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STOCK PURCHASE AGREEMENT

Purchase and Sale Agreement

STOCK PURCHASE AGREEMENT | Document Parties: Arias Fabrega  Fabrega Trust Company | BVI Ltd | OAK FINANCE INVESTMENTS LIMITED You are currently viewing:
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Arias Fabrega Fabrega Trust Company | BVI Ltd | OAK FINANCE INVESTMENTS LIMITED

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Title: STOCK PURCHASE AGREEMENT
Governing Law: New York     Date: 1/26/2005
Law Firm: Orrick Herrington;McGuireWoods    

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EXECUTION COPY

 

 

STOCK PURCHASE AGREEMENT

by and between

 

OAK FINANCE INVESTMENTS LIMITED

(a British Virgin Islands company)

 

and

THE A CONSULTING TEAM, INC.

(A New York Corporation)

 

 

 

 

 

 

 

 

Dated as of

January 21, 2005

 

 

 

 

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TABLE OF CONTENTS

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ARTICLE 1 DEFINITIONS AND USAGE......................................................................2

Section 1.1 Definitions.......................................................................2

Section 1.2 Other Defined Terms..............................................................10

Section 1.3 Usage............................................................................10

ARTICLE 2 SALE AND TRANSFER OF THE SHARES...........................................................11

Section 2.1 Sale of the Firm Shares..........................................................11

Section 2.2 Purchase Price...................................................................11

Section 2.3 Closing..........................................................................12

Section 2.4 Closing Obligations..............................................................12

Section 2.5 Sale of the Additional Shares; Delivery of the Additional Shares and

Payment Therefor.................................................................12

Section 2.6 Restrictive Legends..............................................................13

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................15

Section 3.1 Organization and Good Standing...................................................15

Section 3.2 No Conflict; No Consent..........................................................15

Section 3.3 Books and Records................................................................16

Section 3.4 Capitalization...................................................................16

Section 3.5 SEC Reports......................................................................17

Section 3.6 No Material Adverse Change.......................................................17

Section 3.7 Absence of Certain Changes or Events.............................................17

Section 3.8 Legal Proceedings; Orders........................................................19

Section 3.9 Brokers or Finders...............................................................19

Section 3.10 Issuance of Shares; No Agreements................................................20

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................................20

Section 4.1 Organization and Good Standing...................................................20

Section 4.2 Enforceability; Authority; No Conflict...........................................20

Section 4.3 Brokers or Finders...............................................................20

Section 4.4 Disclosure.......................................................................21

Section 4.5 Investment Representation........................................................21

Section 4.6 Certain United States Laws.......................................................22

Section 4.7 Questionnaire....................................................................23

Section 4.8 Representation by Legal Counsel; Review of Agreement.............................23

ARTICLE 5 COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE............................................23

Section 5.1 Access and Investigation.........................................................23

Section 5.2 Required Approvals...............................................................23

Section 5.3 Business Operations of the Company and its Subsidiaries..........................24

Section 5.4 Negative Covenant................................................................24

Section 5.5 Notification.....................................................................24

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Section 5.6 Payment of Indebtedness by Related Persons.......................................25

Section 5.7 Best Efforts.....................................................................25

Section 5.8 Form D...........................................................................25

Section 5.9 NASDAQ Listing; Reporting Status.................................................25

Section 5.10 Use of Proceeds..................................................................25

Section 5.11 State Securities Laws............................................................25

Section 5.12 Limitation on Certain Actions....................................................25

ARTICLE 6 COVENANTS OF THE BUYER PRIOR TO CLOSING DATE..............................................26

Section 6.1 Approvals of Governmental Bodies.................................................26

Section 6.2 Best Efforts.....................................................................26

Section 6.3 Notification.....................................................................26

ARTICLE 7 ADDITIONAL COVENANTS......................................................................26

Section 7.1 Public Announcements.............................................................26

Section 7.2 Confidentiality..................................................................27

ARTICLE 8 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE...................................27

Section 8.1 Accuracy of Representations......................................................27

Section 8.2 Company's Performance............................................................27

Section 8.3 Consents.........................................................................27

Section 8.4 Additional Documents.............................................................28

Section 8.5 No Proceedings...................................................................28

Section 8.6 No Material Adverse Change.......................................................28

Section 8.7 Consummation of Other Transactions...............................................28

ARTICLE 9 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE.................................28

Section 9.1 Accuracy of Representations......................................................28

Section 9.2 The Buyer's Performance..........................................................28

Section 9.3 Consents.........................................................................29

Section 9.4 Additional Documents.............................................................29

Section 9.5 No Proceedings...................................................................29

ARTICLE 10 REGISTRATION RIGHTS.......................................................................29

Section 10.1 Mandatory Registration...........................................................29

Section 10.2 Obligations of the Company.......................................................31

Section 10.3 Obligations of the Investors.....................................................34

Section 10.4 Rule 144.........................................................................35

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ARTICLE 11 TERMINATION...............................................................................36

Section 11.1 Termination Events...............................................................36

