SHARE SUBSCRIPTION AGREEMENT BETWEEN MILLENNIUM INDIA ACQUISITION COMPANY INC AND SAM GLOBAL SECURITIES LIMITED AND PROMOTERS OF SAM GLOBAL SECURITIES LIMITED Dated ___ day of May, 2007 3/F, Mahatma Gandhi Memorial Building, 7, Netaji Subhash Road,...
EXHIBIT
10.2a
BETWEEN
MILLENNIUM
INDIA ACQUISITION COMPANY INC
AND
XXX
GLOBAL SECURITIES LIMITED
AND
PROMOTERS
OF XXX GLOBAL SECURITIES LIMITED
Dated
___ day of May, 2007
3/F,
Xxxxxxx Xxxxxx Memorial Building,
7,
Netaji Subhash Road, Charni Road (West),
Mumbai
400 002
Tel:
(x00) 00 0000 0000
Fax:
(x00) 00 0000 0000
E-mail:
xxxxxx@xxxxxx.xxx
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Strictly
Private & Confidential
1.
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DEFINITIONS
AND INTERPRETATION
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3
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2.
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SUBSCRIPTION
ON COMPLETION DATE
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8
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3.
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CONDITIONS
PRECEDENT
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9
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4.
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COMPLETION
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10
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5.
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CONDITIONS
SUBSEQUENT TO COMPLETION AND COVENANTS
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12
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6.
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REPRESENTATIONS
AND WARRANTIES
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13
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7.
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INDEMNITY
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14
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8.
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CO-OPERATION
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16
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9.
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RESOLUTION
OF DISPUTES
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17
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10.
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GOVERNING
LAW
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17
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11.
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NOTICES
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17
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12.
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TERM
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18
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13.
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CONFIDENTIALITY
AND PUBLICITY
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19
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14.
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AUTHORIZED
PERSON
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19
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15.
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TERMINATION
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20
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16.
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MISCELLANEOUS
PROVISIONS
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22
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SCHEDULE
1 - PROMOTER AND PROMOTER GROUP
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25
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SCHEDULE
2 - COMPANY AND XXX GROUP COMPANIES
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26
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SCHEDULE
3 - POST COMPLETION SHAREHOLDING STRUCTURE
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27
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SCHEDULE
4 - CONDITIONS PRECEDENT
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29
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SCHEDULE
5 - RESTRICTED ACTIONS
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32
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SCHEDULE
6 - CONDITION SUBSEQUENT
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34
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SCHEDULE
7 - REPRESENTATIONS AND WARRANTIES
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35
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SCHEDULE
8 - PRE-COMPLETION SHAREHOLDING OF XXX GROUP COMPANIES
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52
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SCHEDULE
9 - LIST OF REGULATORY APPROVALS
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54
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SCHEDULE
10 - LIST OF CLOSING DELIVERABLES
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55
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ANNEXURE
1 - FORM OF SHAREHOLDERS AGREEMENT
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56
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ANNEXURE
2 - FORM OF NO OBJECTION LETTER
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57
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ANNEXURE
3 - DISCLOSURE SCHEDULE
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59
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ANNEXURE
4 - INVESTOR DISCLOSURE SCHEDULE
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60
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Strictly
Private & Confidential
1
THIS
SHARE SUBSCRIPTION AGREEMENT (this “Agreement”) is made
as on this ______ day of May, 2007.
BETWEEN:
(1)
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MILLENNIUM
INDIA ACQUISITION COMPANY INC. a company organised under the laws
of the State of Delaware, United States of America and having its
office
address at 000 Xxxx, 00xx Xxxxxx, xxxxx 00X, Xxx Xxxx, XX 00000,
XXX
(hereinafter referred to as “Investor”, which expression
shall, unless it be repugnant to the context or meaning thereof,
be deemed
to mean and include its successors and assigns);
AND
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(2)
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XXX
GLOBAL SECURITIES LIMITED, a company incorporated under the
Indian Companies Act, 1956, having its registered office 00, Xxxxxx
Xxxxxxx Xxxx, Xxxxx Xxxx, Xxx Xxxxx(xxxxxxxxxxx referred to as
“Company” which expression shall, unless repugnant to the
context or meaning thereof, be deemed to mean and include its
successors); AND
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(3)
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MR.
XXXX XXXX (“Promoter No. 1”), son of late Xx.
Xxxxxxxx Xxxx, Indian inhabitant, residing at X-000, Xxxxxxxxx Xxxxx,
Xxxxx - 000000; AND
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(4)
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SMC
GLOBAL SECURITIES LIMITED (“Promoter No.
2”), a company incorporated under the Indian
Companies Act, 1956, having its registered office 00, Xxxxxx Xxxxxxx
Xxxx,
Xxxxx Xxxx, Xxx Xxxxx; AND
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Strictly
Private & Confidential
2
(5)
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SMC
SHARE BROKERS LIMITED (“Promoter No.
3”), a company incorporated under the Indian
Companies Act, 1956, having its registered office at 00, Xxxxxx Xxxxxxx
Xxxx, Xxxxx Xxxx, Xxx Xxxxx; AND
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(6)
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Person
and entities listed at Schedule 1 (“Promoter
Group”) represented jointly by Mr. S.C. Aggarwal and Xx. X. X.
Xxxxx.
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Promoter
No.1, Promoter No.2and Promoter No.3 are collectively referred to as
“Promoters”.
W
H E R E A S:
A.
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The
Company is in the business of dealing in security market as stock
broker
and is providing depository services as a depository participant.
The
Company through XXX Group Companies (defined below) is engaged in
the business of investment and merchant banking as more specifically
defined in Schedule 2 of this
Agreement;
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B.
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On
the request of the Company and the Promoters, the Investor proposes
to
invest in the Company in accordance with the terms and subject to
the
conditions of this Agreement;
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C.
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The
subscription to the Subscription Shares (defined below) by the
Investor shall be in accordance with the terms and subject to the
conditions of this Agreement and the number of Subscription Shares
(defined below) shall be such, that post subscription and
acquisition of Subscription Shares of the Company, the Investor shall
be
the direct, legal and beneficial owner of 14.90% of the total issued
and
paid up equity share capital of the Company on a fully diluted basis
and
indirect proportionate shareholder in the XXX Group Companies as
contemplated in Schedule
3;
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D.
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The
Parties hereto wish to record in the manner herein mentioned the
terms and
conditions on which the Investor shall subscribe to and acquire the
Subscription Shares of the Company.
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NOW
THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED
HEREIN AND OTHER GOOD AND VALUABLE CONSIDERATION THE ADEQUACY OF WHICH IS HEREBY
ACKNOWLEDGED, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AND THIS
AGREEMENT WITNESSETH AS UNDER:
1.
|
DEFINITIONS
AND INTERPRETATION
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1.1.
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Definitions:
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In
this
Agreement, the following terms, to the extent not inconsistent with the context
thereof or otherwise defined herein, shall have the following meanings assigned
to them herein below:
i.
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‘Act’
shall mean the Indian Companies Act,
1956.
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ii.
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‘Affiliate’
in relation to the Investor, being a corporate entity, means any
entity,
which is a subsidiary (with Investor, directly or indirectly, holding
50.1% or more shares) of the Investor including the Investor’s Dubai
Subsidiary.
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iii.
|
‘Agreement’
shall mean this Share Subscription Agreement together with the schedules,
Disclosure Schedule, and annexure thereto as from time to time made,
amended, supplemented or replaced or otherwise modified in accordance
with
the terms of this Agreement.
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Strictly
Private & Confidential
3
iv.
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‘Alternative
Transaction’ shall mean (a) (i) any direct or indirect acquisition or
purchase of any Securities of the Company or XXX Group Companies
(including but not limited to, a subscription for new Securities
or
purchase of existing Securities, unless otherwise contemplated in
this
Agreement) or any tender offer or exchange offer or irrevocable
contribution in favor of any Person, (ii) any direct or indirect
acquisition or purchase of any material assets of the Company or
XXX Group
Companies (unless otherwise agreed in writing by the Investor), other
than
in the Ordinary Course of Business; or (b) any merger, consolidation,
business combination, sale of a material portion of the assets,
recapitalization, liquidation, dissolution, incurrence of material
indebtedness or similar transaction involving the Company or XXX
Group
Companies; or (c) any other transaction the consummation of which
would
prevent or materially delay the transactions contemplated
hereby.
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v.
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‘Applicable
Law’ shall mean any applicable constitution, treaty, statute,
rule, regulation, ordinance, order, directive, code, judgment, decree,
injunction, or any interpretation, determination, award, permit,
license,
authorization, directive requirement, ruling or decision of, agreement
with, or by a Government Authority.
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vi.
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‘Authorised
Dealer’ shall mean ICICI Bank Limited or such other bank as is
notified to the Investor by the
Company.
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vii.
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‘Bankruptcy
Matter’ shall mean any matter in connection with any liquidation;
dissolution; reorganization; winding up; readjustment of debts;
insolvency; bankruptcy; suspension of payments, inability to repay
debts
as such debts become due within the meaning of Section 434 of the
Companies Act; general assignment for the benefit of creditors;
administration or re-organization; action to appoint or application
for a
consent to the appointment of, or the taking of possession by, a
receiver,
custodian, trustee, liquidator, administrator, operating agency or
similar
officer for all or any part of a Person’s assets or revenues; a case of
Proceeding under any applicable suspension of payments or bankruptcy
laws
or regulations; or a petition seeking to take advantage of any Applicable
Laws providing for relief of
debtors.
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viii.
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‘Business’
means the business carried on by the Company including the business
carried on by each of the XXX Group
Companies.
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ix.
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‘Claim’
includes any notice, demand, assessment, letter or other document
issued
or action taken by any tax, fiscal or other statutory or governmental
authority, body or official whatsoever (whether of India or elsewhere
in
the world) whereby the Company is or may be placed or sought to be
placed
under a liability to make a payment or deprived of any relief, allowance,
credit or repayment otherwise
available.
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x.
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‘Completion’
shall mean completion of the events specified in Clause 4.3 below
and the
Investor being registered as a member in respect of the Subscription
Shares in the register of members of
Company.
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xi.
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‘Completion
Date’ shall mean date mentioned in Clause 4.3
hereof.
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xii.
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‘Conditions
Precedent’ shall mean the conditions precedent mentioned in Clause 3
of this Agreement.
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xiii.
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‘Derivative
Securities’ of a Person shall mean any subscriptions, options,
debentures, bonds, conversion rights, warrants, phantom stock rights
or
similar agreements, Securities or commitments of any kind obligating
such
Person to issue, grant, deliver or sell or cause to be issued, granted,
delivered or sold (i) any shares or Securities of such Person; (ii)
any
Securities convertible into or exchangeable for any shares of such
Person or (iii) any rights to participate in the equity of such
Person or to participate in or direct the election of any directors
or
officers of such Person.
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Strictly
Private & Confidential
4
xiv.
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‘Effective
Date’ shall mean the date of signing this Agreement by the
Parties.
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xv.
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‘Encumbrances’
shall mean any encumbrance, lien, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention or
non-disposal agreement or other restriction of a similar kind, and
all
other easements, encroachments and title defects of every type and
nature,
or any conditional sale contract, title, retention contract, or other
contract to give or to refrain from giving any of the
foregoing.
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xvi.
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‘Environment
Law’ shall mean any Applicable Law pertaining to land use, air, soil,
surface water groundwater (including the protection, cleanup, removal,
remediation or damage thereof), public of employee health or safety
or
other environmental matter and any Applicable
Law.
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xvii.
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‘Fully
Diluted’ shall mean the total of all classes and series of Company or
XXX Group Companies shares outstanding combined with all Derivative
Securities (including both issued and un-issued), approved stock
incentive
plans for the employees and convertible Securities of all kinds and
effect
of any anti-dilution protection regarding previous financings, all
on an
“as if converted” basis.
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xviii.
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‘Governmental
Authority’ shall mean any administrative agency, commission, court or
other governmental or regulatory authority or instrumentality, whether
central, state, local or municipal or judicial, quasi-judicial or
administrative forum, including but not limited to, ministries and
departments of the Government of India and Tax
authorities.
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xix.
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‘Group
Companies’ shall mean (i) SMC Comtrade Limited, (ii) DSP Insurance Brokers
Private Limited, (iii) Nexgen Capitals Limited, (iv) SMC Comex
International DMCC, (v) Abhichaya Investment Private Limited, (vi)
Xxxxx
Investment Private Limited, (vii) SMC Global Securities
Limited.
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xx.
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‘INR’
or ‘Rs’ or ‘Rupees’ shall mean the lawful currency of
India.
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xxi.
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‘Indian
GAAP’ shall mean the generally accepted accounting principles
recommended by the Institute of Chartered Accountants of India and
where
there are no such principles recommended, the accounting principles
accepted in India and consistently applied from period to period
and
throughout any period in accordance with past practices of Company
and XXX
Group Companies.
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xxii.
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‘Investor’s
Dubai Subsidiary’ shall mean the company proposed to be formed
under the laws of the United Arab Emirates and Controlled by the
Investor.
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xxiii.
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‘Knowledge’
as used with respect to Company or XXX Group Companies shall mean
matters
as to which any of Promoters or any director, officer manager or
employee
of Company or XXX Group Companies has knowledge or matters which
are not
actually known but could have been known by such Persons based upon
reasonable inquiry in the course of business or in connection with
the
verification of the representations and warranties under the
Agreement.
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xxiv.
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‘Liabilities’
shall mean any and all current liabilities, obligations, payables,
forms
of taxation whether of India or elsewhere in the world, past, present
and
deferred (including, without limitation, income tax, stamp duty,
customs
and other import or export duties) and all other statutory or governmental
impositions, duties and levies and all penalties, charges, costs
and
interest relating to any Claim.
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Strictly
Private & Confidential
5
xxv.
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“Licenses”
shall mean all approvals, licenses, permits and other authorizations
issued by central, state or local Government Authorities and required
for
the Business of the Company or XXX Group
Companies.
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xxvi.
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‘Material
Adverse Effect’ shall mean the occurrence or reasonably likely
occurrence of any event, change, circumstance or effect that individually
or in the aggregate (taking into account all other such events, changes,
circumstances or effects), is or is reasonably likely to (a) have
a
material adverse effect to the financial conditions, properties,
assets
(including intangible assets), liabilities, business, operations,
results
of operations or prospects of Company or XXX Group Companies, or
(b)
materially hinder or delay Company’s or XXX Group Companies ability to
consummate the transactions contemplated herein, or (C) materially
hinder
Company’s or XXX Group Companies ability to operate its business
substantially in the manner previously conducted following the
Completion.
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xxvii.
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‘Ordinary
Course of Business’ shall mean the ordinary course of business
consistent with past custom and practice (including with respect
to
quantity and frequency), but only to the extent consistent with Applicable
Law and the custom of entities engaged in the same business as the
existing business of the Company or XXX Group Companies, as the case
may
be.
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xxviii.
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‘Party’
shall mean the Investor, the Promoters or the Company referred to
individually and ‘Parties’ shall mean the Investor, the Promoters
and the Company referred to
collectively.
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xxix.
|
‘Person’
shall include an individual, an association, a corporation, a partnership,
a joint venture, a trust, an unincorporated organisation, a joint
stock
company or other entity or organisation, including a government or
political subdivision, or an agency or instrumentality thereof and/or
any
other legal entity.
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xxx.
|
Proprietary
Rights’ shall mean (i) Indian and foreign patents, patent
applications, patent disclosures and improvements thereto;
(ii) Indian and foreign trademarks, service marks, domain names,
trade dress, logos, designs, slogans, trade names and corporate names,
the
goodwill associated therewith, and the registrations and applications
for
registration thereof; (iii) United States and foreign copyrights, and
the registrations and applications for registration thereof;
(iv) computer software (including source and object code) and related
specifications, flow charts and other documentation; and
(v) confidential information, trade secrets, inventions (whether
patentable or not), business information, customer lists, know-how,
technology; and all documentation relating to any of the
foregoing.
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xxxi.
|
‘Proceeding’
shall mean any action, suit, charge, hearing, claim, legal quasi-judicial,
administrative, regulatory, arbitration or other alternative dispute
resolution proceeding or
investigation.
|
xxxii.
|
‘Representations
and Warranties’ shall mean the representations, warranties covenants
and undertakings given by the Company and/or the Promoters in this
Agreement for themselves and for XXX Group
Companies.
|
xxxiii.
|
‘Securities’
shall have the meaning provided to the term under Section 2(h) of
the
Securities Contract (Regulation) Act,
1956.
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Strictly
Private & Confidential
6
xxxiv.
|
‘Shares’
or ‘Equity Shares’ shall mean the equity shares of the
Company.
|
xxxv.
|
‘Shareholder’
or ‘Shareholders’ shall mean any Person who holds any
Shares.
|
xxxvi.
|
‘Shareholders
Agreement’ shall mean the Shareholders Agreement to be executed
between the Parties hereto in a form and manner annexed hereto as
Annexure 1.
|
xxxvii.
|
‘XXX
Group Companies’ shall mean (i) Nexgen Capitals Limited, (ii)
Abhichaya Investment Private Limited, and (iii) Xxxxx Investment
Private
Limited more specifically defined in Schedule
2.
|
xxxviii.
|
‘Subscription
Shares’ shall mean 1,750,891 Equity Shares of the Company to be
subscribed to and acquired by the Investor at a total consideration
of
INR 262,090,893.79 constituting 14.90% of the Fully Diluted
issued and paid-up share capital of the Company post Completion
representing more specifically the Fully Diluted shareholding as
set out
in Schedule 3.
|
xxxix.
|
‘Tax’
and, collectively ‘Taxes’ shall mean any and all foreign, central,
state, municipal and local (or equivalent) taxes of any country,
assessments and other governmental charges, customs duties, duties,
impositions and liabilities, including taxes based upon or measured
by
gross receipts, income, profits sales, service, use and occupation,
and
value added, ad valorem, stamp duty, stamp transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes,
together with all interest, penalties and additions imposed with
respect
to such amounts and any obligations under any agreements or arrangements
with any other Person with respect to such amounts and including
any
liability for Taxes of a predecessor
entity.
|
xl.
|
‘Tax
Return’ shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto and including any amendment
thereof.
|
xli.
|
‘US
GAAP’ shall mean the generally accepted accounting principles in the
United States.
|
xlii.
|
‘Warrantors’
shall mean the Company and the Promoters for themselves and on behalf
of
XXX Group Companies and ‘Warrantor’ means any one of
them.
|
1.2.
|
Other
Defined Terms:
|
i.
|
‘Business
Days’ means the days on which the banks are open for business in New
Delhi.
|
ii.
|
‘Dispute’
shall have the meaning as ascribed to it in Clause 9.1 of this
Agreement.
