Exhibit 10.3


 


STOCK PURCHASE AGREEMENT


 


STOCK PURCHASE AGREEMENT,
dated as of October 11, 2004 (the “Agreement”), by and among (i) Patni
Computer Systems Inc., a Massachusetts corporation (“Buyer”), (ii) Cymbal
Corporation, a California corporation (the “Company”) and (iii) the
stockholders of the Company listed on the signature pages hereto (the “Stockholders”,
the Stockholders and the Company are referred to herein as the “Sellers”).


 


WITNESSETH


 


WHEREAS, Buyer desires to
purchase from the Stockholders all of the outstanding shares of capital stock
of the Company, consisting of 24,667,500 shares of Common Stock, no par value
(the “Common Stock”);


 


WHEREAS, the Stockholders
desire to sell to Buyer the shares of Common Stock owned by them, which
constitute all of the outstanding capital stock of the Company; and


 


NOW, THEREFORE, in
consideration of the mutual promises, covenants and agreements contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby being acknowledged, the parties hereto agree as
follows:


 


ARTICLE 1

DEFINITIONS


 


1.1.                              Certain
Matters of Construction. A reference to an Article, Section, Exhibit or
Schedule shall mean an Article of, a Section in, or Exhibit or
Schedule to, this Agreement unless otherwise expressly stated. The titles
and headings herein are for reference purposes only and shall not in any manner
limit the construction of this Agreement which shall be considered as a whole.
The words “include,” “includes” and “including” when used herein shall be
deemed in each case to be followed by the words “without limitation.”


 


1.2.                              Cross
References. The following terms defined elsewhere in this Agreement in the
Sections set forth below shall have the respective meanings therein defined:


 


	
  Term

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  
	
  2005 MBO Payment

  	
   

  	
  Section 2.2.3(a)

  
	
  2005 Stockholder
  Payment

  	
   

  	
  Section 2.2.3(a)

  
	
  2006 MBO Payment

  	
   

  	
  Section 2.2.3(a)

  
	
  2006 Stockholder
  Payment

  	
   

  	
  Section 2.2.3(a)

  
	
  2007 MBO Payment

  	
   

  	
  Section 2.2.3(a)

  



 













 


	
  2007 Stockholder
  Payment

  	
   

  	
  Section 2.2.3(a)

  
	
  Advisory Agreements

  	
   

  	
  Section 1.3.6(vi)

  
	
  Affiliated Group

  	
   

  	
  Section 3.10.1

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Avendus Letter

  	
   

  	
  Section 7.2.15

  
	
  Balance Sheet
  Certificate

  	
   

  	
  Section 2.2.4

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer Claims

  	
   

  	
  Section 8.1

  
	
  Buyer Group

  	
   

  	
  Section 8.1

  
	
  Cash Consideration

  	
   

  	
  Section 2.2.1

  
	
  Closing

  	
   

  	
  Section 2.2.

  
	
  Closing Balance Sheet

  	
   

  	
  Section 2.2.4

  
	
  Closing Date

  	
   

  	
  Section 2.2

  
	
  Closing Net Worth

  	
   

  	
  Section 2.2.4

  
	
  Closing Working Capital

  	
   

  	
  Section 2.2.4

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company Balance Sheet

  	
   

  	
  Section 3.6

  
	
  Common Stock

  	
   

  	
  Preamble

  
	
  Company Contracts

  	
   

  	
  Section 3.18.1

  
	
  Company Financial
  Statements

  	
   

  	
  Section 3.6

  
	
  Company Insurance
  Contracts

  	
   

  	
  Section 3.19

  
	
  Company Plans

  	
   

  	
  Section 3.11.1

  
	
  Company Proprietary
  Rights

  	
   

  	
  Section 3.17.1

  
	
  Company Subs

  	
   

  	
  Section 3.2.2

  
	
  Confidentiality
  Agreement

  	
   

  	
  Section 3.17.5

  
	
  Eligible Employee Pool

  	
   

  	
  Section 2.2.3(a)

  
	
  Employee and Contractor
  List

  	
   

  	
  Section 3.12.2

  
	
  Employee Agreement

  	
   

  	
  Section 6.4

  
	
  Encumbrances

  	
   

  	
  Section 3.15.1

  
	
  Escrow Account

  	
   

  	
  Section 2.2.2

  
	
  Escrow Agent

  	
   

  	
  Section 2.2.2

  
	
  Escrow Agreement

  	
   

  	
  Section 2.2.2

  
	
  Escrowed Consideration

  	
   

  	
  Section 2.2.2

  
	
  Excluded Transactions
  Schedule

  	
   

  	
  Section 3.25

  
	
  Governmental Entity

  	
   

  	
  Section 3.5.2

  
	
  Key Employee Agreement

  	
   

  	
  Section 6.4

  
	
  Liabilities

  	
   

  	
  Section 3.7.2

  
	
  Like Minds Amendment

  	
   

  	
  Section 3.27

  
	
  Other Equity Interests

  	
   

  	
  Section 3.2.2

  
	
  Parent

  	
   

  	
  Section 3.27

  
	
  Permits

  	
   

  	
  Section 3.8.

  
	
  Plans

  	
   

  	
  Section 7.2.12

  
	
  Pre-Closing Tax Period

  	
   

  	
  Section 6.9

  
	
  Purchase

  	
   

  	
  Section 2.1

  
	
  Purchase Price

  	
   

  	
  Section 2.1

  
	
  Quadrille Termination

  	
   

  	
  Section 3.27

  



 


2













 


	
  Sanbar Waiver

  	
   

  	
  Section 3.27

  
	
  SBC Waiver

  	
   

  	
  Section 3.27

  
	
  Sellers

  	
   

  	
  Preamble

  
	
  Shareholder Key
  Employee Agreement

  	
   

  	
  Section 6.4

  
	
  Stock Transfer
  Agreement

  	
   

  	
  Section 3.27

  
	
  Stockholder Payments

  	
   

  	
  Section 2.2.3

  
	
  Stockholders

  	
   

  	
  Preamble

  
	
  Stockholders Agent

  	
   

  	
  Section 2.2.7

  
	
  Tax

  	
   

  	
  Section 3.10.1

  
	
  Tax Return

  	
   

  	
  Section 3.10.1

  
	
  Third-Party Buyer
  Claims

  	
   

  	
  Section 8.4.2

  
	
  Treasury Regulations

  	
   

  	
  Section 3.10.1

  
	
  Welfare Plan

  	
   

  	
  Section 3.11.5

  
	
  Zensar Amount

  	
   

  	
  Section 1.3.6

  
	
  Zensar Option

  	
   

  	
  Section 3.27

  



 


1.3.                              Certain Definitions. As used herein, the following terms
shall have the following meanings:


 


1.3.1.                     2005 Revenues: the Specified Revenue during the twelve
months ended June 30, 2005.


 


1.3.2                        2005 Post-Closing Revenues: the Specified Revenue during the
period from the Closing Date through June 30, 2005.


 


1.3.3                        2006 Revenues: the Specified Revenue during the twelve
months ended June 30, 2006.


 


1.3.4                        2007 Revenues: the Specified Revenue during the twelve
months ended June 30, 2007.


 


1.3.5                        Affiliate: with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person where control (including with correlative meaning, controlled
by and under common control with) as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, or by written contract.


 


1.3.6                        Closing Liabilities: a total amount equal to the sum of (i) the
$6,800,000 to be paid by the Company pursuant to the agreement with Like Minds, Inc.,
as described in Section 3.27; (ii) the $350,000 payable by the
Company to Quadrille Data Limited, as described in Section 3.27; (iii) $250,000,
which shall be applied to the Buyer’s actual out-of-pocket costs associated
with its audit and/or review of the Company’s financial statements and tax compliance,
(iv) $700,000 payable to Avendus Advisors Pvt Ltd pursuant to the Avendus
Letter, (v) $1,000,000, which shall be applied to the Company’s payments
to be made to Zensar Technologies Ltd. in connection with the exercise of the
Zensar Option described in Section 3.27 and the transactions contemplated
by the notice to Zensar Technologies Ltd. described in Section 7.2.15,
such amount to be reduced by the amount of any payments made by the Company
with


 


3













 


respect to such
liabilities prior to the Closing (as so reduced, the “Zensar Amount”), (vi) $2,150,000
payable to those persons set forth on Schedule 1.3.6(vi) pursuant
to those certain Advisory Agreements between the Company and such persons (the “Advisory
Agreements”), and (vii) the amount specified by the Company to Buyer at
least two business days prior to Closing representing its out-of-pocket Closing
expenses, including the Company’s share of the initial fees of the Escrow Agent
and the Company’s share of the Hart-Scott-Rodino filing fee pursuant to Section 6.1,
to the extent not already paid.


 


1.3.7.                     Commercial Software: packaged commercial software programs generally
available to the public through retail dealers in computer software or directly
from the manufacturer which have been licensed to the Company or any Company
Sub pursuant to End-User Licenses and which are used in the Company’s or any
Company Sub’s business but are in no way a component of or incorporated in or
specifically required to develop or support any of the Company’s or any Company
Sub’s products and related trademarks, technology and know-how.


 


1.3.8.                     Company Leases: each lease, sublease, license or other
agreement under which the Company or any Company Sub uses, occupies or has the
right to occupy any real property or interest therein.


 


1.3.9.                     Company Material Adverse Effect: any materially adverse
change in or effect on the financial condition, business, operations, assets,
properties, results of operations or prospects of the Company or any Company
Sub.


 


1.3.10.               End-User Licenses: any object code end-user licenses granted
to end-users in the ordinary course of business that permit use of software
products without a right to modify, distribute or sublicense the same.


 


1.3.11.               Environmental Claim: any written notice alleging potential
liability (including, potential liability for investigatory costs, cleanup
costs, response or remediation costs, natural resources damages, property
damages, personal injuries, fines or penalties) arising out of, based on or
resulting from (a) the presence, or release of any Material of
Environmental Concern at any location, whether or not owned by that party or
any of its Affiliates or (b) circumstances forming the basis of any
violation, or alleged violation, by that party of any Environmental Law.


 


1.3.12.               Environmental Laws: any and all statutes, regulations and
ordinances relating to the protection of the environment.


 


1.3.13.               ERISA: the Employee Retirement Income Security Act of 1974,
as amended.


 


1.3.14.               ERISA Affiliate: with respect to a party, any member (other
than that party) of a controlled group of corporations, group of trades or
businesses under common control or affiliated service group that includes that
party (as defined for purposes of Section 414(b), (c) and (m) of the
Code).


 


1.3.15                  Founders: Neeraj Gupta and Surjeet Singh.


 


4













 


1.3.16.               GAAP: generally accepted U.S. accounting principles
consistently applied.


 


1.3.17.               Gross Contribution Dollars: with respect to a party, means
that party’s gross revenue (adjusted downwards for reimburseable expenses accounted
in revenues) less the line items set forth on Schedule 1.3.17. all
as determined in accordance with GAAP as modified by Schedule 1.3.17.


 


1.3.18.               Knowledge: with respect to the Company, the actual knowledge
of the Founders and the other officers and directors of the Company and the
Company Subs after making reasonable inquiry of the Company’s employees, and
with respect to Buyer, the actual knowledge of the officers and directors of
the Buyer after making reasonable inquiry of Buyer’s employees.


 


1.3.19.               Materials of Environmental Concern: petroleum and its
by-products and all substances or constituents that are regulated by, or form
the basis of liability under, any Environmental Law.


 


1.3.20.               MBO Payments: the 2005 MBO Payment, the 2006 MBO Payment and
the 2007 MBO Payment.


 


1.3.21.               MBO Schedule: the schedule of employees of the Company
eligible to participate in the MBO Payments, along with each such employee’s
participation percentage, as delivered by the Company to and accepted by Buyer
prior to the date of this Agreement.


 


1.3.22.               Net Worth shall mean the amount equal to (i) total
assets of the Company, as defined under GAAP, on a consolidated basis minus (ii) total
liabilities of the Company, as defined under GAAP, on a consolidated basis.


 


1.3.23.               Net Worth Standard: $5,277,726.


 


1.3.24.               Permitted Encumbrances: (a) liens for current taxes and
other statutory liens and trusts not yet due and payable or that are being
contested in good faith, (b) liens that were incurred in the ordinary
course of business, such as carriers’, warehousemen’s, landlords’ and mechanics’
liens and other similar liens arising in the ordinary course of business, (c) liens
on personal property leased under operating leases, (d) liens, pledges or
deposits incurred or made in connection with workmen’s compensation,
unemployment insurance and other social security benefits, or securing the
performance of bids, tenders, leases, contracts (other than for the repayment
of borrowed money), statutory obligations, progress payments, surety and appeal
bonds and other obligations of like nature, in each case incurred in the
ordinary course of business, (e) pledges of or liens on manufactured
products as security for any drafts or bills of exchange drawn in connection
with the importation of such manufactured products in the ordinary course of
business, (f) liens under Article 2 of the Uniform Commercial Code
that are special property interests in goods identified as goods to which a
contract refers, and (g) liens under Article 9 of the Uniform
Commercial Code that are purchase money security interests, none of which are
material in the aggregate or individually.


 


5













 


1.3.25.               Person: an individual, a corporation, an association, a
partnership, an estate, a limited liability company, a trust and any other
entity or organization.


 


1.3.26.               Specified Revenue: revenue as determined in accordance with Schedule 1.3.26.


 


1.3.27.               Subsidiary: any corporation, association, or other business
entity a majority (by number of votes on the election of directors or persons
holding positions with similar responsibilities) of the shares of capital stock
(or other voting interests) of which is owned by Buyer, the Company or their
respective Subsidiaries, as the case may be.


 


1.3.28.               Working Capital: (a) consolidated accounts receivable,
cash (including restricted cash, even though including such restricted cash may
not be in accordance with GAAP) and cash equivalents and short-term
investments, all as determined in accordance with GAAP minus (b) consolidated
accounts payable and the accrued liabilities included in the current
liabilities, all as determined in accordance with GAAP.


 


1.3.29.               Working Capital Standard: $3,500,000.


 


ARTICLE 2

PURCHASE AND SALE


 


2.1.                              Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing the Stockholders shall sell to
Buyer, and Buyer shall purchase from the Stockholders, all shares of Common
Stock owned by the Stockholders (the purchase of the Common Stock is referred
to herein as the “Purchase”). The total purchase price for the Purchase,
including amounts placed in escrow at closing and the contingent payments
referred to below, is an amount up to US$68,000,000 (the “Purchase Price”),
which amount may be adjusted as of the Closing as provided in Section 2.2.4
and which shall be finally determined as provided in Section 2.2.3. The
Purchase Price shall be paid as provided in Section 2.2.


 


2.2.                              Closing; Payment of Purchase Price. The closing (the “Closing”)
of the Purchase hereunder shall take place at the offices of Foley Hoag LLP in
Boston, MA on the fifth business day after the parties have received
Hart-Scott-Rodino clearance and all other consents or approvals required as a
condition to closing have been obtained (or, if such date falls on or between November 10,
2004 and November 28, 2004, on November 29, 2004), or on such other date
or at such other location as Buyer and Seller may mutually agree (such date
referred to as the “Closing Date”). The Purchase Price shall be payable as
follows:


 


2.2.1.                     Initial Consideration. Buyer shall pay an aggregate amount
equal to US$35,000,000 as follows: (i) at the Closing, Buyer shall pay to
the Stockholders an aggregate amount equal to US$35,000,000 in immediately
available funds, less the amount of the Closing Liabilities and the Escrowed
Consideration (the “Cash Consideration”), provided, however, that Buyer shall
be entitled to offset any amounts owed to the Company by any Stockholder from
the amount of the Cash Consideration to be delivered to such Stockholder, (ii) at
the Closing, Buyer shall deposit the Escrowed Consideration in accordance with Section 2.2.2,
and (iii) Buyer shall


 


6













 


pay the Closing Liabilities
at or following the Closing in accordance with their terms. The Buyer shall
disburse to each Common Stockholder an amount representing the product of (a) a
fraction the numerator of which is the number of shares of Common Stock held by
such Stockholder at Closing, and the denominator of which is the total number
of shares of Common Stock held by all Stockholders at Closing multiplied by (b) the
Cash Consideration. Each Stockholder’s portion of the Cash Consideration is set
forth on Schedule 2.2.1. The Buyer shall disburse to each
Stockholder his or her portion of the Cash Consideration by wire transfer or by
cashier’s checks payable to one or more accounts of the Stockholders in
accordance with the written instructions set forth on Schedule 2.2.1;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, Buyer shall have no obligation to deliver the Cash
Consideration or the Escrowed Consideration to any Stockholder unless the Buyer
shall have first received from such Stockholder a stock certificate or
affidavit of loss (in a form acceptable to Buyer) and stock powers duly
endorsed in blank, with any required transfer stamps affixed thereto.


