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[EXECUTION COPY]
EXHIBIT 10.40
STOCK PURCHASE AGREEMENT
BETWEEN
THE A CONSULTING TEAM, INC.
AND
LEVEL 8 SYSTEMS, INC.
Dated as of September 29, 2000
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STOCK PURCHASE AGREEMENT dated as of September 29, 2000 (this "Agreement")
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between (i) THE A CONSULTING TEAM, INC., a New York corporation (the "Company"),
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and (ii) LEVEL 8 SYSTEMS, INC. (the "Investor").
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The parties agree as follows:
1. Authorization. The Company has authorized the issuance and sale, upon the
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terms and set forth in this Agreement, of (i) the shares of the Company's Common
Stock, $.01 par value (the "Common Stock"), referred to below, (ii) the Warrant
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referred to below in the form attached hereto as Exhibit A (the "Warrant"), and
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(iii) the shares of Common Stock issuable upon exercise of the Warrant (the
"Warrant Shares").
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2. Purchase and Sale of the Shares and the Warrant.
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2.1. The Investor hereby purchases from the Company, and the Company hereby
issues and sells to the Investor, 500,000 shares of Common Stock (collectively,
the "Shares") and a Warrant to purchase 500,000 shares of Common Stock, subject
to certain adjustments as provided for in the Warrant, for an aggregate purchase
price of four million dollars ($4,000,000) (the "Purchase Price"). The Investor
agrees that payment for the Purchase Price shall be made pursuant to a wire
transfer of immediately available funds in accordance with the wire transfer
instructions set forth in Schedule 2.1.2 hereto on the date hereof (the "Closing
Date').
2.2. Upon receipt of the Purchase Price, the Company shall send by
overnight courier on the Closing Date (i) certified copies of all requisite
corporate actions taken by the Board of Directors of the Company to authorize
the execution and delivery of this Agreement and the Warrant by the Company and
its consummation of the transactions contemplated thereby, (ii) such other
corporate documents and other papers as the Investor or its counsel may
reasonably request, (iii) the Warrant and (iv) the certificate for the Shares,
duly registered in the Investor's name, against payment in full by the Investor
of the Purchase Price.
2.3. Subject to and in accordance with the terms of the Warrant, the
Investor shall have the option, exercisable by notice from the Investor to the
Company at any time commencing 120 days after the date hereof but prior to the
second anniversary of the date hereof to purchase from the Company up to an
aggregate of 500,000 shares of Common Stock at a purchase price of $13.00 per
share, subject to certain adjustments as provided for in the Warrant.
3. Representations and Warranties of Company.
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The Company hereby represents and warrants to the Investor as follows
except as set forth in the schedules hereto with respect to specific Sections
below:
3.1. Organization.
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The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has all requisite corporate
power and authority to own, lease and operate the assets used in its business,
to carry on its business as presently conducted and as proposed to be conducted,
to enter into the Documents (as hereinafter defined),
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to perform its obligations thereunder, and to consummate the transactions
contemplated by the Documents. "Documents" means (a) this Agreement and (b) the
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Warrant. The Company has made available to the Investor upon request therefor
copies of its Certificate of Incorporation, as amended (the "Certificate of
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Incorporation") and By-laws, as amended; said copies are true, correct and
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complete and contain all amendments through the date hereof.
3.2. Qualification; Good Standing.
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The Company is duly qualified to do business and is in good standing as a
foreign corporation in the States of New Jersey, Georgia, Illinois and
Connecticut. The Company is not required to be qualified in any other
jurisdiction where the failure to qualify would have a material adverse effect
on the Company. The Company is not and, upon consummation of the transactions
contemplated by the Documents will not be, an "investment company" or a company
controlled by an investment company within the meaning of the Investment Company
Act of 1940, as amended.
