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EXHIBIT 10.11
DATED: 19 JULY 0000
X/0000/0/XX/XXX XX D1-68605-1
AGREEMENT
between
JF ELECTRA (MAURITIUS) LIMITED
as Investor
COMPLETE BUSINESS SOLUTIONS, INC.
as Parent
CBS COMPLETE BUSINESS SOLUTIONS (MAURITIUS) LIMITED
as Company
and
XXX XXXXXXXXX
XXXXXXX & XXXXXXX
24th Floor Xxxxxxx Xxxxx Xxx Xxxxxxxxx Xxxxx Xxxxxxx Xxxx Xxxx
Tel: (000) 0000 0000 Fax: (000) 0000 0000 DX009121 Central 1
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CONTENTS
1. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Provisions relating to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. Costs and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SCHEDULE 1 : WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE 2: DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SCHEDULE 3: CORPORATE DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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THIS AGREEMENT dated the 19th day of July 1996 and made
BETWEEN:
(1) JF ELECTRA (MAURITIUS) LIMITED, a company incorporated and existing
under the laws of Mauritius whose registered office is at 4/F, Les
Cascades Building, Xxxxx Xxxxxx Street, Port Louis, Mauritius ("the
Investor");
(2) COMPLETE BUSINESS SOLUTIONS, INC. , a corporation incorporated and
existing under the laws of the state of Michigan whose registered office
is at 32605 West Twelve Mile Road, Suite 250, Farmington Hills, Michigan
48334-3339, U.S.A. ("the Parent") ; and
(3) CBS COMPLETE BUSINESS SOLUTIONS (MAURITIUS) LIMITED, a company
incorporated and existing under the laws of Mauritius whose registered
office is at Les Jamalacs Building, Vieux Conseil Street, Port Louis,
Mauritius (the "Company"); and
(4) XXX XXXXXXXXX of 32605 West Twelve Mile Road, Suite 250, Farmington
Hills, Michigan 48334-3339, U.S.A. ("Xx Xxxxxxxxx").
WHEREAS:
(A) The Parent is the beneficial owner of the entire issued share capital of
the Company.
(B) The Investor wishes to subscribe for new shares in the capital of the
Company in the amount of US$4,000,000 on the terms of this Agreement.
(C) The Company wishes to use part of the proceeds of the subscription
referred to in Recital (B) above (and other funds available to it) to
(I) repay a loan in the amount of US$2,760,000 outstanding to the Parent
and (ii) make a capital contribution to, or subscribe for new shares in
the capital of, the Subsidiary (as defined herein) in the amount of
US$2,500,000 on the terms of this Agreement.
(D) The Parent wishes to subscribe for additional new shares in the capital
of the Company in the amount of US$1,709,040 on the terms of this
Agreement.
(E) Xx Xxxxxxxxx and the Parent have agreed to give certain warranties and
representations in connection with the subscription for shares by the
Investor as described in Recital (B) above.
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NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement where the context admits:
"Completion" means completion of the Subscription and the Top Up
Subscription in accordance with Clause 5;
"Due Diligence" means the due diligence conducted by the Investor prior
to execution of this Agreement, comprising a review of the Due Diligence
Bundle;
"Due Diligence Bundle" means the agreed form bundle of documents
reviewed by the Investor as part of the Due Diligence, comprising copies
of the documents listed in Schedule 2;
"India Shares" means equity shares of Rs100 each in the capital of the
Subsidiary;
"Loan" means the loan in the amount of US$2,760,000 made by the Parent
to the Company and outstanding at the date of this Agreement;
"Parties" means the named parties to this Agreement and their respective
successors and assigns and "Party" shall be construed accordingly;
"Shares" means ordinary shares of US$1 each in the capital of the
Company;
"Shareholders Agreement" means the shareholders agreement in an agreed
form marked "A" to be entered into by the Parties and the Subsidiary on
Completion;
"Subscription" means the subscription by the Investor for the
Subscription Shares on the terms of this Agreement;
"Subscription Price" means the price of US$291.3965 per Subscription
Share;
"Subscription Shares" means the 13,727 new Shares to be subscribed for
by the Investor pursuant to this Agreement;
"Subsidiary" means Complete Business Solutions (India) Private Limited,
a wholly owned subsidiary of the Company;
"Top Up Subscription" means the subscription by the Parent for the Top
Up Subscription Shares on the terms of this Agreement;
"Top Up Subscription Price" means the price of US$291.3965 per Top Up
Subscription Share;
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"Top Up Subscription Shares" means the 5,865 new Shares to be subscribed
for by the Parent pursuant to this Agreement;
"Warranties" means the warranties and representations set out in
Schedule 1;
"Warrantors" means the Parent and Xx Xxxxxxxxx;
"Rs" means Indian rupees; and
"US$" means United States dollars.
1.2 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement where the context admits:
(A) references to statutory provisions shall be construed as references
to those provisions as amended or re-enacted or as their
application is modified by other provisions from time to time and
shall include references to any provisions of which they are
re-enactments (whether with or without modification);
(B) references to Clauses and Schedules are references to clauses
hereof and schedules hereto, references to Sub-Clauses or
Paragraphs are, unless otherwise stated, references to sub-clauses
or paragraphs of the Clause or Schedule in which the reference
appears, and references to this Agreement include the Schedules;
and
(C) references to any document being in agreed terms or in agreed form
are to that document in the form signed or initialled by or on
behalf of the Parties for identification.
1.3 JOINT AND SEVERAL LIABILITIES
All warranties, representations, indemnities, covenants, agreements and
obligations given or entered into by more than one person in this
Agreement are given or entered into jointly and severally.
1.4 HEADINGS
The headings and sub-headings are inserted for convenience only and
shall not affect the construction of this Agreement.
1.5 SCHEDULES
Each of the Schedules shall have effect as if set out herein.
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2. SUBSCRIPTIONS
2.1 SUBSCRIPTION
The Investor agrees to subscribe for, and the Company agrees to issue,
the Subscription Shares at the Subscription Price, on the terms and
subject to the conditions of this Agreement.
2.2 TOP UP SUBSCRIPTION
The Parent agrees to subscribe for, and the Company agrees to issue, the
Top Up Subscription Shares at the Top Up Subscription Price, on the
terms and subject to the conditions of this Agreement.
2.3 PARI PASSU
The Company hereby covenants and undertakes that the Subscription Shares
and the Top Up Subscription Shares shall rank pari passu and as a single
class with the existing Shares in issue at the date of Completion.
3. CAPITAL CONTRIBUTION
3.1 Subject to and conditional upon Completion, the Company hereby covenants
and undertakes that it will subscribe for new India Shares or (if
appropriate and permissible) make capital contributions to the
Subsidiary in the aggregate amount of US$2,500,000 in such manner as is
set out in the section headed "Sources and Uses of Funds" in the
Business Plan (as defined in the Shareholders Agreement).
4. CONDITION
4.1 CONDITION
Completion of the Subscription and the Top Up Subscription are each
conditional upon receipt by the Investor of foreign legal opinions in a
form reasonably acceptable to it in connection with the transactions
contemplated by this Agreement and the Shareholders Agreement, and dated
at the date of Completion.
4.2 SATISFACTION
The Investor shall use all reasonable endeavours to procure the
satisfaction of the condition set out in Clause 4.1 (the "Completion
Condition").
4.3 WAIVER
The Investor may waive in whole or in part the Completion Condition.
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4.4 LAPSE
If the Completion Condition has not been satisfied or otherwise waived
by the Investor on or before 26th July 1996 (or such later date as the
Investor and Xx Xxxxxxxxx shall agree in writing), this Agreement shall
lapse and no Party shall be entitled to make any claim against any other
in respect hereof, save for any antecedent breach.
5. COMPLETION
5.1 DATE OF COMPLETION
Completion shall take place as soon as practicable after satisfaction
(or waiver by the Investor, as the case may be) of the Completion
Condition at the offices of Xxxxxxx & Xxxxxxx, 00 Xxxxxx Xxxxxx, Xxxxxx
XX0X 0XX.
