CONFIDENTIAL INFORMATION REDACTED EXHIBIT 10.68
SHAREHOLDERS AGREEMENT
DATED
31st MAY 2002
BETWEEN
INDUSIND TELECOM NETWORK LIMITED
And
HAMKO FINANCIAL SERVICES LIMITED
And
KOTAK MAHINDRA FINANCE LIMITED
And
TRANS CRYSTAL LIMITED
And
XXXX XXXXXX TELEMATICS LIMITED
And
FASCEL LIMITED
----------
in respect of
FASCEL LIMITED
----------
1
CONTENTS
1. DEFINITIONS AND INTERPRETATION............................................5
1.1 DEFINITIONS.......................................................5
1.2 INTERPRETATION....................................................8
2. EFFECTIVE DATE............................................................9
3. SHAREHOLDING PATTERN......................................................9
4. MEETINGS OF SHAREHOLDERS.................................................10
4.1 GENERAL MEETINGS.................................................10
4.2 QUORUM...........................................................10
5. DIRECTORS AND OFFICERS...................................................10
5.1 DIRECTORS........................................................10
5.2 NOMINATED DIRECTORS TO BE ELECTED................................11
5.3 ALTERNATE DIRECTOR...............................................11
5.4 DIRECTORS FEES...................................................12
5.5 PLACE AND CALLING OF BOARD MEETINGS..............................12
5.6 RESOLUTION BY CIRCULATION........................................12
5.7 CHAIRMAN AND VICE CHAIRMAN.......................................13
5.8 QUORUM FOR DIRECTORS MEETINGS....................................13
5.9 ATTENDANCE BY CONSULTANTS, ADVISERS AND NON VOTING ATTENDEES.....13
5.10 DECISIONS BY MAJORITY VOTE.......................................13
5.11 SECRETARY........................................................14
5.12 AUDITORS.........................................................14
5.13 ACCOUNTING YEAR..................................................14
6. MANAGEMENT...............................................................14
6.1 BUSINESS TO BE MANAGED BY BOARD..................................14
6.2 EXECUTIVES.......................................................14
6.3 PERFORMANCE OF CEO...............................................15
6.4 MAJORITY VOTES REQUIRED FOR CERTAIN BOARD MEETING................15
6.5 RESERVED DECISIONS...............................................16
7. BUSINESS PLAN & BUDGET...................................................17
7.1 BUSINESS PLAN & BUDGET...........................................17
7.2 BUDGET DETAILS...................................................17
8. INITIAL PUBLIC OFFERING..................................................18
9. FUNDING AND CAPITAL......................................................18
9.1 FUNDING OF THE COMPANY...........................................18
9.2 CAPITAL CONTRIBUTION.............................................18
9.3 DEBT FINANCING...................................................19
10. TRANSFER OF SHARES.......................................................20
10.1 RESTRICTIONS ON TRANSFERS OF OWNERSHIP...........................20
10.2 NO MORTGAGE OR PLEDGE OF SHARES..................................20
10.3 PERMITTED TRANSFERS..............................................20
10.4 DEFAULT..........................................................21
10.5 SALE OF SHARES ON DEFAULT........................................21
10.6 REPAYMENT OF SHAREHOLDER LOANS AND GUARANTEES....................23
2
10.7 TITLE AND COMPLETION OF SHARE TRANSFERS..........................23
10.8 RIGHTS OF FIRST REFUSAL..........................................24
10.9 TAG ALONG........................................................27
10.10 SECTORAL CAPS....................................................28
10.11 DEED OF ADHERENCE................................................29
11. FURTHER OBLIGATIONS OF THE PARTIES.......................................29
11.1 FURTHER ASSURANCE................................................29
11.2 DIRECTORS TO VOTE TO IMPLEMENT THIS AGREEMENT....................29
11.3 ACCOUNTING AND REPORTING.........................................30
11.4 EXCHANGE OF INFORMATION..........................................30
11.5 FAIR DEALINGS....................................................30
12. MAINTENANCE OF LICENCES, GOVERNMENT APPROVALS............................31
13. TERM, TERMINATION AND DISPUTES...........................................32
13.1 TERM.............................................................32
13.2 RIGHTS OF PARTIES ON WINDING UP..................................32
13.3 AGREEMENT TERMINATES ON WINDING UP...............................32
14. ARBITRATION AND CONSULTATION.............................................32
14.1 CONSULTATION.....................................................32
15. CONFIDENTIALITY..........................................................34
15.1 AGREEMENT CONFIDENTIAL...........................................34
15.2 INJUNCTIVE RELIEF................................................34
15.3 SURVIVAL.........................................................34
16. AGREEMENT................................................................34
16.1 AGREEMENT TO PREVAIL.............................................34
16.2 AMENDMENT OF MEMORANDUM AND ARTICLES.............................35
17. NOTICES..................................................................35
18. MISCELLANEOUS............................................................36
18.1 LEGAL AND OTHER COSTS............................................36
18.2 COMPLETE AGREEMENT...............................................36
18.3 UNENFORCEABLE PROVISIONS.........................................36
18.4 NO PARTNERSHIP...................................................37
18.5 AMENDMENT IN WRITING.............................................37
18.6 NO ASSIGNMENT....................................................37
18.7 NO WAIVER........................................................37
18.8 COUNTERPARTS.....................................................37
18.9 GOVERNING LAW....................................................37
DRAFT ARTICLES OF THE COMPANY.................................................41
3
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made the 31st day of May 2002;
BETWEEN:
A. IndusInd Telecom Network Limited a company incorporated in India whose
registered office is at Hinduja House 171 Xx Xxxxx Xxxxxx Xxxx, Xxxxx,
Xxxxxx 000000, ("Indusind");
B. Hamko Financial Services Limited, a company incorporated under the
Companies Act, 1956 whose registered office is at Bakhtawar, 0xx Xxxxx,
000, Xxxxxxx Xxxxx, Xxxxxx 400 021, India ("KMIL");
C. Kotak Mahindra Finance Limited, a company incorporated under the
Companies Act, 1956 whose registered office is at Bakhtawar, 0xx Xxxxx,
000, Xxxxxxx Xxxxx, Xxxxxx 400 021, India ("KMFL");
D. Trans Crystal Limited, a company incorporated in Mauritius whose
registered office is at 4th Floor, Les Cascades Building, Xxxxx Xxxxxx
Street, Port Louis, Mauritius ("TCL");
E. Xxxx Xxxxxx Telematics Limited, a company incorporated under the
Companies Act, 1956 whose registered office is at 2A, Landmark, 000X,
XXX Xxxx Xxxx, Xxxxxxxx 000 000, Xxxxx ("Telematics"); and
F. Fascel Limited, a company incorporated in India whose registered office
is at 6th Floor, Sakar-II, Ellisbridge, Ahmedabad 380 006, Gujarat (the
"Company");
(Each of the aforesaid shall be referred to as "Party" and collectively as
"Parties")
WHEREAS:
A. The Company is a public company limited by shares, which holds the
license to provide Cellular Mobile Services in the circle of Gujarat by
virtue of the license agreement no. 842-58(b)/95-UAS dated 11 January
1996.
B. KMFL and Fascel (among others) are parties to an existing joint venture
agreement dated 29 March 1995. Since the date of that joint venture
agreement the shareholding pattern has changed and
4
Indusind, KMIL, Telematics and TCL have become shareholders of the
Company and the Parties wish to enter into a new agreement in
replacement thereof.
C. The present shareholding of the Company is as follows:
TCL: Representing 49% of the issued share capital of the Company
Telematics: Representing 10% of the issued share capital of the Company
Indusind: Representing 30% of the issued share capital of the Company
KMFL: Representing 7% of the issued share capital of the Company
KMIL: Representing 4% of the issued share capital of the Company
D. Indusind, KMFL, KMIL and Telematics, being companies incorporated in
India collectively hold 51% of the issued share capital of the Company,
and the balance 49% of the issued share capital of the Company is held
by TCL.