Section 11.2 Effect of Termination............................................................36

Section 11.3 Extension; Waiver................................................................37

ARTICLE 12 MISCELLANEOUS PROVISIONS..................................................................37

Section 12.1 No Survival......................................................................37

Section 12.2 Expenses.........................................................................37

Section 12.3 Notices..........................................................................37

Section 12.4 Entire Agreement; Modifications..................................................38

Section 12.5 Governing Law....................................................................39

Section 12.6 Assignment; Successors; No Third Party Rights....................................39

Section 12.7 Severability.....................................................................39

Section 12.8 No Waiver........................................................................39

Section 12.9 Jurisdiction; Service of Process.................................................39

Section 12.10 Further Assurances...............................................................39

Section 12.11 Counterparts.....................................................................40

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STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of January

21, 2005, between Oak Finance Investments Limited, a British Virgin Islands

company (the "Buyer"), and The A Consulting Team, Inc., a New York corporation

(the "Company").

THE RECITALS

A. The Company desires to issue and sell to the Buyer, and the Buyer

desires to purchase from the Company, 625,000 shares (the "Firm Shares") of the

Company's Common Stock, par value $0.01 per share (the "Common Stock"), pursuant

to the terms and conditions of this Agreement;

B. In addition, the Company has agreed to sell to the Buyer, or, at

the option of the Buyer, the Additional Shares Buyer, upon the terms and

conditions stated herein, up to an additional 625,000 shares of the Common Stock

(the "Additional Shares"). The Firm Shares and the Additional Shares are

collectively referred to in this Agreement as the "Shares."

C. Simultaneously herewith the Buyer has entered into a Stock

Purchase Agreement, dated the date hereof (the "Shareholder Stock Purchase

Agreement"), with the sellers identified therein (the "Selling Shareholder"),

pursuant to which the Buyer has agreed to purchase and the Selling Shareholder

has agreed to sell 1,024,697 Shares of the Common Stock;

D. Simultaneously herewith the Company has entered into a Share

Exchange Agreement, dated the date hereof, (the "Company Share Exchange

Agreement") with Vanguard Info-Solutions Corporation, a New Jersey corporation

formerly known as B2B Solutions, Inc. ("B2B"), each of the stockholders of B2B

(the "B2B Stockholders"), and the Authorized Representative identified therein,

pursuant to which the Company will issue 7,312,796 shares of Common Stock to the

B2B Stockholders in exchange for 100% of the issued and outstanding shares of

all classes of capital stock of B2B;

E. In order to induce the Buyer to enter into the Shareholder Stock

Purchase Agreement, simultaneously herewith the Selling Shareholder has entered

into an agreement with the Buyer, dated the date hereof (the "Principal

Shareholder's Agreement"), pursuant to which the Selling Shareholder has agreed

to vote the shares of Common Stock that he owns in favor of the transactions

contemplated hereby and by the Company Share Exchange Agreement and to refrain

from taking certain actions regarding other potential transactions involving the

Company;

F. The Company's Board of Directors has approved the transactions

contemplated by each of this Agreement, the Company Share Exchange Agreement and

the Shareholder Stock Purchase Agreement and has agreed to recommend to its

shareholders that they approve the transactions contemplated by this Agreement

and the Company Share Exchange Agreement; and

G. The approval of the shareholders of the Company is necessary to

consummate the transactions contained in this Agreement and the Company Share

Exchange Agreement.

 

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THE AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements

set forth in this Agreement, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties hereto

agree as follows:

ARTICLE 1

DEFINITIONS AND USAGE

Section 1.1 Definitions. For purposes of this Agreement, the following

terms have the respective meanings set forth below:

"Additional Registrable Securities" means any Shares which are

included within the definition of Registrable Securities but not

included in any Registration Statement pursuant to Section 10.1.

"Additional Shares Buyer" means Clariden Bank, Switzerland (a

unit of Credit Suisse) or any other Person to whom the Buyer assigns

its right to purchase the Additional Shares pursuant to Section 2.5.

"Agreement" means this Stock Purchase Agreement, as amended

from time to time pursuant to the terms hereof.

"Approved Market" means the AMEX, the NASDAQ National Market,

the NASDAQ Small Cap Market or the New York Stock Exchange, Inc.

"Best Efforts" means the efforts that a prudent Person

desirous of achieving a result would use in similar circumstances to

achieve that result as expeditiously as possible, provided, however,

that a Person required to use Best Efforts under this Agreement will

not thereby be required to take actions that would result in a material

adverse change in the benefits to such Person of this Agreement and the

Contemplated Transactions or to dispose of or make any change to its

business, expend any material funds or incur any other material burden.