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iii.
|
‘Losses’
shall have the meaning as ascribed to it in Clause 7.1 of this
Agreement.
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1.3.
|
Interpretation:
|
i.
|
The
terms referred to in this Agreement shall, unless defined otherwise
or
inconsistent with the context or meaning thereof, bear the meaning
ascribed to it under the relevant
statute/legislation.
|
ii.
|
All
references in this Agreement to statutory provisions shall be construed
as
meaning and including references
to:
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a.
|
Any
statutory modification, consolidation or re-enactment (whether before
or
after the date of this Agreement) for the time being in
force;
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Strictly
Private & Confidential
7
b.
|
All
statutory instruments or orders made pursuant to a statutory provision;
and
|
c.
|
Any
statutory provisions of which these statutory provisions are a
consolidation, re-enactment or
modification.
|
d.
|
Words
denoting the singular shall include the plural and words denoting
any
gender shall include all genders.
|
e.
|
Headings
to clauses, sub-clauses and paragraphs are for information only and
shall
not form part of the operative provisions of this Agreement or the
Schedules and shall be ignored in construing the
same.
|
f.
|
References
to recitals, clauses or schedules are, unless the context otherwise
requires, are references to recitals, to clauses of or schedules
to this
Agreement.
|
g.
|
Reference
to days, months and years are to Gregorian days, months and calendar
years
respectively.
|
h.
|
Any
reference to the words “hereof,” “herein”, “hereto” and “hereunder” and
words of similar import when used in this Agreement shall refer to
clauses
or annexures of this Agreement as specified
therein.
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i.
|
Any
expression importing a natural person includes any company, trust,
partnership, joint venture, association, body corporate or governmental
agency.
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j.
|
Where
a word or phrase is given a defined meaning, another part of speech
or
other grammatical form in respect of that word or phrase has a
corresponding meaning
|
k.
|
Reference
to “Investor” shall unless repugnant to the context shall for the
purpose of this Agreement, mean and include the Affiliates of the
Investor. The rights under this Agreement shall be exercised by the
Affiliate holding 7.451% of the issued and paid-up share capital
of the
Company at Completion. For computing the paid-up equity share capital
of
the Company, the bonus shares shall be
included.
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l.
|
The
words “include” and “including” shall be construed without
limitation.
|
2.
|
SUBSCRIPTION
ON COMPLETION DATE
|
2.1.
|
Subject
to the terms and conditions set forth in this Agreement, and relying
on
the Representations and Warranties and the indemnities given by the
Promoters and the Company under this Agreement, the Investor agrees on the
Completion Date to subscribe for and the Company agrees to issue
and allot
to the Investor the Subscription Shares of face value of INR10/-
each at
issue price of INR 149.69/- each aggregating to an amount of INR
262,090,873.79 such that post acquisition of Subscription Shares
of the
Company, the Investor is the legal and beneficial owner of
14.90% of the total issued and paid up equity share
capital of the Company and indirect shareholder of XXX Group Companies
as
set out in more detail at Schedule 3. The consideration
to be paid for Subscription Shares shall be referred to as the Investment
Amount (“Investment
Amount”).
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2.2.
|
The
Subscription Shares shall be acquired by Investor on Completion Date
free
from all Encumbrances and together with all rights, title and interests
now or hereafter attaching thereto. The Investment Amount shall be
fixed
and firm and shall not be subject to escalation unless mutually agreed
upon in writing between the Parties
hereto.
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Strictly
Private & Confidential
8
2.3.
|
All
payments under this Agreement shall be paid in Indian Rupees and
shall be
by way of pay order or banker’s draft drawn on scheduled bank in India or
by way of telegraphic transfer to such account as may be notified
to the
Investor.
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2.4.
|
The
Subscription Shares shall rank pari pasu with the existing issued
Equity Shares of the Company with respect to all stock activities
including but not limited to voting rights, dividends and rights
issuance.
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3.
|
CONDITIONS
PRECEDENT
|
3.1.
|
The
Parties agree that the obligation of the Investor to acquire the
Subscription Shares, is conditional upon the fulfillment of the conditions
stipulated in Schedule 4 hereto to the satisfaction of
the Investor, unless specifically waived in writing by the Investor
and
the Representations and Warranties continue to be true and correct
on the
Completion Date.
|
3.2.
|
If
the Conditions Precedent mentioned in Schedule 4 are not
fulfilled or satisfied or waived in writing by the Investor on or
before
165 days from the Effective Date or such other date as may be mutually
agreed between the Parties in writing, the Investor shall have the
right
to terminate this Agreement
forthwith.
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3.3.
|
The
Promoters and the Company shall co-operate and provide all information
and
assistance to the Investor and/or its advisors and authorised
representatives as reasonably requested by the Investor to enable
them to
verify the records/documents of the Company and XXX Group Companies,
including as may be required for the purposes of the proxy statement
filed
by the Investor in accordance with the requirements of the laws of
United
States.
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3.4.
|
Conduct
Prior to Completion: During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement
or
the Completion, the Promoters and the Company agree (except to the
extent
expressly contemplated by this Agreement or as consented to in writing
by
Investor) that Company and XXX Group Companies shall and Promoters
shall
cause the Company and XXX Group Companies to and shall ensure that
each of
the Company and XXX Group Companies shall, (i) carry on its business
in
the Ordinary Course of Business; (ii) pay its debts and taxes when
due,
subject to good faith disputes over such debts or Taxes, (iii) pay
or
perform other obligations when due, subject to good faith disputes;
and
(iv) use all reasonable efforts to preserve intact its present business
organizations, and preserve its relationship with clients, lessors,
licensors and others having business dealings with it, to the end
that its
goodwill and ongoing ability to provide services shall be unimpaired
at
the Completion. The Promoters agree to promptly notify the Investor
of any
event or occurrence not in the Ordinary Course of Business, and of
any
event which, in the opinion of the Company and/or the Promoters could
reasonably be expected to have a Material Adverse Effect. Without
limiting
the foregoing, except as expressly contemplated by this Agreement,
the
Company shall not and the Promoters shall cause the Company and XXX
Group
Companies not to and shall ensure that Company and XXX Group Companies
do
not engage in any of the actions set out at Schedule 5,
without the prior written consent of Investor which may be withheld
in its
sole discretion.
|
3.5.
|
No
Solicitation on Promoters, Company and XXX Group
Companies.
|
i.
|
From
and after the date of this Agreement until the earlier of the Completion
or the termination of this Agreement, the Company, XXX Group Companies
and
each of the Promoters shall not and the Promoters shall ensure that
the
Company and XXX Group Companies shall not directly or indirectly
through
any officer, director, employee, representative or agent of the Promoters
or the Company or XXX Group Companies or otherwise, (i) solicit,
initiate,
or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to an Alternative Transaction; (ii)
engage
or participate in negotiations or discussions concerning, or provide
any
information to any Person with respect to, or afford any access to
the
properties, books or records of Company or XXX Group Companies, or
take
any other action to facilitate any inquiries or the making of any
proposal
that may reasonably be expected to lead to an Alternative Transaction;
or
(iii) authorize, agree into, accept, approve or recommend any agreement
or
understanding with respect to any Alternative Transaction. The Promoters,
the Company and XXX Group Companies have terminated all and any pending
discussions or negotiations relating to any Alternative Transaction
and
represent and warrant that they had the legal right to terminate
such
discussions without payment of any fee or other
penalty.
|
Strictly
Private & Confidential
9
ii.
|
The
Company, the XXX Group Companies and the Promoters shall immediately
notify the Investor (and no later than 24 hours) after (a) receipt
by the
Promoters or the Company or the XXX Group Companies (or its advisors)
of
Knowledge of any Alternative Transaction, or (b) if any discussions
are
sought to be initiated with regard to any Alternative Transaction,
or (c)
receipt of any request for information or for access to the properties,
books or records of Company or XXX Group Companies by any Person
that
intends to enter into or has entered into an Alternative Transaction.
Such
notice shall be made orally and in writing and shall communicate
to
Investor the identity of the Person making such request or inquiry
and any
other terms of such request or inquiry and any other terms of such
request
or inquiry.
|
iii.
|
It
is acknowledged and agreed between the Parties that the Subscription
Shares are not an ordinary article of commerce and are of special
value of
interest to the Investor and any breach or violation of the provisions
of
this Clause 3.5 shall cause to Investor irreparable harm and damages
for
which payment in damages shall not constitute adequate relief, and
that
therefore, without prejudice to any and all other rights and remedies
the
Investor may have, the Investor shall be entitled without proof of
special
damage to the remedies of injunction, specific performance and other
equitable relief for any threatened or actual breach of the provisions
of
this Clause 3.5. Provided, however, that any sum payable to the Investor
under this section as liquidated damages, compensation or costs shall
not
exceed US$ 2 million.
|
3.6.
|
No
Solicitation by Investor. From and after the date of this Agreement
until the earlier of the Completion or the termination of this Agreement
the Investor shall not directly or indirectly solicit, initiate,
or
encourage any inquiries or proposals that constitute, or could reasonably
be expected to lead to any acquisition or subscription or purchase
of
Securities of any company in India engaged in similar line of Business.
Any breach of this clause 3.6 by the Investor shall cause irreparable
harm
and damages to the Promoters and the Company for which payment in
damages
shall not constitute adequate relief and therefore without prejudice
to
any and other rights available to the Company and the Promoters,
the
Company and the Promoters shall be entitled jointly without proof
of
special damage to the remedies of injunction, specific performance
and
other equitable relief for any threatened or actual breach of the
provisions of this Clause 3.6
provided that the Promoters and the Company
can jointly claim actual liquidated damages, compensation
or costs incurred to the extent of US$ 2
million.
|
4.
|
COMPLETION
|
4.1.
|
The
Promoters and the Company shall notify the Investor of the fulfillment
of
the Company Conditions Precedent and provide to the Investor, all
the
requisite documents evidencing fulfillment of such Conditions Precedent
applicable to the Promoters and/or the Company and/or XXX Group Companies.
The Investor through its advisors/counsel shall then satisfy itself
as to
the fulfillment of the Company Conditions Precedent. The Investor
shall
notify the Promoters and the Company within 7 days from the date of
receipt of all the documents/information from the Promoters of its
satisfaction or dissatisfaction with the same or of waiving the
fulfillment of any of the Company Conditions Precedent applicable
to the
Promoters and/or the Company and/or the XXX Group
Companies.
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Strictly
Private & Confidential
10
4.2.
|
In
case the Investor notifies the Promoters or the Company of its
dissatisfaction under Clause 4.1 above, the Promoters shall fulfill
the
unfulfilled Conditions Precedent on receipt of such notice and shall
provide to the Investor, all requisite documents evidencing fulfillment
of
that Condition Precedent. The procedure referred to in Clause 4.1
above
shall be followed thereafter until the fulfillment of all Company
Conditions Precedent applicable to the Promoters and/or Company and/or
XXX
Group Companies, to the satisfaction of the
Investor.
|
4.3.
|
Upon
fulfillment of all the Conditions Precedents to the satisfaction
of the
Investor or if specifically waived in writing by the Investor, the
Parties
shall proceed to complete the subscription and purchase of Subscription
Shares to the Investor (‘Completion’) in the manner provided in
this Clause 4 and shall agree upon a date on which the Completion
shall
take place. The date so agreed between Investor, the Company and
the
Promoters shall hereinafter be referred to as the
‘Completion Date’, which in any case shall not be
later than 165 days from the Effective Date. This date may however
be
extended upon mutual agreement between the
Parties.
|
4.4.
|
The
Completion shall take place at the time and place mutually agreed
between
the Parties and on simultaneous completion of the following actions
and
receipt of the Investment Amount as indicated in Clause
4.5:
|
i.
|
The
Promoters shall convene meeting of the Board of Directors of the
Company,
wherein the Board shall pass the following
resolutions:
|
ii.
|
Approve
issue and allotment of Subscription
Shares.
|
iii.
|
Appoint
one nominee of Investor as
director.
|
iv.
|
Enter
the name of the Investor as the legal and beneficial owner of the
Subscription Shares free of all Encumbrances, in the register of
members
of the Company.
|
v.
|
Notify/intimate
regulatory authorities as required under Applicable
law.
|
4.5.
|
The
Promoters shall convene meeting of the Board of Directors and/or
shareholders as may be required under Applicable Law for the XXX
Group
Companies, wherein the Board of Directors and the shareholders of
respective companies shall pass the following
resolutions:
|
i.
|
Noting
the indirect change in the shareholding, pursuant to investments
made by
Investor in the Company and reflecting the proposed shareholding
as
contemplated under Schedule 3.
|
ii.
|
Pass
necessary board resolutions, shareholders resolution and take such
actions
as may be necessary to adopt the revised Articles of Association
as set
out in Schedule 4 of the Shareholders
Agreement.
|
iii.
|
Notify/intimate
regulatory authorities as required under Applicable
law.
|
4.6.
|
The
Promoters shall deliver and cause the Company and XXX Group Companies
to
deliver, wherever required, the following documents to the
Investor:
|
i.
|
A
certificate signed by the Promoters and the Company to the effect
that the
Representations and Warranties contained in this Agreement, continue
to be
true and correct as on the Completion Date with the same effect as
though
such Representations and Warranties had been made as of such
date;
|
Strictly
Private & Confidential
11
ii.
|
Original
share certificates evidencing the Subscription Shares or credit of
the
Subscription Shares in the depository account provided by the Investor
to
the Company; and
|
iii.
|
Other
documents as specifically identified as Schedule
10.
|
4.7.
|
Simultaneously
upon completion of all the steps contemplated in Clause 4.4 above
(but
prior to the issue of share certificate or credit of the Subscription
Shares in the depository account provided by the Investor to the
Company),
the Investor shall remit the Investment Amount, for credit to the
account
of the Company as intimated to the Investor in accordance with Clause
2.3.
|
4.8.
|
Immediately
after subscription and purchase of Subscription Shares by the Investor,
the shareholding pattern of the Company and the XXX Group Companies
shall
be as set out in Schedule 3.
|
4.9.
|
The
Parties agree to take all measures that may be required to ensure
to the
extent possible, that all the events contemplated in this Clause
4 on the
Completion Date are completed on the same day unless otherwise
specifically agreed in writing by the
Parties.
|
4.10.
|
Notwithstanding
the provisions of Clause 4.7, all proceedings to be taken and all
documents to be executed and delivered by the Parties at Completion
shall
be deemed to have been taken and executed simultaneously to the extent
possible and no proceedings shall be deemed to have been taken nor
documents executed or delivered until all have been taken, executed
and
delivered.
|
5.
|
CONDITIONS
SUBSEQUENT TO COMPLETION AND
COVENANTS
|
5.1.
|
The
Investor’s obligation to subscribe for and purchase of Subscription Shares
at the Completion is subject to the fulfillment after the Completion
of
each of the conditions as set out in Schedule 6, unless
waived in writing by such Investor at the
Completion.
|
5.2.
|
No
Guarantee/Pledge. The Investor shall not at any point in time be
required to pledge their Subscription Shares or provide any guarantee
or
other support to any third party, including without limitation lenders
of
Company and/or XXX Group Companies.
|
5.3.
|
Ethical
Business Practices. The Company and XXX Group Companies shall and the
Promoters shall ensure that the Company and XXX Group Companies shall
ensure that the business practices of Company and XXX Group Companies
are
ethical and in accordance with Applicable
Laws.
|
5.4.
|
Variances
to annual operating budget & business plan. Any proposed variance
to the annual operating budget, business plan or estimations in relation
to capital expenditure or indebtedness (including giving of security
for
or guaranteeing debts but excluding (i) loan taken against the investments
as appearing in the stock-in trade and investments in third party
securities and given as security to exchanges/banks/institution by
Company
on behalf of Group Companies or Group Companies on
behalf of the Company, and (ii) any guarantees given to exchanges
on
behalf of the Company or any Group Companies or vive versa) beyond
25% of
what is stated in the annual operating budget, business plan or
estimations along with reasons for such variance shall be brought
to the
immediate attention of the Board and shall not be implemented without
the
prior written consent of Investor.
|
Strictly
Private & Confidential
12
5.5.
|
Financial
and accounting records. The Company and XXX Group Companies shall
maintain true and accurate financial and accounting records of all
operations in accordance with Indian GAAP, and in accordance with
all
relevant Indian statutory and accounting standards and the policies
from
time to time adopted by the respective Board of Directors. The financial
statements and accounts of Company and XXX Group Companies shall
be
prepared in English and shall be audited on an annual
basis.
|
5.6.
|
Inspection
& Audit Rights of Investor. The Company and XXX Group Companies
shall and the Promoters shall ensure that the Company and XXX Group
Companies, on receiving a request from Investor provide as soon as
practicable to Investor copies of any documents, secretarial, accounting
or other records which are prepared and maintained by Company and
XXX
Group Companies as may be required by Investor. The Investor shall
have
full and complete access to the premises, records, accounts, documents
of
Company, XXX Group Companies and their subsidiaries with rights,
by itself
or through its authorised representatives, to inspect such accounts,
records and documents.
|
5.7.
|
Listing
of Subscription Shares. Company shall take necessary steps and the
Promoters shall ensure that the Company makes necessary applications
and
ensure that the Subscription Shares of the Investors are listed on
the
regional stock exchanges where the Equity Shares of the Company are
currently listed as soon as possible after
Completion.
|
5.8.
|
Investor
shareholding. Promoters and the Company shall ensure that on
completion of the proposed merger of the Company with SMC Global
Securities Limited, the Investor will continue to hold at least 14.90%
of
the post merger issued and paid-up share capital of SMC Global Securities
Limited.
|
5.9.
|
Listing.