E. This Agreement sets forth the arrangement between the parties for the
shareholding and management of the Company on an ongoing basis and
replaces the joint venture agreement dated 29 March 1995 and the Parties
confirm that they waive all rights (if any), except for claims already
lodged with the Company, under such joint venture agreement and the
articles of association of the Company in place prior to the Effective
Date
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as
follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement unless the context otherwise requires or expressly
provides, the following words shall have the following meanings
respectively:
"Accounting Year" shall have the meaning set forth in Clause 5.13
hereof;
5
"Act" or "Companies Act" shall mean the Indian Companies Act, 1956
and/or any statutory modifications amendments or re-enactments thereto
from time to time;
"Affiliate" means any entity, which controls, is controlled by, or is
under the common control of any of the Parties or the majority
shareholder of any of the Parties;
The term 'Control' being used in the sense of power to elect, appoint or
remove either singly by itself or together with other Affiliates a
majority of its directors or to direct and control the management of a
company, or to hold in excess of 40% of the voting interest. The term
'Common Control' being used in the sense that the shareholder and the
other person are both ultimately controlled by the same person. Common
Control shall mean the predominant ultimate beneficial interest and/or
effective control being exercised by the same person or a group of
persons over third parties, any Party and/or any of its Affiliates. The
term "majority shareholder" being used in the sense of power to elect,
appoint, remove either singly by itself or together with other
affiliates a majority of its directors or to direct and control the
management of a company or to hold in excess of 50% of the voting
interest of such company.
"AGM" means an annual general meeting of the Company;
"Agreement" means this Shareholders Agreement;
"Alternate Directors" means Directors appointed pursuant to Clause 5.3;
"Articles" means the articles of association of the Company for the time
being;
"Board" means the board of directors of the Company;
"Business" means providing mobile telephone services as defined in the
Licence.
"Business Day" means a day on which scheduled banks are open for
business in Gujarat and Maharashtra;
"Chief Executive Officer" or "CEO" means the chief executive officer of
the Company appointed pursuant to Clause 6.2;
"Directors" mean the directors of the Company from time to time;
"Effective Date" means the day of April 2002;
6
"EGM" means an extraordinary general meeting of the Company;
"Fair Value" has the meaning set out in Schedule A hereto;
"General Meeting" means an AGM or an EGM;
"High Value Contracts" mean contracts with a value greater than US$5
million entered into or to be entered into by the Company or any of its
Subsidiaries;
"IPO" means an initial public offering made in accordance with Clause 8;
"Indusind Directors" means any Directors nominated by Indusind in
accordance with Clause 5.1(a);
"Indusind Shares" means the Shares held by Indusind;
"KMFL Director" means the Director nominated by KMFL and jointly KMIL in
accordance with Clause 5.1(a);
"KMFL Shares" means the Shares held by KMFL;
"KMIL Shares" means the Shares held by KMIL;
"Licence" means the cellular mobile telephone licence Number
TM842-58B/95-VAS issued by the Government of India to the Company for
operations in Gujarat;
"Memorandum" means the memorandum of association of the Company for the
time being;
"Original Director" shall have the meaning set forth in Clause 5.3
hereof;
"Party or Parties" shall mean the parties to this Agreement;
"Reserved Decisions" shall have the meaning set forth in Clause 6.5
hereof;
"ROC" means the Registrar of Companies, Ahmedabad;
"Rs." means Rupees, the lawful currency of India;
7
"Securities" means any security instrument or right (whether vested,
deferred or contingent) entitling or enabling the allottee or holder
thereof to acquire shares of or a beneficial interest or voting rights
in the Company, but shall not include securities issued to any financial
institution in respect of the ordinary financing requirements of the
Company;
"Shareholder" means any of TCL, Telematics, Indusind, KMFL, KMIL or any
direct holder of any issued Shares in the Company;
"Shares" and "Shares in the Company" mean all classes of shares in the
capital of the Company or any class thereof, as the case may be and
includes any and all of the rights conferred on a person by the
ownership of such shares;
"Subsidiary" means with respect to any party, any other entity directly
or indirectly fully owned, majority owned or controlled by such party.
For the purposes of this definition the term "control" as applied to any
person means the direct or indirect possession of the power to direct or
cause the direction of the management of that person whether through
ownership of voting securities or otherwise;
"TCL Directors" means any Director nominated by TCL in accordance with
Clause 5.1(a);
"TCL Shares" means the Shares held by TCL;
"Telematics Director" means the Director nominated by Telematics in
accordance with Clause 5.1(a);
"Telematics Shares" means the Shares held by Telematics..
1.2 INTERPRETATION
(a) Heading and bold typeface are only for convenience and shall be
ignored for the purpose of interpretation;
(b) Unless the context of this Agreement otherwise requires;
(i) words using the singular number also include the plural
or singular number, respectively;
(ii) the terms "hereof, "hereto" and derivative or similar
words refer to this entire Agreement or specified
Clauses of this Agreement, as the case may be;
8
(iii) the term "Clause" refers to the specified clause of this
Agreement;
(iv) reference to any legislation or law or to any provision
thereof shall include references to any such law as it
may, after the date hereof, from time to time, be
amended, supplemented or re-enacted, and any reference
to statutory provision shall include any subordinate
legislation made from time to time under that provision;
(v) reference to the word "include" shall be construed
without limitation; and
(vi) The Recitals, Schedules and Exhibits hereto shall
constitute an integral part of this Agreement.
2. EFFECTIVE DATE
2.1 This Agreement shall take effect on the Effective Date.
2.2 On the Effective Date, the Parties shall ensure that the Articles, in
the form and manner attached hereto as Schedule B are adopted at a
General Meeting, and the resolution adopting the same shall be filed
with the ROC within 7 days of the Effective Date. The Company shall take
all steps including issue of necessary notices in accordance with the
Companies Act to the shareholders of the Company and ensure that an EGM
is convened on the Effective Date and the requisite resolutions are
passed.
3. SHAREHOLDING PATTERN
Subject to the provisions of this Agreement, the issued and paid-up
share capital of the Company is held by the Parties, directly in the
following manner:
TCL: 49 %
KMFL: 7 %
INDUSIND: 30 %
KMIL: 4 %
Telematics: 10 %
9
4. MEETINGS OF SHAREHOLDERS
4.1 GENERAL MEETINGS
An AGM shall be held each calendar year within six (6) months following
the end of the previous Accounting Year of the Company. The Board shall
provide the Company's previous Accounting Year's audited financial
statements to all Shareholders at least 15 days before the AGM is held
to approve and adopt the audited financial statements. All other
Shareholders' meetings, other than the AGM shall be EGMs.
4.2 QUORUM
The quorum for an AGM or EGM with respect to any agenda shall be at
least five (5) Shareholders, including at least TCL, Telematics and
Indusind and one of KMFL or KMIL, present in person or through a duly
authorised representative, holding more than sixty percent (60%) of the
total issued and paid-up equity share capital of the Company. If the
proposed AGM or EGM with respect to any quorum is not validly
constituted as required by this Clause 4.2, or if such a quorum is not
maintained throughout such meeting, then the meeting shall be adjourned
for a period of 7 days, with notice of such adjournment to be provided
to the Shareholders within three (3) days of such adjournment. At the
meeting held pursuant to the adjournment, the Shareholder(s) present
shall constitute the quorum for the meeting. A quorum must be present at
the beginning and throughout the meeting.
5. DIRECTORS AND OFFICERS
5.1 DIRECTORS
(a) Save and except as provided in this Agreement, the Board shall
comprise Nine Directors. Four Directors (the "TCL Directors")
shall be nominated by TCL, one Director (the "KMFL Director")
shall be nominated by KMFL and KMIL jointly, three Directors
(the "Indusind Directors") shall be nominated by Indusind and
one Director (the "Telematics Director") shall be nominated by
Telematics. The Shareholder or Shareholders nominating a
Director may by notice in writing to the Company require the
removal of such Director and nominate another person as a
Director to act in his/her place. The Parties agree that nothing
contained in section 284 of the Act applies in respect of the
appointment of Directors.
10
(b) If the holding, directly or indirectly, of any Shareholder (or,
in the case of KMFL and KMIL, their joint holding) falls below
7% of the issued and paid-up equity share capital of the
Company, then that Shareholder shall cease to have the right of
nomination under this Clause 5.1, in respect of any Director and
shall procure such Director to, and such Director shall, resign
forthwith.