5.2 SUBSCRIPTION
Subject to fulfilment of the Completion Condition (or waiver by the
Investor, as the case may be), on Completion :-
(A) The Company shall:-
(1) allot and issue to the Investor the Subscription Shares and
shall promptly thereafter register the Investor as a member of
the Company; and
(2) deliver to Maigrot Xxxxxx, the Investor's lawyers in
Mauritius, share certificates in respect of the Subscription
Shares.
(B) The Investor shall pay to the Company the aggregate Subscription
Price for the Subscription Shares to the bank account nominated by
the Company which shall constitute a complete discharge of the
Investor's obligations in respect thereof.
5.3 TOP UP SUBSCRIPTION
Subject to the completion of the Subscription as set out in Clause 5.2
above:-
(A) The Company shall:-
(1) allot and issue to the Parent the Top Up Subscription Shares;
and
(2) deliver to the secretary of the Company, as agent for the
Parent, share certificates in respect of the Top Up
Subscription Shares.
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(B) The Company shall pay to the Parent a net amount equal to the
amount of the Loan less the aggregate Top Up Subscription Price for
the Top Up Subscription Shares, to the bank account nominated by
the Parent which shall constitute:-
(1) a complete discharge of the Parent's obligations (as the
Company hereby acknowledges) in respect of the Top Up
Subscription; and
(2) a complete discharge of the Company's obligations (as the
Parent hereby acknowledges) in respect of repayment of the
Loan.
5.4 SHAREHOLDERS AGREEMENT
Subject to the fulfilment of the Completion Conditions set out in Clause
4.1 and subject to the completion of all the matters set out in Clauses
5.2 and 5.3, all the Parties shall, and Xx Xxxxxxxxx shall procure that
the Subsidiary shall, enter into the Shareholders Agreement.
5.5 COVENANTS AND UNDERTAKINGS
Xx Xxxxxxxxx hereby irrevocably covenants and undertakes to and for the
benefit of the Investor to procure the due and punctual performance by
the Parent, the Company and the Subsidiary of all acts, covenants and
obligations to be performed, given or observed by each of them under
this Agreement.
5.6 FAILURE TO COMPLETE
If in any respect the preceding provisions of this Clause are not
complied with on the date for Completion set by Clause 5.1 the Party not
in default may:
(A) defer Completion to a date not more than 28 days after the date set
by Clause 5.1 (and so that the provisions of this Clause 5.6, apart
from this Clause 5.6(A), shall apply to Completion as so deferred);
or
(B) proceed to Completion so far as practicable (without prejudice to
its rights hereunder); or
(C) rescind this Agreement.
6. WARRANTIES
6.1 INVESTOR'S KNOWLEDGE
(A) The Warranties are given subject to matters fairly disclosed in
this Agreement and the Due Diligence Bundle. No other information
relating to the Parent, the Company or the Subsidiary of which the
Investor has knowledge (actual or constructive) shall prejudice any
claim made by the
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Investor under the Warranties or operate to reduce any amount
recoverable.
(B) The Investor acknowledges that at the date hereof it is not aware
of any claim that it would be entitled to bring against the
Warrantors in respect of a breach of the Warranties at the date of
this Agreement.
(C) The Investor further acknowledges that the projections provided by
the Company and the Parent to it are subject to a high degree of
uncertainty and do not necessarily reflect the actual performance
that the Company may achieve in the future.
6.2 WARRANTIES TO BE INDEPENDENT
Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other
Warranty or anything in this Agreement.
6.3 DAMAGES
Without restricting the rights of the Investor or the ability of the
Investor to claim damages on any basis in the event that any of the
Warranties is broken or proves to be untrue or misleading, the
Warrantors shall, on demand, pay to the Investor:
(A) the amount necessary to put the Investor into the position which
would have existed if the Warranties had not been broken and had
been true and not misleading; and
(B) all costs and expenses incurred by the Investor as a result of the
breach.
6.4 LIMITATION
Notwithstanding the provisions of Clause 6.3:
(A) the maximum aggregate liability of the Warrantors under or in
connection with the Warranties shall not exceed a sum equal to the
aggregate of (I) US$4,000,000 (the "Principal Sum") and (ii)
interest in respect of the Principal Sum (accruing daily and
compounded quarterly) at a rate of five per cent. (5%) above LIBOR
from the date of this Agreement up to (and including) the date
payment is made to the Investor in respect of any claim
successfully brought by it against the Warrantors under this
Agreement; and
(B) notwithstanding Sub-Clause (A), the maximum liability of Xx
Xxxxxxxxx under or in connection with the Warranties shall not
exceed the sum of US$1,000,000.
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6.5 INVESTOR'S REPRESENTATIONS AND WARRANTIES
The Investor hereby represents and warrants to and for the benefit of
the Parent as follows:
(A) The Investor is a company duly incorporated and validly existing
under the laws of Mauritius.
(B) (1) The Investor has the power, legal capacity and authority to
execute, deliver and perform this Agreement and the
Shareholders Agreement and necessary in order for it to
perform any of its obligations under this Agreement and the
Shareholders Agreement.
(2) The execution, delivery and performance of this Agreement and
the Shareholders Agreement have been duly authorised by
appropriate action of the Investor.
(C) The execution, delivery and performance of this Agreement and the
Shareholders Agreement does not conflict with or constitute a
violation or breach of the Company's organisational documents, or
any law, regulation, order, writ, agreement, understanding,
document or instrument binding upon the Investor. No governmental
authorisation, permit or registration is required in connection
with the execution, delivery and performance by the Investor of
this Agreement or the Shareholders Agreement.
6.6 PENDING COMPLETION
Xx Xxxxxxxxx shall procure that (save only as may be necessary to give
effect to this Agreement) neither the Parent, the Company nor the
Subsidiary shall do, allow or procure any act or omission before
Completion which would constitute a breach of any of the
Warranties if they were given at any and all times from the date
hereof down to Completion or which would make any of the Warranties
inaccurate or misleading if they were so given.
7. CONFIDENTIALITY
7.1 CONFIDENTIALITY
Subject to sub-clause 7.2 and 7.3, each Party:-
(A) shall treat as strictly confidential information obtained or
received by it as a result of entering into or performing its
obligations under this Agreement and relating to the negotiations
relating to, or the provisions or subject matter of, this Agreement
or the other Parties ("confidential information"); and
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(B) shall not, except with the prior written consent of the other
Parties, publish or otherwise dispose to any person any
confidential information.
7.2 PERMITTED DISCLOSURES
Any Party may disclose confidential information which would otherwise be
subject to sub-clause 7.1 if but only to the extent that it can
demonstrate that:-
(A) such disclosure is required by law or by any securities exchange or
regulatory or governmental body having jurisdiction over it,
wherever situated and whether or not the requirement has the force
of law;
(B) the confidential information was lawfully in its possession prior
to its disclosure by any other Party (as evidenced by written
records) and has not been obtained from such other Party; or
(C) the confidential information has come into the public domain other
than through its fault or the fault of any person to whom the
confidential information has been disclosed in accordance with
Clause 7.3.
7.3 DISCLOSURES TO CERTAIN PARTIES
Any Party may for the purposes contemplated by this Agreement disclose
confidential information to the following persons:-
(A) its professional advisers, auditors, bankers and insurers, acting
as such; and
(B) its directors, officers and senior employees.
7.4 PERSISTENCE OF RESTRICTIONS
The restrictions contained in this Clause shall survive the termination
of this Agreement.
7.5 DUTY OF CARE
In fulfilling its obligations under this clause, each Party shall only
be required to use the same degree of care to prevent unauthorised
disclosure of confidential information as it would use to prevent the
disclosure of confidential information relating to itself.
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8. PROVISIONS RELATING TO THIS AGREEMENT
8.1 ASSIGNMENT
This Agreement shall be binding upon and enure for the benefit of the
successors of the Parties but shall not be assignable, save that the
Investor may assign the benefit of the Warranties to any transferee of
the Subscription Shares.