"Blackout Period" means the period of up to an aggregate of

twenty (20) Trading Days in any period of three hundred sixty-five

(365) consecutive days, in each case commencing on the day immediately

after the date the Company notifies the Investors that they are

required, pursuant to Section 10.3(d), to suspend offers and sales of

Registrable Securities pursuant to the Registration Statement as a

result of an event or circumstance described in Section 10.2(e)(i)

during which period, by reason of Section 10.2(e)(ii), the Company is

not required to amend the Registration Statement or to supplement the

Prospectus; provided, that (1) no Blackout Period may exceed ten

consecutive Trading Days in any period of one hundred twenty (120)

consecutive days and (2) no Blackout Period may commence sooner than

sixty (60) days after the end of a prior Blackout Period.

"Breach" means any breach of, or any inaccuracy in, any

representation or warranty or any breach of, or failure to perform or

comply with, any covenant or obligation, in or of this Agreement or any

other Contract, or any event which with the passing of time or the

giving of notice, or both, would constitute such a breach, inaccuracy

or failure.

 

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"Business Day" means any day except Saturday, Sunday or any

other day on which commercial banks located in New York, New York are

authorized by law to be closed for business.

"Buyer's Disclosure Schedule" means the Disclosure Schedule

provided by the Buyer to the Company pursuant to this Agreement.

"Code" means the Internal Revenue Code of 1986.

"Commission" means the U.S. Securities and Exchange

Commission.

"Common Stock Equivalent" means any warrant, option,

subscription or purchase right with respect to shares of Common Stock,

any security convertible into, exchangeable for, or otherwise entitling

the holder thereof to acquire, shares of Common Stock or any warrant,

option, subscription or purchase right with respect to any such

convertible, exchangeable or other security.

"Company's Disclosure Schedule" means the Disclosure Schedule

provided by the Company to the Buyer pursuant to this Agreement.

"Consent" means any approval, consent, ratification, waiver or

other authorization.

"Contemplated Transactions" means all of the transactions

contemplated by this Agreement and by the Shareholder Stock Purchase

Agreement and the Company Exchange Agreement.

"Contract" means any agreement, contract, obligation, promise

or undertaking (whether written or oral and whether express or implied)

that is legally binding.

"Disclosure Schedule" means a schedule delivered by one party

to the other party concurrently with the execution and delivery of this

Agreement, setting forth certain disclosure information arranged in

numbered Items each of which corresponds to a section of this Agreement

and provides (i) additional disclosure in response to an express

disclosure requirement in such section or (ii) an exception or

qualification to a representation or warranty contained in such

section.

"Employee Plan" means, with respect to an employer, all

"employee benefit plans" as defined by Section 3(3) of ERISA, all

specified fringe benefit plans as defined in Section 6039D of the Code,

and all other bonus, incentive compensation, deferred compensation,

profit sharing, stock option, stock appreciation right, stock bonus,

stock purchase, employee stock ownership, savings, severance, change in

control, supplemental unemployment, layoff, salary continuation,

retirement, pension, health, life insurance, disability, accident,

group insurance, vacation, holiday, sick leave, fringe benefit or

 

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welfare plan, and any other employee compensation or benefit plan,

agreement, policy, practice, commitment, contract or understanding

(whether qualified or nonqualified, currently effective or terminated,

written or unwritten) and any trust, escrow or other agreement related

thereto that (i) is maintained or contributed to by any such employer

or any ERISA Affiliate or has been maintained or contributed to in the

last six (6) years by any such employer or any ERISA Affiliate, or with

respect to which any such employer or any ERISA Affiliate has or may

have any liability, and (ii) provides benefits, or describes policies

or procedures applicable to any current or former director, officer,

employee or service provider of any such employer or any ERISA

Affiliate, or the dependents of any thereof, regardless of how (or

whether) liabilities for the provision of benefits are accrued or

assets are acquired or dedicated with respect to the funding thereof.

"Encumbrance" means any charge, claim, community or other

marital property interest, condition, equitable interest, lien, option,

pledge, security interest, mortgage, right of way, easement,

encroachment, servitude, right of first option, right of first refusal

or similar restriction, including any restriction on use, voting (in

the case of security or equity interests), transfer, receipt of income

or exercise of any other attribute of ownership.

"ERISA" means the Employee Retirement Income Security Act of

1974.

"ERISA Affiliate" means, with respect to an employer, any

other corporation or trade or business controlled by, controlling or

under common control with such employer (within the meaning of Section

414, Section 4001(a)(14) or Section 4001(b) of ERISA).

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"GAAP" means United States generally accepted accounting

principles applied on a consistent basis.

"Governmental Authorization" means any Consent, license,

registration or permit issued, granted, given or otherwise made

available by or under the authority of any Governmental Body or

pursuant to any Legal Requirement.

"Governmental Body" means any (i) nation, state, county, city,

town, borough, village, district or other jurisdiction; (ii) federal,

state, local, municipal, foreign or other government; (iii)

governmental or quasi-governmental authority of any nature (including

any self-regulatory organization, agency, branch, department, board,

commission, court, tribunal or other entity exercising governmental or

quasi-governmental powers); (iv) multinational organization or body;

(v) body exercising, or entitled or purporting to exercise, any

administrative, executive, judicial, legislative, police, regulatory or

taxing authority or power; or (vi) any official of any of the

foregoing.

