AGREEMENT OF PURCHASE AND SALE dated as of May 7, 1998 (the
"Agreement"), among Intelligroup, Inc., a New Jersey corporation
("Intelligroup"), Intelligroup Europe Limited (No. 3205142), a corporation
formed pursuant to the laws of England and Wales and a wholly-owned subsidiary
of Intelligroup ("Sub"), and the shareholders of CPI Consulting Limited (No.
3316554), a corporation formed pursuant to the laws of England and Wales
("Consulting"), listed on Annex 1 hereto (collectively, the "Consulting
Shareholders").
WITNESSETH:
WHEREAS, the Boards of Directors of Intelligroup and Sub have
determined that it is advisable and in the best interests of their respective
shareholders for Sub to acquire the share capital of Consulting owned by the
Consulting Shareholders (the "Consulting Capital") upon the terms and subject to
the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Intelligroup and Sub have each approved the acquisition of the Consulting
Capital by Sub (the "Acquisition"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, pursuant to the Acquisition, the Consulting Capital shall be
acquired by Sub in exchange for the consideration set forth in Section 2.2
hereof upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Intelligroup, Sub and the Consulting Shareholders hereby agree as
follows:
ARTICLE 1.
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DEFINITIONS
-----------
1.1. Defined Terms. As used herein, the terms below shall have the
following meanings:
"Affiliate" of a Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreements Regarding Confidentiality and Proprietary Rights" means the
Agreement substantially in the form of Exhibit A hereof.
"Ancillary Agreements" means the Employment and Non-Compete Agreements,
the Agreements Regarding Confidentiality and Proprietary Rights and all other
agreements required hereunder to consummate the Acquisition.
"Assets" means the right, title and interest of Consulting in and to
its properties, assets and rights of any kind, whether tangible or intangible,
real or personal, including without limitation the right, title and interest in
the following:
(a) all Contracts and Contract Rights;
(b) all Fixtures and Equipment;
(c) all Books and Records;
(d) all Proprietary Rights;
(e) all Permits;
(f) all cash, accounts receivable, deposits and prepaid
expenses; and
(g) all goodwill.
"Average Share Price" means, as of any date of determination, the
average of the closing prices of Intelligroup Stock on the Nasdaq National
Market as reported in the Wall Street Journal for the 20 trading days ending on
the day which is three trading days prior to such date of determination.
"Balance Sheet" means the balance sheet of Consulting as of the Balance
Sheet Date.
"Balance Sheet Date" means December 31, 1997.
"Books and Records" means (a) all product, business and marketing
plans, sales and promotional literature and artwork relating to the Assets or
the Business, (b) all books, records, lists, ledgers, financial data, files,
reports, product and design manuals, plans, drawings, technical manuals and
operating records of every kind relating to the Assets or the Business
(including records and lists of customers, distributors, suppliers and
personnel) and (c) all telephone and fax numbers used in the Business, in each
case whether maintained as hard copy or stored in computer memory and whether
owned by Consulting or any of its Affiliates.
"Business" means the business and operations of Consulting consisting
of providing software utilities for the management of data and applications
within large organizations.
"Closing" has the meaning set forth in Section 2.1(b).
"Closing Date" means the date of the Closing.
"Companies Act 1985" means the Companies Xxx 0000 (as amended by the
Companies Act 1989) (both being UK statutes).
"Consents" means any and all Permits and any and all consents,
approvals or waivers from third parties that are required for the consummation
of the transactions contemplated by this Agreement.
"Consulting Financial Statements" means collectively, the Balance Sheet
and the profit and loss account of Consulting for the ten-month period ended on
the Balance Sheet Date, together with the report of Xxxxxxx Xxxx thereon, and
the Management Accounts.
"Contract Rights" means all rights and obligations under the Contracts.
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"Contracts" means all agreements, contracts, leases (whether for real
or personal property), purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations and commitments to which Consulting is a party or by which
Consulting or any of the Assets are bound or affected, whether written or oral.
"Court Order" means any judgment, decision, consent decree, injunction,
ruling or order of any foreign, federal, state or local court or governmental
agency, department or authority that is binding on any Person or its property
under applicable law.
"Default" means (a) a breach of or default under any Contract, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Employees" means all officers and directors of Consulting and all
other Persons employed by Consulting on a full or part-time basis as of the
relevant date.
"Employment and Non-Compete Agreements" means the Agreements dated as
of April 27, 1998, among Intelligroup, Sub and each of the Consulting
Shareholders (except for Xxxxxx Xxxxxx).
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.
"Environmental Conditions" means the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any drinking water supply, subsurface strata or ambient air, relating to
or arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Substances by Consulting or any of its predecessors or
successors in interest, or by its agents, representatives, employees or
independent contractors when acting in such capacity on behalf of Consulting.
With respect to Environmental Claims by third parties, Environmental Conditions
also include the exposure of persons to Hazardous Substances at the work place
or the exposure of persons or property to Hazardous Substances migrating from or
otherwise emanating from or located on property owned or occupied by Consulting.
"Environmental Laws" means all applicable federal, state, district and
local laws, all rules or regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances into the environment and (ii) laws relating to the
identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of
pollutants, contaminants, chemicals, industrial materials, wastes or other
substances. Environmental Laws shall include, without limitation, applicable
United Kingdom environmental laws being any statute, rule, regulation, statutory
instrument, treaty, directive, direction, decision, by-law, code of practice,
circular, guidance note, order, notice, demand, injunction, rule of common law
or statutory or common
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law, duty of care of (in each case) any governmental authority or agency or any
regulatory or other body (whether in the United Kingdom or overseas) in relation
to Environmental Conditions.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
and the rules and regulations promulgated thereunder.
"Facilities" means all offices, manufacturing facilities, stores,
warehouses, administration buildings and all real property and related
facilities used by Consulting all as identified or listed on Schedule 3.8.
"Fixtures and Equipment" means all of the furniture, fixtures,
furnishings, machinery, computer hardware, and other tangible personal property
owned by Consulting wherever located and including any such Fixtures and
Equipment in the possession of any of the suppliers or other vendors of
Consulting.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substances or materials (whether solids, liquids or gases)
subject to regulation, control or remediation under Environmental Laws. By way
of example only, the term Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides,
herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
"Intelligroup Stock" means the common stock, par value $.01 per share,
of Intelligroup.
"knowledge" or "to the knowledge" of a party (or similar phrases) means
to the extent of matters (i) which are actually known by such party or (ii)
which, based on facts of which such party is aware, would be known to a
reasonable Person in similar circumstances.
"Liability" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"Management Accounts" means the balance sheet of Consulting as of March
31, 1998 and the related statements of income, changes in shareholders' equity
and cash flows, of Consulting for the three months then ended.
"Material Adverse Effect" or "Material Adverse Change" or a similar
phrase means, with respect to any Person, (a) any material adverse effect on or
change with respect to (i) the business, operations, assets (taken as a whole),
liabilities (taken as a whole), condition (financial or otherwise) or results of
operations, of such Person, taken as a whole, or (ii) the right or ability of
such Person to consummate any of the transactions contemplated hereby or (b) any
event or condition which, with the passage of time, the giving or receipt of
notice or the occurrence or nonoccurrence of any other circumstance, action or
event, would reasonably be expected to constitute a "Material Adverse Effect" on
or "Material Adverse Change" with respect to such Person.
"Permitted Encumbrances" means (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable, or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by U.S. GAAP or U.K. GAAP, as applicable, shall have been made therefor, (b)
statutory liens of landlords, liens of carriers, warehousepersons, mechanics and
materialpersons and other liens imposed by law incurred in the ordinary course
of business for sums (i) not yet due and payable, or (ii) being contested in
good faith, if a reserve or other appropriate provision, if any, as shall
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be required by U.S. GAAP or U.K. GAAP, as applicable, shall have been made
therefor, (c) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, and (d) easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case, which do
not interfere with the ordinary conduct of business of Consulting and do not
materially detract from the value of the property upon which such encumbrance
exists.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the Business or
ownership of the Assets of such Person.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
"Proprietary Rights" means all (a) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, including xxxxx
patents and utility models and applications therefor, (b) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (c) U.S. and foreign copyrights and registrations and
applications for registration thereof, (d) U.S. and foreign mask work rights and
registrations and applications for registration thereof, (e) Trade Secrets, (f)
other proprietary rights, (g) copies and tangible embodiments thereof (in
whatever form or medium) and (h) licenses granting any rights with respect to
any of the foregoing.
"Regulations" means any laws, statutes, ordinances, regulations, rules,
notice requirements, court decisions, agency guidelines, principles of law and
orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, Environmental
Laws, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"Related Party" means (i) any of Consulting's officers, directors and
shareholders, and any officers, directors, partners, associates or relatives of
such officers, directors and shareholders, and (ii) any Person in which
Consulting or any Shareholder or any Affiliate, associate or relative of any
such Person has any direct or indirect interest.