3.3. Corporate Authorization; Enforceability, Etc.
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The Company has taken all corporate action, including all action required
of its Board of Directors and stockholders, necessary to authorize its execution
and delivery of the Documents, its performance of its obligations thereunder,
and its consummation of the transactions contemplated thereby. The Documents
have been executed and delivered by an officer of the Company in accordance with
such authorization. Each Document constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium, and similar laws affecting
creditors' rights generally and to general principles of equity. The Company
has authorized and shall at all times hold in reserve for issuance in accordance
with this Agreement the Shares and the Warrant Shares. Upon delivery, the
Shares will be duly authorized and validly issued, and upon payment of the
Purchase Price will be fully paid and nonassessable and will be free of any
liens or encumbrances other than any liens or encumbrances created by the
Investor outside of this Agreement; provided, however, that the Shares are
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subject to the restrictions on transfer under "blue-sky", state and/or Federal
securities laws and pursuant to this Agreement. The Warrant Shares have been
duly authorized and when issued in compliance with the provisions of the
Warrant, will be validly issued, fully paid and nonassessable, and will be free
of any liens or encumbrances other than any liens or encumbrances created by the
Investor outside of the Documents; provided, however, that the Warrant Shares
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are subject to the restrictions on transfer under "blue-sky", state and/or
Federal securities laws and pursuant to this Agreement and the Warrant. The
Shares and the Warrant Shares shall not be subject to any preemptive rights or
rights of first offer or refusal except as set forth herein.
3.4. No Conflict.
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The execution and delivery by the Company of the Documents, its
consummation of the transactions contemplated thereby, and its compliance with
the provisions thereof, will not in any material respect (a) violate or conflict
with its Certificate of Incorporation or By-laws, (b) violate, conflict with, or
give rise to any right of termination, cancellation, rescission or acceleration
under any agreement, lease, security, license, permit, or instrument to which
the
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Company is a party, or to which it or any of its assets is subject, (c) result
in the imposition of any Encumbrance (as hereinafter defined) on any asset of
the Company, (d) violate or conflict with any Laws (as hereinafter defined), or
(e) require any consent, approval or other action of, notice to, or filing with
any entity or person (governmental or private), except for those that have been
obtained or made or will be made in a timely manner. "Encumbrance" means any
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security interest, mortgage, lien, pledge, charge, easement, reservation,
restriction, or similar right of any third party; and "Laws" means all laws,
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rules, regulations, ordinances, orders, judgments, injunctions, decrees and
other legislative, administrative or judicial restrictions.
3.5. Capitalization.
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The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, $.01 par value (the "Common Stock"), and 2,000,000 shares of
Preferred Stock, $.01 par value (the "Preferred Stock"), of which (A) no shares
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of Preferred Stock are outstanding and (B) 6,609,996 shares of Common Stock are
issued and outstanding. Except (i) for an aggregate of 900,000 shares of Common
Stock reserved for issuance under the Company's Stock Option Plan(s), (ii) as
set forth on Schedule 3.5, and (iii) for the shares of Common Stock issued or
issuable in accordance with this Agreement and the Warrant, immediately after
the date hereof there will be no outstanding (1) securities convertible into or
exchangeable for shares of capital stock or other securities of the Company, (2)
options, warrant, or other rights to purchase or otherwise acquire from the
Company shares of such capital stock, or securities convertible into or
exchangeable for shares of such capital stock, or (3) contracts, agreements or
commitments relating to the issuance by the Company of any shares of such
capital stock, any such convertible or exchangeable securities, or any such
options, warrant or other rights. There are no voting trusts, voting
agreements, proxies or other agreements, instruments or understandings with
respect to the voting of the capital stock of the Company. Except (i) as set
forth herein, and (ii) as set forth on Schedule 3.5, there are no agreements or
understandings granting to any person or entity any right to cause the Company
to effect the registration under the Securities Act of 1933, as amended (the
"Securities Act"), of any shares of its capital stock.
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3.6. Securities Laws.
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Subject to and based in part upon the truth and accuracy of the
representations and warranties of the Investor contained herein, the offering
and sale of the Shares, the Warrant and the Warrant Shares contemplated hereby
are not subject to the registration requirements of the Securities Act pursuant
to an exemption thereunder and are, or following the date hereof will be, exempt
from registration or will be qualified as and when required under all applicable
state securities or "blue-sky" laws.
3.7. Financial Statements; SEC Documents.
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3.7.1 Since June 30, 1999, the Company has filed with the Securities
and Exchange Commission (the "SEC") all forms, reports,
schedules, statements and other documents, and amendments
thereto, required to be filed by it through the date hereof,
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (such forms, reports, schedules, statements,
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amendments and other documents, to the extent filed and
publicly available prior to the date of this Agreement, other
than preliminary filings, are referred to as the "SEC
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Reports").
