NOTE PURCHASE AGREEMENT
EXHIBIT
10.3
EXECUTION
VERSION
THIS
NOTE PURCHASE AGREEMENT (the “Agreement”),
effective as of December 24, 2007, is by and among INDIA GLOBALIZATION CAPITAL,
INC., a Maryland corporation (the “Company”),
and each of the other parties who is a signatory hereto (each a “Lender”
and, collectively “Lenders”).
1. The
Loan
Transaction and Closing.
1.1 The
Loans. Subject
to the terms and conditions of this Agreement, Lenders agree to make a loan
to
the Company in the aggregate principal amount of up to $7.275 million, to
be governed by the terms and conditions of, and repaid in accordance with the
Notes (as hereinafter defined). The parties hereto agree and accept
that there is no minimum principal amount of Notes required to be sold hereunder
in order to consummate any sale of Notes hereunder.
1.2 The
Notesand
Pledge
Agreements. A
promissory note executed on the date hereof and delivered to each Lender (each,
a “Note”
and, collectively the “Notes”)
shall evidence the loan made by each Lender to the Company pursuant to this
Agreement in the amount indicated on Schedule
1 (each, a “Loan
Amount”). In order to secure repayment of the Notes by the
Company, the Company will enter into a Pledge Agreement with the Lenders (the
“Pledge
Agreement”).
1.3 The
IGC
Shares.
(a)
Subject to the terms and conditions of this Agreement, the Company shall also
issue, as additional consideration, shares of common stock (the “Common
Stock”) of the Company to each Lender in such amounts as are indicated on
Schedule
2 attached hereto (collectively, such shares of Common Stock are referred
to as, the “IGC
Shares”), within 10 business days following the consummation of a
Business Combination (as defined in the Notes) that is approved by the
affirmative vote (the “Yes
Vote”) of the holders of a majority of the shares of the Company’s Common
Stock issued in its initial public offering (the “Public
Offering”), provided that the holders of 20% or more of the shares of
Common Stock issued in the Public Offering do not otherwise elect to exercise
their conversion rights, as such rights are further described in the Company’s
final prospectus for its Public Offering filed March 3,
2007. Regardless of whether the Notes have been timely paid-in-full,
the Lenders shall be entitled to the issuance of the above shares of Common
Stock should the Company enter into a Business Combination within one-year
of
the effective date of the Notes. In addition to the foregoing, Ranga
Krishna (“Krishna”)
agrees to restrict the transfer of his IGC Shares in accordance with the terms
and conditions of the Lock-Up Letter (the “Lock-Up
Letter”) for the period of time following the consummation of a Business
Combination as is set forth therein.
(b)
Between the date hereof and the Maturity Date (as defined in each Note), the
Company shall take all steps necessary to cause its wholly owned subsidiary,
India Globalization Capital, Mauritius, Limited, a Mauritius Company (“IGC-M”),
to abstain from issuing any shares of its capital stock (and any other
securities convertible into such common stock) to any party other than the
Company. If any such prohibited issuance is made by IGC-M during such
period, in addition to any other rights or remedies available to Lenders under
this Agreement, the Pledge Agreement, or otherwise at law or in equity, each
Lender may at its option and by written notice delivered to the Company within
10 days after such prohibited issuance, obtain payment in full of all amounts
then owed to such Lender under its respective Note, which payment shall when
made by the Company satisfy in full the Company’s obligations thereunder to such
Lender.
(c)
Each Lender acknowledges that if (i) the Business Combination is not approved
by
the holders of a majority of the shares of the Company’s Common Stock issued in
the Public Offering, or (ii) the Business Combination is validly approved by
the
shareholders, but the holders of 20% or more of the shares of Common Stock
issued in the Public Offering elect to exercise their conversion rights, or
(iii) the date by which a Business Combination must be consummated in accordance
with the Company’s Amended and Restated Articles of Incorporation passes without
an extension of such date, such Lender shall not be entitled to receive any
IGC
Shares under this Agreement.
1.4 Registration
Rights. The
Company will enter into a Letter Agreement with Krishna (the “Krishna
Letter
Agreement”) and with Xxxxxxxx (the “Xxxxxxxx
Letter Agreement” and, together with the Krishna Letter Agreement, the
“Letter
Agreements”), and a Registration Rights Agreement with the remaining
Lenders (the “Registration
Rights Agreement”), each on the date hereof, in order to provide for
registration with the Securities and Exchange Commission (“SEC”)
of the resale of the IGC Shares under the Securities Act of 1933, as amended
(the “Securities
Act”).
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1.5 Closing. The
purchase and sale of the Notes (the “Closing”)
will take place at the offices of Shulman, Rogers, Gandal, Pordy & Xxxxx,
P.A., 00000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx, at such time as
the
parties shall mutually agree. The Company may issue and sell
additional promissory notes and shares of Common Stock from time to time in
such
amounts and to such persons as the Company may determine, in one or more
closings (each, a “Subsequent
Closing”) after the initial Closing (the “Initial
Closing”). The Initial Closing and each Subsequent Closing are
each referred to herein as a “Closing.” Any
such issuance and sale shall be upon substantially the same terms and conditions
as those contained herein. At each Subsequent Closing, (i) each
additional Lender shall execute and deliver a counterpart signature page to
this
Agreement and the other agreements described in Section 1.6, as applicable,
and such additional Lender shall become a “Lender” hereunder, and (ii) the
Company shall cause Schedule 1
and Schedule 2
attached hereto and Schedule 1
to the Pledge Agreement to be amended as appropriate to reflect the loans made
by each such additional Lender, the additional IGC Shares to be issued to
such Lender in accordance with the terms hereof, and the pro-rata share of
such
Lender in and to the collateral described in the Pledge Agreement.