"Representative" of any Person means any officer, director, principal,
attorney, agent, employee or other representative of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes,
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including information returns, any documents with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
"Taxes" mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, license, net worth, payroll, franchise and transfer
and recording, imposed by Inland Revenue or any taxing authority (whether
domestic or foreign, including any federal, state, county, local or foreign
government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments.
"Trade Secrets" means all trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
research and development information, software, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information).
"U.K. GAAP" means generally accepted United Kingdom accounting
principles.
"U.S. GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, which are applicable
to the facts and circumstances on the date of determination.
1.2. Interpretation Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
(b) References to agreements and other documents shall be deemed
to include all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(e) The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
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(f) The annexes, schedules and exhibits to this Agreement are a
material part hereof and shall be treated as if fully incorporated into the body
of the Agreement.
ARTICLE 2.
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THE ACQUISITION
---------------
2.1. The Acquisition.
(a) Effective Time. At the Closing (as defined in Section
2.1(b) hereof), and subject to and upon the terms and conditions of this
Agreement, each of the Consulting Shareholders agrees to sell to Sub, and Sub
agrees to purchase from the Consulting Shareholders, the Consulting Capital.
(b) Closing. Subject to the satisfaction or waiver, if
permissible, of the conditions set forth in Articles 5 and 6, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place (i)
at the offices of Xxxxxxxx Xxxxxxxxx, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx
Xxxxxx, xx the date hereof or (ii) at such other time, date or place as
Intelligroup and the Consulting Shareholders may mutually agree.
2.2. Purchase Price. At the Closing:
(a) Acquisition of Securities.
(i) The Consulting Shareholders shall receive 165,696
shares of validly issued, fully paid and nonassessable shares of restricted
Intelligroup Stock and a contingent payment of up to (pound)1,513,200 in
restricted Intelligroup Stock to be determined as set forth in subsection (ii).
(ii) Within 20 days after the completion of an audit of
Consulting's financial statements for the year ended December 31, 1998,
Intelligroup shall pay to the Consulting Shareholders, a contingent payment of
up to (pound)1,513,200, such amount to be paid by the issuance of such number of
shares of restricted Intelligroup Stock (as are calculated on a dollar/sterling
conversion rate of $1.652/(pound)1) subject to the registration provisions set
forth in Section 9.2, which when multiplied by the Average Share Price as of
December 31, 1998, shall have a market value of the actual amount of payment due
calculated as follows:
(A) three times the dollar value by which Consulting's
pre-tax income exceeds (pound)563,200 up to pre-tax income of (pound)684,300 for
the twelve months ended December 31, 1998; plus
(B) four times the dollar value by which Consulting's
pre-tax income exceeds (pound)684,300 up to pre-tax income of (pound)805,400 for
the twelve months ended December 31, 1998; plus
(C) five and one-half times the dollar value by which
Consulting's pre-tax income exceeds (pound)805,400 for the twelve months ended
December 31, 1998 (but no payment shall be due on any of Consulting's pre-tax
income in excess of (pound)926,400).
The Intelligroup Stock described in clauses (i) and (ii) above shall be
"restricted" under SEC Rule 144 prior to the effective date of registration, but
shall not be subject to any other restriction on transfer by contract.
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The shares of Intelligroup Stock issued in connection with the
Acquisition pursuant to subsection (i) above are sometimes referred to herein as
the "Acquisition Shares."
In the event of (i) the merger or consolidation of Intelligroup with or
into another entity where the shareholders of Intelligroup immediately prior to
such transaction hold less than a majority of the voting shares of the surviving
entity, or (ii) the sale of all or substantially all of the assets of
Intelligroup, in either event prior to December 31, 1998, Intelligroup shall pay
the Consulting Shareholders $1,000,000 in cash in lieu of such contingent
payment as set above. Such payment shall be due upon the consummation of
applicable transaction.
Any contingent payment paid to the Consulting Shareholders herein shall
be paid pro-rata based upon each individual shareholder's respective percentage
interest in Consulting.
(iii) (A) Management of Consulting shall remain the same as
in place as of the date hereof through December 31, 1998.
(B) Prior to December 31, 1998, existing Consulting
management shall have complete control over hiring and firing of consultants and
no expenses of Intelligroup (including, for the avoidance of double, management
charges) shall be allocated to Consulting during such period representing
Intelligroup overhead or expenses or expenses relating to any employees or
consultants not hired, or retained by Consulting, and Consulting shall not be
merged with any other entity, except as mutually agreed to by Sub and Consulting
management.
(C) During such period, Consulting shall only incur
such expenditures as are authorized by existing Consulting management, provided
existing Consulting management exercises good faith in continuing to operate
Consulting in the manner in which it has been operated to the date hereof.
(D) During such period, existing Consulting management
shall keep Intelligroup and Sub apprised of proposed hiring of employees or
consultants and major business decisions throughout.
(E) As soon as reasonably practicable after December
31, 1998, existing Consulting management shall prepare and submit to
Intelligroup and Sub the financial statements as of December 31, 1998 for
Consulting, which statements shall state Consulting's pre-tax income for the
twelve months ending December 31, 1998 and shall be subject to review by
Intelligroup's auditors. The statements shall be prepared in a manner consistent
with prior financial statements of Consulting.
(F) The parties agree that support revenues relating to
the PeopleSoft System Support Services which was introduced by Consulting during
1998, shall be dealt with as follows:
The charges for such services consist of an advance
payment which includes two elements:
(i) sign-on fee; and
(ii) 50 pre-paid support incident units at (pound)100
each.
The accounting treatment of the foregoing will be as
follows:
(a) Full value of the sign-on fee shall be taken on the
month in which the support agreement is signed as it is not refundable and not
associated with the services performed in the future. The expenses associated
with the sign-on fee shall be incurred in the month in which such sign-on fee
revenue is recognized.
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(b) The value of the pre-paid incident units shall be
taken as and when the units are used by the client and additional units shall be
treated in the same way.
(G) In the absence of an agreement in writing between
the Consulting Shareholders and Intelligroup within 30 business days after the
Consulting Shareholder's delivery of each such financial statement either
Intelligroup or the Consulting Shareholders may by notice in writing to the
other require the 1998 pre-tax income of Consulting to be certified by a single
independent chartered accountant or an independent firm of chartered accountants
to be agreed upon between them or (in default of such agreement) to be selected
(at the instance of either of them) by the President of the Institute of
Chartered Accountants (the "ICS") in England and Wales, and any such chartered
accountant or firm of chartered accountants (whose costs shall be paid as he or
they shall direct) shall act as expert (and not as arbitrator) in connection
with the giving of such certificate, which shall be binding. Any fees and
expenses incurred in connection with the engagement of an independent chartered
accountant or an independent firm of chartered accountants shall be the joint
responsibility of Intelligroup and the Consulting Shareholders or, in the event
a party elects to have such accountant(s) selected by the President of the ICS,
such fees and expenses shall be the sole responsibility of the party making such
election.
2.3. Taking of Necessary Action; Further Action. Each of Intelligroup,
Sub and the Consulting Shareholders will take all such reasonable lawful action
as may be necessary or appropriate in order to effect the Acquisition in
accordance with this Agreement as promptly as practicable. If, at any time after
the Closing, any such further action is necessary or desirable to carry out the
purposes of this Agreement, to vest Sub with full right, title and possession to
the Consulting Capital and to vest the Consulting Shareholders with full right,
title and possession of the Acquisition Shares, the officers and directors of
Intelligroup and the Consulting Shareholders immediately prior to the Closing
are fully authorized to take, and will take, all such lawful and necessary
action.
ARTICLE 3.
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REPRESENTATIONS AND WARRANTIES OF THE CONSULTING SHAREHOLDERS
-------------------------------------------------------------
As an inducement of Intelligroup and Sub to enter into this Agreement,
the Consulting Shareholders hereby make, jointly and severally, as of the date
hereof, the following representations and warranties to Intelligroup and Sub,
except as otherwise set forth in written disclosure schedules (the "Schedules")
delivered to Intelligroup and Sub on or prior to the date hereof, a copy of
which is attached hereto, except that the representations and warranties made in
Section 3.3 are made by each of the Consulting Shareholders as to his shares of
Consulting Capital only and not jointly and severally. The Schedules are
numbered to correspond to the various sections of this Article 3 setting forth
certain exceptions to the representations and warranties contained in this
Article 3 and certain other information called for by this Agreement. Unless
otherwise specified, no disclosure made in any particular Schedule shall be
deemed made in any other Schedule unless expressly made therein (by
cross-reference or otherwise), unless, and only to the extent, that it would
fairly be understood to contain information which also is applicable to another
representation and warranty in this Article 3.
3.1. Organization of Consulting. Consulting is a corporation duly
organized, validly existing and in good standing under the laws of England and
Wales. Consulting has full corporate power and authority to conduct the Business
as it is presently being conducted and to own or lease, as applicable, the
Assets owned or leased by it. Consulting is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
the Business or the ownership of its properties and where the failure to be so
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qualified would have a Material Adverse Effect on Consulting. Each jurisdiction
in which Consulting is qualified to do business as a foreign corporation is set
forth in Schedule 3.1.