"Investor" means any of the Buyer, the Additional Shares Buyer

and any permitted transferee or assignee who agrees to become bound by

terms and conditions of this Agreement.

 

 

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"Item" means, with respect to a party, a section of that

party's Disclosure Schedule.

"Knowledge" means, with respect to a particular fact or other

matter:

(i) in the case of an individual, either that

individual is actually aware of that fact or matter, or a

prudent individual could be expected to discover or otherwise

become aware of that fact or matter in the course of

conducting a reasonably comprehensive investigation regarding

the accuracy of any representation or warranty contained in

this Agreement;

(ii) in the case of a Person (other than an

individual), any individual who is serving, or who has at any

time served, as a director, officer, executor or trustee of

that Person (or in any similar capacity) has, or at any time

had, Knowledge of that fact or other matter (as set forth in

clause (i) above); and

(iii) any such individual (referred to in clause (ii)

above) and any individual party to this Agreement will be

deemed to have conducted a reasonably comprehensive

investigation regarding the accuracy of any representation or

warranty made herein by that Person or individual.

"Legal Requirement" means any federal, state, local,

municipal, foreign, international, multinational or other constitution,

law, ordinance, principle of common law, code, regulation, rule, Order,

Governmental Authorization, statute or treaty, including any rule or

regulation of the NASDAQ Small Cap Market and further including the

Sarbanes-Oxley Act of 2002.

"Liability" means, with respect to any Person, any liability

or obligation of such Person of any kind, character or description,

whether known or unknown, absolute or contingent, accrued or unaccrued,

disputed or undisputed, liquidated or unliquidated, secured or

unsecured, joint or several, due or to become due, vested or unvested,

executory, determined, determinable or otherwise, and whether or not

the same is required to be accrued on the financial statements of such

Person.

"Lien" means, with respect to any asset, any deed of trust

mortgage, lien, pledge, charge, security interest or encumbrance of any

kind in respect of that asset.

"Material Adverse Effect" means a material adverse effect on

the business, condition (financial or otherwise), assets, properties,

operations, results of operations, prospects, affairs or Liabilities of

the relevant Organization and its Subsidiaries taken as a whole.

"Order" means any order, injunction, judgment, decree, ruling,

assessment or arbitration award of any Governmental Body, arbitrator or

NASDAQ, Inc. (including without limitation any notice or letter

threatening or warning of possible delisting of the Common Stock).

 

 

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"Ordinary Course of Business" means, with respect to any

action, the action taken by a Person only if that action:

(i) is consistent in nature, scope and magnitude with

the past practices of such Person and is taken in the ordinary

course of the normal, day-to-day operations of such Person;

(ii) does not require authorization by the board of

directors or stockholders of such Person (or by any Person or

group of Persons exercising similar authority) and does not

require any other separate or special authorization of any

nature; and

(iii) is similar in nature, scope and magnitude to

actions customarily taken, without any separate or special

authorization, in the ordinary course of the normal,

day-to-day operations of other Persons that are in the same

line of business as such Person.

"Organization" shall be construed as broadly as possible and

shall include any entity, including a corporation (either non-profit or

other), partnership (either limited or general), joint venture, joint

stock company, limited liability company, trust, estate or other

unincorporated association, whether or not a legal entity.

"Organizational Documents" means (a) the articles or

certificate of incorporation and the bylaws of a corporation; (b) the

partnership agreement and any statement of partnership of a general

partnership; (c) the limited partnership agreement and the certificate

of limited partnership of a limited partnership; (d) the articles of

organization or certificate of formation and any operating or limited

liability company agreement of a limited liability company; (e) any

charter or similar document adopted or filed in connection with the

creation, formation, or organization of a Person, and (f) any amendment

to any of the foregoing.

"Person" means an individual or an Organization.

"Proceeding" means any action, arbitration, audit, hearing,

investigation, litigation or suit (whether civil, criminal,

administrative, judicial or investigative, whether formal or informal,

whether public or private) commenced, brought, conducted or heard by or

before, or otherwise involving, any Governmental Body or arbitrator.

"Prospectus" means the prospectus forming part of the

Registration Statement at the time the Registration Statement is

declared effective and any amendment or supplement thereto, including

any documents or information incorporated therein by reference.

"Questionnaire" means the Selling Security Holder

Questionnaire in the form attached hereto as Annex B and completed by

the Investor and furnished to the Company in connection with this

Agreement.

 

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"Register," "registered," and "registration" refer to a

registration effected by preparing and filing with the Commission of a

Registration Statement or Statements in compliance with the Securities

Act and pursuant to Rule 415, and the declaration or ordering of

effectiveness of such Registration Statement by the Commission.

"Registrable Securities" means (1) the Shares (including the

Additional Shares, to the extent purchased under this Agreement), (2)

if the Shares are changed, converted or exchanged by the Company or its

successor, as the case may be, into any other stock or other securities

after the Closing, such other stock or other securities which are

issued or issuable in respect of or in lieu of the Shares and (3) if

any other securities are issued to holders of the Shares (or such other

shares or other securities into which or for which the Shares is so

changed, converted or exchanged as described in the immediately

preceding clause (2)) upon any reclassification, share combination,

share subdivision, share dividend, merger, consolidation or similar

transaction or event, such other securities which are issued or

issuable in respect of or in lieu of the Shares.