(c) Three Directors shall be non-retiring Directors, one each of
whom shall be nominated by TCL, Indusind and in the case of KMFL
and KMIL jointly, provided that if the nominating Party ceases
to have the right to nominate a Director pursuant to Clause
5.1(b) such Director shall cease to be non-retiring and shall
immediately resign from the Board. The nominating Party
undertakes to procure the resignation of such Director nominated
by it.
(d) The number of Directors may be extended in the event that any
financial institution being a creditor to the Company should
choose to nominate a Director as their representative on the
Board and the Board agrees to accept such nomination.
5.2 NOMINATED DIRECTORS TO BE ELECTED
Subject to the provisions of the Act, each of the Parties (on behalf of
itself) undertake to procure that the persons nominated in accordance
with Clause 5.1 (except Clause 5.1(d)) shall be elected or re-elected as
Directors or appointed to the Board as the case may be. Furthermore,
upon receipt of a written request from TCL, Indusind, KMFL and KMIL
jointly, or Telematics (as the case may be) to remove or not to re-elect
any Director nominated by them, the Parties shall procure the removal or
shall not re-elect such Director as so requested.
5.3 ALTERNATE DIRECTOR
In the event that a Director (an "Original Director") is away for a
continuous period of not less than three (3) months from the state in
which the meetings of the Board are ordinarily held, the Board shall
appoint another Director (an "Alternate Director") for and in place of
the Original Director. The Board shall endeavour to appoint only such
Alternate Director nominated by the Shareholder that nominated the
Original Director. The Alternate Director shall vacate office if and
when the Original Director returns to the state in which meetings of the
Board are ordinarily held. Upon the appointment of the Alternate
Director, the Company shall ensure compliance with the provisions of
11
the Act, including by filing necessary forms with the ROC. The Alternate
Director shall be entitled to receive notice of all meetings and to
attend and vote at such meetings in place of the Original Director and
generally to perform all functions of the Original Director in his
absence.
5.4 DIRECTORS FEES
Subject to the provisions of the Act, the Directors shall not be paid
any fees for acting in their capacity as Directors. All Directors may,
subject to applicable restrictions if any under law, be remunerated
separately for the performance of special or executive duties approved
from time to time by the Board. All Directors will be entitled to be
paid or reimbursed their reasonable travelling, accommodation and
subsistence expenses incurred in attending meetings (Board/ general/ any
other committee meeting) and/or in the discharge of their duties as
Directors.
5.5 PLACE AND CALLING OF BOARD MEETINGS
Board meetings shall be held at such places, in or outside of India as
the Board may determine and failing any such determination at the
Company's registered office in Ahmedabad. Board meetings shall be held
at least once every three months and at least four times in each year.
Any Director may requisition a meeting of the Board. Unless the
requirement of notice is waived by all Directors, seven days written
notice (or such shorter period as all the Directors may agree) of Board
meetings shall be given to all Directors and their Alternate Directors.
Each notice of a meeting of the Board shall contain inter alia, an
agenda specifying in reasonable detail the matters to be discussed at
the relevant meeting and shall be accompanied by all necessary written
information. Where a Board meeting is adjourned, it shall be reconvened
on a day seven days from the original date at the same place and time
unless the Board decides otherwise. Notices and minutes of Board
meetings shall be given to each Director at their last known address,
whether resident in India or abroad.
5.6 RESOLUTION BY CIRCULATION
Subject to the provisions of the Act, resolutions of the Board may be
passed by circulation, if the resolution has been circulated in draft,
together with necessary papers, if any, to all the Directors, then in
India or outside India, and has been signed by a majority of the
Directors, provided that in respect of matters contained in Clause 6.4
hereof, the resolution should be signed by at least one TCL Director,
12
one Indusind Director and the KMFL Director. Such resolutions may be
signed by the Directors as single documents or in counterparts.
5.7 CHAIRMAN AND VICE CHAIRMAN
The Chairman of the Board shall be nominated by Indusind in consultation
with TCL from amongst the Indusind Directors. The Vice-Chairman of the
Board shall be nominated by TCL from amongst the TCL Directors. Each of
the Shareholders (on behalf of itself) shall ensure (including by
exercise of their respective voting rights) the appointment of the
Indusind nominee as the Chairman and the TCL nominee as the
Vice-Chairman. The Chairman of the Board shall preside as chairman of
each meeting of the Board at which he is present and in his absence the
Vice Chairman shall preside as Chairman of the meeting. In the absence
of the Chairman and the Vice-Chairman, the Directors attending the
meeting shall elect a Director from amongst themselves to chair the
meeting. In the event of any equality of votes, the chairman of the
meeting shall not have a second or casting vote. , If either Indusind or
TCL ceases to hold at least 20% of the issued and paid up share capital
of the Company it shall cease to have the right to nominate the Chairman
or Vice-Chairman, as the case may be.
5.8 QUORUM FOR DIRECTORS MEETINGS
The quorum for meetings of the Board shall be 5 (five) Directors
consisting of at least one TCL Director, one Indusind Director and the
KMFL Director, excluding interested Directors in respect of any
particular item. If a quorum is not present, the meeting shall be
adjourned for seven days at the same place and time and if no quorum is
then present the Director(s) present shall form a quorum.
5.9 ATTENDANCE BY CONSULTANTS, ADVISERS AND NON VOTING ATTENDEES
If the Board so authorises or requests, auditors, consultants, and
advisers of the Company (in addition to those who also act for any one
or more of the Directors in a personal capacity) and employees of the
Company shall be permitted to attend and speak at meetings of the Board,
but not to vote.
5.10 DECISIONS BY MAJORITY VOTE
Subject to Clause 6.4 hereof and except as otherwise provided in the
Act, all decisions of the Board shall be taken by a majority of the
Directors present and voting at a meeting of the Board, or as the case
may be, all the Directors voting by way of a circular resolution.
13
5.11 SECRETARY
The secretary of the Company shall be such person as shall from time to
time be determined by the Board.
5.12 AUDITORS
The auditors of the Company shall be PricewaterhouseCoopers with respect
to the next Accounting Year or, alternatively, such other international
and reputable "big 5" firm of accountants as shall from time to time be
recommended by the Board.
5.13 ACCOUNTING YEAR
The accounting year of the Company (the "Accounting Year") shall end on
31st March each year or such other date as the Board shall agree and the
Company in general meeting shall resolve.
6. MANAGEMENT
6.1 BUSINESS TO BE MANAGED BY BOARD
The Board shall be responsible for the management of the business of the
Company and determining the overall policies and objectives of the
Company. The Board shall delegate responsibility for managing the day to
day operations of the Company to either the CEO or the Executive
Committee on such terms as the Board deems desirable and subject always
to the terms of this Agreement.
6.2 EXECUTIVES
In addition to the Directors appointed under Clause 5.1, TCL shall
nominate and the Board shall appoint a Chief Executive Officer, a Chief
Financial Officer and a Chief Operating Officer of the Company, provided
that:
(a) any candidate for the post shall have the requisite technical
qualifications and provided that prior to such nomination TCL
shall consult Indusind and KMFL; and
(b) any appointment thereof shall be subject to Board approval.
14
6.3 PERFORMANCE OF CEO
The CEO shall be responsible for the day to day operations of the
Company subject to the overall control of the Board and shall be deemed
to be the Manager of the Company as defined in the Act. The Parties
recognise that the CEO will manage the business and affairs of the
Company and that his performance shall be the subject matter of a
consultative process and joint review of the Board.
