shares promptly upon the issuance by
the Commission of any state securities commission or agency of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose.
5. Conditions to Registration Ob1igations. The Company shall not be
obligated to effect the registration of the Registrable Shares pursuant to
Section 2 unless the holders of Registrable Shares being included in the
Registration Statement consent to customary conditions of a reasonable nature
that are imposed by the Company, including, but not limited to, the following:
(a) conditions prohibiting the sale of Registrable Shares by each
Stockholder until the registration shall have been declared effective by the
Commission;
(b) conditions requiring each Stockholder to comply with all applicable
provisions of the Securities Act and the Exchange Act including, but not limited
to, the prospectus delivery requirements of the Securities Act; and
(c) if such registration is an underwritten Public Offering, conditions
requiring each Stockholder to enter into an underwriting agreement in form and
substance customary under the circumstances.
6. Information Provided by the Stockholders. Whenever under this Agreement
Registrable Shares are being registered, each Stockholder, as a condition to the
inclusion of Registrable Shares held by such Stockholder in such registration,
shall provide the Company on a timely basis with such information and materials
as the Company may reasonably request in order to effect the registration of the
Registrable Shares and the Company shall not be obligated to register such
Stockholder's Registrable Shares if such Stockholder fails within ten (10)
Business Days after written request to provide such information and materials to
the Company.
7. Rule 144. With a view to making available to the Stockholders the
benefits of Rule 144 under the Securities Act, the Company agrees to use
commercially reasonable efforts to make available adequate current public
information with respect to it within the meaning of, and as required pursuant
to, Rule 144(c).
8. Terms and Conditions of Registration. In connection with the
registration pursuant to this Agreement, and subject to the other terms and
conditions of this Agreement, the Company shall in its sole discretion determine
the terms and conditions of such registration, including, without limitation,
the timing thereof; the scope of the offering contemplated thereby (i.e.,
whether the offering shall be a combined primary offering and a secondary
offering or limited only to a secondary offering); the manner of distribution of
Registrable Shares consistent with the plan of distribution agreed upon by the
Company and the Stockholders; the period of effectiveness of registration for
permissible sales of Registrable Securities thereunder subject to
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the provisions of Section 4(a) hereof and all other material aspects of the
registration and the registration process to the extent consistent herewith. In
connection therewith, the Company may require that any such registration be
underwritten, in which event (i) the managing underwriter shall be selected by
the Company and (ii) the inclusion of Registrable Shares in such registration
shall be conditioned upon each holder thereof entering into an underwriting
agreement in customary form with such underwriters participating in such
registration.
9. Expenses. All expenses incurred by the Company in effecting a
registration under this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to any filing with
any exchange or quotation system), fees and expenses of complying with
securities and "blue-sky" laws, printing expenses, the fees and expenses of the
Company's counsel and accountants, shall be paid by the Company; provided,
however, that all underwriting discounts and selling commissions applicable to
the Registrable Shares and the fees and expenses of any counsel to the
Stockholder or Stockholders, shall be borne by the Stockholders, in proportion
to the number of Registrable Shares sold by such Stockholder or Stockholders.
10. Indemnification.
(a) In connection with the registration of any Registrable Shares under the
Securities Act pursuant to this Agreement, the Company shall indemnify and hold
harmless the Stockholders and in the case of a Stockholder that is not a natural
person, such Stockholder's directors and officers, each underwriter, broker or
other person acting on behalf of the Stockholders and each person that controls
any of the foregoing (the "Stockholder Indemnified Persons") against any losses,
claims, damages or liabilities, joint or several (or actions in respect
thereof), to which the Stockholder Indemnified Persons may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said Registration Statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in strict conformity with
information furnished in writing to the Company by any such Stockholder with
respect to information regarding any such Stockholder expressly for inclusion
therein; provided, further, that the Company shall not be liable in any such
case if the Stockholder failed to deliver an amendment or supplement to a
prospective purchaser, if such amendment or supplement was provided to the
Stockholder in sufficient time to deliver to the prospective purchaser and it
corrected the untrue statement or alleged untrue statement or omission or
alleged omission.
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(b) In connection with the registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each Stockholder shall severally and
not jointly indemnify and hold harmless the Company, each director of the
Company, each officer of the Company, each underwriter, broker or other person
acting on behalf of the Company and each person who controls any of the
foregoing persons within the meaning of the Securities Act against any losses,
claims, damages or liabilities joint or several (or actions in respect thereof),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, to the extent, but only to the extent, such statement or omission
was made in reliance upon and in strict conformity with information furnished to
the Company or such underwriter, in writing, by such Stockholder for use in
connection with the Registration Statement, preliminary prospectus, final
prospectus, amendment, supplement or document, provided, that the maximum
liability of such Stockholder under this Section 10(b) shall be limited to an
amount equal to the gross proceeds received by such Stockholder upon the sale of
Registrable Shares by such Stockholder pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 10, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
such indemnifying party of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Agreement unless
the indemnifying party is materially prejudiced thereby. In case any such action
is brought against an indemnified party, the indemnifying party will be entitled
to participate in and to assume the defense thereof; jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof; the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the reasonable fees
and expenses to be paid by the indemnifying party, if such indemnified party
upon advice of legal counsel shall have reasonably concluded that representation
of such indemnified party or parties by the counsel retained by the indemnifying
party or parties would be inappropriate due to actual or potential differing
interests between such indemnified party or parties and any other party
represented by such counsel in such proceeding (provided that the indemnifying
party shall not be responsible for the fees and expenses of more than one
additional counsel for all indemnified parties). No indemnifying party, in the
defense of any such claim or litigation shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation. Each
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indemnified party shall furnish such information regarding itself or the claim
in question as an indemnifying party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(d) If the indemnification provided for in this Section 10 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
11. Termination. The registration rights granted pursuant to this Agreement
shall terminate on the earlier of (i) the date as of which the Stockholders may
sell or transfer all of the Registrable Shares covered by the Registration
Statement in a three-month period under Rule 144, (ii) the date on which the
Stockholders have sold or transferred all of the Registrable Shares covered by
the Registration Statement or (iii) the three year anniversary of this
Agreement; provided, that the provisions of Section 10 shall survive
termination.
12. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company, the Stockholders and, subject to Section 14, the
respective successors, permitted assigns, heirs and legal representatives (as
the case may be) of the Company and each Stockholder.
13. Confidentiality. Each Stockholder hereby agrees to and shall keep
strictly confidential and will not disclose or divulge any confidential,
proprietary or secret information which such Stockholder may obtain from the
Company in connection with this Agreement, unless required to be disclosed by
law or pursuant to any judgment, order, subpoena or decree of any court having
competent jurisdiction, or unless such information is or becomes publicly known
(other than as a result of a violation of this Section 13), or unless the
Company gives its written consent to the release by such Stockholder of such
information, except that no such written consent shall be required (and such
Stockholder shall be free to release such information) if such information is to
be provided to a lawyer or accountant of such Stockholder who is instructed to
comply with this provision. Each Stockholder shall be responsible for making
sure its lawyer and accountant comply with this Section 13. In the event the
Stockholder becomes legally compelled to disclose any confidential information
pursuant to a subpoena, summons, order or other judicial or governmental
process, the Stockholder shall provide the Company with prompt notice thereof so
that the Company may seek a protective order or another appropriate
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remedy, or waive compliance with the relevant provisions of this agreement. In
the event such a protective order or other remedy is not obtained, or that such
a waiver is granted, the Stockholder shall furnish only that portion of such
confidential information that is legally required.
14. Assignment. A Stockholder may not assign its rights under this
Agreement to any purchaser or transferee of Registrable Shares without the prior
written consent of the Company.
15. Entire Agreement. This Agreement and the Purchase Agreement and the
other writings referred to herein and therein contain the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous arrangements or understandings with respect to the subject
matter hereof.
16. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested or by telecopier, with
confirmation as provided above addressed as follows:
(a) if to the Company, to:
The A Consulting Team, Inc.
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000;
with copies to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000; and
(b) If to the Stockholders, to the addresses set forth on Schedule I
attached hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith. All
such notices or communications shall be deemed to be received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of facsimile transmission or telecopier upon
confirmed receipt and (d) in the case of mailing, on the third Business Day
following the date on which the piece of mail containing such communication was
posted.
17. Modifications; Amendments; Waivers. The terms and provisions of this
Agreement may only be amended or waived either (a) with the written consent of
the Company
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and the holders of a majority of the Registrable Shares, or (b) in a writing by
the party or parties against whom such amendment or waiver is sought to be
enforced.
18. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
19. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without reference to its
conflicts of laws principles).
21. Consent to Jurisdiction. Each of the parties hereto hereby absolutely
and irrevocably consents and submits to the jurisdiction of the courts in the
State of New York and of any Federal court located in the City and County of New
York in connection with any actions or proceedings brought against them by any
of the other parties hereto. In any such action or proceeding, the parties
hereto each hereby absolutely and irrevocably (i) waives any objection to
jurisdiction or venue, (ii) waives personal service of any summons, complaint,
declaration or other process, and (iii) agrees that the service thereof may be
made by certified or registered first-class mail directed to such party, as the
case may be, at their respective addresses as set forth in Section 16 hereof.
[Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed and delivered as of the date first above written.
THE A CONSULTING TEAM, INC.
By: /s/ Xxxxxx XxxXxx
-------------------------------------
Name: Xxxxxx XxxXxx
Title: President and Chief Executive
Officer
[Counterpart signature page follows]
[Counterpart Signature Page to Registration Rights Agreement]
STOCKHOLDER:
If an individual Stockholder:
/s/ Piotr Zielcyznski
------------------------------------
(signature)
/s/ Xxxxxxx Xxxxxxx
------------------------------------
(signature)
/s/ Xxxx Xxxxxxxx
------------------------------------
(signature)
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
(signature)
/s/ Xxxxxx X. Xxxxxx
------------------------------------
(signature)
If an entity Stockholder:
bCompliant, Inc.
------------------------------------
(print name of entity)
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
(signature)
Xxxxxxx X. Xxxxxx
--------------------------------
(print name)
President
--------------------------------
(print title)
Number of Registrable Shares Owned
by Stockholder: ________________________
SCHEDULE I
Number of Registrable
Stockholder Name and Address Shares
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxxx 536,749
00 Xxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxxx 536,749
00 Xxxxxxx Xxxxx Xxx
Xxxxxx, XX 00000
Xxxx Xxxxxxxx 83,494
00 Xxxx Xxxxx
Xxxxxxx, XX 00000
bCompliant, Inc. 80,804
00 Xxxx 00xx Xx., Xxxxx 0X
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxx 16,102
00 Xxxx 00xx Xx., Xxxxx 0X
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx 16,102
00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