8.2 WHOLE AGREEMENT
This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Parties relating to its
subject matter and no variations hereof shall be effective unless made
in writing and signed by or on behalf of all the Parties.
8.3 AGREEMENT SURVIVES COMPLETION
The Warranties and all other provisions of this Agreement, in so far as
the same shall not have been performed at Completion, shall remain in
full force and effect notwithstanding Completion.
8.4 RIGHTS OF RESCISSION
Any right of rescission conferred upon any Party hereby shall be in
addition to and without prejudice to all other rights and remedies
available to it and no exercise or failure to exercise such a right of
rescission shall constitute a waiver by such Party of any such other
right or remedy. Completion shall not constitute a waiver by any Party
of any breach of any provision of this Agreement whether or not known to
such Party at the date of Completion.
8.5 FURTHER ASSURANCE
At any time after the date hereof the Company shall, and Xx Xxxxxxxxx
shall procure that the Company shall, at the request of the Investor,
execute such documents and do such acts and things as the Investor may
reasonably require for the purpose of vesting the Subscription Shares in
the Investor and giving to the Investor the full benefit of all the
provisions of this Agreement.
8.6 INVALIDITY
If any provision of this Agreement shall be held to be illegal or
unenforceable, the enforceability of the remainder of this Agreement
shall not be affected.
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8.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, which
shall together constitute one Agreement.
8.8 NOTICES
(A) As between the Parties, for the purposes of this Agreement, all
notices shall be given in accordance with this Clause 8.8. Any
notice (which term shall include any other communication) required
to be given under this Agreement or in connection with the matters
contemplated by it shall, except where otherwise specifically
provided, be in writing in the English language.
(B) Any such notice shall be addressed as provided in Clause 8.8(C) and
may be:-
(1) personally delivered, in which case it shall be deemed to have
been given upon delivery at the relevant address; or
(2) sent by international express mail service in which case it
shall be deemed to have been given seven days after the date
of posting; or
(3) sent by facsimile, in which case it shall be deemed to have
been given when despatched, subject to confirmation of
uninterrupted transmission by a transmission report provided
that any notice despatched by facsimile after 17.00 hours
(Hong Kong time) on any day shall be deemed to have been
received at 09.00 hours (Hong Kong time) on the next day.
(C) The addresses and other details of the Parties referred to in
Clause 8.8 are, subject to Clause 8.8(D):-
(1) Name: JF Electra (Mauritius) Limited
For the attention of: Xxxx Xxxxxx
Address: 0/X, Xxx Xxxxxxxx Xxxxxxxx
Xxxxx Xxxxxx Xxxxxx
Port Louis
Mauritius
Facsimile number: (000) 000 0000
With a copy to:- JF Electra Limited
For the attention of: Xxxx Xxxxxx/Xxxxxx Xx
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Address: 00/X, Xxxxxxx Xxxxx
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx Xxxx
Facsimile number: (000) 0000 0000
(2) Name: Complete Business Solutions,
Inc.
For the attention of: Xxx Xxxxxxxxx/Xxx Xxxxxx
Address: 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx
Xxxxxxxx 00000-0000
U.S.A.
Facsimile number: (0) 000 000 0000
With a copy to:- Butzel Long
For the attention of: Xxxxxx Xxxxxx XX
Address: Suite 900
000 Xxxx Xxxxxxxxx
Xxxxxxx
Xxxxxxxx 00000-0000
X.X.X.
Facsimile Number: (0) 000 000 0000
(3) Name: CBS Complete Business
Solutions
(Mauritius) Limited
For the attention of: The Company Secretary
Address: Les Jamalacs Building
Vieux Conseil Street
Port Louis
Mauritius
Facsimile number: (000) 000 0000
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With a copy to:- Butzel Long
For the attention of: Xxxxxx Xxxxxx XX
Address: Suite 900
000 Xxxx Xxxxxxxxx
Xxxxxxx
Xxxxxxxx 00000-0000
X.X.X.
Facsimile Number: (0) 000 000 0000
With a copy to: Complete Business Solutions,
Inc.
For the attention of: Xxx Xxxxxxxxx/Xxx Xxxxxx
Address: 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx
Xxxxxxxx 00000-0000
U.S.A.
Facsimile number: (0) 000 000 0000
(4) Name: Xxx Xxxxxxxxx
Address: 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx
Xxxxxxxx 00000-0000
U.S.A.
Facsimile number: (0) 000 000 0000
(D) Any Party may notify the other Parties of any change to the
address or any of the other details specified in sub-clause
8.8(C), provided that such notification shall only be
effective on the date specified in such notice or five days
after the notice is given, whichever is later.
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9. ANNOUNCEMENTS
9.1 The Parties shall be entitled to make or permit or authorise the making
of any press release or other public statement or disclosure concerning
this Agreement or any of the transactions contemplated herein.
10. COSTS AND COMMISSIONS
10.1 Each Party shall bear its own costs in connection with the preparation
and execution of this Agreement and the Shareholders Agreement.
10.2 As authorised by Article 13 of the Company's Articles of Association,
the Company shall pay the following commissions to the Investor and the
Parent in consideration of each one subscribing the Shares subscribed by
it and each one procuring the subscription by the other of those Shares
subscribed by the other in connection with this Agreement:-
(A) a commission of US$140,000 to the Investor, representing
approximately two and forty-five hundredths per cent.
(2.45%) of the aggregate subscription proceeds pursuant to
the Subscription and the Top Up Subscription; and
(B) a commission of US$360,000 to the Parent, representing
approximately six and thirty-one hundredths per cent.
(6.31%) of the aggregate subscription proceeds pursuant to
the Subscription and the Top Up Subscription.
11. LAW
11.1 This Agreement shall be governed by and construed in accordance with
the laws of England.
11.2 Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or invalidity thereof shall be
settled by arbitration which shall be conducted in accordance with the
UNCITRAL Arbitration Rules in force at the date of this Agreement (the
"UNCITRAL Rules") in the English language. The appointing authority
shall be the International Chamber of Commerce ("ICC") and the
arbitration will take place in London. There shall be three
arbitrators. One arbitrator shall be appointed by each of the Investor
and the Parent and the third arbitrator shall be appointed by the first
two arbitrators. If the first two arbitrators shall fail to agree on
the appointment of a third arbitrator within 30 days of their own
appointments, the third arbitrator shall be appointed in accordance
with the UNCITRAL Rules. Any such arbitration shall be conducted in
accordance with the ICC arbitration procedures in force at the date of
this Agreement, including such additions to the UNCITRAL Rules as are
therein contained.
11.3 The decision of the arbitration will be final and binding and not
subject to appeal.
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AS WITNESS the hands of the parties or their duly authorised representatives
the day and year first before written.
