Exhibit 4.(a).27
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of
February 17, 2006, is made by and among CDC GLOBAL SERVICES, INC., a Delaware
corporation, whose principal business address is 000-X Xxxxx 00 Xxxx, Xxxxxxxxx,
XX 00000, XXX with facsimile number x0-000-000-0000 ("CGS"), CDC SERVICES, INC.
DBA HORIZON COMPANIES, a Delaware corporation, whose principal business address
is 000-X Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with facsimile number
x0-000-000-0000 ("CSI"), HORIZON COMPANIES, INC., a New Jersey corporation,
whose principal business address is 0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, XX
00000, XXX with facsimile number x0-000-000-0000 (after February 27, 2006: 0000
Xxxx Xxxxxx, Xxxxxx, XX 00000 XXX) ("HC Inc."), TRANS HORIZON CONSULTING (INDIA)
LTD., a company incorporated under the laws of the Republic Of India, whose
principal business address is Xxxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxx (Xxxx), Xxxxxx
000000 with facsimile number x000-00-00-00000000 ("THC Ltd.") and HORIZON
SOFTWARE SERVICES INC., a company incorporated under the laws of Canada whose
principal business address is 00000 00X Xxxxxx, Xxxxx, XX X0X 0X0, Xxxxxx with
facsimile number x0-000-000-0000 with another office at 0000 Xxxxxxxx Xxxxxxxx,
Xxxx #00, Xxxxxxxxxxx, Xxxxxxx X0X-0X0, Xxxxxx with facsimile number
x0-000-000-0000 ("HSS Inc with respect to CGS's purchase of certain assets from
HC Inc., THC Ltd. and HSS Inc.
RECITALS
WHEREAS, HC Inc. wishes to sell and assign and CGS wishes to buy and assume
certain assets of HC Inc. set forth in SCHEDULE A-1 hereto;
WHEREAS, THC Ltd. wishes to sell and assign and CGS wishes to buy and assume
certain assets of THC Ltd. set forth in SCHEDULE A-2 hereto;
WHEREAS, HSS Inc. wishes to sell and assign and CGS wishes to buy and assume
certain assets of HSS Inc. set forth in SCHEDULE A-3 hereto;
WHEREAS, CGS wishes to place the assets purchased from HC Inc., THC Ltd. and HSS
Inc. in CSI, a 100% owned subsidiary of CGS;
WHEREAS, CSI wishes to employ Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx, currently
the Chief Executive Officer and the Chief Operating Officer of HC Inc.,
respectively, for the purpose of maintaining and operating the contracts
pertaining to the assets being sold and assigned to CGS after the closing of the
transaction;
WHEREAS, references to "$" shall refer to United States Dollars unless stated
otherwise, and all applicable financial numbers expressed in this Asset Purchase
Agreement shall be calculated in accordance with US generally accepted
accounting principles, consistently applied by Horizon (as defined below) prior
to the date of this Asset Purchase Agreement ("US GAAP");
WHEREAS, as set forth herein, HC Inc., THC Ltd. and HSS Inc. are referred to
herein collectively as "Horizon"; and
WHEREAS, as set forth herein, CGS, CSI, HC Inc., THC Ltd. and HSS Inc. are each
referred to as a "Party" and together as the "Parties".
NOW, FOR THE MUTUAL PROMISES AND CONSIDERATION EXCHANGED HEREIN, THE PARTIES
HERETO HEREBY AGREE AS FOLLOWS:
Initials: Horizon_______; GRN______; SRN________;
CGS________; RV________.
DEFINITIONS
"Actual EBITDA" Shall mean with respect to any Year, the
actual audited earnings before interest,
taxes, depreciation and amortization of the
Horizon Business for that Year. The earnings
on the Horizon Business shall be calculated by
aggregating all revenues produced by the
Horizon Business during such Year (including
consulting fees, license fees and any other
amounts paid by a Customer) and deducting the
payroll costs associated therewith as set
forth in SCHEDULE B hereto and the other costs
described in SCHEDULE C hereto during such
Year. For purposes of determining any
adjustment to the Consideration pursuant to
Section 2 below, Actual EBITDA shall not be
adversely affected in any way by any other
activities or assets of CGS, other than the
Horizon Business.
"Audit" Shall mean the US GAAP financial audit of CGS.
"Authorized Signatories" Shall mean two co-signatories, one of whom
shall be Xxxxx Xxx, and the other shall be one
of either Xxxxxxx Xxxxxxxx or Xxxxxx Xxxxxxxx.
Any substitution or replacement of any
Authorized Signatory shall be approved by
representatives of CDC Corporation.
"CDC Corporation" Shall mean CDC Corporation, a company
organized under the laws of the Cayman
Islands, and the ultimate parent company of
SGI, CGS and CSI.
"CGS" Shall have the meaning set forth in the first
paragraph of this Asset Purchase Agreement.
CGS is a 100% owned subsidiary of SGI.
"CGS Management Date" Shall mean the Closing Date or such other
date, agreed upon by CGS and Horizon in
writing, after which the contracts pertaining
to the Horizon Assets transferred herein shall
be managed and operated by CGS.
"Claim" Shall have the meaning set forth in Section
6(b).
"Claim Amount" Shall have the meaning set forth in Section
2(a).
"Closing" Shall mean the completion of the transactions
contemplated hereby on the Closing Date.
"Closing Date" Shall have the meaning set forth in Section 3.
"Consideration" Shall have the meaning set forth in Section
1(a)(ii).
"Contracted Employees" Shall have the meaning set forth in Section
4(c)(ii)
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"CSI" Shall have the meaning set forth in the first
paragraph of this Asset Purchase Agreement.
CSI shall be the Horizon Assets business unit
within CGS. CSI is a 100% owned subsidiary of
CGS.
"Customers" Shall have the meaning set forth in Section
4(c)(i).
"Employees" Shall have the meaning set forth in Section
3(d).
"Employment Agreement" Shall have the meaning set forth in Section
3(c)(i).
"Expiration Date" Shall have the meaning set forth in Section
6(b).
"Existing Horizon Accounts" Shall mean those bank accounts of HC Inc., THC
Ltd. and HSS Inc. set forth in EXHIBIT B.
"HC Inc." Shall have the meaning set forth in the first
paragraph of this Asset Purchase Agreement.
"Horizon" Shall have the meaning set forth in the
Recitals.
"Horizon Accounts Receivable" Shall have the meaning set forth in Section
4(d)(i).
"Horizon Assets" Shall mean (1) all proceeds and revenues from
the contracts set forth in SCHEDULE X-0, X-0
XXX X-0 hereto, (2) the right of CGS to demand
and enforce the transfer and assignment of the
contracts set forth on SCHEDULE X-0, X-0, XXX
X-0 on any date chosen by CGS, (3) all
consulting contracts which any of HC Inc., THC
Ltd. or HSS Inc. may enter into after the
Closing Date which are substantially similar
in character to the contracts set forth in
SCHEDULE X-0, X-0 AND A-3 ((1), (2) and (3)
together, the "Contracts") and (4) all
employment contracts between any of HC Inc.,
THC Ltd. and HSS Inc. with the employees
listed in SCHEDULE B hereto; provided,
however, that at the sole and absolute
discretion of CGS, CGS has the right to reject
the purchase and assumption of any such
contract entered into after the Closing Date
which shall thereafter not be considered a
Horizon Asset. All intangible assets (such as
brands, copyrights, trademarks, patents,
licenses, franchise, customer lists and
goodwill), furniture, fixtures and equipment
used in connection with the operation of the
Horizon Business as defined herein are
included. Excluded are cash, accounts
receivable and liabilities incurred prior to
the Closing Date, subject to Section 3(c)(iv)
and Section 4(k), as well as brands,
copyrights, trademarks, patents, licenses,
know how, franchises, customer lists, goodwill
and supplies and equipment not used or
involved in the operation of the Horizon
Business.
"Horizon Business" Shall mean the business conducted in
connection
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with the Horizon Assets.
"HSS Inc." Shall have the meaning set forth in the first
paragraph of this Asset Purchase Agreement.
"Immigration Service" Shall mean the United States Bureau of
Citizenship and Immigration Services of the
Department of Homeland Security (formerly the
Immigration and Naturalization Service of the
Department of Justice).
"Management Team" Shall mean both of Xxxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxx.
"Net 1st Payment" Shall have the meaning set forth in Section
1(b).
"New Horizon Account" Shall have the meaning set forth in Section
3(e).
"Party" and "Parties" Shall have the meaning set forth in the
Recitals.
"Payment" and "Payments" Shall have the meaning set forth in Section
1(b).
"PE" Shall be 3.00.
"Projected EBITDA" Shall be $1.35 million.
"Retained Asset" Shall have the meaning set forth in Section
4(c)(ii).
"Retained Liabilities" Shall mean all liabilities of Horizon other
than liabilities associated with the Horizon
Business and Horizon Assets arising from and
after the Closing Date.
"Xxxxxxxxx Financing Agreement" Shall mean the Financing Agreement dated April
5, 2000 between Horizon Companies, Inc. and
Xxxxxxxxx & Xxxxxxxxx, Inc. consisting of
receivables financing.
"SBA Loan" Shall mean the U.S. Small Business
Administration Loan Authorization and
Agreement dated as of November 27, 2001 from
the U.S. Small Business Administration to
Horizon Companies, Inc. in the aggregate
amount of US$582,100 (Loan Number EIDL
50675740-10).
"SGI" Shall mean Software Galeria, Inc., a New
Jersey corporation. SGI is an 80% owned
subsidiary of CDC Corporation
"THC Inc." Shall have the meaning set forth in the first
paragraph of this Asset Purchase Agreement.
"Third Party Claim" Shall have the meaning set forth in Section
6(a).
"Unity Loan" Shall mean the loan from Unity Bank,
guaranteed by the U.S. Small Business
Administration, dated as of July 9, 2001 to
Horizon Companies, Inc. in
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the aggregate amount of US$750,000.
"US GAAP" Shall have the meaning set forth in the
Recitals.
"Valuation" Shall have the meaning set forth in Section
1(a)(ii).
"Year" Shall mean a period beginning on January 1 and
ending on December 31 during the term of this
Asset Purchase Agreement.
1. PURCHASE AND PAYMENT OF CONSIDERATION
(a) (i) CGS hereby agrees to purchase the Horizon Assets from Horizon on
the Closing Date and Horizon agrees to sell the Horizon Assets to CGS.