"Registration Default" means the period following the

occurrence of a Registration Event for so long as such Registration

Event is continuing.

"Registration Event" means the occurrence of any of the

following events:

(i) the Company fails to file with the Commission the

Registration Statement on or before the date by which the

Company is required to file the Registration Statement

pursuant to Section 10.1;

(ii) the Registration Statement covering Registrable

Securities does not become effective within one hundred twenty

(120) days following the Closing Date; provided, that if the

Registration Statement is subject to review by the Commission

staff, such date of effectiveness shall be within one hundred

fifty (150) days following the Closing Date;

(iii) after the SEC Effective Date, sales cannot be

made pursuant to the Registration Statement for any reason

(including without limitation by reason of a stop order, or

the Company's failure to update the Registration Statement)

but except as excused pursuant to Section 10.2(e), other than

a failure by any Investor to comply with the legal

requirements applicable to such sale; or

(iv) the Common Stock generally or the Registrable

Securities specifically are not listed or included for

quotation on an Approved Market, or trading of the Common

Stock is suspended or halted on the Approved Market which at

the time constitutes the principal market for the Common

Stock.

"Registration Period" means the period from the SEC Effective

Date to the earliest of:

(i) the date which is two years after the Closing

Date; and

 

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(ii) the date on which the Investors no longer own or

have any right to acquire any Registrable Securities.

"Registration Statement" means a registration statement on

Form S-3 (or if Form S-3 is then not available to the Company, on Form

S-1 or such other form of registration statement as is then available

to effect a registration for resale of the Registrable Securities) of

the Company under the Securities Act, including any amendment thereto,

which names the Investors as selling stockholders (including any

documents or information incorporated therein by reference, whether

before or after the SEC Effective Date) filed into order to register

with the Commission the Firm Shares and, to the extent sold under this

Agreement, the Additional Shares.

"Regulation D" means Regulation D under the Securities Act.

"Required Information" means, with respect to any Investor

(including the Additional Shares Buyer), all information regarding such

Investor, the Registrable Securities held by such Investor or which

such Investor has the right to acquire and the intended method of

disposition of the Registrable Securities held by such Investor or

which such Investor has the right to acquire as shall be required by

the Securities Act to effect the registration of the resale by such

Investor of such Registrable Securities.

"Rule 144" means Rule 144 under the Securities Act or any

other similar rule or regulation of the Commission that may at any time

provide a "safe harbor" exemption from registration under the

Securities Act so as to permit a holder of securities to sell such

securities to the public without registration under the Securities Act.

"Rule 415" means Rule 415 under the Securities Act or any

successor rule providing for offering securities on a delayed or

continuous basis.

"Related Person" means:

(a) with respect to a particular individual,

(i) each other member of such individual's Family;

(ii) any Person that is directly or indirectly

controlled by any one or more members of such

individual's Family; (iii) any Person in which

members of such individual's Family hold

(individually or in the aggregate) a Material

Interest; and (iv) any Person with respect to which

one or more members of such individual's Family

serves as a director, officer, partner, executor or

trustee (or in a similar capacity); and

(b) with respect to a specified Person other

than an individual, (i) any Person that directly or

indirectly controls, is directly or indirectly

controlled by or is directly or indirectly under

common control with such specified Person; (ii) any

Person that holds a Material Interest in such

specified Person; (iii) each Person that serves as a

director, officer, partner, executor or trustee of

such specified Person (or in a similar capacity);

(iv) any Person in which such specified Person holds

a Material Interest; and (v) any Person with respect

to which such specified Person serves as a general

partner or a trustee (or in a similar capacity).

 

 

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For purposes of this definition:

(i) "control" (including

"controlling," "controlled by," and "under

common control with") means the possession,

direct or indirect, of the power to direct

or cause the direction of the management and

policies of a Person, whether through the

ownership of voting securities, by contract

or otherwise, and shall be construed as such

term is used in the rules promulgated under

the Securities Act;

(ii) the "Family" of an individual

includes (i) the individual, (ii) the

individual's spouse, (iii) any other natural

person who is related to the individual or

the individual's spouse within the second

degree and (iv) any other natural person who

resides with such individual; and

(iii) "Material Interest" means

direct or indirect beneficial ownership (as

defined in Rule 13d-3 under the Exchange

Act) of voting securities or other voting

interests representing at least ten percent

(10%) of the outstanding voting power of a

Person or equity securities or other equity

interests representing at least ten percent

(10%) of the outstanding equity securities

or equity interests in a Person.

"Representative" means, with respect to a Person, any

director, officer, manager, employee, agent, consultant, advisor,

accountant, financial advisor, legal counsel or other representative of

that Person.