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SCHEDULE 1 : WARRANTIES AND REPRESENTATIONS
1. INTERPRETATION
In this schedule where the context admits:-
(1) "Audited Accounts" means the audited consolidated balance sheet of the
Parent and the audited balance sheet of the Subsidiary made up as at
the Balance Sheet Date and the audited consolidated profit and loss
account of the Parent and the audited profit and loss account of the
Subsidiary for the year ended on the Balance Sheet Date, including the
notes thereto, copies of which have been disclosed to the Investor in
the Due Diligence Bundle;
(2) "Balance Sheet Date" means 31st December 1995;
(3) "Company Accounts" means the unaudited balance sheet of the Company
made up as at 19th July 1996, a copy of which has been disclosed to
the Investor in the Due Diligence Bundle;
(4) "Computer Systems" means all computer systems used by or for the
benefit of the Company at any time, including computer processors,
associated and peripheral equipment, computer programs, technical and
other documentation, and data entered into or created by the foregoing
from time to time, but excluding any computer systems owned by clients
of the Company or provided by such clients for use by the Company;
(5) "Companies Acts" means the Companies Xxx 0000 of Mauritius, the
Companies Xxx 0000 of India and any other statutes from time to time
in force concerning companies in Mauritius and India (as appropriate);
(6) "encumbrance" includes any interest or equity of any person
(including, without prejudice to the generality of the foregoing, any
right to acquire, option or right of pre-emption) or any mortgage,
charge, pledge, lien, assignment, hypothecation, security interest,
title retention or any other security agreement or arrangement;
(7) "environmental liability" includes liability for any form of damage to
the environment and for any of the following: damage to living
organisms or persons (including impairment of health and interference
with amenity); damage to land or personal property; interference with
riparian or other proprietary or possessory rights; and public or
private nuisance;
(8) "intellectual property" means patents, trade marks, service marks,
rights (whether registered or unregistered) in any designs,
applications for any of the foregoing, trade or business names and
copyright;
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(9) "intellectual property agreements" means agreements or arrangements
relating (wholly or partly) to intellectual property or to the
disclosure, use, assignment or patenting of any inventions, discovery,
improvements, processes, formulae or other knowhow;
(10) "Management Accounts" means the management accounts of the Subsidiary
for the period ended on the Management Accounts Date, copies of which
have been disclosed to the Investor in the Due Diligence Bundle;
(11) "Management Accounts Date" means 30th April 1996;
(12) "Parent's Group" means the Parent and its subsidiaries and associated
companies at the date of this Agreement;
(13) "Properties" means the properties owned or occupied by the Subsidiary
for the purposes of carrying on its business, details of which have
been disclosed to the Investor in the Due Diligence Bundle;
(14) "Reorganisation" means the corporate reorganisation of the share
capitals of the Parent, the Company and the Subsidiary carried out
prior to execution of this Agreement, copies of documents in relation
to which have been provided to the Investor;
(15) "GAAP" means Generally Accepted Accounting Principles in force at the
date hereof in any applicable territory;
(16) any question whether a person is connected with another shall be
determined in accordance with s.839 of the United Kingdom Income and
Corporation Taxes Act 1988 which shall apply in relation to this
schedule as it applies in relation to that Act;
(17) references to "the Company" include the Subsidiary;
(18) where any statement is qualified by the expression "so far as the
Warrantors are aware" or "to the best of the Warrantors' knowledge and
belief" or any similar expression, that statement shall be deemed to
include an additional statement that it has been made after due and
careful enquiry; and
(19) reference to any Act, statutory instrument, regulation, bye-law or
other requirement of English law and to any English legal term for any
action, remedy, method of judicial proceeding, legal document, legal
status, court, official or any legal concept or thing shall in respect
of any jurisdiction other than England be deemed to include that which
most nearly approximates in that jurisdiction to the English legal
term.
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2. WARRANTIES AND REPRESENTATIONS
The Warrantors hereby jointly and severally warrant and represent to and for
the benefit of the Investor in the following terms.
(A) THE COMPANY AND THE PARENT
(1) Capacity
The Parent, the Company and the Subsidiary have full power to
enter into and perform this Agreement and this Agreement
constitutes binding obligations on the Parent, the Company and
the Subsidiary in accordance with its terms.
(2) Liabilities Owing to or by Company
Except as disclosed, contained or accrued in the Audited
Accounts and the Management Accounts, there is not outstanding
any material indebtedness or other material liability (actual
or contingent) owing by the Company to any member of the
Parent's Group or any director or any person connected with
any of them, nor is there any material indebtedness owing to
the Company by any such person, and no promise or
representation has been made to the Warrantors in connection
with the Warranties in respect of which the Company might be
liable.
(3) Parent's Other interests
Neither Xx Xxxxxxxxx nor any member of the Parent's Group
(save for the Company and the Subsidiary) nor any person
connected with Xx Xxxxxxxxx or any such member has any
interest, direct or indirect, in any business other than that
now carried on by the Company which is or is likely to be or
become competitive with the business or any proposed business
of the Company (save for a holding of shares in any company
not exceeding five per cent. (5%) of such company's issued
share capital).
(4) Reorganisation
The Reorganisation was properly carried out in compliance with
the Companies Acts and all other applicable laws and
regulations and all consents, approvals and permissions were
duly obtained and all relevant filings were duly made in
connection with the Reorganisation.
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(B) THE COMPANY'S CONSTITUTION
(1) Share Capital
Parts I and II of Schedule 3 contain true particulars of the
authorised and issued share capital and other corporate
details of the Company and the Subsidiary and all the shares
there shown as issued are in issue fully paid and are
beneficially owned and registered as set out therein free from
any encumbrance.
(2) Memorandum and Articles
The copy of the memorandum and articles of association of the
Company disclosed to the Investor in the Due Diligence Bundle
is true and complete and has embodied therein or annexed
thereto a copy of every such resolution or agreement as is
required by applicable laws.
(3) Company Resolutions
Neither the Company nor any class of its members has passed
any resolution (other than resolutions relating to business at
annual general meetings which was not special business or
those resolutions specifically passed in connection with the
transactions contemplated by this Agreement).
(4) Options
No person has the right (whether exercisable now or in the
future and whether contingent or not) to call for the
allotment, issue, sale, transfer or conversion of any share or
loan capital of the Company under any option or other
agreement (including conversion rights and rights of
pre-emption), other than those Shares which may be issued and
allotted pursuant to the Company's management stock option
plan.
(C) THE COMPANY AND THE LAW
(1) Compliance with Laws
The Company and the Parent have conducted their businesses in
all material respects in accordance with all applicable laws
and regulations of their respective countries of incorporation
and any relevant foreign country and there is no order, decree
or judgment of any Court or any governmental agency of or any
country outstanding against the Company or the Parent or which
may have a material adverse effect upon the assets or business
of the Company or the Parent.
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(2) Investment Holding
The Company (which, for the purpose of this Paragraph (2),
shall not include the Subsidiary) carries on no business other
than as an investment holding company.
(3) Licences
All necessary licences, consents, permits and authorities
(public and private) have been obtained by the Subsidiary and
the Parent to enable them to carry on their respective
businesses effectively in the places and in the manner in
which such businesses are now carried on and all such
licences, consents, permits and authorities are valid and
subsisting and to the best of the Warrantors' knowledge and
belief there is no reason why any of them should be suspended,
cancelled or revoked.
(4) Breach of Statutory Provisions
Neither the Company nor the Parent, nor any of their
respective officers, agents or employees (during the course of
their duties in relation to the Company or the Parent) have
committed, or omitted to do, any act or thing the commission
or omission of which is, or could be, in contravention of any
Act, Order, Regulation, or the like in any country which is
punishable by fine or other penalty.
(5) Litigation
Neither the Company nor the Parent is engaged in any
litigation or arbitration proceedings and so far as the
Warrantors are aware no litigation or arbitration proceedings
are pending or threatened by or against the Company or the
Parent and there are no facts which the Warrantors believe are
likely to give rise to any litigation or arbitration and
neither the Company nor the Parent has been a party to any
undertaking or assurance given to any Court or governmental
agency or the subject of any injunction which is still in
force.
(6) Insolvency
(a) No order has been made or petition presented or
resolution passed for the winding up of the Company
or the Parent, nor has any distress, execution or
other process been levied against the Company or the
Parent or action taken to repossess goods in the
Company's or the Parent's possession.
(b) No steps have been taken for the appointment of an
administrator or receiver of any part of the
Company's or the Parent's property.
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(c) No floating charge created by the Company or the
Parent has crystallised and, so far as the Warrantors
are aware, there are no circumstances likely to cause
such a floating charge to crystallise.
(d) Neither the Company nor the Parent has been a party
to any transaction which could be avoided in a
winding up.
(e) Neither the Company nor the Parent has made or
proposed any arrangement or composition with its
creditors or any class of its creditors.
(7) Defective Products
Neither the Subsidiary nor the Parent has provided any
services which are or were below the standard of services
generally provided within the industry sector in which those
companies operate and to the best of the Warrantors' knowledge
and belief all such services provided by the Parent and/or the
Subsidiary comply or complied in all material respects with
any warranties or representations expressly or impliedly made
by the Subsidiary or the Parent (as the case may be) or with
all applicable regulations, standards and requirements in
respect thereof. Neither the Subsidiary nor the Parent has
undertaken any contract where a customer has challenged or is
challenging the quality standards or cost estimates provided
by the Subsidiary or the Parent (as the case may be), other
than to the extent normally experienced within the relevant
industry sector.
