BUSINESS TRANSFER AGREEMENT

 

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                                                                     EXHIBIT 2.2

 

                                 MARCH 31, 2005

 

                           BUSINESS TRANSFER AGREEMENT

 

                                     BETWEEN

 

                       INDIA SWITCH COMPANY PRIVATE LIMITED

 

                                       AND

 

                   EFUNDS INTERNATIONAL INDIA PRIVATE LIMITED

 

                                       AND

 

             CLASSIC PAYMENT SOLUTIONS AND SERVICES PRIVATE LIMITED

 

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                                 [STAMP PAPER]                         [1000 RS.]

 

                          BUSINESS TRANSFER AGREEMENT

 

This Business Transfer Agreement (hereinafter known as the "Agreement") is

entered into in Chennai, the 31st day of March 2005 by and between:

 

INDIA SWITCH COMPANY PRIVATE LIMITED, a company incorporated under the laws of

India and having its registered office at 5, Mezzanine Floor, Thapar House,

43-44 Montieth Road, Egmore, Chennai 600 008 (hereinafter referred to as "ISC"

which expression shall, unless it is repugnant to the context or meaning

thereof, include its successors and permitted assigns);

 

                                       AND

 

EFUNDS INTERNATIONAL INDIA PRIVATE LIMITED, a company incorporated under the

laws of India and having its registered office at F-40, N.D.S.E.-I, New Delhi -

110 049 (hereinafter referred to as "EFUNDS" which expression shall, unless it

is repugnant to the context or meaning thereof, include its successors and

permitted assigns);

 

                                       AND

 

CLASSIC PAYMENT SOLUTIONS AND SERVICES PRIVATE LIMITED, a company incorporated

under the laws of India and having its registered office at F-40, N.D.S.E.-I,

New Delhi - 110 049 (hereinafter referred to as the "PURCHASER" which expression

shall, unless it is repugnant to the context or meaning thereof, include its

successors and permitted assigns).

 

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(ISC, eFunds and the Purchaser are hereinafter also individually and

collectively referred to as "PARTY" or "PARTIES" respectively)

 

WHEREAS:

 

A.     ISC is engaged in the business of providing (a) automated teller machines

      ("ATM") with or without infrastructural facilities under outsourcing,

      managed services and processing arrangements which include ATM

      maintenance, terminal driving and terminal health monitoring (b)

      transaction processing comprising the processing of electronic debit and

      credit transactions through networks including gateway processing to

      national and international networks; (c) switch processing services to

      enable shared electronic transactions between financial institutions; (d)

      shared networks (e.g. "BANCS") through which financial institutions can

      participate to pursue processing services and (e) debit card production

      and issuance fulfillment (the "BUSINESS").

 

B.     ISC has agreed to sell and transfer, and the Purchaser has agreed to

      purchase and acquire the ISC Transferred Business (as defined

      hereinafter), as a going concern on a slump sale basis for a lump sum

      consideration upon and subject to the terms and conditions set forth

      herein. The Purchaser shall, prior to the Closing Date, be a wholly owned

       subsidiary of eFunds, which in turn is an indirectly held wholly owned

      subsidiary of eFunds Inc., a public listed company incorporated in the

      United States of America.

 

NOW THEREFORE in consideration of the mutual promises hereinafter set forth, the

Parties hereto agree as follows:

 

                                    ARTICLE 1

                         DEFINITIONS AND INTERPRETATION

 

1.1    Definitions

 

      In this Agreement, unless repugnant or contrary to the context hereof, the

      following terms when capitalized, shall have the meaning assigned herein

      when used in this Agreement. When not capitalized, such words shall be

      attributed their ordinary meaning.

