STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into, by, and between
Xxxxxx Xxxxxx (hereinafter "Bentov"), his wife Xxxxx XxxXxx,
sons Xxxxxxxx XxxXxx and Xxxxxx XxxXxx, collectively referred to as
"Sellers," and Helios & Xxxxxxxx Information Technology Ltd. (NSE:
HELIOSMATH), referred to as "Buyer."
WHEREAS, Sellers are the owners and holders of 1,024,697 fully diluted
shares out of total outstanding 2,361,333 Common Stock shares (as of
December 31, 2005) in The A Consulting Team Inc. ("TACT" or "Company"
Nasdaq: TACX) referred to as "TACT-Shares"; and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, all of the shares of stock of Company held by the Sellers
upon the terms and conditions and for the consideration set forth below;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this agreement, the parties agree as follows:
ARTICLE 1
PURCHASE
Section 1.01. Purchase
For the purchase price, and on the terms and subject to the
conditions set forth in this agreement, Sellers hereby sell, assign,
transfer, and deliver to Buyer, and Buyer hereby purchases from Sellers,
all of their right, title, and interest in the TACT-Shares now owned by
each of the Sellers individually or jointly. The stock will be delivered
to the Buyer at the closing. The Shares being purchased are owned by the
Sellers as follows:
Xxxxxx Xxxxxx & Xxxxx XxxXxx 7,500
Xxxxxxxx XxxXxx 18,855
Xxxxxx XxxXxx 18,855
Xxxxxx Xxxxxx 979,487
Total: 1,024,697
ARTICLE 2
PURCHASE PRICE
Section 2.01. Purchase Price
The purchase price to be paid by Buyer to Sellers for the TACT shares is
Eight Million Seven Hundred Fifty Thousand United States Dollars
(USD $8,750,000), which will be paid in cash as described in Section
2.02. The Buyer has additionally agreed to pay the Sellers as additional
consideration for the TACT-Shares, an Earn-Out Amount as described in
Section 2.03, below.
Section 2.02. Payment
(a) $8,750,000 Payout Amount. Buyer will pay a total of Eight
Million Seven Hundred Fifty Thousand United States Dollars
(USD $8,750,000) ("Payout Amount") as consideration for the sale
of the TACT-Shares owned by the Sellers, per the following structure:
1. First Payment of Three Million Four Hundred Thousand Dollars
(US$3,400,000) upon signing of definitive documents ("Closing");
2. Second Payment of Three Hundred Fifty Thousand Dollars
(USD $350,000) within Six (6) months from Closing;
3. Third Payment of Two Million Five Hundred Thousand Dollars
(USD $2,500,000) plus interest thereon on the first anniversary
of Closing ("Anniversary Date"); and
4. Fourth Payment of Two Million Five Hundred Thousand Dollars
(US $2,500,000) plus interest thereon on the second anniversary of
Closing ("Anniversary Date").Payments under Section 2.02 (a) 3, and
4 will be referred to as Deferred Payouts
(b) Interest on Deferred Payouts. Interest will be calculated
on the Deferred Payout amount at the rate of 8.5%, simple interest.
(c) Conditions for Payment of Payout Amount . Buyer and Sellers
agree that the Deferred Payouts described in Section 2.02(a) are
additional payments for the capital stock of the Company owned by the
Sellers representing the inherent value of the goodwill and other
intangibles of the Company, and such realization by the Company and
Buyer of such goodwill and other intangibles may be dependent on the
continuation of Bentov in the position of the President and CEO. The
Deferred Payouts are subject to the continuation of Bentov in the
position of the President and CEO of TACT, unless Bentov is terminated
without Cause, or Bentov resigns with Good Reason (as such terms are
defined in the Employment Agreement dated December 1, 2005). There
will be no pro rata payments for a shorter duration of employment if
the employment does not continue until the respective Anniversary
Dates. If Bentov's employment is terminated for any other reason except
for Just Cause (as defined in the Employment Agreement dated December
1, 2005 between TACT and Bentov (the "Employment Agreement"), the
Deferred Payouts will be paid per Section 2.02 (a) above. It is agreed
that the work location shall remain either the current two work locations
or any other location that is within a 60 mile radius of Scarsdale, NY.
All travel up to five hours will be in Business Class; travel over
five hours shall be in first class; and travel to India shall be no
more than four times a year.
If Bentov voluntarily terminates his employment in the first
12 months after this Agreement other than for Good Reason (as defined
in the Employment Agreement), then Bentov must buy back the TACT-Shares
that Buyer is purchasing through this Agreement for a price equal to
the amount that the Buyer has already paid Bentov up to the date of
voluntary termination, if and only if, the Buyer chooses to sell all
of their TACT-Shares.