 


2.2.2                        Escrowed Funds. At the Closing, Buyer shall deliver to
Wachovia Bank, as escrow agent (the “Escrow Agent”) an aggregate amount equal
to US$4,000,000 in immediately available funds (the “Escrowed Consideration”),
which amount shall be placed into an escrow account maintained by the Escrow
Agent (the “Escrow Account”). The Escrow Agent shall maintain the Escrow
Account for a minimum of two (2) years in accordance with the terms of the
Escrow Agreement in the form attached as Exhibit A hereto (the “Escrow
Agreement”), for the purpose of partially securing any amounts payable by the
Stockholders to the Buyer on account of indemnification claims under Article 8
hereof.  The fees and expenses of the
Escrow Agent shall be borne 50% by Buyer and 50% by the Stockholders.


 


2.2.3                        Stockholder Payments. Subject to the set
off provisions contained in Section 8.3(d) hereof, Buyer shall pay to
the Stockholders Agent, for and on behalf of the Stockholders, as contingent
payments (the “Stockholder Payments”), an amount of cash determined and payable
as follows:


 


(a)                                  Payment.
Buyer shall pay to the Stockholders Agent, as contingent payments, the
following cash payments:


 


(i)                                     An
amount (the “2005 Stockholder Payment”) payable on October 31, 2005,
calculated as follows: If 2005 Revenues are less than or equal to $38,150,000,
or if the Gross Contribution Dollars associated with the 2005 Post-Closing
Revenues are less than 25% of 2005 Post-Closing Revenues, then the 2005
Stockholder Payment shall be $0. If 2005 Revenues are greater than $38,150,000
and if the Gross Contribution Dollars associated with the 2005 Post-Closing
Revenues are greater than or equal to 25% of 2005 Post-Closing Revenues, then
the 2005 Stockholder Payment shall be equal to the product of (x) a fraction,
the numerator of which is $23,000,000 and the denominator of which is $221,540,000
times (y) the amount of 2005 Revenues; and provided, however, that (i) the
2005 Stockholder Payment shall be adjusted on a dollar for dollar basis (but
not below zero) for each dollar by which the Gross Contribution Dollars
associated with the 2005 Post-Closing Revenues are greater than or less than
30.6% of 2005 Post-Closing Revenues (the “2005 Gross Contribution Adjustment”);
(ii) the 2005 Stockholder Payment shall not exceed $33,000,000; and (iii) 14.78%
of the 2005 Stockholder Payment (the “2005 MBO Payment”) shall be distributed
by Buyer to certain


Changes made
pursuant to e-mail dated October 10, 2004


 


7













 


employees of the Company
in accordance with Section 2.2.3(a)(iv) (provided, however, that the
2005 MBO Payment shall not exceed $3,400,000).


 


(ii)                                  An
amount (the “2006 Stockholder Payment”) payable on October 31, 2006,
calculated as follows: If the aggregate amount of 2005 Revenues and 2006
Revenues is equal to or less than $88,928,000 or if the aggregate Gross
Contribution Dollars associated with the 2005 Post-Closing Revenues and 2006
Revenues are less than 25% of the aggregate amount of 2005 Post-Closing
Revenues and 2006 Revenues, then the 2006 Stockholder Payment shall be $0. If
the aggregate amount of 2005 Revenues and 2006 Revenues is greater than
$88,928,000, and if the aggregate Gross Contribution Dollars associated with
the 2005 Post-Closing Revenues and 2006 Revenues are greater than or equal to
25% of the aggregate amount of 2005 Post-Closing Revenues and 2006 Revenues,
then the 2006 Stockholder Payment shall be equal to (x) the product of (i) a
fraction, the numerator of which is $23,000,000 and the denominator of which is
$221,540,000 times (ii) the aggregate amount of 2005 Revenues and
2006 Revenues, less (y) the amount of the 2005 Stockholder Payment; and
provided, however, that (i) the 2006 Stockholder Payment shall be adjusted
on a dollar for dollar basis (but not below zero) for each dollar by which the
aggregate Gross Contribution Dollars associated with the 2005 Post-Closing
Revenues and 2006 Revenues are greater than or less than 30.6% of the aggregate
of 2005 Post-Closing Revenues and 2006 Revenues; (ii) the sum of the 2005 Stockholder
Payment and the 2006 Stockholder Payment shall not exceed $33,000,000; and (iii) 14.78%
of the 2006 Stockholder Payment (the “2006 MBO Payment”) shall be distributed by
Buyer to certain employees of the Company in accordance with Section 2.2.3(a)(iv) (provided,
however, that the sum of the 2005 MBO Payment and the 2006 MBO Payment shall not
exceed $3,400,000).


 


(iii)                               An
amount (the “2007 Stockholder Payment”) payable on October 31, 2007,
calculated as follows: If the aggregate amount of 2005 Revenues, 2006 Revenues
and 2007 Revenues is equal to or less than $155,078,000, or if the aggregate
Gross Contribution Dollars associated with the 2005 Post-Closing Revenues, 2006
Revenues and 2007 Revenues are less than 25% of the aggregate amount of 2005
Post-Closing Revenues, 2006 Revenues and 2007 Revenues, then the 2007
Stockholder Payment shall be $0. If the aggregate amount of 2005 Revenues, 2006
Revenues and 2007 Revenues is greater than $155,078,000 and if the aggregate
Gross Contribution Dollars associated with the 2005 Post-Closing Revenues, 2006
Revenues and 2007 Revenues are greater than or equal to 25% of the aggregate
amount of 2005 Post-Closing Revenues, 2006 Revenues and 2007 Revenues, then the
2007 Stockholder Payment shall be equal to (x) the product of (i) a
fraction, the numerator of which is $23,000,000 and the denominator of which is
$221,540,000 times (ii) the aggregate amount of 2005 Revenues, 2006
Revenues and 2007 Revenues, less (y) the aggregate amount of the 2005 Stockholder
Payment and 2006 Stockholder Payment; and provided, however, that (i) the
2007 Stockholder Payment shall be adjusted on a dollar for dollar basis (but
not below zero) for each dollar by which the aggregate Gross Contribution
Dollars associated with the 2005 Post-Closing Revenues, 2006 Revenues and 2007
Revenues are greater than or less than 30.6% of the aggregate of the 2005
Post-Closing Revenues, 2006 Revenues and 2007 Revenues; (ii) the sum of
the 2005 Stockholder Payment, the 2006 Stockholder Payment and the 2007
Stockholder Payment shall not exceed $33,000,000; and (iii) 14.78% of the
2007 Stockholder Payment (the “2007 MBO Payment”) shall be distributed by Buyer
to certain employees of the Company in 


 


Changes made
pursuant to e-mail dated October 10, 2004


 


8













 


accordance with Section 2.2.3(a)(iv) (provided,
however, that the sum of the 2005 MBO Payment, the 2006 MBO Payment and the
2007 MBO Payment shall not exceed $3,400,000).


 


(iv)                              On
the date of each Stockholder Payment, the Company shall pay each employee of
the Company listed on the MBO Schedule his or her participation percentage
of the applicable MBO Payment if such employee has been continuously employed
by the Company from the Closing Date through the date of such Stockholder
Payment. Any amount not paid to any employee listed on the MBO Schedule because
of such employee’s failure to qualify for such payment shall be retained by
Buyer.


 


(b)                                 Records.
No later than September 15, 2005, 2006 and 2007, as applicable, Buyer
shall deliver to the Stockholders Agent (as defined herein) a calculation of
2005 Revenues, 2006 Revenues or 2007 Revenues, as applicable, together with all
relevant work papers and supporting calculations, including calculations of the
Gross Contribution Dollars. Such calculations shall be prepared by Buyer’s
auditors, or such other nationally recognized accounting firm selected by
Buyer, in accordance with GAAP and on a consistent basis from year to year
(except where specific provisions in this Agreement permit such calculations to
be otherwise than in accordance with GAAP and on a consistent basis from year
to year). Upon written request from the Stockholders Agent, Buyer agrees to
give a nationally recognized accounting firm, reasonably acceptable to Buyer,
reasonable access to the books and records of the Company for purposes of
reviewing the determination of such calculations.


 


2.2.4.                     Working Capital and Net Worth Adjustment.


 


(a)                                  The
Purchase Price paid to the Stockholders pursuant to Section 2.2.1 shall be
subject to adjustment as follows (the “Purchase Price Adjustment”): (i) if
the Closing Working Capital and Closing Net Worth are each less than the
Working Capital Standard and Net Worth Standard, respectively, the Purchase
Price be paid to the Stockholders pursuant to Section 2.2.1 shall be
reduced by the greater of (x) the dollar amount by which the Net Worth Standard
is greater than the Closing Net Worth, and (y) the dollar amount by which the
Working Capital Standard is greater than the Closing Working Capital; (ii) if
the Closing Working Capital and Closing Net Worth are each greater than the
Working Capital Standard and Net Worth Standard, respectively, the Purchase
Price be paid to the Stockholders pursuant to Section 2.2.1 shall be
increased by the greater of (x) the dollar amount by which the Closing Net
Worth is greater than the Net Worth Standard, and (y) the dollar amount by
which the Closing Working Capital is greater than the Working Capital Standard;
and (iii) in all other cases, the Purchase Price shall be adjusted on a dollar
for dollar basis for the net amount by which each of the Closing Net Worth and
Closing Working Capital are greater than or less than the Net Worth Standard
and Working Capital Standard, respectively, provided, however, that in each
case no adjustment to the Purchase Price shall be made unless the amount of the
Purchase Price Adjustment exceeds $100,000.


 


(b)                                 At
the Closing, the Company shall deliver to Buyer a certificate, executed by an
executive officer of the Company (the “Balance Sheet Certificate”), which shall
attach and attest to the accuracy and completeness of (i) a balance sheet
of the Company as of the close of business on the Closing Date (the “Closing
Balance Sheet”); and (ii) a statement of the Working Capital of the
Company (the “Closing Working Capital”) and a statement of the Net Worth of the


 


Changes made
pursuant to e-mail dated October 10, 2004


 


9













 


Company (the “Closing Net
Worth”), each as reflected on the Closing Balance Sheet. The Closing Balance Sheet,
Closing Working Capital and Closing Net Worth will be prepared and determined
in accordance with GAAP, using the same policies, principles and methodologies
used in connection with the preparation of the Company Financial Statements. At
Closing, the Purchase Price paid to the Stockholders shall be reduced by any
downward Purchase Price Adjustment as calculated based on the Closing Balance
Sheet delivered by the Company, provided, however, that no adjustment shall be
made unless such amount exceeds $100,000. The Company will deliver to Buyer a
draft of the Balance Sheet Certificate no less than five (5) business days
prior to the Closing Date, which draft shall set forth the Company’s good faith
estimates of the Closing Balance Sheet, the Closing Working Capital, the
Closing Net Worth.


 


(c)                                  Within
120 days following the Closing, Buyer shall obtain a review or audit of the
Closing Balance Sheet from KPMG or such other nationally recognized independent
accounting firm selected by Buyer and reasonably acceptable to Stockholders
Agent. Such firm shall also be required to calculate the Working Capital and
Net Worth of the Company as of the close of business on the Closing Date in
accordance with GAAP, using the same principles and methodologies used in
connection with the preparation of the Company Financial Statements. Upon
receipt of the results of such review or audit, the Purchase Price Adjustment
shall be recalculated based on the accountant’s calculations of such Net Worth
(the “Final Net Worth”) and Working Capital (“Final Working Capital”) and shall
be further adjusted, on a dollar for dollar basis, by the amount by which the
Zensar Amount is greater than or less than the actual amounts paid by the
Company after Closing to Zensar Technologies Ltd. in connection with the
exercise of the Zensar Option described in Section 3.27 and the
transactions contemplated by the notice to Zensar Technologies Ltd. described
in Section 7.2.15.


 


(d)                                 In
the event that the calculations pursuant to Section 2.2.4(c) would
result in a greater downward Purchase Price Adjustment than the Purchase Price
Adjustment made pursuant to the Company’s calculations pursuant to Section 2.2.4(b),
such difference shall be distributed to Buyer from the Escrow Account first,
and if collection from cash in the Escrow Account is insufficient to satisfy
such adjustment, Buyer shall have the right to set off such amount against
Stockholder Payments owed by Buyer to the Stockholders (which right of set off
the Company and the Stockholders explicitly grant Buyer), or to recover such
amount directly from the Stockholders, to the extent such set off is not
available, provided, however, that no adjustment shall be made unless such
difference exceeds $100,000. In the event that the calculations pursuant to Section 2.2.4(c) would
result in either an upward Purchase Price Adjustment or a lesser downward
Adjustment than any downward Purchase Price Adjustment made pursuant to the
Company’s calculations pursuant to Section 2.2.4(b), then Buyer shall
deposit an amount into the Escrow Account equal to the sum of (i) any
upward Purchase Price Adjustment determined pursuant to the accountant’s
report, (ii) the difference between the downward Purchase Price Adjustment
determined pursuant to the accountant’s report, if any, and any Purchase Price
Adjustment deducted from the Purchase Price at Closing, provided, however, that
no adjustment shall be made unless such sum exceeds $100,000, and (iii) any
portion of the $250,000 set aside as Closing Liabilities for Buyer’s actual
our-of-pocket costs associated with its audit and/or review of the Company’s
financial statements and tax compliance that was not in fact expended.


 


10













 


2.2.5.                     Delivery of Certificates. At the Closing, the Stockholders
shall deliver to Buyer certificates for the shares of Common Stock duly
endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto, or if stock certificates are not then
available, affidavits of loss in a form acceptable to Buyer in lieu thereof.


 


2.2.6                        Ancillary Agreements; Further Actions. The appropriate
parties shall execute and deliver the agreements referred to in Section 6.3
hereof. The parties shall execute and deliver any other instruments, documents
and certificates that are required to be delivered pursuant to this Agreement
or as may be reasonably requested by any party in order to the transactions
contemplated by this Agreement. If at any time after the Closing, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest, perfect or confirm in Buyer title to or ownership or possession of any
property, right, privilege, power, franchise or other asset of the Company
acquired or to be acquired by reason of, or as a result of, the transactions
contemplated hereby, the officers and directors of the Company and Buyer are
fully authorized in the name of the respective corporations or otherwise to
take, and will take, all such lawful and necessary action, so long as such
action is consistent with this Agreement.


 


2.2.7                        Stockholders
Agent.


 


(a)                                  Neeraj
Gupta hereby is appointed attorney-in-fact and authorized and empowered to act,
for and on behalf of any or all of the Stockholders (with full power of
substitution in the premises) in connection with the indemnity provisions of Article 8
as they relate to the Stockholders generally, the Escrow Agreement, the notice
provisions of this Agreement and such other matters as are reasonable necessary
for the consummation of the transactions contemplated hereby and thereby
including to receive all Stockholder Payments on behalf of the Stockholders, to
act as the representative of the Stockholders to review and authorize all
set-offs, claims and other payments authorized or directed by this Agreement
and dispute or question the accuracy thereof, to compromise on their behalf
with Buyer any claims asserted thereunder and to authorize payments to be made
with respect thereto, and to take such further actions as are authorized in
this Agreement (the above named representative, as well as any subsequent
representative of the Stockholders appointed by him or after his death or
incapacity elected by the vote of holders of a majority of the shares of Common
Stock issued and outstanding immediately prior to the Closing, being referred
to herein as the “Stockholders Agent”).


