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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made on _______, 1997,
between Syntel, Inc., a Michigan corporation ("Buyer"), and Xxxxxx Xxxxx and
Xxxxxx Xxxxx (each a "Stockholder" and, collectively, the "Stockholders"), the
stockholders of Syntel Software Private Limited, a corporation organized under
the laws of India (the "Company").
The Stockholders are the beneficial and registered owners of all of the
issued and outstanding capital stock (the "Shares") of the Company. The
Stockholders desire to sell to Buyer and Buyer desires to purchase from the
Stockholders all of the Shares for the price, upon the terms and subject to the
conditions hereinafter set forth. Capitalized terms not otherwise defined at
the time of usage shall have the meanings designated in Section 8.8 hereof.
In consideration of the premises and of the respective covenants and
agreements contained herein, the parties agree as follows:
ARTICLE I
Purchase and Sale of Shares; Closing
1.1 Purchase and Sale. On the terms and subject to the conditions set
forth in this Agreement, the Stockholders shall sell and transfer to Buyer, and
Buyer shall purchase and accept from the Stockholders, all of the outstanding
Shares.
1.2 Purchase Price. Buyer agrees to pay to the Stockholders at the
Closing the aggregate sum of $7,000,000 (the "Purchase Price") by wire transfer
of immediately available federal funds to such accounts as the Stockholders
shall designate. The Purchase Price shall be allocated among the Stockholders
in proportion to their respective holdings of the Shares as set forth on Annex
A hereto.
1.3 Closing. Subject to the conditions set forth in this Agreement, the
purchase and sale of the Shares pursuant to this Agreement (the "Closing")
shall take place upon consummation of the public offering of Buyer's Common
Stock (the "Public Offering") pursuant to the Registration Statement on Form
S-1 filed with the Securities and Exchange Commission on June 6, 1997 (the
"Closing Date").
1.4 Deliveries at the Closing. At the Closing, the Stockholders shall
deliver to Buyer certificates representing all the Shares, endorsed in blank in
proper form for transfer, and Buyer shall deliver the Purchase Price to the
Stockholders in proportion to their respective holdings of the Shares as set
forth in Annex A hereto.
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ARTICLE II
Representations and Warranties of the Stockholders
The Stockholders jointly and severally represent and warrant to the Buyer
that the following representations and warranties are true and correct on the
date hereof and will be true and correct as of the Closing Date in all material
respects.
2.1 Authority. The Stockholders have the authority to enter into this
Agreement and to carry out the transactions contemplated hereby. This
Agreement has been duly executed by the Stockholders and constitutes a valid
and binding agreement of the Stockholders, enforceable against the Stockholders
in accordance with its terms.
2.2 Consents and Approvals; No Violation. To the knowledge of the
Stockholders, neither the execution and delivery of this Agreement by the
Stockholders nor the consummation of the transactions contemplated hereby will
(a) result in any breach of any provision of the charter or Bylaws (or other
similar governing documents) of the Company,(b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound, or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any of its subsidiaries or any of their
properties or assets, except in the case of (b) and (c) for violations,
breaches or defaults which would not individually or in the aggregate, have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole.
2.3 Organization of Company; Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
country of India, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
2.4 No Encumbrances; Capitalization.
(a) The Shares are free all Liens and the Stockholders have full
authority to transfer the Shares pursuant to this Agreement.
(b) The issued and outstanding common stock of the Company consists of
500,000 shares US $0.32 per share. All such outstanding shares of the
Company's capital stock are validly issued, subscribed and paid up. There is
no security, option, warrant, right, call, subscription, agreement, commitment
or understanding of any nature whatsoever, fixed or contingent, that directly
or indirectly (i) calls for the issuance, sale, pledge or other disposition of
any shares of stock of the Company or any securities convertible into, or
exchangeable for, or other rights to acquire, any shares of stock of the
Company, or (ii) obligates the Company to grant, offer or enter into any of the
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foregoing. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any outstanding shares of its capital
stock. There are no agreements or understandings to which the Company is a
party with respect to the (A) voting of capital stock or other securities of
the Company, (B) dividends or distributions on account of such capital stock or
(C) the transfer or disposition of such capital stock.
(c) Upon delivery of the Shares to Buyer and full payment therefor as
contemplated by this Agreement, Buyer shall acquire good and valid title to all
of the Shares free and clear of all Liens.