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3.7.2 The Company is subject to Section 13 of the Exchange Act and is
in compliance with its reporting obligations thereunder,
satisfies the current public information requirement of Rule
144(c)(1) under the Securities Act (and is current in such
reporting obligations) and is currently eligible to file a
registration statement on Form S-3 under the Securities Act.
3.7.3 On the date of filing of each of the SEC Reports, such Report,
(a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
and (b) complied as to form in all material respects with the
applicable requirements of the Exchange Act.
3.7.4 The financial statements for the Company filed with the SEC in
its Form 10-K for the year ended December 31, 1999 present
fairly the financial condition and the results of operations of
the Company as of the dates and for the periods indicated, and
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP").
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The unaudited financial statements for the Company filed with
the SEC in its Form 10-Q for the quarter ended June 30, 2000,
present fairly the financial condition and the results of
operations of the Company as of the date and for the period
indicated, and have been prepared in accordance with GAAP
(subject to year-end audit adjustments not in the aggregate
material and except for the absence of footnotes required by
GAAP). The statement of income included in the unaudited
financial statements does not contain any items of
extraordinary or nonrecurring income except as expressly stated
therein, and the Company's balance sheet does not reflect any
write-up or revaluation increasing the book value of any
assets.
3.7.5 Since June 30, 2000, except as disclosed in Schedule 3.7.5
hereto, (a) the Company has conducted its business only in the
ordinary course, and has not incurred any (i) liabilities or
obligations (except such as were incurred in the ordinary
course of the Company's business consistent with past practice
and which do not exceed $100,000 in the aggregate) and (ii)
indebtedness for money borrowed (whether absolute, accrued,
contingent or otherwise), (b) no event has occurred or
circumstance or state of facts exist, whether or not in the
ordinary course of business, which has had or could reasonably
be expected to have a material adverse effect on the business,
operations, condition (financial or otherwise) or properties of
the Company and (c) the Company has not set aside, declared or
paid any dividend or other distribution to any of its
securityholders.
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3.7.6 Except as disclosed in the SEC Reports or in Schedule 3.7.6
attached hereto, the Company is not subject to any actual or,
to the Company's knowledge, reasonably foreseeable potential
material claims or liabilities (whether absolute, accrued,
contingent or otherwise), including, without limitation, any
tax, environmental, ERISA or employment material claims or
liabilities, or any other material debts, liabilities,
obligations, claims or potential material claims.
3.7.7 All taxes, including, without limitation, income, property,
sales, use, franchise, added value, employees' income
withholding and social security taxes, imposed by the United
States or by any foreign country or by any state, municipality,
subdivision or instrumentality of the United States or of any
foreign country, or by any other taxing authority, which are
due or payable by the Company, and all interest and penalties
thereon, whether disputed or not, have been paid in full, all
tax returns required to be filed in connection therewith have
been accurately prepared and duly and timely filed and all
deposits required by law to be made by the Company with respect
to employees' withholding taxes have been duly made. The
Company has not been delinquent in the payment of any foreign
or domestic tax, assessment or governmental charge or deposit
and has no tax deficiency or claim outstanding, proposed or
assessed against it, and there is no basis for any such
deficiency or claim.
3.8. Subsidiaries; Real Property.
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Except as set forth on Schedule 3.8, the Company does not own, directly or
indirectly, any capital stock or other proprietary interest in any other
corporation, partnership, or other entity. The Company does not own or hold,
directly or indirectly, any real property.
3.9. Compliance with Laws; Governmental Authorizations.
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The Company is in compliance with all Laws, except for such noncompliance
as would not have a material adverse effect on its assets, business condition
(financial or otherwise), or property. The Company is not required to hold or
maintain any material governmental authorizations, licenses or permits in the
conduct of its business as presently conducted and as proposed to be conducted
(other than any thereof which it holds on the date hereof).
3.10. Litigation.
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Except as set forth on Schedule 3.10 hereto, there are no (a) actions,
suits, claims, investigations or other proceedings by or before any governmental
authority or arbitrator pending or, to the knowledge of the Company, threatened
against the Company, or (b) judgments, decrees, injunctions or orders of any
governmental authority or arbitrator against the Company.
3.11. Brokers and Finders.
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No person or entity acting on behalf or under the authority of the Company
is or will be entitled to any broker's, finder's, or similar fee or commission
in connection with the issuance of the Shares or the consummation of any of the
transactions contemplated by the Documents.
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3.12. Disclosure.