 


(b)                                 By
his execution hereof, Neeraj Gupta hereby accepts such appointment and agrees
to act as the Stockholders Agent hereunder until such time as a subsequent Stockholders
Agent shall be appointed by the Stockholders.


 


(c)                                  The
Stockholders agree that the Stockholders Agent is specifically empowered to
disburse funds from the Stockholder Payments to fulfill the obligations to Avendus
Advisors Pvt Ltd under the Avendus Letter.


 


(d)                                 In
discharging his duties hereunder, the Stockholders Agent may hire professionals
(including without limitation, attorneys, accountants, financial advisors and


 


11













 


investigators), and incur
such other fees and expenses on behalf of the Stockholders as the Stockholders
Agent determines in his sole and absolute discretion to be reasonably necessary
to carry out his duties hereunder, and to disburse funds from the Stockholder
Payments or any other amounts paid to the Stockholders Agent for the benefit of
the Stockholders to discharge any such expenses.


 


(e)                                  The
Stockholders Agent shall not be liable to any Stockholder with respect to any
action taken or omitted to be taken by the Stockholders Agent under or in
connection with the payment to the Stockholders of the Stockholder Payments,
this Agreement or the Escrow Agreement unless such action or omission results
from or arises out of fraud, gross negligence or willful misconduct on the part
of the Stockholders Agent. Buyer and its Affiliates shall be entitled to rely
on such appointment and treat such Stockholders Agent as the duly appointed
attorney-in-fact of each Stockholder until such time as a subsequent
Stockholders Agent shall be appointed by the holders of a majority of the
shares of Common Stock issued and outstanding immediately prior to the Closing.


 


ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


As a material
inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, the Company and each of the Founders jointly
and severally (but subject to the limitations contained in Section 8.3)
represent and warrant to Buyer as follows:


 


3.1.                              Corporate Status of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California, with the requisite corporate power to own,
operate and lease its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business and is in good
standing in all jurisdictions in which the character of the properties owned or
held under lease by it or the nature of the business transacted by it makes
qualification necessary, except where the failure to be so qualified would not
have a Company Material Adverse Effect. All jurisdictions in which the Company
is qualified to do business are set forth on Schedule 3.1 hereto.


 


3.2.                                     Capital
Stock.


 


3.2.1.                     Authorized Stock of the Company. The authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock, of which
24,667,500 shares are issued and outstanding and 5,000,000 shares of Preferred
Stock, none of which shares are issued and outstanding. All of the outstanding
shares of Common Stock are held of record by the Stockholders in the amounts
set forth opposite their respective names as set forth on Schedule 3.2.1.
All of the outstanding shares of Common Stock have been duly authorized and
validly issued, were not issued in violation of any person’s preemptive rights,
are fully paid and nonassessable and were issued in compliance with applicable
federal and state securities laws, including exemptions from registration under
the Securities Act of 1933, as amended.


 


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3.2.2.                     Options and Convertible Securities of the Company. Except as
set forth on Schedule 3.2.2, there are no outstanding
subscriptions, options, warrants, conversion rights or other rights,
securities, agreements or commitments obligating the Company to issue, sell or
otherwise dispose of shares of its capital stock, or any securities or
obligations convertible into, or exercisable or exchangeable for, any shares of
its capital stock (collectively, the “Other Equity Interests”). As of, or
immediately prior to the Closing, all Other Equity Interests have been
terminated or converted into shares of Common Stock, as set forth on Schedule 3.2.2.
Except as set forth on Schedule 3.2.2. there are no voting trusts
or other agreements or understandings to which the Company or any Stockholder
is a party with respect to the voting of the shares of Common Stock, and the
Company is not a party to or bound by any outstanding restrictions, options or
other obligations, agreements or commitments to sell, repurchase, redeem or
acquire any outstanding shares of Common Stock or other equity securities of
the Company.


 


3.3.                              Subsidiaries. Except for two non-voting nominee shares held
by Webspace Consulting Inc., the Company owns all of the outstanding capital
stock of Cymbal Information Services Private Limited, a company duly organized,
validly existing and in good standing under the laws of India. The Company owns
all of the outstanding capital stock of Cymbal Corporation Limited, a company
duly organized, validly existing and in good standing under the laws of the
United Kingdom. Except for the holders of certain non-voting nominee shares as
set forth on Schedule 3.3, Cymbal Information Services Private
Limited owns all of the outstanding capital stock of Cymbal Information
Services (Thailand) Limited, a company duly organized, validly existing and in
good standing under the laws of Thailand (Cymbal Information Services Private
Limited, Cymbal Corporation Limited and Cymbal Information Services (Thailand)
Limited are collectively referred to as “Company Subs”). There are no
outstanding subscriptions, options, warrants, conversion rights or other
rights, securities, agreements or commitments obligating any Company Sub to
issue, sell or otherwise dispose of shares of its capital stock, or any
securities or obligations convertible into, or exercisable or exchangeable for,
any shares of its capital stock. Each Company Sub has all requisite corporate
power to own, operate and lease its properties and to carry on its business as
now being conducted. Except for the Company Subs, the Company does not have any
Subsidiaries. Except for the Company Subs and except as set forth on Schedule 3.3.
the Company does not own, directly or indirectly, any shares or other equity
interest or securities in any business organization, entity or enterprise.


 


3.4.                              Articles of Organization, Bylaws, Directors and Officers. The Company has delivered to Buyer
true and correct copies of the articles of organization and bylaws or similar
organizational documents of the Company and each Company Sub, including all
amendments thereto, as in effect on the date hereof. The minute books of the
Company and each Company Sub contain accurate records of all meetings and
consents in lieu of meetings of the board of directors of the Company and each
Company Sub respectively (and any committees thereof, whether permanent or
temporary) and of each of their respective stockholders since the date of its
incorporation, and such records accurately reflect all transactions referred to
in such minutes and consents. The stock book of the Company and each Company
Sub accurately reflect record ownership of the Company’s capital stock and each
Company Sub’s capital stock, respectively. Buyer has been provided with a copy
of or access to such minutes or consents and stock books.


 


13













 


Schedule 3.4
hereto sets forth a list of the directors and officers of the Company and each
Company Sub.


 


3.5.                              Authority for Agreement; Noncontravention.


 


3.5.1.                     Authority. The Company has the corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby (i) have been duly and validly
authorized by the board of directors and the stockholders of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and (ii) will not, as of the Closing
Date, require any third party consents, approvals, authorizations or actions,
except where failure to obtain such consents, approvals, authorizations or
actions would not have a material adverse effect on the ability of the Company
to perform its obligations under this Agreement. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the qualifications that enforcement of the rights and
remedies created hereby are subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws of general
application affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law). On or before the Closing, the other agreements
contemplated hereby to be executed and delivered by the Company on or before
the Closing will have been executed and delivered by the Company, and, upon
such execution and delivery, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
respective terms, subject to the qualifications that enforcement of the rights
and remedies created thereby are subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws of general
application affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).


 


3.5.2.                     No Conflict Except. as set forth on Schedule 3.5.2 hereto, neither the execution and delivery of this
Agreement by the Company, nor the performance by the Company of its obligations
hereunder, nor the consummation by the Company of the transactions contemplated
hereby will (a) conflict with or result in a violation of any provision of
the articles of organization or bylaws or similar organizational documents of
the Company or any Company Sub, (b) with or without the giving of notice
or the lapse of time, or both, conflict with, or result in any violation or
breach of, or constitute a default under, or result in any right to accelerate
or result in the creation of any Encumbrance pursuant to, or right of
termination under, any provision of any note, mortgage, indenture, lease,
instrument or other agreement, Permit, concession, grant, franchise, license,
judgment, order, decree, statute, ordinance, rule or regulation to which
the Company or any Company Sub is a party or by which it or any of its assets
or properties is bound or which is applicable to it or any of its assets or
properties. Except for any filing required under the Hart-Scott-Rodino Act, no
authorization, consent or approval of, or filing with or notice to, any United
States or foreign governmental or public body or authority (each a “Governmental
Entity”) is necessary for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby.


 


14













 


3.6.                              Financial Statements. Attached as Schedule 3.6
are accurate and complete copies of (a) the unaudited balance sheet of the
Company and the statements of operations and cash flows of the Company as of
and for the fiscal years ended June 30, 2003 and 2004, and (b) the
unaudited balance sheet of the Company and the unaudited statements of
operations and cash flows of the Company as of and for the month ended August 31,
2004. Collectively, the financial statements referred to in the immediately
preceding sentence are sometimes referred to herein as the “Company Financial
Statements” and the unaudited balance sheet of the Company as of August 31,
2004 is referred to herein as the “Company Balance Sheet” Each of the balance
sheets included in the Company Financial Statements (including any related
notes) has been prepared on a consolidated basis, has been reviewed (with the
exception of the August 31, 2004 unaudited balance sheet) by an
independent accountant, fairly presents in all material respects the financial
position of the Company as of its date, and the other statements included in
the Company Financial Statements (including any related notes) fairly present
in all material respects the results of operations and cash flows, as the case
may be, of the Company for the periods therein set forth, in each case in
accordance with GAAP consistently applied (except as otherwise stated therein),
subject to (i) the absence of certain notes thereto and (ii) normal audit
adjustments which would not be material in the aggregate. The Company has not
participated, engaged in or entered into, directly or indirectly, including
through any Subsidiary, any off balance sheet financing arrangements or
transactions of any kind or nature since the Company’s inception.


 


3.7.                             Absence
of Material Adverse Changes and Undisclosed Liabilities.


 


3.7.1.                     Changes. Except as described on Schedule 3.7.1
hereto, since the date of the Company Balance Sheet, the Company has not
suffered any Company Material Adverse Effect, nor has there occurred or arisen
any event, condition or state of facts of any character that would reasonably
be expected to have a Company Material Adverse Effect Except as described on Schedule 3.7.1.
without limiting the generality of the foregoing, since the date of the Company
Balance Sheet, neither the Company nor any Company Sub has, except in the
ordinary course of business, consistent with past practice:


 


(a) sold,
leased, transferred or assigned any of its assets, tangible or intangible;


 


(b) accelerated,
terminated, modified in a manner adverse to the Company, or canceled any
contract, lease, sublease, license, or sublicense (or series of related
contracts, leases, subleases, licenses, and sublicenses) involving more than
$50,000 in the aggregate to which the Company or any Company Sub is a party.


 


(c) canceled,
compromised, waived, or released any right or claim (or series of related
rights and claims);


 


(d) granted
any license or sublicense of any rights under or with respect to any Company
Proprietary Rights other than (i) pursuant to End-User Licenses granted by
the Company or any Company Sub and (ii) to the Company’s or any Company
Sub’s distributors, resellers and other licensees under agreements disclosed on
Schedule 3.7.1 hereto;


 


15













 


(e) experienced material
damage, destruction, or loss (whether or not covered by insurance) to its
property (other man ordinary wear and tear not caused by neglect);


 


(f)  created or
suffered to exist any Encumbrance not in effect on the date of the Company
Balance Sheet (other than Permitted Encumbrances) upon any of its assets,
tangible or intangible;


 


(g) issued, sold,
otherwise disposed of or reacquired any of its capital stock, or granted or
reacquired any options, warrants, or other rights to purchase or obtain (including
upon conversion or exercise) any of its capital stock, or any securities
convertible or exchangeable into any of its capital stock or otherwise changed
its capital structure or stock ownership in any way;


 


(h) declared, set
aside, or paid any dividend or distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its capital stock;


 


(i)   entered
into financial arrangements for the benefit of any of the Stockholders;


 


(j)   made or
committed to make any capital expenditures or entered into any other material
transaction, in either case outside the ordinary course of business or
involving an expenditure in excess of $50,000 in the aggregate;


 


(k)  amended or
modified in any respect any employment contract or arrangement or any profit
sharing, bonus, incentive compensation, severance, employee benefit or
multiemployer plans, nor paid any compensation or bonus in excess of existing
employment agreements;


 


(l)    entered
into any employment agreement or collective bargaining agreement or increased
the compensation (A) of any Stockholder or (B) of any other of its
employees;


 


(m)  incurred any
indebtedness for borrowed money;


 


(n)   amended,
modified or terminated any customer contract in any material respect; or


 


(o)   committed (orally or in writing) to any of
the foregoing.


 


3.7.2. Liabilities.
Neither Company nor any Company Sub has any liabilities or obligations, fixed,
accrued, contingent or otherwise (collectively, “Liabilities”), except for
Liabilities (i) that are fully reflected or provided for on, or disclosed
in the notes to, the balance sheets included in the Company Financial
Statements, (ii) that were incurred in the ordinary course of business
since the date of the Company Balance Sheet, none of which individually or in
the aggregate has had or would reasonably be expected to have a Company
Material Adverse Effect, (iii) are expressly disclosed on the Schedules
delivered hereunder, or (iv) were incurred as a result or arising out of
transactions contemplated by this Agreement.


 


16













 


3.8.                Compliance with Applicable Law, Articles of Organization and Bylaws.
The Company has all requisite licenses, permits and certificates from all
Governmental Entities (collectively, “Permits”) necessary to conduct its
business as currently conducted, and to own, lease and operate its properties
in the manner currently held and operated, except for any Permit which the
failure to obtain would not have a Company Material Adverse Effect. The Company
is in compliance in all respects with all the terms and conditions related to
such Permits. There are no proceedings in progress, pending or, to the
Knowledge of the Company, threatened, which may result in revocation, cancellation,
suspension, or any material adverse modification of any of such Permits.
Neither the business of the Company nor any Company Sub is being conducted in
violation of any applicable law, statute, ordinance, regulation, rule,
judgment, decree, order, Permit, concession, grant or other authorization of
any Governmental Entity (including without limitation any laws or regulations
relating to export control), except where such violation has no Company
Material Adverse Effect. Neither Company nor any Company Sub is in default or
violation of any provision of its articles of organization or its bylaws or
similar organizational documents.


 


3.9.         Litigation and Audits. Except as set forth on Schedule 3.9.
there is no investigation by any Governmental Entity with respect to the
Company or any Company Sub pending or, to the Knowledge of the Company,
threatened, nor has any Governmental Entity indicated to the Company or any
Company Sub in writing an intention to conduct the same. Except as set forth on
Schedule 3.9. there is no claim, action, suit, arbitration or
proceeding pending or, to the Knowledge of the Company, threatened in writing
against or involving the Company or any Company Sub, or any of its assets or
properties, at law or in equity, or before any arbitrator or Governmental
Entity and there are no judgments, decrees, injunctions or orders of any
Governmental Entity or arbitrator outstanding against the Company or any
Company Sub.


 


3.10.         Tax Matters.
Except as set forth on Schedule 3.10 hereto:


 


3.10.1. Definitions. As
used in this Agreement, “Affiliated Group” means any affiliated group within
the meaning of Code §1504(a) or any similar group defined under a similar
provision of state, local or foreign law; ‘Tax” means any federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code §59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not; “Tax Return” means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof; and “Treasury
Regulations” means those regulations promulgated under the Code.


 


3.10.2. S Election. The
Company has not elected to be treated as an S Corporation under Code §1362 (or
its predecessor Code Provision) or under the corresponding provisions of
applicable state and local laws where it files tax returns.