3.2. Capitalization of Consulting.
(a) As of the date of this Agreement, the authorized share
capital of Consulting is (pound)10,000 consisting of 10,000 ordinary shares of
(pound)1 each, of which 100 ordinary shares of (pound)1 each are in issue.
Schedule 3.2 sets forth the name of each holder of shares of Consulting Capital,
as well as the number of shares of Consulting Capital held by each such holder.
(b) As of the date of this Agreement, a nominal number of
ordinary shares of Consulting are reserved for issuance upon the exercise of
outstanding options (the "Consulting Options"). By entering into this Agreement,
the Consulting Shareholders hereby waive any rights they may have in respect of
such Consulting Options, which shall be deemed to have lapsed. At the Closing,
each of the Consulting Shareholders shall deliver all option agreements
evidencing the Consulting Options, which agreements shall be deemed to be
terminated as of the Closing Date.
(c) Except for the Consulting Options referred to above, there
are no outstanding options, warrants, convertible securities or rights of any
kind to purchase or otherwise acquire any shares of capital stock or other
securities of Consulting.
(d) All issued shares of Consulting Capital are validly issued,
fully paid and nonassessable and not subject to any preemptive or other rights
created by statute, Consulting's Articles of Association or Bylaws or any
Contract or otherwise. The Consulting Capital has been issued in compliance with
the Companies Xxx 0000.
(e) Other than the transactions contemplated by this Agreement,
there is no outstanding vote, plan, pending proposal or right of any Person to
cause any redemption of Consulting Capital or the merger or consolidation of
Consulting with or into any other entity.
3.3. Ownership of Consulting Capital; Title. The Consulting Capital
held by the Consulting Shareholders are accurately set forth on Schedule 3.2 and
all of such Consulting Capital is lawfully owned of record and beneficially
owned by the Consulting Shareholders, free and clear of any Encumbrances. Except
as set forth on Schedule 3.3 and 3.4, the Consulting Capital held by the
Consulting Shareholders is not subject to any shareholder agreement, voting
trust, proxy or other agreement or understanding with respect to or concerning
the purchase, sale or voting of such Consulting Capital. Upon the Acquisition by
Sub of the Consulting Capital presently held by the Consulting Shareholders,
Intelligroup shall acquire good title to such Consulting Capital, free and clear
of all Encumbrances.
3.4. Shareholders' Agreements, Etc. Except as set forth on Schedule
3.4, there are no shareholder agreements, voting trusts, proxies or other
agreements or understandings with respect to or concerning the purchase, sale or
voting of the capital stock of Consulting.
3.5. Authorization. Each of the Consulting Shareholders has all
necessary power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and has taken all actions necessary to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. This Agreement has been duly executed and
delivered by each of the Consulting Shareholders and is, and upon the execution
and delivery thereof each Ancillary
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Agreement to which it is a party will be, a valid and binding obligation of each
of the Consulting Shareholders, enforceable against each of the Consulting
Shareholders in accordance with its terms, except that enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors or (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
3.6. Officers and Directors. Schedule 3.6 contains a true, correct and
complete list of all the officers and directors of Consulting.
3.7. Bank Accounts. Schedule 3.7 contains a list of all of
Consulting's bank accounts, safe deposit boxes, and persons authorized to draw
thereon or have access thereto.
3.8. Real Property.
(a) General. Consulting has a revocable license to use all real
property necessary for the conduct of its business as presently conducted.
Schedule 3.8 sets forth all such real property. Except as otherwise set forth on
Schedule 3.8, Consulting is not a party to any Leases of real property.
(b) Owned Real Property. Consulting does not own any real
property.
3.9. Personal Property.
(a) General. Consulting owns or leases all personal property
Assets necessary for the conduct of its business as presently conducted, and the
personal property Assets (taken as a whole) are in such operating condition and
repair (subject to normal wear and tear) as is necessary for the conduct of its
business as presently conducted.
(b) Owned Personal Property. Consulting has good and
marketable title to all such personal property owned by it, free and clear of
any and all Encumbrances other than Permitted Encumbrances. With respect to each
such item of personal property (i) there are no Leases, subleases, licenses,
options, rights, concessions or other agreements, written or oral, granting to
any party or parties the right of use of any portion of such item of personal
property (except licenses of Proprietary Rights in the ordinary course of
business), (ii) except as set forth on Schedule 3.9, there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(iii) there are no parties (other than Consulting) who are in possession of or
who are using any such item of personal property.
(c) Leased Personal Property. Consulting has good and valid
leasehold title to all of such Fixtures and Equipment, vehicles and other
tangible personal property Assets leased by it from third parties, free and
clear of any and all Encumbrances other than Permitted Encumbrances which would
not permit the termination of the lease therefor by the lessor. Consulting is
not a party to any Lease for personal property involving annual payments in
excess of $25,000.
With respect to each Lease listed on Schedule 3.9, (i) there has been
no material default under any such Lease by Consulting or, to the knowledge of
Consulting or any of the Consulting Shareholders, by any other party, (ii) the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby will not cause a material default under any such Lease, (iii) such Lease
is a valid and binding obligation of Consulting, is in full force and effect
with respect to Consulting, and is enforceable against Consulting, in accordance
with its terms, except as the enforceability thereof may be limited by (1)
applicable bankruptcy,
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insolvency, moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors' rights generally or (2) general principles of
equity, whether considered in a proceeding at law or in equity, (iv) no action
has been taken by Consulting, and no event has occurred which, with notice or
lapse of time or both, would permit termination, modification or acceleration by
a party thereto other than Consulting without the consent of Consulting, under
any such Lease that is material to Consulting, (v) no party has repudiated in
writing any term thereof or threatened in writing to terminate, cancel or not
renew any such Lease that is material to Consulting and (vi) Consulting has not
assigned, transferred, conveyed, mortgaged or encumbered any interest therein or
in any leased property subject thereto (or any portion thereof).
3.10. Environmental Matters.
(a) To the knowledge of the Consulting Shareholders,
Consulting is in material compliance with all Environmental Laws. To the
knowledge of the Consulting Shareholders, neither Consulting, nor any of the
Consulting Shareholders, has received any notice to the effect that, or
otherwise has knowledge that, (i) Consulting is not in compliance in any
material respect with, or is in violation of, any such Environmental Laws
required thereunder or (ii) any currently existing circumstances are likely to
result in a failure of Consulting to comply with, or a violation by Consulting
of, any such Environmental Laws. Consulting does not handle or utilize Hazardous
Substances in the operation of its Business.
(b) To the knowledge of the Consulting Shareholders, (i) no
underground tank or other underground storage receptacle for Hazardous
Substances is currently located on the Facilities, and there have been no
releases of any Hazardous Substances from any such underground tank or related
piping and (ii) there have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping) of Hazardous Substances in
quantities exceeding the reportable quantities as defined under federal or state
law by Consulting on, upon or into the Facilities other than those authorized by
Environmental Laws including, without limitation, the Permits required
thereunder.
(c) To the knowledge of the Consulting Shareholders, there are
no PCBs or asbestos-containing materials located at or on the Facilities.
3.11. Contracts.
(a) Disclosure. To the knowledge of the Consulting
Shareholders, Schedule 3.11 sets forth a complete and accurate list of all of
the Contracts of the following categories:
(i) Contracts not made in the ordinary course of business;
(ii) License agreements or royalty agreements, whether
Consulting is the licensor or licensee thereunder;
(iii) Confidentiality and non-disclosure agreements (whether
Consulting is the beneficiary or the obligated party thereunder);
(iv) Customer orders under which the customer is to make a
payment after the date hereof of $10,000 or more;
(v) Research, consulting, service or distribution
agreements;
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(vi) Contracts or commitments involving future expenditures
or Liabilities, actual or potential, in excess of $10,000 after the date hereof
or otherwise material to the Business or the Assets;
(vii) Contracts or commitments relating to commission
arrangements with others;
(viii) Employment contracts, consulting contracts and
severance agreements, including Contracts (A) to employ or terminate executive
officers or other personnel and other contracts with present or former officers
or directors of Consulting or (B) that will result in the payment by, or the
creation of any Liability of Consulting, any of the Consulting Shareholders,
Intelligroup or Sub to pay any severance, termination, "golden parachute," or
other similar payments to any present or former personnel following termination
of employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
(ix) Indemnification agreements;
(x) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation to pay money, whether Consulting shall be the
borrower, lender or guarantor thereunder (excluding credit provided by
Consulting in the ordinary course of business to purchasers of its products and
obligations to pay vendors in the ordinary course of business and consistent
with past practice);
(xi) Contracts containing covenants limiting the freedom of
Consulting or any officer, director, Employee or Affiliate of Consulting, to
engage in any line of business or compete with any Person that relates directly
or indirectly to the Business;
(xii) Any Contract with the federal, state or local
government or any agency or department thereof;
(xiii) Any Contract with a Related Party;
(xiv) Leases of real or personal property involving annual
payments of more than $10,000; and
(xv) Any other Contract under which the consequences of a
default or termination would reasonably be expected to have a Material Adverse
Effect on Consulting, individually or in the aggregate.