6.4 MAJORITY VOTES REQUIRED FOR CERTAIN BOARD MEETING
Notwithstanding any other provision in this Agreement, the Shareholders
agree that the following matters shall not be implemented in respect of
the Company without the passing of a resolution of the Directors present
and voting, on the issue at a Board Meeting of the Company, which
resolution is approved by at least one TCL Director, one Indusind
Director and the KMFL Director (for so long as the Shareholders have the
right to nominate a Director pursuant to Clause 5.1(b)), excluding
interested Directors who are prohibited at law to vote thereon:
(a) approval of the five year and annual business plan of the
Company where such business plan is not within guidelines agreed
between the Parties;
(b) any single investment in excess of US$5 million in any other
Companies, including by way of merger and/or acquisition or
consolidation of the Company or its business with another
company or acquisition of the substantial part of the business
or assets of another company;
(c) entry into a new business not carried on by the Company as at
the Effective Date;
(d) sale of a substantial part of the business or assets of the
Company;
(e) transactions, other than in the ordinary course of business,
between the Company and any Shareholder or its Affiliate;
(f) execution or material alteration of High Value Contracts which
have not been contemplated in the business plan or budget;
(g) execution or material alteration of any agreement between the
Company and any Shareholder or its Affiliate other than those
15
entered into on an arms length basis in the ordinary course of
business of the Company;
(h) any issue, other than on a pro-rata basis at not more than Fair
Value, of Shares or Securities or any cash call other than on an
equal basis;
(i) incorporation by the Company of a Subsidiary for purposes other
than carrying out the Business;
(j) any investments by a Subsidiary in a joint venture or creating a
further Subsidiary or any dilution of the economic interest in a
Subsidiary by fresh investment or otherwise;
(k) liquidation, dissolution or winding up of the Company;
(l) amendment to the Memorandum or Articles;
(m) subject always to sub-clause (h) above, any change in the
authorised or issued capital of the Company or the issue of any
additional Shares or Securities;
(n) offer of any Shares by the Company to the public and the listing
thereof on a stock exchange;
(o) any change in or modification of the rights which any class of
Shares confers on the holders thereof; and
(p) relinquishing the Licence or applying for any new licence for
providing telecommunication services.
6.5 RESERVED DECISIONS
Decisions of the Board under sub-clauses (a), (f), (m)(if not a pro rata
issue and not an issue falling under Clause 6.4(h)), and (n) of Clause
6.4 shall be referred to as "Reserved Decisions". In the event of the
Board being unable to agree on any Reserved Decision within seven (7)
days of the Board meeting, the following procedures shall apply:
(a) A summary of the facts surrounding the disputed Reserved
Decision shall be sent by the Company to one of the Directors
nominated by each of the Shareholders, or in the case of KMFL
and KMIL, the KMFL Director ("Concerned Directors");
(b) Within seven (7) days of the receipt of such summary, the
Concerned Directors shall meet and discuss the disputed
16
Reserved Decision and shall take all steps to reach a consensus
acceptable to the Shareholders;
If the Concerned Directors are unable to reach a consensus in the manner
set forth in sub-clause (b) above within a further period of fourteen
(14) days, then the matter shall be referred back to the Board where a
simple majority shall be all that is required to decide the matter
provided that if the Reserved Decision involves a decision of the Board
falling under Clause 6.4(a) and the Concerned Directors are not able to
resolve the issue within 7 days of a board meeting at which such matter
is considered then the relevant business plan shall be forwarded to the
Company's auditors, who shall review such business plan. The auditors
sole task shall be to determine whether, in their opinion, the said
business plan is reasonable or unreasonable, taking into account the
prevailing commercial factors and market conditions. In the event that
the auditors determine the business plan is reasonable then the matter
shall be referred back to the Board where a simple majority shall be all
that is required to approve such business plan. Any business plan
determined by the auditors to be unreasonable shall be amended and
resubmitted to the Board in accordance with the procedures set out in
Clauses 6.4 and 6.5.
7. BUSINESS PLAN & BUDGET
7.1 BUSINESS PLAN & Budget
The relevant officers of the Company shall prepare at least two months
prior to the close of each Accounting Year and the Board shall review,
amend and, if deemed appropriate, approve prior to the close of such
Accounting Year a business plan and a budget comprised of a balance
sheet, profit and loss statement, cash flow statement, capital
expenditure statement and funding requirements schedule covering the
five year period commencing at the close of such Accounting Year. The
Shareholders shall determine broad guidelines for drawing up the
business plan to include having a best in class network and customer
service platform, best branding, sufficient cash requirement to tackle
competition and with an initial focus on voice telephony.
7.2 BUDGET DETAILS
The budget shall be in sufficient detail to provide the Directors with
information sufficient to facilitate their approval.
17
8. [***]
9. FUNDING AND CAPITAL
9.1 FUNDING OF THE COMPANY
Unless otherwise determined by the Board, the funds required by the
Company shall be provided first, by the Company's cash flow, secondly,
by external borrowings in accordance with Clause 9.3 and lastly, by the
issue of additional share capital or loans from the Shareholders, pro
rata to their shareholding in the Company. For the avoidance of doubt,
failure by a Shareholder to provide shareholder loans will not
constitute a default under Clause 10.4.The additional share capital
shall either be equity or preference. The debt-equity ratio shall be
determined by the Board from time to time.
9.2 CAPITAL CONTRIBUTION
(a) Based on the funding requirements of the Company, the CEO shall
determine when equity capital calls are to be made, and shall
make a recommendation to the Board for making equity capital
calls. Subject to clause 6.4, the Board may, from time to time,
pass resolutions calling for equity capital contributions to the
Company (each such contribution a "Capital Contribution") from
the Shareholders which will result in the Company receiving the
amount of cash determined by the Board to be necessary to fund
the business needs of the Company to support growth requirements
(each such resolution, a "Cash Call"). Each Capital Contribution
pursuant to this Clause 9.2 shall be made by the Shareholders in
the form of a subscription of Shares. The Shareholders shall
make such Capital Contributions in proportion to their
respective holdings of the total issued and paid-up share
capital of the Company at the time of the applicable Cash Call.
Each Capital Contribution shall be payable by the Shareholders
in Rupees, on the date specified in the applicable Cash Call, by
wire transfer to the account of the Company specified in such
Cash Call.
(b) If any Shareholder does not pay or procure payment of its
ratable portion of any Capital Contribution required to be made
pursuant to sub-clause (a) above within thirty (30) days from
the date of the applicable Cash Call (or such other extended
period as may be required to obtain necessary regulatory
approvals), each of the other Shareholders if it has paid its
ratable portion of such Capital Contribution, has the option to
pay or ensure that its designee (acceptable to the other
Shareholders, who shall
18
not unreasonably withhold their acceptance) pays a pro-rata
share of such non-paying Shareholder's portion in the form of a
subscription of Shares, thereby increasing its respective
holdings of the total issued and paid-up share capital of the
Company, and decreasing the percentage holdings of the
non-paying Shareholder's holding in the total issued and paid-up
capital of the Company. The valuation for the issue of the
Shares pursuant to this Clause 9.2 shall be as agreed to between
the Parties, or if the Parties cannot reach an agreement within
14 days, Fair Value determined in the manner set forth in
Schedule A.
9.3 DEBT FINANCING
In the event that the financing is done through external borrowing by
the Company, the Parties shall take all reasonable steps to ensure that
the debt is subject to the following conditions:
(a) that the debt is without recourse to the Shareholders; or
(b) where the lenders do not accept a non recourse loan or where the
terms of the non recourse loan are not on reasonable commercial
terms acceptable to the Board and therefore the debt involves
recourse to the Shareholders, the Shareholders shall provide
corporate guarantees or procure acceptable bank or third party
guarantees for their respective Shares on a pro rata basis and
several basis (but not joint and several basis).
(c) In the event that corporate guarantees are required and one or
more of the Shareholders does not wish to provide such guarantee
then any of the other Shareholders may, in its absolute
discretion, elect to provide or procure the non participating
Shareholder's proportion of the guarantee and the non
participating Shareholder shall immediately pay to the
Shareholder providing or procuring such guarantee a fee of 2.0%
per annum of the amount of the guarantee that the non
participating Shareholder would have been obliged to provide.
For the avoidance of doubt, failure by any Shareholder to
provide any guarantee will not constitute a default under Clause
10.4.
9.4 DEBT EQUITY RATIO
It is the Parties intention that for so long as the debt equity ratio of
the Company does not exceed 2:1 then the Board shall not make a Cash
Call or seek recourse lending. However, if due to adverse market
19
conditions or if the terms of non-recourse funding are unreasonable in
the opinion of the Board then the Board may call for Cash Calls in
accordance with Clause 9.2 or funding with recourse to the Shareholders
in accordance with Clause 9.3, even in situations where the debt equity
ratio does not exceed 2:1.