The Company shall and the Promoters shall ensure that the Equity
Shares of
the Company are listed on the Bombay Stock Exchange Limited and/or
National Stock Exchange Limited within four (4) years from the date
of
Completion.
|
6.
|
REPRESENTATIONS
AND WARRANTIES
|
6.1.
|
True
and Accurate: The Warrantors represent, warrant and undertake to the
Investor, that each of the statements set out in this Clause and
Part 1 of
Schedule 7 hereof, as applicable to the Warrantors,
is now and will be true and accurate at the Completion Date. The
Warrantors acknowledge that the Investor, in entering into this Agreement,
is relying on such representations, warranties and undertakings and
shall
be entitled to treat the same as conditions of the
Agreement.
|
6.2.
|
Investor
Representation: The Investor hereby represents and warrants that
subject to the fulfillment of the Condition Precedent to this Agreement,
it has the corporate power and authority to execute, delivers and
perform
this Agreement and the transactions contemplated herein. The execution,
delivery and performance by the Investor of this Agreement has been
duly
authorized and approved by its board of directors. Investor additionally
makes the representations and warranties as set out in this Clause
and
Part 2 of Schedule 7, is true now and will be true
and accurate at the Completion
Date.
|
6.3.
|
Separate
and Independent: Each of the Representations and Warranties shall be
separate and independent and, save as expressly provided to the contrary,
shall not be limited by reference to or inference from any other
Representations and Warranty or any other term of this Agreement,
which is
not expressly referenced to the Representations and Warranty
concerned.
|
6.4.
|
Knowledge:
If any Representation or Warranty is qualified by Knowledge, then
it means
that the Representation or Warranty has been made to the Knowledge
of the
Warrantors, after the Warrantors have made and caused to be made
such due
and proper inquiries as may be required in respect of the relevant
matter
to obtain informed Knowledge.
|
Strictly
Private & Confidential
13
6.5.
|
Undertaking:
None of the Warrantors shall do, allow or procure any act or omission
before the Completion Date which would respectively constitute a
breach of
any of the Representations and Warranties if they were given at the
Completion Date, or which would make any of the Representations and
Warranties inaccurate or misleading if they were so
given.
|
6.6.
|
Notification
of breach: Each of the Warrantors hereby agree to disclose promptly to
the Investor in writing immediately upon becoming aware of the same,
any
matter, event or circumstance (including any omission to act) which
may
arise or become known to it after the date of this Agreement
which:
|
i.
|
would
render any of the Representations and Warranties to be
inaccurate;
|
ii.
|
in
the Knowledge of the Warrantors has, or is likely to have, a Material
Adverse Effect on the Company or XXX Group
Companies.
|
6.7.
|
Survival:
The Representations and Warranties provided in this Agreement shall
survive the Completion Date for a period of three (3)
years.
|
6.8.
|
Investor’s
Reliance. The Company and the Promoter hereby agree and acknowledge
that the Investor has agreed to subscribe to the Subscription Shares
inter alia relying upon the Representations and
Warranties.
|
7.
|
INDEMNITY
|
7.1.
|
Without
prejudice to any other right available to the Investor in law or
under
equity, the Company and the Promoters (“Indemnifying Party”) shall
jointly and severally indemnify, defend and hold harmless the Investor,
their Affiliates, directors, advisors, officers, employees and agents,
(collectively the “Investor Indemnified Party”), from and against
any and all direct and actual liabilities, damages, demands, Claims
including third-party claims (“Third-Party Claims”), actions,
judgments or causes of action, assessments, interest, fines, penalties,
and other costs or expenses (including, without limitation, amounts
paid
in settlement, court costs and all reasonable attorneys’ fees and out of
pocket expenses) (“Losses”) (excluding any indirect and remote
Third Party Claims or loss of profit or opportunities or such punitive
damages), directly or indirectly, based upon, arising out of, or
in
relation to or otherwise in respect
of:
|
i.
|
any
willful misrepresentation or false information in or any breach of
any
Representation and Warranty, covenant or agreement of the Promoters
or
Company contained in this Agreement or any document or other papers
delivered by any of them to the Investor (other than relating to
forward
looking statement and future projections or disclosed in the Disclosure
Schedule) in connection with or pursuant to this
Agreement;
|
ii.
|
any
liability arising out of non compliance of any obligation undertaken
by
the Company or the Promoters;
|
iii.
|
any
liabilities and obligations of whatever nature relating to any litigation,
Claim or governmental investigation pending or relating to the business
or
operations of the Promoters or the business of the Company or XXX
Group
Companies prior to the date of execution of this Agreement and as
on the
Completion Date and not disclosed in the Disclosure
Schedule;
|
Strictly
Private & Confidential
14
iv.
|
any
liability due to any non-compliance of any Applicable Law, rules
or
regulations prior to the date of execution of this Agreement and
as on the
Completion Date and not disclosed in the Disclosure
Schedule.
|
v.
|
Irrespective
of any disclosures made in the Disclosure Schedule, any Losses
arising out of the termination of license obtained by the
Company from Bombay Stock Exchange
Limited
|
7.2.
|
Limitation
of Liability. The Company’s and the Promoters’ obligation to indemnify
the Investor under Clause 7.1 and Clause 7.3 shall not exceed an
amount
equal to the Investment Amount. Provided further that, Promoters’
obligation to indemnify the Investor under Clause 7.1 and Clause
7.3 will
be limited to the extent of and for the amount of shortfall in the
Losses
that the Company has failed to pay to the Investors in the first
place. Further, for the purposes of this Clause 7.1 and Clause
7.3, the term Promoters shall only include:(i) Xx. X.X. Xxxxx, (ii)
Mr.
S.C. Aggarwal, (iii) Mr. Xxxx Xxxx, (iv) SMC Global Securities Limited,
(v) SMC Share Brokers Limited and no other
Promoters.
|
7.3.
|
Any
compensation or indemnity as referred to in Clause 7.1 above shall
be such
as to place the Investor in the same position as it would have been
in,
had there not been any such breach and as if the Representation and
Warranty under which Investor is to be indemnified, had been
correct.
|
7.4.
|
The
Investor shall not assume in any manner, any responsibility or liability
whatsoever in respect of the business of the Company, the XXX Group
Companies, or its operations or activities, to any Person, firm,
the
company, body corporate or other entity and any authority, whether
central, state, local, municipal or otherwise, in respect of any
time
prior to or after the Completion Date, nor assume any responsibility
or
liability for any non-compliance, of any Applicable Law, rules,
regulations, any monetary or other
liability.
|
7.5.
|
Procedure
for Indemnification:
|
i.
|
The
Investor Indemnified Party shall give notice to the Indemnifying
Part of
any Claim, specifying in reasonable detail the factual basis for
the
Claim, the amount thereof, estimated in good faith, all with reasonable
particularity and containing a reference to the provisions of this
Agreement in respect of which such Claim shall have
occurred.
|
ii.
|
With
respect to Claim solely between the parties hereto, following receipt
of
written notice from the Indemnified Party of a Claim, the Indemnifying
Party shall have fifteen (15) days to make such investigation of
the Claim
as the Indemnifying Party deems necessary or desirable, and the Investor
Indemnified Party agrees to make available to the Indemnifying Party
to
substantiate the Claim. If the Investor Indemnified Party and the
Indemnifying Party agree at or prior to the expiration of the fifteen
(15)
day period to the validity and amount of such Claim, or if the
Indemnifying Party fails to notify the Indemnified Party of any dispute
with respect to the validity or amount of such Claim within such
fifteen
(15) day period, the Indemnifying Party shall immediately pay to
the
Indemnified Party the full amount of the Claim, subject to the terms
hereof. If the Investor Indemnified Party and the Indemnifying Part
do not
agree within the fifteen (15) day period, the Indemnifying Party
shall
immediately pay to the Indemnified Party the amount of such Claim
to the
extent the parties agree or remains undisputed, and the Investor
Indemnified Party may seek appropriate remedy at law or equity, as
applicable, subject to the limitations hereof, with respect to any
portion
of its Claim not paid by the Indemnifying Party
hereunder.
|
Strictly
Private & Confidential
15
iii.
|
Third-Party
Claims: The obligations and liabilities of each party to this
Agreement under Clause 7.1 hereof related to Third-Party Claims shall
be
subject to the following terms and
conditions:
|
a.
|
At
any time after receipt of notice of any Third-Party Claim asserted
against, imposed upon or incurred by an Investor Indemnified Party,
the
Investor Indemnified Party shall notify the Indemnifying Party of
such
claim in writing. The Indemnifying Party shall be entitled, at its
own
expenses, to participate in and, upon written request from the Investor
Indemnified Party, shall undertake the defense thereof in good faith
by
counsel of the Indemnifying Party’s own choosing, which counsel shall be
satisfactory to the Investor Indemnified Party; provided, however,
that
(i) the Investor Indemnified Party shall at all times have the option,
at
its own expense, to participate fully therein (without controlling
such
action) and (ii) if in the Investor Indemnified Party’s judgment a
conflict of interest exists, such Investor Indemnified Party shall
be
entitled to select counsel of its own choosing reasonably satisfactory
to
the Indemnifying Party, and the Indemnifying Party shall be obligated
to
pay the fees and expenses of such
counsel.
|
b.
|
If
within thirty (30) days after written notice to the Investor Indemnified
Party of the Indemnifying Party’s intention to undertake the defense of
any Third-Party Claim the Indemnifying Party shall fail to defend
the
Investor Indemnified Party against such Third Party Claim, the Investor
Indemnified Party will have the right (but not the obligation) to
undertake the defense and/or enter into a compromise or settlement
of such
Third-Party Claim on behalf of, and for the account and at the risk
of,
the Indemnifying Party.
|
iv.
|
Each
Party shall provide the other with access to all records and documents
within the first named party’s possession, custody or control relating to
any Third Party Claim, and shall otherwise co-operate with the other
Party
with respect to defending any Third-Party
Claim.
|
7.6.
|
Other
Rights and Remedies Not Affected: The Parties hereto acknowledge and
agree that damages alone would not provide an adequate remedy for
any
breach or threatened breach of the provisions of this Agreement and
therefore that, without prejudice to any and all other rights and
remedies
the Investor may have (including but not limited to, damages), the
Investor shall be entitled to the remedies of injunction, specific
performance and other equitable relief for any threatened or actual
breach
of the provisions of this Agreement. The remedies set forth in this
Clause
7 are cumulative and shall in no way limit any other remedy any party
hereto has at law, in equity or pursuant
hereto.
|
8.
|
CO-OPERATION
|
8.1.
|
The
Parties shall use their best efforts to ensure that the transactions
contemplated by this Agreement are consummated as per the terms hereof,
including without limitation, obtaining all approvals from the applicable
government and/or regulatory authorities and other Persons as may be
necessary or reasonably requested by Investor in order to consummate
the
transaction contemplated by this
Agreement.
|
8.2.
|
The
Promoters, Promoter Group and the Company, in so far as the XXX Group
Companies is concerned undertake to ensure that they, their
representatives and proxies representing them at the general meetings
of
the Company and the XXX Group Companies, shall at all times exercise
their
votes and through their respective appointed/nominated Directors
(or
alternate Directors) at Board meetings and otherwise, act in such
manner
so as to comply with, and to fully and effectually implement the
spirit,
intent and specific provisions of this
Agreement.
|
Strictly
Private & Confidential
16
9.
|
RESOLUTION
OF DISPUTES
|
9.1.
|
Amicable
Settlement: If any dispute arises between Investor and/or the
Promoters and/or Company during the subsistence of this Agreement
or
thereafter, in connection with the validity, interpretation,
implementation or alleged breach of any provision of this Agreement
or
regarding a question, including the question as to whether the termination
of this Agreement by one Party hereto has been legitimate
(“Dispute”), the disputing Parties hereto shall endeavour to settle
such Dispute amicably. The attempt to bring about an amicable settlement
shall be considered to have failed if not resolved within 60 days
from the date of the Dispute.
|
9.2.
|
Conciliation:
If the Parties are unable to amicably settle the Dispute in accordance
with Clause 9.1 within the period specified therein, the Parties
shall
forthwith but not later than 30 days after expiry of the aforesaid
period, refer the Dispute to conciliation for resolution of the said
Dispute to a retired High Court Judge or a reputed Chartered Accountant
acceptable to the Parties. The attempt to bring about such resolution
shall be considered to have failed if not resolved within 30 days
from the date of receipt of a written notification in this
regard.
|
9.3.
|
Arbitration:
If the Parties are unable to amicably settle the Dispute in accordance
with Clause 9.2 within the period specified therein, any Party to
the
Dispute shall be entitled to serve a notice invoking this Clause
and
making a reference to an arbitration panel of three arbitrators.
Each
party to the dispute shall appoint one arbitrator within 30 days of
receipt of the notice of the Party making the reference, and the
two
arbitrators, so appointed shall appoint a third arbitrator. The
Arbitration proceedings shall be held in accordance with the rules
of the
Singapore International Arbitration Centre. The decision of the
arbitration panel shall be binding on all the Parties to the
Dispute.
|
i.
|
The
place of the arbitration shall be
Singapore.
|
ii.
|
The
proceedings of arbitration shall be in the English
language.
|
iii.
|
The
Arbitrator’s award shall be substantiated in writing. The court of
arbitration shall also decide on the costs of the arbitration proceedings.
In case the arbitrators have not decided on the costs of the arbitration
proceedings, each Party to the Dispute shall bear its own costs,
in
relation to the arbitration
proceedings.
|
iv.
|
The
award shall be binding on the Parties subject to the Applicable Laws
in
force and the award shall be enforceable in any competent court of
law.
|
v.
|
The
Indian courts shall have exclusive
jurisdiction.
|
10.
|
GOVERNING
LAW
|
This
Agreement shall be governed by and construed under the laws of India, without
regard to the conflicts of law provisions thereof.
11.
|
NOTICES
|
11.1.
|
Any
notice or other communication that may be given by one Party to the
other
shall always be in writing and shall be served either by (i) hand
delivery duly acknowledged; or (ii) sent by registered post with
acknowledgment due; or (iii) by facsimile at the respective addresses
set out herein below or at such other address as may be subsequently
intimated by one party to the other in writing as set out herein.
If the
notice is sent by facsimile, the said notice shall also be sent by
registered post acknowledgment due.
|
Strictly
Private & Confidential
17
The
Investor:
|
Mr.
F. Xxxxx Xxxxxxx
|
Address:
|
000
Xxxx, 00xx Xxxxxx, xxxxx 00X, Xxx Xxxx, XX 00000,
XXX
|
Tel:
|
|
x0
000 000 0000
|
|
With
a copy to:
|
(i)
|
Xxx
Xxxxxxx
|
Xxxxxxxxxxxx
Xxxx & Xxxxxxxxx LLP
1221
Aevnue of the
Americas
Xxx
Xxxx, XX 00000-0000
Fax:
x0 000 000 0000
(ii)
|
Rajesh
Begur
|
A.R.A.
LAW
0/X
Xxxxxxx Xxxxxx Xxxx
Xxxxxx
Xxxx (Xxxx)
Xxxxxx
–
400
002
Fax:
x00 000 0000 0000
|
|
|
|
|
|
The Company: | XXX Global Securities Limited |
Address:
|
00,
Xxxxxx Xxxxxxx Xxxx, Xxxxx Xxxx, Xxx Xxxxx -
000000
|
Tel:
|
|
000-00000000
|
Facsimile:
|
011-23263297
|
Attn:
|
Mr.
Xxxx Xxxx
|
|
|
|
|
|
|
The
Promoter and Promoter Group:
|
Mr.
S.C Aggarwal
|
Address:
|
X-000,
Xxxxxxxxx Xxxxx, Xxx Xxxxx - 000000
|
Tel:
|
|
011
- 0000000
|
Facsimile:
|
011
- 23263297
|
11.2.
|
All
notices shall be deemed to have been validly given on (i) the
business date immediately after the date of transmission with confirmed
answer back, if transmitted by facsimile transmission, or (ii) the
business date of receipt, if sent by courier or hand delivery; or
(iii) the expiry of seven days after posting, if sent by registered
post.
|
11.3.
|
Any
Party may, from time to time, change its address or representative
for
receipt of notices provided for in this Agreement by giving to the
other
Party not less than 10 days prior written
notice.
|
12.
|
TERM
|
This
Agreement shall come into effect and force and be binding on the Parties from
the date first written above and shall remain in full force for a period of
three years unless:
(i)
|
terminated
in accordance with the provisions of this Agreement,
or
|
(ii)
|
the
Investor failing to hold at least 7.451% of the issued and paid-up
share
capital of the Company at Completion. For computing the paid-up equity
share capital the bonus shares shall be included, whichever is
earlier.
|
Strictly
Private & Confidential
18
13.
|
CONFIDENTIALITY
AND PUBLICITY
|
13.1.
|
The
Parties recognize that each of them will be given and have access
to
confidential and proprietary information of the other Parties. The
Parties
undertake not to use any of such confidential information for their
own
corporate purposes without the prior written consent of the Party
owning
such information and shall use their best efforts to keep confidential
and
not to disclose to any third party any of the other Parties’ confidential
and proprietary information. The Parties shall also cause their respective
directors, employees, officers and any other persons to whom the
above
mentioned information is disclosed to execute a letter of confidentiality
to the effect provided in this Clause. The obligations of confidentiality
shall not apply to any information
that:
|
i.
|
was
developed independently by the
Parties;
|
ii.
|
was
known to the Party prior to its disclosure by the disclosing
Party;
|
iii.
|
has
become generally available to the public (other than by virtue of
its
disclosure by the receiving Party);
|
iv.
|
may
be required in any report, statement or test, the Company submitted
to any
governmental or regulatory body;
|
v.
|
may
be required in response to any summons or subpoena or in connection
with
any litigation; or
|
vi.
|
may
be required to comply with any law, order, regulation or ruling applicable
to any Party hereto.
|
Provided
that prior to any disclosure in respect of a request to disclose confidential
information under subclauses (iv), (v) and (vi), above a Party must first notify
the Party owning such confidential information, who shall then have the
opportunity to respond to and/or dispute such request. The provisions of this
Clause shall survive the termination of this Agreement.