The parties agree that the Horizon Assets shall be held in CSI. TABLE
A attached hereto sets forth the purchase price allocation with
respect to the Horizon Assets.
(ii) The value of the Horizon Assets shall be an amount equivalent to
the PE multiplied by the Projected EBITDA (I.E. 3.0 X $1.35 MILLION =
$4.05 MILLION) (the "Valuation"). The purchase price for the Horizon
Assets shall be 80% of the Valuation (I.E. 0.80 X $4.05 MILLION =
$3.24 MILLION) (the "Consideration"), as may be adjusted on the terms
and conditions set forth herein.
(b) The Consideration shall be payable by CGS in several part payments
(each, a "Payment" and collectively, the "Payments"), further divided
into installments, by wire transfer of immediately available funds or
by tendering a cashier's or certified check according to the following
schedule:
1st Payment Assuming satisfaction of the conditions precedent set
forth in EXHIBIT A, at Closing, CGS shall pay the
amount of 18.75% of the Consideration (ie. 0.1875 X
$3.24 MILLION = $607,500); provided, however, that CGS
may in its sole discretion, make such 1st Payment in
installments to Horizon as follows:
(i) The amount of $250,000 shall be credited against
the 1st Payment to reflect an advance of such
amount made by SGI to Horizon in October 2005;
(ii) A sum of $17,500 payable on the CGS Management
Date;
(iii) The balance of $340,000 reduced by payments made
by the Horizon Business toward Retained
Liabilities and liabilities incurred prior to
October 3, 2005 (the "Net 1st Payment") payable on
the CGS Management Date. The entire Net 1st
Payment shall be paid by CGS to one or more third
parties in accordance with the provisions of
Section 1(c) in lieu of payment to Horizon. It is
understood by the Parties that the cash balance of
Horizon as of the CGS Management Date includes the
cash balance as of October 3, 2005 as increased by
collected Horizon Accounts Receivable and other
accounts receivable, and decreased by payment of
Retained Liabilities, liabilities incurred prior
to October
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3, 2005 and liabilities incurred after October 3,
2005. Hence the payment of the entire cash balance
in Existing Horizon Accounts as of the CGS
Management Date toward reducing debt owed by
Horizon in accordance with the provisions of
Section 1(c) and Section 3(c)(iv) results in
payments to Horizon of Horizon Accounts Receivable
and cash as of October 3, 2005 (assets not
transferred to CGS pursuant to the terms herein)
as well as payments on behalf of Horizon to
satisfy Retained Liabilities and liabilities
incurred prior to October 3, 2005. Such aggregate
payments on behalf of Horizon will result in a
reduction of the balance of $340,000 otherwise
payable toward the 1st Payment.
2nd Payment An aggregate of 18.75% of the Consideration (ie. 0.1875
X $3.24 MILLION = $607,500), shall, subject to the
provisions of Section 1(c) below, be paid by CGS in
eight (8) consecutive equal monthly installments of
$75,937.50 each on the 28th day of each month,
beginning May 28, 2006 subject to adjustments as set
forth in Section 2; provided, however, that each of the
conditions precedent set forth in EXHIBIT A shall be
satisfied prior to making any such installment payment.
3rd Payment An aggregate of 31.25% of the Consideration (ie. 0.3125
X $3.24 MILLION = $1,012,500), shall, subject to the
provisions of Section 1(c) below, be paid by CGS in
eight (8) consecutive equal monthly installments of
$126,562.50 each on the 28th day of each month,
beginning May 28, 2007 subject to adjustments as set
forth in Section 2 and based on an Audit which shall be
completed for the Year ending December 31, 2006, no
later than one hundred twenty (120) days after December
31, 2006; provided, however, that each of the
conditions precedent set forth in EXHIBIT A shall be
satisfied prior to making any such installment payment.
4th Payment An aggregate of 31.25% of the Consideration (ie. 0.3125
X $3.24 MILLION = $1,012,500), shall, subject to the
provisions of Section 1(c) below, be paid by CGS in
eight (8) consecutive equal monthly installments of
$126,562.50 each on the 28th day of each month,
beginning May 28, 2008 subject to adjustments as set
forth in Section 2 and based on an Audit which shall be
completed for the Year ending December 31, 2007, no
later than one hundred twenty (120) days after December
31, 2007; provided, however, that each of the
conditions precedent set forth in EXHIBIT A shall be
satisfied prior to making any such installment payment.
(c) The Parties agree that the amounts payable pursuant to Section 1(b),
except for the advance of $250,000 to Horizon from SGI in October 2005
and the payment of $17,500 on the CGS Management Date both under the
1st Payment, be distributed in accordance with the following
procedure, and that CGS is authorized and instructed
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to make payment directly to the beneficiaries listed below in lieu of
payment to Horizon.
(i) FIRST, to the payment of any amounts which may be overdue or in
default under any of the Xxxxxxxxx Financing Agreement, Unity
Loan or SBA Loan, until any such overdue amount or amounts in
default shall have been fully paid;
(ii) SECOND, to the payment of any amounts owing or borrowed under the
Xxxxxxxxx Financing Agreement until such Financing Agreement
shall have been repaid in full, such Financing Agreement
terminated and the security interests securing the amounts owing
and borrowed thereunder released;
(iii) THIRD, to the payment of any amounts owing or borrowed under the
Unity Loan until such Loan shall have been repaid in full, such
Loan terminated and the security interests securing the amounts
owing and borrowed thereunder released;
(iv) FOURTH, to the payment of any amounts owing or borrowed under the
SBA Loan until such Loan shall have been repaid in full, such
Loan terminated and the security interests securing the amounts
owing and borrowed thereunder released;
(v) FIFTH, to Horizon.
(d) (i) If the Horizon Business exceeds 50% of the Projected EBITDA for
the Year ending December 31, 2006, shares of common stock representing
a 5% equity stake in CSI shall be issued to HC Inc. by way of
additional consideration. This issuance shall be effected by the end
of April 2007 and will have the effect of diluting the percentage
ownership of all of the then current shareholders of CSI; provided,
however, that each of the conditions precedent set forth in EXHIBIT A
shall be satisfied prior to making any such issuance. The equity
interest (if any) shall be considered transferred on the date of
issuance.
(ii) If the Horizon Business exceeds 50% of the Projected EBITDA for
the Year ending December 31, 2007, shares of common stock representing
an additional 5% equity stake in CSI shall be issued to HC Inc. by way
of additional consideration. This issuance shall be effected by the
end of April 2008 and will have the effect of diluting all the then
current shareholders of CSI; provided, however, that each of the
conditions precedent set forth in EXHIBIT A shall be satisfied prior
to making any such issuance. The equity interest (if any) shall be
considered transferred on the date of issuance.
(iii) If the Horizon Business exceeds 50% of the Projected EBITDA for
the Year ending December 31, 2008, shares of common stock representing
a further 10% equity stake in CSI shall be issued to HC Inc. by way of
additional consideration. This issuance shall be effected by the end
of April 2009 and will have the effect of diluting all of the then
current shareholders of CSI; provided, however, that each of the
conditions precedent set forth in EXHIBIT A shall be satisfied prior
to making any such issuance. The equity interest (if any) shall be
considered transferred on the date of issuance.
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(iv) Concurrently with each issuance of shares of common stock of CSI
to HC Inc., CGS shall grant to each of Xxxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxx (to whom HC Inc. shall transfer the CSI shares in equal
amounts) an option exercisable for a two year period at any time after
April 30, 2009 to sell to CGS any or all of the shares of CGS held by
such person at a price per share based upon each block of 2.5% of the
shares of common stock of CSI held by such person (whenever issued)
being valued at $100,000. The form of put option to be executed by CGS
setting forth the terms and conditions of such option is annexed
hereto as EXHIBIT D. The obligations of CGS thereunder shall be
guaranteed by Software Galeria, Inc., a New Jersey corporation and an
affiliate of CGS, pursuant the terms of the Guaranty annexed hereto as
EXHIBIT E.
(e) To the extent that any payment day is not a business day in New
Jersey, the Payment shall be made on the immediately succeeding
business day.
(f) If any installment due under the 2nd Payment, 3rd Payment or 4th
Payment is not made in a timely manner as provided in this Asset
Purchase Agreement, whether because an Audit is not completed within
the one hundred twenty (120) day period indicated above or otherwise,
then in each such case interest on such installment shall accrue at a
rate of five percent (5%) per annum for such installment until such
installment shall be paid by CGS; provided, however, the preceding
clause shall not apply in the event that payment for such installment
payment was not made because the conditions precedent set forth in
EXHIBIT A shall not have been satisfied. In the event that any such
installment or issuance of an equity stake in CGS set forth in Section
1(d) shall not have been made because the conditions precedent set
forth in EXHIBIT A shall not have been satisfied, such installment or
issuance of an equity stake shall be made as soon as reasonably
practicable after satisfaction of such conditions precedent set forth
in EXHIBIT A.
(g) The auditors will be instructed to prepare a balance sheet, income
statement and calculation of Actual EBITDA solely with respect to the
Horizon Business, which statements shall be in form and substance
reasonably acceptable to Horizon and CGS. An external Audit shall not
be required if an internal Audit is found acceptable, agreed upon and
signed-off by each of the Parties hereto.
2. ADJUSTMENT OF CONSIDERATION
(a) The amount of the 2nd Payment shall be adjusted downward in the event
that CGS has notified Horizon of any Claim in an amount equal to the
amount of such Claim (the "Claim Amount") and shall be withheld from
such Payment, subject to the limits set forth in Section 2(d).
Concurrently with the delivery of such notice by CGS to Horizon of the
Claim pursuant to Section 6, the Claim Amount shall be deposited by
CGS and retained in a segregated trust account until such Claim has
been resolved in accordance with Section 6(b). For example, in the
event the Claim Amount has been accepted by the Parties as $50,000,
then the amount of the 2nd Payment shall be adjusted downwards in the
amount of $50,000, such that the amount of the 2nd Payment shall be
$607,500 - $50,000 = $557,500, and each eight consecutive monthly
installment shall be $557,500 / 8 = $69,687.50.