10. TRANSFER OF SHARES
10.1 RESTRICTIONS ON TRANSFERS OF OWNERSHIP
No rights conferred by the ownership of a Share may be transferred
separately from legal title to the Share itself and no Share can be
transferred other than pursuant to the provisions of this Agreement. Any
transfer of Shares not made in accordance with the provisions of this
Agreement shall be null and void and shall not be registered by the
Company.
10.2 NO MORTGAGE OR PLEDGE OF SHARES
Each of the Shareholders, hereby undertakes with the others that during
the continuance of this Agreement it shall not, without the prior
written consent of the other Shareholders (which may be given in their
sole discretion and subject to such terms and conditions as they may
deem fit):
(a) mortgage, charge, pledge or otherwise encumber the whole or any
part of its Shares; or
(b) assign or otherwise purport to deal with the beneficial interest
therein or any right in relation thereto separately from the
legal interest,
provided that this clause shall not apply in respect of any mortgage,
charge or pledge of Shares by the Shareholders, or any of them, in
favour of any financial institution or bank in support of advances or
financial accommodation made available to the Company.
10.3 PERMITTED TRANSFERS
Subject to Clause 10.11 hereof, any Shareholder may transfer its Shares
to an Affiliate thereof, so long as the following conditions are
satisfied:
(a) a notice is given to the other Shareholders specifying the name
of the transferee, the details based on which the transferee is
to
20
be considered an Affiliate and the number of Shares to be
transferred to the transferee;
(b) the transferee has executed an instrument agreeing to be bound
by the terms of this Agreement;
(c) the relevant Shareholder and the transferee have undertaken that
in the event that the transferee ceases to be an Affiliate it
shall transfer the transferred Shares back to that Shareholder.
10.4 DEFAULT
A Shareholder shall be in default for the purposes of Clause 10.5 if:
(a) it breaches Clause 10.1;
(b) it breaches Clause 10.2;
(c) it commits a material breach of any other provision of this
Agreement and, in respect of a breach which is capable of being
remedied, fails to remedy such breach within 30 days of being
required in writing to do so by any other Shareholder;
(d) it becomes bankrupt or insolvent or stops payment to or makes an
arrangement with its creditors generally, or any resolution is
passed for its winding up or bankruptcy (other than a winding up
for the purpose of reconstruction or amalgamation) or any
petition or proceedings to winding up that Shareholder has been
admitted by a competent court of law (and such petition or
proceeding is not disputed in good faith) or it ceases to exist
or there is an attachment of or the levy of execution on a
substantial part of the assets or business of that Shareholder
which is not remedied within 120 days, or an encumbrancer takes
possession of or a receiver, trustee, administrator or similar
officer is appointed over all or substantial part of its assets
or business; or
(e) it breaches Clause 15.1
10.5 SALE OF SHARES ON DEFAULT
If any Shareholder is in default within the meaning of Clause 10.4 (the
"Defaulting Party") the other Shareholders or any of them (not including
the Company or any Affiliate of the Defaulting Party) (the
"Non-Defaulting Parties") may within 30 days of becoming aware of such
default give the Defaulting Party and the other Shareholders,
21
written notice of the default ("Default Notice") and require the Company
to arrange for the determination of Fair Value. Within 30 days of the
determination of Fair Value the Non-Defaulting Parties may give written
notice ("Disposal Notice") to the Defaulting Party to transfer all of
its Shares (the "Disposal Shares") to the Non-Defaulting Parties or
their designees (acceptable to the Non-Defaulting Parties) at 10% less
than the Fair Value, and the Disposal Shares shall then be promptly
transferred to the Non-Defaulting Parties or their designees. In the
event of more than one Disposal Notice being served, any transfer of
Shares thereby resulting shall be pro-rata to the existing respective
shareholdings in the Company of the Non-Defaulting Parties that have
served Disposal Notices. In order to facilitate such sale and transfer
the following shall apply:
(a) 14 days after the receipt by the Defaulting Party of the
Disposal Notice, the Directors appointed by the Non-Defaulting
Parties or their Affiliates (the "Non-Defaulting Directors")
shall be constituted the lawful attorneies of the registered
owner of the Disposal Shares, for the sale and transfer of the
Disposal Shares free from encumbrances to the Non Defaulting
Party or Parties or their designees.
(b) Within 7 days after the expiry of the 14 day period referred to
in Clause 10.5 (a) above, the Non-Defaulting Directors shall
execute in the name and on behalf of the registered owners
thereof, and deliver to the Non-Defaulting Parties, or their
designees, a transfer of the Disposal Shares to the
Non-Defaulting Parties or their designees in exchange for
cashiers or bank cheques in favour of the registered owners of
the Disposal Shares at 10% less than the Fair Value. The
Non-Defaulting Directors shall hold the cheques to the order of
the registered owners of the Disposal Shares, once such Shares
have been registered in the name of the Non-Defaulting Parties
or its designees.
(c) Notwithstanding the provisions of Clauses 5.0, 5.10 and 6.4, the
Directors nominated by the Non-Defaulting Parties shall
constitute a quorum for passing a resolution to register the
transfer of the Disposal Shares to the transferee.
(d) In the event that Government and regulatory approvals are needed
for the transfer of the Disposal Shares to any of the
Non-Defaulting Parties or their designees, the time for transfer
and payment for such Shares shall be extended while such
approval is being actively sought by the relevant Non-Defaulting
Party or its designee.
22
(e) In the event that a Non-Defaulting Party or one of its
Affiliates is unable to take up any of the Disposal Shares due
to Indian law or foreign investment regulations, such
Non-Defaulting Party shall be entitled to nominate any third
party acceptable to all other Non-Defaulting Parties and under
Indian law to acquire such Disposal Shares.
(f) The Defaulting Party agrees not to take any actions to prevent
or delay the transfer and registration of the Disposal Shares.
The rights of the Non Defaulting Parties under this Clause 10.5 shall be
in addition to and without prejudice to their rights to claim damages
and other remedies against the Defaulting Party.
10.6 REPAYMENT OF SHAREHOLDER LOANS AND GUARANTEES
In the event of any transfer of Shares consequent on a default and
unless otherwise agreed:
(a) any shareholder loans advanced by the Defaulting Party or any of
its Affiliates shall, notwithstanding the terms of such loan, be
repaid at the Company's option, either:
(i) by the Company at the earlier of the original repayment
date or the first anniversary of the date of such
transfer; or
(ii) by an assignment or novation of all or part of such
loan(s) to the Non-Defaulting Parties or their designees
at the face value plus the accumulated interest on the
loans or such part of the loan being transferred,
assigned or novated. Any interest to be paid by the
Company in respect of such loan(s) shall continue to
accrue until payment shall be made in full but not
otherwise;
(b) the Non Defaulting Parties shall use reasonable endeavours to
procure the release of any shareholder guarantee given by the
Defaulting Party or any of its Affiliates for the benefit of the
Company.
10.7 TITLE AND COMPLETION OF SHARE TRANSFERS
Subject to the provisions of clause 10.5, all transfers of Shares shall
be effected by the transferor selling as beneficial and legal owner free
and clear of all liens, charges and encumbrances and together with all
rights attaching thereto, and upon completion, the transferor shall
23
deliver to the transferee, forms of transfer in respect of the relevant
Shares duly executed by the transferor in favour of the transferee
together with the relevant share certificates and shall vote on the
Board to register the transferee as the owner of the Shares against
payment by the transferee of the price due in respect thereof. Subject
to this Clause 10.7 the Parties shall thereupon do or procure to be done
all such acts and things as may be necessary to give full effect to the
transfer and the registration thereof.
