EXHIBIT 99.2
SUBSCRIPTION AGREEMENT
by and between
▇▇▇▇▇▇ INFOWAY LIMITED
and
VENTURE TECH SOLUTIONS PRIVATE LIMITED
--------------------------
Dated: October 7, 2002
--------------------------
Table of Contents
Page
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ARTICLE I DEFINITIONS ............................................... 2
ARTICLE II SUBSCRIPTION FOR EQUITY SHARES ............................ 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............. 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF VENTURE TECH ............ 12
ARTICLE V CONDITIONS TO THE OBLIGATION OF VENTURE TECH TO CLOSE ..... 13
ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE ...... 15
ARTICLE VII INDEMNIFICATION ........................................... 17
ARTICLE VIII AFFIRMATIVE AND NEGATIVE COVENANTS ........................ 17
ARTICLE IX EXCLUSIVITY ............................................... 20
ARTICLE X TERMINATION OF AGREEMENT .................................. 20
ARTICLE XI MISCELLANEOUS ............................................. 21
SCHEDULES
Schedule 1 Particulars of the Company
Schedule 2 Company Warranties
Schedule 3 Venture Tech Warranties
EXHIBITS
A FORM OF INDEMNIFICATION DEED
B FORM OF COMPANY COUNSEL OPINION
C FORM OF EXECUTIVE LETTER
D CLOSING CERTIFICATES
E DISCLOSURE DOCUMENTS
F EXISTING CHARTER DOCUMENTS
G ESCROW AGREEMENT
SUBSCRIPTION AGREEMENT, dated October 7, 2002 (this "Agreement"), by
and between:
1. ▇▇▇▇▇▇ INFOWAY LIMITED, a company incorporated under the laws of
India and having its principal office at Tidel Park, 2nd Floor, No. ▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ - ▇▇▇▇▇▇ (the "Company"); and
2. VENTURE TECH SOLUTIONS PRIVATE LIMITED, a company incorporated
under the provisions of the Companies Act, 1956 and having its registered office
at ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ("Venture Tech").
WHEREAS,
(A) The Company has an authorized share capital of 35,000,000 Equity
Shares (as defined herein) of which 23,202,176 Equity Shares are issued and
outstanding on the date of this Agreement, and following completion of the
transactions contemplated hereby and by the other Transaction Documents (as
defined herein), will have an authorized share capital of 37,500,000 made up of
32,795,200 Equity Shares issued and outstanding (prior to the Venture Tech
Second Tranche as defined in this Agreement and the Investor Rights Agreement)
and 34,830,083 Equity Shares outstanding (after the Venture Tech Second
Tranche). 13,491,543 ADSs (as defined herein) of the Company are listed and are
traded on The Nasdaq National Market and each ADS presently represents one
Equity Share.
(B) Upon the terms and conditions of this Agreement, the Company and
Venture Tech have agreed that the Company shall allot and issue to Venture Tech
and Venture Tech shall subscribe for and purchase an aggregate of 4,069,767
Equity Shares or ADSs (as defined herein) for an aggregate purchase price of Rs.
337,960,000 (equivalent to USD 7 million as on the date hereof) in two tranches
subject to the terms and conditions of this Agreement.
(C) Upon the terms and conditions of this Agreement (as defined
herein) (a) VentureTech (as defined herein) shall subscribe for 2,034,884 Equity
Shares of the Company for a consideration of Rs. 168,980,000 (equivalent to US$
3.5 million as of the date hereof) at a purchase price per share of Rs. 83.04
(equivalent to USD 1.72 per share as of the date hereof at the exchange rate of
Rs. 48.28 per USD 1) payable at the Closing and (b) subject to the Closing of
this Agreement and the SAIF Subscription Agreement, VentureTech shall
irrevocably and unconditionally subscribe for 2,034,883 Equity Shares or
equivalent ADSs of the Company for a consideration of Rs. 168,980,000
(equivalent to US$ 3.5 million as of the date hereof) for a purchase price per
share of Rs. 83.04 per share (equivalent to USD 1.72 per share as of the date
hereof at the exchange rate of 48.28 per USD 1), on or before 30 April 2003.