 

      "ACCOUNTING STANDARDS" means the Accounting Standards issued by the

      Institute of Chartered Accountants of India;

 

      "AFFILIATE" means with respect to any Person (as defined hereinafter), any

      other Person directly or indirectly controlling, controlled by or under

      common control with such first Person. For purposes of this definition,

      the term "control" (including, with correlative meaning, the terms

      "controlled by" and "under common control with") as applied to any Person,

      means the possession, directly or indirectly, of the power to direct or

      cause the direction of the management of that Person whether

 

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      through ownership of voting securities, by contract or otherwise;

 

      "AGREEMENT" means this Business Transfer Agreement including all

      annexures, schedules and exhibits attached hereto or incorporated in it by

      reference and also includes all subsequent amendments and modifications to

      this Agreement, if any;

 

      "ASSUMED NET CURRENT ASSET VALUE" shall have the meaning assigned to it in

      Article 2.2.1;

 

      "BENEFIT PLANS" means all provident fund, gratuity, medical insurance,

      leave encashment and other similar funds or benefits, if any, created and

      or maintained by ISC with respect to the Transferred Employees (as defined

      hereinafter) and as detailed in ANNEXURE A hereof;

 

      "BUSINESS DAY" means any day, which is not (a) a day when principal

      commercial banks in Chennai are closed for business; or (b) a day which is

       notified as a holiday under the Indian Negotiable Instruments Act, 1881

      and pursuant to such notification principal commercial banks in Chennai

      are dosed for business;

 

      "CLOSING" means the consummation of the transfer of the ISC Transferred

      Business from ISC to the Purchaser as contemplated by this Agreement, and

      specifically as contemplated by Article 3.2 hereof;

 

      "CLOSING PAYMENT" has the meaning assigned to it in Article 2.1.2 hereof;

 

      "CLOSING DATE" means the date on which the Closing takes place;

 

      "CLOSING NET CURRENT ASSET AMOUNT" shall have the meaning assigned to in

      Article 2.2.2 (i);

 

      "CONTINGENT AMOUNT" means the amount(s) defined in Article 2.1.5 hereof

      and calculated and paid in accordance with ANNEXURE O;

 

      "EFFECTIVE DATE" means the date of execution of this Agreement;

 

      "EXCLUDED LIABILITIES" has the meaning assigned to it in Article 2.1.8

      hereof;

 

      "FINANCIAL STATEMENTS" has the meaning assigned to it in Article 4 (e) (1)

      hereof;

 

      "GOVERNMENTAL BODY" means any national, regional or local government, any

      governmental, semi-governmental, administrative, regulatory, or judicial

      body, department, commission, authority, tribunal, agency, central bank or

      other entity with jurisdiction over the transactions contemplated

      hereunder, exercising executive, legislative, judicial, regulatory or

      administrative functions of government;

 

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      "INTELLECTUAL PROPERTY" means the trademarks, copyright and entitlement to

      use third party software relating to the ISC Transferred Business

      (including any software developed by ISC's Affiliates for use in the ISC

      Transferred Business) and more particularly identified in ANNEXURE B

      hereof, which licenses, trademarks and copyright shall be transferred to

      or assigned in favour of the Purchaser;

 

      "ISC ASSUMED LIABILITIES" means the liabilities of ISC which shall be

      transferred to the Purchaser on the Closing Date, consisting of secured

      loans, outstandings in relation to ATMs acquired on lease, the ISC Assumed

      Current Liabilities (as defined hereinafter), the ISC Assumed Benefit Plan

      Liabilities (as defined hereinafter) only as listed in ANNEXURE C. It

      shall also include all liabilities in relation to the ISC Transferred

      Business, whether current, contingent or otherwise, accruing and arising

      after the Closing Date and only to the extent the liability relates to the

      conduct of the ISC Transferred Business after the Closing Date including

      under the Contracts (as defined hereinafter) novated in favour of the

      Purchaser at the Closing. In no event do ISC Assumed Liabilities include

      Excluded Liabilities;

 

      "ISC ASSUMED BENEFIT PLAN LIABILITIES" means the liabilities of ISC in

      respect of the Benefit Plans of the Transferred Employees;

 

      "ISC ASSUMED CURRENT LIABILITIES" means all current liabilities and

      obligations of ISC including sundry creditors, sundry deposits, advance

      subscriptions and provisions and payables relating exclusively to the

      Business, loans, borrowings & claims, accrued liabilities to Transferred

      Employees which are incurred in accordance with the terms of employment,

      and taxes accrued but unpaid (excluding overdue and / or unaccounted

      taxes) all of the above as specifically identified in ANNEXURE C. For the

      purposes of this definition, it is clarified that the term "ISC Assumed

      Current Liabilities" shall not include any liability, which is not

      identified at ANNEXURE C hereof and shall specifically exclude the

      Excluded Liabilities.