Complete and accurate copies of all of the Contracts listed on Schedule
3.11, including all amendments and supplements thereto, have been made available
to Intelligroup. The Consulting Shareholders have included as part of Schedule
3.11 a brief summary of the material terms of each oral Contract.
(b) Absence of Defaults. All of the Contracts are valid, binding
and enforceable in accordance with their terms with no existing (or to the
knowledge of Consulting Shareholders, threatened) Default or dispute. Consulting
has fulfilled, or taken all action necessary to enable it to fulfill when due,
all of its material obligations under each of such Contracts. To the knowledge
of the Consulting Shareholders, all parties to such Contracts have complied in
all material respects with the provisions thereof, no party is in Default
thereunder and no notice of any claim of Default has been given
- 13 -
to Consulting or any of the Consulting Shareholders. None of the Consulting
Shareholders has any reason to believe that the products or services called for
by any executory Contract cannot be supplied in accordance with the terms of
such Contract, including time specifications, and has no reason to believe that
any unfinished Contract will, upon performance by Consulting result in a loss to
Consulting.
(c) Product Warranty. To the knowledge of the Consulting
Shareholders, Consulting has not committed any act, and there has been no
omission, which may result in, and there has been no occurrence which may give
rise to Liability for breach of warranty (whether covered by insurance or not)
on the part of Consulting, with respect to services rendered prior to or on the
Closing Date.
3.12. No Conflict or Violation; Consents. None of the execution,
delivery or performance of this Agreement or any Ancillary Agreement, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by the Consulting Shareholders with any of the provisions hereof or thereof,
will (a) violate or conflict with any provision of the governing documents of
Consulting, (b) violate, conflict with, or result in a breach of or constitute a
default (with or without notice of passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a right
to terminate, accelerate, modify or cancel under, or require a notice under, or
result in the creation of any Encumbrance upon any of its respective assets
under, any Contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
security interest or other arrangement to which Consulting or any of the
Consulting Shareholders is a party or by which Consulting or any of the
Consulting Shareholders is bound or to which any of its respective assets are
subject, (c) violate any applicable Regulation or Court Order or (d) impose any
Encumbrance on any Assets or the Business. No notices to, declaration, filing or
registration with, approvals or Consents of, or assignments by, any Persons
(including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by Consulting or any of the
Consulting Shareholders in connection with the execution, delivery or
performance of this Agreement or any Ancillary Agreement or the consummation of
the transactions contemplated hereby or thereby.
3.13. Permits. The operation of the Business does not require any
Permits.
3.14. Financial Statements; Books and Records.
(a) Except for the Management Accounts in relation to Section
3.14(a)(i), (ii) and (iii), the Consulting Financial Statements:
(i) comply with the provisions of the Companies Xxx 0000 and
all other relevant statutes;
(ii) have been prepared in accordance with U.K. GAAP
consistently applied;
(iii) are complete and accurate in all material respects;
and
(iv) show a true and fair view of the state of affairs of
Consulting as at the Balance Sheet Date and of the profit or loss of the
Consulting for the accounting period ended on that date.
(b) The values placed on the current assets of Consulting in the
Consulting Financial Statements are not in excess of their market values at the
Balance Sheet Date nor their market values at the date of this Agreement.
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(c) To the knowledge of the Consulting Shareholders, the results
shown by the Consulting Financial Statements were not materially affected by:
(i) transactions of a nature not usually undertaken by
Consulting;
(ii) circumstances of an extraordinary, exceptional or
non-recurring nature;
(iii) charges or credits relating to prior years; or
(iv) any change in the basis of accounting.
(d) Consulting maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed with management's authorizations, (ii) transactions are recorded as
necessary to permit preparation of audited financial statements in accordance
with U.K. GAAP and Companies Xxx 0000 and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
authorization and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(e) The Books and Records, in reasonable detail, accurately and
fairly reflect the activities of Consulting and the Business and have been
provided to Intelligroup for its inspection.
(f) To the knowledge of the Consulting Shareholders, Consulting
has not engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts or funds which have been
and are reflected in the normally maintained Books and Records.
(g) To the knowledge of the Consulting Shareholders, the stock
records and minute books of Consulting that are made available to Intelligroup
have been accurately and properly maintained and fully reflect all minutes of
meetings, resolutions and other material actions and proceedings of their
respective shareholders and boards of directors and all committees thereof, all
issuances, transfers and redemptions of share capital of which Consulting and
any of the Consulting Shareholders are aware and contain true, correct and
complete copies of their respective Articles of Incorporation and Bylaws and all
amendments thereto through the date hereof.
3.15. Absence of Certain Changes or Events. Except as set forth on
Schedule 3.15, since the Balance Sheet Date there has not been any:
(a) Material Adverse Change with respect to Consulting;
(b) failure to operate the Business of Consulting in the
ordinary course so as to use its commercially reasonable efforts to preserve its
Business intact and to preserve the continued services of its Employees and the
goodwill of customers and others having business relations with Consulting or
their respective Representatives;
(c) resignation or termination of any officer or Employee of
Consulting, or any increase in the rate of compensation payable or to become
payable to any officer, Employee or Representative of Consulting, including the
making of any loan to, or the payment, grant or accrual of any bonus, incentive
compensation, service award or other similar benefit to, any such Person, or the
addition to, modification of, or contribution to any Employee Plan (as defined
below);
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(d) payment, loan or advance of any amount to or in respect of,
or the sale, transfer or lease of any properties or the Assets of Consulting to,
or entering into of any Contract with, any Related Party except (i) directors'
fees and (ii) forgiveness of loans in the amounts and to the individuals set
forth on Schedule 3.15;
(e) sale, assignment, license, transfer or Encumbrance of any of
the Assets of Consulting, tangible or intangible, singly or in the aggregate,
other than sales of products and services in the ordinary course of business and
consistent with past practice;
(f) new Contracts, or extensions, modifications, terminations or
renewals thereof, except for Contracts entered into, modified or terminated in
the ordinary course of business and consistent with past practice;
(g) actual or threatened early termination of any material
customer account or group of accounts;
(h) disposition or lapsing of any Proprietary Rights of
Consulting, in whole or in part, or any disclosure of any trade secret, process
or know-how to any Person not an Employee;
(i) material change in accounting methods or practices by
Consulting;
(j) revaluation by Consulting of any of its Assets, including
writing off notes or accounts receivable other than for which adequate reserves
have been established;
(k) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Assets, the Business or the
prospects of Consulting;
(l) declaration, setting aside or payment of dividends or
distributions in respect of any share capital of Consulting or any redemption,
purchase or other acquisition of any equity securities of Consulting;
(m) issuance or reservation for issuance by Consulting of, or
commitment of it to issue or reserve for issuance, any share capital or other
equity securities or obligations or securities convertible into or exchangeable
for share capital or other equity securities;
(n) increase, decrease or reclassification of the share capital
of Consulting;
(o) amendment of the Memorandum of Association or Articles of
Association of Consulting;
(p) capital expenditure or execution of any lease or any
incurring of liability therefor by Consulting, involving payments in excess of
$10,000 in the aggregate;
(q) failure to pay any material obligation of Consulting when
due;
(r) cancellation of any indebtedness or waiver of any rights of
substantial value to Consulting, except in the ordinary course of business and
consistent with past practice;
(s) indebtedness incurred by Consulting for borrowed money or
any commitment to borrow money entered into by Consulting, or any loans made or
agreed to be made by Consulting;
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(t) liability incurred by Consulting except in the ordinary
course of business and consistent with past practice, or any increase or change
in any assumptions underlying or methods of calculating any bad debt,
contingency or other reserves;
(u) payment, discharge or satisfaction of any Liabilities of
Consulting other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of Liabilities reflected or
reserved against in the Consulting Financial Statements or incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date;
(v) acquisition by Consulting of any equity interest in any
other Person; or
(w) agreement by Consulting to do any of the foregoing.
3.16. Liabilities. To the knowledge of the Consulting Shareholders,
Consulting has no Liabilities or obligations (absolute, accrued, contingent or
otherwise) except (i) Liabilities which are reflected and properly reserved
against in the Financial Statements, (ii) Liabilities incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date (all of which liabilities do not exceed $50,000 in the aggregate) and (iii)
liabilities arising under the Contracts (other than obligations which are
required to be reflected on a balance sheet prepared in accordance with U.K.
GAAP) set forth on Schedule 3.11 or which are not required to be disclosed on
such Schedule and which have arisen or been incurred in the ordinary course of
business. None of the Liabilities described in this Section 3.16 relates to any
breach of Contract, breach of warranty, tort, infringement or violation of law
or arose out of any action, order writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, investigation or dispute
(collectively, "Actions"). The reserves set forth on the Balance Sheet for
liabilities are reasonable.