 


17













 


3.10.3.    Tax Returns. The Company and each Company Sub has filed all
Tax Returns that it was required to file. All such Tax Returns were correct and
complete in all respects. Except as set forth on Schedule 3.10.3,
neither the Company nor any Company Sub is the beneficiary of any extension of
time within which to file any Tax Returns. The Company and each Company Sub has
paid or caused to be paid all taxes required to be paid prior to the date of
this Agreement and have made provisions, in accordance with GAAP, for taxes
accrued through the date of this Agreement. The Company and each Company Sub
has filed Tax Returns in all jurisdictions where it is required to file Tax
Returns. No claim has ever been made in writing by an authority in a
jurisdiction where the Company or any Company Sub does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Encumbrances on any of the assets of the Company or any Company Sub that arose
in connection with any failure (or alleged failure) to pay any Tax.


 


3.10.4.    Withholding. Other than as set forth on Schedule 3.10.4.
The Company and each Company Sub has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, stockholder, or other third party.


 


3.10.5.    Audits. The Company has no Knowledge that any authority
intends to assess any additional Taxes for any period for which Tax Returns
have been filed with respect to the Company or any Company Sub. There is no
dispute or claim concerning any Tax liability of the Company or any Company Sub
either (A) claimed or raised by any authority in writing or (B) as to
which the Company has Knowledge based upon personal contact with any agent of
such authority of any actual or threatened audits or proceedings or is
otherwise aware of any such audits or proceedings. Schedule 3.10.5 (i) lists
all federal, state, local, and foreign income Tax Returns filed with respect to
the Company and each Company Sub for taxable periods ended on or after December 31,
1998, (ii) indicates those Tax Returns that have been audited, and (iii) indicates
those Tax Returns that currently are the subject of audit. The Company has
delivered to Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against
or agreed to by the Company since December 31, 1998.


 


3.10.6.    Waivers and Extensions. Neither the Company nor any Company
Sub has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.


 


3.10.7.    Elections and Consents. Neither the Company nor any Company
Sub has filed a consent under Code §341(f) concerning collapsible
corporations. Neither the Company nor any Company Sub has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances would obligate it to make any payments that
will not be deductible under Code §280G. Neither the Company nor any Company
Sub has been a United States real property holding corporation within the
meaning of Code §897(c)(2) during the applicable period specified in Code
§897(c)(1)(A)(ii). The Company and each Company Sub has disclosed on its
federal income Tax Returns all positions taken therein that would give rise to
a substantial understatement of federal income Tax within the meaning of Code
§6662. Neither the Company nor any Company Sub is a party to any Tax allocation
or sharing agreement. Neither the Company nor any Company Sub (A) has ever
been


 


18













 


a
member of an Affiliated Group filing a consolidated federal income Tax Return
and (B) has any liability for the Taxes of any person under Treasury
Regulation §1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.


 


3.10.8.    Unpaid Taxes. The unpaid Taxes of the Company and each
Company Sub (i) did not, as of December 31, 2003, exceed the reserve
for Tax liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
Company Balance Sheet (rather than in any notes thereto) and (ii) will not
exceed that reserve as adjusted for the passage of time through the date of the
Closing in accordance with the past custom and practice of the Company and each
Company Sub in filing its Tax Returns.


 


3.10.9     Post Closing Adjustments. Neither the Company nor any
Company Sub will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (A) change in
method of accounting for a taxable period ending on or prior to the Closing
Date; (B) “closing agreement” as described in Code §7121 (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (C) intercompany transactions or
any excess loss account described in Treasury Regulations under Code §1502 (or
any corresponding or similar provision of state, local or foreign income Tax
law); (D) installment sale or open transaction disposition made on or
prior to the Closing Date; or (E) prepaid amount received on or prior to
the Closing Date.


 


3.10.10      Certain Distributions. Neither the Company nor any Company
Sub has distributed stock of another Person, or has had its stock distributed
by another Person, in a transaction that was purported or intended to be
governed in whole or in part by Code §355 or Code §361.


 


3.11.   Employee
Benefit Plans.


 


3.11.1.    List of Plans.  Schedule 3.11.1 hereto contains a
correct and complete list of each “employee benefit plan”, as defined in Section 3(3) of
ERISA, and each other employment, consulting, bonus or other incentive
compensation, cafeteria benefit (Section 125 of the Code), severance,
deferred compensation, change in control, retention, stock option, stock
purchase, restricted stock plan or agreement mat is currently, or has been at
any time in the five prior calendar years, maintained, administered,
contributed to or required to be contributed to by the Company or any Company
Sub (collectively, the “Company Plans”). The Company has delivered to Buyer (i) accurate
and complete copies of all Company Plan documents and all other material
documents relating thereto, including (if applicable) all documents
establishing or constituting any related trust, annuity contract, insurance
contract or other funding instruments, and summary plan descriptions relating
to said Company Plans, (ii) accurate and complete copies of the most
recent financial statements with respect to all Company Plans for which
financial statements are required or have been prepared, and (iii) accurate
and complete copies of all annual reports and summary annual reports for all
Company Plans (for which annual reports are required) prepared for the three most
recent plan years. Neither the Company nor any Company


 


19













 


Sub has ever maintained
or contributed to any “defined benefit plan” as defined in Section 3(35)
of ERISA, any plan subject to Title IV of ERISA or Section 412 of the
Code, or to any collectively bargained (“multiemployer”) plan as defined in Section 3(37)
of ERISA.


 


3.11.2.    ERISA. With respect to all the Company Plans, the Company,
each Company Sub and each ERISA Affiliate of any of them are in material
compliance with all requirements prescribed by all statutes, regulations,
orders or rules currently in effect, and have in all material respects
performed all obligations required to be performed by them. All returns,
reports and disclosure statements required to be made under ERISA and the Code
with respect to all Company Plans have been timely filed or delivered. Neither
the Company, nor any Company Sub, nor any ERISA Affiliate of any of them, nor
any of their directors, officers, employees or agents, nor any trustee or
administrator of any trust created under the Company Plans, has engaged in or
been a party to any “prohibited transaction” as defined in Section 4975 of
the Code and Section 406 of ERISA.


 


3.11.3.    Plan
Determinations. Each Company Plan intended to qualify under Section 401(a) of
the Code has been determined by the Internal Revenue Service to so qualify, and
the trusts created thereunder have been determined to be exempt from tax under Section 501(a) of
the Code; copies of all determination letters have been delivered to the
Company; and nothing has occurred since the date of such determination letters
which is likely to cause the loss of such qualification or exemption, or result
in the imposition of any excise tax or income tax on unrelated business income
under the Code or ERISA with respect to any Company Plan.


 


3.11.4.    Funding.


 


(a)           All
contributions, premiums or other payments due or required to be made under any
Company Plan prior to the date hereof have been made as of the date hereof or,
if required by GAAP, are properly reflected on the Company’s financial
statements;


 


(b)          there
are no pending or, to the Knowledge of the Company, threatened actions, liens,
suits, proceedings relating to any Company Plan other than routine claims by
persons entitled to benefits thereunder, nor is any Company Plan the subject of
any pending (or, to the Knowledge of the Company, any threatened) investigation
or audit by the Internal Revenue Service or Department of Labor;


 


(c)           no
event has occurred, and there exists no condition or set of circumstances,
which presents a material risk of a partial termination (within the meaning of Section 41l(d)(3) of
the Code) of any Company Plan; and


 


(d)          with
respect to any Company Plan that is qualified under Section 401(k) of the
Code, individually and in the aggregate, no event has occurred, and to the
Knowledge of the Company, there exists no condition or set of circumstances in
connection with which the Company could be subject to any liability that is
reasonably likely to have a Company Material Adverse Effect (except liability
for benefits claims and funding obligations payable in the ordinary course)
under ERISA, the Code or any other applicable law. All employee contributions,
including elective deferrals, to the Company’s 401(k) plan have been segregated


 


20













 


from Company’s
general assets and deposited into the trust established pursuant to the 401(k)
plan in a timely manner in accordance with the “plan asset” regulations of the
Department of Labor.


 


3.11.5.    Welfare Plans. With respect to any Company Plan that is an
employee welfare benefit plan (within the meaning of Section 3(1) of
ERISA (a “Welfare Plan”), (i) each Welfare Plan for which contributions
are claimed by the Company as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) any Company Plan that is a group health plan (within the
meaning of Section 4980B(g)(2) of the Code) has complied with all of
the applicable material requirements of COBRA, the Family Medical Leave Act of
1993, the Health Insurance and Portability and Accountability Act of 1996, the
Women’s Health and Cancer Rights Act of 1996, the Newborns’ and Mothers, Health
Protection Act of 1996, or any similar provisions of state law applicable to
employees of the Company or any Company Sub or any ERISA Affiliate of any of
them. None of the Company Plans promises or provides retiree medical or other
retiree welfare benefits to any person except as required by applicable law,
and neither the Company or any Company Sub or any ERISA Affiliate of any of
them has represented, promised or contracted (whether in oral or written form)
to provide such retiree benefits to any employee, former employee, director,
consultant or other person, except to the extent required by statute. No
Company Plan or employment agreement provides health benefits that are not
insured through an insurance contract. Each Company Plan is amendable and
terminable unilaterally by the Company at any time without liability to the
Company as a result thereof.


 


3.11.6     Effect of Transaction. Except as specifically set forth in Schedule 3.11.6.
no employee or former employee of the Company or any Company Sub will become
entitled to any material bonus, severance or similar benefit (including
acceleration of vesting or exercise of an incentive award) as a result of the
transactions contemplated by this Agreement, and there is no contract, plan or
arrangement covering any employee or former employee of the Company or any
Company Sub that, individually or collectively, could reasonably be expected to
give rise to a payment that would not be deductible to the Buyer, the Company
or any Company Sub by reason of Sections 280G of the Code.


 


3.11.7     Foreign Employee Benefit Plans.  Schedule 3.11.7
hereto lists each material non-governmental plan maintained, or contributed to,
by or on behalf of any Company Sub applicable to employees of a business
located outside of the United States (a “Foreign Retirement Plan”) and each
non-governmental welfare benefit plan maintained or contributed to by or on
behalf of any Company Sub applicable to employees of a business located outside
of the United States (a “Foreign Welfare Plan”). Except as set forth in Schedule 3.11.7,
each such Foreign Retirement Plan and Foreign Welfare Plan (collectively, the “Foreign
Plans”) has been administered, in all material respects, in compliance with its
terms and the requirements of all applicable Laws and Regulations, and all
required contributions to each Foreign Plan have been made. Except as set forth
in Schedule 3.11.7, there are no inquiries or investigations by any
foreign governmental body, and no termination proceedings against any Foreign Plan
or the assets thereof that would have a Company Material Adverse Effect. Except
as set forth in Schedule 3.11.7, there are no actions, suits or
claims (other than routine benefit claims by persons entitled to benefits
thereunder) pending or, the Company’s Knowledge, threatened against any Foreign
Plan or the assets thereof which would have a Company Material Adverse


 


21













 


Effect.  Except as set forth in Schedule 3.11.7,
there are no material unfunded obligations under any Foreign Plan providing
benefits after termination of employment to any employee or former employee.


 


3.12.   Employment-Related


 


3.12.1.    Labor and Employee Relations.
Neither Company nor any Company Sub is a party to any collective bargaining
agreement or other contract or agreement with any labor organization or other
representative of any of the employees of the Company or Company Sub. There is
no labor strike, dispute, slowdown, work stoppage or lockout that is
pending or threatened against or otherwise affecting the Company or any Company
Sub, and neither the Company nor any Company Sub has experienced the same since
its inception. The Company has not closed any plant or facility, effectuated
any layoffs of employees or implemented any early retirement or separation
program at any time from or after its inception, nor has the Company planned or
announced any such action or program for the future with respect to which the
Company has any liability. No person has asserted any claim, or to the
Knowledge of the Company, threatened to assert any claim against the Company or
any Company Sub relating to the termination of any employee of the Company or
any Company Sub. All salaries, wages, vacation pay, bonuses, commissions and
other compensation payable by the Company or any Company Sub to the employees
of the Company or any Company Sub before the date hereof have been paid or
accrued in all respects as of the date hereof.


 


3.12.2.    Employee and Contractor List. The Company has heretofore
delivered to Buyer a list (the “Employee and Contractor List”) containing the
name of each employee of the Company and each Company Sub, each employee of
Zensar Technologies Ltd. contracted to the Company or any Company Sub, and each
contractor of the Company and each Company Sub, and each such person or entity’s
position and annual salary or compensation. The Employee and Contractor List is
correct and complete as of the date of the Employee and Contractor List, and is
correct and complete as of the date hereof, except for changes since that date
that are not material in the aggregate or individually. No third party has
asserted any claim, or, to the Knowledge of the Company, has any reasonable
basis to assert any valid claim, against the Company or any Company Sub that
either the continued employment by, or association with, the Company or such
Company Sub of any of the present officers or employees of, or contractors to, the Company or such
Company Sub contravenes any agreements or laws applicable to unfair competition,
trade secrets or proprietary information. To the Knowledge of the Company, none
of the employees or contractors of the Company listed on the Employee and
Contractor List intends to terminate his or her employment or contracting
relationship with the Company after the Closing.


 


3.13.   Environmental.


 


3.13.1.    Environmental Laws. The Company and each Company Sub are in
compliance in all material respects with all applicable Environmental Laws.
Neither Company nor any Company Sub has received any written communication that
alleges that the Company or any Company Sub is not in compliance with all
applicable Environmental Laws in effect on the date hereof. To the Knowledge of
the Company, there are no circumstances that may prevent, and there are no
circumstances specific to the Company or any Company Sub that may interfere


 


Changes made pursuant to
e-mail dated October 10, 2004


 


22













 


with,
compliance by the Company or any Company Sub in the future with all applicable
Environmental Laws. All Permits and other governmental authorizations currently
held by the Company or any Company Sub pursuant to the Environmental Laws are
in full force and effect, the Company is in compliance in all material respects
with all of the terms of such Permits and authorizations, and no other Permits
or authorizations are required by the Company or any Company Sub for the
conduct of its business as of the date hereof. The management, handling,
storage, transportation, treatment, and disposal by the Company and each
Company Sub of all Materials of Environmental Concern has been in compliance in
all material respects with all applicable Environmental Laws.


 


3.13.2.    Environmental Claims. There is no Environmental Claim
pending or, to the Knowledge of the Company, threatened in writing against or
involving the Company or any Company Sub or, to the Knowledge of the Company,
against any person or entity whose liability for any Environmental Claim the
Company or any Company Sub has or may have retained or assumed either
contractually or by operation of law.


 


3.13.3     No Basis for Claims. To the Knowledge of the Company, there
are no past or present actions or activities by the Company or any Company Sub,
or any circumstances, conditions, events or incidents, including the storage,
treatment, release, emission, discharge, disposal or arrangement for disposal
of any Material Environmental Concern, that could reasonably form the basis of
any Environmental Claim against any other person or entity whose liability for
any Environmental Claim the Company or any Company Sub may have retained or
assumed either contractually or by operation of law.


 


3.14.          No Broker’s or Finder’s Fees. Except for the fees payable to
Avendus Advisors Pvt Ltd, whose fees are set forth in Section 13.6(iv),
the Company has not paid or become obligated to pay any fee or commission to
any broker, finder, financial advisor or intermediary in connection with the
transactions contemplated by this Agreement.


 


3.15.          Assets Other Than Real Property.


 


3.15.1.    Title. The Company and each Company Sub has good and
marketable title to all of the tangible assets shown on the Company Balance
Sheet, in each case, free and clear of any mortgage, pledge, lien, claim,
charge, security interest, lease or other encumbrance (collectively, “Encumbrances”),
except for (a) assets which have been disposed of to nonaffiliated third
parties since the date of the Company Balance Sheet in the ordinary course of
business, (b) liabilities, obligations and Encumbrances reflected in the
Company Balance Sheet or otherwise in the Company Financial Statements, (c) Permitted
Encumbrances, and (d) liabilities, obligations and Encumbrances set forth
on Schedule 3.15.1 hereto.