"SEC Effective Date" means the date the Registration Statement

is declared effective by the SEC.

"SEC Filing Date" means the date the Registration Statement is

first filed with the Commission pursuant to Section 10.1.

"SEC Reports" means all forms, reports, schedules, statements

and other documents, and amendments thereto, required to be filed by

the Company under the Exchange Act.

"Securities Act" means the Securities Act of 1933, as amended.

"Subsidiary" means, with respect to an Organization (the

"Owner"), any Organization of which securities or other interests

having the power to elect a majority of that Organization's board of

directors or similar governing body, or otherwise having the power to

direct the business and policies of that Organization (other than

securities or other interests having such power only upon the happening

of a contingency that has not occurred) are held by the Owner or one or

more of its Subsidiaries; when used without reference to a particular

Person, "Subsidiary" means a Subsidiary of the Company as of the date

of this Agreement.

 

 

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"Trading Day" means any day (other than a Saturday or Sunday)

on which the NASDAQ Small Cap Market is open for business.

"Transfer Agent" means Mellon Shareholder Services, or any

successor thereof duly appointed by the Company, serving as transfer

agent and registrar for the Common Stock.

Section 1.2 Other Defined Terms. For purposes of this Agreement, the

following terms have the respective meanings set forth in the section and at the

page referred to opposite each such term:

 

Defined Term Section Page

------------ ------- ----

Additional Shares Recitals 1

Additional Shares Notice Section 2.5 12

Agreement Heading 1

Buyer Heading 1

Buyer's Advisors Section 6.1 23

Closing Section 2.3 12

Closing Date Section 2.3 12

Company Recitals 1

Company Share Exchange Agreement Recitals 1

Company Stock Purchase Agreement Recitals 1

Firm Shares Recitals 1

Owner Section 1.1 1

Principal Shareholder's Agreement Recitals 1

Purchase Price Section 2.2 11

Restricted Securities Section 2.6 13

Selling Shareholder Recitals 1

Shares Recitals 1

Transfer Section 2.6 13

Section 1.3 Usage.

(a) Interpretation. In this Agreement, unless a clear contrary

intention appears:

(1) a reference herein to days shall mean calendar

days unless otherwise specified. Any day or deadline or end of

a time period hereunder which falls on a day other than a

Business Day shall be deemed to refer to the first Business

Day following such day or deadline or end of the time period,

as the case may be;

 

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(2) a reference in this Agreement to an article,

section, exhibit or schedule shall mean an article or section

of, or exhibit or schedule attached to, this Agreement, as the

case may be. Article and section headings in this Agreement

are for reference purposes only and shall not affect in any

way the meaning or interpretation of this Agreement;

(3) a reference to any Legal Requirement means such

Legal Requirement as amended, modified, codified, replaced or

reenacted, in whole or in part, and in effect from time to

time, including rules and regulations promulgated thereunder,

and reference to any section or other provision of any Legal

Requirement means that provision of such Legal Requirement

from time to time in effect and constituting the substantive

amendment, modification, codification, replacement or

reenactment of such section or other provision;

(4) the word "including" means without limitation;

the word "or" is not exclusive and is used in the inclusive

sense of "and/or"; and the words "herein", "hereof", "hereby",

"hereto" and "hereunder" refer to this Agreement as a whole;

(5) a reference to document, instrument or agreement

shall be deemed to refer as well to all addenda, exhibits,

schedules or amendments thereto; and

(6) all words used in this Agreement will be

construed to be of such gender or number as the circumstances

require.

(b) Accounting Terms and Determinations. Unless otherwise

specified herein, all accounting terms used herein shall be interpreted

and all accounting determinations hereunder shall be made in accordance

with GAAP.

(c) Legal Representation of the Parties. This Agreement was

negotiated by the parties with the benefit of legal representation, and

any rule of construction or interpretation otherwise requiring this

Agreement to be construed or interpreted against a party shall not

apply to any construction or interpretation hereof.

ARTICLE 2

SALE AND TRANSFER OF THE SHARES

Section 2.1 Sale of the Firm Shares. Subject to the terms and

conditions of this Agreement, at the Closing the Company will issue and sell the

Firm Shares to the Buyer, and the Buyer will purchase the Firm Shares from the

Company.

Section 2.2 Purchase Price. The purchase price (the "Purchase Price")

for the Firm Shares will be $8.00 per share, or an aggregate Purchase Price of

$5,000,000.

 

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Section 2.3 Closing. The purchase and sale (the "Closing") provided for

in this Agreement will take place (a) at the offices of McGuireWoods LLP, 1345

Avenue of the Americas, 7th Floor, New York, NY 10105, at 10:00 a.m. (local

time) on the day on which the closing of the Exchange (as defined in the Company

Share Exchange Agreement) occurs (the "Closing Date").