10.8 RIGHTS OF FIRST REFUSAL
(a) Should any Shareholder ("Transferring Shareholder") wish to
transfer any Shares (except for the transfer of Shares permitted
in Clause 10.3), it shall offer them to the other Shareholders,
in proportion to their respective shareholdings in the Company,
by serving a transfer notice ("Transfer Notice") on them stating
the number of Shares ("Offer Shares") which it proposes to sell
and whether any shareholder loans or part thereof are to be sold
as condition of the sale of the Offer Shares together with:
(i) the price and other terms, if any, at which it is
willing to sell the Offer Shares and shareholder loans,
such price not being higher or the terms more onerous
than those to any bona fide third person offering to buy
the Offer Shares or, in the case of shareholder loans
such price being not higher than the face value of such
loans plus the accumulated interest thereon, if any;
(ii) if relevant, such details of the terms of any bona fide
offer it has received to purchase the Offer Shares and
the shareholder loans, if any, as may be reasonably
necessary for the other Shareholders to determine the
price and other terms of such offer;
(iii) if relevant, the identity of the person making the offer
("Prospective Purchaser") and of its ultimate parent
company and beneficial owner and/ or the true buyer (if
known to be different).
(b) Within 21 days after the Transfer Notice is given the other
Shareholders may:
(i) if the Transfer Notice is accompanied by details of the
Prospective Purchaser, require the Transferring
Shareholder to produce to it such further evidence as it
24
may reasonably require to enable it to establish the
bona fides of the offer by the Prospective Purchaser;
(ii) if the Transfer Notice is not accompanied by details of
the Prospective Purchaser , serve on the Transferring
Shareholder and the Company a notice requiring the Fair
Value of the Offer Shares to be determined ("Valuation
Notice");
(c) Each of the other Shareholders shall be entitled within a period
of 21 days after any Transfer Notice is given or within a period
of 7 days after the date of provision to them of such further
evidence or information as may be requested under Clause 10.8
(b)(i) as the case may be (whichever is the later), to serve a
purchase notice ("Purchase Notice") on the Transferring
Shareholder stating:
(i) that it wishes to purchase all or part of the Offer
Shares and the shareholder loans if any at the price and
on the other terms stated in the Transfer Notice; or
(ii) that it declines the Offer Shares.
(d) Subject to clauses 10.8 (e) and (f), if the Transferring
Shareholder has not received a Purchase Notice (or Notices)
under the terms of Clause 10.8 (c) (i) in respect of the total
number of Offer Shares or having received the same has not
within 30 days thereafter received the price for the Offer
Shares in return for a transfer complying with Clause 10.7, it
shall be entitled to sell all, but not less than all, of the
Offer Shares not so purchased to the Prospective Purchaser if
there is any, otherwise to any person at not less than the price
and on the terms no less onerous than those set out in the
Transfer Notice provided that if such sale is not completed
within 90 days after the expiry of the relevant time period
referred to in Clause 10.8(c), subject to any extension thereof
under Clause 10.10(c) hereof, the right to sell the Offer Shares
to the Prospective Purchaser or any other person shall lapse.
(e) In the event that a Valuation Notice is served under the
provisions of Clause 10.8 (b) (ii) then, the provisions of
Schedule A shall apply. On determination of the Fair Value in
accordance with such schedule, the Company shall forthwith upon
receipt of the valuers' (as defined in Schedule A below)
determination notify the Transferring Shareholder and the other
Shareholders thereof and then each of the other Shareholders
25
shall have the option within 14 days of the Company's notice
under this Clause 10.8(e) to serve a purchase notice ("Purchase
Notice") on the Transferring Shareholder stating the Offer
Shares and shareholder loans (if any) which it wishes to
purchase.
(f) In respect of Clause 10.8(e) hereof, if the Transferring
Shareholder has not received Purchase Notice (or Notices) in
respect of the total number of Offer Shares or having received
the same has not within 30 days thereafter received the total
price for the Offer Shares in return for a transfer complying
with Clause 10.7, the Transferring Shareholder shall be entitled
to sell all but not part of the Offer Shares not so purchased to
any person at a price not less than that represented by the Fair
Value, provided that if such sale is not completed within 90
days after the expiry of the relevant time period referred to in
Clause 10.8(e) subject to any extension thereof under Clause
10.10(c) the right to sell the Offer Shares shall lapse.
(g) (i) In the event of there being more than one Purchase
Notice served on the Transferring Shareholder, the
Parties serving such Purchase Notice shall be entitled
to purchase the Offer Shares in proportion to the size
of their respective shareholdings in the Company. If
more than one Purchase Notice is served on the
Transferring Shareholder, the Transferring Shareholder
shall so inform the Company which shall allocate the
Offer Shares to such Parties who have served a Purchase
Notice(s), in proportion to their shareholdings in the
Company. The Company shall forthwith give notice of such
allocations to the Transferring Shareholder and such
Parties, and the Transferring Shareholder shall be bound
upon payment to transfer the Offer Shares so allocated
to such Parties; provided that the Transferring
Shareholder shall not be bound to transfer the Offer
Shares to any purchaser unless it has received payment
in full for all such Offer Shares.
(ii) Provided that nothing in this Clause 10.8 shall apply in
respect of an IPO, including any restructuring required
prior to an IPO or by virtue of any governmental
guidelines or requirements.
(h) In the event that any of the Offer Shares are not purchased and
the Transferring Shareholder has received at least one (1)
Purchase Notice then those Offer Shares not purchased shall be
offered to the Shareholder(s) that have served a Purchase
26
Notice in proportion to their shareholding in the Company and
such Shareholders shall have a further 7 days within which to
issue a Purchase Notice in respect of those Offer Shares. This
process shall be repeated until either no Purchase Notices are
issued or all the Offer Shares are purchased by the one or more
of the existing Shareholders. Only then is the Transferring
Shareholder free to sell the Offer Shares not so purchased to a
Prospective Purchaser in accordance with clause 10.8 (d).
10.9 TAG ALONG
Subject to Clause 10.10 hereof and provided TCL holds at least 30% of
the issued and paid up share capital of the Company, in the event that
(a) TCL intends to sell its shareholding in the Company (the "Sale
Shares") so that its aggregate shareholding in the Company falls below
30% of the issued and paid up share capital of the Company, otherwise
than as permitted by Clause 10.3 hereof, and/or (b) Xxxxxxxxx
Telecommunications Limited ("Xxxxxxxxx") intends to sell its
shareholding or part thereof in TCL or TCL intends to issue shares so
that Xxxxxxxxx'x aggregate attributable interest in the Company falls
below 40% of the issued and paid up share capital in the Company:
(a) TCL shall notify the other Shareholders in writing stipulating
the principal terms and conditions of any such sale(s) or issue
of shares, particularly as to the price and time scale thereof
(the "Sale Notice(s)");
(b) Any of the other Shareholders ("Offeree(s)") may, by written
notice to TCL, within 21 days or such longer reasonable period
permitted by the time scale shown by the Sale Notice(s),
exercise its rights under this Clause 10.9 to the effect that it
wishes to dispose of a number of the Shares equal to the parties
respective shareholdings in the Company (pro rata the number of
Sale Shares in question) in the context of the sale contemplated
by the Sale Notice, or in the case of Xxxxxxxxx selling its
shares in TCL or TCL issuing further shares, the Offeree(s) may
exercise its rights under this Clause 10.9 to the effect that
they may dispose of a number of Shares pro rata to the amount of
the attributable interest in the Company being sold or
transferred by way of Xxxxxxxxx selling its shares in TCL or TCL
issuing new shares, as the case may be;
(c) TCL shall use all reasonable endeavours to procure that the
intended purchaser of the Sale Shares (or the shares of TCL, as
the case may be) shall extend to the Offeree(s) an offer to
purchase or acquire from the
27
Offeree(s) a proportion of the Sale Shares which such Offeree's
shareholding bears to the entire issued share capital of the
Company (or a proportion of the attributable number of Shares to
be acquired by the intended purchaser of shares of TCL which
such Offeree's shareholding bears to the entire issued share
capital of the Company), on terms no less favourable than those
relating to the Sale Shares (or the shares of TCL, as the case
may be). TCL shall only be permitted to dispose to the intended
purchaser such number of the Sale Shares as is reduced by the
number of Shares agreed to be sold by the Offerees accepting the
offer above. Notwithstanding the restrictions on transfer
contained in this clause 10, each of the Offerees shall be
permitted to transfer Shares to the intended purchaser and/or
TCL.