(b) (i) The amount of the 3rd Payment shall be adjusted upward in the
event that Actual EBITDA for the Year ending December 31, 2006 exceeds
Projected EBITDA in the
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amount of such excess, and downwards in the event that Actual EBITDA
for the Year ending December 31, 2006 is less than Projected EBITDA in
the amount of such shortfall, in each case subject to the limits set
forth in Section 2(d). For example, in the event that Actual EBITDA
for such period is $1,500,000, then the amount of the 3rd Payment
shall be adjusted upwards in the amount of $1,500,000 - $1,350,000 =
$150,000, such that the amount of the 3rd Payment shall be $1,012,500
+ $150,000 = $1,162,500, and each eight consecutive monthly
installment shall be $1,162,500 / 8 = $145,312.50. For example, in the
event that Actual EBITDA for such period is $1,200,000, then the
amount of the 3rd Payment shall be adjusted downwards in the amount of
$1,350,000 - $1,200,000 = $150,000, such that the amount of the 3rd
Payment shall be $1,012,500 - $150,000 = $862,500, and each eight
consecutive monthly installment shall be $862,500 / 8 = $107,812.50.
(ii) In the event that CGS has notified Horizon of any Claim, the
Claim Amount shall be withheld from such Payment, subject to the
limits set forth in Section 2(d). Concurrently with the delivery of
such notice by CGS to Horizon of the Claim pursuant to Section 6, the
Claim Amount shall be deposited by CGS and retained in a segregated
trust account until such Claim has been resolved in accordance with
Section 6(b). For example, in the event Actual EBITDA for such period
is $1,350,000 and the Claim Amount has been accepted by the Parties as
$100,000, then the amount of the 3rd Payment shall be adjusted
downwards in the amount of $100,000, such that the amount of the 3rd
Payment shall be $1,012,500 - $100,000 = $912,500, and each eight
consecutive monthly installment shall be $912,500 / 8 = $114,062.50.
(iii) For the avoidance of doubt, the adjustments set forth in Section
2(b)(i) and Section 2(b)(ii) shall be cumulative.
(c) (i) The amount of the 4th Payment shall be adjusted upward in the
event that Actual EBITDA for the Year ending December 31, 2007 exceeds
Projected EBITDA in the amount of such excess, and downwards in the
event that Actual EBITDA for the Year ending December 31, 2007 is less
than Projected EBITDA in the amount of such shortfall, in each case
subject to the limits set forth in Section 2(d). For example, in the
event that Actual EBITDA for such period is $100,000, then the amount
of the 4th Payment shall be adjusted downwards in the maximum amount
of $1,012,500 pursuant to Section 2(d), such that the amount of the
4th Payment shall be $1,012,500 - $1,012,500 = $0, and each eight
consecutive monthly installment shall be $0 / 12 = $0.
(ii) In the event that CGS has notified Horizon of any Claim, the
Claim Amount shall be withheld from such Payment, subject to the
limits set forth in Section 2(d). Concurrently with the delivery of
such notice by CGS to Horizon of the Claim pursuant to Section 6, the
Claim Amount shall be deposited by CGS and retained in a segregated
trust account until such Claim has been resolved in accordance with
Section 6(b). For example, in the event Actual EBITDA for such period
is $1,350,000 and the Claim Amount has been accepted by the Parties as
$1,100,000, then the amount of the 4th Payment shall be adjusted
downwards in the maximum amount of $1,012,500 pursuant to Section
2(d), such that the amount of the 4th Payment shall be $1,012,500 -
$1,012,500 = $0, and each eight consecutive monthly installment shall
be $0 / 12 = $0.
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(iii) For the avoidance of doubt, the adjustments set forth in Section
2(c)(i) and Section 2(c)(ii) shall be cumulative.
(d) Notwithstanding the foregoing, the amount of any Payment subject to
adjustment shall be subject to a maximum reduction equal to 100% of
the original amount of such Payment.
3. CLOSING/INTERIM MANAGEMENT/CGS MANAGEMENT DATE
(a) The closing date of this asset purchase transaction shall be as of
February 17, 2006 (the "Closing Date") and the rights and obligations
of the parties as set out herein shall commence as of such date unless
any modification thereof shall be agreed upon or ratified in writing
by both parties, provided, however, that for the purposes of Section
1(b) the Closing Date shall be deemed to be October 3, 2005.
(b) At the Closing:
(i) The amount of $250,000 shall be credited against the 1st Payment
to reflect an advance of such amount made by SGI to Horizon in
October 2005;
(ii) HC Inc., THC Ltd. and HSS Inc. shall effect the assignment of all
of the Horizon Assets to CSI by delivering to CSI the executed
Instrument of Assignment set forth in SCHEDULE D hereto with the
original contractual documents pertaining thereto. Pursuant to
such assignment, CSI shall assume all rights and obligations with
respect to the Horizon Assets from and after the Closing;
(iii) In consideration of the agreement of CDC Corporation Limited to
provide a Revolving Credit Agreement to SGI (which SGI shall use
to provide substitute financing in place of the Xxxxxxxxx
Financing Agreement), and which Horizon recognizes and
acknowledges as a benefit to it, Horizon agrees to grant a first
priority security interest over the assets set forth in EXHIBIT C
hereto in favor of CDC Corporation Limited in order to secure the
amounts borrowed and owing under such Revolving Credit Agreement.
Horizon recognizes and acknowledges that Horizon's agreement to
grant a first priority security interest to CDC Corporation
Limited is necessary to induce CGS and CSI to enter into this
Asset Purchase Agreement, and that without Horizon's commitment
and agreement to grant such a first priority security interest
concurrently with termination of the Xxxxxxxxx Financing
Agreement and its replacement by CGS with a comparable financing
facility, CGS and CSI would not have entered into this Asset
Purchase Agreement.
(c) At the Closing, CGS shall, for its convenience, require Horizon,
acting at all times under the direction and control of CGS, to
continue the management and operation of the contracts pertaining to
the Horizon Assets on an interim basis until the agreed upon CGS
Management Date. On the CGS Management Date:
(i) Horizon shall procure the execution of employment agreements in
substantially the form set forth in SCHEDULE E (each, an "Employment
Agreement") by each member of the Management Team;
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(ii) Horizon shall deliver to CGS a legal opinion from the law firm of
Xxxxxxx and Xxxxxxx or their immigration counsel of choice (which
counsel shall be reasonably satisfactory to CGS), in substantially the
same form and with substantially the same content as the form opinion
set forth in SCHEDULE F-1 hereto.
(iii) [INTENTIONALLY OMITTED]
(iv) Horizon shall cause all cash in the Existing Horizon Accounts to
be applied pursuant to the waterfall provisions set forth in Section
1(c).
(d) Immediately after the CGS Management Date, Horizon shall commence a
process to procure within a reasonable time after Closing (and deliver
to CGS), from each of the employees listed in SCHEDULE B hereto
(collectively, the "Employees"), his or her unequivocal written
consent (in English) to the assignment of his or her employment
contract from Horizon to CGS.
(e) Immediately after the CGS Management Date, CGS shall open a new bank
account in the name of CSI (the "New Horizon Account") for the Horizon
Business and will file such documents as may be necessary to conduct
business under such name. All the revenues and other monies generated
by and from the Horizon Business shall be deposited in the New Horizon
Account, and all withdrawals, payments and checks written from the New
Horizon Account shall be approved by authorized signatories of CGS who
need not include members of the Management Team.
(f) Immediately after the CGS Management Date, Horizon shall cause the
authorized signatories with respect to the Existing Horizon Accounts
to be changed to the Authorized Signatories.
4. COVENANTS
(a) Horizon shall remain liable for the Retained Liabilities following the
Closing Date, including, without limitation, any liabilities arising
out of the Horizon Business and Horizon Assets before the Closing
Date. CSI agrees to assume the liabilities and obligations relating to
the Horizon Business and Horizon Assets arising on or after the
Closing Date.
(b) Horizon and CGS shall undertake such actions as are reasonably
required in order to ensure that after the Closing Date the staffing
of the Canadian Contracts set forth in SCHEDULE A-3 hereto shall
continue to be staffed in a manner in compliance with all applicable
immigration laws of Canada while preserving the effectiveness and
intent that CGS is purchasing such Canadian Contracts pursuant to this
Asset Purchase Agreement, including (1) all proceeds and revenues from
such Canadian Contracts and (2) the right of CGS to demand and enforce
the transfer and assignment of such Canadian Contracts.
(c) (i) Horizon shall, as and when directed by CGS, deliver a notice of
assignment and request for consent in the form set forth in SCHEDULE G
to the transfer of all rights, title, benefits and obligations of the
contracts pertaining to the Horizon Assets from Horizon to CSI to all
customers and end-clients associated with the Horizon Assets set forth
in SCHEDULE X-0, X-0 XXX X-0 hereto (collectively, the "Customers").
-11-
(ii) For the avoidance of doubt, unless the Contract between the
Customer and Horizon specifically requires the consent of the Customer
to transfer such rights, title, benefits and obligations from Horizon
to CSI, the return of an executed consent of such Customer shall not
be required to effectuate such transfer, and such transfer shall be
deemed to occur on the Closing Date. In the event the Contract between
the Customer and Horizon specifically requires the consent of the
Customer to transfer such rights, title, benefits and obligations from
Horizon to CSI, and should such Customer fail to return an duly signed
consent without qualifications on or before September 30, 2006 or such
extended date as may be permitted by CSI, the Horizon Asset associated
with such Contract shall not be transferred to CSI, but rather shall
remain an asset of Horizon (a "Retained Asset"), and Horizon and CSI
shall enter into a sub-contract (if permitted by the Contract) whereby
CSI shall perform all obligations thereunder for the same
consideration set forth in such Retained Asset. In such a
circumstance, for the avoidance of doubt, (A) the employees assigned
to the performance of Retained Assets (the "Contracted Employees")
shall be transferred to CSI, (B) the retention by Horizon of the
Retained Assets and the employment of the Contracted Employees shall
be deemed not to violate the non-competition covenants in this Asset
Purchase Agreement or the Employment Agreements and (C) such Retained
Assets shall be transferred and assigned to CSI if at a future time a
consent may be obtained from the Customer. Horizon agrees that upon
the following renewal of the Contract with any Customer made after the
Closing Date, such renewal shall be made with CSI as the contracting
party.