13.2.
|
Upon
termination of this Agreement, the Parties shall cause the Company
to
either (i) return to the Investor and the Promoter, as applicable,
and the
Parties shall return to each other, all documents and information
belonging to such Person and all copies thereof in the possession
or under
the control of a Party which does not own such property, and all
confidential information in whatever media; or (ii) destroy all
documents and information belonging to the other Party and all copies
thereof in the possession or under the control of a
Party.
|
13.3.
|
Publicity.
Except as required by Applicable Law, the Company, Promoters and
the
Investor (or any of their respective Affiliates) shall not, and the
Promoters shall cause the Company not to, without the prior written
consent of each other Party hereto, which consent shall not be
unreasonably withheld or delayed, make any public announcement or
issue
any press release with respect to the transactions contemplated by
this
Agreement. Prior to making any public disclosure required by Applicable
Law, the disclosing party shall consult with the other Parties hereto,
to
the extent feasible, as to the content and timing of such public
announcement or press release.
|
14.
|
AUTHORISED
PERSON
|
For
the
purposes of this Agreement, the XXX Group Companies and Promoter Group shall
be
represented by Mr. S.C. Aggarwal and Xx. X.X. Xxxxx, jointly and severally.
Accordingly, the XXX Group Companies and Promoter Group hereby authorise Mr.
S.C. Aggarwal and Xx. X.X. Xxxxx to, jointly and severally, represent and take
any decision which may be required to be taken, do all acts and execute all
documents which are or may be required by the XXX Group Companies and Promoter
Group for the proper and effective fulfillment of the rights and obligations
under this Agreement. Any action taken or deed performed or document executed
by
Mr. S.C Aggarwal and/or Xx. X.X. Xxxxx shall be deemed to be acts or deeds
done
or documents executed by all the XXX Group Companies and/or Promoter Group,
and
shall be binding on all the XXX Group Companies and Promoter Group.
Strictly
Private & Confidential
19
15.
|
TERMINATION
|
15.1.
|
Termination
before Completion:
|
i.
|
Grounds
of Termination. This Agreement may be terminated at any time prior to
Completion upon the occurrence of any of the following
events:
|
a.
|
By
mutual written agreement of the
Parties.
|
b.
|
By
the Investor upon written notice to the Promoters and Company, if
there
shall have been: (i) a breach of any Representation and Warranty
made
under this Agreement, or if any Representation and Warranty shall
have
become untrue in any respect, or (ii) a breach by the Warrantors
of any of
their covenants or agreements hereunder and such breach is not cured
within thirty (30) days after notice thereof by the Non-defaulting
Party,
or (iii) in case of Material Adverse
Effect.
|
c.
|
By
the Investor only, upon written notice to Promoters and Company,
if any
Governmental Authority of competent jurisdiction shall have issued
any
judgment, injunction, order, ruling or decree or taken any other
action
restraining, enjoining or otherwise prohibiting the consummation
of the
transactions contemplated by this
Agreement.
|
d.
|
By
the Investor only, in the event the Company or any XXX Group Companies
or
any Promoter becomes or is declared insolvent or bankrupt, makes
an
assignment for the benefit of all or substantially all of its creditors,
enters into an agreement for the composition, extension or readjustment
of
all or substantially all or of its obligations, or becomes the subject
of
any Proceedings related to its liquidation or insolvency or for the
appointment of a receiver or similar
officer.
|
e.
|
By
the Promoters only, in the event the if the Investor becomes or is
declared insolvent or bankrupt, makes an assignment for the benefit
of all
or substantially all of its creditors, enters into an agreement for
the
composition, extension or readjustment of all or substantially all
or of
its obligations, or becomes the subject of any Proceedings related
to its
liquidation or insolvency or for the appointment of a receiver or
similar
officer.
|
f.
|
By
Investors only, on termination of the Share Subscription Agreement
and/or
Shareholders Agreement with SMC Global Securities Limited for any
reason
whatsoever attributable to the Company and the
Promoters.
|
ii.
|
The
Parties acknowledge and agree that Promoters must exercise the right
to
terminate this Agreement pursuant to Clause 15 as a group and that
no
individual Promoter shall have the right to exercise such right without
agreement of the other Promoters.
|
Strictly
Private & Confidential
20
iii.
|
Effect
of Termination Before Closing: The provisions of Clause 7 (Indemnity),
Clause 9 (Resolution of Disputes), Clause 10 (Governing Law), Clause
13
(Confidentiality), Clause 16 (Miscellaneous Provisions) and this
Clause
15.1(iii)shall survive the termination
hereof.
|
15.2.
|
Termination
after Completion.
|
i.
|
Grounds
of Termination. This Agreement may be terminated after Completion as
follows:
|
a.
|
If
so agreed in writing by Promoters and
Investors.
|
b.
|
By
the Investor with immediate effect by notice in writing to the Promoters
if the Company or any of the XXX Group Companies is declared insolvent,
bankrupt, industrially sick, or is unable to pay its debts, or enters
into
a compromise or any arrangement with its creditors, or in the event
that a
trustee, receiver or liquidator is appointed to take over all or
a
substantial part of the assets of the Company or any XXX Group Companies
or if the Company or any XXX Group Companies are liquidated or
dissolved.
|
c.
|
If
the Promoters or Company or XXX Group Companies or any of them (the
“Defaulting Party”) commits any material breach under this Agreement which
has Material Adverse Effect, the Investors may terminate this Agreement
with immediate effect if such material breach is not remedied within
thirty (30) days after receipt by the Defaulting Party of a written
notification of default from the
Investor
|
d.
|
By
the Promoters with immediate effect by notice in writing to the Investor,
if the Investor is declared insolvent, bankrupt, industrially sick
or is
unable to pay its debts, or enters into a compromise or any arrangement
with its creditors, or in the event that a trustee, receiver or liquidator
is appointed to take over all or a substantial part of the assets
of the
Investor or if the Investor is liquidated or
dissolved.
|
e.
|
By
the Investor, if at any time the facts emerge indicating that the
Company
and / or Promoters have intentionally withheld or suppressed information
or made any misrepresentations which would have had a Material Adverse
Effect.
|
f.
|
By
Investors only, on termination of the Share Subscription Agreement
and/or
Shareholders Agreement with SMC Global Securities Limited for any
reason
whatsoever attributable to the Company and the
Promoters.
|
g.
|
By
the Investor, if within four years from the signing of this Agreement,
conditions exist that would allow for a listing of the Company’s equity
shares on any agreed Indian stock exchange(s) as contemplated in
Clause
5.8 of the Agreement and the Company and/or the Promoters decide
for
reasons of their own not to seek a listing unless such listing is
postponed at the request of the
Investor.
|
ii.
|
The
provisions of Clause 6 (Representation and Warranty), Clause 7
(Indemnity), Clause 9 (Resolution of Disputes), Clause 10 (Governing
Law),
Clause 13 (Confidentiality), Clause 16 (Miscellaneous Provisions)
and this
Clause 15.2 (ii)shall survive the termination
hereof.
|
Strictly
Private & Confidential
21
16.
|
MISCELLANEOUS
PROVISIONS
|
16.1.
|
Reservation
of Rights: No forbearance, indulgence or relaxation or inaction by any
Party at any time to require performance of any of the provisions
of this
Agreement shall in any way affect, diminish or prejudice the right
of such
Party to require performance of that provision, and any waiver or
acquiescence by any Party of any breach of any of the provisions
of this
Agreement shall not be construed as a waiver or acquiescence of any
continuing or succeeding breach of such provisions, a waiver of any
right
under or arising out of this Agreement or acquiescence to or recognition
of rights other than that expressly stipulated in this
Agreement.
|
16.2.
|
Cumulative
Rights: All remedies of either Party under this Agreement whether
provided herein or conferred by statute, civil law, common law, custom
or
trade usage, are cumulative and not alternative and may be enforced
successively or concurrently.
|
16.3.
|
Partial
Invalidity: If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to
any extent, the remainder of this Agreement and the application of
such
provision to persons or circumstances other than those as to which
it is
held invalid or unenforceable shall not be affected thereby, and
each
provision of this Agreement shall be valid and enforceable to the
fullest
extent permitted by law. Any invalid or unenforceable provision of
this
Agreement shall be replaced with a provision, which is valid and
enforceable and most nearly reflects the original intent of the
unenforceable provision. Provided however, if said provision is
fundamental provision of this Agreement or forms part of the consideration
or object of this Agreement, the provision of this Clause shall not
apply.
|
16.4.
|
Amendments:
No modification or amendment of this Agreement and no waiver of any
of the
terms or conditions hereof shall be valid or binding unless made
in
writing and duly executed by all the Parties. The Parties may mutually
agree to amend or waive any terms of this
Agreement.
|
16.5.
|
Assignment:
This Agreement and the rights and liabilities hereunder shall bind
and
inure to the benefit of the respective successors of the Parties
hereto,
but no Party shall assign or transfer any of its rights and liabilities
hereunder to any other Person without the prior written consent of
the
other Parties which will not be unreasonably withheld. Notwithstanding
anything stated above, the Investor shall be entitled to assign its
rights
and obligations hereunder to any of its Affiliates without the consent
of
the other Parties provided that Investor shall continue to be liable
for
the Investment Amount, subject to terms of this Agreement, irrespective
of
such assignment.
|
16.6.
|
Entire
Agreement: This Agreement constitutes the entire Agreement between the
Parties with respect to the subscription and purchase of Subscription
Shares and supersedes and cancels any prior oral or written agreement,
representation, understanding, arrangement, communication or expression
of
intent relating to the subject matter of this
Agreement.
|
16.7.
|
Relationship:
None of the provisions of this Agreement shall be deemed to constitute
a
partnership between the Parties hereto and no Party shall have any
authority to bind the other Party otherwise than under this Agreement
or
shall be deemed to be the agent of the other in any
way.
|
16.8.
|
Costs:
Each Party shall bear its own expenses incurred in preparing this
Agreement. The stamp duty and other costs payable: (i) on this Agreement,
(ii) the issue of Subscription Shares to the Investor and (iii) transfer
of shares in order to restructure the shareholding of XXX Group Companies
as contemplated under this Agreement, shall be borne by the Company
or XXX
Group Companies.
|
Strictly
Private & Confidential
22
16.9.
|
Force
Majeure: No Party shall be liable to the other if, and to the extent,
that the performance or delay in performance of any of its obligations
under this Agreement is prevented, restricted, delayed or interfered
with
due to circumstances beyond the reasonable control of such Party,
including but not limited to, Government legislations, fires, floods,
explosions, epidemics, accidents, acts of God, wars, riots, strikes,
lockouts, or other concerted acts of workmen, acts of Government
and/or
shortages of materials. The Party claiming an event of force majeure
shall promptly notify the other Parties in writing, and provide
full
particulars of the cause or event and the date of first occurrence
thereof, as soon as possible after the event and also keep the other
Parties informed of any further developments. The Party so affected
shall
use its best efforts to remove the cause of non-performance, and
the
Parties shall resume performance hereunder with the utmost dispatch
when
such cause is removed. However, it is agreed between the Parties
that if
such event continues for more than 60 (sixty) days the affected Party
may
terminate this Agreement thereafter, unless mutually agreed between
the
Parties.
|
16.10.
|
Severance:
Any provision of this Agreement which is invalid or unenforceable
under
Applicable Law shall be ineffective to the extent of such invalidity
or
unenforceability, without affecting in any way the validity, legality
and
enforceability of the remaining provisions hereof. Should any provision
of
this Agreement be or become ineffective for reasons beyond the control
of
the Parties including any provisions under Applicable Law, the Parties
shall use reasonable efforts to agree upon a new provision which
shall as
nearly as possible have the same commercial effect as the inefficient
provision.
|
16.11.
|
Good
Faith Negotiations and Further Assurances: Subject to Clause 15.1, the
Parties agree that if the transactions contemplated in this Agreement
cannot be completed in the manner set forth herein, then the Parties
shall
use reasonable endeavours to enter into other transaction, no later
than
sixty (60) days from the expiration of one hundred and sixty five
(165)
days period from the Effective Date, that (a) would result in a
substantially similar outcome and (b) do not materially prejudice any
of the Parties. Each of the Parties further agrees that, during any
such
negotiations, it shall refrain from initiating any legal actions
against
the other Parties.
|
16.12.
|
Execution
in Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which,
taken together, shall constitute one and the same
instrument.
|
16.13.
|
Authorisation:
The persons signing this Agreement on behalf of the Parties represent
and
covenant that they have the authority to so sign and execute this
document
on behalf of the Parties for whom they are
signing.
|
Signature
Page Follows:
Strictly
Private & Confidential
23
IN
WITNESS WHEREOF THE PARTIES HERETO HAVE SET AND SUBSCRIBED THEIR RESPECTIVE
HANDS TO THESE PRESENTS ON THE DAY, MONTH AND YEAR HEREIN
WRITTEN:
Millennium
India Acquisition Company Inc.
|
XXX
Global Securities Limited
|
|||
Name:
Mr. F Xxxxx XXXXXXX
|
Name:
Xxxx XXXX
|
|||
Title:
CEO & President
|
Title:
Director
|
|||
Name:
Xx. Xxxxx XXXXXX
|
||||
Title:
CFO and Exec Vice President
|
||||
PROMOTERS
AND PROMOERS GROUP
|
||||
SMC
Global Securities Limited
|
||||
Mr.
Xxxx XXXX
|
Mr.
S.C. AGGARWAL
|
|||
SMC
Share Brokers Limited
|
||||
Mr.
S.C. AGGARWAL and Xx. X.X. Xxxxx (for and on behalf of the Promoter
Group)
|
Xx.
X.X. XXXXX
|
|||
Strictly
Private & Confidential
24
SCHEDULE
1 - PROMOTER AND PROMOTER GROUP
PROMOTERS
Name
|
Number
of Share
|
Percentage
|
SMC
Global Securities Ltd.
|
970000
|
9.70
|
SMC
Share Brokers Ltd.
|
970000
|
9.70
|
Xxxx
Xxxx
|
150000
|
1.50
|
PROMOTERS
GROUP
Name
|
Number
of Share
|
Percentage
|
Xxx
Xxxxx Share Broking Ltd.
|
970000
|
9.70
|
MVR
Share Trading (P) Ltd.
|
960000
|
9.60
|
A
To Z Consultants (P) Ltd.
|
725000
|
7.25
|
A
To Z Venture Capitals Ltd.
|
725000
|
7.25
|
Rolex
Finvest (P) Ltd.
|
725000
|
7.25
|
Zee
Datatline (P) Ltd.
|
725000
|
7.25
|
Xxxxxx
Xxxxxx
|
150000
|
1.50
|
Strictly
Private & Confidential
25
SCHEDULE
2 - COMPANY AND XXX GROUP COMPANIES
S.
No.
|
Name
of Company
|
Status
|
Activity
|
1.
2.
a)
b)
c)
|
XXX
Global Securities Limited
XXX
Global Securities Limited Group Companies
Xxxxx
Investment Private Limited
Abhichhaya
Investment Private Limited
Nexgen
Capitals Limited
|
· Registered
as Member with BSE for Capital Market
· Registered
as Member with BSE as trading and clearing member in F&O.
· Registered
as Depository Participant with the Central Depository Services (India)
Ltd.
Investment
Company
Investment
Company
Category-I
Merchant Banker
|
· Trading/
Broking in:
-
Capital Market Segment
-
Future & Option Market Segment
· Clearing
member (F & O)
· Providing
depository participant services
Investment
Investment
Merchant
Banking Activities
|
Strictly
Private & Confidential
26
SCHEDULE
3 – POST COMPLETION SHAREHOLDING STRUCTURE
XXX
GLOBAL SECURITIES LIMITED
Name
|
Number
of
|
Face
value
|
Amt.
Paid
|
%
of total
|
|
shresheld
|
per
shares (Rs)
|
(Rs.
In lakhs)
|
|
Promoters
|
|
|
|
|
SMC
Global Securities Ltd.
|
970,000
|
10
|
9,700,000.00
|
8.25
|
SMC
Share Brokers Ltd.
|
970,000
|
10
|
9,700,000.00
|
8.25
|
Xxx
Xxxx Share Broking Ltd.
|
970,000
|
10
|
9,700,000.00
|
8.25
|
MVR
Share Trading (P) Ltd.
|
960,000
|
10
|
9,600,000.00
|
8.17
|
ATOZ
Consultants (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
6.17
|
ATOZ
Venture Capital Ltd.
|
725,000
|
10
|
7,250,000.00
|
6.17
|
Rolex
Finvst (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
6.17
|
Zee
Dataline (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
6.17
|
Xx.
Xxxxxx Xxxxxx
|
150,000
|
10
|
1,500,000.00
|
1.28
|
Mr.