(d) The Offeree(s) shall thereafter co-operate with TCL and do all
things necessary to effect completion of a sale of their Shares
substantially on the terms contemplated by the Sale Notice;
Provided that:
(i) it is hereby agreed and acknowledged that all negotiations in
respect of a sale under the provisions of this Clause 10.9 shall
be conducted by TCL who, however, shall take due note of any
reasonable requests of the Offeree(s) in regard thereto;
(ii) in the event that the intended purchaser or one of its
Affiliates is unable to take up any Offerees' Shares due to
Indian law or foreign investment regulations, the intended
purchaser shall nominate any third party acceptable under Indian
law to acquire such Offeree's Shares;
(iii) in the event that any such sale does not proceed to completion
for whatever reason, none of the parties shall have any claim
against the other in respect thereof, whether for damages, costs
or otherwise. Provided that this clause 10.9 shall not apply in
respect of any sale of TCL Shares resulting from a mortgage,
charge or pledge of the TCL Shares by TCL in favour of any
financial institution or bank in support of advances or
financial accommodation made available to the Company
10.10 SECTORAL CAPS
It is hereby agreed that:
(a) the Parties shall do all things necessary to ensure that any
exercise of the rights comprised in this Clause 10 hereof shall
not give rise to any breach of the sectoral caps of the
28
Government of India then in force relating to foreign investment
in the telecom sector; and
(b) any sale or transfer contemplated under the provisions of this
Clause 10 shall be subject to any necessary Government or
regulatory approvals, whether in respect of the said sectoral
caps or otherwise; and
(c) any time limit imposed by the provisions of this Clause 10 shall
be extended pro tanto in respect of any period reasonably
necessary to obtain any approval under Clause 10.10 (b) hereof.
Provided that, the parties shall use all reasonable endeavours
to expedite the obtaining of any such approvals; and
(d) If any Shareholder is unable to take up any Shares to be
transferred in accordance with the provisions of this Agreement
or any part thereof due to Indian law or foreign investment
regulations, such Shareholder shall be entitled to nominate any
third party acceptable to the continuing Shareholders and under
Indian law to purchase such Shares or any part thereof.
10.11 DEED OF ADHERENCE
If Shares are being transferred in accordance with the provisions of
this Agreement to any party not already bound by the terms of this
Agreement, then the Shareholder transferring those Shares must procure
prior to such transfer that such transferee, agrees to be bound by this
Agreement by signing a deed of adherence in a form approved by the
Board.
10.12 [***]
11. FURTHER OBLIGATIONS OF THE PARTIES
11.1 FURTHER ASSURANCE
The Parties shall do and execute or procure to be done and execute all
such further acts, deeds, things and documents as may be necessary to
give full effect to the terms of this Agreement.
11.2 DIRECTORS TO VOTE TO IMPLEMENT THIS AGREEMENT
Each of the Shareholders shall procure that any Director nominated by
it, shall exercise or refrain from exercising any voting rights so as to
29
ensure the passing of any resolution necessary to give full effect to
the provisions of this Agreement.
11.3 ACCOUNTING AND REPORTING
Each of the Shareholders shall (to the extent it is within its power to
do so) procure that the Company will and the Company shall:
(a) prepare business plans and budgets as set out in Clause 7.1;
(b) keep true and accurate books of accounts and records in
accordance with Indian and internationally accepted accounting
practice and procedure and in accordance with Indian law and
procure that such books and records are audited by the auditors
annually as soon as possible after the end of each financial
year;
(c) upon reasonable written notice to the Company allow the
Shareholders or their authorised representatives or professional
advisers and the Directors, the right during normal business
hours to inspect/audit the books, accounting records and any
documents or records of the Company, to make extracts and copies
there from at their own expense, and to have full access to all
its property and assets; and
(d) supply to each Director, such regular management and financial
information in English as is customary and as they may from time
to time reasonably require including monthly financial reports,
monthly operating reports and status of various compliances.
11.4 EXCHANGE OF INFORMATION
Each of the Parties shall promptly notify each other and the Company, of
all or any matters coming to its notice which may affect the title to or
enjoyment of the Company's premises, licences, authorisations, assets or
property or the conduct of its business, and of all notifications,
orders, demand and other communication received from any government or
other authority in relation to the Company's business, licences,
authorisations, assets or property.
11.5 FAIR DEALINGS
All dealings between the Company and any Party or any Affiliate of a
Party shall be on a fair and equitable basis and at arm's length.
30
12. MAINTENANCE OF LICENCES, GOVERNMENT APPROVALS
Each of the Parties shall (to the extent it is within its power to do
so) procure that the Company will:
(a) use its best endeavours to obtain and maintain in full force and
effect all governmental or other approvals, consents, licences,
authorisations, declarations, filings and registrations as may
be required or advisable for the carrying on of its business
("Relevant Authorisations"); and
(b) obtain and keep in effect such new or additional Relevant
Authorisations as may become necessary for the carrying on of
its business.
31
13. TERM, TERMINATION AND DISPUTES
13.1 TERM
This Agreement shall continue in force from the Effective Date unless
terminated by six months written notice upon mutual consent of all the
Shareholders holding Shares on the date of such termination notice or
upon the occurrence of a Pre - IPO Restructuring or an IPO provided that
the provisions of Clauses 10.9 and 10.12, on the terms contained therein
will survive the occurrence of a Pre-IPO Restructuring or an IPO in a
market where the Shareholders incorporated in India do not have a right
to sell their Shares.
13.2 RIGHTS OF PARTIES ON WINDING UP
The Parties may prove in the winding-up of the Company to the maximum
extent permitted by law for all sums due or to fall due to them
respectively from the Company and shall exercise all rights of set off
and generally do all such other acts and things as may be available to
them in order to obtain the maximum receipts and recoveries.
13.3 AGREEMENT TERMINATES ON WINDING UP
In the event of the winding up of the Company, this Agreement shall
terminate and all of the terms of this Agreement shall cease to bind the
Parties. Termination of this Agreement shall not affect the rights of
any Party to exercise its rights in respect of any breach of this
Agreement by any or all of the Parties prior to the winding up of the
Company. In the event of any Party ceasing to have any legal or
beneficial interest in any Shares, the terms of this Agreement shall
cease to bind such Party (except Clauses 13.2 and 13.3 which shall
continue to bind such Party) without prejudice to the rights of the
other Parties to exercise their rights in respect of any breach of this
Agreement by the departing Party prior to its ceasing to have any such
interest, and if none of its Subsidiaries own any Shares, the Party
ceasing to have such interest shall cause the Directors and CEO (if any)
nominated by it to resign immediately.
14. ARBITRATION AND CONSULTATION
14.1 CONSULTATION
In the case of any dispute arising out of or in connection with this
Agreement or its performance, including any question regarding its
32
existence, validity or termination, the Parties shall first endeavour to
reach an amicable settlement through mutual consultations and
negotiations. If the Parties are unable to reach an amicable settlement
within 30 Business Days from the date on which the dispute arose (except
as to any matter for which express provisions are made in this
Agreement), any of the Parties may make a reference to arbitration in
accordance with Clause 14.2 hereof.
14.2 (a) In the absence of any settlement of disputes or differences
under Clause 14.1 above, any and all disputes or differences
arising out of or in connection with this Agreement or its
performance shall be submitted to arbitration at the request of
a Party upon written notice to that effect to the other
Party/Parties and such arbitration shall be conducted in
accordance with the rules of the London Court of International
Arbitration ("LCIA"), which rules are deemed to be incorporated
by a reference into this clause, except as otherwise provided
for in this Agreement. The dispute or difference shall be
referred to a Sole Arbitrator to be appointed by the LCIA
provided that if any party to the dispute or difference, within
seven days of arbitration being invoked, stipulates that it is
not agreeable to the appointment of a sole arbitrator, then the
dispute or difference shall be referred to a Tribunal consisting
of three arbitrators all of whom shall be appointed by the LCIA.
The arbitrator(s) to be appointed by the LCIA shall not be a
member of the LCIA's Indian Panel of arbitrators and shall be
fluent in English. The language of arbitration shall be English
and the place of arbitration shall be London.