If Bentov voluntarily terminates his employment in the 13th
through the 24th month after this Agreement other than for Good
Reason (as defined in the Employment Agreement), then Bentov
must return the Deferred Payout referred to in Section 2.02 (a)
3 to the Buyer.
(d) Life Insurance. Buyer will acquire and pay for term life
insurance in the amount of $5 million on the life of Seller Bentov
with Seller Bentov's estate as the beneficiary. This insurance will
be acquired to secure the Deferred Payouts in the unlikely event of
an untimely demise of Seller Bentov. The face amount of the insurance
will reduced in half after the Third Payment has been made, and the
insurance will be cancelled after the Fourth Payment has been made. If
Bentov's heirs are the beneficiaries of this Life Insurance, and they
get the life insurance proceeds directly, then to the extent of the
life insurance proceeds, the liability of the Buyer to pay the
Deferred Payouts will be correspondingly reduced.
(e) Disability In the event of any disability of Seller Bentov
which hinders him from performing his normal services, Buyer has a
right to buy Disability insurance on Seller Bentov, however, the
Deferred Payouts will be paid per Section 2.02 (a) above.
(f) Change in Control. In the event of Change in Control in
TACT or the Buyer, the Deferred Payouts will continue to be paid as per
Section 2.02 (a) above. Change in Control in TACT will be defined as an
event wherein more than 51% of the shares held by the Buyer in TACT are
sold or transferred, more than 51% of the shares held by any and all
parties in the Buyer are sold or transferred to another person or
entity in one or a series of transactions within two years of the
date of this Agreement, or the sale of more than 50% of the assets
of Buyer or TACT. Buyer shall not, and shall cause TACT not to, engage
in a Change in Control without the consent of Seller Bentov, which
shall not be unreasonably withheld.
Section 2.03. Security for Deferred Payouts
The Buyer, a listed public company in India, is undertaking
the Deferred Payout obligations as outlined in this Agreement.
However, as additional security to the Sellers for Payout
amounts in 2.02 (a) 3, and 4, Buyer will pledge the TACT-Shares to the
Sellers and will place them with Olshan, Grundman, Frome, Xxxxxxxxxx &
Xxxxxxx LLP, or any other party acceptable to Sellers and Buyer
("Pledge Holder"). The Pledge Holder may be changed at any time by
the Buyer with the consent of Seller who will not unreasonably withhold
consent.
When the Payout amounts in 2.02 (a) 3, and 4 have been paid, the
Pledge Holder shall release the TACT-Shares to the Buyer. If Bentov's
Employment Agreement is terminated by the Buyer for Cause, or by Seller
Bentov without Good Reason, or by death or disability of Seller Bentov,
the Pledge Holder will return the TACT-Shares to the Buyer.
If Buyer at any point after the execution of this Agreement is
able to procure a letter of credit or bank guarantee or any other form
of collateral acceptable to the Sellers, and if the Buyer requests the
Sellers to cancel the pledge and accept the new collateral, then the
Sellers will accept the new collateral and not unreasonably withhold
the acceptance.
Section 2.04. Earn-Out Payment for TACT-Shares
An additional Earn-Out Payment will be made by Buyer as
additional consideration for the TACT-Shares as follows:
(a) For the period beginning April 1, 2006 and ending March 31, 2007,
and for period beginning April 1, 2007 and ending March 31, 2008,
an Earn-Out cash payment will be made to Sellers equal to 35% of
the EBTDA (Earnings before Taxes, Depreciation and Amortization of
TACT) for such period.(b) This Earn-Out payment shall be made in 2007
and 2008 within five business days of the SEC filing with respect to
such period by TACT for the previous 12 months based on the financial
results of TACT. The financial statement presentation must be consistent
with past financial practices. Any funds received outside the ordinary
course of business in March of 2006 shall be deemed received in April 2006.
(c) The EBTDA will be calculated by taking the Net Earnings from the
Form 10-K or Form 10-Q and related schedules, and the amounts of Taxes,
Depreciation, and Amortization added back to the Net Earnings.
(d) In the event of death or long-term disability, the Earn-Out
will be pro-rated to the actual number of days worked in the year of
the death or long-term disability.
(e) In the event of a termination of Bentov's employment for Cause,
or voluntary termination without Good Reason, the Earn-Outs shall
not be due. In the event of the termination of Bentov's employment
by TACT without Cause or termination by Bentov with Good Reason,
Earn-Outs will be paid to the Sellers.
Section 2.05. Executive Compensation & Employment
(a) Bentov is presently under an employment agreement with TACT.