Xxxx Xxxxx
|
150,000
|
10
|
1,500,000.00
|
1.28
|
Millennium
India Acquistion Company Inc
|
1,750,891
|
10/-
|
17,508,910.00
|
14.90
|
Others
|
2,930,057
|
10
|
29,300,570.00
|
24.93
|
TOTAL
|
11,750,948
|
10
|
117,509,480.00
|
100
|
ABHICHHAYA
INVESTMENTS PRIVATE LIMITED
Name
of Shareholder
|
No.
of shares held
|
Percentage
|
|
|
|
Promoters
|
|
|
SMC
Comtrade Limited
|
18,200
|
39.91
|
XXX
Global Securities Ltd.
|
12,200
|
26.75
|
Others
|
15,200
|
33.34
|
TOTAL
|
45600
|
100
|
XXXXX
INVESTMENTS PRIVATE LIMITED
Name
of Shareholder
|
No
of shares held
|
Percentage
|
|
|
|
SMC
Comtrade Limited
|
14,000
|
39.88
|
XXX
Global Securities Ltd.
|
9,400
|
26.78
|
Others
|
11,700
|
33.34
|
TOTAL
|
35100
|
100
|
Strictly
Private & Confidential
27
NEXGEN
CAPITALS LIMITED
Name
of Shareholder
|
No
of shares held
|
Percentage
|
|
|
|
Abhichhaya
Investments (P) Ltd.
|
1141897
|
44.93
|
Xxxxx
Investments (P) Ltd.
|
1195363
|
47.03
|
SMC
Comtrade Limited
|
69,600
|
2.74
|
Others
|
134,800
|
5.3
|
TOTAL
|
2541660
|
100
|
Strictly
Private & Confidential
28
SCHEDULE
4 - CONDITIONS PRECEDENT
|
PART
1: CONDITIONS PRECEDENT OF PROMOTERS AND THE
COMPANY
|
1.
|
Board
approval by Company: The Board of Directors shall have passed
necessary resolutions at duly constituted meetings approving the
issue of
the Subscription Shares.
|
2.
|
Shareholders
approval by Company: The Company shall have been passed at a
resolution at its general meeting approving resolution under section
81(1A) of the Act the preferential allotment of the Subscription
Shares to
the Investor.
|
3.
|
Increase
Authorized Share Capital: The Company shall have increased its
authorized share capital as necessary to issue the Subscription Shares
to
Investor and the Company shall have paid the necessary stamp duties
and
filed necessary forms with Registrar of
Companies.
|
4.
|
Articles
of Association. Shareholders approval shall have been
obtained for amending Articles of Association of the Company and
XXX Group
Companies in a manner necessary to facilitate the transaction contemplated
by this Agreement.
|
5.
|
Shareholding
of XXX Group Companies: Each of the XXX Group Companies shall have
changed the existing shareholding structure in a manner to ensure
that the
shareholding of XXX Group Companies reflects the proposed shareholding
structure as specified in Schedule 8
hereto.
|
6.
|
Material
Adverse Effect. There shall not have been any event, such as, (i)
termination or cancellation of material Licenses of the Company or
XXX
Group Company, (ii) any event that materially hinders the ability
to
consummate the transaction contemplated by this Agreement, (iii)
any event
that effects the business or operations of the Company or XXX Group
Companies that has Material Adverse
Effect.
|
7.
|
Listing.
Obtain in-principal approval for listing of Subscription Shares
on the
regional stock exchanges where the shares of the Company are currently
listed.
|
8.
|
Agreement.
The Promoters of SMC Global Securities Limited, Investor and
SMC
Global Securities Limited shall have executed a Share Subscription
Agreement and Shareholders Agreement in a form acceptable to the
Parties
and shall have completed the Closing as contemplated in such
agreement.
|
9.
|
Employment
Agreements. (i) The directors of the companies forming part of the XXX
Group shall have entered into employment contracts with their respective
companies setting out the specific terms and conditions of their
employment with the company, (ii) All Key Employees (as set out in
Annexure “3”) of the XXX Group Companies shall have entered into a
standard format employment agreement, incorporating provisions relating
to
the adoption of Chinese walls, handling of price sensitive information
and
non-compete and non-solicitation obligations, and (iii) All employees,
on
or before Completion or within 60 days from Completion, shall have
entered
into a standard format employment agreement, incorporating provisions
relating to the adoption of Chinese walls, handling of price sensitive
information and non-compete and non-solicitation
obligations.
|
10.
|
Compliance
Certificate. The Company and each of XXX Group Companies
shall have obtained a certificate from a practicing Company Secretary
confirming that the statutory records have been updated as required
under
Applicable Laws.
|
11.
|
Bank
details: The Company shall have provided details of the bank account
of the Company maintained with the Authorised Dealer to the Investor
for
the purpose of receiving the Investment Amount under this
Agreement.
|
Strictly
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29
12.
|
Financial
Statements: The Investor shall have received from the Promoters and
the Company (i) two years Balance Sheet and Profit and Loss Account
for
the period ended March 31, 2007 and March 31, 2006, and (ii)
three years Profit and Loss Account for the period ended March 31,
2007,
March 31, 2006 and March 31, 2005 (“Financial Statement”)
prepared and translated in accordance with US GAAP and re-audited
by a
Public Company Accounting Oversight Board accounting firm acceptable
to
the Investor.
|
13.
|
No
Objection Letter: The Promoters, the Company and XXX Group Companies
shall have delivered to the Investor a No Objection Letter pursuant
to
Press Note No. 1 and Press Note No. 3 of 2005, in a form attached
as
Annexure “2” of this Agreement and shall be signed and delivered to
the Investor by the Promoters, the Company and XXX Group Companies
on or
before Completion.
|
14.
|
Regulatory
Approvals: The Promoters, the Company and XXX Group Companies shall
have obtained necessary regulatory approvals as specified in
Schedule 9 attached hereto and complied with the
requirements of Listing Agreement with respect to the transaction
as
contemplated in this Agreement and the resulting change in the
shareholding of the XXX Group Companies, directly or indirectly,
shall be
in compliance with the requirements of Applicable
Laws.
|
15.
|
Financial
Statement. The translation and re-audit of Financial Statements in US
GAAP shall not have resulted in any variance of more than 25% to
the
Financial Statements prepared under Indian
GAAP.
|
16.
|
Name
License Agreement. Xx. X.X. Xxxxx, Mr. S.C. Aggarwal and XXX Global
Securities Limited shall have executed a Name License Agreement with
the
Company for assigning the use of the words “SMC” as part of its corporate
name at a nominal fee and agreeing that a similar license shall not
be
given to any other entity engaged in the similar line of Business
except
as provided in the Disclosure Schedule. Provided that such companies
shall
execute similar agreement with the Company confirming that it shall
not
permit use of the word “SMC” to any other entity without prior approval of
the Company.
|
|
PART
2: CONDITIONS PRECEDENT OF
INVESTOR
|
1.
|
Financial
Statements: The translation and re-audit of Financial Statements in US
GAAP shall not have resulted in any variance of more than 25% from
the
Financial Statements prepared under Indian
GAAP.
|
2.
|
Consent
by Investor: (i) US Securities and Exchange Commission would have
advised that there are no further comments to the proxy statement
filed by
the Investor in accordance with the requirements of the laws of United
States, (ii) the shareholders of the Investor would have passed resolution
approving the investments in the Company, and (iii) holders of no
greater
than 19.9% of equity interest of the Investor should have sought
redemption of their equity shares;
|
3.
|
KYC
Compliance: The Investor shall have satisfied the Know Your
Client norms to ascertain that the Investor is an ‘eligible investor’ in
accordance with the laws of United
States;
|
4.
|
Regulatory
Approvals: The Investor shall have obtained Foreign Investment
Promotion Board approval as specified in Schedule 9 attached
hereto.
|
Strictly
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30
5.
|
Agreement.
The Promoters of SMC Global Securities Limited, Investor and
SMC
Global Securities Limited shall have executed a Share Subscription
Agreement and Shareholders Agreement in a form acceptable to the
Parties
and shall have completed the Closing as contemplated in such
agreement.
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Strictly
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31
SCHEDULE
5 – RESTRICTED ACTIONS
Any
and
all of the following actions by Promoters, the Company and/or XXX Group
Companies prior to the Completion Date shall be subject to prior consent of
the
Investor:
1.
|
Charter
Documents. Cause or permit any amendments to its Memorandum of
Association or Articles of Association save and except as may be
required
to give effect to the transactions contemplated by this
Agreement.
|
2.
|
Dividends.
Declare or pay any dividends on or make any other distributions (whether
in cash, shares, securities or property) in respect of any of its
share
capital.
|
3.
|
Share
Capital. Issue or split, combine or reclassify any of its share
capital or issue or authorize the issuance of any Derivative Securities,
or repurchase or otherwise acquire, directly or indirectly, any shares
or
Derivative Securities.
|
4.
|
Transfer. Transfer
of any shares or Securities in the Company by Promoter or Promoter
Group
(except amongst Promoter Group or Promoters spouse and lineal antecedent
and descendent) or the Company in XXX Group Companies to any third
party.
|
5.
|
Issuance
of Securities. Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, or purchase or propose the purchase
of, any
shares of Company or Derivative Securities, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments
of any
character obligating Company to issue any such shares or
Securities.
|
6.
|
Dispositions.
Sell, lease, license or otherwise dispose of or encumber any of its
properties or assets, except in the Ordinary Course of Business,
consistent with past practice.
|
7.
|
Payment
of Obligations. Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or
otherwise) arising other than in the Ordinary Course of
Business.
|
8.
|
Capital
Expenditures. Make any capital expenditures, capital additions or
capital improvements in excess of rupee equivalent of INR 82 Million
in
the aggregate in each Financial
Year.
|
9.
|
Insurance.
Materially reduce the amount of any insurance coverage provided by
existing insurance policies other than in the Ordinary Course of
Business.
|
10.
|
Termination
or Waiver. Terminate or waive any right or benefit of substantial
value other than in the Ordinary Course of
Business.
|
11.
|
Employee
Benefit Plans, New Hires, Pay Increases. Amend any company employee
plan or adopt any plan that would constitute a company employee plan,
pay
any special bonus, special remuneration or special non-cash benefit,
or
increase the benefits, salaries or wage rates of its employees, save
and
except in the Ordinary Course of
Business.
|
12.
|
Severance
Arrangements. Grant or pay any severance or termination pay or
benefits (i) to any director or officer, or (ii) except for payments
made
pursuant to written agreements outstanding on the date hereof, to
any
other employee.
|
13.
|
Lawsuits.
Commence a lawsuit other than in such cases where the company in
good
faith determines that a failure to commence such suit would result
in the
material impairment of a valuable aspect of the company’s business,
provided that it consults with the Investor prior to the filing of
such a
suit.
|
Strictly
Private & Confidential
32
14.
|
Acquisitions.
Acquire or agree to acquire by merging with, or by purchasing a
substantial portion of the shares, Securities or assets of, or by
any
other manner, any business or any company, partnership, association
or
other business organization division thereof or otherwise acquire
or agree
to acquire any assets that are material individually or in the aggregate,
to the Business other than in the Ordinary Course of
Business.
|
15.
|
Taxes.
Other than in the Ordinary Course of Business, make or change any
election
in respect of taxes, adopt or change any accounting method in respect
of
taxes, file any tax return or any amendment to a tax return, settle
any
claim or assessment in respect of taxes, or consent to any extension
or
waiver of the limitation period applicable to any claim or assessment
in
respect of taxes.
|
16.
|
Revaluation.
Revalue any of its assets, including without limitation writing down
the
value of inventory or writing off notes or accounts receivable other
than
in the Ordinary Course of Business or as required by changes in Indian
GAAP.
|
17.
|
Listing:
All decisions with respect to listing of the
Company.
|
18.
|
Liquidation:
Voluntary liquidation or dissolution of the company or any bankruptcy
action in relation to the company.
|
19.
|
Other.
Take or agree in writing or otherwise to take, any of the actions
described in Clause 1 through 18
above.
|
Strictly
Private & Confidential
33
SCHEDULE
6 - CONDITION SUBSEQUENT
1)
|
Key
Persons Provisions: The Company shall maintain Directors’ and
Officers’ insurance for members of its Board of Directors in amounts
considered reasonable by the Company and consistent with market practice
in India.
|
2)
|
Key
Man Insurance: The Company shall purchase Key Man Insurance policy of
such amounts as may be decided by the Board, with benefits payable
to the
Company, covering the Key Employees and such of the Promoters as
may be
identified by the Company.
|
3)
|
RBI
Reporting. The Company shall also ensure that within 30 days from
the Completion Date, the relevant forms of the Company are filed
with the
concerned regulatory authorities including the Registrar of Companies,
Reserve Bank of India, etc. in accordance with the provisions of
Applicable Law.
|
4)
|
Condition
Precedent. Any Conditions Precedent not fulfilled at the time of
Completion and not entirely waived in
writing.
|
5)
|
Periodical
Financial Statements. The Company shall and the Promoters shall ensure
that the Investor is furnished with its quarterly financial statements
prepared under Indian GAAP duly translated and audited (if required
under
Applicable Laws) as per the US GAAP within 42 days of closure of
the
quarter and annual financial statements prepared in accordance with
US
GAAP and audited by a Public Company Accounting Oversight Board top
6
accounting firm within 87 days of closure of the financial year,
so that
the Investor may file the same with the US Securities Exchange
Commission. The Company and the Promoters shall ensure that the
Investor is informed of any and all material occurrences on an ongoing
basis within 4 working days of such occurrence so that the Investor
may
file the same with the US Securities Exchange
Commission.
|
6)
|
Continued
guarantee. Promoters shall continue to maintain the personal guarantee
issued by them for the financial facilities obtained by the Company
and
XXX Group Companies from the
lenders.
|
7)
|
Employment
Contracts. All employees, on or before Completion or within 60 days
from Completion, shall have entered into a standard format employment
agreement, incorporating provisions relating to the adoption of Chinese
walls, handling of price sensitive information and non-compete and
non-solicitation obligations.
|
8)
|
Listing.
The Company shall and the Promoters shall ensure that the Equity
Shares of
the Company are listed on the Bombay Stock Exchange Limited and/or
National Stock Exchange Limited within four (4) years from the date
of
Completion.
|
9)
|
Any
other items specifically agreed between the Parties and reasonably
requested by the Investor.
|
Strictly
Private & Confidential
34
SCHEDULE
7 - REPRESENTATIONS AND WARRANTIES
PART
1
- REPRESENTATION AND WARRANTY FROM THE COMPANY AND
PROMOTERS
REPRESENTATIONS
AND WARRANTIES
Prior
to
the execution and delivery of this Agreement, the Company and the Promoters,
have together delivered to the Investor a disclosure schedule with numbered
sections corresponding to the relevant sections in this Agreement (the
“Disclosure Schedule” as set out in Annexure
3).
Any
exception or qualification set forth in the Disclosure Schedule with respect
to
a particular representation or warranty contained in this Agreement, shall
be
deemed to be an exception or qualification with respect to all other applicable
representations and warranties contained in this Agreement, but only where
the
relevance of such disclosure to such other representations or warranties is
reasonably apparent from the text of such disclosure.
The
Company and the Promoters (for themselves and on behalf of the XXX Group
Companies) are hereinafter referred to as “Warrantors”.
1
|
The
Promoters, jointly and severally, represent and warrant to the Investor
as
follows:
|
1.1
|
Binding
Agreement.
|
i)
|
Each
of the Promoters have the full legal right, power, authority and
capacity
to execute, deliver and fully perform such Promoter’s obligations under
this Agreement and any documents contemplated hereby to which any
of
Promoters is a party according to their respective
terms.
|
ii)
|
This
Agreement and any documents contemplated hereby to which any of Promoters
is a party have been duly executed and delivered by such Promoter
and
constitute the legal, valid and binding agreement of such Promoter
enforceable against such Promoter in accordance with its terms, except
to
the extent that: (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or
hereafter in effect relating to creditor’s rights generally, and (b) the
remedy of specific performance or injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the
court before which any proceeding therefore may be
brought.
|
1.2
|
Bankruptcy.
No Bankruptcy Matter of any character affecting all or any of the
Promoters are pending or threatened, and none of the Promoters have
made
any assignment for the benefit of creditors or taken any action in
contemplation of, or which would constitute the basis for any Bankruptcy
Matter.
|
1.3
|
Non-Contravention.
The execution, delivery and performance by all and any of the Promoters
of
this Agreement and the documents contemplated hereby (with or without
the
giving of notice, the lapse of time, or both) and the consummation
by each
of the Promoters of the transactions contemplated hereby or thereby
do
not: (a) other than for Clause 2.5 hereof require the consent of
any third
party; (b) conflict with, result in a breach of, or constitute a
default
under, any Applicable Law; (c) violate any agreement, indenture,
instrument, note, mortgage, lease, license, franchise, permit or
other
authorization, right, restriction or obligation to which any of the
Promoters is a party or by which any of the Promoters may be bound;
(d)
violate any order, injunction judgment or decree of any Government
Authority by which any of the Promoters may be bound; (e) constitute
an
act of bankruptcy, preference, insolvency or fraudulent conveyance
under
any bankruptcy act or other Applicable Law for the protection of
debtors
or creditors; or (f) conflict with or result in any breach or violation
of
the terms, conditions or provisions of the Charter Documents (defined
below). None of the Promoters is a party to, or bound by, any
agreement or commitment that prohibits or restricts the execution
and
delivery by any of the Promoters of this Agreement or the consummation
of
the transactions contemplated
hereby.
|
Strictly
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35
1.4
|
Litigation.