(b) The Parties agree that the award of the arbitrators shall be
final and binding upon the Parties, and that none of the Parties
shall be entitled to commence or maintain any action in a court
of law upon any matter in dispute arising from or in relation to
this Agreement, except for the enforcement of an arbitral award
granted pursuant to this Clause if required.
(c) The Arbitrator(s) may (but shall not be required to) award to
the Party/Parties that substantially prevails on merits, its
costs and reasonable expenses (including legal costs).
(d) When any dispute or difference is under arbitration, except for
the matters under dispute or difference, the Parties shall
continue to exercise their remaining respective rights and
fulfill their remaining respective obligations under this
Agreement to the extent practicable.
33
15. CONFIDENTIALITY
15.1 AGREEMENT CONFIDENTIAL
The Parties agree to keep secret and confidential and not to disclose,
except to the extent required by law or any regulatory authority, to any
third party (other than the respective directors, employees and advisors
of the Parties or their controlling shareholders on a need to know
basis) without the prior written consent of the disclosing Party any
information (including the information as to the execution of this
Agreement) or documents (including this Agreement and other related
agreements that the Parties may execute) relating to the operation of
the business of the Company.
Any formal press or other public announcement in writing relating to
this Agreement or any of its terms shall be in a form previously agreed
by all Shareholders.
15.2 INJUNCTIVE RELIEF
The obligations cast upon the Parties by this Clause 15 are extremely
valuable, for which no adequate monetary compensation may be available,
and accordingly performance of the said obligations by the other Party
forms the very substance of this Agreement and goes to its very root and
intent for which the aggrieved Party shall be, notwithstanding any other
stipulation in this Agreement (including the arbitration provision),
entitled to injunctive relief from the appropriate law courts in the
event of the failure of the other Party to perform the said obligations.
15.3 SURVIVAL
The rights, duties and obligations contained in this Clause 15 shall
survive termination of this Agreement.
16. AGREEMENT
16.1 AGREEMENT TO PREVAIL
If any provision of the Memorandum or the Articles at any time conflicts
with any provision of this Agreement then, to the extent permitted by
Indian law, as between the Parties the provisions of this Agreement
shall prevail.
34
16.2 AMENDMENT OF MEMORANDUM AND ARTICLES
Each of the Parties hereby undertakes that it shall whenever necessary
exercise all voting and other rights and powers available to it to
procure the amendment of the Memorandum and Articles to the extent
necessary to permit the Company and its affairs to be operated as
provided herein so that the same are consistent with the provisions of
this Agreement.
17. NOTICES
Any notice to be given by any Party to this Agreement should be in
writing and shall be deemed duly served if delivered personally or sent
by fax or by prepaid registered post (airmail in the case of
international mail) to the addressee at the address or fax number set
opposite its name below or at such other address or fax number as the
Party to be served may have notified as its address or fax number for
service:
TCL
To: the Registered Office address stated above
Attn: Company Secretary;
Copy to: Xxxxxxxxx Telecommunications Limited
18th Floor, Tower 2, Harbourfront
00 Xxx Xxxx Xx, Xxxxxxx
Xxxx Xxxx
Attn: Xxxx Xxxx
Fax No: (000) 0000-0000
Telematics:
To: the Registered Office address stated above
Attn: The Chairman
Indusind
To: the Registered Office address stated above
Attn: Company Secretary
35
KMFL & KMIL
To: the Registered Office address stated above
Attn: Company Secretary
Fascel
To: the Registered Office address stated above
Attn: Company Secretary
Any notice sent by fax shall be deemed served on confirmation of good
receipt in the case of a fax, and any notice served by registered post
shall be deemed served 10 days after posting airmail, whether to an
address in India or an address outside India. In proving the service of
any notice it will be sufficient to prove, in the case of service by
registered post, that such letter was properly stamped, registered,
addressed and placed in the post.
18. MISCELLANEOUS
18.1 LEGAL AND OTHER COSTS
Each Party shall be responsible for the legal fees, costs and expenses
incurred by it in the preparation, negotiation and execution of this
Agreement.
18.2 COMPLETE AGREEMENT
This Agreement, and any agreements to be entered into pursuant thereto
embody all the terms and conditions agreed upon between the Parties and
as from the Effective Date supersedes and cancels in all respects all
previous correspondence, understandings and agreements (including the
joint venture agreement dated 29 March 1995, except for claims already
lodged with the Company, under such joint venture agreement and/or the
articles of association of the Company in place prior to the Effective
Date) between the Parties with respect to the subject matter hereof,
whether such be written or oral.
18.3 UNENFORCEABLE PROVISIONS
In the event that any provision contained in this Agreement or any part
thereof shall for any reason be held to be invalid or unenforceable in
any respect under the laws of India, such invalidity or unenforceability
shall not affect any other provisions of this Agreement or the
36
remaining parts thereof which shall then be construed as if such
unenforceable provision or part thereof had never been contained herein.
18.4 NO PARTNERSHIP
Nothing herein shall be taken to constitute or create a partnership
among any of the Parties. No Party shall be deemed to be the agent of
the other and none of the Parties shall have any authority to bind the
other Party in any way except as provided in this Agreement.
18.5 AMENDMENT IN WRITING
This Agreement shall not be varied amended or supplemented except by a
written instrument signed by or on behalf of all the Parties to be
bound.
18.6 NO ASSIGNMENT
Without prejudice to the provisions of Clause 10, this Agreement is
personal to the Parties and is not capable of being assigned in whole or
in part by any Party.
18.7 NO WAIVER
Failure of any Party at any time to require performance by any other
Party of any provision of this Agreement shall in no way affect the
right of such Party to require performance of that or any other
provision, and any waiver by such Party of any breach of this Agreement
shall not be construed as a waiver by such Party of any continuing or
succeeding breach of such provision a waiver of the provision itself or
a waiver of any other right under this Agreement.
18.8 COUNTERPARTS
This Agreement may be executed in several counterparts, and any single
counterpart or set of counterparts, signed in either case by all of the
Parties shall be deemed to be an original, and all taken together shall
constitute one and the same instrument.
18.9 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of India.
37
IN WITNESS WHEREOF this Agreement was executed by the Parties on the day and
year first above written.
SIGNED BY
for and on behalf of
INDUSIND TELECOM NETWORK LIMITED
in the presence of:
SIGNED BY
for and on behalf of
HAMKO FINANCIAL SERVICES LIMITED
in the presence of:
SIGNED BY
for and on behalf of
KOTAK MAHINDRA FINANCE LIMITED
in the presence of:
SIGNED BY
for and on behalf of
TRANS CRYSTAL LIMITED
in the presence of:
38
SIGNED BY
for and on behalf of
XXXX XXXXXX TELEMATICS LIMITED
in the presence of:
SIGNED BY
for and on behalf of
FASCEL LIMITED
in the presence of:
39
SCHEDULE A - FAIR VALUE
Where Fair Value falls to be determined under this Agreement in relation to any
Shares, it shall be the average of the two valuations provided by overseas
offices of Xxxxxxx Sachs and any one of CS First Boston, Xxxxxx Xxxxx or Xxxxxx
Xxxxxxx ("the Valuers"). The valuation shall be done in accordance with the
following provisions of this Schedule:
1 The Valuers shall be jointly instructed by the Shareholder whose Shares
are to be transferred ("Transferor") and the intending purchaser to
value the Shares on the basis of an arm's length sale between a willing
buyer with the funds to buy and a willing seller.
2. The Valuers shall be directed to advise the Company and the relevant
Parties of their determination of the fair value of the Shares within 45
days or as soon as practicable thereafter.
3. The decision of the Valuers shall be final and binding on the Parties
and they shall be deemed to act as experts and not as arbitrators.
4. The costs of the Valuers shall be borne equally by the Parties
requesting the determination of the Fair Value.
5. Each of the Transferor and the other such Parties shall be entitled to
make such written submissions as the Valuers may accept and each of them
and the Valuers shall have such access to the books and records of the
Company as shall be reasonably required in connection with such
determination.
40
SCHEDULE - B
DRAFT ARTICLES OF THE COMPANY
41