 

      "ISC TRANSFERRED ASSETS" means all of the tangible and intangible assets,

      excluding cash, used in or otherwise related to the ISC Transferred

      Business on the Closing Date, including the following:

 

      (a)    All movable properties comprising the following ("MOVABLE ASSETS"):

 

            (i)    current assets related to the ISC Transferred Business

                  including inventories, receivables and other current assets

                  ("CURRENT ASSETS") as set out in ANNEXURE D hereof;

 

            (ii)   All electrical and office equipment, apparatus, machinery,

                  computers and accessories and other miscellaneous fixed assets

                  related to the ISC Transferred Business more particularly

                  described in ANNEXURE E hereof;

 

            (iii) All fixtures, related to the ISC Transferred Business more

                  particularly described in ANNEXURE F;

 

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      (b)    All books, records, ledgers, documents and files or other similar

            information used primarily in the conduct of the ISC Transferred

            Business, including vendor lists, customer lists, mailing lists,

            warranty information, catalogs, promotion literature, advertising

            materials, brochures, standard forms of documents, manuals of

            operations or business procedures, research materials, personnel

            records, and all other relevant data and information (collectively

            referred to as "RECORDS");

 

       (c)    All agreements and/ or contracts, purchase orders, sale orders, and

            instruments used or held for use primarily in the operation or

            conduct of the ISC Transferred Business and to which ISC is a party

            identified in ANNEXURE G hereto, including but not limited to

            contracts for lease of car, machinery, equipment, sale by ISC of

            goods or performance by ISC of services, contracts for sale and

            distribution of products, (collectively referred to as "CONTRACTS");

 

      (d)    All leased lands and premises including structure and other

            improvements constructed thereon relating to the ISC Transferred

            Business ("LEASED PREMISES") identified in ANNEXURE H leased to ISC

            by the lessors ("LANDLORDS") under existing lease agreements

            ("LEASES" or "LEASE DEEDS");

 

      (e)    All Intellectual Property.

 

      "ISC TRANSFERRED BUSINESS" means the Business of ISC, as a going concern,

      including the ISC Transferred Assets, the Transferred Employees and the

      ISC Assumed Liabilities;

 

      "LENDERS" means the lenders of ISC listed in ANNEXURE I:

 

      "LIEN" means liens, interests, restrictions, claims, charges, mortgages,

      pledges, security interests and encumbrances of every kind, whether

      written or oral and whether or not relating in any way to credit or to the

      borrowing of money;

 

      "LOAN AGREEMENTS" or "LOANS" means all loan agreements between ISC and the

      Lenders more particularly described at ANNEXURE I:

 

      "NET CURRENT ASSETS" means Current Assets less the ISC Assumed Current

      Liabilities;

 

      "NET CURRENT ASSETS CLOSING ACCOUNT" shall have the meaning assigned to it

      in Article 2.2.2;

 

      "ORDINARY COURSE" means the ordinary and normal course of the ISC's

      Business that is consistent with its past practice and business policies

      in respect of the Business.

 

      "PERMITS" means all consents, approvals and registrations that are

      required to carry on the ISC Transferred Business;

 

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      "PERSON" shall mean any individual, firm, company, joint venture,

      association, partnership, trust, unincorporated organisation or other

      entity (whether having separate legal personality and identity or not)

      including a government entity or a political sub-division or an agency or

      instrumentality thereof;

 

      "PURCHASE PRICE" shall have the meaning assigned to it in Article 2.1;

      and,

 

      "TRANSFERRED EMPLOYEES" means the employees of ISC listed at ANNEXURE J

      whose employment shall be transferred to the Purchaser, with effect from

      the Closing Date.