 


3.15.2.    Condition. Except as set forth on Schedule 3.15.2,
all receivables shown on the Company Balance Sheet and all receivables accrued
by the Company since the date of the Company Balance Sheet, have been recorded
in accordance with GAAP and, to the Knowledge of the Company, are collected or
are collectible in the aggregate amount shown, less any allowances for doubtful
accounts reflected therein, and there are no disputes related thereto. All
material plant, equipment and personal property owned by the Company or any
Company Sub


 


23













 


and
regularly used in its business is in good operating condition and repair,
ordinary wear and tear excepted.


 


3.16.    Real Property.


 


3.16.1.    Company Real Property. Neither Company nor any Company Sub
owns any real property.


 


3.16.2.    Company Leases.  Schedule 3.16.2 hereto lists all
of the Company Leases. Complete copies of the Company Leases, and all material
amendments thereto (which are identified on Schedule 3.16.2), have
previously been delivered by the Company to Buyer. The Company Leases grant
leasehold estates free and clear of all Encumbrances, except Permitted
Encumbrances. The Company Leases are in full force and effect and are binding and
enforceable against each of the parties thereto in accordance with their
respective terms. Except as set forth on Schedule 3.16.2, none of
the Company Leases has been amended since the date of delivery of a copy
thereof to Buyer. Neither the Company, nor any Company Sub nor, to the
Knowledge of the Company, any other party to a Company Lease, has committed a
material breach or default under any Company Lease, nor, to the Knowledge of
the Company, has these occurred any event that with the passage of time or the
giving of notice or both would constitute such a breach or default, nor are
there any facts or circumstances, to the Knowledge of the Company, that would
reasonably indicate that the Company or any Company Sub is likely to be in
material breach or default thereunder. Schedule 3.16.2 correctly
identifies each Company Lease that requires the consent of any third party in
connection with the transactions contemplated hereby. No material construction,
alteration or other leasehold improvement work . with respect to the real
property covered by any of the Company Leases remains to be paid for or to be
performed by the Company or any Company Sub.


 


3.16.3     Condition. All buildings, structures and fixtures, or parts
thereof, used by the Company or any Company Sub in the conduct of its business
are in good operating condition and repair, ordinary wear and tear excepted,
and are insured with coverages that are usual and customary for similar
properties and similar businesses or are required, pursuant to the terms of the
Company Leases, to be insured by third parties.


 


3.17.    Intellectual Property.


 


3.17.1.    Right to Intellectual Property. The Company and each Company
Sub owns, or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, domain names, service marks, copyrights, and
any applications for the foregoing, maskworks, net lists, schematics,
technology, know-how, trade secrets, algorithms, concepts, processes, methods,
data, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material that are used in its business as currently conducted by the Company or
such Company Sub or as currently proposed by the Company to be conducted (the “Company
Proprietary Rights”), free and clear (in the case of Company Proprietary Rights
owned by the Company or any Company Sub) of any and all Encumbrances. To the
Company’s Knowledge, there is no reason why the Company or


 


24













 


each
Company Sub will not be able to continue to own or have legally enforceable
rights to use all Company Proprietary Rights used in its business as currently
conducted and as currently proposed by the Company to be conducted, without any
infringement or conflict with the rights of others. Except as set forth in Schedule 3.17.1
hereto, all of the Company’s and Company Sub’s rights in and to the Company
Proprietary Rights (excluding Commercial Software), including (if applicable)
the right to create derivatives, are freely assignable in the name of the
Company or the applicable Company Sub and the Company or the applicable Company
Sub, as the case may be, is under no obligation to obtain any approval or
consent for use of any of the Company Proprietary Rights.


 


3.17.2.    List of Company Proprietary Rights. Set forth on Schedule 3.17.2
is a complete list of all patents, trademarks, trade names, domain names,
service marks, registered copyrights, and any applications therefor, and
computer software programs (excluding Commercial Software) included in the
Company Proprietary Rights, specifying, where applicable, the jurisdictions in
which each such Company Proprietary Right has been issued or registered or in
which an application for such issuance and registration has been filed,
including the respective registration or application numbers and the names of
all registered owners.


 


3.17.3.    Status of Rights. The Company and each Company Sub has at
all times diligently maintained and protected the Company Proprietary Rights
owned by it and diligently maintained and protected the confidentiality of its
trade secrets, pending patent applications, know-how and other confidential
Company Proprietary Rights, and there have been no acts or omissions by the
Company or any Company Sub, the result of which would be to compromise or
impair the ability of the Company or such Company Sub to apply for or enforce
appropriate legal protection of the Company Proprietary Rights owned by the
Company or such Company Sub, whether pursuant to the doctrines of laches,
waiver, estoppel, or other doctrine, means or legal theory that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.


 


3.17.4.    No Conflict. To the Knowledge of the Company, the Company
and each Company Sub has conducted its business without infringement or claim
of infringement of any license, patent, copyright, service mark, trademark,
trade name, trade secret or other intellectual property rights of others, in
each case that would reasonably be expected to have a Company Material Adverse
Effect. To the Knowledge of the Company, neither Company nor any Company Sub is
or has been in violation of any licenses, sublicenses and other agreements to
which the Company or such Company Sub is a party and pursuant to which the
Company or such Company Sub is authorized to exercise any rights with respect
to any Company Proprietary Rights owned by any Person, except for any such
violations which have been remedied by the Company or such Company Sub without
any liability of the Company or any Company Sub or which has not had and would
not reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any Company Sub has received written notice of any actual,
alleged, possible or potential infringement of intellectual property owned or
used by any other Person. To the Knowledge of the Company, no Person is
infringing, and no proprietary right owned or used by any other Person
infringes or conflicts with, any Company Proprietary Right owned by the Company
or any Company Sub.


 


25













 


3.17.5.    Old Employee Agreements. Each employee, officer, contractor
(in the case of contractors under direct agreement with the Company or a
Company Sub), or third-party provider of contracting services (in the case of
contractors working for the Company or a Company Sub under an arrangement with
a third party) of either the Company or any Company Sub has executed an
agreement in substantially the form attached hereto as Schedule 3.17.5
providing the Company or such Company Sub with title and ownership to the
Company Proprietary Rights developed or used by the Company or such Company Sub
in its business and agreeing to maintain the confidentiality of the Company
Proprietary Rights and the Company’s or such Company Sub’s other confidential
information. The Company has informed each employee of the Company and the
Company Sub that such confidentiality agreement will be superseded at Closing
by the agreement signed by such employee pursuant to either Section 3.26
or Section 6.4. To the Knowledge of the Company, no such employee,
officer, contractor or third party is in violation of any term of any
employment or consulting contract, proprietary information and inventions
agreement, non-competition agreement, or any other contract or agreement
relating to the relationship of any such employee, officer, contractor or third
party with the Company or such Company Sub.


 


3.18.        Agreements, Contracts and Commitments.


 


3.18.1.    Company Agreements. The contracts, leases, instruments, licenses
and other agreements or documents set forth on Schedule 3.18.1 (“Company
Contracts”) collectively constitute all of the contracts reasonably necessary
to enable the Company and each Company Sub to conduct its business
substantially in the manner in which such business is currently being conducted
and in the manner in which such business is proposed to be conducted. The
Company has provided to Buyer true, correct and complete copies of all Company
Contracts. Except as set forth on Schedule 3.18.1 hereto, neither
the Company nor any Company Sub is a party to:


 


(a)           any
employment agreement or offer letter, including amendments thereto, with any
present employee, officer, director or contractor (or former employees,
officers, directors and contractors to the extent there remain at the date
hereof obligations to be performed by the Company or such Company Sub), other
than employment agreements or offer letters, all of the terms of which are
being superseded by either a Key Employee Agreement (A), Key Employee Agreement
(B) or Employee Agreement, as described in Sections 3.26 and 6.4;


 


(b)          any
agreement for personal services or employment with a term of service or
employment specified in the agreement in which the Company or such Company Sub
has agreed on the termination of such agreement to make any payments greater
than those that would otherwise be imposed by law;


 


(c)           any
agreement of guarantee of the obligations of others;


 


(d)          any
agreement or commitment containing a covenant limiting or purporting to limit
the freedom of the Company or such Company Sub to compete with any person in
any geographic area or to engage in any line of business;


 


(e)           any
joint venture or profit-sharing agreement;


 


26













 


(f)           except
for trade indebtedness incurred in the ordinary course of business and
reflected on the Company Balance Sheet, any loan or credit agreements providing
for the extension of credit to the Company or such Company Sub or any
instrument evidencing or related in any way to indebtedness incurred in the
acquisition of companies or other entities or indebtedness for borrowed money
by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, lease, guarantee, or otherwise in excess of $25,000 or more
in the aggregate;


 


(g)          any
license or royalty agreement (other than (A) with respect to Commercial
Software or (B) End-User Licenses granted by the Company or a Company Sub
as licensor);


 


(h)          any
distribution, VAR or OEM agreement (Schedule 3.18.1 lists any
exclusivity provisions contained in any such agreements);


 


(i)            any
agreement or arrangement with any third party to develop any intellectual
property or other asset expected to be used or currently used or useful in the
Company’s or any Company Sub’s business;


 


(j)            any
agreement or arrangement for the Company or any Company Sub to develop any
intellectual property or other asset for any third party;


 


(k)           any
agreement or arrangement providing for the payment of any commission based on
sales;


 


(1)           any
agreements for the sale or license by or to the Company or any Company Sub of
materials, products, Commercial Software, services or supplies that involves
future payments by or to the Company or such Company Sub of more than $100,000
in the aggregate;


 


(m)          any
agreement for the purchase or license by or to the Company or any Company Sub
of any materials, equipment, products, Commercial Software, services, or
supplies, that either (i) involves a binding commitment by the Company or
any Company Sub to make future payments in excess of $100,000 in the aggregate
and cannot be terminated by the Company or any Company Sub without penalty upon
less than three months’ notice or (ii) was not entered into in the
ordinary course of business;


 


(n)          any
agreement or commitment for the acquisition, construction or sale of fixed
assets owned or to be owned by the Company or any Company Sub that involves
future payments by it of more than $100,000 in the aggregate;


 


(o)          any
agreement or commitment to which present or former stockholders, directors or
officers (or their Affiliates or members of their immediate families) or
Affiliates (or directors or officers of an Affiliate) are also parties
(including any loans by the Company to any stockholders, directors or officers
(or their Affiliates or members of their immediate families));


 


27













 


(p)          any
agreement not described above (ignoring, solely for this purpose, any dollar
amount thresholds in those descriptions) involving the payment or receipt by
the Company or any Company Sub of more than $100,000 in the aggregate, other
than the Company Leases; or


 


(q)          any
agreement not described above that was not made in the ordinary course of
business and that is material to the financial condition, business, operations,
assets, results of operations or prospects of the Company or any Company Sub.


 


3.18.2. Validity.
Except as set forth on Schedule 3.18.2, the Company Contracts are
valid and in full force and effect and neither Company nor any Company Sub has
committed any material breach or default under the terms of any Company
Contract, and, to the Knowledge of the Company, (i) no other party thereto
has committed any material breach of or default under the terms of any Company
Contract; (ii) no event has occurred, and no circumstance or condition
exists, that might (with or without notice or lapse of time) (A) result in
a violation or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Company Contract, or (C) give any Person the right to accelerate the
maturity or performance of, or to cancel, terminate or modify, any Company
Contract; and (iii) neither Company nor any Company Sub has waived any of its
rights under any Company Contract. Schedule 3.18.2 identifies each
agreement and other document set forth on Schedule 3.18.1 or
disclosed by the Company on another Schedule hereto that requires the
consent of a third party in connection with the transactions contemplated
hereby.


 


3.18.3. Performance. To
the Knowledge of the Company, the performance of any Company Contracts will not
result in any violation of or failure to comply with any legal requirements.


 


3.18.4 Renegotiation.
No Person has requested to renegotiate, is renegotiating, or has the right to
renegotiate, any amount paid or payable to or by the Company under any Company
Contract or any term of provision of any Company Contract.


 


3.19.   Insurance Contracts.  Schedule 3.19 hereto lists
all contracts of insurance and indemnity (not shown on any other Schedule to
this Agreement) in force at the date hereof with respect to the Company or any
Company Sub. Such contracts of insurance and indemnity and those shown in other
Schedules to this Agreement (collectively, the “Company Insurance Contracts”)
insure against such risks, and are in such amounts, as are reasonable and
appropriate considering the Company, each Company Sub and each of their
respective property, business and operations. All of the Company Insurance
Contracts are in full force and effect, with no default thereunder by the
Company or any Company Sub which would permit the insurer to deny payment of
claims thereunder. Except as set forth on Schedule 3.19, the
execution and delivery of this Agreement by the Company, and the consummation
of the transactions contemplated hereby, will not cause the Company or any
Company Sub to be in violation or default under any Company Insurance
Contracts, nor entitle any other party thereto to terminate or modify a Company
Insurance Contract. Neither Company nor any Company Sub has received notice
from any of its insurance carriers that any insurance premiums will be
materially increased in the future or that any insurance coverage provided
under the Company Insurance Contracts will not


 


28













 


be available in the
future on substantially the same terms as now in effect. Neither Company nor
any Company Sub has received or given a notice of cancellation with respect to
any of the Company Insurance Contracts.


 


3.20.   Banking Relationships.
Schedule 3.20 hereto shows the names and locations of all banks and
trust companies in which the Company or any Company Sub has accounts, lines of credit
or safety deposit boxes and, with respect to each account, line of credit or
safety deposit box, the names of all persons authorized to draw thereon or to
have access thereto.


 


3.21.   Suppliers, Distributors
and Customers.


 


3.21.1 Relationships. The relationships of the Company and each
Company Sub with its customers, distributors and suppliers are satisfactory
commercial working relationships. Since the date of the Company Balance Sheet,
no customer, distributor or material supplier of the Company or any Company Sub
has terminated, cancelled, curtailed or otherwise materially modified its
relationship with the Company or any Company Sub in a manner adverse to the Company
or any Company Sub and, to the Knowledge of the Company, no customer,
distributor or material supplier of the Company or any Company Sub has any
specific intention to do so.


 


3.21.2 Customer Revenues.
Schedule 3.21.2 accurately
identifies, and provides an accurate and complete breakdown of the revenues
received from, each customer or other Person that accounted for more than
$100,000 of the gross revenues of the Company during the fiscal year ended June 30,
2004 and the month ended August 31, 2004. Neither the Company, nor any
Company Sub, nor any Stockholder, nor any Employee has received any written
notice, or, to the knowledge of the Company any verbal notice with respect to
any of the Company’s top 5 customers over such period (by gross revenue),
indicating that any customer or other Person identified on Schedule 3.21.2
either intends to cease dealing with the Company or any Company Sub or will
reduce the volume of business transacted by such Person with the Company or any
Company Sub below the average revenue attributable to such Person for the three
month period ending August 31, 2004 as set forth on Schedule 3.21.2.


 


3.22.   Sale of Products; Performance of Services. Excepts set forth
on Schedule 3.22, to the Knowledge of the Company, no customer or
other Person has ever asserted or threatened to assert any material claim
against the Company or any Company Sub(i) under or based upon any warranty
provided by or on behalf of the Company or any Company Sub, or (ii) under
or based upon any other warranty relating to any services performed, or product
sold, by the Company or any Company Sub. To the Knowledge of the Company, no
event has occurred, and no condition or circumstance exists, that likely would
(with or without notice or lapse of time) directly or indirectly give rise to
or serve as a basis for the assertion of any such claim that would have a
Company Material Adverse Effect.


 


3.23.   Acquired Business. Upon consummation of the Closing, the
Buyer, through the stock purchase, will acquire the entire assets of the
Company and each Company Sub immediately prior to the Closing, and the Buyer
will then own and have the right to use all tangible and intangible assets and
properties necessary for the normal continued conduct of the


 


29













 


business
of the Company and each Company Sub as now conducted by it and as proposed by
the Company to be conducted.