Section 2.4 Closing Obligations. At the Closing:

(a) The Company will deliver to the Buyer:

(1) certificates representing the Firm Shares,

registered in the name of the Buyer; and

(2) a certificate executed by the Chief Executive

Officer or President of the Company to the effect that each of

the Company's representations and warranties in this Agreement

was accurate in all material respects as of the date of this

Agreement and is accurate in all material respects as of the

Closing Date as if made on the Closing Date (giving full

effect to any supplements to the Company's Disclosure Schedule

that was delivered by the Company to the Buyer prior to the

Closing Date in accordance with Section 5.5).

(b) the Buyer will deliver to the Company:

(1) the Purchase Price in immediately available funds

by wire transfer of U.S. $5,000,000.00 to the Company to a

bank account specified in writing by the Company not less than

three Business Days prior to the Closing; and

(2) a certificate executed by an authorized officer

of the Buyer to the effect that each of the Buyer's

representations and warranties in this Agreement was accurate

in all material respects as of the date of this Agreement and

is accurate in all materials respects as of the Closing Date

as if made on the Closing Date.

Section 2.5 Sale of the Additional Shares; Delivery of the Additional

Shares and Payment Therefor. The Buyer and, to the extent assigned by the Buyer

pursuant to this Section 2.5, the Additional Shares Buyer, shall have the right

for 120 days from the Closing Date to purchase from the Company up to 625,000

Additional Shares at the purchase price of $8.00 per Share. Delivery to the

Buyer or, as the case shall be, the Additional Shares Buyer, of a certificate or

certificates representing the Additional Shares and the payment therefor shall

take place at the offices of the Company on such date (the "Additional Closing

Date"), which may be the same as the Closing Date, but shall in no event be

earlier than the Closing Date nor earlier than two nor later than ten Business

Days after the giving of the notice hereinafter referred to. The Buyer shall

specify in a written notice to the Company (the "Additional Shares Notice") the

determination of the Buyer to purchase a number, specified in such notice, of

Additional Shares, and/or the Buyer's election to assign its right to purchase

the Additional Shares to the Additional Shares Buyer, in which case the

Additional Shares Notice shall specify the number of Additional Shares to be

purchased by the Additional Shares Buyer and/or the Buyer. The Additional Shares

Notice may be given at any time within 120 days of the Closing Date and must set

forth (i) the

 

 

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aggregate number of Additional Shares as to which the Buyer is exercising the

option and (ii) the names and denominations in which the certificates for the

Additional Shares are to be registered. Payment for the Additional Shares shall

be made by the Buyer or, as the case shall be, the Additional Shares Buyer, in

the manner set forth in Section 2.4(b)(1). The place of closing for the purchase

and sale of the Additional Shares and the Additional Closing Date may be varied

by agreement between the Buyer or, as the case shall be, the Additional Shares

Buyer, and the Company. The Buyer shall have the right to assign to the

Additional Shares Buyer the right to purchase all or a part of the Additional

Shares by the Additional Shares Notice in accordance with this Section 2.5;

provided, that (i) the Buyer's assignment of its right to purchase the

Additional Shares shall not be effective unless the Additional Shares Buyer

shall have executed the Additional Shares Notice jointly with the Buyer and (ii)

the Additional Shares Notice shall state that by executing such notice the

Additional Shares Buyer is making, on its own behalf, each of the

representations and warranties set forth in ARTICLE 4 and is agreeing to perform

each of the covenants set forth in ARTICLE 6, ARTICLE 7, ARTICLE 10, ARTICLE 12.

Section 2.6 Restrictive Legends.

(a) The Shares to be issued under this Agreement and any

shares of capital stock or other securities received with respect

thereto (collectively, the "Restricted Securities") shall not be sold,

transferred, assigned, pledged, encumbered or otherwise disposed of

(each, a "Transfer") except upon the conditions specified in this

Section 2.6, which conditions are intended to insure compliance with

the provisions of the Securities Act. Each Investor shall observe and

comply with the Securities Act and the rules and regulations

promulgated by the Commission thereunder as now in effect or hereafter

enacted or promulgated, and as from time to time amended, in connection

with any Transfer of Restricted Securities beneficially owned by the

Investor.

(b) Each certificate representing Restricted Securities issued

to a Investor and each certificate for such securities issued to

subsequent transferees of any such certificate shall (unless otherwise

permitted by the provisions of Section 2.6(c) and Section 2.6(d)

hereof) be stamped or otherwise imprinted with a legend in

substantially the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED

FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR

"BLUE-SKY" LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,

ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE

ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.

ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE

CONDITIONS SPECIFIED IN SECTION 2.6 OF THE STOCK PURCHASE

AGREEMENT DATED AS OF JANUARY 21, 2005, BETWEEN CICADA, INC. AND

OAK FINANCE INVESTMENTS LIMITED, AND NO TRANSFER OF THESE

SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE

BEEN FULFILLED. UPON THE FULFILLMENT OF CERTAIN OF SUCH

CONDITIONS, CICADA, INC. HAS AGREED TO DELIVER TO THE HOLDER

HEREOF A CICADA, INC. CERTIFICATE NOT BEARING THIS LEGEND, FOR THE

SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER

HEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY

WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE

TO THE SECRETARY OF THE COMPANY."