This employment agreement shall continue to remain in full force
and effect. Bentov agrees to be further employed, subject to TACT
Board approval, until March 31, 2008.
(b) Helios & Xxxxxxxx is currently drafting a stock option plan
for its senior executives. The same may also be offered to Xx.
Xxxxxx Xxxxxx at the discretion of management.
(c) Non-Competition and Non-Solicitation Covenants. Seller Bentov
undertakes that for a period of two years from the Closing Date or
employment of Bentov whichever comes later, Seller Bentov shall
not engage directly or indirectly in the same or similar business
being carried on by TACT in the US. A passive investment by Sellers
of less than 5% in a publicly traded company in the U.S. shall not
constitute a breach of these covenants. Further, Seller Bentov also
undertakes he will not, for a period of two years from the Closing
Date or employment of Bentov whichever comes later, on his own account
or jointly with or as manager, agent, officer or otherwise on behalf
of any person, firm or corporation (directly or indirectly) hire
any employee or consultant of TACT or Buyer or Buyer's subsidiaries.
The restrictions contained herein shall become null and void in the
event of a default in any Deferred Payout or Earn-Out Payment.
ARTICLE 3
KEY ASSETS & GOODWILL
Seller Bentov acknowledges that the Sale Price of the Company
shares includes a significant premium over the book value of the assets
of TACT. This premium represents payment for the key assets of the
Company, and it is because of these key assets that the Buyer is buying
the Company shares from the Sellers.
These key assets include:
1. Goodwill,
2. Key Customers and relationships, and
3. Employees of TACT.
Section 3.01. Key Customers.
(a) The Name, contact information of the project manager or director,
and type of work done by the Company for each of the Key Customers
is set forth in Exhibit A.
(b) Seller Bentov shall perform or fulfill his duties under the
Employment Agreement consistent with past practices.
Section 3.02. Employee Retention
(a) Seller Bentov shall perform or fulfill his duties under the
Employment Agreement consistent with past practices.
ARTICLE 4
WARRANTIES OF SELLERS IN THEIR INDIVIDUAL CAPACITY
Section 4.01. Warranties of Sellers.
Sellers hereby jointly and severally warrant, represent,
and covenant to Buyer, and this agreement is made in reliance on
the following, each of which is deemed to be a separate covenant,
representation, and warranty:
(a) Authority
This contract is entered into on the basis and representation of
Bentov that he has the necessary title, power, authority, sanction
and consent of the general body of shareholders or statutory govt.
regulatory authorities to enter into this Agreement. Bentov
represents that he will not be employed or involved directly
or indirectly with any other employer, individual, corporate,
firm or any other business or legal entity of whatever nature that
is likely to compete with TACT's
business in any manner whatsoever.
(b) Ownership of Stock
Each Seller owns, beneficially and of record, free and clear
of all liens, charges, claims, equities, restrictions, or
encumbrances, the shares of capital stock of the Company set forth
opposite his or her name in Section 1.01 hereof, which is attached
to and incorporated in this agreement, and has the full right, power,
and authority to sell, transfer, and deliver to the Buyer, in
accordance with this agreement, the number of shares of common stock
of the Company so set forth, free and clear of all liens, charges,
claims, equities, restrictions, and encumbrances and attachments.
The sale by each Seller of those shares does not constitute a breach
or violation of, or default under, any will, deed or trust, agreement,
or other instrument by which that Seller is bound.
(c) Liens Created by Sale
The execution and carrying out of the provisions of this
agreement and compliance with its provisions by the Sellers,
will not violate any provision of law and will not conflict with
or result in any breach of any of the terms, conditions, or provisions
of, or constitute a default under, or result in the creation of, any
lien, charge, or encumbrance upon any of the properties or assets of
the Company pursuant to the articles of incorporation, bylaws, or
any indenture, mortgage, deed of trust, agreement or other instrument
to which the Company is a party or by which it is bound or affected.
(d) Board
Buyer has informed Sellers that Buyer intends to exercise its
significant voting power of the TACT-Shares to nominate and elect
sufficient board members so as to constitute a majority on the board.
(e) Acts by Company
To the best knowledge of Seller Bentov, since January 1, 2006,
there have been no adverse material changes in the assets, key customer
relationships, key employee relationships, number of employees,
liabilities, business, or condition of the Company other than changes in
the ordinary course of business, which changes have not adversely affected
its business, properties, prospects, or condition. To the best knowledge
of Seller Bentov, since January 1, 2006, the Company has not not signed
any contract or entered into any written or oral agreement other than in
the ordinary course of business.