(iii) In order to secure the value of the purchase of the Horizon
Assets from Horizon hereunder, each member of the Management Team
agrees to grant a first priority security interest to CGS over 100% of
the shares of HC Inc. In the event of any of the following:
(A) More than 15% of the Customers by number who have Contracts on
the Closing Date terminate their Contracts because of the
assignment of the Horizon Assets to CSI;
(B) Customers accounting for more than 15% of the revenues under the
Contracts on the Closing Date terminate their Contracts because
of the assignment of the Horizon Assets to CSI;
(C) More than 15% of the Employees by number listed in SCHEDULE B
hereto terminate their employment contracts because of the
assignment of the Horizon Assets to CSI;
then, at the option of CGS in its sole discretion but after
consultation with the Management Team, CGS may foreclose over the
shares of HC Inc. The Parties acknowledge and agree that the intent of
such a foreclosure would be to preserve the value of the Horizon
Assets, and to prevent Customers and Employees from terminating their
respective contracts with Horizon as a result of the purchase of the
Horizon Assets hereunder through an assignment. In such an event, the
Parties agree to negotiate in good faith the disposition of the assets
and liabilities of Horizon which were not intended to be purchased by
CGS pursuant to the terms of this Asset Purchase Agreement.
Notwithstanding anything in the foregoing Section 4(c)(iii), the
provisions of this Section 4(c)(iii) shall terminate and expire, and
be of no further force or effect, at such time as Xxxxxxxxx &
Xxxxxxxxx shall assign its security interest under the
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Xxxxxxxxx Financing Agreement to CDC Corporation Limited to secure the
amounts under the Revolving Credit Agreement.
(iv) Concurrently with the delivery of the notice of assignment and
request for consent set forth in Section 4(c)(i), Horizon shall
instruct each Customer that all receivables accruing as and from the
date of such notice shall thereafter be paid to CSI or remitted to the
New Horizon Account as may be provided by CGS.
(d) (i) CGS covenants that the receivables due to Horizon as of the
Closing Date for services performed during any period prior to the
Closing Date (the "Horizon Accounts Receivable") shall be for the
account of Horizon (subject to the provisions of Section 3(c)(iv) and
Section 4(k)), and Horizon shall be solely responsible for any
collection of the same. Horizon may take such action that Horizon
deems reasonably necessary to collect such accounts receivable;
provided, however, that such action shall not diminish, interfere or
threaten the value of any of the Horizon Assets purchased hereunder
without the prior written consent of CGS.
(ii) To the extent that CGS receives any amount representing payment
of any Horizon Accounts Receivable, CGS shall hold such amount in
trust for Horizon, and shall within five (5) business days of receipt
of such amount remit such amount to Horizon subject to the provisions
of Section 3(c)(iv) and Section 4(k).
(iii) To the extent that Horizon receives any amount representing
payment of any accounts receivable pertaining to the Horizon Assets
(or other return on such Horizon Asset) arising from and after the
Closing Date but prior to the CGS Management Date, Horizon shall hold
such amount in trust for CGS, and pay payables incurred in the
ordinary course of business with respect operations of the Horizon
Business after the Closing Date or make payment to the appropriate
parties pursuant to the provisions of Section 3(c)(iv); provided,
however, that written notice of such application shall be provided to
CGS.
(iv) To the extent that Horizon receives any amount representing
payment of any accounts receivable pertaining to the Horizon Assets
(or other return on such Horizon Asset) arising from and after the CGS
Management Date, all of such amounts shall be remitted to the New
Horizon Account.
(e) CSI agrees to offer to the Employees, as of the Closing Date, a
continuation of their employment contracts under the existing
employment conditions as of the Closing Date and with acknowledgement
of the length of service with Horizon.
(f) Horizon assigns and CSI undertakes to assume all rights and
obligations under the employment and consulting contracts relating to
the Employees, and Horizon agrees to obtain the approval of such
Employees to replace Horizon with CSI as employer or contract party as
of or reasonably after the Closing Date or CGS Management Date as may
be acceptable to CGS. For the avoidance of doubt, unless the
employment and consulting contracts relating to the Employees and
Horizon specifically requires the consent of such Employee to the
assignment and assumption of all rights and obligations, the written
approval of such Employee shall not be required to effectuate such
assignment and assumption, and such transfer shall be deemed to occur
on the Closing Date or CGS Management Date as may be mutually
acceptable to CGS and Horizon. In the event the employment and
consulting contracts relating to the Employees and Horizon
specifically requires the consent of such Employee to the
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assignment and assumption of all rights and obligations, and should
such approval has not been granted by April 30, 2006, any offer of
employment or consulting contract by CSI shall expire, and Horizon
undertakes to promptly fulfill and terminate its obligations towards
such employee or contractor. The Parties may, however, mutually agree
that such Employees may be subcontracted by Horizon to CSI at an
agreed upon cost; provided, however, that if Horizon and any such
Employee do not mutually agree, Horizon shall not employ or use such
Employee as a contractor for the length of the non-compete period set
forth in Section 4(j). Upon the following renewal of the employment or
consulting contract with any Employee, the Parties each agree that any
offer shall be made with CSI as the contracting party.
(g) (i) Except as otherwise specifically referred to in this Asset
Purchase Agreement, CGS or Horizon, acting under the direction of CGS
as interim manager for the benefit of CGS, shall carry on the Horizon
Business following the Closing Date in the ordinary course and
substantially in the same manner as heretofore carried on and to use
its reasonable best efforts to preserve the business and relationships
with the Customers and the Employees.
(ii) During the term of his Employment Agreement (and subject to the
provisions thereof), Xxxxxxx Xxxxxxxx shall have executive
responsibility and control of the running of the Horizon Business.
(iii) CGS will advise Horizon promptly in writing of any material
adverse change in the financial condition or business of CGS, and
Horizon will ensure that Xxxxxxx Xxxxxxxx shall advise CGS promptly in
writing of any material adverse change in the financial condition or
business of the Horizon Business.
(h) Horizon specifically covenants to assume the costs of immigration
processing which may be reasonably required to transfer the Horizon
Assets from Horizon to CGS (excluding the payment of future
immigration processing costs associated with renewals of immigration
status in the ordinary course of business).
(i) Except as permitted by CGS, Horizon agrees not to borrow any
additional funds under or utilize the Xxxxxxxxx Financing Agreement.
Promptly upon the repayment in full of all amounts due and owing under
the Xxxxxxxxx Financing Agreement, Horizon agrees to terminate such
facility; provided, however, that it shall instruct Xxxxxxxxx &
Xxxxxxxxx, Inc., as lender, to assign its security interest under the
Xxxxxxxxx Financing Agreement to CDC Corporation Limited to secure the
amounts under the Revolving Credit Agreement.
(j) (i) Each of HC Inc., THC Ltd. and HSS Inc. agrees on behalf of itself
and each of its affiliates (together, the "Restricted Entities"), that
for so long as CGS shall conduct the Horizon Business (the "Restricted
Period"), that the Restricted Entities shall not (except by way of
interim management under the direction of CGS for the benefit of CGS
as provided herein) without the express written consent of the Board
of Directors or the Chief Executive Officer of CDC Corporation,
directly or indirectly:
(A) advise, manage, carry on, establish, control, engage in,
invest in, offer financial assistance or services to, or lend to, any
business that supplies services to customers located anywhere in the
world of the kind conducted through the Horizon Business;
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(B) own an interest in, lend money or render financial or other
assistance to, any person that competes with the Horizon Business
located anywhere in the world;
(C) in any way for the purpose of conducting or engaging in any
business that supplies services to customers located anywhere in the
world of the kind conducted through the Horizon Business, call upon,
solicit, advise or otherwise do business with any customers, employees
or contractors with whom Horizon had any dealings during the 12 months
prior to the Closing Date; or
(D) in any way, for any purpose whatsoever, employ, solicit for
employment, or advise or recommend to any other person that they
employ or solicit for employment, any employee or contractor who
during the 12 months prior to Closing Date, was employed or in any way
engaged with the Horizon Business.
(ii) For purposes of this Section 4(j), "directly" shall include as a
director, officer, employee, manager, partner, stockholder,
independent contractor, advisor, consultant or otherwise and
"indirectly" shall include in partnership or jointly or in conjunction
with any other person, entity or organization, as principal, agent,
consultant, contractor, employer, employee, investor, lender or
shareholder.
(iii) IN CONNECTION WITH THIS SECTION 4(j), EACH RESTRICTED ENTTIY
REPRESENTS THAT THE LIMITATIONS SET FORTH HEREIN ARE REASONABLE AND
PROPERLY REQUIRED FOR THE ADEQUATE PROTECTION OF CGS AND THE HORIZON
BUSINESS.
(iv) Each Restricted Entity acknowledges that CGS (and its affiliates)
and the Horizon Business may suffer irreparable harm, which cannot
readily be measured in monetary terms, if the Restricted Entity
breaches the obligations under this Section 4(j). Each Restricted
Entity further acknowledges and agrees that CGS (and its affiliates)
and the Horizon Business may obtain injunctive or other equitable
relief against it to prevent or restrain such breach causing such
harm; provided, however, that where such breach involves subject
matter that is susceptible of being cured, the Restricted Entity will
cure such breach as promptly as practicable upon notice of such breach
to the Restricted Entity. Such injunctive relief shall be in addition
to any other remedies CGS (and its affiliates) and the Horizon
Business might have under this Asset Purchase Agreement or at law.
(k) Horizon shall cause (when received) payments for all Horizon Accounts
Receivable (ie. any accounts receivable associated with the Horizon
Assets arising before the Closing Date) to be applied pursuant to the
waterfall provisions set forth in Section 1(c) or (with notice to and
the prior written consent of CGS) applied toward Retained Liabilities
discovered after the Closing Date. The obligation of Horizon as set
out herein may be satisfied in part or in full by the payment of all
balances in Existing Horizon Accounts to CGS or CSI as of the CGS
Management Date in accordance with the provisions of Section 1(c) and
Section 3(c)(iv).
(l) Horizon agrees that, at any time and from time to time, at the request
of CGS, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that CGS may otherwise reasonably request in order to
carry out the provisions of this Asset Purchase Agreement. This shall
include, but not be limited to, perfecting and protecting any security
interest granted or purported to be granted in connection with this
Xxxxx
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Xxxxxxxx Agreement or assigning, transferring or delivering any
consulting contracts which any of HC Inc., THC Ltd. or HSS Inc. may
enter into after the Closing Date which are substantially similar in
character to the Contracts.
5. REPRESENTATIONS AND WARRANTIES OF HORIZON
(a) Horizon hereby represents and warrants as at the Closing Date (and
unless otherwise specified, at the time of the making of each of the
Payments), that:
(i) Each of the representations and warranties in this Section 5 are
true and correct on the Closing Date or date of making Payment,
as the case may be, except as otherwise provided herein;
(ii) As they relate to obligations of Horizon, Horizon has performed
or is compliance with each of the covenants set forth in Section
4 on the Closing Date, CGS Management Date or date of making
Payment, as the case may be.