 


3.24.   Accounting System. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (a) transactions
are executed in accordance with management’s general or specific authorizations;
(b) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability; (c) access to assets is permitted only in accordance with
management’s general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.


 


3.25.   Working Capital. Except as set forth in the list of transactions
previously delivered by the Company to and accepted by Buyer (the “Excluded
Transactions Schedule”), and except to the extent such items result in an
adjustment to the Purchase Price due to a shortfall in Working Capital pursuant
to Section 2.2.4, since June 30, 2004, the Company has not engaged in
any transactions with respect to the management of its Working Capital outside
the ordinary course of business. Any change in the amount of the Company’s
Working Capital as of the date hereof compared to the Company’s Working Capital
as of June 30, 2004 is consistent with normal monthly fluctuations in
Working Capital.


 


3.26        Key Employee Agreements. Each of the employees of the
Company listed on Schedule 3.26(a) has entered into a key
employee agreement in the form attached hereto as Exhibit B (the “Key
Employee Agreement (A)”), and each of the employees of the Company listed on Schedule 3.26(b) has
entered into a key employee agreement in the form attached hereto as Exhibit C
(the “Key Employee Agreement (B)”). Each of such agreements remains in full
force and effect and no amendments or supplements have been created for any
such agreements.


 


3.27         Certain Agreements.
The Company has entered into agreements providing for (i) the termination
of the Business Development Agreement, dated April 7, 2003, between the
Company and Quadrille Data Limited, in exchange for the payment of $350,000 by
the Company to Quadrille Data Limited (the “Quadrille Termination”), (ii) the
amendment of the agreement by and among the Company, Like Minds LLC, Nikhil
Khosla, Socka Suppiah and Arvind Kapur dated August 1, 2004, to provide
for, upon the exercise of the buy-out option by the Company, a fixed payment of
$6,800,000 payable contemporaneously with the Closing (the “Like Minds Amendment”),
(iii) waiver and notice to SBC Services, Inc. (the “SBC Waiver”), (iv) payments
and releases under the Advisory Agreements referenced in Section 1.3.6(vi),
and (v) releases under an Agreement and Waiver with Sanbar Development
Corporation, Ltd.,Sanbar Development Corporation, S.A. and Ramzi Sanbar (the “Sanbar
Waiver”). Upon payment of the amounts set forth above, the Company will have no
liabilities or obligations with respect to any of Quadrille Data Limited, Like
Minds LLC, Nikhil Khosla, Socka Suppiah, Arvind Kapur,  Sanbar Development Corporation, Ltd., Sanbar
Development Corporation, S.A.,Ramzi Sanbar or any of the individuals listed on Schedule 1.3.6.(vi).
In addition, Webspace Consulting Inc. has entered into a Stock Transfer
Agreement with Patni Computer Systems Limited, an Indian company and parent of
Buyer (“Parent”), providing for the transfer of two non-voting nominee


 


30













 


shares of Cymbal Information Services Private Limited
(the “Stock Transfer Agreement”). Copies of the executed Quadrille Termination,
Like Minds Amendment, SBC Waiver, Advisor Agreements, Sanbar Waiver and Stock
Transfer Agreement are attached to this Agreement as Schedule 3.27.
The Quadrille Termination, Like Minds Amendment, SBC Waiver, Advisory
Agreements, Sanbar Waiver and Stock Transfer Agreement remain in full force and
effect, and have not been modified or amended in any way. The Company has also
exercised its option I purchase under Article 8 of its Agreement with Zensar
Technologies Ltd. dated April 16, 2004, as amended by an Amendment to the
Agreement dated May 13, 2004 (the “Zensar Option”).


 


3.28.        Full Disclosure.  Neither this Agreement nor any written
statement, report or other document furnished or to be furnished by the Company
pursuant to this Agreement or ii connection with the transactions contemplated
hereby contains, or will contain, any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not false or misleading. There is no fact known to the
Company which has not been disclosed to Buyer in writing that materially
adversely affects, or so far as Company can foresee will materially adversely
affect, (a) the ability of the Company to perform this Agreement and carry
out the transactions contemplated hereby or (b) the financial condition
business, operations, assets, properties, results of operations or prospects of
the Company or Company Sub.


 


Article 4

SEVERAL REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS


 


As a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, each of the Stockholders, severally and not jointly,
represent and warrants as follows:


 


4.1.          Authority.  Such Stockholder has the power to enter into
this Agreement and the other agreements contemplated hereby to be signed by
such Stockholder and to consummate the transactions contemplated hereby and
thereby. Such Stockholder has good and marketable title to the shares of
Company Common Stock set forth opposite such Stockholder’s name on Schedule 3.2.1,
free and clear of all Encumbrances. At the Closing, such Stockholder will
deliver the shares of Company Common Stock owned by such Stockholder free and
clear of all Encumbrances other than Encumbrances resulting from this
Agreement. This Agreement and the other agreements contemplated hereby to be
signed by such Stockholder have been duly executed and delivered by such
Stockholder, and constitute the valid and binding obligations of such
Stockholder, enforceable against such Stockholder in accordance with their
respective terms, subject to the qualifications that enforcement of the rights
and remedies created hereby and thereby is subject to (a) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other laws of
general application affecting the rights and remedies of creditors and
(b) general principles of equity (regardless of whether the enforcement is
considered in a proceeding in equity or at law).


 


4.2.          No Conflict.  Neither the execution and delivery of this
Agreement by such Stockholder and the other agreements contemplated hereby to
be signed by such Stockholder, nor the performance by such Stockholder of such
Stockholder’s obligations hereunder or thereunder, nor the consummation by such
Stockholder of the transactions contemplated hereby


 


31













 


or thereby will with or
without the giving of notice or the lapse of time, or both, conflict with, or
result in any violation or breach of, or constitute a default under, or result
in any right to accelerate or result in the creation of any Encumbrance
pursuant to, or right of termination under, any provision of any note,
mortgage, indenture, lease, instrument or other agreement, Permit, concession,
grant, franchise, license, judgment, order, decree, statute, ordinance,
rule or regulation to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder’s assets or properties is bound or which
is applicable to such Stockholder or any of such Stockholder’s assets or
properties.


 


4.3.          No Broker’s or Finder’s Fees. Except for the fees payable to Avendus
Advisors Pvt Ltd, whose fees are set forth in Section 1.3.6(iv), such
Stockholder has not paid or become obligated to pay any fee or commission to
any broker, finder, financial advisor or intermediary in connection with the
transactions contemplated by this Agreement.


 


ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER


 


As a material inducement
to the Company and the Stockholders to enter into this Agreement and consummate
the transactions contemplated hereby, Buyer hereby makes all of the
representations and warranties to the Company and the Stockholders as follows:


 


5.1.          Corporate Status of Buyer.  Buyer is a company duly organized, validly
existing and in good standing under the laws of India and has all requisite
corporate power to own, operate and lease its properties and to carry on its
business as now being conducted.


 


5.2.          Authority for Agreement;
Noncontravention.


 


5.2.1.       Authority.  Buyer has the corporate power and authority to
execute and deliver this Agreement and each agreement, document and instrument
to be executed and delivered by or on behalf of Buyer pursuant to this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
subject to the qualifications that enforcement of the rights and remedies
created hereby are subject to (a) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws of general application
affecting the rights and remedies of creditors and (b) general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law). On or before the Closing Date, the other agreements
contemplated hereby to be executed and delivered by Buyer on or before the Closing
Date will have been executed and delivered by Buyer, and, upon such execution
and delivery, will constitute valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms, subject to
the qualifications that enforcement of the rights and remedies created thereby
are subject to (a) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws of general application affecting the
rights and remedies of creditors and (b) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law).


 


32













 


5.2.2.       No Conflict.  Neither the execution and delivery by Buyer of
this Agreement and the other agreements, documents and instruments contemplated
hereby, nor the performance by Buyer of its obligations hereunder, nor the
consummation by Buyer of the transactions contemplated hereby will
(a) conflict with or result in a breach of any provision of the charter or
by-laws or other organizational documents of Buyer, or (b) with or without
the giving of notice or the lapse of time, or both, conflict with, or result in
any violation or breach of, or constitute a default under, or result in any
right to accelerate or result in the creation of any Encumbrance pursuant to,
or right of termination under, any provision of any note, mortgage, indenture,
lease, instrument or other agreement, Permit, concession, grant, franchise,
license, judgment, order, decree, statute, ordinance, rule, regulation,
contract, or other agreement to which Buyer is a party or by which either of
them or any of their respective assets or properties is bound or which is
applicable to either of them or any of their assets or properties.


 


5.3.          Consents
and Approvals.


 


(a)           Except for any filing required under
the Hart-Scott-Rodino Act, any filing required with an Authorized Dealer of the
Reserve Bank of India and except as set forth on Schedule 5.3, the
execution, delivery and performance of this Agreement by Buyer will not, as of
the Closing Date, require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority, except where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not have a material adverse effect on the
ability of Buyer to perform its obligations under this Agreement.


 


(b)           To the Knowledge of Buyer, except
(i) as set forth on Schedule 5.3. (ii) for any filing
required under the Hart-Scott-Rodino Act or any filing required with an
Authorized Dealer of the Reserve Bank of India, and (iii) the consent of
the board of directors of each of Buyer and Parent, the execution, delivery and
performance of this Agreement by Buyer will not, as of the Closing Date,
require any third party consents, approvals, authorizations or actions, except
where failure to obtain such consents, approvals, authorizations or actions
would not have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement.


 


5.4.          Litigation.  There is no litigation, action, suit,
proceeding, claim, arbitration or investigation pending or, to Buyer’s
Knowledge, threatened in writing, against Buyer, as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined (a) would delay, hinder or prevent the consummation of the
transactions contemplated by this Agreement by Buyer, or (b) would have in
the aggregate a material adverse effect on the ability Buyer to perform its
obligations under this Agreement.


 


5.5.          Brokers.  Except for the fees payable to Kotak Mahindra,
Buyer has not incurred or become liable for any broker’s commission or finder’s
fee relating to or in connection with this Agreement or the transactions
contemplated hereby.


 


5.6.          Investment Intent. Buyer is acquiring the Common Stock
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution


 


33













 


thereof. Buyer is an
“accredited investor” as such term is defined in Rule 501 under the
Securities Act of 1933. Buyer acknowledges that the Common Stock to be acquired
by Buyer pursuant to the transactions contemplated hereby have not been
registered under the Securities Act or the securities laws of any state or
other jurisdiction and cannot be disposed of unless they are subsequently
registered under the Securities Act and the securities laws of any applicable
state or other jurisdiction or an exemption from such registration is
available.


 


ARTICLE 6

ADDITIONAL AGREEMENTS


 


6.1.          Expenses.  The Buyer shall be responsible for its own
costs and expenses in connection with this Agreement and the other agreements,
documents and instruments contemplated hereby and the transactions contemplated
hereby, including fees and disbursements of consultants, investment bankers and
other financial advisors, brokers and finders, counsel and accountants. The Stockholders shall be responsible for the
Company’s and their own costs and expenses in connection with this Agreement
and the transactions contemplated hereby, including fees and disbursements of
consultants, investment bankers and other financial advisors, brokers and
finders, counsel and accountants. Notwithstanding the foregoing, Buyer, on the
one hand, and the Sellers, on the other hand, shall each pay one-half of the
Hart-Scott-Rodino filing fee in connection with the Purchase and otherwise
shall bear the respective costs incurred by them in connection with
Hart-Scott-Rodino compliance.


 


6.2.          Public Disclosure. Each of Buyer, the Company and the
Stockholders severally agrees that the terms of this Agreement and the other
agreements, documents and instruments and the transactions contemplated hereby
shall be kept confidential, and no written or public disclosures relating
thereto shall be made without the prior written consent of the parties hereto
(with the Stockholders Agent providing any such necessary consent), except for
disclosures (a) to any of the parties’ investors, accountants, attorneys
or representatives (b) required by law or applicable regulations
(including, without limitation, any disclosures required by any stock
exchanges), or (c) of the existence of the transactions contemplated hereby
upon the consummation of such transactions pursuant to press releases and other
press relation and investor relation activities approved by Buyer.


 


6.3.          Escrow Agreement. At the Closing, Buyer, the Stockholders
Agent and the Escrow Agent shall enter into the Escrow Agreement with the
Escrow Agent.


 


6.4.          Employee Agreements. Prior to the Closing, Parent or Buyer
shall enter into an employee agreement in the form attached hereto as Exhibit D
with the U.S. and Canadian employees listed on Schedule 6.4, an
employee agreement in the form attached hereto as Exhibit E with
the Indian and Thai employees listed on Schedule 6.4, and an
employee agreement in the form attached hereto as Exhibit F with
the U.K. employees listed on Schedule 6.4, (collectively, the
“Employee Agreements”).


 


34













 


6.5.          Termination of Company
Plans.  The Company and each
Company Sub shall terminate all Company Plans by resolution adopted by the
Board of Directors of the Company or such Company Sub prior to the date of the
Closing, on terms acceptable to Buyer, and shall simultaneously amend each
Company Plan to the extent necessary to comply with all applicable laws,
including the so-called “GUST” and “EGTRRA” legislation, to the extent not previously
amended. Said termination shall provide that all participants in each 401(k)
plan of the Company and each Company Sub shall be fully vested in their account
balances under said Plan. The Company or the applicable Company Sub shall
further notify participants in each Company Plan of its termination prior to
the Closing Date.


 


6.6.          Conduct of Business. Between the date of this Agreement and
the Closing or the date, if any, on which this Purchase Agreement is earlier
terminated pursuant to its terms, the Company and each Company Sub shall,
except to the extent that Buyer shall otherwise consent in writing,
(i) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, (ii) pay its debts
and Taxes when due, subject to good faith disputes over such debts or Taxes,
(iii) pay or perform other material obligations when due subject to good
faith disputes over such obligations, (iv) use all reasonable efforts
consistent, with past practices and policies, to preserve its business, keep
available the services of its present officers, contractors and employees and
preserve its relationships with clients, suppliers and others having business
relationships with it, to the end Company’s and each Company Sub’s goodwill
will be unimpaired at the Closing, and (v) promptly notify Buyer of any
event or occurrence not in the ordinary course of business which will have or
could reasonably be expected to have a Company Material Adverse Effect. In
addition, between the date of this Agreement and the Closing or the date, if
any, on which this Agreement is earlier terminated pursuant to its terms,
neither Company nor any Company Sub shall, except as set forth on the Excluded
Transactions Schedule and except to the extent that Buyer shall otherwise
agree in writing:


 


(a) enter into any
contract or commitment or take any other action that is not in the ordinary
course of business or that, at the time such party enters into such contract or
commitment or takes such action, may reasonably be expected to have an adverse
impact on the transactions contemplated hereby;


 


(b) issue, sell,
otherwise dispose of or reacquire any of its capital stock, or grant or
reacquire any options, warrants, or other rights to purchase or obtain
(including upon conversion or exercise) of any of its capital stock, or any
securities convertible or exchangeable into any of its capital stock or
otherwise changed its capital structure or stock ownership in any way;


 


(c) declare, set aside,
or pay any dividend or distribution with respect to its capital stock (whether
in cash or in kind) or redeem, purchase or otherwise acquire any of its capital
stock;


 


(d) enter into any
financial arrangement for the benefit of any of the Stockholders;


 


35













 


(e) sell, lease, transfer
or assign any of its assets, tangible or intangible (other than in the ordinary course of business), the value of which
exceeds $75,000 in the aggregate;


 


(f) increase the
compensation of any its employees, contractors or agents or pay any special
compensation or bonuses in excess of their existing employment agreements;


 


(g) make any capital
expenditure in excess of $75,000 in the aggregate;


 


(h) enter into any
contract or commitment or take any other action that is not in the ordinary
course of its business or could reasonably be expected to have an adverse
impact on the transactions contemplated hereunder or that would have or could
reasonably be expected to have a Company Material Adverse Effect; or


 


(i) agree, whether
in writing or otherwise, to take any action described in this Section 6.6.