 

1.2    Interpretation

 

      In this Agreement, (unless repugnant or contrary to the context hereof):

 

      (a)    reference to the singular includes a reference to the plural and

            vice versa, and reference to any gender includes a reference to the

            other gender;

 

      (b)    reference to an individual shall include his legal representative,

            successor, legal heir, executor and administrator and reference to

            natural persons shall include bodies corporate and vice versa;

 

      (c)    reference to statutory provisions shall be construed as meaning and

            including references also to any amendment or re-enactment (whether

            before or after the date of this Agreement) for the time being in

            force and to all statutory instruments or orders made pursuant to

            statutory provisions;

 

      (d)    references to any statute or regulation made using a commonly used

            abbreviation, shall be construed as a reference to the title of the

            statute or regulation;

 

      (e)    the terms "hereof", "herein", "hereby", "hereto" and derivative or

            similar words refer to this entire Agreement;

 

      (f)    the term "including" means "including, but not limited to";

 

      (g)    the headings and sub-headings hereto are inserted only for reference

            to the provisions hereof and shall not affect the construction of

            such provisions;

 

      (h)    information contained in the relevant Annexures hereto have been

            updated until February 28, 2005 and shall be further updated

            immediately prior to Closing; and

 

      (i)    Any word or phrase defined in the body of this Agreement as opposed

            to being defined in Article 1.1 above shall have the meaning

            assigned to it in such definition throughout this Agreement, unless

            the contrary is expressly stated or the contrary clearly appears

            from the context.

 

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                                    ARTICLE 2

                     TRANSFER OF BUSINESS AND PURCHASE PRICE

 

2.1    TRANSFER OF BUSINESS

 

2.1.1 Upon the terms and subject to the conditions of this Agreement, ISC agrees

      to sell and transfer to the Purchaser and the Purchaser hereby agrees to

      purchase and acquire from ISC, on the Closing Date, all of the right,

      title and interest in the ISC Transferred Business as a going concern and

      on a slump sale basis. In consideration of the sale, transfer, assignment,

      conveyance and delivery by ISC of the ISC Transferred Business at Closing,

      the Purchaser shall pay to ISC the Purchase Price, comprising of an amount

      of Rupees 76,56,25,000 (Rupees Seventy Six Crores Fifty Six Lakhs Twenty

      Five Thousand Only (the "INITIAL PAYMENT") and the Contingent Amount in

      accordance with the terms of this Agreement.

 

2.1.2 On the Closing Date, the Purchaser shall pay to ISC an amount of Rupees

      67,81,25,000 (Rupees Sixty Seven Crores Eighty One Lakhs and Twenty

      Thousand Only) (the "CLOSING PAYMENT"), being the Initial Payment less

      Rupees 8,75,00,000 (Rupees Eight Crores and Seventy Lakhs Only) (the

      "HOLDBACK AMOUNT"), by certified or cashiers cheque or wire transfer of

      immediately available funds to an account or accounts identified in

      writing by ISC prior to the Closing Date. Simultaneously, the Holdback

      Amount shall be remitted by the Purchaser into the Escrow Account, which

      amount shall be held in escrow by the Escrow Agent for the benefit of ISC

      in accordance with the Escrow Agreement.

 

2.1.3 Incidental to the aforesaid sale, ISC hereby also agrees and undertakes to

      initiate and complete all steps required for the transfer of the ISC

      Transferred Business as aforesaid, including the following:

 

      (a)    wherever transferable, all licenses, registrations, or permits

            standing in the name of ISC for or in relation to the ISC

            Transferred Business shall be transferred in accordance with the

            procedures prescribed by law;

 

      (b)    the Movable Assets shall be transferred by delivery of possession;

 

      (c)    the Contracts shall be novated in favour of the Purchaser on terms

            satisfactory to the Purchaser ("NOVATION AGREEMENTS");

 

       (d)    the Lease Deeds shall be novated in favour of the Purchaser on terms

            satisfactory to the Purchaser;

 

      (e)    Intellectual Property shall be transferred to the Purchaser on terms

            satisfactory to the Purchaser.

 

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2.1.4 On the Closing Date, subject to the fulfillment of the conditions

      precedent at Article 7 of the Agreement, the Purchaser shall accept,

      assume and agree to pay, perform or otherwise discharge, in accordance

      with their respective terms and subject to the respective conditions in

      this Agreement, the ISC Assumed Liabilities.