(8) Inducements
So far as the Warrantors are aware no officer, agent or
employee of the Company or the Parent has paid any bribe or
used any of the Company's or the Parent's assets unlawfully to
obtain an advantage for any person.
(D) THE COMPANY'S ACCOUNTS AND RECORDS
(1) Books and Records
All accounts, books, ledgers, financial and other records of
whatsoever kind ("records") of the Parent and the Company:-
(a) have been fully, properly and accurately maintained,
are in the possession of the Parent and the Company
and contain true and accurate records of all matters
required by law to be entered therein;
(b) do not contain or reflect any material inaccuracies
or discrepancies; and
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(c) give and reflect a true and fair view of the matters
which ought to appear therein
and no notice or allegation that any of the records is
incorrect or should be rectified has been received.
(2) Accounts Warranty
(a) The Audited Accounts have been prepared in accordance
with the requirements of all relevant statutes and
generally accepted accounting principles and present
fairly, in all material respects, the assets and
liabilities of the Parent and the Subsidiary at the
Balance Sheet Date and the profits of the Parent and
the Subsidiary for the year ended on the Balance
Sheet Date and apply bases and policies of accounting
which have been consistently applied in the audited
balance sheet and profit and loss accounts for the
three financial years prior to the Balance Sheet
Date.
(b) The Company Accounts present fairly, in all material
respects, the assets and liabilities of the Company
at 19th July 1996.
(3) Provision for Liabilities
Full provision has been made in the Audited Accounts for all
material actual liabilities of the Parent and the Subsidiary
outstanding at the Balance Sheet Date and proper provision (or
note) in accordance with generally accepted accounting
principles has been made therein for all other liabilities of
the Parent and the Subsidiary then outstanding whether
contingent, quantified, disputed or not, including (without
limitation) the cost of any work or material for which payment
has been received or credit taken, any future loss which may
arise in connection with uncompleted contracts and any claims
against the Parent and/or the Subsidiary in respect of
completed contracts and, taken as a whole, the aggregate
liabilities of the Parent and the Subsidiary are not
materially higher than as disclosed in the Audited Accounts.
(4) Stock Valuation and Accounting Policies
For the purposes of the Audited Accounts, the Parent and the
Subsidiary's stock in trade and work in progress has been
valued in accordance with applicable GAAP and on a basis in
all material respects consistent with that adopted for the
purpose of the Parent's audited consolidated accounts in
respect of the beginning and end of each of the three last
preceding accounting periods and the value of redundant or
obsolete materials and materials below standard has been
written down to realisable market value or adequate provision
has been made therefor.
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(5) Management Accounts
The Management Accounts have been prepared in accordance with
the Subsidiary's normal practices and the Warrantors do not
consider them misleading.
(6) Returns
The Company has complied with the provisions of the Companies
Acts and all returns, particulars, resolutions and other
documents required under any legislation to be delivered on
behalf of the Company to the Registrar of Companies or to any
other authority whatsoever in any applicable territory have
been properly made and delivered. All such documents
delivered to the Registrar of Companies or to any other
authority whatsoever in any applicable territory, whether or
not required by law, were true and accurate when so delivered.
(E) THE SUBSIDIARY'S BUSINESS
(1) Business since the Balance Sheet Date
Since the Balance Sheet Date:-
(a) the Subsidiary has carried on its business in the
ordinary and usual course and without entering into
any transaction, assuming any liability or making any
payment which is not in the ordinary course of its
business and without any interruption or alteration
in the nature, scope or manner of its business;
(b) the Company has not borrowed or raised any money or
taken any financial facility;
(c) the Company has paid its creditors within the times
agreed with such creditors and so that there are no
debts outstanding by the Company which have been due
for more than eight weeks;
(d) the Company has not entered into, or agreed to enter
into, any capital commitments;
(e) no share or loan capital has been issued or agreed to
be issued by the Company;
(f) save for the payment by the Subsidiary of a dividend
in the aggregate amount of Rs1,435,000 in respect of
the year ended on the Balance Sheet Date, no
distribution of capital or income has been declared,
made or paid in respect of any share capital of the
Company and (excluding fluctuations in overdrawn
current accounts with bankers)
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no loan or share capital of the Company has been
repaid in whole or part or has become liable to be
repaid; and
(g) there has been no material deterioration in the
financial position, prospects or turnover of the
Company.
(2) Working Capital
Having regard to existing bank and other facilities, the
Company has sufficient working capital for the purposes of
continuing to carry on its business in its present form and at
its present level of turnover for the foreseeable future and
for the purposes of executing, carrying out and fulfilling in
accordance with their terms all orders, projects and
contractual obligations which have been placed with, or
undertaken by the Company.
(3) Commission
No one is entitled to receive from the Company any finder's
fee, brokerage, or other commission in connection with this
Agreement or the Shareholders Agreement.
(4) Consequence of the Subscription and the Top Up Subscription
The subscription for the Subscription Shares by the Investor,
the subscription for the Top Up Subscription Shares by the
Parent or compliance with the terms of this Agreement:-
(a) will not cause the Company to lose the benefit of any
right or privilege it presently enjoys or so far as
the Warrantors are aware, cause any person who
normally does business with the Company not to
continue to do so on the same basis as previously;
(b) will not relieve any person of any obligation to the
Company or enable any person to determine any such
obligation or any right or benefit enjoyed by the
Company or to exercise any right whether under an
agreement with or otherwise in respect of the
Company;
(c) will not result in any present or future indebtedness
of the Company becoming due or capable of being
declared due and payable prior to its stated
maturity; and
(d) will not give rise to or cause to become exercisable
any right of pre-emption,
and, to the best of the knowledge and belief of the
Warrantors, the Company's relationships with clients,
customers, suppliers and employees will not be adversely
affected thereby.
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(5) Grants
The Company has not applied for or received any financial
assistance from any supranational, national or local authority
or government agency.
(6) Insurances
(a) Full particulars of all the Subsidiary's insurances
(including, without limitation, the limit of cover
and the basis of cover under each policy and the
amount of excess applicable thereto) have been
provided to the Investor and the insurances which are
maintained by the Subsidiary afford the Subsidiary
adequate cover against such risks as companies
carrying on the same type of business as the
Subsidiary commonly cover by insurance and in
particular:
(i) the assets of the Subsidiary are insured
against fire in their full replacement value;
(ii) the Computer Systems are adequately insured
for all material risks; and
(iii) the Subsidiary is now, and has at all
material times been, adequately covered
against accident, damage, injury, third party
loss (including product liability), loss of
profits and other risks normally covered by
insurance.
(b) All the Subsidiary's insurances (details of which
have been disclosed to the Investor in the Due
Diligence Bundle) are in full force and effect, and
so far as the Warrantors are aware there are no
circumstances which might lead to any liability under
any of the Subsidiary's insurances being avoided by
the insurers or the premiums being materially
increased and, there are no special or unusual terms,
restrictions or rates of premium, all premiums have
been paid on time and there is no claim outstanding
under any such insurance nor are the Warrantors aware
of any circumstances likely to give rise to a claim.
(7) Trading Name
The Subsidiary does not trade under any name other than "Total
Business Solutions", "CBSI" or "CBS India".
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(F) THE COMPANY'S ASSETS
(1) Net Asset Value
The value of the net tangible assets of the Parent and the
Subsidiary at Completion determined in accordance with the
same accounting policies as those applied in the Audited
Accounts (and on the basis that each fixed asset is valued at
a figure no greater than the value attributed to it in the
Audited Accounts or, in the case of any fixed asset acquired
by the Parent and the Subsidiary after the Balance Sheet Date,
at a figure no greater than cost) will not be less than the
value (subject to normal depreciation charges) of the net
tangible assets of the Parent and the Subsidiary at the
Balance Sheet Date as shown in the Audited Accounts.