3.17. Litigation. There is no Action, pending or, to the knowledge of
the Consulting Shareholders, threatened (i) against, relating to or affecting
Consulting, any of its Assets or any of its officers and directors as such, (ii)
which seeks to enjoin or obtain damages in respect of the transactions
contemplated hereby or by the Ancillary Agreements or (iii) with respect to
which there is a reasonable likelihood of a determination which would prevent
Consulting or any of the Consulting Shareholders from consummating the
transactions contemplated hereby. To the knowledge of the Consulting
Shareholders, there is no basis for any Action, which if adversely determined
against Consulting or any of the Consulting Shareholders, Consulting's directors
or officers, or any other Person could reasonably be expected to result in a
loss to Consulting, individually or in the aggregate, in excess of $10,000.
There are presently no outstanding judgments, decrees or orders of any court or
any governmental or administrative agency against or affecting Consulting, its
Business or any of its Assets.
3.18. Labor Matters.
(a) Consulting has only two Employees, Xxx Xxxxxx (director)
and X. Xxxxxxxxx (secretary). Neither of such Employees received any
compensation for the period ended on the Balance Sheet Date. To the knowledge of
the Consulting Shareholders, Consulting is in material compliance with all
applicable Regulations respecting employment practices, terms and conditions of
employment, wages and hours, equal employment opportunity, and the payment of
social security and similar taxes, and none of them are engaged in any unfair
labor practice.
(b) To the knowledge of the Consulting Shareholders,
Consulting has not entered into any severance or similar arrangement in respect
of any present or former Employee that will result
- 17 -
in any obligation (absolute or contingent) of Intelligroup or Sub, Consulting to
make any payment to any present or former Employee following termination of
employment or upon consummation of the transactions contemplated by this
Agreement.
3.19. Employee Benefit Plans. As of the Closing, Consulting shall
neither operate nor be a participant in any pension arrangements. Consulting
does not operate or participate in or have any legal or moral obligation to
contribute to any permanent health insurance, private health provision, accident
benefit or any other ancillary schemes or have any liability with respect to any
such benefit, arrangement or scheme.
3.20. Transactions with Related Parties. Except for employment
agreements and other compensation arrangements disclosed on Schedule 3.20, to
the knowledge of the Consulting Shareholders, no Related Party has (a) borrowed
or loaned money or other property to Consulting which has not been repaid or
returned, (b) any contractual or other claims, express or implied, of any kind
whatsoever against Consulting or (c) any interest in any property used by
Consulting.
3.21. Compliance with Law. To the knowledge of the Consulting
Shareholders, Consulting has conducted the Business in material compliance with
all applicable Regulations and Court Orders. Neither Consulting, nor any of the
Consulting Shareholders, has received any notice to the effect that, or has
otherwise been advised that, Consulting is not in compliance with any such
Regulations or Court Orders, and none of the Consulting Shareholders has any
reason to anticipate that any existing circumstances are likely to result in any
material violation of any of the foregoing.
3.22. Intellectual Property.
(a) General. Consulting does not hold or use any patent,
patent application, trademark, tradename, service xxxx, copyright or mask work.
(b) Adequacy. The Proprietary Rights of Consulting are all
those necessary for the normal conduct of the Business as presently conducted
and as presently contemplated.
(c) Royalties and Licenses. Except as set forth on Schedule
3.22, Consulting has no obligation to compensate any Person for the use of any
of its Proprietary Rights nor, except in the ordinary course of business, has
Consulting granted to any Person any license, option or other rights to use in
any manner any of its Proprietary Rights, whether requiring the payment of
royalties or not.
(d) Ownership. Consulting owns or has a valid right to use its
Proprietary Rights, and such Proprietary Rights will not cease to be valid
rights of Consulting by reason of the execution, delivery and performance of
this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby.
(e) Absence of Claims. Neither Consulting nor any of the
Consulting Shareholders (A) has received any notice alleging, or otherwise has
knowledge of facts that might give rise to, invalidity with respect to any of
the Proprietary Rights of Consulting or (B) has received any notice of alleged
infringement of any rights of others due to any activity by Consulting. To the
knowledge of the Consulting Shareholders, Consulting's use of its Proprietary
Rights in its past, current and planned products do not and would not infringe
upon or otherwise violate the valid rights of any third party anywhere in the
world. No other Person (i) has notified Consulting or any of the Consulting
- 18 -
Shareholders that it is claiming any ownership of or right to use any of
Consulting' Proprietary Rights or (ii) is infringing upon any such Proprietary
Rights in any way.
3.23. Intentionally Omitted.
3.24. Insurance. Schedule 3.24 contains a complete and accurate list of
all policies or binders of insurance (showing as to each policy or binder the
carrier, policy number, coverage limits, expiration dates, annual premiums, a
general description of the type of coverage provided and any pending claims
thereunder) of which Consulting is the owner, insured or beneficiary. All of
such policies are sufficient for (i) compliance with all Regulations and all of
the Contracts, (ii) covering all reasonably foreseeable damage to and
liabilities or contingencies relating to Consulting' conduct of the Business and
(iii) providing replacement cost insurance coverage for all of the Assets,
Fixtures and Equipment of Consulting and all leasehold improvements. Consulting
is not in default under any of such policies or binders, and none of them has
failed to give any notice or to present any claim under any such policy or
binder in a due and timely fashion. There are no facts known to any of the
Consulting Shareholders upon which an insurer might be justified in reducing or
denying coverage or increasing premiums on existing policies or binders. There
are no outstanding unpaid claims under any such policies or binders. Such
policies and binders are in full force and effect on the date hereof and shall
be kept in full force and effect by Consulting through the Closing Date.
3.25. Accounts Receivable. The accounts and notes receivable reflected
in the Balance Sheet, and all accounts or notes receivable arising since the
Balance Sheet Date, represent bona fide claims against debtors for services
performed or other charges arising on or before the date of recording thereof,
and all the services performed which gave rise to said accounts were performed
in accordance with the applicable orders, Contracts or customer requirements. To
the knowledge of the Consulting Shareholders, all such receivables are fully
collectible in the ordinary course of business except to the extent of an amount
not in excess of the reserve for doubtful accounts reflected on the Balance
Sheet and additions to such reserves as reflected on the Books and Records.
3.26. Customers. Schedule 3.26 sets forth a complete and accurate list
of the names and addresses of the ten customers who purchased from Consulting
the greatest dollar volume or services during its last fiscal year and last
fiscal quarter, showing the approximate total sales in dollars to each such
customer during such fiscal year and quarter. Since the Balance Sheet Date,
there has been no Material Adverse Change in the business relationship of
Consulting with any customer named on Schedule 3.26.
3.27. Brokers; Transaction Costs. Neither Consulting nor any of the
Consulting Shareholders has entered into or will enter into any contract,
agreement, arrangement or understanding with any Person which will result in the
obligation of Intelligroup, Sub, Consulting or any of the Consulting
Shareholders to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
3.28. No Other Agreements to Sell Consulting or the Assets. Neither
Consulting nor any of the Consulting Shareholders has any legal obligation,
absolute or contingent, to any other Person to sell the Assets (other than
Inventory in the ordinary course of business) or to sell any capital stock of
Consulting or to effect any merger, consolidation or other reorganization of
Consulting or to enter into any agreement with respect thereto, except pursuant
to this Agreement.
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ARTICLE 4.
----------
REPRESENTATIONS AND WARRANTIES OF INTELLIGROUP AND SUB
------------------------------------------------------
As an inducement of the Consulting Shareholders to enter into this
Agreement, except as set forth on the Intelligroup Schedule of Exceptions
attached to this Agreement, Intelligroup represents and warrants to the
Consulting Shareholders as follows, which representations and warranties are, as
of the date hereof, true and correct:
4.1. Organization. Intelligroup is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Intelligroup has full corporate power and authority to conduct its business as
it is presently being conducted and to own or lease, as applicable, the assets
owned or leased by it. Intelligroup is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
its business or the ownership of its properties and where the failure to be so
qualified would have a Material Adverse Effect on Intelligroup. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of England and Wales.
4.2. Capitalization.
(a) There are 25,000,000 shares of Intelligroup Stock
authorized under its Articles of Incorporation, 11,993,697 of which were issued
and outstanding as of February 28, 1998; 5,000,000 authorized shares of
Preferred Stock, $.01 par value, of Intelligroup ("Intelligroup Preferred Stock"
and together with the Intelligroup Stock, the "Intelligroup Securities")
authorized under its Articles of Incorporation, none of which were issued and
outstanding. Intelligroup has no other stock authorized, issued or outstanding.
(b) As of December 31, 1997, there were (i) 1,450,000 shares
of Intelligroup Stock reserved for issuance upon the exercise of options granted
or available for grant under the Intelligroup Option Plan (the "Intelligroup
Options"), (ii) Intelligroup Options representing the right to purchase an
aggregate of 1,079,992 shares of Intelligroup Stock outstanding and (iii)
370,008 shares of Intelligroup Stock available for future grants of Intelligroup
Options.