 

2.1.5 CONTINGENT AMOUNT

 

      (a)    The Purchaser shall pay to ISC the Contingent Amount, determined in

             accordance with this Article 2.1.5 in the event that the Purchaser

            achieves or exceeds the following revenue (which shall be determined

            and accounted for in accordance with the Accounting Standards)

            targets during the period between the Closing Date and the first

            anniversary of the Closing Date (the "EARN OUT PERIOD"): (i) if

            revenue is less than Rupees 21,87,50,000, then no Contingent Amount

            shall be payable; (ii) if revenue is equal to Rupees 21,87,50,000,

            the Contingent Amount payable shall be Rupees 5,68,75,000; (iii) if

            revenue is equal to or exceeds Rupees 46,81,25,000, the Contingent

            Amount payable shall be Rupees 10,93,75,000; and (iv) if the revenue

            exceeds Rupees 21,87,50,000 but is less than Rupees 46,81,25,000,

            the Contingent Amount payable shall be as set out in ANNEXURE O

            hereto. The payment of the Contingent Amount by the Purchaser to ISC

            shall be guaranteed by an irrevocable unconditional corporate

            guarantee (in form and substance acceptable to ISC) provided by

            eFunds to ISC on or prior to the Closing Date. Notwithstanding

            anything to the contrary contained in this Agreement or elsewhere,

            the obligation of the Purchaser to make payment of the Contingent

            Amount to ISC shall be absolute and the Purchaser shall not be

            entitled to exercise any right of set off, counterclaim or deduction

            in relation to the Contingent Amount.

 

      (b)    The Purchaser undertakes to ensure that the ISC Transferred Business

            is conducted in good faith during the Earn Out Period with a view to

            maximize the revenue generated during such period. The Purchaser

            further undertakes not to commit any act or omission in the conduct

            of the Business post the Closing Date that may affect the Contingent

            Amount including by way of postponement or deferral of any revenue

            and to recognize the same during the Earn Out Period, provided

            however that the Purchaser shall not be required to undertake any

            act or omission outside its ordinary and customary policies and

            procedures to achieve the aforesaid. Any suggestions made in writing

            by ISC in relation to the conduct of the ISC Transferred Business by

            the Purchaser during the Earn Out Period shall be considered by the

             Purchaser in good faith.

 

            Purchaser shall consult with ISC on any price reduction it wishes to

            extend to existing customers of the ISC Transferred Business, which

            could materially impact the revenues during the Earn Out Period. The

            amount of any such reduction in revenue during the Earn Out Period

            shall be calculated by multiplying the difference between the two

            rates times the number of billable days during the Earn Out Period

             for each ATM affected.

 

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            The total amount of the above reductions to revenues during the Earn

            Out Period shall be added to the revenues actually achieved from the

            specific customer(s) affected for purposes of computing the total

            revenues against which the Contingent Payment shall be made.

 

            For the purposes of the above adjustment, it is expressly agreed

            that any price reduction agreed to between ISC and the Bank of India

            prior to the execution of this Agreement, pursuant to extension or

            amendment of the agreements dated August 31,2001 and October 28,2003

            between ISC and the Bank of India shall be added to the revenues

            actually received from the Bank of India under aforesaid agreement

            with the Bank of India provided that any increase in the Bank of

            India revenue hereunder shall not exceed Rupees 1,09,37,500.

 

             The Purchaser shall provide to ISC, monthly statements in relation

            to revenues achieved by the ISC Transferred Business, the order

            backlog and such other relevant information as may be reasonably

            requested by ISC. ISC shall, at its own cost, be entitled to

            undertake an audit (by an internationally recognized audit firm) of

            the information provided to it at the end of the Earn Out Period.

 

      (c)    The Contingent Payment, if and to the extent payable in terms of

            Article 2.1.5 (a) above, shall be made by the Purchaser to ISC by

            certified or cashier cheques or wire transfer of immediately

            available funds within a period of 30 days from the expiry of the

             Earn Out Period.

 

2.1.6 HOLD BACK

 

      (a)    The Holdback Amount shall be remitted into the Escrow Account in

            accordance with Article 2.1.2 above.