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3.12.1 No representation or warranty of the Company contained in
this Agreement or the Schedules hereto, when read together,
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the
statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
3.12.2 The representations and warranties contained in this
Agreement shall not be affected or deemed waived by reason of
the fact that Investor or its representatives knew or should
have known that any such representation or warranty is or
might be inaccurate in any respect.
3.12.3 Except as otherwise provided herein, the representations and
warranties in this Agreement shall survive for all claims
made prior to June 14, 2001.
4. Representations and Warranties of the Investor.
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The Investor represents and warrants to the Company as follows:
4.1. Organization.
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The Investor is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has all requisite corporate or
partnership power and authority to enter into this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
4.2. Authorization.
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The Investor has taken all action necessary to authorize its execution and
delivery of this Agreement, its performance of its obligations hereunder, and
its consummation of the transactions contemplated hereby and this Agreement has
been executed and delivered by an officer or other authorized representative of
the Investor in accordance with such authorization. This Agreement constitutes
a valid and binding obligation of the Investor, enforceable in accordance with
its terms, subject to bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting creditors' rights generally and to general principles of
equity.
4.3. Investment Representations and Warranties.
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4.3.1 The Shares, the Warrant and any Warrant Shares which are
acquired by the Investor hereunder will be acquired by it
hereunder for its own account, for investment and not with a
view to the distribution thereof, nor with any present
intention of distributing the same. The Investor further
understands the transfer restrictions on the Shares, the
Warrant and the Warrant Shares hereof in the event the
Investor desires to transfer any of its Shares, the Warrant or
any Warrant Shares.
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4.3.2 The Investor understands that, except as provided in Section 5
hereof, any Shares and the Warrant acquired by it hereunder
have not been, and the Warrant Shares will not be, registered
under the Securities Act or registered or qualified under any
state securities or "blue-sky" laws, by reason of their
issuance in a transaction exempt from the registration and/or
qualification requirements thereof, and that they must be held
indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or registered or qualified
under any applicable state securities or "blue-sky" laws or is
exempt from registration and/or qualification.
4.3.3 The Investor understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the
Investor) promulgated under the Securities Act depends on the
satisfaction of various conditions and that, if applicable,
Rule 144 may only afford the basis for sales under certain
circumstances and only in limited amounts.
4.3.4 The Investor acknowledges that it has met with representatives
of the Company and has had the opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering of the Shares, the Warrant and the Warrant Shares,
and to obtain any additional information which the Company
possessed or could acquire without unreasonable effort or
expense, and has generally such knowledge and experience in
business and financial matters and with respect to such
investments as to enable the Investor to understand and
evaluate the risks of such investment and form an investment
decision with respect thereto.
4.3.5 The Investor has no need for liquidity in its investment in
the Company, and is able to bear the economic risk of such
investment for an indefinite period and to afford a complete
loss thereof.
4.3.6 The Investor is an "accredited investor" as such term is
defined in Rule 501 (the provisions of which are known to the
Investor) promulgated under the Securities Act.
4.3.7 The Investor has not been formed solely for the purpose of
effecting its investment hereunder.
4.3.8 The Investor acknowledges that the securities laws and state
fiduciary laws impose certain obligations on persons who trade
on or divulge material non-public information of publicly
traded companies.
4.4. Brokers and Finders.
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No person or entity acting on behalf or under the authority of the Investor
is or will be entitled to any broker's, finder's, or similar fee or commission
in connection with the transactions contemplated hereby.
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4.5. 1934 Act Filings.
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The Investor will make all filings (if any) required to be made by it under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended, and all
regulations thereunder, in connection with the transactions contemplated hereby.
5. Registration Rights.
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5.1. On or before December 1, 2000, the Company shall use its best efforts
to file a registration statement on Form S-3 (or on such other form as
may be available to the Company) (the "Registration Statement") with
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the SEC for the public sale of the Shares and the Warrant Shares. For
the purpose of certainty, the Investor shall not be obligated to
exercise the Warrant in order for the Registration Statement to cover
the Warrant Shares.
5.2. The Company shall use its best efforts to cause such Registration
Statement to become effective not later than 90 days after the date of
filing, and to remain effective until the Warrant Shares are eligible
for sale under Rule 144(k) of the Securities Act. The Investor
acknowledges that the occurrence of material events may require that
the Registration Statement be amended before further sales are
permitted thereunder, in which case the Company will promptly effect
such amendment.