 


6.7          No Solicitation. The Stockholders and the Company agree
that, from the date hereof and until any termination of this Agreement, neither
of the Stockholders, the Company, or any of its officers and directors shall,
and the Stockholders and the Company will direct and use commercially
reasonable efforts to cause each of their respective employees, representatives
and Affiliates not to, initiate, solicit or encourage, directly or indirectly,
the making or implementation of any proposal or offer with respect to any
merger, acquisition, consolidation or similar transaction directly involving,
or any direct purchase of all or any significant portion of the assets or any equity securities of, the Company or
any Company Sub (any such proposal or offer being an “Acquisition Proposal”) or
engage in any activities, discussions or negotiations concerning, or provide
any confidential information regarding, the Company to, or have any discussions
with, any Person relating to an Acquisition Proposal or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal. The
Stockholders and the Company shall: (i) immediately cease any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) notify Buyer immediately if any
Acquisition Proposal is received by the Stockholders or the Company.


 


6.8        Straddle Period. In the case of any taxable period that
includes (but does not end on) the Closing Date, the amount of any Taxes for
the taxable period that includes (but does not end on) the Closing Date (the
“Pre-Closing Tax Period”) shall be determined based upon an interim closing of
the books as of the close of business on the Closing Date (and for such
purpose, the taxable period of any partnership or other pass through entity in
which the Company or any Company Sub holds a beneficial interest shall be
deemed to terminate at such time).


 


6.9        Responsibility for Filing
Tax Returns.  Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company and each Company Sub that are filed after the Closing Date.


 


6.10      Refunds and Tax Benefits. Any Tax refunds that are received by
Buyer or the Company or any Company Sub, and any amounts credited against Tax
to which Buyer or the Company or any Company Sub becomes entitled, that relate
to Tax periods or portions thereof


 


36













 


ending on or before the
Closing Date and are in excess of the amounts accrued on the Closing Balance
Sheet shall be for the account of Stockholders, and Buyer shall pay over to the
Stockholders Agent any such refund or the amount of any such credit within 15
days after receipt or entitlement thereto.


 


6.11         Cooperation on Tax
Matters.


 


(i)            Buyer and Sellers shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with the filing of Tax Returns pursuant to this Section 6.11
and any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include (upon the other Party’s request) the provision of
records and information that are reasonably relevant to any such audit, litigation
or other proceeding and making themselves and their employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.


 


(ii)           Buyer and Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).


 


(iii)           Buyer and Sellers further agree,
upon request, to provide the other Party with all information that either Party
may be required to report pursuant to Code §6043 and all Treasury Regulations
promulgated thereunder.


 


6.12         Tax Sharing Agreements. All tax-sharing agreements or similar
agreements with respect to or involving the Company or any Company Sub shall be
terminated as of the Closing Date and, after the Closing Date, the Company and
the Company Subs shall not be bound thereby or have any liability thereunder.


 


6.13         Certain Taxes and Fees. All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with the consummation of the transaction contemplated by
this Agreement shall be borne 50% by Buyer and 50% by the Stockholders.


 


6.14         Option Agreement. Prior to the Closing Date, the Company,
Buyer and Neeraj Gupta shall enter into an option agreement granting the
Company the right to sell to Mr. Gupta the equity shares of
Visage Mobile, Inc. and Speedera Networks, Inc. currently owned by
the Company, in the form attached hereto as Exhibit G (the “Option
Agreement”).


 


6.15         Hart-Scott-Rodino. The Buyer and the Company each agree to
file with the United States Federal Trade Commission and the Antitrust Division
of the United States Department of Justice pursuant to the Hart-Scott-Rodino
Act all requisite documents and notifications in connection with the
transactions contemplated by this Agreement; and to coordinate and cooperate
with each other in exchanging such information and providing such assistance as
any of them may require to comply with the Hart-Scott-Rodino Act; and to use
their respective best efforts to cause a termination of the applicable waiting
periods, and overcome


 


37













 


any objection made by
either the Federal Trade Commission or Department of Justice to the consummation
of the transactions contemplated by this
Agreement.


 


ARTICLE 7

CONDITIONS PRECEDENT


 


7.1.          Conditions Precedent to
the Obligations of Each Party.  The obligations of the parties hereto to
effect the Purchase shall be subject to the fulfillment at or prior to the Closing
of the following conditions:


 


7.1.1.       No Injunction.  No injunction or restraining or other order
issued by a court of competent jurisdiction that prohibits or materially
restricts the consummation of the Purchase or the other transactions
contemplated hereby shall be in effect (each party agreeing to use all
reasonable efforts to have any injunction or other order immediately lifted),
and no action or proceeding shall have been commenced seeking any injunction or
restraining or other order that seeks to prohibit, restrain, invalidate or set
aside consummation of the Purchase or any of the other transactions
contemplated hereby.


 


7.12.        Illegality.  There shall not have been any action taken,
and no statute, rule or regulation shall have been enacted, by any state
or federal government agency that would prohibit or materially restrict the
consummation of the Purchase or the other transactions contemplated hereby.


 


7.1.3.     Governmental Permits and
Approvals.  All permits and
approvals from any Governmental Entity required for the lawful consummation of
the Purchase and the other transactions contemplated hereby shall have been
obtained, including without limitation, any filings or approvals required under
the Hart-Scott-Rodino Act.


 


7.2.          Conditions Precedent to Obligation of
Buyer to Effect the Purchase.  The obligation of Buyer to effect the Purchase
shall be subject to the fulfillment (or waiver by Buyer) at or prior to the
Closing of the following additional conditions:


 


7.2.1.       Representations and
Warranties.  The
representations and warranties of the Company and the Stockholders contained in
this Agreement shall be true and correct in all material respects as of the
Closing, except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such date), with the same force
and effect as if made as of the Closing.


 


72.2.        Agreements and Covenants.  The Company and the Stockholders shall have
performed in all material respects all of their agreements and covenants set
forth herein that are required to be performed at or prior to the Closing.


 


7.2.3.       Legal Opinion.  Buyer shall have received an opinion from
Stubbs Alderton & Markiles, LLP, counsel to the Company and the
Stockholders, in the form attached as Exhibit H hereto.


 


38













 


7.2.4.       Closing Documents. The Company shall have delivered to
Buyer such closing documents as Buyer shall reasonably request (other than
additional opinions of counsel).


 


7.2.5.       Escrow Agreement. The Stockholders and the Escrow Agent
shall have entered into the Escrow Agreement with Buyer as contemplated by
Section 6.3 hereof


 


7.2.6.       New Employee Documents. An aggregate of at least 85% of the
employees of the Company listed on Schedule 3.26(a), Schedule 3.26(b) and
Schedule 6.4 shall have executed and delivered a Key Employee
Agreement (A), Key Employee Agreement (B) or Employee Agreement, as applicable,
as contemplated by Sections 3.26 and 6.4 hereof.


 


7.2.7.       Resignations.  Each officer and each member of the board of
directors of the Company and each Company Sub shall have resigned as an officer
or director of the Company, to the extent requested by Buyer, effective as of
the Closing.


 


7.2.8.       Third Party Consents. All material third party consents or
approvals listed in Schedule 3.18.2 shall have been obtained by the
Company and shall be effective and shall not have been suspended, revoked, or stayed
by action of any such third party.


 


7.2.9.       No Material Adverse Effect. Since the date of the Company Balance
Sheet, the Company shall not have suffered a Company Material Adverse Effect.


 


7.2.10.     Employee Matters.  Buyer shall not have received, at or prior to
Closing, any indication that any of the key employees of the Company identified
on Schedule 3.26(a) or more than 5% of the key employees
identified on Schedule 3.26(b) intend to terminate their
employment with the Company after the Closing.


 


7.2.11.     Stock Option Plans. The Company and each Company Sub shall
have terminated any stock plans that may exist (collectively, the “Plans”), and
all options granted thereunder shall have been exercised or terminated prior to
the Closing. in terminating each Plan, the Company shall have complied with all
provisions of such Plan and applicable stock option grant agreements and shall
have timely sent all notices to optionholders required by such Plan.


 


7.2.12.     Bank Accounts.  The Company shall have taken all actions to
turn over its bank accounts to the authorized signatories of Buyer, to the
extent requested by Buyer.


 


7.2.13.     Option Agreement.  Neeraj Gupta and the Company shall have
entered into the Option Agreement with Buyer as contemplated by
Section 6.14.


 


7.2.14.     Stock Transfer Agreement. Webspace Consulting Inc. shall have
performed its obligations under the Stock Transfer Agreement.


 


7.2.15.     Zensar.  Each of the Company and Zensar Technologies
Ltd. shall have executed and delivered the notice in the form attached hereto
as Exhibit I.


 


39













 


7.2.16      Avendus Advisors. Each of the Company and Avendus Advisors
Pvt Ltd shall have executed and delivered the Avendus Letter in the form
attached hereto as Exhibit J (the “Avendus Letter”).


 


7.2.17      Transfer of Thai Nominee
Shares.  Each holder of a
nominee share of Cymbal Information Services (Thailand) Limited shall have
executed and delivered to Buyer an instrument of transfer in the form attached
hereto as Exhibit K.


 


7.3.          Conditions
Precedent to Obligations of the Company and Stockholders.  The obligation of the Company and the
Stockholders to effect the Purchase shall be subject to the fulfillment (or
waiver by the Company) at or prior to the Closing of the following additional
conditions:


 


7.3.1.       Representations and
Warranties.  The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the Closing, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made as of the Closing.


 


7.3.2.       Agreements and Covenants. Buyer shall have performed in all
material respects all of their agreements and covenants set forth in this
Agreement that are required to be performed at or prior to the Closing.


 


7.3.3        Payment of Cash at Closing.  Buyer shall have paid the amount specified in
Section 2.2.1 as provided in Section 2.2.1.


 


ARTICLE 8

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION


 


8.1.          Agreement to Indemnify. Subject to the terms and conditions of
this Article 8 (including, without limitation, the limitations of
liability set forth in Section 8.3), the Stockholders agree (without any
right of contribution from the Company or any right of indemnification against
the Company), jointly and severally, to indemnify, defend and hold harmless
Buyer and each of its directors, officers, agents and Affiliates (collectively,
the “Buyer Group”) from and against any loss, liability, damage, cost or
expense (including costs and reasonable attorneys’ fees and disbursements)
suffered, incurred or paid by any member of the Buyer Group as a result of any
breach of the representations, warranties, covenants and agreements of the
Company, the Founders and the Stockholders contained in this Agreement or in
any other agreement, certificate or other document delivered by the Company or
any of the Stockholders pursuant hereto or arising from or relating to any of
the items listed on Schedule 3.9, Schedule 3.10,  Schedule 3.10.3
or Schedule 3.10.4 (collectively, “Buyer Claims”), provided,
however, that in each case such representations and warranties shall be deemed
to have been made without any qualifications of materiality or Company Material
Adverse Effect. With respect to any member of the Buyer Group other than Buyer,
the Company and the Stockholders


 


40













 


knowledge and agree that Buyer is contracting on its
own behalf and for such member and Buyer shall obtain and hold the rights and
benefits provided for in this Section 8.1 in trust for and on behalf of
such member.


 


8.2.          Survival of
Representations.  All
representations, warranties and covenants made by any party in this Agreement
or any certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing for a period of two years and any
investigation at any time made by or on behalf of any other party, subject to
the following:


 


(a) the Stockholders
shall be obligated to indemnify members of the Buyer Group for Buyer Claims
only if Buyer has given the Stockholders Agent written notice of such Buyer
Claim on or prior to the second anniversary of the Closing;


 


(b) notwithstanding
anything to the contrary contained in the foregoing there shall be no time
limit with respect to the obligations of the Stockholders to indemnify members
of the Buyer Group from Buyer Claims arising out of or relating to
(i) intentional or fraudulent misrepresentations or actions by the Company
or any of the Stockholders, (ii) a breach of a covenant or agreement by the
Company or any of the stockholders under this Agreement or (iii) a breach
of the representations and warranties contained in Sections 3.1 through 3.5,
3.11 and 3.13 and Article 4; and


 


(c) notwithstanding
anything to the contrary contained in subsection(a), the time limit with
respect to the obligations of the Stockholders to indemnify members of the
Buyer Group from Buyer Claims arising out of or relating to breaches of the
representations and warranties contained in Section 3.10 (tax matters) or
arising out of or relating to any of the items listed on Schedule 3.9,
Schedule 3.10, Schedule 3.10.3 or Schedule 3.10.4
shall be the applicable statute of limitations.


 


8.3.          Satisfaction of Buyer
Claims.  The obligations and
liabilities of the Stockholders hereunder with respect to indemnification for
Buyer Claims shall be subject to the following limitations:


 


(a) no defense,
indemnification or obligation to hold any member of the Buyer Group harmless
shall be requested to be made by the Stockholders hereunder unless the amount
of Buyer Claims to which the Buyer Group is entitled to indemnification
hereunder exceeds $250,000, in the aggregate, in which case the Stockholders’
indemnification obligations shall apply to the full amount of such Buyer Claims
and all Buyer Claims thereafter, provided, however, that the limitations
contained in this Section 8.3(a) shall not apply to Buyer Claims
arising out of or relating to (i) intentional or fraudulent
misrepresentations or actions by the Company or any of the Stockholders,
(ii) a breach of a covenant or agreement by the Company or any of the Stockholders
under this Agreement, (iii) a breach of the representations and warranties
contained in Sections 3.1 through 3.5, 3.10, 3.11 and 3.13 and Article 4,
or (iv) any of the items listed on Schedule 3.9, Schedule 3.10,
Schedule 3.10.3 or Schedule 3.10.4;


 


(b) in seeking to collect
the amount of any Buyer Claim, Buyer will seek to collect such amount by the
return to Buyer of cash from the Escrow Account, to the extent


 


41













 


available, and thereafter will only seek to collect the amount of such
Buyer Claim from other assets of the Stockholders, or set off such amount
against Stockholder Payments owed by Buyer to the Stockholders (which right of
set off the Company and the Stockholders explicitly grant Buyer) if collection
from cash in the Escrow Account is insufficient to satisfy the amount of such
Buyer Claim;


 


(c) notwithstanding
the provisions of Section 8.3(b), with respect to any Buyer Claims for
which Buyer has given the Stockholders Agent written notice after the date
which is eighteen (18) months after the Closing Date, Buyer’s recovery shall be
limited to collecting such amount by the return to Buyer of cash from the
Escrow Account, to the extent available, and thereafter only by way of set off
of such amount against Stockholder Payments owed by Buyer to the Stockholders
(which right of set off the Company and the Stockholders explicitly grant
Buyer), or recovery of the amount of any Stockholder Payments already
distributed to the Stockholders, if collection from cash in the Escrow Account
is insufficient to satisfy the amount of such Buyer Claim, provided, however,
that the limitations contained in this Section 8.3(c) shall not apply
to Buyer Claims arising out of or relating to (i) intentional or fraudulent
misrepresentations or actions by the Company or any of the Stockholders,
(ii) a breach of a covenant or agreement by the Company or any of the
Stockholders under this Agreement, (iii) a breach of the representations
and warranties contained in Sections 3.1 through 3.5, 3.10, 3.11 and 3.13 and
Article 4, or (iv) any of the items listed on Schedule 3.9,
Schedule 3.10, Schedule 3.10.3 or Schedule 3.10.4;
and


 


(d) subject to the
Escrow Agreement, Buyer and the Stockholders acknowledge and agree that any distribution
of cash from the Escrow Account to satisfy a Buyer Claim hereunder shall be
done so as to reduce each Stockholder’s interest in the Escrow Account in a pro
rata manner based on the Stockholders’ respective ownership interests in the
Escrow Account as of the Closing.