(c) Except for the Intelligroup Options and shares of
Intelligroup Preferred Stock listed above, and except for director options and
warrants exercisable for not more than 140,000 shares, there are no outstanding
options, warrants, convertible securities or rights of any kind to purchase or
otherwise acquire any shares of capital stock or other securities of
Intelligroup. Except as set forth above, no shares of capital stock of
Intelligroup are reserved for issuance.
(d) All shares of Intelligroup Stock to be issued hereunder
will be validly issued, fully paid and nonassessable and not subject to any
preemptive rights created by statute, Intelligroup's Certificate of
Incorporation or Bylaws or any Contract.
(e) Other than the transactions contemplated by this
Agreement, there is no outstanding vote, plan or pending proposal for any
redemption of stock of Intelligroup or any merger or consolidation of
Intelligroup with or into any other entity.
(f) The authorized share capital of Sub consists of 1,000
ordinary shares of(pound)1 each of which 2 shares are in issue and are held by
Intelligroup.
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4.3. Authorization. Each of Intelligroup and Sub has all necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and has taken all action necessary to
consummate the transactions contemplated hereby and thereby and to perform its
respective obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by each Intelligroup and Sub, and this Agreement is, and
upon execution and delivery each of the Ancillary Agreements to which each of
Intelligroup and Sub is a party will be, a valid and binding obligation of each
of Intelligroup and Sub enforceable against each of Intelligroup and Sub in
accordance with its terms, except that enforceability may be limited by the
effect of (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors or (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
4.4. No Conflict or Violation; Consents. None of the execution,
delivery or performance of this Agreement or any Ancillary Agreement, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by Intelligroup or Sub with any of the provisions hereof or thereof, will (a)
violate or conflict with any provision of Intelligroup's or Sub's governing
documents to the extent applicable, (b) violate, conflict with, or result in a
breach of or constitute a default (with or without notice of passage of time)
under, or result in the termination of, or accelerate the performance required
by, or result in a right to terminate, accelerate, modify or cancel under, or
require a notice under, or result in the creation of any Encumbrance upon any of
its assets under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which Intelligroup or
Sub is a party or by which Intelligroup or Sub is bound or to which any of their
respective assets are subject, (c) violate any Regulation or Court Order
applicable to Intelligroup or Sub or (d) impose any Encumbrance on any assets of
Intelligroup or Sub. Except as set forth on Schedule 4.4, no notices to,
declaration, filing or registration with, approvals or Consents of, or
assignments by, any Persons (including any federal, state or local governmental
or administrative authorities) are necessary to be made or obtained by
Intelligroup or Sub in connection with the execution, delivery or performance of
this Agreement or any Ancillary Agreement or the consummation of the
transactions contemplated hereby or thereby.
4.5. Reports and Financial Statements. Intelligroup has timely filed
all reports required to be filed with the SEC pursuant to the Exchange Act or
the Securities Act (collectively, the "SEC Reports"), and has previously made
available to Consulting true and complete copies of all such SEC Reports. Such
SEC Reports, as of their respective dates, complied in all materials respects
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and none of such SEC Reports contained any untrue statement of
a material fact or omitted 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. The consolidated
financial statements of Intelligroup, including the notes thereto, included in
the SEC Reports have been prepared in accordance with U.S. GAAP consistently
applied and fairly present the consolidated financial condition of Intelligroup
as at the dates thereof and consolidated results of operations and cash flows
for the periods then ended.
- 21 -
4.6. Absence of Certain Changes or Events. Except as set forth on
Schedule 4.6, since the Balance Sheet Date, there has not been any fact, event,
circumstance or change affecting or relating to Intelligroup and its
subsidiaries which has had or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Intelligroup (an "Intelligroup
Material Adverse Effect"), including:
(a) any litigation (whether criminal or civil), arbitration or
reference of any dispute or disagreement with an expert or any alternative
dispute resolution process (apart from routine debt collection) and there are no
facts or circumstances known to the management of Intelligroup likely to give
rise to such litigation, arbitration, referenced or any alternative dispute
resolution process;
(b) receipt of written notification from any customer or
supplier that such customer or supplier intends to cease to do business with
Intelligroup or to substantially reduce its existing level of business with
Intelligroup;
(c) receipt of written notification from SAP, Oracle or any
similar licensor that Intelligroup's license with such licensor is to be
terminated;
(d) receipt of written notification from any officer or senior
employee of Intelligroup that they are to leave their employment with
Intelligroup or have dismissed such senior employee or officer;
(e) entering into any contract other than in the ordinary
course of business or acquired any material interest in another corporation or
unincorporated business; or
(f) entering into an arrangement or composition with its
creditors in any form whatsoever;
provided, however, that an Intelligroup Material Adverse Effect shall not
include any adverse effect following the date of this Agreement which is solely
attributable to (i) the announcement or pendency of the transactions
contemplated by this Agreement or (ii) changes in national economic conditions,
stock market or industry conditions generally.
4.7. S-3 Eligibility. Intelligroup satisfies the registrant
requirements set forth in the general instructions for use of Form S-3 under the
Securities Act.
4.8. Certain Securities Law Representations. Intelligroup has been
given the opportunity to obtain any information or documents relating to, and to
ask questions and receive answers about, Consulting and the business and
prospects of Consulting which it deems necessary to evaluate the merits and
risks related to its investment in the Consulting Capital and to verify the
information received, and Intelligroup's knowledge and experience in financial
and business matters are such that it is capable of evaluating the merits and
risks of its receipt of such shares.
ARTICLE 5.
----------
CONDITIONS TO THE CONSULTING SHAREHOLDERS' OBLIGATIONS
------------------------------------------------------
The obligations of the Consulting Shareholders to effect the
Acquisition and complete the related transactions contemplated by this Agreement
are subject, in the discretion of the Consulting
- 22 -
Shareholders, to the satisfaction, on or prior to the Closing Date, of each of
the following conditions or the waiver of such conditions by the Consulting
Shareholders:
5.1. Representations, Warranties and Covenants. All representations
and warranties of Intelligroup and Sub contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date, and
Intelligroup and Sub shall have performed in all material respects all
agreements and covenants required hereby to be performed by it prior to or at
the Closing Date. There shall be delivered to the Consulting Shareholders a
certificate signed by a senior officer of Intelligroup and Sub to the foregoing
effect ("Intelligroup Closing Certificate").
5.2. Consents. All Consents, approvals and waivers from governmental
authorities and other parties necessary to permit Intelligroup and Sub to
consummate the Acquisition as contemplated hereby and by the Ancillary
Agreements shall have been obtained. The Consulting Shareholders shall be
satisfied that all approvals required under any Regulations to permit
Intelligroup and Sub to carry out the transactions contemplated by this
Agreement and the Ancillary Agreements shall have been obtained.
5.3. No Court Orders. No Action by any court, governmental authority
or other Person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and by the
Ancillary Agreements. There shall not be any Regulation or Court Order that
makes the acquisition of the Consulting Capital contemplated hereby illegal or
otherwise prohibited.
5.4. Closing Documents. Intelligroup shall have delivered to the
Consulting Shareholders the documents and other items described in Section 7.2
and such other documents and items as the Consulting Shareholders may reasonably
require.
ARTICLE 6.
----------
CONDITIONS TO INTELLIGROUP'S AND SUB'S OBLIGATIONS
--------------------------------------------------
The obligations of Intelligroup and Sub to effect the Acquisition and
complete the related transactions contemplated by this Agreement are subject, in
the discretion of Intelligroup and Sub, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, or the waiver of such
conditions by Intelligroup and Sub:
6.1. Representations, Warranties and Covenants. All representations
and warranties of the Consulting Shareholders contained in this Agreement shall
be true and correct at and as of the Closing Date and the Consulting
Shareholders shall have performed in all material respects all agreements and
covenants required hereby to be performed prior to or at the Closing Date. There
shall be delivered to Intelligroup and Sub a certificate signed by the
Consulting Shareholders to the foregoing effect (each, a "Shareholder's Closing
Certificate").
6.2. Consents. All Consents, approvals and waivers from governmental
authorities and other parties necessary to permit the Consulting Shareholders to
consummate the Acquisition as contemplated hereby and by the Ancillary
Agreements and for the operation of the Business after the Closing (including
all required third party consents under the Contracts) shall have been obtained.
Intelligroup and Sub shall be satisfied that all approvals required under any
Regulations to permit the Consulting Shareholders to carry out the transactions
contemplated by this Agreement and the Ancillary Agreements shall have been
obtained.
- 23 -
6.3. No Actions or Court Orders. No Action by any court, governmental
authority or other Person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
by the Ancillary Agreements and which could reasonably be expected to damage
Intelligroup, the Assets or the Business materially if the transactions
contemplated hereby or thereby are consummated, including any material adverse
effect on the right or ability of Intelligroup to own, operate or transfer
Consulting after the Closing. There shall not be any Regulation or Court Order
that makes the acquisition of the Consulting Capital contemplated hereby illegal
or otherwise prohibited or that otherwise may have a Material Adverse Effect on
Consulting.