(iii) As at the Closing Date, based upon the revenues received through
the Closing Date and the work that has been commissioned by the
Customers and assuming that the services to be performed under
the Contracts are not reduced at the request of the relevant
Customers and assuming further that any Contract that terminates
according to its term prior to December 31, 2007 will be renewed
on substantially similar terms, the Horizon Assets are currently
projected to generate an aggregate amount equal to the Projected
EBITDA during each of the Years ending December 31, 2006 and
2007;
(iv) As at the Closing Date, each Employee who will be transferred to
CGS upon or after the Closing Date as set forth on SCHEDULE A-1
is in lawful non-immigrant or lawful permanent resident status in
the United States of America and, to Horizon's knowledge, has
neither committed any act nor allowed any omission which would
change that status, nor has Horizon received any notice, order or
other communication from the Immigration Service or the
Department of Labor which would affect such status;
(v) As at the Closing Date, HSS Inc. has no Employees. As at the
Closing Date, Horizon has staffed the contracts set forth on
SCHEDULE A-3 hereto in a lawful manner in compliance with the
immigration laws of Canada, and immediately after the Closing as
a result of the consummation of the transactions set forth in
this Asset Purchase Agreement, such contracts set forth on
SCHEDULE A-3 hereto shall continue to be staffed in a lawful
manner in compliance with the immigration laws of Canada while
preserving the effectiveness and intent that CGS is purchasing
such contracts pursuant to this Asset Purchase Agreement,
including (1) all proceeds and revenues from such contracts and
(2) the right of CGS to demand and enforce the transfer and
assignment of such contracts.
(vi) The Board of Directors of each Horizon company has reviewed this
Asset Purchase Agreement and each Board is of the opinion that
the transactions herein are fair transactions with CGS giving
good and sufficient consideration for the assets sold,
transferred and assigned by this Asset Purchase Agreement;
-16-
(vii) Except for an overdraft under the Xxxxxxxxx Financing Agreement
known to CGS, as of the Closing Date or date of Payment, as the
case may be, no amounts are or shall be overdue or in default
under any of the Xxxxxxxxx Financing Agreement, Unity Loan or SBA
Loan;
(viii) As of the Closing Date or date of Payment, as the case may be,
CDC Corporation Limited has a valid, perfected security interest
over the assets set forth in EXHIBIT C to secure the amounts
borrowed and owing under the Revolving Credit Agreement.
(ix) The execution, delivery and performance by the Horizon of this
Asset Purchase Agreement and each other document to which Horizon
is or is to be a party, and the consummation of the transactions
contemplated hereby and thereby, are within Horizon's corporate
powers, have been duly authorized by all necessary corporate
action and do not (a) contravene the certificate of
incorporation, bylaws, or other applicable governance document of
any Horizon entity, (b) violate any applicable governmental law,
rule regulation, order, judgment, directive or similar decision
the violation of which could reasonably be expected to have a
material adverse effect on the value of the Horizon Assets being
transferred hereunder, or (c) conflict with or result in the
breach of, or constitute a default under, any loan agreement,
indenture, mortgage, deed of trust or lease, or any other
contract or instrument binding on or affecting Horizon or any of
their respective properties, the conflict, breach or default of
which could reasonably be expected to have a material adverse
effect on the value of the Horizon Assets being transferred
hereunder.
(x) This Asset Purchase Agreement has been, and each other document
to which Horizon is or is to be a party when delivered hereunder
will be, duly executed and delivered by each respective Horizon
entity. Assuming due execution and delivery by CGS and CSI, this
Asset Purchase Agreement is, and the other documents to which
Horizon is or is to be a party when delivered, will be, legal,
valid and binding obligations of each respective Horizon entity,
enforceable against each respective Horizon entity in accordance
with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights
generally or by general principles of equity.
(xi) As of the Closing Date, each Contract to which Horizon is a party
which pertains to a Horizon Asset being transferred hereunder has
been duly executed by the respective Horizon entity part thereto,
as applicable, and creates an enforceable obligation of such
Horizon entity, as applicable, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights
generally or by general principles of equity.
-17-
6. INDEMNIFICATION
(a) Neither CGS nor CSI shall be liable for any of the Retained
Liabilities whatsoever or howsoever arising. If any claim, demand,
action or proceeding is made, instituted or threatened against CGS or
CSI in respect of a Retained Liability (a "Third Party Claim"), the
following procedure shall apply:
(1) CGS will give prompt written notice of the Third Party Claim to
Horizon and will ensure that it consults with Horizon concerning
the Third Party Claim;
(2) CGS will not admit, compromise, settle or pay any Third Party
Claim or take any other steps which may in any way prejudice the
defense or challenge thereof without the prior written consent of
Horizon;
(3) CGS will permit Horizon to take such reasonable action in the
name of CGS to defend or otherwise settle the Third Party Claim
as Horizon may reasonably require;
(4) CGS will ensure that Horizon and its representatives are given
reasonable access to such of the documents and records of CGS as
may be reasonably required by Horizon in relation to any action
taken or proposed to be taken by Horizon; and
(5) CGS will ensure that it does not do or cause to be done anything
in relation to the Third Party Claim which compromises or
prejudices Horizon's rights; provided, however, that nothing in
the foregoing shall be deemed to prevent CGS from taking such
action which upon the advice of counsel to CGS shall be
considered reasonably necessary so as not to compromise or
prejudice CGS's rights or to diminish, interfere or threaten the
value of the Horizon Assets purchased hereunder, taken as a
whole.
(b) Horizon hereby agrees to indemnify CGS and CSI from any and all Third
Party Claims and breaches of any of the representations, warranties
and covenants made in this Asset Purchase Agreement by Horizon
(together, a "Claim"). The representations, warranties and indemnities
set forth in this Asset Purchase Agreement shall expire upon the
making of the last instalment payment under the 4th Payment (the
"Expiration Date"). In order to be a valid claim for indemnification,
such Claim must be asserted by CGS no later than ninety (90) days
after CGS becomes aware of the Claim, and in all cases prior to the
Expiration Date. In the event that CGS notifies Horizon of a Claim for
indemnification hereunder, Horizon shall have a period of thirty (30)
days to accept or reject such Claim. In the event that Horizon accepts
a Claim, Horizon shall at its option (i) pay the amount of such Claim
to CGS directly in immediately available funds, (ii) be deemed to have
agreed to allow CGS to deduct from any amounts held in segregated
trust accounts for Horizon, an amount equal to such Claim, to the
extent such amounts are available, or (iii) be deemed to have agreed
to allow CGS to deduct an amount equal to such Claim from the Payments
in the manner set forth in Section 2. In the event that Horizon
rejects a Claim, the Parties shall within thirty (30) days following
notice of the rejection of such Claim meet to discuss such Claim. In
the event that such discussions do not resolve the Claim, the Parties
agree to submit to the arbitration of such Claim by the American
Arbitration Association (using the rules for the appointment of one
arbitrator) and to accept the award delivered in such arbitration. The
arbitration shall take place in New Jersey. The costs of conducting
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such arbitration, as determined by the arbitrator, shall be borne by
the losing Party. In the event that any rejected Claim has not been
resolved on either the date of determination of the 3rd or 4th
Payment, the Parties agree that CGS shall maintain in a segregated
trust account an amount equal to such Claim pending resolution of such
Claim in accordance with this Section 6.
7. OTHER TERMS
(a) This Asset Purchase Agreement other than a dispute arising under
Section 6(b) shall be governed by the laws of the State of New Jersey,
without reference to the conflict of law provisions thereof.
(b) Should any dispute arise regarding this Asset Purchase Agreement, the
Parties hereto consent to the exclusive jurisdiction of the courts of
either New Jersey or New York.
(c) This Asset Purchase Agreement shall be binding on the Parties, their
successors, parents, subsidiaries, affiliates, assigns, agents,
directors, officers, employees, and shareholders.
(d) Each of the signatories to this Asset Purchase Agreement represents
and warrants that he is authorized to execute this Asset Purchase
Agreement on behalf of such Party, and that this Asset Purchase
Agreement represents a valid, binding and enforceable obligation of
such Party.
(e) This Agreement and each Party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the
prior written consent of the other Parties.
(f) This Asset Purchase Agreement reflects the complete agreement between
the Parties, and supersedes any and all prior agreements,
understandings, promises, warranties and representations made by and
to each other with respect to its subject matter (including, but not
limited to, the Asset Purchase Agreement dated October 3, 2005 among
Tiffinbox, Inc., dba Horizon Companies, Horizon Companies, Inc. and
Trans Horizon Consulting (India) Ltd. which is considered null and
void).
(g) The Parties acknowledge that they have had the opportunity to consult
with legal counsel of their choosing prior to entering into this Asset
Purchase Agreement and that they enter this Asset Purchase Agreement
freely and voluntarily.
(h) For all notices relating to this Asset Purchase Agreement, notices to
CGS or CSI shall be sent by mail and fax to:
c/o Xxxxx Xxx
CDC Global Services, Inc.
000-X Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000 XXX
Facsimile number: x0-000-000-0000
With a copy to:
Head of the Legal Department
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c/o CDC Corporation
34th Floor, Citicorp Centre
00 Xxxxxxxxx Xxxx
Xxxxxxxx Xxx, Xxxx Xxxx
Facsimile number: x000-0000-0000
while notices to HC Inc., THC Ltd. and/or HSS Inc. shall be sent by
mail and fax to:
(prior to February 27, 2006)
c/o Xxxxxxx Xxxxxxxx
Horizon Companies, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
XXX
Facsimile number: +1--732-650-0052
(from and after February 27, 2006)
c/o Xxxxxxx Xxxxxxxx
Horizon Companies, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
XXX
Facsimile number: +1--732-650-0052
(i) Any notices of change of address or facsimile number shall be
effective on the 15th day after such notice is received by the Party
to whom such notice is addressed.
(j) This Asset Purchase Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one an the same instrument.
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IN WITNESS WHEREOF THE PARTIES HERETO HAVE HEREBY EXECUTED THIS ASSET PURCHASE
AGREEMENT AS OF THE DATE FIRST WRITTEN ABOVE:
Horizon Companies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer and Director
Trans Horizon Consulting (India) Ltd.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer and Director
Horizon Software Services Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer and Director
CDC Global Services, Inc.