(2) Assets and Charges
(a) Except for current assets disposed of by the Parent
or the Subsidiary in the ordinary course of its
business, the Parent and the Subsidiary are the
owners of and have good marketable title to all
assets included in the Audited Accounts and all
assets which have been acquired by the Parent or the
Subsidiary since the Balance Sheet Date and no such
asset, nor any of the undertaking, goodwill or
uncalled capital of the Parent or the Subsidiary is
subject to any encumbrance or any agreement or
commitment to give or create any encumbrance.
(b) Since the Balance Sheet Date, save for disposals in
the ordinary course of its business, the assets of
the Parent and the Subsidiary have been in the
possession of, or under the control of, the Parent
and the Subsidiary.
(c) No asset is shared by the Subsidiary with any other
person and the Subsidiary does not depend for its
business upon any assets, facilities or services
owned or supplied by other members of the Parent's
Group.
(d) No charge in favour of the Company is void or
voidable for want of registration.
(3) Debts
Any debts owed to the Company as recorded in the Company's
books and records are good and collectable in the ordinary
course of business and not subject to any defence, right of
set-off or counter-claim of any kind arising from an act or
omission occurring prior to the date of this Agreement and no
amount included in the Audited Accounts as owing to the Parent
or the Subsidiary at the Balance Sheet Date has been released
for an amount less than the value at which it was included in
the Audited Accounts or is now
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regarded by the Warrantors as irrecoverable in whole or in
part. The Subsidiary has not factored or discounted any of
its debts or agreed to do so.
(4) Title Retention
The Company has not acquired or agreed to acquire any material
asset on terms that property therein does not pass until full
payment is made.
(5) Intellectual Property Rights
(a) All the intellectual property used by the Subsidiary
is owned or properly licenced by it and it does not
use any intellectual property in respect of which any
third party has any right, title or interest.
(b) So far as the Warrantors are aware, none of the
processes or products of the Subsidiary infringes any
right of any other person relating to intellectual
property or involves the unlicensed use of
confidential information disclosed to the Subsidiary
by any person in circumstances which might entitle
that person to a claim against the Subsidiary.
(c) There are no outstanding claims against the
Subsidiary for infringement of any intellectual
property used (or which has been used) by it and no
such claims have been settled by the giving of any
undertakings which remain in force.
(d) Confidential information and knowhow used by the
Subsidiary is kept strictly confidential and the
Subsidiary operates and fully complies with
procedures which maintain such confidentiality. The
Warrantors are not aware of any such confidentiality
having been breached.
(e) Any computer software licensed by the Subsidiary for
use by third parties has and is being used by those
third parties within and in accordance with any
conditions imposed by such licence.
(6) Plant
The machinery and plant, including fixed plant and machinery,
and all vehicles and the Computer Systems and other office and
other equipment used in connection with the business of the
Company:-
(a) is (subject to fair wear and tear) in good repair and
condition and in satisfactory working order;
(b) is capable, and will (subject to fair wear and tear)
be capable, over the period of time during which it
will be written down to a nil value
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in the accounts of the Company, of doing the work for
which it was designed or purchased;
(c) is not surplus to the Company's requirements in the
ordinary course of its business; and
(d) is in the possession and control of, and is the
absolute property free from any encumbrance of, the
Company save for those items held under hire purchase
or rental agreements the value of which items in the
aggregate does not exceed US$1,000,000.
(7) Computer Systems
(a) The Computer Systems have been satisfactorily
maintained and supported.
(b) The Computer Systems have adequate capability and
capacity for the projected requirements of the
Company for the processing and other functions
required to be performed for the purposes of the
business of the Company.
(c) Disaster recovery plans are in effect and are
adequate to ensure that the Computer Systems can be
replaced or substituted without material disruption
to the business of the Company.
(d) The Company has sufficient technically competent and
trained employees to ensure proper handling,
operation, monitoring and use of the Computer
Systems.
(e) The Company has adequate procedures to ensure
internal and external security of the Computer
Systems, including procedures for taking and storing
on-site and off-site back-up copies of computer
programs and data.
(f) Where any of the records of the Company are kept on
Computer Systems, the Company is the owner of all
hardware and all software licences necessary to
enable it to keep, copy, maintain and use the records
(as defined in paragraph (D)(1)) in the course of its
business and does not share any hardware or software
relating to the records with any person.
(8) Title to Properties
The particulars of the Properties disclosed to the Investor in
the Due Diligence Bundle are true and correct and the
Subsidiary has good and marketable title to each Property
which it is said to own free from any encumbrance, sub-lease,
tenancy or right of occupation, reservation,
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easement, quasi-easement or privilege in favour of any third
party and there are appurtenant to each Property all rights
and easements necessary for its use and enjoyment and except
as shown the Company has no other interest in land and does
not occupy any other property.
(10) Matters affecting Properties
(a) No Property or any part thereof is affected by any of
the following matters or is to the knowledge of the
Warrantors likely to become so affected:-
(I) any outstanding dispute, notice or complaint
or any exception, reservation, right,
covenant, restriction or condition which is
of an unusual nature or which affects or
might in the future affect the use of any of
the Properties for the purpose for which it
is now used or which affects or might in the
future affect the value of the Properties; or
(ii) any notice, order, demand, requirement or
proposal of which the owner has notice or of
which the Warrantors are aware made or issued
by or on behalf of any government or
statutory authority, department or body for
acquisition, clearance, demolition or
closing, the carrying out of any work upon
any building, the modification of any
planning permission, the discontinuance of
any use or the imposition of any building or
improvement line; or
(iii) any compensation received as a result of any
refusal of any application for planning
consent or the imposition of any restrictions
in relation to any planning consent; or
(iv) any commutation or agreement for the
commutation of rent or payment of rent in
advance of the due dates of payment thereof.
(b) Each of the Properties is in a good and substantial
state of repair and condition and fit for the
purposes for which it is at present used.
(c) All material restrictions conditions and covenants
(including any imposed by or pursuant to any lease)
affecting any of the Properties have been observed
and performed and no notice of any breach of any of
the same has been received or is to the Warrantors'
knowledge likely to be received.
(d) The use of the Properties and all machinery and
equipment therein and the conduct of any business
therein complies in all material respects with all
relevant statutes and regulations and with all rules
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regulations and delegated legislation thereunder and
all necessary licences and consents required
thereunder have been obtained.
(e) There are no material restrictive covenants or
provisions, legislation or orders, charges,
restrictions, agreements, conditions or other matters
which preclude the use of any of the Properties for
the purposes for which the Properties are now used
and each such user is the permitted user under the
provisions of applicable legislation and all material
restrictions, conditions and covenants imposed by or
pursuant to the said applicable legislation been
observed and performed.
(f) All replies by or on behalf of the Warrantors or the
Company to enquiries relating to any of the
Properties made by or on behalf of the Investor were
when given and are now true and correct.
(11) Properties Previously Owned
The Company has no existing or contingent liabilities in
respect of any properties previously occupied by it or in
which it owned or held any interest, including, without
limitation, leasehold premises assigned or otherwise disposed
of.
(G) THE COMPANY AND THE ENVIRONMENT
(1) Compliance with Environmental Protection Laws
(a) The Company has not committed any breach of statutory
requirements for the protection of the environment or
of human health or amenity, and has acted at all
times in conformity with all relevant codes or
practice, guidance, notes, standards and other
advisory material issued by any competent authority.
(b) The Company has not received any communication from
any competent authority in respect of the Company's
business, failure to comply with which would
constitute breach of any statutory requirements or
compliance with which could be secured by further
proceedings. The Warrantors are not aware of any
circumstances which might give rise to any such
communication being received.
(H) THE COMPANY'S CONTRACTS
(1) Documents
All title deeds and agreements to which the Company is a party
and other documents owned by or which ought to be in the
possession of the
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Company are in the possession of the Company and are properly
stamped and are free from any encumbrance.