5.3. The Registration Statement shall be accompanied by blue sky clearances
in such states as the Investor may reasonably request, provided,
however, the Company shall not be required to execute any general
consent to service of process in order to obtain such blue sky
clearance, except in a jurisdiction where the Company is already
subject to such process.
5.4. The Company shall supply to the Investor a reasonable number of copies
of all registration materials and prospectuses relating to the
registration of the Shares and the Warrant Shares. The Company and the
Investor shall execute and deliver to each other indemnity agreements
that are conventional in transactions of this type. The Investor shall
cooperate with the Company in the preparation and filing of the
Registration Statement and appropriate amendments thereto.
5.5. Notwithstanding the effectiveness of any Registration Statement, the
Investor will not sell any of the Company's stock covered by the
Registration Statement in a public offering or on any exchange which
such stock is traded, prior to 30 days after the effectiveness of the
Registration Statement.
5.6. The Company shall at all times file such public reports as shall be
required to satisfy the current public information requirements
contained in Rule 144 of the Securities Act, shall not hinder or delay
any sales under such Rule, or permit or suffer its counsel to hinder
or delay any such sales. The Company shall pay the fees and expenses
of its counsel in connection with any such sales.
5.7. Time is of the essence for purposes of this Section 5.
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6. Legend.
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The Shares and any Warrant Shares issued shall bear the legend set forth on
Exhibit B hereof (the "Legend"). The Company will promptly, upon request and
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receipt from the Investor of reasonable and customary written representations,
opinions and brokers letters for sales under Rule 144, remove the Legend (i) in
connection with any transfer of securities that is registered under the
Securities Act or made in compliance with Rule 144 or (ii) when it is otherwise
no longer required by applicable provisions of the Securities Act.
7. Right of First Offer
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(a) If the Investor proposes to sell (which term shall include any
disposition) any Shares or any Warrant Shares (the "Securities") in a Covered
Sale (as hereinafter defined), the Investor will give written notice to the
Company (the "Transfer Notice") of the number of Securities the Investor
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proposes to sell in Covered Sales during the 90-day period (the "Notice Period")
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commencing on the date of the Investor's delivery of the Transfer Notice (the
"Delivery Date") and the price per share at which the Investor proposes to sell
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such Securities. The Company shall have the right, during the 10-day period
commencing on the Delivery Date, to purchase all, but not less than all, of the
Securities described in the Transfer Notice at the price per share set forth in
the Transfer Notice by delivery to the Investor of (i) the Company's written
irrevocable agreement to purchase all of such Securities at such price per share
and (ii) payment in immediately available funds of the aggregate purchase price
for such Securities to such account or accounts as shall be designated by the
Investor. The right described in the preceding sentence shall terminate if the
agreement and purchase price described in the preceding sentence are not
received by the Investor prior to 4:00 p.m. New York City time on the 10th day
immediately following the Delivery Date. If the Company does not exercise its
right as hereinabove set forth within such 10-day period, the Investor may sell
all or any portion of the Securities described in the Transfer Notice to any
purchaser for a price per share equal to or in excess of the price set forth in
the Transfer Notice. If, at the end of the Notice Period, the Investor has not
completed such sales, the Investor shall no longer be permitted to sell such
Securities in a Covered Transaction without again complying with all of the
provisions of this Section. Notwithstanding the foregoing, the Investor may at
any time amend, supplement or revise any information set forth in any previously
delivered Transfer Notice by delivering an amended Transfer Notice to the
Company, in which event the 10- and 90- day periods described above shall
recommence from the date of Investor's delivery of such amended Transfer Notice
to the Company.
(b) As used in this Section, "Covered Sale" shall mean any sale of
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Securities by the Investor other than (i) a sale to an Affiliate of the Investor
or (ii) a transfer that is registered under the Securities Act or effected
pursuant to Rule 144 under the Securities Act.
(c) Notwithstanding anything in the Documents, the provisions of this
Section shall terminate and be of no further effect on the second anniversary of
the date hereof.
<PAGE>
8. Indemnification.
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8.1. The Company shall indemnify, defend and hold the Investor harmless
against all liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal fees and expenses),
relating to or arising from the untruth, inaccuracy or breach of any of the
representations, warranties or agreements of the Company contained in the
Documents.