 


Notwithstanding anything to the contrary contained in this Agreement,
the maximum cumulative liability of any Stockholder under this Article 8
cannot exceed the portion of the Purchase Price received by such Stockholder
under this Agreement, provided however, that the foregoing shall not limit the
ability of Buyer to recover funds from the Escrow Account or to recover funds
from the Stockholders by way of set off from the Stockholder Payments.


 


8.4.          Process
of Indemnification for Buyer Claims.


 


8.4.1.       Recovery by Buyer. In seeking to collect the amount of any
Buyer Claim that a member of the Buyer Group seeks to recover, Buyer shall
first give the Stockholders Agent written notice of such Buyer Claim. Such
notice of a Buyer Claim or potential Buyer Claim shall specify the amount of
the Buyer Claim (or Buyer’s good faith estimate of the amount of the Buyer
Claim if the amount is not yet determined), after giving effect to the
limitations set form in this Article 8. The notice shall also provide a
reasonably detailed summary of the basis for such Buyer Claim. The delay or
failure of Buyer to provide notice hereunder shall not in any way limit Buyer’s
indemnification rights hereunder except to the extent that the Stockholders
shall have been materially adversely affected by such delay or failure and
except that in any


 


42













 


event such notice shall
be made within the period provided in Section 8.2 hereof, if applicable.
If the Stockholders Agent does not dispute the basis or amount of any Buyer
Claim within 30 days of receiving written notice thereof, Buyer shall have the
right promptly to recover indemnity as and to the extent provided herein. If
the Stockholders Agent disagrees with the basis of the Buyer Claim or the
amount of damages caused thereby, then within 30 days of receiving written
notice thereof, the Stockholders Agent shall give notice to Buyer of such
disagreement and, in that case, Buyer shall have no right to recover indemnity
hereunder until such time, if at all, as (a) a court of competent
jurisdiction issues a final, non-appealable order specifying the amount of
Buyer’s recovery, in which case Buyer shall have the right promptly to recover
the amount so specified (subject to the limitations contained in this
Article 8) or (b) Buyer and the Stockholders Agent, as applicable,
agree in writing to the amount of Buyer’s recovery, in which case Buyer shall
have the right promptly to recover the amount so agreed (subject to the
limitations contained in this Article 8).


 


8.4.2.       Third-Party Buyer Claims. Buyer agrees to notify the Stockholders
Agent of any Buyer Claims asserted by third parties that, in the opinion of
Buyer, are reasonably likely to give rise to indemnification hereunder (“Third-Party
Buyer Claims”). The Stockholders Agent may (i) participate in the defense
of any Third-Party Buyer Claim or (ii) upon written notice thereof to
Buyer, assume the defense of any Third-Party Buyer Claim, with counsel
reasonably satisfactory to Buyer; provided that the Stockholders Agent may not
assume such defense if there exists a conflict of interest between the
positions of Buyer and the Stockholders with respect to such Third-Party Buyer
Claim or such Third-Party Buyer Claim seeks equitable relief against a member
of the Buyer Group. Buyer agrees that it will not settle any Third-Party Buyer
Claims without the consent of the Stockholders Agent, which consent shall not
be unreasonably withheld or delayed. Buyer further agrees that if the Stockholders
Agent wishes to enter into a settlement with respect to a Third-Party Buyer
Claim on terms reasonably acceptable to Buyer, Buyer will cooperate in such
settlement, provided that such settlement includes, as an unconditional term
thereof, the giving by the third party to Buyer of a release from all liability
in respect of such Third-Party Buyer Claim.


 


8.5           Exclusive Remedy. The rights of the Buyer under this
Article 8 and the Escrow Agreement shall be the exclusive remedy of the
Buyer with respect to claims resulting from or relating to any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement contained in this Agreement.


 


ARTICLE 9

MISCELLANEOUS


 


9.1.          Amendments, Supplements
and Termination.  This
Agreement, including the Schedules delivered pursuant to this Agreement or
attached to this Agreement, may not be amended, modified, supplemented or
terminated by the parties hereto in any manner, except after the Closing, by an
instrument in writing signed by Buyer and the Stockholders Agent.
Notwithstanding the foregoing, this Agreement may be terminated at any time
prior to the Closing by either the Stockholders Agent or Buyer if the Closing
shall not have occurred within sixty (60) days of the date hereof for any
reason; provided, however, that
the right to terminate this Agreement under this Section 9.1 shall not be
available to any party whose action or failure


 


43













 


to act has been a
principal cause of or resulted in the failure of the Closing to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement.


 


9.2.          Waiver.  The terms and conditions of this Agreement may
be waived only by a written instrument signed by the party waiving compliance.
The failure of any party hereto to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of or non-compliance with this Agreement
shall be held to be a waiver of any other or subsequent breach or
non-compliance. The rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at
law or in equity.


 


9.3.          Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the Commonwealth
of Massachusetts, without regard to its principles of conflicts of laws.


 


9.4.          Notice.  All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered by hand, sent by
facsimile transmission with confirmation of receipt, sent via a reputable
overnight courier service with confirmation of receipt requested, or mailed by
registered or certified mail (postage prepaid and return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice), and shall be deemed given on the date on
which delivered by hand or otherwise on the date of receipt as confirmed:


 


Buyer:


 


Patni Computer
Systems, Inc.

1 Broadway

15th Floor


Cambridge, MA 02142

Attn: President


 


With copies to:


 


John G. Ganick, Esq.

Vacovec, Mayotte & Singer LLP

225 Washington Street, Suite 340

Newton, Massachusetts 02459

Facsimile: (617) 969-2002


 


and


 


44













 


John D.
Patterson, Jr., Esq.

Foley Hoag LLP

Seaport World Trade Center West

155 Seaport Boulevard

Boston, Massachusetts 02210

Facsimile: (617) 832-7000


 


To the
Company:


 


Cymbal Corporation

39141 Civic Center Drive

Fremont, CA 94538

Attn: President

Facsimile: (510) 494-2051


 


With a copy to:


 


Scott Alderton, Esq.

Stubbs Alderton & Markiles, LLP

15821 Ventura Boulevard, Suite 525

Encino, California 91436

Facsimile: (818) 444-4520


 


To the
Stockholders Agent:


 


Neeraj Gupta

c/o Cymbal Corporation

39141 Civic Center Drive

Fremont, CA 94538

Facsimile: (510) 494-2051


 


9.5.          Entire Agreement. This Agreement and the documents and
instruments and other agreements among the parties hereto as contemplated by or
referred to herein constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof. Each party hereto acknowledges that, in entering
into this Agreement and completing the transactions contemplated hereby, such
party is not relying on any representation, warranty, covenant or agreement not
expressly stated in this Agreement or in the agreements, certificates and other
documents among or between the parties contemplated by or referred to herein.


 


9.6.          Third Party Beneficiaries. Except as expressly provided in this
Agreement, each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than
the parties hereto.


 


9.7.          Legal Action or
Proceeding.  Any legal action
or proceeding with respect to this Agreement or any matters arising out of or
in connection with this Agreement shall be brought


 


45













 


solely and exclusively in the federal or state courts
of the Commonwealth of Massachusetts and, by execution and delivery of this
Agreement, parties each hereby accept, generally and unconditionally, the sole
and exclusive jurisdiction of the aforesaid courts and appellate courts
thereof. The parties irrevocably consent to venue in and service of process
from aforementioned courts.


 


9.8.          Mutual Drafting. The parties hereto are sophisticated and
have been represented by attorneys throughout the transactions contemplated hereby
who have carefully negotiated the provisions hereof. As a consequence, the
parties do not intend that the presumptions of laws or rules relating to
the interpretation of contracts against the drafter of any particular clause
should be applied to this Agreement or any agreement or instrument executed in
connection herewith, and therefore waive their effects.


 


9.9.          Remedies.  It is specifically understood and agreed that
any breach of the provisions of this Agreement or any other agreement executed
and delivered pursuant to this Agreement by any party hereto will result in
irreparable injury to the other parties hereto, that the remedy at law alone
will be an inadequate remedy for such breach, and that, in addition to any
other remedies which they may have, such other parties may enforce their
respective rights by actions for specific performance (to the extent permitted
by law).


 


9.10.        Binding Effect;
Assignability.  This Agreement
shall be binding upon and [ILLEGIBLE] to the benefit of the parties hereto and
their respective successors and assigns. This Agreement is not intended to
confer upon any person other than the parties hereto and members of the Buyer
Group (and such parties’ and members’ respective successors and assigns) any
rights or remedies hereunder, except as otherwise expressly provided herein.
Neither this Agreement nor any of the rights and obligations of the parties
hereunder shall be assigned or delegated, whether by operation of law or
otherwise, without the written consent of all parties hereto.


 


9.11.        Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full
force and effect.


 


9.12.        Counterparts.  This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
agreement.


* * * * *


 


46













 


IN WITNESS WHEREOF, the
parties have caused this Stock Purchase Agreement to be executed as an
agreement under seal as of the date first above written.


 


	
   

  	
  Patni Computer Systems, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cymbal Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neeraj Gupta

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Stockholders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amitabh Nagpal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  1993 Edmund Pickell Ang and Lorna

  
	
   

  	
  Garcia Ang Revocable Trust

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Neeraj Gupta

  	
   

  
	
   

  	
  Neeraj Gupta

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Samvit Raina as custodian for Nikita Raina

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Praveen Arora

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mohanlal Mehndiratta

  



 


47













 


AMENDMENT
NO. 1

TO

STOCK PURCHASE AGREEMENT


 


This Amendment No. 1 to Stock Purchase Agreement is entered into
as of the 3rd day of November, 2004 (this “Amendment No. 1”), by
and between Patni Computer Systems Inc., a Massachusetts corporation (“Buyer”),
and Neeraj Gupta (“Stockholders Agent”) as agent for the stockholders of
Cymbal Corporation, a California corporation (the “Stockholders” and the
“Company”, respectively). Buyer and Stockholders Agent are sometimes
referred to herein together as the “Parties”.


 


Recitals


 


WHEREAS, the Company, the
Stockholders and Buyer have executed and delivered that certain Stock Purchase
Agreement dated as of October 11, 2004 (the “Stock Purchase Agreement”;
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Stock Purchase Agreement) pursuant to which, among other
things, Buyer agreed to purchase from the Stockholders, and the Stockholders
agreed to sell to Buyer, all of the outstanding capital stock of the Company;


 


WHEREAS, this Amendment
No. 1 is entered into immediately following the Closing of the
transactions contemplated by the Stock Purchase Agreement;


 


WHEREAS, the Parties
desire to amend certain provisions of the Stock Purchase Agreement and the
Schedules thereto with such amendments to be effective as of and following the
Closing; and


 


WHEREAS, pursuant to
Section 9.1 of the Stock Purchase Agreement, the Stock Purchase Agreement
and the Schedules delivered pursuant to the Stock Purchase Agreement may be
amended by an instrument in writing signed by Buyer and the Stockholders Agent.


 


NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:


 


1.             Schedules.  The introductory cover page to the
Schedules along with the Schedules delivered on October 11, 2004 at the
time of the signing of the Stock Purchase Agreement shall be replaced in their entirety
with the introductory cover page to the Schedules and the Schedules,
respectively, attached hereto.


 


2.             Cross References.  Section 1.2 of the Stock Purchase
Agreement is hereby amended by (i) deleting the following terms and cross
references: “Confidentiality Agreement” (Section 3.17.5), “Eligible
Employee Pool” (Section 2.2.3(a)), “Key Employee Agreement”
(Section 6.4), and “Shareholder Key Employee Agreement”
(Section 6.4); (ii) by deleting the existing cross reference associated
with the following terms and inserting the respective cross reference in
parentheses following each term: “Avendus Letter” (Section 7.2.16),
“Company Subs” (Section 3.3), “Plans” (Section 7.2.11), and
“Pre-Closing Tax Period” (Section 6.8); and (iii) adding the terms “Key Employee Agreement (A)” and “Key
Employee Agreement (B)”, each with cross reference to “Section 3.26”.


 













 


3.             Closing Liabilities.  Section 1.3.6(v) of the Stock
Purchase Agreement is hereby amended by deleting such clause and replacing it
in its entirety with the following:  “(v) $811,670,
which shall be applied to the Company’s payments to be made to Zensar
Technologies Ltd. in connection with the exercise of the Zensar Option
described in Section 3.27 and the transactions contemplated by the notice
to Zensar Technologies Ltd. described in Section 7.2.15 (the “Zensar
Amount”),”.


 


4.             Net Worth Standard.  Section 1.3.23 of the Stock Purchase
Agreement is hereby amended by deleting such Section in its entirety and
replacing it with the following: “1.3.23 Net Worth Standard:
$5,277,726, plus the amount of the profit of the Company from July 1, 2004
through and including the Closing Date.”


 


5.             Zensar Adjustment.  Section 2.2.4(c) of the Stock
Purchase Agreement is hereby amended by adding the following language at the
end of the last sentence of such Section: 
“; provided, however, that any amount shown as an advance to Zensar on
the Closing Balance Sheet of the Company shall be treated as an amount paid by
the Company after Closing to Zensar Technologies Ltd. for purposes of
calculating any adjustment relating to the Zensar Amount.”


 


6.             Corporate Status.  Section 5.1 of the Stock Purchase
Agreement is hereby amended by deleting the word “India” and inserting in its
place the words “The Commonwealth of Massachusetts”.


 


7.             Employment Agreements.  Section 6.4 of the Stock Purchase
Agreement is hereby amended by deleting the first sentence contained therein
and replacing it in its entirety with the following: “Prior to the Closing, the
U.S. and Canadian employees listed on Schedule 6.4 shall each enter
into an employee agreement in the form attached hereto as Exhibit D,
the Indian and Thai employees listed on Schedule 6.4 shall each
enter into an employee agreement in the form attached hereto as Exhibit E,
and the U.K. employees listed on Schedule 6.4 shall each enter into
an employee agreement in the form attached hereto as Exhibit F
(collectively, the “Employee Agreements”).”


 


8.             Company Plans.  Section 6.5 of the Stock Purchase
Agreement is hereby amended by deleting the first sentence contained therein
and replacing it in its entirety with the following: “With the exception of the
Employee Provident Fund maintained with the Government of India- P.F. Authority
(which shall not be terminated and shall remain in full force and effect
following the Closing), the Company and each Company Sub shall terminate all
Company Plans by resolution adopted by the Board of Directors of the Company or
each Company Sub prior to the date of the Closing, on terms acceptable to
Buyer, and shall simultaneously amend each Company Plan to the extent necessary
to comply with all applicable laws, including the so-called “GUST” and “EGTRRA”
legislation, to the extent not previously amended.”


 


9.             Tax Matters.  Section 6.11(iii) of the Stock Purchase
Agreement is hereby amended by deleting the sentence contained therein and
replacing it in its entirety with the following: “Buyer and Sellers further
agree, upon request, to provide the other Party with all information that
either Party may be required to report pursuant to Code §6043 and all Treasury
Regulations promulgated thereunder, as well as all information necessary to
comply with Code


 


2













 


§6043A, including, without limitation, the name and address of each of
the Stockholders and the other information set forth in Code §6043A(a).”


 


10.           Savings.  Except as amended hereby, the terms of the
Stock Purchase Agreement, remain in full force and effect.


 


[Remainder of this page intentionally left blank.]


 


3













 


IN WITNESS WHEREOF, this Amendment No. 1 to the Stock Purchase
Agreement has been executed under seal as of the date first written above.


 


 


THIS AGREEMENT MAY BE EXECUTED
IN COUNTERPARTS.


 


	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  PATNI COMPUTER SYSTEMS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STOCKHOLDERS AGENT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Neeraj Gupta

  	
   

  
	
   

  	
  Neeraj Gupta