There is no action, claim, suit, Proceedings or investigation pending
or
threatened by or against or affecting all or any of the Promoters
which
questions the validity of this Agreement or the right of any of the
Promoters to enter into it, or to consummate the transactions contemplated
hereby, or which could result in any change in the equity ownership
of all
or any of the Promoters in the Company. None of the Promoters is
a party
or subject to the provisions of any order, writ, injunction, judgment
or
decree of any Governmental Authority, and there is no investigation
pending or threatened that could prohibit or restrict the execution
and
delivery by any of the Promoters of this Agreement or the consummation
of
the transactions contemplated
hereby.
|
1.5
|
No
conflicting interest. Except as disclosed in Section 1.5 of the
Disclosure Schedule, none of the Promoters own, beneficially or of
record,
directly or indirectly, any share capital or other ownership or
proprietary interest in any partnership, association, trust joint
venture,
limited liability company, or other entity that is in direct or indirect
competition with the Company or XXX Group
Companies.
|
2
|
The
Warrantors, jointly and severally represent and warrant to the Investor
as
follows:
|
2.1
|
Binding
Agreement:
|
i)
|
The
Company and XXX Group Companies have all requisite corporate power
and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby and subject to receipt of proposed necessary
regulatory approvals as specified in Schedule 9, to perform their
obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. There are no other regulatory approvals
required for consummating the transaction contemplated under this
Agreement other than the approvals as set out in Schedule
9.
|
ii)
|
The
execution and delivery of this Agreement and the other agreements
contemplated hereby, by the Company and XXX Group Companies, the
performance by the Company and XXX Group Companies of their obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby or thereby have been duly authorized by the board
of
directors of the Company and XXX Group Companies, and no other action
on
the part of the Company and XXX Group Companies is necessary to authorize
the execution and delivery of this Agreement or any other agreements
contemplated hereby by the Company and XXX Group Companies or the
performance by the Company and XXX Group Companies of their obligations
hereunder and thereunder or the consummation by the Company and XXX
Group
Companies of the transactions contemplated hereby or thereby, except
for
the receipt of proposed regulatory approvals as specified in Schedule
9
and lenders consent (as referred to in Schedule
2).
|
Strictly
Private & Confidential
36
iii)
|
This
Agreement has been duly executed and delivered by the Company and
XXX
Group Companies, and this Agreement constitutes, and the other agreements
contemplated hereby upon execution and delivery by the Company and
XXX
Group Companies will each constitute (in each case assuming due
authorization, execution and delivery by the other parties thereto),
a
legally valid and binding obligation of the Company and XXX Group
Companies, enforceable against the Company and XXX Group Companies
in
accordance with its terms, except as such enforceability may be limited
by
principles of public policy, and subject to: (a) such enforcement
may be
subject to bankruptcy, insolvency, reorganization, moratorium or
other
similar laws now or hereafter in effect relating to creditor’s rights
generally, and (b) the remedy of specific performance or injunctive
and
other forms of equitable relief may be subject to equitable defenses
and
to the discretion of the court before which any proceeding therefore
may
be brought.
|
2.2
|
Organization:
|
i)
|
The
Company and XXX Group Companies are companies incorporated, validly
existing and in good standing under the Indian Companies Act, 1956,
and
each of them have all requisite corporate power and authority to
own,
operate or lease the properties and assets now owned, operated or
leased
by it, and to carry on its business in all material respects as currently
conducted. The Company and XXX Group Companies are duly qualified
to do
business as an Indian corporation and in good standing under the
laws of
India..
|
ii)
|
True
and complete copies of the Memorandum and Articles of Association
of the
Company and XXX Group Companies, as amended and in effect as of the
date
of this Agreement, have been made available to the Investor (“Charter
Documents”).
|
iii)
|
The
Company and XXX Group Companies are not in violation of any of the
provisions of the Charter
Documents.
|
iv)
|
True
and complete copies of the minutes of all meetings of the board of
directors and the shareholders of the Company and XXX Group Companies
have
been made available by the Company and XXX Group Companies to the
Investor.
|
2.3
|
Bankruptcy.
No Bankruptcy Matter of any character affecting the Company or XXX
Group
Companies is pending or threatened, and Company or XXX Group Companies
have not made any assignment for the benefit of creditors or taken
any
action in contemplation of, or which would constitute the basis for
any
Bankruptcy Matter.
|
2.4
|
Capitalization:
|
i)
|
Section
2.4 of the Disclosure Schedule, sets out the existing authorized,
issued
and paid-up share capital of the Company and XXX Group Companies.
Except
as set forth in Section 2.4, no other Securities of the Company and
XXX
Group Companies are issued or outstanding. All such issued and outstanding
Securities shall have been duly authorized and validly issued, and
were
not issued in violation of any preemptive or similar rights created
by
statute or the Charter Documents.
|
Strictly
Private & Confidential
37
ii)
|
The
Company and XXX Group Companies or any agreement to which the Warrantors
are a party or by which they are bound, and have been issued in compliance
with Applicable Law.
|
iii)
|
The
Company has complete and unrestricted power and the unqualified right
to
issue, transfer and deliver to the Investor, and upon consummation
of the
transactions contemplated by this Agreement, the Investor will acquire
good and valid and marketable title to all of the Subscription Shares,
free and clear of all Liens. Section 2.4 of the Disclosure Schedule
sets
out the indirect shareholding of the Investor in XXX Group Companies,
upon
Completion.
|
iv)
|
As
of the date of this Agreement, there are: (a) no outstanding options,
warrants, calls, rights of conversion or other rights, agreements,
arrangements or commitments of any kind or character, whether written
or
oral, relating to the Shares to which the Warrantors are a party,
or by
which they are bound, obligating the Warrantors to issue, deliver
or sell,
or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire any Securities, (b) no outstanding or authorized
share appreciation, phantom share, profit participation, or other
similar
rights with respect to the Company and XXX Group Companies, and (c)
no
voting agreements, member agreements, proxies or other agreements
or
understandings in effect to which the Warrantors are a party, or
by which
they are bound, with respect to the governance of the Company and
XXX
Group Companies or the voting or transfer of any
Securities.
|
2.5
|
Third
Party Consents. Other than consents and regulatory approvals required
for consummating the transaction as set out in Schedule 9, no consent,
approval, authorization, order, filing, registration, declaration
or
qualification of or with any Government Authority or third Person
is
required to be obtained by the Warrantors in connection with the
execution
and delivery by the Warrantors of this Agreement or consummation
of the
transactions contemplated hereby. The Warrantors specifically represent
and warrant that the proposed transaction does not require any consent
from the lenders of the Company or XXX Group
Companies.
|
2.6
|
Financial
Statements:
|
i)
|
The
audited consolidated financial statements of the Company and XXX
Group
Companies (including the balance sheet and the related statements
of
income and cash flows) as of and for each of the 12-month periods
ended
March 31, 2006, March 31, 2005 and March 31, 2004, and the un-audited
and
unconsolidated financial statements of the Company for the nine months
period ended on December 31, 2006 (the “The Financial Statements”)
are attached in Section 2.6 of the Disclosure
Schedule.
|
ii)
|
Except
as set forth therein, the Financial Statements have been prepared
in
accordance with Indian GAAP applied on a consistent basis throughout
the
periods indicated therein.
|
iii)
|
The
Financial Statements present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows
of
the Company and XXX Group Companies as of the respective dates and
during
the respective periods indicated
therein.
|
iv)
|
All
accounts receivable, including without limitation, all trade amounts
receivable and other obligations from clients and customers, whether
or
not evidenced by a note (collectively, “Accounts Receivable”): (a)
are bona fide receivables incurred in the Ordinary Course of Business,
and
(b) are not currently the subject of any counterclaim, or a claim
for a
chargeback, deduction, credit, set off or other offset, other than
in the
Ordinary Course of Business and as reflected by the reserve for bad
debts
recorded on the Financial Statements. No Person has any Encumbrance
on any
Accounts Receivable or any part
thereof.
|
Strictly
Private & Confidential
38
v)
|
There
are no agreement for deduction, free services, discount or other
deferred
price or quantity adjustment made by the Company or XXX Group Companies
exceeding in aggregate of INR
4,000,000.
|
vi)
|
Undisclosed
Liabilities: The Company or XXX Group Companies do not have any
Liabilities of a nature that is required to be reflected on a balance
sheet or in the financial notes thereto in accordance with Indian
GAAP,
except as: (i) reflected in, reserved against or disclosed in the
Financial Statements; (ii) disclosed in Section 2.6 of the
Disclosure Schedule, (iii) incurred in the Ordinary Course of
Business since March 31, 2006.
|
2.7
|
Certain
Changes or Events: Except as expressly contemplated by this Agreement
or as disclosed in Section 2.7 of the Disclosure Schedule, since the
Audited Financial Statements Date and through the date of this Agreement,
the Company and XXX Group Companies have conducted its business
(including, without limitation, its cash management customs and practices
(e.g., collection of receivables, payment of payables, and maintenance
of
credit practices)) only in the Ordinary Course of Business. Since
such
date through the date of this Agreement, there has not been, occurred
or
arisen:
|
i)
|
any
material damage to, or destruction or loss of, any of the material
assets
or properties of the Company and/or XXX Group Companies other than
related
to information technology;
|
ii)
|
any
declaration, setting aside or payment of any dividend, or other
distribution or capital return in respect of any Shares or Securities
or
other equity security, or any redemption, repurchase or other acquisition
by the Company and/or XXX Group
Companies;
|
iii)
|
any
sale, pledge, assignment, transfer, lease, guarantee, encumbrance,
license
or other disposition, or agreement to sell, pledge, assign, transfer,
lease, guarantee, encumber, license or otherwise dispose of, any
property,
asset or interest therein of the Company and/or the XXX Group Companies
otherwise than in the Ordinary Course of
Business;
|
iv)
|
any
acquisition (by merger, consolidation or other combination, or acquisition
of shares or assets or otherwise) by the Company and/or XXX Group
Companies other than over INR 41 million for each such
acquisition;
|
v)
|
any
change in any method of accounting or accounting practice used by
the
Company and/or XXX Group Companies, other than such changes as are
required by Indian GAAP;
|
vi)
|
any
increase in or establishment of any bonus, insurance, severance,
deferred
compensation, pension, retirement, profit sharing, share option,
share
purchase or other employee benefit plan (other than any such increases
required under the applicable terms of any such plan or Applicable
Law),
or any other increase in the compensation payable or to become payable
to
any officers of the Company and/or XXX Group Companies, other than
in the
Ordinary Course of Business;
|
Strictly
Private & Confidential
39
vii)
|
any
issuance by the Company and/or XXX Group Companies of any Securities
convertible, exchangeable or exercisable into any equity securities
or
warrants, options or other rights to acquire equity
shares;
|
viii)
|
any
termination, cancellation or any modification of a material term
of any
Listed Contracts, other than this
Agreement.
|
2.8
|
Intellectual
Property.
|
i)
|
Section 2.8
of the Disclosure Schedule contains a true, correct and complete
list of
all (i) Indian and foreign patent and patents applications, the
number, issue date, title and priority information for each country
in
which such patent has been issued, or the application number, date
of
filing, title and priority information for each country in which
a patent
application is pending; (ii) registered and unregistered trademarks,
trade names or service marks, logos, designs and slogans, the application
serial number or registration number thereof, if applicable, the
class of
goods or services or the description of the goods or services covered
thereby, the jurisdiction in which such trade name or trademark is
registered or filed, and the expiration date for each jurisdiction
in
which such trademark or trade name has been registered or filed;
(iii) registered copyrights, the number and date of registration
thereof for each country in which a copyright has been registered
and
(iv) domain names and applications for registration of domain names,
in each case included in the Proprietary
Rights.
|
ii)
|
Except
as disclosed in Section 2.8 of the Disclosure Schedule, (i) the
operation of the business, including the use of the Owned Proprietary
Rights, does not infringe or misappropriate or otherwise materially
violate the Proprietary Rights of any third party, and no claim is
pending
or, to the Knowledge of the Warrantors, threatened against the Company
or
any XXX Group Companies alleging any of the foregoing, (ii) the
Company and XXX Group Companies owns, or has necessary licenses all
of the
Proprietary Rights necessary for the conduct of the business, and
(iii) except for the Owned Proprietary Rights and the Licensed
Proprietary Rights, no material right, license, lease, consent, or
other
agreement is required with respect to any Proprietary Right for the
conduct of the Business.
|
iii)
|
Subject
only to the terms of the licenses listed in Section 2.8 of the Disclosure
Schedule or licenses that are immaterial to the Ordinary Course of
Business of the Company and/or any XXX Group Companies, or except
as
disclosed in Section 2.8 of the Disclosure Schedule, the Company or
an XXX Group Companies is (i) the sole owner of the entire and
unencumbered right, title and interest in and to each item of the
Owned
Proprietary Rights, and (ii) entitled to use the Owned Proprietary
Rights and Licensed Proprietary Rights in the ordinary course of
its
business to the extent such Proprietary Rights are used in the operation
of the business.
|
iv)
|
Except
as disclosed in Section 2.8 of the Disclosure Schedule, the Owned
Proprietary Rights and Licensed Proprietary Rights include all of
the
material Proprietary Rights used in the business, and there are no
other
items of Proprietary Rights that are material to the business of
the
Company and XXX Group Companies.
|
Strictly
Private & Confidential
40
v)
|
The
Company and XXX Group Companies have made available to Investor for
inspection during the due diligence by the Investor all material
correspondence and all written opinions in its possession relating
to
potential infringement or misappropriation (a) by the Company or
any XXX
Group Companies of any Proprietary Rights of any third party, or
(b) by
any third party of any of the Owned Proprietary Rights or Licensed
Proprietary Rights.
|
vi)
|
Except
as disclosed in Section 2.8 of the Disclosure Schedule, to the
Knowledge of the Warrantors, (i) no third party is engaging in any
activity that infringes or misappropriates the Owned Proprietary
Rights or
Licensed Proprietary Rights and (ii) the Company and the XXX Group
Companies have not granted any material license or other right to
any
third party with respect to the Owned Proprietary Rights or Licensed
Proprietary Rights.
|
vii)
|
The
Company and the XXX Group Companies have a license to use all software
development tools, library functions, compilers and other third-party
software that are used in the operation of the business and are material
to the business, taken as a whole. To the Knowledge of
Warrantors, all material software used in the business is free of
all
viruses, worms and Trojan horses, and does not contain any critical
bugs,
errors, or problems, in each case that reasonably would be expected
to
have a material adverse impact on the business, taken as a
whole.
|
viii)
|
The
Company and each of the XXX Group Companies have secured valid written
assignments or agreements from all current and former consultants
and
employees who contributed to the creation or development of the material
Owned Proprietary Rights used or held for use by the Company or the
XXX
Group Companies, in each case assigning such Person’s ownership interest
therein. All employees of, consultants to or vendors of the
Company or any XXX Group Companies with access to confidential information
of the Company or any XXX Group Companies are parties to written
agreements under which, among other things, each such employee, consultant
or vendor is obligated to maintain the confidentiality of confidential
information of the Company or any XXX Group Companies. To the
Knowledge of Warrantors, none of the employees, consultants or vendors
of
the Company or any XXX Group Companies is in violation of such
agreements.
|
3
|
Contracts.
|
3.1
|
As
of the date of this Agreement, Section 3.1 of the Disclosure Schedule
contains a true, correct and complete list of all contracts in excess
of
INR 41 Million referred to in clauses (i) through (xv), inclusive, of
this Section 3.1 to which the Company or any XXX Group Companies is a
party (each, a “Listed Contract” and, collectively, the “Listed
Contracts”). True, correct and complete copies of each
Listed Contract have been made available to the
Investor:
|
i)
|
Contract
notes (other than in the Ordinary Course of Business), debentures,
other
evidences of indebtedness, guarantees, loans, credit or financing
agreements or instruments, or other Listed Contracts for money borrowed,
including any agreements or commitments for future loans, credit
or
financing;
|
Strictly
Private & Confidential
41
ii)
|
Contracts
with any labor union or contracts for the employment of any Person
on a
full-time, part-time or consulting basis or any consulting, termination
or
severance agreements to the extent there remain payment obligations
to be
performed by the Company or any XXX Group
Companies;
|
iii)
|
leases
of real property from or to a
Person;
|
iv)
|
leases,
rental or occupancy agreements, installment and conditional sale
agreements, and other Contracts affecting the ownership of, leasing
of,
title to, use of, or any
|
v)
|
leasehold
or other interest in, any personal property or asset involving individual
annual aggregate payments in excess of INR 20.5 million and which
are not
terminable by the Company or an XXX Group Companies without
penalty or further payment or without more than 90 days’
notice;
|
vi)
|
joint
venture, partnership or limited liability company agreements involving
a
share of profits, losses, costs or liabilities (excluding agreements
with
third parties involving the co-branding and hosting of websites under
a
revenue sharing arrangement);
|
vii)
|
Contracts
explicitly requiring fixed expenditures after the date of this Agreement
in an amount in excess of INR 20.5 million which are not terminable
by the
Company or an XXX Group Companies without penalty at its
discretion;
|
viii)
|
Contracts
with any Person that generated consolidated net revenues for the
Company
and XXX Group Companies during the twelve months ended March 31,
2007 in
excess of INR 20.5 million other than brokerage contracts and Bombay
Stock
Exchange;
|
ix)
|
licensing
agreements with respect to proprietary rights that obligate the Company
or
any XXX Group Companies to make royalty payments, license fee payments
or
other similar payments after the date of this
Agreement;
|
x)
|
Listed
Contracts between the Company or an XXX Group Companies, on the one
hand,
and any director, officer, equity holder or Affiliate of the Company
or
any XXX Group Companies, on the other hand, or any former director,
officer, equity holder or Affiliate to the extent there remain payment
or
issuance of equity obligations to be performed by the Company or
any XXX
Group Companies pursuant to such Listed
Contracts;
|
xi)
|
Listed
Contracts containing covenants limiting the freedom of the Company
or any
XXX Group Companies in any material respect to compete with any Person
in
any line of business or in any area or
territory;
|
xii)
|
all
Listed Contracts that result in any Person holding a power of attorney
from the Company or any XXX Group Companies that relates to the Company,
any XXX Group Companies or their respective businesses (other than
powers
of attorney granted in the ordinary course of business to (i) patent
counsel engaged in the prosecution of patents, trademark counsel
and their
agents engaged in applying for trademarks and accountants engaged
in
filing tax returns, and (ii) employees of the Company or any XXX
Group Companies to act on behalf of the Company or such XXX Group
Companies with respect to Taxes);
and
|
Strictly
Private & Confidential
42
xiii)
|
all
other Listed Contracts, whether or not made in the ordinary course
of
business, the termination of which would reasonably be expected to
have a
Material Adverse Effect.