8.2. The Investor, severally and not jointly, shall indemnify and hold the
Company harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including reasonable legal fees
and expenses), relating to or arising from the untruth, inaccuracy or breach of
any of the representations, warranties or agreements of the Investor contained
in the Documents.
9. Fees and Expenses.
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Each party hereto shall bear its own costs and expenses incurred on its
behalf in connection with the preparation, negotiation, execution, and delivery
of the Documents, and the preparation for and consummation of the transactions
contemplated thereby and therein, including any expenses incurred in connection
with the Registration Statement; provided, however, that the Company shall pay
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the reasonable fees and expenses of one law firm representing the Investor up to
an amount not in excess of $25,000.
10. Publicity; Press Release.
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Neither the Company nor Investor shall issue any press release or make any
public disclosure regarding the transactions contemplated unless such press
release or public disclosure is approved by the other party in advance, provided
that neither party hereto shall prevent the other from making any disclosures
required by law. Subject to the foregoing, the Company shall issue a press
release in form and substance acceptable to investor promptly following the
Closing.
11. Entire Agreement.
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This Agreement (including the Exhibits and Schedules hereto) contain the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter, including, without limitation, any oral or
written communications made by an officer, employee, agent or affiliate of the
Company in connection therewith.
12. Notices.
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All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
if to the Company:
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The A Consulting Team, Inc.
200 Park Avenue South
New York, New York 10003
Telephone: (212) 979-1010
Fax: (212) 979-7838
Attention: Shmuel BenTov, Chairman & Chief Executive Officer
if to the Investor:
Associate Corporate Counsel
Level 8 Systems, Inc.
8000 Regency Parkway
Cary, North Carolina 27511
Phone: 919-319-2440
Fax: 919-380-5090
Attention: James Andrew Saputo, Jr.
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of an
internationally-recognized overnight courier, on the next business day after the
date when sent, (c) in the case of telecopy transmission with confirmation of
its receipt, and (d) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted.
13. Amendments.
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The terms and provisions of this Agreement may only be modified or amended,
or the performance thereof waived, pursuant to an instrument signed by (a) the
Company and the Investor or (b) the party against whom enforcement of such
modification, amendment or waiver is sought.
14. Counterparts.
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This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
15. Headings.
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The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE>
16. Governing Law.
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This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York, without giving effect to any law or rule
that would cause the laws of any jurisdiction other than the State of New York
to be applied.
17. Successors and Assigns.
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Except as otherwise provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors and permitted assigns of the
parties hereto. No assignment of the Documents (or delegation of the Company's
obligations thereunder) may be made by the Company at any time, whether or not
by operation of law, without the Investor's prior written consent; provided,
however, that this sentence shall not be interpreted to require a separate
consent of the holders of the Warrant in connection with any acquisition,
business combination, or similar transaction where all or substantially all of
the assets or securities of the Company are acquired by a third party. The
Investor may not assign its rights or delegate its duties hereunder without the
Company's prior consent, except that the Investor may assign any or all of its
rights under this Agreement to an Affiliate of the Investor without the
Company's consent provided that such Affiliate delivers to the Company an
agreement reasonably satisfactory to the Company in which such Affiliate assumes
all of the Investor's payment and other obligations under this Agreement and
makes the representations made by the Investor hereunder.
18. Delays or Omissions.
-------------------
Except as expressly provided herein, no delay or omission to exercise any
right, power or remedy accruing to the Company or the Investor upon any breach
or default of any party under any Document shall impair any such right, power or
remedy of the Company or the Investor nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of the Company or the Investor of any breach
or default under any Document, or any waiver on the part of any such party of
any provisions or conditions of any Document, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under the Documents or by law or otherwise afforded to the
Company or the Investor, shall be cumulative and not alternative.
19. Stock Certificates.
------------------
Upon surrender of any certificate representing Securities for exchange at
the office of the Company, the Company at its expense will cause to be issued in
exchange therefor new certificates in such denomination or denominations as may
be requested for the same aggregate number of Securities represented by the
certificate so surrendered and registered as such holder may request. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
<PAGE>
theft, destruction or mutilation of any certificate evidencing any of the
Securities and (in case of loss, theft or destruction) of indemnity reasonably
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, the Company will make and deliver in lieu of such
certificate a new certificate of like tenor and for the number of Securities
evidenced by such certificate which remain outstanding.