By: /s/ Xxxxx Xxx
---------------------------------------
Name: Xxxxx Xxx
Title: Managing Director
CDC Services, Inc. dba Horizon Companies
By: /s/ Xxxxx Xxx
---------------------------------------
Name: Xxxxx Xxx
Title: Managing Director
-21-
SCHEDULE A-1
CONSULTING CONTRACTS TO BE PURCHASED FROM HC INC.
[INSERT SCHEDULE]
SCHEDULE A-2
CONSULTING CONTRACTS TO BE PURCHASED FROM THC LTD.
[INSERT SCHEDULE]
-23-
SCHEDULE A-3
CONSULTING CONTRACTS TO BE PURCHASED FROM HSS INC.
iGATE Corporation
-24-
SCHEDULE B
PAYROLL DATA FOR EMPLOYEES REFERENCED IN SCHEDULE A (AS OF [INSERT DATE])
[INSERT SCHEDULE]
-25-
SCHEDULE C
AGREED COSTS TO BE DEDUCTED FOR ACTUAL EBITDA CALCULATIONS
The following costs for the relevant time period shall be deducted as expenses
associated with the Horizon Assets in determining the Actual EBITDA for that
particular period:
1. Any actual direct costs attributable to the Employees in connection
with the performance of the Contracts (including but not limited to
payroll, payroll taxes, medical, insurance, future immigration and
relocation costs);
2. No overhead allocations will be charged to Horizon Assets for the
first two (2) months. An overhead allocation of 1 to 3% of gross
revenues will be charged by CGS to Horizon Assets after two months
determined in accordance with US GAAP to cover selling, marketing and
general administrative costs of CGS attributable to the Horizon
Assets. The exact percentage will be mutually determined after each
Party has had some experience of operating under the Asset Purchase
Agreement.
3. All direct and indirect costs associated with the marketing personnel
employed solely with respect to the Horizon Assets.
4. The periodic costs associated with the Employment Agreements of each
member of the Management Team, including, but not limited to, the
salary and bonus payments made to Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx
(which employment contracts are exhibited as Schedule E hereto).
5. All of the above costs related to the Horizon Assets arising between
November 1, 2005 and the Closing inclusive shall be specifically
deductible from the Actual EBITDA for the period ending December 31,
2005.
SCHEDULE D
FORMAL INSTRUMENT OF ASSIGNMENT
INSTRUMENT OF ASSIGNMENT TO CDC SERVICES, INC. DBA HORIZON COMPANIES
Reference is hereby made to the Asset Purchase Agreement (the "Asset Purchase
Agreement") dated as of February 17, 2006, made by and among CDC GLOBAL
SERVICES, INC., a Delaware corporation, whose principal business address is
000-X Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with facsimile number
x0-000-000-0000 ("CGS"), CDC SERVICES, INC. DBA HORIZON COMPANIES, a Delaware
corporation, whose principal business address is 000-X Xxxxx 00 Xxxx, Xxxxxxxxx,
XX 00000, XXX with facsimile number x0-000-000-0000 ("CSI"), HORIZON COMPANIES,
INC., a New Jersey corporation, whose principal business address is 0000 Xxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxx, XX 00000, XXX with facsimile number x0-000-000-0000
(after February 27, 2006: 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000 XXX) ("HC Inc."),
TRANS HORIZON CONSULTING (INDIA) LTD., a company incorporated under the laws of
the Republic of India, whose principal business address is Xxxxxxxx Xxxxx, Xxxx
Xxxx, Xxxxxxxx (Xxxx), Xxxxxx 000000 with facsimile number x000-00-00-00000000
("THC Ltd.") and HORIZON SOFTWARE SERVICES INC., a company incorporated under
the laws of Canada whose principal business address is 00000 00X Xxxxxx, Xxxxx,
XX X0X 0X0, Xxxxxx with facsimile number x0-000-000-0000 with another office at
0000 Xxxxxxxx Xxxxxxxx, Xxxx #00, Xxxxxxxxxxx, Xxxxxxx X0X-0X0, Xxxxxx with
facsimile number x0-000-000-0000 ("HSS Inc."). Capitalized term used herein
without definition shall have the meaning given to such term in the Asset
Purchase Agreement.
Pursuant to Section 3(b)(ii) of the Asset Purchase Agreement, each of HC Inc.,
THC Ltd. and HSS Inc. hereby expressly and irrevocably assigns, transfers and
delivers to CSI the Horizon Assets described below consisting of :
(1) all proceeds and all revenues earned from the contracts (including all
revenue produced by such contracts from and after the date of this
assignment) set forth in SCHEDULE X-0, X-0 XXX X-0 of the Asset Purchase
Agreement;
(2) an irrevocable option, enforceable at the request of CGS, to require
Horizon to assign, transfer and deliver to CSI all contracts set forth in
SCHEDULE X-0, X-0 XXX X-0 of the Asset Purchase Agreement which may be
assigned to CGS without jeopardizing the revenues and proceeds earned from
such contracts;
(3) all intangible assets such as copyrights, brands, trademarks, patents,
licenses, franchises, customer lists, and goodwill as defined in the Asset
Purchase Agreement;
(4) all consulting contracts which any of HC Inc., THC Ltd. or HSS Inc. may
enter into after the Closing Date which are substantially similar in
character to the contracts set forth in SCHEDULE X-0, X-0 XXX X-0
(together, the "Contracts"), unless rejected by CGS pursuant to the terms
of the Asset Purchase Agreement.); and
(5) All employment contracts between any of HC Inc., THC Ltd. and HSS Inc. with
the employees listed in SCHEDULE B of the Asset Purchase Agreement to the
extent assignment of such contracts shall not be unlawful.
Horizon hereby irrevocably confers on CSI all of its right, title and interest
in the same, for CSI to otherwise deal with the aforesaid tangible and
intangible property as it deems fit and proper and all of the same shall inure
to the benefit of the successors and assigns of CSI. In connection with the
foregoing assignment and as condition thereof, CSI hereby assumes all
obligations relating to the use, operation and management of the Horizon Assets
from and after the date of this assignment.
Executed copies of the contracts referred to in the foregoing instrument of
assignment are attached hereto,
Executed this __ day of ____________ by
Horizon Companies, Inc.
By:
---------------------------------------
Name:
-------------------------------------
Title: Chief Executive Officer and Director
Trans Horizon Consulting (India) Ltd.
By:
---------------------------------------
Name:
-------------------------------------
Title: Chief Executive Officer and Director
Horizon Software Services Inc.
By:
---------------------------------------
Name:
-------------------------------------
Title: Chief Executive Officer and Director
ACCEPTED AND AGREED
CDC Global Services, Inc.
By:
---------------------------------------
Name: Xxxxx Xxx
Title:
------------------------------------
CDC Services, Inc. dba Horizon Companies
By:
---------------------------------------
Name: Xxxxx Xxx
Title:
------------------------------------
-28-
SCHEDULE E - FORM OF EMPLOYMENT CONTRACT FOR EACH MEMBER OF THE MANAGEMENT TEAM
[INSERT FORMS]
-29-
SCHEDULE F-1
FORM OF LEGAL OPINION TO BE PROVIDED BY HORIZON TO CGS
February 17, 2006
The Board of Directors
CDC Global Services, Inc.
000-Xxxx Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000
The Board of Directors
Horizon Companies, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Re: Asset Purchase Transaction and Its Status as a "Successor-in-Interest"
in respect of those Consulting Agreements under the United States
Immigration and Nationality Act
Dear Sir/Madam,
We are immigration law counsel for Horizon Companies, Inc., a New Jersey
corporation (the "Company"). This opinion is furnished pursuant to your request.
We have examined a copy of the Asset Purchase Agreement dated as of February 17,
2006 among CDC Global Services, Inc., CDC Services, Inc. dba Horizon Companies,
Horizon Companies, Inc., Trans Horizon Consulting (India) Ltd. and Horizon
Software Services Inc., a copy of which is attached hereto for identification
purposes (together with the Schedules and Exhibits thereto, the "Documents").
Unless otherwise defined herein, terms defined in the Documents shall have the
same meanings herein. In addition, we have made such inquiries of officials of
the Company, and considered such questions of law as we have deemed necessary
for the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the authenticity of all
items submitted to us as originals and the conformity with originals of all
items submitted to us as copies. In making our examination of the Documents, we
have assumed that each party to one or more of the Documents other than the
Company has the power and authority to execute and deliver, and to perform and
observe the provisions of, the Documents, and has duly authorized, executed and
delivered such Documents, and that such Documents constitute the legal, valid
and binding obligations of such party.
Based upon and subject to the foregoing, we are of the opinion that:
(a) Regulations clearly state (see 20CFR Section 655.730(e)) "Where an
employer corporation changes its corporate structure as the result of
an acquisition, merger, "spin-off", or other such action, the new
employing entity is not required to file new LCAs and H-1B petitions
with respect to the H-1B non-immigrants transferred to the employ of
the new employing entity (regardless of whether there is a change in
the Employer Identification Number (EIN)), provided that the new
employing entity maintains in its records a list of the H-1B
non-immigrants transferred to the employ of the new employing entity,
and maintains in the public access file(s) (see Section 655.760) a
document containing all of the following."
(i) Each affected LCA number and its date of certification;
(ii) A description of the new employing entity's actual wage
system applicable to H-1B nonimmigrant(s) who become employees of the
new employing entity;
(iii) The employer identification number (EIN) of the new
employing entity (whether or not different from that of the
predecessor entity); and
(iv) A sworn statement by an authorized representative of the new
employing entity expressly acknowledging such entity's assumption of
all obligations, liabilities and undertakings arising from or under
attestations made in each certified and still effective LCA filed by
the predecessor entity. Unless such statement is executed and made
available in accordance with this paragraph, the new employing entity
shall not employ any of the predecessor entity's H-1B nonimmigrants
without filing new LCAs and petitions for such nonimmigrants. The new
employing entity's statement shall include such entity's explicit
agreement to:
(A) Abide by the DOL's H-1B regulations applicable to the
LCAs;
(B) Maintain a copy of the statement in the public access
file (see Section 655.760); and
(C) Make the document available to any member of the public
or the Department upon request.