2.5 Financial Statements. The Stockholders have previously furnished to
Buyer (a) an unaudited balance sheet of the Company as of March 31, 1997 and
related statement of income of the Company for the period then ended, (b)
audited balance sheet of the Company as of December 31, 1996 and (c) the
related audited statement of income, statement of stockholders' equity and
statement of cash flows for the fiscal year then ended together with the
related notes thereto and the report thereon of Xxxxxxxx Xxxx & Co., chartered
accountants. The balance sheet of the Company as of March 31, 1997, is
hereafter referred to as the "1997 Balance Sheet". All such financial
statements are in accordance with the books and records of the Company and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The balance sheets
included in the financial statements referred to in this Section 2.5 (including
the related notes thereto) present fairly the financial position of the Company
as of their respective dates, and each of the related statements of income and
(where applicable) stockholders' equity and cash flows included therein
(including the related notes thereto) present fairly the results of operations
and (where applicable) cash flows for the fiscal years or periods then ended.
2.6 Absence of Certain Changes. Since March 31, 1997, there has not been
any Material Adverse Effect and the Stockholders are not aware of any
condition, development or contingency existing which, so far as reasonably can
be foreseen at this time, may reasonably be expected to result in any Material
Adverse Effect.
2.7 Properties; Title.
(a) The Company does not own any real property, but leases property in
Mumbai, India and Chennai, India. True and correct copies of such leases have
been delivered to Buyer. Each lease is in full force and effect and there is
no default thereunder.
(b) The Company has (i) good, valid and marketable title to the
tangible property and all of the other assets reflected on the 1997 Balance
Sheet, except as disposed of in the ordinary course of business, and (ii) a
valid leasehold interest in its leased real property, in each case with
respect to subsections (i) and (ii) above, free and clear of all Liens other
than (A) Liens for current taxes, assessments or governmental charges not yet
due and delinquent, or (B) Liens which do not,
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individually or in the aggregate, materially interfere with the use of the real
properties or materially detract from their value.
2.8 Legal Compliance, Licenses and Authorizations.
(a) To the knowledge of the Stockholders, the Company has complied in
all material respects with all applicable laws, statutes, rules, regulations and
orders, of federal, state, local and foreign governments (and all agencies
thereof), including, without limitation, all environmental laws and no action,
proceeding, complaint, claim, demand or notice has been filed or commenced
against it alleging any failure so to comply.
(b) To the knowledge of the Stockholders, the Company holds all
material licenses and other permits and authorizations necessary for the
operation of the business of the Company as presently conducted. There is not
now pending or threatened any action by the grantor of any such license, permit
or authorization to revoke, cancel or refuse to renew any such license, permit
or authorization.
2.9 Labor Matters. The Company is not a party to or subject to any labor
union or collective bargaining agreement. The Company is in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice except where the failure to be in compliance would not
reasonably be expected to have a Material Adverse Effect.
2.10 Material Contracts. No material default or alleged material default
exists under any of the Material Contracts. Each of the Material Contracts is
now valid, in full force and effect and enforceable in accordance with its
terms and the Company has fulfilled in all respects, or taken all action
reasonably necessary to enable it to fulfill when due, all its obligations
under such contracts, except where the failure to fulfill such obligations
would not reasonably be expected to have a Material Adverse Effect.
2.11 Legal Proceedings. There is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened in
writing against the Company before any court or governmental or regulatory
authority or body wherein a result adverse to the Company's interests would
have a Material Adverse Effect, or would prevent or delay the transactions
contemplated in this Agreement. The Company is not subject to any outstanding
order, writ, injunction or decree which would have a Material Adverse Effect or
would prevent or delay the transactions contemplated in this Agreement.
2.12 Taxes. The Company has duly filed (or caused to be filed) all
returns of Taxes (as defined below) required to be filed by it, and has paid or
provided for all Taxes shown to be due on such returns. No action or
proceeding for the assessment or collection of any Taxes is pending or proposed
in writing against the Company, and no deficiency, assessment or other claim in
writing for any Taxes has been asserted or made against the Company that has
not been fully paid or finally
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settled. To the knowledge of the Stockholders, all Taxes which the Company has
been required to collect or withhold have been duly withheld or collected and,
to the extent required, have been paid to the proper taxing authority. As used
herein, "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, excise, property, transfer,
payroll, withholding, employment, value added, capital, net worth, estimated,
sales, use and franchise taxes, imposed by any government or subdivision or
agency thereof, and including any interest, penalties or additions attributable
thereto.