20. Specific Enforcement.
--------------------
The Company acknowledges and agrees that irreparable damage would be
suffered by the Investor in the event that any of the Company's covenants
contained in the Documents were not performed in accordance with their specific
terms or were otherwise breached, and that money damages are an inadequate
remedy for breach thereof because of the difficulty of ascertaining and
quantifying the amount of damage that will be suffered by the Investor in the
event that such covenants are not performed in accordance with their terms or
are otherwise breached. It is accordingly agreed that the Investor shall be
entitled to an injunction or injunctions to prevent breaches of the covenants
referred to in the immediately preceding sentence and to enforce specifically
the terms and provisions of the Documents in any court having jurisdiction, this
being in addition to any other rights and remedies to which the Investor may be
entitled at law or equity.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.
THE A CONSULTING TEAM, INC.
By:____________________________
Name:
Title:
LEVEL 8 SYSTEMS, INC.
By:____________________________
Name:
Title:
<PAGE>
Schedule 2.1.2
--------------
The A Consulting Team, Inc.
Citibank N.A.
Branch #52
330 Madison Avenue
New York, NY 10017
ABA#021000089
Account #46913374
<PAGE>
Schedule 3.5
------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Outstanding Warrants
--------------------
-----------------------------------------------------------------------------------------------
Investor Shares
-------- ------
-----------------------------------------------------------------------------------------------
<S> <C>
Yossi Vardi 271,428
-----------------------------------------------------------------------------------------------
Rita Folger 14,286
-----------------------------------------------------------------------------------------------
DS Polaris Group 168,068
-----------------------------------------------------------------------------------------------
SFK Group 168,068
-----------------------------------------------------------------------------------------------
Koonras Technologies, Ltd. 142,857
-----------------------------------------------------------------------------------------------
Arison Investments Ltd. 378,150
-----------------------------------------------------------------------------------------------
Eurocom Communications, Ltd. 178,570
-----------------------------------------------------------------------------------------------
Poalim Capital Markets Technologies, Ltd. 142,857
-----------------------------------------------------------------------------------------------
Michael G. Jesselson 4/8/71 Trust 87,500
-----------------------------------------------------------------------------------------------
Michael G. Jesselson 12/18/80 Trust 37,500
---------
-----------------------------------------------------------------------------------------------
Total 1,589,284
===== =========
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Shares with Registration Rights
-------------------------------
-----------------------------------------------------------------------------------------------
Investor Shares
-------- ------
-----------------------------------------------------------------------------------------------
Yossi Vardi 542,856
-----------------------------------------------------------------------------------------------
Rita Folger 28,571
-----------------------------------------------------------------------------------------------
DS Polaris Group 203,782
-----------------------------------------------------------------------------------------------
SFK Group 203,782
-----------------------------------------------------------------------------------------------
Koonras Technologies, Ltd. 285,714
-----------------------------------------------------------------------------------------------
Arison Investments Ltd. 556,721
-----------------------------------------------------------------------------------------------
Eurocom Communications, Ltd. 357,140
-----------------------------------------------------------------------------------------------
Poalim Capital Markets Technologies, Ltd. 285,714
-----------------------------------------------------------------------------------------------
Michael G. Jesselson 4/8/71 Trust 175,000
-----------------------------------------------------------------------------------------------
Michael G. Jesselson 12/18/80 Trust 75,000
-----------------------------------------------------------------------------------------------
Total 2,714,280
===== =========
-----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.7.5
--------------
The Company has a credit line from Citibank N.A., of which $2,000,000 was
outstanding on the date hereof.
<PAGE>
Schedule 3.7.6
--------------
None
<PAGE>
Schedule 3.8
------------
T3 Media, Inc.
Always-On, Inc.
<PAGE>
Schedule 3.10
-------------
Litigation
----------
None
<PAGE>
EXHIBIT A
---------
[Warrant]
<PAGE>
EXHIBIT B
---------
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT. ADDITIONALLY, UNTIL
SEPTEMBER 29, 2002, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS, INCLUDING A RIGHT OF FIRST OFFER, SPECIFIED IN THE STOCK PURCHASE
AGREEMENT DATED AS OF SEPTEMBER 29, 2000, BETWEEN THE A CONSULTING TEAM, INC.
AND THE OTHER PARTY THERETO, 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, THE A CONSULTING TEAM, INC. HAS AGREED TO DELIVER TO
THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER. 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 A CONSULTING TEAM, INC."