(b) In this instance the transaction between Horizon and CSI seems to one
of an "asset purchase transaction". The regulations do not specify if
an "asset purchase transaction" is included within the meaning "where
an employer corporation changes its corporate structure". However,
they have mentioned transactions such as "acquisitions, merger,
spin-off, or other such action" as evidence of corporate change. A
close reading of the language of the statute and regulations shows
that the rule makers did not intend to restrict the meaning of
corporate changes to exclude other transactions such as
consolidations, stock and asset purchases, joint ventures and
strategic alliances, among other transactions.
(c) Therefore, I favor the more liberal interpretation of the statute, and
I am of the opinion that the acquisition by CSI of the Horizon
employment agreements corresponding to those consultants listed in
Schedule A-1 of Documents under the provisions thereof comes within
the meaning of Section 214(c) of the Immigration and Nationality Act,
8 U.S.C. 1184(c)(10), despite the fact that CGS is not acquiring all
of nor succeeding to all of the obligations of Horizon. (Where a new
corporate entity succeeds to the interests and obligations of the
original petitioning employer and where the terms and conditions of
employment remain the same but for the identity of the petitioner, an
amended H1-B petition shall not be required. Such acquisition will not
require CGS or CSI to submit an amended H-1B visa petition on behalf
of any of the consultants corresponding to any of the Consulting
Agreements, until such time as the USCIS clarifies or issues an
explanation of the regulations. A new petition shall be required upon
the filing of any extensions.)
(d) CSI shall be obligated to maintain in its records a list of the H-1B
non-immigrants transferred to the employ of the new employing entity,
and maintain its public access file(s) (see Section 655.760) a
document containing all of the following: (i) each affected LCA number
and its date of certification; (ii) a description of the new employing
entity's actual wage system applicable to H-1B nonimmigrant(s) who
become employees of the new employing entity; (iii) the employer
identification number (EIN) of the new employing entity (whether or
not different from that of the predecessor
entity); and (iv) a sworn statement by an authorized representative of
the new employing entity expressly acknowledging such entity's
assumption of all obligations, liabilities and undertakings arising
from or under attestations made in each certified and still effective
LCA filed by the predecessor entity. Unless such statement is executed
and made available in accordance with this paragraph, the new
employing entity shall not employ any of the predecessor entity's H-1B
non-immigrants without filing new LCAs and petitions for such
non-immigrants. The new employing entity's statement shall include
such entity's explicit agreement to: (A) abide by the DOL's H-1B
regulations applicable to the LCAs; (B) maintain a copy of the
statement in the public access file (see Section 655.760); and (C)
make the document available to any member of the public or the
Department upon request."
We express no opinion as to matters governed by any laws other than the
substantive federal laws of the United States, in each case which are in effect
on the date hereof. We have assumed that the transaction contemplated by the
Documents does not violate the public policy of any jurisdiction having a
substantial relationship to that transaction and that no provision of the law of
the United States applicable to the Documents violates the public policy of any
other such jurisdictions.
Very truly yours,
-------------------------------------------
SCHEDULE G
FORM OF NOTICE AND REQUEST FOR CONSENT TO CUSTOMERS
To: [INSERT CUSTOMER NAME AND ADDRESS]
Subject: Merger of Consulting Divisions of Horizon Companies, Inc., Trans
Horizon Consulting (India) Ltd. and Horizon Software Services, Inc.
with CDC Services, Inc. dba Horizon Companies
Dear [INSERT CUSTOMER NAME]:
We would like to thank you for the opportunity you have provided to us to serve
your consulting needs. We are pleased to inform you that Horizon's consulting
division has been merged with CDC Services, Inc. dba Horizon Companies and will
continue under the name 'Horizon CSI'. The contract between Horizon and your
company will be assigned to CDC Services, Inc. dba Horizon Companies, and the
reorganization is due to become effective February 17, 2006. We have been
fortunate to retain the employees that worked with Horizon, so you will see
familiar faces representing Horizon CSI.
We believe that this assignment will greatly enhance the capability of our
business to address your needs as CDC Services, Inc. dba Horizon Companies has a
wider range of experience and resources on which to draw.
Effective February 17, 2006 all invoicing for our consultants will be undertaken
by CDC Services, Inc. dba Horizon Companies and all payments FOR THE PERIOD
ENDING FEBRUARY 17, 2006 AND ONWARDS should be remitted to CDC Services, Inc.
dba Horizon Companies, at 000-X Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000.
Any pending payments to Horizon Companies, Inc. for services provided prior to
the date indicated above should be made to Horizon Companies, Inc. at 0000
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxxx, XX 00000.
To confirm your agreement to this assignment, please sign a copy of the letter
below and return it to Horizon at the address above. You should retain a copy
for your records.
Thank you for your business and we look forward to continue to serve you. Please
acknowledge the receipt of this letter by signing and faxing it back to us at
000-000-0000.
Regards,
Xxxxxxx Xxxxxxxx
Chief Executive Officer
Customer:
I acknowledge receipt and agree to the matters set out above.
Signature:
-------------------------
Name:
-------------------------
Date:
-------------------------
EXHIBIT A
LIST OF CONDITIONS PRECEDENT
1. The representations and warranties set forth in Section 5 are true and
correct.
2. Horizon shall be in compliance with each of the material provisions of this
Asset Purchase Agreement.
3. HC Inc. shall have executed an instrument of assignment granting CDC
Corporation Limited a valid, perfected security interest over the assets
set forth in EXHIBIT C to secure the amounts borrowed and owing under the
Revolving Credit Agreement between CDC Corporation Limited and SGI (but
only to the extent of sum advanced by CGS/CSI to HC Inc.), it being agreed
among the Parties that CGS shall receive from Horizon a grant of a valid,
perfected first priority security interest when either CGS or any
affiliated company shall provide financing to the Horizon Business thereby
enabling the Management Team to terminate the Xxxxxxxxx Financing
Agreement, and if required, the full payment and discharge of all
liabilities of Horizon under the Unity Loan and SBA Loan.
4. Each member of the Management Team shall be in material compliance with the
material provisions of his Employment Agreement as may be applicable on the
date when any Payment under the terms of this Agreement is required to be
made by CGS. Notwithstanding anything stated above in this Paragraph 4 or
in the event either or both of Xxxxxxx Xxxxxxxx or Xxxxxx Xxxxxxxx shall
not then be in the employment of CSI for whatever reason, there shall be no
delay or failure to make any Payment due to Horizon (adjusted as provided
herein), so long as 50% of Projected EBITDA is achieved by the Horizon
Business.
EXHIBIT B
EXISTING HORIZON BANK ACCOUNTS
EXHIBIT C
ASSETS TO SECURE THE LOAN AGREEMENT FROM CDC TO SGI
(1) All of the outstanding shares of Horizon Companies, Inc.
(2) All of the shares of Mobiliti, Inc. owned by Horizon (Horizon owns 5184% of
the total outstanding stock (common and preferred) not counting the vested
but not exercised options
(3) The promissory note to Horizon from Mobiliti, Inc. (currently $506,745
outstanding)
(4) The interest in Communications Experts, Inc. held by each of Xxxxxxx
Xxxxxxxx (20%) and Xxxxxx Xxxxxxxx (20%)
(5) The following products developed and owned by Horizon:
a. FOREsure
b. LDAP tool-kit
c. SCTP Stack
d. The Learning Management System
e. H.323 Stack
EXHIBIT D-1
FORM OF OPTION AGREEMENT
This option agreement is entered into as of February 17, 2006 by and
between CDC Global Services, Inc., a Delaware corporation ("Grantor") and
Xxxxxxx X. Xxxxxxxx ("Optionee") having a place of residence at 00 Xxxxxxx
Xxxxx, Xxxxxx, XX 00000.
WHEREAS, an Asset Purchase Agreement (the "Asset Purchase Agreement") dated
as of February 17, 2006, has been made and entered into by and among CDC GLOBAL
SERVICES, INC., a Delaware corporation whose principal business address is 000-X
Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with facsimile number x0-000-000-0000
("CGS"), CDC SERVICES, INC. DBA HORIZON COMPANIES, a Delaware corporation, whose
principal business address is 000-X Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with
facsimile number x0-000-000-0000 ("CSI"), HORIZON COMPANIES, INC., a New Jersey
corporation, whose principal business address is 0000 Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxx, XX 00000, XXX with facsimile number x0-000-000-0000 (after February
27, 2006: 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000 XXX) ("HC Inc."), TRANS HORIZON
CONSULTING (INDIA) LTD., a company incorporated under the laws of the Republic
of India, whose principal business address is Xxxxxxxx Xxxxx, Xxxx Xxxx,
Xxxxxxxx (Xxxx), Xxxxxx 000000 with facsimile number x000-00-00-00000000 ("THC
Ltd.") and HORIZON SOFTWARE SERVICES INC., a company incorporated under the laws
of Canada whose principal business address is 00000 00X Xxxxxx, Xxxxx, XX X0X
0X0, Xxxxxx with facsimile number x0-000-000-0000 with another office at 0000
Xxxxxxxx Xxxxxxxx, Xxxx #00, Xxxxxxxxxxx, Xxxxxxx X0X-0X0, Xxxxxx with facsimile
number x0-000-000-0000 ("HSS Inc."); and
WHEREAS, pursuant to Section 1(d) of the Asset Purchase Agreement,
Optionee, in his capacity as a shareholder of HC Inc., may, subject to the terms
and conditions therein, receive certain shares of common stock of CSI (the
"Shares") from HC Inc.; and
WHEREAS, pursuant to Section 1(d)(iv) of the Asset Purchase Agreement, CGS
has agreed to grant Optionee an option to sell to CGS any or all of the Shares
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valid consideration received by each party
hereto under the terms of the Asset Purchase Agreement, CGS and Optionee agree
as follows:
1. CGS hereby grants to Optionee an irrevocable option to sell some or all
Shares owned by him to CGS at any time beginning April 30, 2009 until 5:00 PM,
EST, and ending on April 29, 2011, subject to the terms and conditions set out
herein.
2. (a) The put option granted herein may be exercised by the Optionee by
written notice to that effect delivered to CGS sent by telefax, certified mail
(return receipt requested) or delivery by a national courier service on or
before the last date for exercise of the option et forth in Section 1 above.
Such notice shall (i) set forth the number of Shares with respect to which this
put option is being exercised and provisions with respect to the remittance of
funds set forth in Section 4(a) below and (ii) be accompanied by the
certificate(s) representing the Shares for which this put option is being
exercised.