(2) Contracts and Terms of Business
Details of all material contracts of the Company, together
with details of the business principles which will govern
future business between the Subsidiary and the Parent, have
been disclosed to the Investor in the Due Diligence Bundle.
(3) Material Contracts
The Company is not a party to or subject to any material
agreement, transaction, obligation, commitment, arrangement or
liability which:
(a) is incapable of complete performance in accordance
with its terms within thirty-six months after the
date on which it was entered into or undertaken; or
(b) is known by the Warrantors or by the Company to be
likely to result in a loss to the Company on
completion of performance; or
(c) involves or is likely to involve obligations,
restrictions, expenditure or receipts of an unusual,
onerous or exceptional nature and not in the ordinary
course of the Company's business; or
(d) is with any trade union or body or organisation
representing its employees; or
(e) requires an aggregate consideration payable by the
Company in excess of US$1 million; or
(f) involves or is likely to involve the supply of
services by or to the Company the aggregate sales
value of which will represent in excess of twenty per
cent. (20%) of the turnover of the Company for its
last financial year; or
(g) in any way restricts the Company's freedom to carry
on the whole or any part of its business in any part
of the world in such manner as it thinks fit; or
(h) are hedging, futures, options or other derivative
contracts; or
(I) is a contract for the sale of shares or assets which
contains warranties or indemnities; or
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(j) is in any way otherwise than in the ordinary course
of the Company's business.
(3) Defaults
Neither the Company nor any other party to any agreement with
the Company is in default thereunder, being a default which
would be material in the context of the financial or trading
position of the Company nor (so far as the Warrantors are
aware) are there any circumstances likely to give rise to such
a default.
(4) Sureties
No person other than the Company has given any guarantee of or
security for any overdraft loan or loan facility granted to
the Company.
(5) Powers of Attorney
No powers of attorney given by the Company (other than to the
holder of an encumbrance solely to facilitate its enforcement)
are now in force. No person, as agent or otherwise, is
entitled or authorised to bind or commit the Company to any
obligation not in the ordinary course of the Company's
business, and the Warrantors are not aware of any person
purporting to do so.
(6) Insider Contracts
Other than transactions carried out between the Company and
the Parent:-
(a) there is not outstanding, and there has not at any
time during the last six years been outstanding, any
agreement or arrangement to which the Company is a
party and in which the Warrantors, any person
beneficially interested in the Company's share
capital or any director or any person connected with
any of them is or has been interested, whether
directly or indirectly;
(b) the Company is not a party to, nor have its profits
or financial position during such period been
affected by, any agreement or arrangement which is
not entirely of an arm's length nature; or
(c) all costs incurred by the Company have been charged
to the Company and not borne by any other member of
the Parent's group.
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(7) Debts
There are no debts owing by or to the Company other than debts
which have arisen in the ordinary course of business, nor has
the Company lent any material amounts of money which have not
been repaid.
(8) Options and Guarantees
The Company is not a party to any option or pre-emption right,
or a party to any guarantee, suretyship, comfort letter or any
other obligation (whatever called) to pay, provide funds or
take action in the event of default in the payment of any
indebtedness of any other person or default in the performance
of any obligation of any other person.
(9) Tenders
No offer, tender, or the like is outstanding which is capable
of being converted into an obligation of the Company by an
acceptance or other act of some other person.
(I) THE COMPANY AND ITS BANKERS
(1) Borrowings
The total amount borrowed by the Company from its bankers does
not exceed its facilities and the total amount borrowed by the
Company from whatsoever source does not exceed any limitation
on its borrowing contained in its articles of association, or
in any debenture or loan stock deed or other instrument.
(2) Continuance of Facilities
Full and accurate details of all overdrafts, loans or other
financial facilities outstanding or available to the Company
have been provided to the Investor and neither the Warrantors
nor the Company has done anything whereby the continuance of
any such facilities in full force and effect might be affected
or prejudiced.
(3) Off-Balance Sheet Financing
Neither the Parent nor the Subsidiary has engaged in any
borrowing or financing not required to be reflected in the
Audited Accounts.
(4) Bank Accounts
A statement of all the bank accounts of the Company and of the
credit or debit balances on such accounts as at a date not
more than seven days before
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the date hereof has been provided to the Investor. The
Company has no other bank or deposit accounts (whether in
credit or overdrawn) and since such statement there have been
no payments out of any such accounts except for routine
payments and the balances on current account are not now
substantially different from the balances shown on such
statements.
(J) THE COMPANY AND ITS OFFICERS
(1) Directors
The particulars shown in Schedule 3 are true and complete and
no person not named therein as such is a director or shadow
director of the Company.
(2) Particulars of Officers
(a) The particulars shown in the schedule of officers
disclosed to the Investor in the Due Diligence Bundle
show all remuneration payable and other benefits
provided or which the Company is bound to provide
(whether now or in the future) to each officer or
consultant of the Company or any person connected
with any such person and are true and complete and
include particulars of all profit sharing incentive
and bonus arrangements to which the Company is a
party whether legally binding on the Company or not.
(b) Since the Management Accounts Date no change has
been made in the rate of remuneration, or the
emoluments or pension benefits of any officer or
ex-officer of the Company and no change has been made
in the terms of engagement of any such officer and no
additional officer has been appointed.
(c) No present officer of the Company has given or
received notice terminating his employment except as
expressly contemplated under this Agreement.
(d) The Company has not given notice of any redundancies
to any government department or started
consultations with any trade union pursuant to any
statute or regulation.
(3) Service Contracts
There is not outstanding any contract of service between the
Company and any of its directors or officers which is not
terminable by the Company without compensation (other than any
compensation payable by statute) on not more than three
months' notice given at any time.
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(4) Disputes with Employees
The Warrantors are not aware of any outstanding material claim
against the Company by any person who is now or has been an
officer or employee of the Company or any material dispute
between the Company and a material number or class of its
employees and no payments are due by the Company to employees
or ex-employees for redundancy, severance pay, long service
payments or similar payments.
(K) THE COMPANY AND ITS SUBSIDIARIES
(1) Particulars of Subsidiaries
The Company has no other subsidiary other than the Subsidiary.
(2) Investments, Associations and Branches
The Company:-
(a) is not the holder or beneficial owner of, and has not
agreed to acquire, any class of the share or other
capital of any other company or corporation (whether
incorporated in Mauritius or elsewhere) other than
the Subsidiary and has not entered into any forward
contracts, options, hedging agreements or similar
financial instruments;
(b) is not and has not agreed to become a member of any
partnership, joint venture, consortium or other
unincorporated association or arrangement for sharing
commissions or income; and
(c) has no branch, agency or place of business outside
Mauritius and no permanent establishment (as that
expression is defined in the relevant double taxation
relief orders current at the date hereof) outside
Mauritius.
(L) MISCELLANEOUS
(1) All Material Matters Disclosed
All information contained or referred to in this Agreement and
the Due Diligence Bundle or in any annexure thereto is
accurate in all material respects and the Warrantors are not
aware of any other fact or matter which renders any such
information misleading or which might reasonably affect the
willingness of a subscriber to subscribe for the Subscription
Shares on the terms, including price, of this Agreement.
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(M) TAXATION
(1) Residence
The Parent and the Company are and always have been resident
for taxation purposes only in the national jurisdiction in
which they are incorporated.
(2) Tax Provisions
Full provision or reserve has been made in the Audited
Accounts for all taxation liable to be assessed on the Parent
and/or the Subsidiary or for which they (or either of them)
are accountable in respect of income, profits or gains earned,
accrued or received on or before the Balance Sheet Date or any
event on or before the Balance Sheet Date including
distributions made down to such date or provided for in the
Audited Accounts and full provision has been made in the
Audited Accounts for deferred taxation calculated in
accordance with generally accepted accounting principles.
(3) Returns
The Parent and the Company have properly and punctually made
all returns and provided all information required for taxation
purposes and none of such returns is subject to a dispute by
the relevant taxation authorities or any other authority
concerned (in the United States of America, Mauritius, India
or elsewhere) which has had or may have a material adverse
effect on the Company and the Warrantors are not aware that
any such dispute is likely in respect thereof.