 

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(c) Prior to any Transfer of Restricted Securities that occurs

subsequent to the Closing, each Investor will give written notice to

the Company of the Investor's intention to effect such Transfer and to

comply in all other respects with the provisions of this Section 2.6.

Each such notice shall describe the manner and circumstances of the

proposed Transfer and, if requested by the Company, shall be

accompanied by the written opinion, addressed to the Company, of

counsel for the holder of such Restricted Securities, stating that in

the opinion of such counsel (which opinion and counsel shall be

reasonably satisfactory to the Company) such proposed transfer does not

involve a transaction requiring registration or qualification of such

Restricted Securities under the Securities Act or the securities or

"blue-sky" laws of any relevant state of the United States. The holder

thereof shall thereupon be entitled to Transfer such Restricted

Securities in accordance with the terms of the notice delivered by it

to the Company. Each certificate or other instrument evidencing the

securities issued upon the Transfer of any such Restricted Securities

(and each certificate or other instrument evidencing any untransferred

balance of such Restricted Securities) shall bear the legend set forth

in Section 2.6(b) unless (x) in such opinion of counsel of the Company

registration of any future Transfer is not required by the applicable

provisions of the Securities Act or (y) the Company shall have waived

the requirement of such legends. No Investor shall Transfer any

Restricted Securities until such opinion of counsel has been given

(unless waived by the Company or unless such opinion is not required in

accordance with the provisions of this Section 2.6(c)).

(d) Notwithstanding the foregoing provisions of this Section

2.6, the restrictions imposed by this Section 2.6 upon the

transferability of Restricted Securities shall cease and terminate when

(i) any such shares are sold or otherwise disposed of pursuant to an

effective registration statement under the Securities Act or as

otherwise contemplated by Section 2.6(c), (ii) pursuant to Section

2.6(c), the shares so transferred are not required to bear the legend

set forth in Section 2.6(b), or (iii) the holder of such Restricted

Securities has met the requirements for Transfer of such Restricted

Securities pursuant to Rule 144(k). Whenever the restrictions imposed

by this Section 2.6 shall terminate, as herein provided, the holder of

Restricted Securities as to which such restrictions have terminated

shall be entitled to receive from the Company, without expense, a new

certificate not bearing the restrictive legend set forth in Section

2.6(b) and not containing any other reference to the restrictions

imposed by this Section 2.6.

 

 

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<PAGE>

(e) Each Investor understands and agrees that the Company, at

its discretion, may cause stop transfer orders to be placed with its

transfer agent with respect to certificates for Restricted Securities

owned by the Investor, but not as to certificates for such shares of

the Company Common Stock as to which the legend set forth in paragraph

(b) of this Section 2.6 is no longer required because one or more of

the conditions set forth in Section 2.6(d) shall have been satisfied,

in the event of a proposed Transfer in violation or breach of this

Section 2.6.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Buyer as follows:

Section 3.1 Organization and Good Standing. The Company and each of its

Subsidiaries is a corporation duly organized, validly existing and in good

standing under the laws of the jurisdiction of its incorporation, has full

corporate power and authority to conduct its business as it is now being

conducted, to own or use the properties and assets that it purports to own or

use, and to perform all of its obligations hereunder. The Company and each of

its Subsidiaries is duly qualified to do business as a foreign corporation and

is in good standing under the laws of each state or other jurisdiction in which

either the ownership or use of the properties owned or used by it, or the nature

of the activities conducted by it, requires such qualification, except for

jurisdictions where the failure to qualify would not have a Material Adverse

Effect.

Section 3.2 No Conflict; No Consent. (a) Except as set forth in Item

3.2 of the Company's Disclosure Schedule, neither the execution and delivery of

this Agreement nor the consummation or performance of any of the Contemplated

Transactions will, directly or indirectly (with or without notice or lapse of

time or both):

(1) Breach (A) any provision of the Organizational

Documents of the Company or its Subsidiaries, or (B) any

resolution adopted by the board of directors or the

stockholders of the Company or any of its Subsidiaries;

(2) Breach or give any Governmental Body or other

Person the right to challenge any of the Contemplated

Transactions or to exercise any remedy or obtain any relief

under, any Legal Requirement or any Order to the Company or

any of its Subsidiaries, or any of the assets owned or used by

the Company or any of its Subsidiaries may be subject;

(3) contravene, conflict with, or result in a

violation of any of the terms or requirements of, or give any

Governmental Body the right to revoke, withdraw, suspend,

cancel, terminate, or modify, any Governmental Authorization

that is held by the Company or any of its Subsidiaries or that

otherwise relates to the business of, or any of the assets

owned or used by, the Company or any of its Subsidiaries;

(4) cause the Company or any of its Subsidiaries to

become subject to, or to become liable for the payment of, any

Tax;

 

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<PAGE>

(5) cause any of the assets owned by the Company or

any of its Subsidiaries to be reassessed or revalued by any

taxing authority or other Governmental Body;

(6) Breach any provision of, or give any Per


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