1.6 Deliveries. At
the Closing:
(a) the
Company will deliver (i) to each Lender, a Note in the applicable Loan
Amount and the Pledge Agreement; (ii) to each Lender (other than Ranga Krishna
(“Krishna”)
and Xxxxxxxx Capital, LLC (“Xxxxxxxx”)),
the Registration Rights Agreement; (iii) to Krishna, the Krishna Letter
Agreement; and (iv) to Xxxxxxxx, the Xxxxxxxx Letter Agreement, each of
which shall be duly executed by the Company; and
(b) each
Lender (i) will pay to the Company, by wire transfer of immediately
available funds, the applicable Loan Amount; (ii) will deliver to the Company
duly executed versions of the applicable Note and the Pledge Agreement;
and
(c)
Krishna and Xxxxxxxx will deliver to the Company duly executed versions of
the
Krishna Letter Agreement and Xxxxxxxx Letter Agreement, respectively; and
Krishna will deliver to the Company a duly executed version of the Lock-Up
Letter.
2. Representations,
Warranties and Covenants of the Company. The
Company hereby represents and warrants to each Lender as follows:
2.1 Organization,
Standing and Power. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland and has all requisite corporate
power and authority to carry on its business as contemplated to be
conducted.
2.2 Authority
and
Enforceability. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, the Notes, the Pledge Agreement, the Letter Agreements, and
the
Registration Rights Agreement (collectively, the “Loan
Agreements”) and to perform fully its obligations hereunder and
thereunder. The execution and delivery of this Agreement and such
other Loan Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement and such other Loan
Agreements have been duly executed and delivered by the Company and, assuming
this Agreement and such other Loan Agreements constitute valid and binding
agreements of the other parties hereto, this Agreement and such other Loan
Agreements each constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity, regardless of whether enforceability is considered in a proceeding
at
law or in equity.
2.3 Accuracy
of
Public Filings; No Adverse Change. The
statements of the Company contained in the Prospectus on file with the SEC
and
all other reports on file with SEC taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements contained therein not misleading as of the respective
dates of such filings. Since the date that the Company filed its last
Form 10-Q with the SEC, there has been no material adverse change in the assets,
business, or financial condition of the Company.
2.4 Use
of
Proceeds. As
disclosed in the Company’s preliminary proxy statement on Schedule 14A
filed with the Securities and Exchange Commission on November 23, 2007 (the
“Proxy
Statement”), IGC-M has previously executed transaction documents for the
purchase of equity securities of Sricon Infrastructure Private Limited (“Sricon”)
and Techni Bhararti Limited (“TBL”)
by the Company, and a wind-energy farm from Chiranjjeevi Wind Energy
Limited. The Company intends to use the proceeds of the Notes to
capitalize IGC-M, which will in turn fund down payments on terms acceptable
to
the Company and to pay for the expenses related to the offering of the Notes
and
for working capital. The Company, in its sole discretion, may
allocate the proceeds of the Notes among Sricon, TBL and the wind energy farm,
or may restructure the transactions to accommodate different forms of
investment, including, but not limited to, the acquisition of or investment
in
equity interests or bridge loans.
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2.5 No
Conflicts. Neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the transactions contemplated hereby will, directly or indirectly
(with or without notice or lapse of time) (i) contravene, conflict with, or
result in a violation of (A) any provision of the Company’s charter or
bylaws, or (B) any resolution adopted by the Company’s board of directors;
or (ii) contravene, conflict with, or result in a violation of, or give any
governmental body the right to challenge any of the transactions contemplated
hereby or to exercise any remedy or obtain any relief under, any legal
requirement or order to which the Company may be subject.
3. Representations
and Warranties of Lenders. Each
Lender, severally but not jointly and as to itself only and not as to the other
Lender, does hereby represent and warrant to the Company as
follows:
3.1 Authorization. Lender
has full power and authority to enter into the Loan Agreements and the Loan
Agreements constitute valid and legally binding obligations
of Lender, enforceable in accordance with their respective
terms.
3.2 Purchase
Entirely for Own Account. Lender
hereby acknowledges and agrees that the IGC Shares received in connection with
a
Yes Vote will be acquired for investment for its own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof,
and Lender has no present intention of selling, granting any participation
in,
or otherwise distributing the same.
3.3 Investment
Experience. Lender
is an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself and bear the economic risk
of
its investment, including the complete loss thereof, and has such knowledge
and
experience in financial or business matters that it is capable of evaluating
the
merits and risks of the investment in the IGC Shares.