(D) Upon the date hereof, SAIF Investment Company Limited ("SAIF")
shall have entered into an agreement with the company to subscribe for 7,558,140
Equity Shares of the Company in the form of ADSs for a consideration of USD 13
million in cash.
(E) Both the parties recognise the existence of SARF Shareholders
Agreement and SARF Registration Rights Agreement (as defined in the Investor
Rights Agreement)
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"ADSs" mean the American Depositary Shares, issued under the Deposit
Agreement, each of which, presently represents one Equity Share.
"Affiliate" shall mean in relation to a person ("Subject Person"), a
person directly or indirectly Controlling, Controlled by or under common Control
with that Subject Person and shall include any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
"Agreement" means this Agreement as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Arbitration Board" has the meaning set forth in Section 11.7 of this
Agreement.
"Assets" has the meaning set forth in Section 24 of Schedule 2 hereto.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York or Chennai, India are authorized
or required by law or executive order to close.
"Claims" means all actions, suits proceedings, claims, complaints
disputes, arbitrations or investigations pending, at law, in equity or before
any Governmental Authority or competent court.
"Closing" has the meaning set forth in Section 2.3 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.3 of this Agreement.
"Code" means the United States Internal Revenue Code of 1986, as amended,
or any successor statute thereto.
"Commission" means the United States Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Exchange Act and the
Securities Act.
"Commonly Controlled Entity" means any entity which is under common
control with the Company within the meaning of Code Section 414(b), (c), (m),
(o) or (t).
"Company" has the meaning set forth in the preamble to this Agreement, the
particulars of which as of the date hereof are set forth in Schedule 1 hereto.
"Company Plans" has the meaning set forth in Section 23 of Schedule 2
hereto.
"Company Warranties" has the meaning set forth in Article III of this
Agreement.
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"Condition of the Company" means the assets, business, properties,
operations or financial condition of the Company, provided, however, that none
of the following shall be deemed (either alone or in combination) to constitute,
and none of the following shall be taken in to account in determining whether
there has been a material adverse effect on the Condition of the Company: (a) a
decline in the trading price of the ADSs on the Nasdaq; or (b) a general decline
in economic conditions in India; or (c) a general decline in the economic
conditions affecting India's Internet and telecommunications sector that does
not have a disproportionate adverse impact on the Company.
"Conditions" means the conditions set forth in Articles V and VI of this
Agreement.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and includes (x) ownership directly or indirectly of 50% or more of the shares
in issue or other equity interests of such person, or (y) possession directly or
indirectly of 50% or more of the voting power of such person, and the terms
"Controlling" and "Controlled" have meanings correlative to the foregoing.
"Copyrights" means any copyright registrations and applications for
registration thereof, and any non-registered copyrights of India, the United
States or any other jurisdiction.
"Deed of Undertaking" means the Deed of Undertaking to Support
Transactions between SCS, SAIF, VentureTech and the Company dated the date
hereof.
"Directors" means the directors of the Company whose names appear on the
register of directors of the Company.
"Disclosed" means fully and fairly disclosed by the Company in this
Agreement or the Disclosure Documents.
"Disclosure Documents" means Exhibit E which contains the disclosures of
the Company in relation to the Company Warranties comprising the documents
listed in Exhibit E hereto in the form copies of such listed documents have been
delivered by the Company to VentureTech prior to the signing of this Agreement
by VentureTech.
"Employee Share Option Scheme" or "ESOP" shall mean the employee stock
ownership plans of the Company entitled the Associate Stock Option Plan 1999,
the Associate Stock Option Plan 2000 and any further stock option plans approved
by stockholders of the Company from time to time including any modifications
thereof, as approved in accordance with this Agreement.
"Encumbrance" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
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"Equity Share Equivalents" means any debenture, preference share, option
or warrant or any other security or obligation which is by its terms, directly
or indirectly convertible into or, exchangeable or exercisable for Equity
Shares, and any option, warrant or other subscription or purchase right with
respect to Equity Shares or any other security referred to in this definition.
"Equity Shares" means the ordinary equity shares, par value Rs.10 per
share, of the Company as subdivided, consolidated or converted from time to
time.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Escrow Agreement" means the Escrow Agreement entered into between Venture
Tech, the Company and the Escrow Agent date hereof and attached to this
Agreement as Exhibit G.