 

      (b)    On completion of two (2) years from the Closing Date and within 14

             days thereof, the Purchaser shall pay to ISC, Rupees 4,37,50,000 of

            the Holdback Amount less any amounts for liquidated Costs or a

            mutually agreed reasonable estimate in relation to outstanding

            claims (the "UNRESOLVED CLAIMS") which have arisen but have not been

            settled pursuant to Article 10 hereof. On completion of three (3)

            years from the Closing Date and within 14 days thereof, the

            Purchaser shall pay to ISC the balance of the Holdback Amount less

            any amounts for liquidated Costs or a mutually agreed reasonable

            estimate in relation to outstanding claims (the "UNRESOLVED CLAIMS")

            which have arisen but have not been settled pursuant to Article 10

            hereof. Upon the expiry of five (5) years, any Unresolved Claims

            shall, as soon as feasible and in any event not exceeding sixty (60)

            days from the expiry of such five (5) year period, be settled

            through mutual agreement between the Parties acting reasonably and

            such part of the remaining Holdback Amount less the amount for which

            the Unresolved Claim(s) have been settled shall be released by the

            Escrow Agent to ISC. Failing mutual

 

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            agreement in the aforesaid period, the Escrow Agent shall in any

            event release the remaining Holdback Amount to ISC.

 

2.1.7 BANK GUARANTEE

 

      On the Closing Date, ISC shall provide a bank guarantee to the Purchaser

      in relation to the indemnity obligations of ISC in terms of Article 10

      hereof in form and substance acceptable to the Purchaser acting reasonably

      (the "BANK GUARANTEE"), which Bank Guarantee shall be effective from the

      Closing Date for a period of three years therefrom. Upon the expiry of

      three years from the Closing Date, the Bank Guarantee shall automatically

      terminate and the Purchaser shall not be entitled to raise any claim

      thereon. The maximum amount payable under the Bank Guarantee shall not:

      (a) during the period between the Closing Date until the expiry of one

      year therefrom, exceed Rupees 13,12,50,000; (b) upon the expiry of one

      year from the Closing Date but prior to the expiry of two years therefrom,

      exceed Rupees 8,75,00,000; and (b) upon the expiry of two years from the

      Closing Date but prior to the expiry of three years therefrom, exceed

      Rupees 4,37,50,000.

 

      The Purchaser shall be entitled to invoke the Bank Guarantee in relation

      to a Cost only in accordance with the procedure set out in Article 10.

 

2.1.8 Notwithstanding anything to the contrary herein contained or implied, it

      is expressly agreed and declared that the Purchaser shall not assume or be

      obligated to pay, perform or otherwise assume or discharge any liabilities

      of ISC which relate to the period on or before the Closing Date

      (regardless of whether they arise before on or after the Closing) whether

      direct or indirect, whether known or unknown, absolute or contingent

      whether or not arising from the ISC Transferred Business or the operation

      thereof ("PRIOR PERIOD LIABILITY") that are not ISC Assumed Liabilities

       (collectively the "EXCLUDED LIABILITIES"), including:

 

      (a)    Any Loans or Liens;

 

      (b)    Any liability of ISC for any statutory levies including income tax,

            sales tax, service tax stamp duty or other like kind amounts which

             relate to a period or event(s) on or preceding the Closing Date and/

            or liabilities pertaining to claims against ISC or any judgment,

            order, decree, ruling or charge, or any action, suit, grievance,

            arbitration, proceeding, hearing or investigation of, in, or before

            any Governmental Body or before any arbitrator, relating to any

            alleged or actual act or omission occurring or alleged or actual

            condition existing on or prior to the Closing (whether the liability

            accrues or arises before, on or after the Closing and including any

            liabilities relating to breach of Contracts or Leases prior to or by

            reason of the Closing);

 

      (c)    Any contingent liability relating to the activities of the ISC

            Transferred Business agreed to be sold and transferred under or

            pursuant to this Agreement up to the Closing Date;

 

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      (d)    Any liability relating to the shareholders or purported shareholders

            of ISC arising from the Parties entering into this Agreement or

            otherwise including liability relating to claims by Capven Limited,

            ACI (India) Inc., ACI Worldwide Inc. USA, Tandem Computers

            International Inc. and/or Financial Software & Systems Private

            Limited;