|
xiv)
|
Except
for such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) each
Listed Contract is in full force and effect and represents a legally
valid
and binding obligation of the Company or an XXX Group Companies which
is a
party thereto, (ii) the Company and each XXX Group Companies has
performed, in all material respects, all obligations required to
be
performed by it under each of the Listed Contracts to which it is
a party
and, to the Knowledge of the Warrantors, each other party to such
Listed
Contracts has performed, in all material respects, all obligations
required to be performed by it under such Listed Contracts, and
(iii) neither the Company nor any XXX Group Companies is in material
breach or violation of, or material default under, any of the Listed
Contracts to which it is a party, nor has the Company or any XXX
Group
Companies received any written notice that it has materially breached,
violated or defaulted under any of the Listed Contracts to which
it is a
party except for income from
brokerage.
|
xv)
|
Except
as set forth on Section 3.1 of the Disclosure Schedule, as of the
date of this Agreement, neither the Company nor XXX Group Companies
nor
the Warrantors have received any notice, nor has any Knowledge, that
any
Person that generated consolidated net revenues for the Company or
XXX
Group Companies during the twelve months ended Match 31, 2006 in
excess of
INR 20.5 million intends to terminate, materially reduce (i.e., reduction
by more than 5% from actual consolidated net revenues for such twelve
month period) or otherwise materially alter its business or relationship
with the Company or any XXX Group Companies and no such Person has
terminated, materially reduced or otherwise materially altered its
business or relationship with the Company or any XXX Group Companies
in
the last twelve (12) months.
|
3.2
|
Taxes:
|
i)
|
The
Company and the XXX Group Companies have timely filed and if there
has
been a delay, with late fee payment) with the appropriate taxing
authorities each Tax Return required to be filed prior to the date
that
such Tax Return became delinquent.
|
ii)
|
All
such Tax Returns filed are complete and accurate in all material
respects,
and all Taxes shown to be due and payable on such Tax Returns have
been
paid, except for those Taxes which are being challenged in good faith
and
for which adequate reserves have been
made.
|
iii)
|
All
unpaid Taxes payable by the Company and XXX Group Companies for periods
(or portions thereof) ending on or before March 31, 2007, whether
or not
disputed, are adequately reserved in accordance with Indian GAAP
on the
Financial Statements.
|
iv)
|
Neither
the Company nor XXX Group Companies are the beneficiaries of any
extension
of time within which to file any Tax
Return.
|
v)
|
There
are no material Encumbrances for Taxes on any of the assets of the
Company
and XXX Group Companies.
|
Strictly
Private & Confidential
43
3.3
|
Except
as set forth in Section 3.3 of the Disclosure
Schedule:
|
i)
|
no
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Tax has been proposed, asserted or assessed
by
any taxing authority against the Company and/or XXX Group
Companies;
|
ii)
|
there
is no Action or audit now in progress, pending or, to the Knowledge
of the
Company and XXX Group Companies and/or the Promoters, threatened
against
or with respect to the Company and/or XXX Group Companies with respect
to
any Tax;
|
iii)
|
neither
the Company nor the XXX Group Companies is a party to or bound by
any Tax
allocation or Tax sharing agreement or has any current or potential
contractual obligation to indemnify any other Person with respect
to
Taxes;
|
iv)
|
no
claim has ever been made by a taxing authority in a jurisdiction
where the
Company and XXX Group Companies does not pay Tax or file Tax Returns
that
the Company and XXX Group Companies are or may be subject to Taxes
assessed by such jurisdiction; and
|
v)
|
The
Company and XXX Group Companies have withheld and paid all Taxes
required
to have been withheld and paid in connection with amounts paid or
owing to
any employee, creditor, independent contractor or other third
party.
|
3.4
|
Section 3.4
of the Disclosure Schedule contains a list of states, territories
and
jurisdictions (whether foreign or domestic) in which the Company
and XXX
Group Companies are required to file Tax Returns relating to its
operations.
|
3.5
|
Litigation
and Governmental Orders: Except as set forth in Section 3.5 of the
Disclosure Schedule, (a) there are no material Actions pending or, to
the Knowledge of the Warrantors, threatened against the Warrantors,
any of
the assets or properties of the Warrantors, or any of the, directors
and/or officers of Warrantors, and (b) none of the Warrantor or their
respective assets or properties are subject to any material Governmental
Authority relating specifically to Warrantor or any of their respective
assets or properties.
|
3.6
|
Compliance
with Laws:
|
i)
|
The
business of the Company and XXX Group Companies are being conducted
in
compliance with all Applicable
Laws.
|
ii)
|
The
Company and XXX Group Companies are in compliance with the terms
and
requirements of all Licenses. The Company and XXX Group Companies
have not
received any written notice or other written communication from any
Governmental Authority regarding: (a) any revocation, withdrawal,
suspension, termination or modification of, or the imposition of
any
conditions with respect to any Licenses, (b) any violation of any
Applicable Law by Company or XXX Group Companies, or (c) any other
limitations on the conduct of business by
Warrantors.
|
iii)
|
The
Company and XXX Group Companies are not in violation of any term
of
provision of: (a) its Charter Documents, or (b) any Applicable Law
or
regulatory approval applicable to, or which is binding upon, or affects
it
or any of its assets or revenues or the operation of their business.
Any
non-compliances have been disclosed in Section 3.6 of the Disclosure
Schedule and there are no outstanding penalties payable to any
Governmental Authority except as set out in Section 3.6 of the Disclosure
Schedule.
|
Strictly
Private & Confidential
44
iv)
|
There
has not been any breach with respect to compliance of the requirements
of
the listing agreement by the
Company.
|
v)
|
All
contract notes (issued to the clients) used by the Company or XXX
Group
Companies are in compliance with the requirements of Applicable
Law.
|
3.7
|
Licenses:
|
i)
|
Set
forth in Section 3.7 of the Disclosure Schedule is a list of all
Licenses held by the Company and XXX Group Companies which are required
for the Business.
|
ii)
|
The
Company and XXX Group Companies have all Licenses required to permit
the
Company and XXX Group Companies to conduct their respective parts
of the
business.
|
iii)
|
All
of the Licenses held by or issued to the Company and XXX Group Companies
are in full force and effect, and the Company and XXX Group Companies
is a
party thereto is and has been in full compliance with each such Licenses
held by or issued to it and all applicable laws, rules, regulations,
bye-laws, and circulars in this regard, including all reporting and
filing
requirements.
|
3.8
|
Immovable
Property. Section 3.8 of the Disclosure Schedule lists all real
property owned by the Company and XXX Group Companies (“Owned Real
Property”). Section 3.8 of the Disclosure Schedule
also lists all real property leased from or to a third party by the
Company or any XXX Group Companies (“Leased Real Property”). Except
as set forth on Section 3.8 of the Disclosure Schedule, the Company
or one of the XXX Group Companies has a valid and subsisting title
to all
Owned Real Property and/or has a valid and subsisting leasehold estate
in,
and enjoys peaceful and undisturbed possession of, all Leased Real
Property, subject only to any (i) Permitted Encumbrance, and
(ii) except where the failure to have such interests or possession
would not, individually or in the aggregate, reasonably be expected
to
materially impair the Company or the XXX Group Companies use of such
parcel of Owned or Leased Real Property for the uses for which it
is
currently intended.
|
3.9
|
Employee
Benefit Matters:
|
i)
|
To
the Knowledge of the Warrantors, there are no claimed and/or outstanding
dues, including salary, provident fund, or gratuity, of any employees,
agents, advisors, and/or consultants of the Company and XXX Group
Companies.
|
ii)
|
The
Company and XXX Group Companies have been in full and complete compliance
of all labour and industrial laws that are applicable to the Company
and
XXX Group Companies as per Applicable Laws.
|
Strictly
Private & Confidential
45
3.10
|
Labor
Matters: The Warrantors are not party to any labour agreement with
respect to its employees with any labour organization, group or
association, nor, to the Knowledge of the Warrantors, the Company
and XXX
Group Companies there been any attempts to organize the employees
of
within the one (1) year period prior to the date of this Agreement.
There
is no labor strike, labor disturbance or work stoppage pending against
the
Company and XXX Group Companies. There are no labour disputes,
administrative proceedings or court complaints pending or threathened,
to
the Knowledge of Warrantors, before any Governmental Authority or
any
court or agency concerning alleged employment discrimination or any
other
matters relating to the employment of labor. No officer or key employee
of
the Company and XXX Group Companies has given oral or written notice
of
termination of his or her relationship with the Company and/or XXX
Group
Companies. Employees of the Company and each of the XXX Group Companies
are required to adhere to the xxxxxxx xxxxxxx policy applicable to
their
respective employer company and that there have been no breaches
of the
same and appropriate indemnities in this
regard.
|
3.11
|
Environmental
Matters: Company is into service industry and Environment Laws are not
applicable to the Company and any of the XXX Group Companies and
accordingly: (i) to the Knowledge of Warrantors, no hazardous
material is present at any Owned or Leased Real Property in violation
of
any Environmental Law; (ii) neither the Company nor any of the XXX
Group Companies has engaged in any hazardous materials activity in
violation of any Environmental Law and (iii) no action is pending or,
to the Knowledge of the Company or XXX Group Companies, threatened
against
the Company or any XXX Group Companies concerning any of the hazardous
materials activities of the Company and the XXX Group Companies,
or
hazardous materials activity on any Owned or Leased Real
Property.
|
3.12
|
Insurance:
|
i)
|
All
requisite insurance cover, including indemnity, fire, crimes
and liability, errors and omissions, workers’ compensation, vehicular, and
other insurance including those prescribed by the exchanges and/or
regulatory authorities have been taken or held as of date by the
Company
and XXX Group Companies and the same is valid and in full force and
effect.
|
ii)
|
The
Company and XXX Group Companies are not in default with respect to
any
material provision contained in any such insurance policies, nor
has the
Company and XXX Group Companies failed to give any material notice
or
present any material claim under any such insurance policies in due
and
timely fashion.
|
iii)
|
The
Company and XXX Group Companies have not received any written notice
of
cancellation or non renewal of any such insurance
policies.
|
3.13
|
Websites:
|
i)
|
Section 3.13
of the Disclosure Schedule sets forth a true, accurate and complete
list
of all domain names for websites that are owned or used by the Company
and
XXX Group Companies (the “Websites”). Except as disclosed in
Section 3.13 of the Disclosure Schedule with respect to each Website,
the Company and XXX Group Companies: (i) possesses all legal rights
to the exclusive use of the domain names with respect thereto;
(ii) to the Knowledge of the Warrantors and based on current traffic
forecasts for its Websites, has adequate computer and personnel resources
to help ensure that no service outages will occur due to insufficient
data-storage, memory, server or other related reasons which would
reasonably be expected to have a Materially Adverse Effect on the
operation of the business; and (iii) has taken commercially
reasonable steps to protect the confidentiality, integrity and security
of
their software, databases, systems, networks and Websites and all
information stored or contained therein or transmitted thereby from
unauthorized or improper access, modification, transmittal or use.
Further, all domain name used by the Company or the XXX Group Companies
and registered in individual name of Xxxxxxxx Xxxx has been transferred
to
and now owned by the Company.
|
Strictly
Private & Confidential
46
ii)
|
The
Company and XXX Group Companies do not distributes Spyware or Adware
in
connection with the Business. “Spyware” means any software that
covertly gathers information regarding user online activity through
the
user’s Internet connection (i.e., without notice that such information
may
be gathered), whether or not such software is bundled as a hidden
component of a toolbar or like application, other than information:
(i) reasonably gathered in connection with services or information
provided by the Company and XXX Group Companies to such users, including
without limitation through or via “cookies”, or (ii) that is not
associated with Personally Identifiable
Information. “Personally Identifiable Information” means
data that identifies a particular person, by name, address, telephone
number, electronic mail address, social security number, permanent
account
number, unique client code, bank account number or credit card number.
“Adware” means any software that causes advertising to pop-up as a
new window (over or under) on the user’s computer based on the user’s
online activity (other than advertisements that the Company and XXX
Group
Companies serves to visitors to their respective Websites while those
visitors are visiting or exiting such Websites) or which is used
to
distribute Spyware.
|
iii)
|
The
Company and XXX Group Companies and the Promoters have not: (i) violated
in any material respect the rights of any Person with respect to
Personally Identifiable Information provided under any applicable
Law
including, without limitation, rights respecting (x) privacy generally,
and (y) the obtaining, storing, using, sharing or transmitting of
Personally Identifiable Information of any type, whether via electronic
means or otherwise; or (ii) failed in any material respect to comply
with
the published privacy policies as applicable from time to
time.
|
3.14
|
Internal
Controls. The Company and XXX Group Companies maintains a system of
internal accounting controls that is sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with the
management’s general or specific authorizations: (ii) transactions are
recorded as necessary to permit preparation of financial statements
in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with the management’s general or specific authorization; and
(iv) except as disclosed in Section 3.14 of the Disclosure Schedule,
the
recorded accountability for assets is compared with the existing
assets at
reasonable intervals and appropriate action is taken with respect
to any
differences.
|
3.15
|
Investor
Proxy Statement: None of the information to be supplied by the
Warrantors for inclusion in the Investor Proxy Statement at the time
of
the mailing of the Investor Proxy Statement and each amendment or
supplement thereto, and at the time of the Investor Special Meeting,
will
contain any untrue statement of a material fact or will omit to state
any
material fact required to be stated therein or necessary in order
to make
the statements therein, in light of the circumstances under which
they are
made, not misleading.
|
Strictly
Private & Confidential
47
3.16
|
Brokers:
Except for Beejay Investments and Financial Consultants Private Limited
and Xxxxxx Advisors Limited (the “Financial Advisors”), who are
entitled to certain investment banking and advisory fees to be mutually
agreed in connection with the transactions contemplated by this Agreement,
no broker, finder, investment banker or other person is entitled
to any
brokerage fee, finders’ fee or other commission in connection with the
transactions contemplated by this Agreement. Prior to the date of
this
Agreement, the Warrantors have delivered to the Investor a true and
complete copy of all agreements between the Warrantors and Financial
Advisors pursuant to which the Financial Advisors would be entitled
to any
payment.
|
3.17
|
Competition
and Trade Relations:
|
i)
|
None
of the Company and XXX Group Companies have entered into any restrictive
practices and/or arrangements.
|
ii)
|
None
of the Company and XXX Group Companies have received or are exchanging
any
communications with or from, or any notifications (including pending
notifications) to, any governmental or regulatory authority under
any
anti-trust regulatory or similar
legislation.
|
iii)
|
No
judgment, ruling, finding, order or any other decision, preliminary
or
final, of any anti-trust regulatory authority or of any court binding
on
the Company and XXX Group Companies has been
passed.
|
iv)
|
There
are no current or pending investigations by, or proceedings before,
any
antitrust or relevant regulatory authority or any court, including
any
pending threat by an anti-trust or relevant regulatory authority
to open
any such investigations or proceedings in respect of the Company
and XXX
Group Companies.
|
3.18
|
Related
Party Transaction. All related party transactions between the
Warrantors and their relatives or group entities have been disclosed
in
Section 3.18 of the Disclosure Schedule other than in the Ordinary
Course
of Business. All transactions with the related parties have been
at arms
length except for the transactions with employees and relatives and
family
members and their companies are not disclosed separately which is
an
industry practice.
|
3.19
|
Representations
Complete. None of the representations or warranties made by the
Warrantors herein or in any schedule or exhibit hereto, including
the
Disclosure Schedule, or certificate furnished pursuant to this Agreement
or any written statement furnished to the Investor pursuant hereto
or in
connection with the transactions contemplated hereby, contain, or
will
contain at the Closing Date any untrue statement of a material fact,
or
omits or will omit at the Closing Date to state any material fact
necessary in order to make the statements contained herein or therein,
in
the light of the circumstances under which made, not
misleading.
|
PART
2 -REPRESENTATIONS AND WARRANTIES OF INVESTOR
Prior
to
the execution and delivery of this Agreement by the Investor, the Investor
has
delivered to the Company and Promoters a disclosure schedule with numbered
sections corresponding to the relevant sections in this Agreement (the
“Investor Disclosure Schedule” attached as Annexure “4”). Any
exception or qualification set forth in the Investor Disclosure Schedule with
respect to a particular representation or warranty contained in this Agreement
shall be deemed to be an exception or qualification with respect to all other
applicable representations and warranties contained in this Agreement, but
only
where the relevance of such disclosure to such other representations or
warranties is reasonably apparent from the text of such
disclosure. Nothing in the Investor Disclosure Schedule is
intended to broaden the scope of any representation, warranty or covenant of
the
Investor contained in this Agreement. Subject to the exceptions and
qualifications set forth in the Investor Disclosure Schedule, the Investor
represents and warrants to the Company and Promoters as follows:
Strictly
Private & Confidential
48
1
|
Authority: The
Investor has all requisite corporate power and authority to execute
and
deliver this Agreement and the other agreements contemplated hereby
and to
perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other agreements contemplated
hereby by
the Investor, the performance by the Investor of its obligations
hereunder
and thereunder and the consummation of the transactions contemplated
hereby or thereby have been duly authorized by the directors of the
Investor, and, except for the approval of this Agreement and the
other
agreements contemplated hereby and the transactions contemplated
hereby
and thereby by the holders of a majority of the Investor’s outstanding and
publicly traded shares of common stock present and voting at a special
meeting of the Investor’s stockholders to be convened for that purpose
(the “Investor Stockholders’ Approval”), no other action on the
part of Investor is necessary to authorize the execution and delivery
of
this Agreement or any other agreements contemplated hereby by the
Investor
or the performance by the Investor of its obligations hereunder and
thereunder or the consummation by the Investor of the transactions
contemplated hereby or thereby. This Agreement has been duly
executed and delivered by the Investor, and this Agreement constitutes,
and the other agreements contemplated hereby upon execution and delivery
by the Investor will each constitute (in each case assuming due
authorization, execution and delivery by the other parties thereto),
a
legally valid and binding obligation of the Investor, enforceable
against
the Investor in accordance with its terms, except as such enforceability
may be limited by principles of public policy, and subject to (i) the
effect of any Applicable Law of general application relating to
bankruptcy, reorganization, insolvency, moratorium or similar Applicable
Laws affecting creditors’ rights and relief of debtors generally and
(ii) the effect of rules of law and general principles of equity,
including rules of law and general principles of equity governing
specific
performance, injunctive relief and other equitable remedies (regardless
of
whether such enforceability is considered in a proceeding in equity
or at
law).