"Escrow Agent" shall have the meaning ascribed to it in the Escrow
Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Existing Charter Documents" means the Memorandum and Articles of
Association of the Company as at the date hereof as set out in Exhibit F to this
Agreement.
"FCPA" has the meaning set forth in Section 10 of Schedule 2 hereto.
"Financial Statements" has the meaning set forth in Section 16 of Schedule
2 hereto.
"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" means the group of companies comprising the Company and its
Subsidiaries. The term "Group Company" shall be construed accordingly.
"Hardware" has the meaning set forth in Section 26 of Schedule 2 hereto.
"ICC" has the meaning set forth in Section 11.7(a) of this Agreement.
"Indemnification Deed" means the Indemnification Deed between the Company
and each Director in the form attached hereto as Exhibit A.
"Indemnified Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Indian GAAP" means generally accepted accounting principles in India from
time to time.
"Intellectual Property" has the meaning set forth in Section 25 of
Schedule 2 hereto.
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"Internet Assets" means any Internet domain names and other computer user
identifiers and any rights in and to sites on the worldwide web, including
rights in an to any text, graphics, audio and video files and html and other
code incorporated in such sites.
"Investor Rights Agreement" means the Investor Rights Agreement dated the
date hereof among the Company, Venture Tech and the other parties that are
signatories thereto and effective as at, but subject to the occurrence of, the
Closing.
"Liabilities" has the meaning set forth in Section 18 of Schedule 2
hereto.
"Losses" has the meaning set forth in Section 7.1 of this Agreement.
"Material Contracts" means, in relation to the Company, any security
issued by the Company or any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument to which the Company is a party or
by which it or any of its property is bound and which (i) involves an aggregate
amount equal to or in excess of US$ 500,000, or (ii) in the case of the Company,
is otherwise material to the Condition of the Company; or (iii) is a material
contract pursuant to Item 10 of Item 601 of Regulation S[-] K.
"NASD" means the National Association of Securities Dealers Inc
Inc. and its affiliate The Nasdaq Stock Market, Inc.
"Orders" means any judgment, injunction, writ, award, decree or order of
any nature of any Governmental Authority or competent court.
"Patents" means any patents and patent applications in India and the
United States including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Permits" has the meaning set forth in Section 9 of Schedule 2 hereto.
"Person" means any individual, corporation, company, partnership, limited
liability company, joint venture, association or trust of any other entity or
organization.
"Plan" means any employee benefit plan, arrangement, policy, program,
agreement or commitment (whether or not an employee plan within the meaning of
Section 3(3) of ERISA), including any employment, consulting or deferred
compensation agreement, executive compensation, bonus, incentive, pension,
profit-sharing, savings, retirement, stock option, stock purchase or severance
pay plan, any life, health, disability or accident insurance plan, whether oral
or written, whether or not subject to ERISA, as to which the Company or any
Commonly Controlled Entity has or in the future could have any director or
indirect, actual or contingent liability.
"Regulation S" means Regulation S adopted by the Commission under the
Securities Act.
"Related Party" of a person ("Subject Person") means (a) any shareholder
holding more than 10% of the voting interests in the Subject Person or an
Affiliate of the Subject Person; (b) any director or officer of a person
referred to in paragraph (a); (c) any Relative of a natural person referred to
in paragraph (a) or (b); (d) any person in which a person referred to in
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paragraph (a) or (b) or (c) has any interest, other than a passive shareholding
of less than 5% in a publicly listed company, and (vi) any Company under
equivalent management to the Company or which is or whose management is
accustomed to act in accordance with the directions of one or more of the
Directors, Shareholders or any other Affiliate of the Company.
"Relative" of a natural person means any spouse, parent, grandparent,
child, grandchild and sibling of such person.
"Requirements of Law" means, as to any Person, any law, statute, treaty,
rule, regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority or
stock exchange (including, without limitation, the NASD), in each case
applicable or binding upon such Person or any of its property or to which such
Person or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.
"Restated Charter Documents" means the Memorandum of Association and
Amended and Restated Articles of Association of the Company reflecting the terms
set forth in the Investor Rights Agreement in a form acceptable to Venture Tech
and to be adopted on the Closing.
"Rs." means Indian Rupees, the lawful currency of India.