ARTICLE III
Representations and Warranties of Buyer
Buyer represents and warrants to the Company that the following
representations and warranties are true and correct on the date hereof and will
be true and correct as of the Closing Date in all material respects.
3.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan.
3.2 Authority Relative to this Agreement. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Buyer, and
no other corporate proceedings on the part of Buyer are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby or
thereby. This Agreement has been duly and validly executed and delivered by
Buyer and constitutes a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
3.3 Consents and Approvals; No Violation. To the knowledge of Buyer,
neither the execution and delivery of this Agreement by Buyer nor the
consummation of the transactions contemplated hereby will (a) result in any
breach of any provision of the Articles of Incorporation or Bylaws (or other
similar governing documents) of Buyer, (b) result in a violation or breach of,
or constitute a default under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation to which Buyer is a party or by which Buyer or
any of its properties or assets may be bound, or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer, any of its
subsidiaries or any of their properties or assets, except in the case of (b)
and (c) for violations, breaches or defaults which would not individually or in
the aggregate, have a Material Adverse Effect on Buyer.
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ARTICLE IV
Covenants of the Parties
4.1 Conduct of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Closing Date, the
Stockholders will cause the Company to conduct its business and operations
according to its ordinary and usual course of business and consistent with past
practices.
4.2 Consents. Buyer and Stockholders will use their respective best
efforts to obtain consents of all persons and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement, including the consent of the Reserve Bank of India.
4.3 Additional Agreements. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties
hereto, the Company, as applicable, shall take all such necessary action.
4.4 Notification of Certain Matters. Between the date hereof and the
Closing, the Stockholders shall give prompt notice in writing to Buyer of: (a)
the occurrence of any event which will result in a Material Adverse Effect or
in the failure to satisfy a condition specified in Article V hereof; and (b)
any notice or other communication from any third person alleging that the
consent of such third person is or may be required in connection with the
transactions contemplated by this Agreement.
4.5 Tax Returns. All Tax returns required to be filed after the date
hereof but prior to the Closing shall be prepared, and any elections with
respect to such returns shall be made, to the extent permitted by law, in a
manner consistent with prior practice with respect to the Company.
ARTICLE V
Conditions To Obligations Of Buyer
The obligations of Buyer required to be performed by it at the Closing
shall be subject to the satisfaction, at or prior to the Closing, of each of
the following conditions, each of which may be waived by Buyer as provided
herein except as otherwise required by applicable law:
5.1 Representations and Warranties; Performance of Obligations. Each of
the representations and warranties of the Stockholders contained in this
Agreement shall be true in all material respects at and as of the Closing;
provided that a breach of any representation or warranty shall not constitute a
failure of the condition contained in this Section 5.1 if such breach, either
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alone, or in conjunction with all other breaches, has not had, and would not
reasonably be expected to have, a Material Adverse Effect.
5.2 Authorization; Consents. All notices to, and declarations, filings
and registrations with, and consents, authorizations, approvals and waivers
from, governmental and regulatory bodies and any third parties required to
consummate the transactions contemplated hereby, and all other governmental,
regulatory or third party consents or waivers which, either individually or in
the aggregate, if not made or obtained, would have a Material Adverse Effect
shall have been made or obtained.
ARTICLE VI
Conditions To Obligations Of The Stockholders
The obligations of the Stockholders required to be performed by them at
the Closing shall be subject to the satisfaction, at or prior to the Closing,
of each of the following conditions, each of which may be waived by the
Stockholders as provided herein except as otherwise required by applicable law:
6.1 Representations and Warranties; Performance of Obligations. Each of
the representations and warranties of the Buyer contained in this Agreement
shall be true in all material respects at and as of the Closing; provided that
a breach of any representation or warranty shall not constitute a failure of
the condition contained in this Section 6.1 if such breach, either alone, or in
conjunction with all other breaches, has not had, and would not reasonably be
expected to have, a Material Adverse Effect.
6.2 Authorization; Consents. All notices to, and declarations, filings
and registrations with, and consents, authorizations, approvals and waivers
from, governmental and regulatory bodies and any third parties required to
consummate the transactions contemplated hereby, and all other governmental,
regulatory or third party consents or waivers which, either individually or in
the aggregate, if not made or obtained, would have a Material Adverse Effect
shall have been made or obtained.