3.4 Financial
Risk. Lender
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment and has the ability
to bear the economic risks of doing so. Lender acknowledges that it
has read and understands the Proxy Statement, including the risk factors
contained therein, and that it has had the opportunity to obtain from
representatives of the Company such information about the Company as is
necessary for Lender to evaluate the merits and risks of the loans represented
by each Lender’s Note.
3.5 Accredited
Investor. Lender
is an “accredited investor” within the meaning of the 501(a) of Regulation D of
the Securities Act.
3.6 Restricted
Securities. Lender
understands that the IGC Shares are deemed “restricted securities” under the
federal securities laws inasmuch as they are being acquired from the Company
in
a transaction not involving a public offering and that, under such laws and
applicable regulations, such securities may be resold without registration
under
the Securities Act, only in certain limited circumstances. In this
connection, Lender is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act. Lender understands Rule 144 is not currently available for the
sale of the IGC Shares and may never be so available.
3.7 No
Conflicts. Neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the transactions contemplated hereby will, directly or indirectly
(with or without notice or lapse of time) contravene, conflict with, or result
in a violation of, or give any governmental body the right to challenge any
of
the transactions contemplated hereby or to exercise any remedy or obtain any
relief under, any legal requirement or order to which Lender may be
subject.
4. Further
Limitations on Disposition. Without
in any way limiting the representations set forth above, Lender further agrees
not to make any disposition of all or any portion of the Securities unless
and
until:
(a) There
is then in effect a Registration Statement under the Securities Act covering
such proposed disposition, and such disposition is made in accordance with
such
Registration Statement; or
(b) (i) Lender
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition, and (ii) if requested by the Company, Lender
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such Securities under the Securities Act or registration or qualification
under any applicable state securities laws.
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5. Legends. The
certificates evidencing the Securities shall bear one or all of the following
legends:
(a) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF,
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT, THE TRANSFER MEETS THE REQUIREMENTS
OF
RULE 144 OR REGULATION S OF THE SECURITIES AND EXCHANGE COMMISSION, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.”
(b) Any
additional legend required by the laws of the State of Maryland or any other
applicable state.
6. Pari
Passu
with All Notes. Each
Note shall rank equally without preference or priority of any kind with each
of
the other Notes issued by the Company to Lenders hereunder. All
payments on account of principal and interest with respect to the Notes shall
be
applied ratably and proportionately on each of the Notes on the basis of the
original principal amount of outstanding indebtedness represented by such
Note.
7. Miscellaneous.
7.1 Waivers
and
Amendments. Any
provision of this Agreement may be amended, waived or modified (either generally
or in a particular instance, either retroactively or prospectively, and either
for a specified period of time or indefinitely), only upon the written consent
of each of the parties hereto.
7.2 Governing
Law;
Venue. This
Agreement shall be governed by and construed in accordance with Maryland law,
without regard to the conflict of laws provisions thereof. The
parties agree that the United States District Court for the District of Maryland
shall have exclusive jurisdiction to enforce the terms of this
Agreement. The parties consent to venue and jurisdiction and waive
all questions and defenses of personal jurisdiction, improper venue, or forum non
conveniens for the purpose of any action described in this
paragraph.
7.3 Survival. The
representations, warranties, covenants and agreements made herein shall survive
the Closing of the transactions contemplated hereby.
7.4 Successors
and
Assigns. Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and
administrators of the parties hereto.
7.5 Entire
Agreement. This
Agreement (including the exhibits attached hereto) constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
7.6 Notices,
etc. All
notices and other communications required or permitted hereunder shall be
effective upon receipt, shall be in writing, and may be delivered in person,
by
telecopy, electronic mail, overnight delivery service or United States mail,
in
which event they may be mailed by first-class, certified or registered, postage
prepaid, addressed at its address set forth on the signature page hereto, or
at
such other address as any party hereto may specify in writing.
7.7 Severability
of this Agreement. If
any provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
7.8 Expenses. Regardless
of whether the Closing is effected, each party shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement.
7.9 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall be deemed to constitute one
instrument.
[SIGNATURE
PAGE FOLLOWS.]
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IN
WITNESS WHEREOF, the Company has caused this Note Purchase Agreement to be
duly
executed and delivered as of the date and year first written above.
COMPANY:
By:
Its:
Address:_____________________________
_____________________________
_____________________________
IN
WITNESS WHEREOF, the undersigned Lender has caused this Note Purchase Agreement
to be duly executed and delivered as of the date and year first written
above.
LENDER:
By:
Its:
Address:_____________________________
_____________________________
_____________________________
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SCHEDULE
1
LOAN
AMOUNTS
Loan
Amount
|
|
DR.
RANGA KRISHNA
(CHAIRMAN OF IGC
BOARD)
|
4,300,000
|
XXXXXXXX
CAPITAL
|
1,000,000
|
Total
|
$5,300,000
|
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SCHEDULE
2
IGC
SHARES
Lender
Name
|
IGC
Share
#
|
DR.
RANGA KRISHNA
(CHAIRMAN OF IGC
BOARD)
|
446,226.42
|
XXXXXXXX
CAPITAL
|
103,773.58
|
Total
|
550,000.00
|
7