(f) Compliance with Laws
To the best knowledge of Seller Bentov, the Company has complied
with, and is complying with, all applicable laws, orders, rules, and
regulations promulgated by any federal, state, municipal, or other
governmental authority relating to the operation and conduct of the
property and business of the Company, and there are no material
violations of any such law, order, rule, or regulation existing or
threatened. To the knowledge of Seller Bentov, the Company has not
received any notices of violation of any applicable zoning regulation or
order, or other law, order, regulation, or requirement relating to the
operation of its business or to its properties.
(g) SEC Reports; Financial Condition.
The SEC Reports of the Company for the most recently filed year and all
reports subsequent thereto, including any financial statements or schedules
included or incorporated therein by reference, (i) comply in all material
respects with the requirements of the Exchange Act or the Securities Act or
both, as the case may be, applicable to those SEC Reports and (ii) did not
at the time they were filed, to Seller Bentov's knowledge, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated or necessary in order to make the statements made in those SEC
Reports, in light of the circumstances under which they were made, not
misleading.
(h) Insurance
Attached to and incorporated in this agreement, as Exhibit C is a list
and brief description of all policies of fire, liability, and other forms
of insurance held by the Company. Those policies are in amounts deemed by the
management of the Company to be sufficient.
ARTICLE 5
WARRANTIES OF BUYER
Section 5.01. Warranties of Buyer
Buyer hereby warrants, represents, and covenants to Seller, and this
agreement is made in reliance on the following, each of which is deemed to be
a separate covenant, representation, and warranty:
(a) Authorization
Buyer is a duly organized and existing corporation under the laws of India,
has all of the corporate powers and authority necessary to carry on the
business it now conducts, and has the power and authority to purchase all
of the capital stock of Company from Sellers on the terms, conditions, and
for the purchase price set forth in this agreement.
(b) Buyer is in compliance with the applicable laws and regulations of India,
and and entry into this agreement and the agreements related hereto will not
conflict with any law, rule or regulation applicable to Buyer, the
organizational documents of Buyer, or any agreement to which Buyer is a party.
(c) The financial statements of the Buyer made available to the Sellers are
true and accurate.
ARTICLE 6
CLOSING DATE AND SURVIVAL OF WARRANTIES
Section 6.01. Time and Place of Closing
The purchase and sale described in this agreement shall be consummated,
unless delayed to another date by agreement of the parties in writing, at Ten
A.M. Eastern Standard Time, on March 27, 2006, called "Closing Date," at the
law offices of Olshan, Grundman, Frome, Xxxxxxxxxx & Xxxxxxx LLP, 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX, called "Closing Place."
Section 6.02. Procedure and Obligations at Closing and Post Closing
On the closing date,
(a) Buyer shall deposit Three Million Four Hundred Thousand Dollars
(US$3,400,000) ("2.02(a)1 Funds") into the trust account of the attorneys
for the Sellers, Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP ("Xxxxxx").
Such deposit shall be made pursuant to an Escrow Agreement of even date
herewith.
b) Sellers shall deposit the TACT-Shares with Xxxxxx as a Pledge Holder
pursuant to an even dated Stock Pledge Agreement, and Xxxxxx will send a
copy of the stock certificates representing theTACT-Shares to Buyer's attorney,
The Xxxxx Firm, attention Xxxxxxx X. Xxxxx by fax at (000) 000-0000.
c) Buyer shall subsequently instruct Xxxxxx to release the 2.02 (a)1 Funds to
the Sellers.
(b) Seller Bentov shall request TACT's counsel to satisfy, all the requirements
of SEC, and NASDAQ and any other governmental authority.
Section 6.03. Survival of Warranties
The warranties, representations, and covenants of each of the parties
to this agreement, Buyer and Sellers, shall survive for one-year after the
execution of this agreement and the consummation of the purchase and sales
described in this agreement.
ARTICLE 7
Notification
Section 7.01. Notification.
(a) The Sellers shall notify all proper government agencies and stock exchange
as required on part of the Sellers by Federal and state laws and regulations,
(b) The Sellers shall notify all Directors and Shareholders of this transaction
prior to closing, as applicable
ARTICLE 8
BROKERAGE
Section 8.01. Brokerage.
Each party to this agreement agrees that and all brokerage fees
payable to their broker, if any, shall be their sole responsibility
and that each party will indemnify and hold the other party harmless from
any and all claims, suits, and actions for brokerage or other commissions,
and from and against all expenses of any character, including reasonable
attorneys' fees incurred by the other by reason of any claim by any person
or broker claiming to have been engaged by, or on behalf of, the indemnifying
party, or with whom the indemnifying party is claimed to have made any
agreement for compensation.