6.4. Closing Documents. The Consulting Shareholders shall have
delivered to Intelligroup and Sub the documents and other items described in
Section 7.1 and such other documents and items as Intelligroup and Sub may
reasonably require.
6.5. Exemption under Federal and State Securities Laws. The issuance
of shares of Intelligroup Stock in the Acquisition shall not violate any federal
or state securities laws.
6.6. Balance Sheets. Except as set forth on Schedule 6.6, on the
Closing Date, immediately prior to the Closing, there shall be no indebtedness
on Consulting's balance sheet other than payables and accrued expenses incurred
by Consulting in the ordinary course of business consistent with past practice.
In addition, the aggregate amount of cash, cash equivalents and accounts
receivable on Consulting's balance sheet as of the Closing Date shall exceed its
accounts payable.
6.7. Shareholder Consent. The Consulting Shareholders shall have
executed the Consulting Shareholder's Consent and shall have taken all further
actions related to the due authorization of the Acquisition as may be required
under applicable law.
6.8. Delivery of Certificates. The Consulting Shareholders shall have
delivered to Intelligroup and Sub duly executed stock transfer forms in favor of
Sub, together with the Certificate or Certificates representing shares of
Consulting Capital held by the Consulting Shareholders.
6.9. Board of Directors Approval. The Acquisition shall have been
approved by appropriate action of the Board of Directors of Intelligroup and
Sub.
6.10. Tax Matters.
(a) No new elections with respect to Taxes, or changes in
current elections with respect to Taxes, affecting Consulting shall have been
made after the date of this Agreement without the prior written consent of
Intelligroup, which consent shall not be unreasonably withheld.
(b) The Consulting Shareholders surrendering Certificates on
the Closing Date shall have provided Intelligroup and Sub with (i) all forms,
certificates and/or other instruments required to pay the transfer and recording
taxes and charges arising from the transactions contemplated by this Agreement,
together with evidence satisfactory to Intelligroup and Sub that such transfer
taxes and charges have been paid by the Consulting Shareholders, and (ii) a
clearance certificate or similar document(s) which may be required by any state
taxing authority to relieve Intelligroup of any obligation to withhold any
portion of the payments to the Consulting Shareholders pursuant to this
Agreement.
6.11. Material Adverse Change. There shall not have been any Material
Adverse Change of Consulting.
- 24 -
ARTICLE 7.
----------
CLOSING
-------
On the Closing Date at the place of Closing:
7.1. Deliveries by the Consulting Shareholders to Intelligroup and
Sub. The Consulting Shareholders shall deliver (or cause to be delivered) to
Intelligroup and Sub:
(a) the Ancillary Agreements, duly executed by each party
thereto other than Intelligroup and Sub;
(b) any Consents required to be obtained by the Consulting
Shareholders;
(c) the Shareholder's Closing Certificates;
(d) an opinion of Xxxxx & Xxxxxx, U.S. counsel to the Consulting
Shareholders, dated as of the Closing Date, in a form reasonably satisfactory to
Intelligroup;
(e) an opinion of Xxxxxxxx, Xxxxx + Xxxx, U.K. counsel to the
Consulting Shareholders, dated as of the Closing Date, in a form reasonably
satisfactory to Intelligroup;
(f) the Consulting Shareholder Consent duly executed by the
Consulting Shareholders;
(g) duly executed transfers in respect of the Consulting Capital
in favour of Sub;
(h) the share certificates relating to the Consulting Capital
(or an indemnity for lost share certificates in a form reasonably satisfactory
to Sub);
(i) the statutory books of Consulting written up to date;
(j) the books of unissued share certificates and the common
seals, if any, of Consulting;
(k) all available prints of the memoranda and articles of
association of Consulting;
(l) a waiver of pre-emption rights by CPI Resources Limited, the
majority shareholder of Consulting;
(m) cancelled option agreements relating to the Consulting
Options; and
(n) such other documents and certificates duly executed as may
reasonably be requested by Intelligroup or Sub prior to the Closing Date.
7.2. Deliveries by Intelligroup. Intelligroup shall deliver to the
Consulting Shareholders, or any other appropriate Persons:
(a) the Ancillary Agreements to which Intelligroup or Sub is a
party, duly executed by them;
- 25 -
(b) any Consents required to be obtained by Intelligroup;
(c) the Intelligroup Closing Certificate;
(d) an opinion of Xxxxxxxx Ingersoll, counsel to Intelligroup,
dated as of the Closing Date, in a form reasonably satisfactory to the
Consulting Shareholders;
(e) the Acquisition Shares to be issued to the Consulting
Shareholders surrendering Certificates on the Closing Date; and
(f) such other documents and certificates duly executed as may
reasonably be requested by Consulting or the Consulting Shareholders prior to
the Closing Date.
ARTICLE 8.
----------
INDEMNIFICATION OF CONSULTING SHAREHOLDERS,
-------------------------------------------
INTELLIGROUP AND SUB
--------------------
8.1. Survival of Representations, Etc. All statements contained in
this Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of the parties pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to be
representations and warranties by such party hereunder. The representations and
warranties contained herein shall survive the Closing Date (and claims based
upon or arising out of such representations and warranties, as well as any
claims based upon or arising out of any covenants and agreements herein or made
hereunder, may be asserted at any time before the date which shall be) until
December 31, 1998; provided, however, the Consulting Shareholders'
representations and warranties set forth in Section 3.3 (Shareholders' Ownership
of Stock) shall survive the Closing Date in perpetuity. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
8.2. Indemnification.
General.
--------
(a) Subsequent to the Closing, except as to the representations
and warranties set forth in Section 3.3 which representations and warranties are
made solely by each such Consulting Shareholder, as applicable, the Consulting
Shareholders shall, jointly and severally, indemnify Intelligroup, its
Affiliates, and each of their respective, officers, directors, employees,
shareholders and agents ("Intelligroup Indemnified Parties") against, and hold
each of the Intelligroup Indemnified Parties harmless from any damage, claim,
loss, cost, liability or expense, including without limitation, interest,
penalties, reasonable attorneys' fees and expenses of investigation, diminution
of value, response action, removal action or remedial action (collectively
"Damages") incurred by any such Intelligroup Indemnified Party, that are
incident to, arise out of, in connection with, or related to, whether directly
or indirectly, the breach of any warranty, representation, covenant or agreement
of any of the Consulting Shareholders contained in this Agreement or any
schedule hereto or in any certificate or instrument of conveyance delivered by
or on behalf of Consulting or any such holder pursuant to this Agreement or in
connection with the transactions contemplated hereby; provided, however, that
the indemnity provisions set forth in this Section 8.2(a) shall not become
effective until such time as the Damages exceed $25,000.
- 26 -
(b) Subsequent to the Closing, Intelligroup shall indemnify each
of the Consulting Shareholders and their respective heirs and assigns
("Shareholder Indemnified Parties"), against, and hold each of the Shareholder
Indemnified Parties harmless from, any Damages incurred by such Shareholder
Indemnified Party, that are incident to, arise out of, in connection with, or
related to, whether directly or indirectly, the breach of any warranty,
representation, covenant or agreement of Intelligroup or Sub contained in this
Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of Intelligroup or Sub pursuant to this Agreement or
in connection with the transactions contemplated hereby at such time; provided,
however, that the indemnity provisions set forth in this Section 8.2(b) shall
not become effective until Damages exceed $25,000.
The term "Damages" as used in this Section 8.2 is not limited to
matters asserted by third parties against the Shareholder Indemnified Parties or
Intelligroup Indemnified Parties, but includes Damages incurred or sustained by
such persons in the absence of third party claims. Notwithstanding the
foregoing, none of the parties hereto shall be liable for any special, indirect,
incidental or consequential Damages.
It is understood and agreed that each of the Consulting Shareholders
shall not be liable for Damages on all matters taken in the aggregate asserted
under this Section 8.2 in excess of the value (at Closing) of one-half of the
shares of Intelligroup Stock delivered to each such Consulting Shareholder
hereunder. In the event that the Consulting Shareholders opt to satisfy any
Claim (as defined below) with shares of Intelligroup Stock, such shares shall be
valued at the greater of (i) the Average Share Price at the Closing Date or (ii)
the Average Share Price at the date on which a Claim is made.
8.3. No Right of Contribution. After the Closing, the Consulting
Shareholders shall not have any right of contribution against Intelligroup or
Sub for any breach of any representation, warranty, covenant or agreement of
Consulting. The remedies described in this Article 8 shall be in addition to,
and not in lieu of, any other remedies at law or in equity that the parties may
elect to pursue.