 

      The Excluded Liabilities shall be and remain the liabilities of ISC and

      shall not be transferred by ISC to the Purchaser or deemed to be assumed

      by the Purchaser under or pursuant to this Agreement. In the event the

      Purchaser, on account of Excluded Liabilities, is required by law to incur

      any liability, ISC shall be liable to reimburse such amount in accordance

      with Article 10 below. Provided that nothing contained herein shall cast

      an obligation upon ISC to bear any liabilities in relation to the ISC

      Transferred Business arising from the conduct of the ISC Transferred

      Business on and from the Closing Date, which liabilities shall be solely

      to the account of the Purchaser.

 

2.2    ADJUSTMENT TO CLOSING PAYMENT

 

2.2.1 The Purchase Price has been agreed to between the Parties on the basis

      that the Net Current Assets as of the Closing Date will be Zero ("ASSUMED

      NET CURRENT ASSET VALUE"). For the purpose of computing the Net Current

      Assets under this Article 2.2, the amount outstanding from ISC on account

      of assets acquired on lease shall be excluded from Current Liabilities

      provided that the relevant leased assets are carried under fixed assets.

 

2.2.2 Determination of Net Current Assets:

 

      (i)    On the Closing Date, ISC shall provide to the Purchaser an inventory

            of the Current Assets as well as an estimate of the aggregate value

            of the Net Current Assets of live ISC Transferred Business (the "

            NET CURRENT ASSETS CLOSING ACCOUNTS"). The Net Current Assets

            Closing Accounts will show ISC's estimate of the value of each Net

            Current Assets category as at the Closing Date (the "CLOSING NET

            CURRENT ASSET AMOUNT").

 

      (ii)   At the option of the Purchaser, on or soon after the Closing Date,

            but not later than 5 days from the Closing Date, the Parties shall

            jointly conduct an inventory of the Net Current Assets and based

            thereon, within a period of fifteen (15) days from the Closing Date,

            confirm the information contained in the Net Current Assets Closing

            Accounts to determined the Closing Net Current Asset Amount.

 

      (iii) In the event that the Parties are unable to agree on the Closing Net

            Current Asset Amount within thirty (30) days after the Closing Date,

            the Parties shall appoint - Price WaterhouseCoopers (Chennai) to

            resolve the dispute (the "INDEPENDENT ACCOUNTANT"). The Independent

            Accountant shall deliver a report setting out the Closing Net

            Current Asset Amount to the Parties within thirty (30) days of his

            appointment. The Independent Accountant

 

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            shall act as an expert and not as an arbitrator and any decision

            made by the Independent Accountant shall be binding on the Parties.

 

      (iv)   In order to assist the Independent Accountant in the preparation of

            his report, each of the Purchaser and ISC severally agree that it

            shall:

 

             (a)    disclose to the Independent Accountant all relevant facts and

                  information in its possession; and

 

            (b)    promptly give to the Independent Accountant, all information,

                  assistance and access to books of account, documents, files

                  and papers which he may require.

 

            The Independent Accountant shall be entitled (to the extent he

            considers it appropriate) to rely on information provided or made

            available by any of the Parties.

 

      (v)    The fees and expenses of the Independent Accountant shall be borne

            equally by the Purchaser and ISC. Such fees and expenses shall be

            paid within thirty (30) days of the decision of the Independent

             Accountant being notified in writing to the Parties.

 

2.2.3 If the Closing Net Current Asset Amount determined as per Article 2.2.2 is

      less than zero, ISC shall pay such difference to the Purchaser, within

      fourteen (14) days of the Parties mutually agreeing on the Net Current

      Assets Closing Account. Provided that if an Independent Accountant is

      appointed in accordance with Article 2.2.2 (iii) then the payment as

      aforesaid shall be made within fourteen (14) days of the Independent

      Accountant intimating the Closing Net Current Asset Amount to the Parties.

 

2.2.4 If the Closing Net Current Asset Amount determined as per Article 2.2.2 is

      higher than zero, then the excess shall be paid by the Purchaser to ISC

       within fourteen (14) days of the Parties mutually agreeing on the Closing

      Net Current Asset Amount. Provided that if an Independent Accountant is

      appointed in accordance with Article 2.2.2 (iii), then the payment as

      aforesaid shall be made within fourteen (14) days of the Independent

      Accountant intimating the Closing Net Current Asset Amount to the Parties.