ARTICLE VII
Indemnification
7.1 Indemnification. The Stockholders jointly and severally agree to
indemnify and hold Buyer harmless from and against any and all liabilities,
losses, damages, deficiencies, judgments, fines, costs and expenses, including
reasonable counsel fees ("Losses"), incurred or sustained by Buyer that result
from, relate to or arise out of:
(a) any material breach of any representation or warranty or material
nonfulfillment of any agreement or covenant on the part of the Stockholders
under this Agreement; and
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(b) any and all actions, suits, claims or proceedings incident to any of
the foregoing or to the enforcement of this Section 7.1;
provided, however that (i) the Stockholders shall not have any obligation to
indemnify Buyer under this Section 7.1 until Buyer has suffered Losses in
excess of $350,000 (after which point the Stockholders will be obligated to
indemnify Buyer only from and against further such Losses), and (ii) the
obligation of the Stockholders to indemnify Buyer from and against Losses
under this Section 7.1 shall not exceed the Purchase Price.
ARTICLE VIII
Miscellaneous
8.1 Survival. All representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing for a period of one year.
8.2 Headings. Section headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
8.3 Notices. All notices or other communications required or permitted
hereunder shall be given in writing and shall be deemed sufficient if delivered
by hand (including by courier), mailed by registered or certified mail, postage
prepaid (return receipt requested), or sent by facsimile:
Notice to the Stockholders shall be made at 0000 Xxxxxxxxx, Xxxxx 000,
Xxxx, Xxxxxxxx 00000; Attention: Xxxxxx Xxxxx, and notices to the Buyer shall
be made at 0000 Xxxxxxxxx, Xxxxx 000, Xxxx, Xxxxxxxx 00000, Attention: Xxxxxx
X. Xxxxx, or such other address as shall be furnished in writing by such party.
8.4 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any of the rights, interests, or obligations hereunder may
be assigned by any of the parties hereto without the prior written consent of
the other parties.
8.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersedes all prior or contemporaneous written or oral commitments,
arrangements or understandings with respect thereto. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the transactions contemplated hereby other than those expressly set
forth herein.
8.6 Modifications, Amendments and Waivers. At any time prior to the
Closing, to the extent permitted by law, (a) Buyer and the Stockholders may, by
written agreement, modify, amend
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or supplement any term or provision of this Agreement and (b) any term or
provision of this Agreement may be waived in writing by the party which is
entitled to the benefits thereof.
8.7 Governing Law. This Agreement shall be governed by the laws of the
State of Michigan (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters including, but not limited
to, matters of validity, construction, effect and performance.
8.8 Certain Definitions. For purposes of this Agreement:
"Lien" shall mean any pledge, lien (including without limitation any
tax lien), charge, claim, encumbrance, security interest, mortgage,
option, restriction on transfer (including without limitation any
buy-sell agreement or right of first refusal or offer), forfeiture,
penalty, equity or other right of another person of every nature and
description whatsoever.
"Material Adverse Effect" shall mean a loss, expense or cost to the
Company which is, or with reasonable probability might be, materially
adverse to the business, operations, assets, properties, results of
operations or financial condition of the Company taken as a whole, it
being understood that a loss, expense or cost to the Company shall be
rendered materially adverse only if the present value of such loss,
expense or cost to the Buyer, calculated at a discount rate of 10% per
annum, after taking into account all tax effects, exceeds $350,000.
"Material Contract" shall mean a contract which: (i) involves the
payment of an amount in excess of $100,000 in the aggregate or $50,000
per annum ; and (ii) is not subject to cancellation without penalty upon
60 days written notice.
"Person" or "person" shall mean an individual or any corporation,
partnership, joint venture, association, limited liability company,
trust, unincorporated organization, or other legal entity or a government
or governmental entity.
"To the knowledge," or "known," and words of similar import shall
mean actual knowledge of a person.
8.9 Severability. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
or enforceability of the remaining provisions of this Agreement shall not be
affected thereby and this Agreement will be construed and enforced as if such
invalid, illegal or unenforceable provisions had not been included herein. To
the extent permitted by applicable law, each party waives any provision of law
which renders any provision of this Agreement invalid, illegal or unenforceable
in any respect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SYNTEL, INC.
By:__________________________
Xxxxxx Xxxxx
Its: President
__________________________
Xxxxxx Xxxxx
__________________________
Xxxxxx Xxxxx
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ANNEX A
Xxxxxx Xxxxx
Xxxxxx Xxxxx
BH/106782.4
ID/DRM
11