8.4. Procedure for Claims. If a claim for Damages (a "Claim") is to be
made under Article 8 by a person entitled to indemnification hereunder, the
person claiming such indemnification (the "Indemnified Party") shall give
written notice (a "Claim Notice") to the indemnifying person (the "Indemnifying
Party") as soon as practicable after the Indemnified Party becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under Section 8.2. The failure of any Indemnified
Party to give timely notice hereunder shall not affect rights to indemnification
hereunder, except and only to the extent that, the Indemnifying Party
demonstrates actual material damage caused by such failure. In the case of a
Claim involving the assertion of a claim by a third party (whether pursuant to a
lawsuit or other legal action or otherwise, a "Third-Party Claim"), if the
Indemnifying Party shall acknowledge in writing to the Indemnified Party that
the Indemnifying Party shall be obligated to indemnify the Indemnified Party
under the terms of its indemnity hereunder in connection with such Third-Party
Claim, then (A) the Indemnifying Party shall be entitled and, if it so elects,
shall be obligated at its own cost, risk and expense, (1) to take control of the
defense and investigation of such Third-Party Claim and (2) to pursue the
defense thereof in good faith by appropriate actions or proceedings promptly
taken or instituted and diligently pursued, including, without limitation, to
employ and engage attorneys of its own choice reasonably acceptable to the
Indemnified Party to handle and defend the same, and (B) the Indemnifying Party
shall be entitled (but not obligated), if it so elects, to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably withheld.
In the event the Indemnifying Party elects to assume control of the defense and
investigation of such lawsuit or other legal action in accordance with this
Section 8.4, the Indemnified Party may, at its own cost and
- 27 -
expense, participate in the investigation, trial and defense of such Third-Party
Claim; provided that, if the named persons to a lawsuit or other legal action
include both the Indemnifying Party and the Indemnified Party and the
Indemnified Party has been advised in writing by counsel that there may be one
or more legal defenses available to such Indemnified Party that are different
from or additional to those available to the Indemnifying Party, the Indemnified
Party shall be entitled, at the Indemnifying Party's cost, risk and expense, to
separate counsel of its own choosing. If the Indemnifying Party fails to assume
the defense of such Third-Party Claim in accordance with this Section 8.4 within
10 calendar days after receipt of the Claim Notice, the Indemnified Party
against which such Third-Party Claim has been asserted shall (upon delivering
notice to such effect to the Indemnifying Party) have the right to undertake the
defense, compromise and settlement of such Third-Party Claim. In the event the
Indemnifying Party assumes the defense of the claim, the Indemnifying Party
shall keep the Indemnified Party reasonably informed of the progress of any such
defense, compromise or settlement, and in the event the Indemnified Party
assumes the defense of the claim, the Indemnified Party shall keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall be liable for any
settlement of any Third-Party Claim effected pursuant to and in accordance with
this Section 8.4 and for any final judgment (subject to any right of appeal),
and the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Party from and against any and all Damages by reason of such
settlement or judgment.
ARTICLE 9.
----------
MISCELLANEOUS
-------------
9.1. Certain Securities Laws Representations. The Consulting
Shareholders represent as follows with respect to the Acquisition Shares to be
acquired in connection with the Acquisition:
(a) Such person has such knowledge and experience in financial
and business matters that he or she is capable of evaluating the merits and
risks of the investment in the Acquisition Shares;
(b) Such person is receiving such shares for investment for
its own account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof, other than as contemplated hereby;
(c) Such person has been given the opportunity to obtain any
information or documents relating to, and to ask questions and receive answers
about, Intelligroup and the business and prospects of Intelligroup which it
deems necessary to evaluate the merits and risks related to its investment in
such shares and to verify the information received, and such person's knowledge
and experience in financial and business matters are such that it is capable of
evaluating the merits and risks of its receipt of such shares;
(d) Such person's financial condition is such that it can
afford to bear the economic risk of holding the shares for an indefinite period
of time and has adequate means for providing for such person's current needs and
contingencies and to suffer a complete loss of its investment in such shares;
(e) All information that such person has provided to
Intelligroup concerning itself and its financial position is correct and
complete; and
(f) Such person has been advised that, subject to the
registration provisions set forth in Section 9.2, (i) Intelligroup's issuance of
shares to the Consulting Shareholders will not have been registered under the
Securities Act, (ii) such shares may need to be held indefinitely, and such
person
- 28 -
must continue to bear the economic risk of the investment in such shares unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available, (iii) there may not be a public market for such
shares, (iv) when and if such shares may be disposed of without registration in
reliance on Rule 144 promulgated under the Securities Act, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (v) if the Rule 144 exemption is not available, public sale without
registration will require compliance with an exemption under the Securities Act
and (vi) a restrictive legend in the following form shall be placed on the
certificates representing such shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY INTELLIGROUP, INC.,
INTELLIGROUP, INC. SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO
THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A
PRECONDITION TO ANY SUCH TRANSFER.
9.2. Registration of Intelligroup Shares. Intelligroup agrees to
register the shares of restricted Intelligroup Stock being distributed to the
Consulting Shareholders pursuant to Section 2.2 by (i) filing a registration
statement on Form S-3 ("Form S-3") with respect to 165,696 shares of
Intelligroup Stock twenty-one (21) days after the Closing Date and using its
best efforts to have such registration statement become effective as soon as
practicable, (ii) filing a Form S-3 with respect to one-half of the total amount
of shares of Intelligroup Stock issued in connection with the contingent payment
as soon as possible after issuance of such shares, but in no event later than
seven days after the issuance of such shares and using its best efforts to have
such registration statement become effective as soon as practicable, and (iii)
filing a Form S-3 with respect to the remaining half of the shares of
Intelligroup stock issued in connection with the contingent payment no later
than December 31, 1999 and using its best efforts to have such registration
statement become effective as soon as practicable.
9.3. Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Consulting Shareholders without the
prior written consent of Intelligroup, or by Intelligroup or Sub without the
prior written consent of the Consulting Shareholders.
9.4. Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and delivered in person or by courier, telegraphed, telexed,
sent by facsimile transmission, sent via overnight delivery service or mailed by
registered or certified mail (such notice to be effective upon receipt), as
follows:
- 29 -
If to the Consulting Shareholders, to the addresses as set forth on
Annex 1 hereto.
With a copy to:
Xxxxxxxx, Xxxxx + Xxxx
Xxxxxx Xxxxx
Xxxx Xxxx
Xxxxxxxxxxxx XX00XX
Xxxxxx Xxxxxxx
Fax: 000-00-0000-000000
Attention: Xxxxx Xxxxxxxx, Esq.
If to Intelligroup:
Intelligroup, Inc.
000 Xxxxx Xxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxx, General Counsel
If to Sub:
Del Xxxxx Xxxxx Xxxxxx Xxxx
Xxxxxxx XX000XX
Xxxxxx Xxxxxxx
Fax: 000-00-0000-000000
Attention: Xxxx Xxxxxxx
With a copy to:
Xxxxxxxx Ingersoll
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
9.5. Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
New Jersey except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern and in respect of such
matters the parties hereby submit to the authority of the courts of such
jurisdiction.
9.6. Descriptive Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
- 30 -
9.7. Entire Agreement; Amendments and Waivers. This Agreement,
together with all exhibits and schedules hereto, constitute the entire agreement
among the parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
9.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9. Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
9.10. Expenses. Each party will be liable for its own expenses incurred
in connection with the negotiation, preparation, execution and performance of
this Agreement, however, Intelligroup agrees to pay an amount, not to exceed
$30,000, to the advisors of the Consulting Shareholders.
9.11. Publicity. Except as required by law or on advice of counsel,
neither party shall issue any press release or make any public statement
regarding the transactions contemplated hereby without the prior approval of the
other parties, and the parties hereto shall issue a mutually acceptable press
release as soon as practicable after the date hereof and after the Closing Date.
Notwithstanding the foregoing, Intelligroup shall be permitted to make any
public statement without obtaining the consent of any other party hereto if (i)
the disclosure is required by law and (ii) Intelligroup has first used its
reasonable efforts to consult with (but not to obtain the consent of) the other
parties about the form and substance of such disclosure.
9.12. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, except
as specifically set forth in Article 8 hereof.
- 31 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.
INTELLIGROUP, INC.,
a New Jersey corporation
By:/s/ Xxxxx Xxxxxx
---------------------------------------
Its: Co-Chairman of the Board of Directors
--------------------------------------
INTELLIGROUP EUROPE LIMITED,
a United Kingdom corporation
By:/s/ Xxxxx Xxxxxx
---------------------------------------
Its: Director
--------------------------------------
CPI CONSULTING LIMITED SHAREHOLDERS
/s/ Xxxxxxx Xxxxx
------------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxxx X. Xxxx
------------------------------------------
Xxxxxxx X. Xxxxx, signed by Xxxxxxx
Xxxxxxx Xxxx as Attorney for Xxxxxxx Xxxx
Xxxxx
/s/ Xxxxxxx X. Lucy
------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxxxxxx X.X. Xxxxx
------------------------------------------
Xxxxxxxxxxx X.X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