(b) This option may be exercised by the Optionee, any proxy or
attorney-in-fact of the Optionee, or any transferee, heir or successor in
interest. Any time taken by CGS to verify the authenticity or validity of an
exercise of this option by any person other than the Optionee shall not be
operate an extension of time when the option is exercised, and the option will
be deemed
validly exercised if notice as provided above is tendered by any such party
other than the Optionee in a timely manner as set out in Section 1 above.
3. The purchase price of the Shares required to be paid by CGS to the
Optionee or any party in interest as set out in Section 2 above shall be based
on a price per Share calculated as follows:
(a) Optionee will be the owner of between one to four blocks of Shares,
each block representing 2.5% of the shares of common stock of CSI at the time of
issuance. The number of Shares in each block of Shares will be different.
(b) Each block of Shares will be assigned a value of $100,000.
(c) The value of all blocks of Shares owned by Optionee divided by the
aggregate number of Shares owned by Optionee in all of such blocks shall yield
the price per Share at the time of exercise.
4. (a) Upon the exercise of this put option by Optionee (or any party in
interest), CGS shall pay to the party exercising the option the purchase price
corresponding to the number of Shares with respect to which this put option is
being exercised. Payment by CGS shall be made within 20 (twenty) business days
of CGS's receipt of the notice of exercise of the put option, and shall be made
by a bank cashier's check mailed by certified mail (return receipt requested) to
the address designated in the notice of exercise or remitted by wire transfer to
an account with respect to which remittance instructions has been provided in
the notice of exercise.
(b) If any amount payable by CGS hereunder is not paid when due, such
amount shall bear interest from the due date until such amount is paid in full,
at the rate of 5% per annum.
(c) This put option may be exercised in whole or in part with respect to
the Shares; provided, however, that it may be exercised a maximum of twice prior
to the last date for the exercise thereof.
5. CGS accepts the exclusive jurisdiction of the courts of the State of New
Jersey or New York with respect to all litigation arising under the terms
hereof.
6. Notice with respect to the exercise of this put option shall be sent as
set forth in the Asset Purchase Agreement, or to the last known address where
CGS maintains or has maintained a place of business, and if such address shall
not be known to the Optionee or a party in interest, the notice of exercise may
be sent by certified mail (return receipt requested) to CGS, c/o Secretary of
State, State of Delaware.
7. The last date for the exercise of this put option shall be extended to
the next business day if April 29, 2011 shall be a public holiday.
In witness whereof, the parties hereto have executed this Option Agreement
as of February 17, 2006.
CDC GLOBAL SERVICES, INC.
By:
------------------------------------
----------------------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT D-2
FORM OF OPTION AGREEMENT
This option agreement is entered into as of February 17, 2006 by and
between CDC Global Services, Inc., a Delaware corporation ("Grantor") and Xxxxxx
X. Xxxxxxxx ("Optionee") having a place of residence at 00 Xxxxxxx Xxxx, Xxxxxx,
XX 00000.
WHEREAS, an Asset Purchase Agreement (the "Asset Purchase Agreement") dated
as of February 17, 2006, has been made and entered into by and among CDC GLOBAL
SERVICES, INC., a Delaware corporation whose principal business address is 000-X
Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with facsimile number x0-000-000-0000
("CGS"), CDC SERVICES, INC. DBA HORIZON COMPANIES, a Delaware corporation, whose
principal business address is 000-X Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000, XXX with
facsimile number x0-000-000-0000 ("CSI"), HORIZON COMPANIES, INC., a New Jersey
corporation, whose principal business address is 0000 Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxx, XX 00000, XXX with facsimile number x0-000-000-0000 (after February
27, 2006: 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000 XXX) ("HC Inc."), TRANS HORIZON
CONSULTING (INDIA) LTD., a company incorporated under the laws of the Republic
of India, whose principal business address is Xxxxxxxx Xxxxx, Xxxx Xxxx,
Xxxxxxxx (Xxxx), Xxxxxx 000000 with facsimile number x000-00-00-00000000 ("THC
Ltd.") and HORIZON SOFTWARE SERVICES INC., a company incorporated under the laws
of Canada whose principal business address is 00000 00X Xxxxxx, Xxxxx, XX X0X
0X0, Xxxxxx with facsimile number x0-000-000-0000 with another office at 0000
Xxxxxxxx Xxxxxxxx, Xxxx #00, Xxxxxxxxxxx, Xxxxxxx X0X-0X0, Xxxxxx with facsimile
number x0-000-000-0000 ("HSS Inc."); and
WHEREAS, pursuant to Section 1(d) of the Asset Purchase Agreement,
Optionee, in his capacity as a shareholder of HC Inc., may, subject to the terms
and conditions therein, receive certain shares of common stock of CSI (the
"Shares") from HC Inc.; and
WHEREAS, pursuant to Section 1(d)(iv) of the Asset Purchase Agreement, CGS
has agreed to grant Optionee an option to sell to CGS any or all of the Shares
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valid consideration received by each party
hereto under the terms of the Asset Purchase Agreement, CGS and Optionee agree
as follows:
1. CGS hereby grants to Optionee an irrevocable option to sell some or all
Shares owned by him to CGS at any time beginning April 30, 2009 until 5:00 PM,
EST, and ending on April 29, 2011, subject to the terms and conditions set out
herein.
2. (a) The put option granted herein may be exercised by the Optionee by
written notice to that effect delivered to CGS sent by telefax, certified mail
(return receipt requested) or delivery by a national courier service on or
before the last date for exercise of the option et forth in Section 1 above.
Such notice shall (i) set forth the number of Shares with respect to which this
put option is being exercised and provisions with respect to the remittance of
funds set forth in Section 4(a) below and (ii) be accompanied by the
certificate(s) representing the Shares for which this put option is being
exercised.
(b) This option may be exercised by the Optionee, any proxy or
attorney-in-fact of the Optionee, or any transferee, heir or successor in
interest. Any time taken by CGS to verify the authenticity or validity of an
exercise of this option by any person other than the Optionee shall not be
operate an extension of time when the option is exercised, and the option will
be deemed
validly exercised if notice as provided above is tendered by any such party
other than the Optionee in a timely manner as set out in Section 1 above.
3. The purchase price of the Shares required to be paid by CGS to the
Optionee or any party in interest as set out in Section 2 above shall be based
on a price per Share calculated as follows:
(a) Optionee will be the owner of between one to four blocks of Shares,
each block representing 2.5% of the shares of common stock of CSI at the time of
issuance. The number of Shares in each block of Shares will be different.
(b) Each block of Shares will be assigned a value of $100,000.
(c) The value of all blocks of Shares owned by Optionee divided by the
aggregate number of Shares owned by Optionee in all of such blocks shall yield
the price per Share at the time of exercise.
4. (a) Upon the exercise of this put option by Optionee (or any party in
interest), CGS shall pay to the party exercising the option the purchase price
corresponding to the number of Shares with respect to which this put option is
being exercised. Payment by CGS shall be made within 20 (twenty) business days
of CGS's receipt of the notice of exercise of the put option together with the
accompanying certificates representing the Shares, and shall be made by a bank
cashier's check mailed by certified mail (return receipt requested) to the
address designated in the notice of exercise or remitted by wire transfer to an
account with respect to which remittance instructions has been provided in the
notice of exercise.
(b) If any amount payable by CGS hereunder is not paid when due, such
amount shall bear interest from the due date until such amount is paid in full,
at the rate of 5% per annum.
(c) This put option may be exercised in whole or in part with respect to
the Shares; provided, however, that it may be exercised a maximum of twice prior
to the last date for the exercise thereof.
5. CGS accepts the exclusive jurisdiction of the courts of the State of New
Jersey or New York with respect to all litigation arising under the terms
hereof.
6. Notice with respect to the exercise of this put option shall be sent as
set forth in the Asset Purchase Agreement, or to the last known address where
CGS maintains or has maintained a place of business, and if such address shall
not be known to the Optionee or a party in interest, the notice of exercise may
be sent by certified mail (return receipt requested) to CGS, c/o Secretary of
State, State of Delaware.
7. The last date for the exercise of this put option shall be extended to
the next business day if April 29, 2011 shall be a public holiday.
In witness whereof, the parties hereto have executed this Option Agreement
as of February 17, 2006.
CDC GLOBAL SERVICES, INC.
By:
------------------------------------
----------------------------------------
Xxxxxx X. Xxxxxxxx
EXHIBIT E
GUARANTY
The undersigned, Software Galeria, Inc. ("SGI"), a New Jersey corporation,
being an affiliate of CDC Global Services, Inc. ("CGS"), a Delaware corporation,
and in consideration of certain indirect benefits received by it under the terms
of an Asset Purchase Agreement referred to in Option Agreements dated as of
February 17, 2006, entered into between CGS and each of Xxxxxxx Xxxxxxxx
(residing at 00 Xxxxxxx Xxxxx, Xxxxxx, XX 08820) and Xxxxxx Xxxxxxxx (residing
at 00 Xxxxxxx Xxxx, Xxxxxx, XX 08820) (together, the "Nadkarnis") (each, an
"Option Agreement", and together, the "Option Agreements"), hereby guarantees
all of the payment and performance obligations of CGS separately to each of the
Nadkarnis in the event of a default ("Default") by CGS under the terms of any
Option Agreement entered into as of February 17, 2006, between CGS and each of
the Nadkarnis. A Default shall be deemed to occur if payment for the exercise of
the put option has not been made by CGS in accordance with the terms of Section
4 of the Option Agreement.
This Guaranty may be enforced by the Nadkarnis or any party in interest set
forth in Section 2(b) of each Option Agreement (a "Beneficiary") by notice sent
by certified mail (return receipt requested) or by a national courier to SGI at:
Software Galeria, Inc.
000-X Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
or the last address where SGI maintains or has maintained a place of business.
This Guaranty shall be fulfilled, performed and discharged only when SGI shall
tender full payment to Beneficiary in the amount to which Beneficiary shall be
entitled under the terms of the Option Agreement (including interest (if any) as
provided for under the Option Agreement).
SGI represents that this Guaranty is a valid and binding agreement of SGI,
enforceable in accordance with its terms, and has complied with all requisite
corporate action in connection with the execution and delivery of this Guaranty.
SGI accepts the exclusive jurisdiction of the courts of the State of New
Jersey or New York with respect to all litigation arising under the terms
hereof.
In witness whereof the undersigned guarantor, SGI, has executed this
instrument as of February 17, 2006.
SOFTWARE GALERIA, INC.
By:
------------------------------------
Xxxxx Xxx, President
Table A
[INSERT PURCHASE PRICE ALLOCATION TABLE]