|
2
|
Organization: The
Investor is a company incorporated, validly existing and in good
standing
under the General Corporation Law of the State of Delaware, and has
all
requisite corporate power and authority to own, operate or lease
the
properties and assets now owned, operated or leased by it, and to
carry on
its business in all material respects as currently
conducted. True and complete copies of the certificate of
incorporation (the “Investor Charter Document”) [and Bylaws (the
“Investor’s Bylaws”)] of the Investor, [each] as amended and in
effect as of the date of this Agreement, have been made available
to the
Company and Promoters. The Investor is not in violation of any
of the provisions of the Investor Charter Document or the Investor’s
Bylaws.
|
3
|
Investor
Capitalization:
|
3.1
|
As
of the date of this Agreement, 9,062,500 shares of Investor’s common stock
are issued and outstanding. Except as set forth under Section
3(a) of the Investor Disclosure Schedule, no other equity securities
of
the Investor are issued or outstanding. All such issued and
outstanding shares of common stock have been duly authorized and
validly
issued, and were not issued in violation of any preemptive or similar
rights created by statute, the Investor Charter Documents, the Investor’s
Bylaws or any agreement to which the Investor is a party or by which
it is
bound, and have been issued in compliance with applicable U.S. Federal
securities Laws.
|
Strictly
Private & Confidential
49
3.2
|
As
of the date of this Agreement, except as set forth in Section 3.2
of the
Investor Disclosure Schedule, there are (i) no outstanding options,
warrants, calls, rights of conversion or other rights, agreements,
arrangements or commitments of any kind or character, whether written
or
oral, relating to the shares of common stock to which the Investor
is a
party, or by which it is bound, obligating the Investor to issue,
deliver
or sell, or cause to be issued, delivered or sold, any shares of
common
stock, and (ii) no outstanding or authorized share appreciation,
phantom share, profit participation, or other similar rights with
respect
to the Investor.
|
3.3
|
As
of the date of this Agreement, except as set forth in Section 3.3
of the
Investor Disclosure Schedule, there are (i) no rights, agreements,
arrangements or commitments of any kind or character, whether written
or
oral, relating to the shares of common stock to which the Investor
is a
party, or by which it is bound, obligating the Investor to repurchase,
redeem or otherwise acquire any issued and outstanding shares of
common
stock ; and (ii) no voting agreements, member agreements, proxies or
other agreements or understandings in effect to which the Investor
is a
party, or by which it is bound, with respect to the governance of
Investor
or the voting or transfer of any shares of common stock.
|
4
|
Investor
Subsidiaries:
|
4.1
|
Section 4(a)
of the Investor Disclosure Schedule sets forth (i) the legal name of
the Investor’s Dubai Subsidiary as of the date of this Agreement and
(ii) the proposed capitalization thereof and the proposed ownership
of interest in the Investor’s Dubai Subsidiary. All issued and outstanding
equity interests in the Investor’s Dubai Subsidiary will be owned
beneficially and of record by the Investor, free and clear of all
Encumbrances of any kind or any restrictions on the right to vote,
sell or
otherwise dispose of such equity interest. No Person other than the
Investor will have any economic interest in, or right to participate
in,
the earnings of the Investor’s Dubai
Subsidiary.
|
4.2
|
When
incorporated the Investor’s Dubai Subsidiary will be duly organized,
validly existing and in good standing under the laws of its jurisdiction
of organization, and have the requisite power and authority to own,
operate or lease the respective properties and assets that it may
own,
operate or lease, and carry on its business in all material respects.
The
Investor’s Dubai Subsidiary will be duly qualified to do business as a
foreign entity, and be in good standing, under the Laws of the
jurisdiction in which the character of its properties are owned,
operated
or leased, or the nature of its activities, makes such qualification
necessary.
|
5
|
Conflicts
and Consents: The execution and delivery by the Investor of
this Agreement and the other agreements contemplated hereby, the
performance by the Investor of its obligations hereunder and thereunder
and the consummation by the Investor of the transactions contemplated
hereby and thereby does not and will not (i) conflict with or result
in a violation of the Investor Charter Document or the Investor’s Bylaws
or any equivalent organizational documents of any Investor Subsidiary;
(ii) conflict with or result in a violation of any Governmental Order
or
Law applicable to the Investor, or any Investor Subsidiary or any
of their
respective assets or properties; or (iii) except for the Investor
Shareholders Approval, require any consent or approval under, result
in a
breach of, or constitute a material default (or event which with
the
giving of notice or lapse of time, or both, would become a material
default) under, or give rise to any rights of termination, amendment,
modification, acceleration or cancellation of or loss of any benefit
under, or result in the creation of any Encumbrance on any of the
assets
or properties of the Investor or any Investor Subsidiary pursuant to any
Contract or any material Permit.
|
Strictly
Private & Confidential
50
6
|
Governmental
Consents, Approvals, Etc.: Except as set forth in Section 6
of the Investor Disclosure Schedule, no consent, waiver, approval,
authorization, order or permit of, or declaration, filing or registration
with, or notification to, any Governmental Authority is required
to be
made or obtained by the Investor or any Investor Subsidiary in connection
with the execution and delivery of this Agreement by the Investor
or the
consummation by the Investor of the transactions contemplated by
this
Agreement.
|
7
|
Litigation
and Governmental Orders: There are no material Actions
pending or, to the Knowledge of the Investor, threatened against
the
Investor or any Investor Subsidiary, any of the assets or properties
of
the Investor or any Investor Subsidiary, or any of the directors
and
officers of the Investor or any Investor Subsidiary in their capacity
as
directors or officers of the Investor or any Investor Subsidiary,
and none
of the Investor, any Investor Subsidiary or their respective assets
or
properties is subject to any material Governmental Order relating
specifically to the Investor, any Investor Subsidiary or any of their
respective assets or properties.
|
8
|
Compliance
with Laws: Neither the Investor nor any Investor Subsidiary
has received any written notice from any Governmental Authority to
the
effect that the Investor or any Investor Subsidiary is not in compliance
with any applicable Law.
|
9
|
Investor
SEC Reports: Since its inception, the Investor has filed
all reports, registration statements and other documents, together
with
any amendments thereto, required to be filed under the Securities
Act and
the Exchange Act, and the Investor will file all such reports,
registration statements and other documents required to be filed
by the
Investor from the date of this Agreement to the Closing Date (all
such
reports, registration statements and documents filed or to be filed
with
the SEC, are collectively referred to as “Investor SEC
Reports”). As of their respective dates, the Investor SEC
Reports complied or will comply in all material respects with all
rules
and regulations promulgated by the SEC and did not or will not contain
any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not
misleading. The Investor has provided to the Company and
Promoters a true and complete copy of all Investor SEC Reports filed
on or
prior to the date hereof, and will promptly provide to the Company
and
Promoters a true and complete copy of any such reports filed after
the
date hereof and prior to the Closing
Date.
|
10
|
Investor
Proxy Statement: None of the information to be supplied by
the Investor or any Investor Subsidiary for inclusion in the Investor
Proxy Statement at the time of the mailing of the Investor Proxy
Statement
and each amendment or supplement thereto, and at the time of the
Investor
Special Meeting, will contain any untrue statement of a material
fact or
will omit to state any material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not
misleading.
|
11
|
Brokers: Except
for Step Two Corporation Limited (the “Investor Financial
Advisor”), which is entitled to certain investment banking and
advisory fees in connection with the transactions contemplated by
this
Agreement, no broker, finder, investment banker or other person is
entitled to any brokerage fee, finders’ fee or other commission in
connection with the transactions contemplated by this Agreement based
upon
arrangements made by or on behalf of the Investor, any Investor
Subsidiary, or any of their respective
Affiliates.
|
Strictly
Private & Confidential
51
SCHEDULE
8 – PRE-COMPLETION SHAREHOLDING OF XXX GROUP COMPANIES
XXX
GLOBAL SECURITIES LIMITED
Name
|
Number
of
|
Face
value
|
Amt.
Paid
|
%
of total
|
|
Shares
Held
|
per
shares (Rs)
|
(Rs.
In lakhs)
|
|
Promoters
|
–
|
–
|
–
|
–
|
SMC
Global Securities Ltd.
|
970000
|
10
|
9,700,000.00
|
9.70
|
SMC
Share Brokers Ltd.
|
970000
|
10
|
9,700,000.00
|
9.70
|
Xxx
Xxxxx Share Broking Ltd.
|
970000
|
10
|
9,700,000.00
|
9.70
|
MVR
Share Trading (P) Ltd.
|
960000
|
10
|
9,600,000.00
|
9.60
|
ATOZ
Consultants (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
7.25
|
ATOZ
Venture Capital Ltd.
|
725,000
|
10
|
7,250,000.00
|
7.25
|
Rolex
Finvst (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
7.25
|
Zee
Dataline (P) Ltd.
|
725,000
|
10
|
7,250,000.00
|
7.25
|
Xx.
Xxxxxx Xxxxxx
|
150,000
|
10/-
|
1,500,000.00
|
1.50
|
Mr.
Xxxx Xxxx
|
150,000
|
10/-
|
1,500,000.00
|
1.50
|
Others
|
2930057
|
10
|
29,300,570.00
|
29.30
|
TOTAL
|
10000057
|
10
|
100,000,570.00
|
100.00
|
ABHICHHAYA
INVESTMENTS PRIVATE LIMITED
Name
of Shareholder
|
No.
of shares held
|
Percentage
|
|
|
|
Promoters
|
|
|
SMC
Comtrade Limited
|
18,200
|
39.91
|
XXX
Global Securities Ltd.
|
12,200
|
26.75
|
Others
|
15,200
|
33.34
|
TOTAL
|
45600
|
100
|
XXXXX
INVESTMENTS PRIVATE LIMITED
Name
of Shareholder
|
No
of shares held
|
Percentage
|
|
|
|
SMC
Comtrade Limited
|
14,000
|
39.88
|
XXX
Global Securities Ltd.
|
9,400
|
26.78
|
Others
|
11,700
|
33.34
|
TOTAL
|
35100
|
100
|
Strictly
Private & Confidential
52
NEXGEN
CAPITALS LIMITED
Name
of Shareholder
|
No
of shares held
|
Percentage
|
|
|
|
Abhichhaya
Investments (P) Ltd.
|
1141897
|
44.93
|
Xxxxx
Investments (P) Ltd.
|
1195363
|
47.03
|
SMC
Comtrade Limited
|
69,600
|
2.74
|
Others
|
134,800
|
5.3
|
TOTAL
|
2541660
|
100
|
Strictly
Private & Confidential
53
SCHEDULE
9 – LIST OF REGULATORY APPROVALS
Regulatory
approval for Investor in India:
» |
Approval
from Foreign Investment Promotion Board for Investor to acquire Investor
Shares in the Company and for Company to hold downstream investments
in
XXX Group Companies.
|
Regulatory
approval for the Company, Promoters and XXX Group Companies:
Name
of Company
|
Activities
|
FDI
regulations
|
Regulatory
Approval required prior change in shareholding
|
XXX
Global Securities Limited
|
» Investment
is Shares & Securities
» BSE
Trading and depository
|
» 100%
permitted to certain capitalization requirements
|
· BSE
· Gauhati
Stock Exchange
|
Xxxxx
Investment Private Limited
|
Investment
Company
|
NIL
|
NIL
|
Abhichaya
Investments Private Limited
|
Investment
Company
|
NIL
|
NIL
|
Nexgen
Capitals Limited
|
Category
I Merchant Banker
|
FDI
upto 100% is permissible under the automatic route subject to certain
minimum capitalization requirements
|
Prior
approval as per Regulation 9A (1) (a) and (b) SEBI (MB) Regulation,
1992
|
Strictly
Private & Confidential
54
SCHEDULE
10 – LIST OF CLOSING DELIVERABLES
1)
|
A
certificate signed by the Promoters and the Company to the effect
that the
Representations and Warranties contained in this Agreement, continue
to be
true and correct as on the Completion Date with the same effect as
though
such Representations and Warranties had been made as of such
date.
|
2)
|
A
certificate signed by the Promoters and the Company confirming the
fulfillment of the Conditions
Precedent.
|
3)
|
A
certificate from the Warrantors confirming that there has not been
any
Material Adverse Effect from the Effective Date to the Completion
Date.
|
4)
|
Original
share certificates or credit to the depository account provided by
the
Investor that evidences the Subscription Shares being issued and
allotted
to the Investor in accordance with the provisions of this
Agreement.
|
5)
|
Certified
true copies of the Register of Member of the Company and XXX Group
Companies confirming the proposed shareholding as set out in Schedule
3.
|
6)
|
No
Objection Letter pursuant to Press Note No. 1 and Press Note No.
3 of
2005, in a form set out in Annexure “2” shall be signed and delivered to
the Investor by the Promoters, the Company and XXX Group
Companies.
|
7)
|
Articles
of Association of the Company and XXX Group Companies amended in
a form
acceptable to the Investor to reflect the provisions of the Shareholders
Agreement to be adopted on or at Completion
Date.
|
8)
|
Certified
copies of board and shareholders resolutions of the Company approving
execution of the Agreement and issue of Subscription Shares and transfer
of Purchased Shares to Investor.
|
9)
|
Certified
true copies of the regulatory approvals as specified in Schedule
9.
|
10)
|
Chartered
accountant certificate for fair value of shares as required under
Foreign
Exchange Management Act, 1999 and the guidelines of Reserve Bank
of
India.
|
11)
|
Certificate
from Company Secretary in Whole Time Practice confirming that the
statutory records of the Company and XXX Group Companies are in accordance
with the requirements of the Act.
|
12)
|
Such
other documents as are required under this Agreement and not specifically
set out above and reasonably requested by the
Investor.
|
Strictly
Private & Confidential
55
ANNEXURE
1 – FORM OF SHAREHOLDERS AGREEMENT
[Attached
separately with this Agreement]
Strictly
Private & Confidential
56
ANNEXURE
2 – FORM OF NO OBJECTION LETTER
[On
the letterhead of SMC Limited]
NO
OBJECTION LETTER
[ ,
2007]
Millennium
India Acquisition Company Inc.
000
Xxxx,
00xx Xxxxxx,
Xxxxx
00X,
Xxx
Xxxx,
XX
00000,
XXX
Dear
Sirs,
Re:
No Objection Letter from XXX Global Securities Limited (the
“Company”)
We
write
with reference to the understanding and arrangement with the Shareholders
Agreement dated l
2007, entered into by and between Millennium India Acquisition Company Inc.,
XXX
Global Securities Limited (“Company”) and the Promoters of the
Company.
1.
|
We
hereby irrevocable declare, acknowledge and confirm that Millennium
India
Acquisition Company Inc., their nominees, assignees, affiliates,
subsidiaries and/or group companies (Collectively “Millennium”),
shall not be subject to any restrictions or objections from us from
entering into any business, opportunities, investments, joint ventures,
collaborations, partnerships, alliances, enterprise, technology transfer,
technology license, trademark agreement or any other collaboration,
agreement or arrangement, by itself or through its subsidiaries,
affiliates, joint ventures, partnerships, offices, representatives,
contractors, or otherwise howsoever, in or outside
India.
|
2.
|
We
hereby irrevocably waive, for purposes of any Indian legal or regulatory
requirements, any objection we may have in connection with any proposal
by
Millennium for investment in any business / arrangement with any
person,
including but not limited to waiver of our rights under Press Note
1 and 3
of 2005 of the Department of Industrial Promotion and Policy, Government
of India in any business or activity other than financial services
(i.e.
stock broking, commodities broking, insurance broking and merchant
banking) for a period of 5 years from the date of issue of this letter
or
termination of the Shareholders Agreement, whichever is earlier.
However,
this restriction will exclude proposed investments by Millennium
in SMC
Global Securities Limited.
|
3.
|
This
no objection letter may be produced by Millennium to any government
or
regulatory authority in support of any proposal by Millennium for
investment in any business / arrangement with any person. This letter
may
be treated as a declaration waiving our rights under Press Note 1
and 3 of
2005 of the Department of Industrial Promotion and Policy, Government
of
India. Our declaration and waiver under this letter is irrevocable.
The
contents of this letter shall be binding on us and on our heirs,
executors, administrators, successors and permitted
assigns.
|
Strictly
Private & Confidential
57
Yours
sincerely,
Millennium
India Acquisition Company
Inc. XXX
Global Securities Limited
_______________________________ _______________________________
Name:
Name: Mr.
Xxxx
Xxxx
Title: <
/font>Title:
Director
_______________________________
Name:
Mr.
Xxxx Xxxx
SMC
Global Securities Limited
_______________________________
Name:
Mr.
S.C.Aggarwal
Title:
Directors
SMC
Share
Brokers Limited
_______________________________
Name:
Xx.
X.X. Xxxxx
Title:
Directors
_______________________________
Mr.
S.C.
Aggarwal and Xx. X.X. Xxxxx (for and on behalf of the Promoter
Group)
Strictly
Private & Confidential
58
ANNEXURE
3 – DISCLOSURE SCHEDULE
[Attached
Seperately]
Strictly
Private & Confidential
59
ANNEXURE
4– INVESTOR DISCLOSURE SCHEDULE
[Attached
Seperately]
Strictly
Private & Confidential
60