 

2.3    eFunds agrees, acknowledges and confirms that upon its execution of this

      Agreement, its liability under or pursuant to this Agreement in respect of

      obligations of the Purchaser in terms of this Agreement shall be joint and

      several with the Purchaser and that ISC shall be entitled, in its absolute

      discretion, to enforce its rights and remedies under this Agreement or

      otherwise at law against either the Purchaser or eFunds.

 

2.4    The Purchaser agrees to take all necessary steps to ensure the appointment

      of MR. HARISH K. MURTHI to the office of a non-executive chairman and

      member of the advisory board of the Purchaser. It is agreed between the

      Parties that the term of

 

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      office of Mr. Harish Murthi shall terminate upon the expiry of one year

      from the Closing provided that Harish Murthi shall be entitled to

      terminate his association with the Purchaser earlier by providing seven

      (7) days written notice to the Purchaser. The Parties agree that the

      Purchaser shall have the unilateral right to terminate the term of office

      of Mr. Harish Murthi in the event his conduct is against the interest of

      the Purchaser or he commits an act which is in non compliance with the

      code of conduct of the Purchaser including without limitation criminal

      misconduct and the like. Subject to applicable law, Mr. Harish Murthi

      shall, at his sole discretion, determine the quantum of his time and

      efforts to be utilized in his capacity as non-executive chairman including

      his participation in meetings of the advisory board of the Purchaser. It

      is agreed between the parties that Mr. Harish Murthi shall not be

      compensated for either of the above positions, although his reasonable out

      of pocket expenses incurred in the performance of his duties will be

      compensated. It is further agreed between the Parties that Mr. Harish

      Murthi shall not be entitled to exercise any rights or power with respect

      to operation and management of the ISC Transferred Business without the

       prior written approval of the Purchaser.

 

                                   ARTICLES 3

                              CLOSING AND PAYMENTS

 

3.1    CLOSING

 

      The Closing shall take place at Chennai no later than 5 Business Days from

      the date of the fulfillment of the terms and conditions hereof that are

      required to be fulfilled prior to the Closing.

 

3.2    ACTIONS AT CLOSING

 

3.2.1 On the Closing Date, ISC shall:

 

      (a)    Transfer, by delivery of possession to the Purchaser, of all Movable

            Assets by actual and /or constructive delivery;

 

      (b)    Deliver the following to the Purchaser, in form and substance

            satisfactory to the Purchaser:

 

            (i)    documents, including permissions for transfer of software

                  licenses, if any, required from any Person for transfer of the

                  ISC Transferred Assets to the Purchaser, free and clear of all

                  Liens but subject to such Liens that may subsist on account of

                   the ISC Assumed Liabilities;

 

            (ii)   Written consents from counter parties for the novation of the

                  Contracts in favour of the Purchaser in place of ISC with

                  effect from the Closing Date. It being clarified that the

                  novation agreements shall be executed within a period of 30

                  days from the Closing Date with the exception of the

                  agreements with the Bank of India, Karnataka Bank and United

                   Bank of India, the novation agreements for which shall be

 

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                  executed on or before the Closing and delivered to Purchaser

                  at Closing with effect from and subject to Closing (failing

                  which, this condition precedent shall be deemed to have been

                  fulfilled if written consent for novation including as to the

                  form of novation is obtained from Bank of India, Karnataka

                   Bank and/or United Bank of India);

 

            (iii) Written consents from the Landlords for the novation of the

                  Leases in favour of the Purchaser in place of ISC with effect

                  from the Closing Date. It being clarified that, with the

                  exception of the main premises lease for the operations / data

                  centre in Mumbai, which shall be novated on or before the

                  Closing with effect from and subject to Closing (failing

                  which, this condition precedent shall be deemed to have been

                  fulfilled if written consent for novation including as to the

                  form of novation shall be obtained from the lessor) and

                  delivered to the Purchaser at Closing, the novation agreements

                  shall be executed within a perio