(4) Payment of Tax
The Parent and the Company have duly and punctually paid all
taxation which they have become liable to pay and are under no
liability to pay any penalty or interest in connection with
any claim for taxation and have not paid any tax which they
were and are not properly due to pay.
(5) Audits
Neither the Parent nor the Subsidiary has in the last six
years received any inspection from any taxation authority.
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SCHEDULE 2: DUE DILIGENCE
DOCUMENT DESCRIPTION DATE
-------------------- ----
1 CBS Complete Business Solutions (Mauritius) Limited Balance Sheet 7/19/96
2 Complete Business Solutions (India) Private Limited employee listing with details of 6/30/96
compensation as of June 30, 1996
3 Addendum to June 30, 1996 employee listing 7/17/96
4 Complete Business Solutions (India) Private Limited 1995 Draft Audited Financial 7/18/96
Statements
5 Complete Business Solutions, Inc.1994 and 1995 Audited Financial Statements 4/11/96
6 Complete Business Solutions, Inc. 1992 and 1993 Audited Financial Statements 4/29/94
7 Complete Business Solutions (India) Private Limited minutes for Board of Directors 1/24/95
meeting
8 Complete Business Solutions (India) Private Limited minutes for Board of Directors 3/29/95
meeting
9 Complete Business Solutions (India) Private Limited minutes for Board of Directors 6/2/95
meeting
10 Complete Business Solutions (India) Private Limited minutes for Board of Directors 6/26/95
meeting
11 Complete Business Solutions (India) Private Limited minutes for Board of Directors 7/28/95
meeting
12 Complete Business Solutions (India) Private Limited minutes for Board of Directors 8/1/95
meeting
13 Complete Business Solutions (India) Private Limited minutes for Board of Directors 12/11/95
meeting
14 Complete Business Solutions (India) Private Limited minutes for Board of Directors 1/8/96
meeting
15 Complete Business Solutions (India) Private Limited minutes for Board of Directors 1/17/96
meeting
16 Complete Business Solutions (India) Private Limited minutes for Board of Directors 5/16/96
meeting
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17 List of assets loaned by Complete Business Solutions, Inc. to Complete Business 7/15/96
Solutions India (Private) Limited through June 1996
18 Complete Business Solutions (India) Private Limited fixed asset list, up to June 30, 7/10/96
1996
19 Letter from Xxxxxx Xxxxxxxx re: explanation of Subchapter S rules 7/16/96
20 Complete Business Solutions (India) Private Limited details of insurance in place as of
June 30, 1996
21 List of ongoing litigation to which Complete Business Solutions, Inc. is a party as of 7/10/96
July 10, 1996
22 Complete Business Solutions, Inc. tax and other audits that have occurred since 1990 7/10/96
as of July 10, 1996
23 Complete Business Solutions (India) Private Limited bank balances as of July 16, 1996 7/17/96
24 Sale Deed between Xxxxxx Rubber Private Limited and Complete Business Solutions (India) 6/2/95
Private Limited
25 Letter from Government of India, Ministry of Commerce, Madras Export Processing Zone to 8/3/93
Total Business Solutions (India) Private Limited re: allotment of additional SDF
building
26 Lease cum sale agreement between Tamil Nadu Housing Board and Complete Business 4/23/96
Solutions (India) Private Limited
27 Lease cum sale agreement between Tamil Nadu Housing Board and Complete Business 4/23/96
Solutions (India) Private Limited
28 Letter from Government of India, Ministry of Commerce, Madras Export Processing Zone to 4/21/95
Complete Business Solutions (India) Private Limited re: transfer of lease plot
29 Memo to Xxx Xxxxxx from P Gunasagar re: Transfer of Funds for Bangalore Property 7/1/96
30 Government of India, Income Tax Department No Objection Certificate 6/24/96
31 Government of India, Income Tax Department No Objection Certificate 6/24/96
32 Application for Certificate Under Section 230A of the Income Tax Act 4/18/96
33 Agreement for Sale between Xxxxxxxxxx Industries Limited and Complete Business 4/12/96
Solutions (India) Private Limited
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34 Agreement of Sale between Xxxxxxxxxx Industries Limited and Complete Business Solutions 4/12/96
(India) Private Limited
35 Letter to Complete Business Solutions (India) Private Limited from Xxxxxxx X. 1/23/96
Xxxxxxxxxxxx re: Scrutiny and Legal Opinion of documents
36 Lease Deed between Vidya Devi Xxxxxx and Complete Business Solutions (India) Private 4/3/96
Limited
37 Lease Deed between A.S.R. Prasad and Complete Business Solutions (India) Private 4/3/96
Limited
38 Complete Business Solutions (India) Private Limited Audited 1994 Financial Statements 6/2/95
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SCHEDULE 3: CORPORATE DETAILS
Part I - The Company
NAME: CBS Complete Business Solutions (Mauritius)
Limited
REGISTERED OFFICE: Les Jamalacs Building, Vieux Conseil Street,
Port Louis, Mauritius
AUTHORISED CAPITAL: 100,000 ordinary shares of US$1 each
ISSUED AND OUTSTANDING
CAPITAL: 29,433 ordinary shares of US$1 each
DIRECTORS: Xxxxxx Xxxxx, Xxxx Xxxxx Xxxxxxxx, Xxx
Xxxxxxxxx, Xxx Xxxxxx, Xxxx Land
SECRETARY: Xxxxx Xxxxxxxx c/o Multiconsult Limited
ACCOUNT REFERENCE DATE: 31st December
Part II - The Subsidiary
NAME: Complete Business Solutions (India) Private
Limited
REGISTERED OFFICE: Xxxx 00, Xxxxx 0, XXX Xxxxxxxxx, Xxxxxx
Export Processing Xxxx, Xxxxxxxx, Xxxxxx
000 000, Xxxxx
AUTHORISED CAPITAL: 1,000,000 equity shares of Rs 100 each
ISSUED CAPITAL: 410,000 equity shares of Rs 100 each
DIRECTORS: B. Xxxxxxxxxxxx Xxx, X. Xxxxxxxxxx, Dr,
X.X. Xxxxxxxxx, Xxx Xxxxxxxxx, Xxx Xxxxxx
SECRETARY: P. Gunasayar
ACCOUNT REFERENCE DATE: 31st December
AUDITORS: Xxxxxx Xxxxxxxx & Co.
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SIGNED by Xxxx Xxxxxx ) Xxxx Xxxxxx
and duly )
authorised for and on behalf of )
JF ELECTRA (MAURITIUS) LIMITED )
in the presence of :- )
Xxxxxx Xxxxx
XXXXXX XXXXX
00/X Xxxxxxx Xxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxx Xxxx
SIGNED by Xxx Xxxxxx ) Xxx Xxxxxx
and XXX XXXXXXXXX duly )
authorised for and on behalf of ) Xxx Xxxxxxxxx
COMPLETE BUSINESS SOLUTIONS INC. )
in the presence of :- )
Xxxxxx Xxxxxx XX
XXXXXX XXXXXX XX
000 X. XXXXXXXXX XXXXX 000
XXXXXXX, XXXXXXXX 00000, XXX
SIGNED by Xxx Xxxxxx ) Xxx Xxxxxx
and XXX XXXXXXXXX duly )
authorised for and on behalf of ) Xxx Xxxxxxxxx
CBS COMPLETE BUSINESS SOLUTIONS )
(MAURITIUS) LIMITED in the presence of :- )
Xxxxxx Xxxxxx XX
XXXXXX XXXXXX XX
000 X. XXXXXXXXX XXXXX 000
XXXXXXX, XXXXXXXX 00000, XXX
SIGNED by XXX XXXXXXXXX ) Xxx Xxxxxxxxx
in the presence of :- )
Xxxxxx Xxxxxx XX
XXXXXX XXXXXX XX
000 X. XXXXXXXXX XXXXX 000
XXXXXXX, XXXXXXXX 00000, XXX
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