ARTICLE 9
INDEMNITY
Section 9.01. Indemnity.
Sellers indemnify Buyer for any damage, including any claim, charge,
action, depletion or diminution in value of the assets of the company,
resulting from the breach of any warranty, representation, or covenant
by the Sellers.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Nonassignability
Neither this agreement, nor any interest in this agreement, (other than
with respect to the related promissory note), shall be assignable by the Buyer
without the prior written consent of all of the Sellers.
Section 10.02. Notices
All notices required or permitted to be given under this agreement shall
be in writing and shall be sent by first-class mail, postage prepaid,
deposited in the United States mail.
If intended for the Sellers, shall be given to each of the Sellers and
shall be addressed:
Xxxxxx Xxxxxx, 000 Xxxx Xxx. Xxxxx, Xxx. 000, Xxx Xxxx, XX 00000.
And if intended for the Buyer, shall be addressed:
Helios & Xxxxxxxx Information Technology Ltd., # 0, Xxxxxxxxxxxx
Xxxx Xxxx, Xxxxxxx 000 000, Xxxxx.
With a copy to:
Xxxxxxx X. Xxxxx, Attorney, C.P.A.
The Xxxxx Firm, APC
00000 Xxxxxxx Xxxx., 0xx Xxxxx, Xxxxxxxx, XX 00000-0000
Email: Xxxxxxx@Xxxxx.xxx
Any party to this agreement may change the address for notices to be
sent to him or her by written notice to the other parties.
Section 10.03. Governing Law
All questions with respect to the construction of this agreement, and
the rights and liabilities of the parties to this agreement, shall be governed
by the laws of the State of New York.
Section 10.04. Arbitration
Any controversy between the parties hereto involving the construction
or application of any terms, covenants or conditions of this Agreement or
the Note, or any claims arising out of or relating to this Agreement or the
Note, or the breach hereof or thereof, will be submitted to and settled by
final and binding arbitration in New York, in accordance with the rules of
the American Arbitration Association then in effect, and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. In the event of any arbitration under this Agreement
or the Note, the prevailing party shall be entitled to recover from the losing
party reasonable expenses, attorneys' fees and costs incurred therein or in
the enforcement or collection of any judgment or award rendered therein. The
"prevailing party" means the party determined by the arbitrator to have most
nearly prevailed, even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.
Section 10.05. Inurement
Subject to the restrictions against assignment as contained in this
agreement, this agreement shall inure to the benefit of, and shall be binding
upon, the assigns, successors in interest, personal representatives, estates,
heirs, and legatees of each of the parties to this agreement.
Section 10.06. Attorneys' Fees
In the event of any controversy, claim or dispute between the
parties to this agreement, arising out of or relating to this agreement
or the breach of this agreement, the prevailing party shall be entitled
to recover from the losing party reasonable expenses, attorneys' fees,
and costs.
Section 10.07. Entire Agreement
This agreement, along with the related promissory note and
security agreement, contains the entire agreement of the parties to
it, and supersedes any prior written or oral agreements between them
concerning the subject matter contained in this agreement. There are no
representations, agreements, arrangements, or understandings, oral or
written, between and among the parties to this agreement, relating to the
subject matter contained in this agreement, which are not fully
expressed in it. Any schedules or exhibits referenced herein to be
delivered by Sellers and not so delivered or attached as of the date
hereof may be delivered at any time within two weeks of the date hereof.
The Stock Purchase Agreement, the Stock Pledge Agreement, the
Promissory Note, the Escrow Agreement all dated March 30, 2006, and
the Bentov Employment Agreement dated December 1, 2005 are all to be
read together for interpretation of the entire transaction.
Section 10.08 Appointed Agent
Xxxxx XxxXxx, Xxxxxxxx XxxXxx and Xxxxxx XxxXxx hereby irrevocably
appoint Xxxxxx Xxxxxx as their agent with all general powers to enter
into any and all Agreements related to the sale of TACT-Shares to the Buyer.
EXECUTED on March 30, 2006, at New York, NY.
SELLERS
/s/Xxxxxx Xxxxxx
____________________________
Xxxxxx Xxxxxx
/s/Xxxxx XxxXxx
____________________________
Xxxxx XxxXxx
/s/Xxxxxxxx XxxXxx
____________________________
Xxxxxxxx XxxXxx
/s/Xxxxxx XxxXxx
____________________________
Xxxxxx XxxXxx
BUYER: Helios & Xxxxxxxx Information Technology Ltd.
/s/Xxxxxx XxxXxx
____________________________
By: V. Xxxxxx XxxXxx