"Rules" has the meaning set forth in Section 11.7(a) of this Agreement.
"SAIF" has the meaning set forth in the preamble to this Agreement.
"SAIF Subscription Agreement" means the subscription agreement dated the
date hereof between SAIF and the Company for the subscription for ADSs of the
Company by SAIF.
"SCS" means ▇▇▇▇▇▇ Computer Services Limited.
"SEC Reports" has the meaning set forth in Section 17 of Schedule 2
hereto.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Shareholders" means the shareholders of the Company whose names appear on
the register of members of the Company.
"Significant Subsidiary" shall have the meaning set forth in Regulation
S-X under the United States federal securities laws.
"Software" means any computer software programs, source code, object code,
data and documentation, including any computer software programs that
incorporate and run the Company's pricing models, formulae and algorithms.
"Subscribed Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Subscription Price" has the meaning set forth in Section 2.2 of this
Agreement.
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"Subsidiary" means any subsidiary of the Company. Part B of Schedule 1
hereto contains a list of the Company's Subsidiaries.
"Taxes" means any federal, state, provincial, county, local, foreign and
other taxes (including income, profits, windfall profits, alternative, minimum,
accumulated earnings, personal holding company, capital stock, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, employment,
unemployment compensation, payroll and property taxes, import duties, octroi,
and stamp duty and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Transaction Documents" means, collectively, this Agreement, the SAIF
Subscription Agreement, the Investor Rights Agreement, the Registration Rights
Agreement, the Restated Charter Documents, Indemnification Deed for Venture Tech
Directors and the Deed of Undertaking.
"US GAAP" means generally accepted accounting principles in the United
States from time to time.
"US$" or "US Dollars" means United States Dollars, the lawful currency of
the United States of America.
"Venture Tech" has the meaning set out in the preamble to this Agreement.
"Venture Tech Warranties" has the meaning set forth in Article IV of this
Agreement.
1.2 Interpretation. In this Agreement, unless the context otherwise
requires:
(a) Accounts. Any reference to a balance sheet, profit and
loss statement or other financial statement or accounts shall include a
reference to any note thereto.
(b) Directly or Indirectly. The phrase "directly or
indirectly" means directly, or indirectly through one or more intermediate
persons or through contractual or other legal arrangements, and "direct or
indirect" has the correlative meaning.
(c) Gender and Number. Unless the context otherwise requires,
all words (whether gender-specific or gender neutral) shall be deemed to include
each of the masculine, feminine and neuter genders, and words importing the
singular include the plural and vice versa.
(d) Headings. Headings are included for convenience only and
shall not affect the construction of any provision of this Agreement.
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(e) Include not Limiting. "Include," "including," "are
inclusive of" and similar expressions are not expressions of limitation and
shall be construed as if followed by the words "without limitation."
(f) Statutory References. A reference to a statute or
statutory provision includes, to the extent applicable at any relevant time:
(i) that statute or statutory provision as from time to
time consolidated, modified, re-enacted or replaced by any other statute or
statutory provision;
(ii) any repealed statute or statutory provision which
it re-enacts (with or without modification); and
(iii) any subordinate legislation or regulation made
under the relevant statute or statutory provision.
(g) Time. If a period of time is specified and dates from a
given day or the day of a given act or event, such period shall be calculated
exclusive of that day. If the day on or by which something must be done is not a
Business Day, that thing must be done on or by the Business Day immediately
following such day. References to a time of day shall be references to Indian
Standard time.
(h) Share Calculations. In calculations of share numbers, (i)
references to a "fully diluted basis" mean that the calculation is to be made
assuming that all outstanding options, warrants and other Equity Share
Equivalents (whether or not by their terms then currently convertible,
exercisable or exchangeable), have been so converted, exercised or exchanged,
and the transactions contemplated by the Buyback Agreement is completed and (ii)
references to a "non-diluted basis" mean that the calculation is to be made
taking into account only Equity Shares then in issue.
(i) Where a matter is expressed to be to the "knowledge" of
the Company such knowledge shall assume reasonable enquiry has been undertaken.
ARTICLE II
SUBSCRIPTION FOR EQUITY SHARES
2.1 Subscription for Subscribed Shares. Upon the terms and subject
to the conditions herein set forth, the Company agrees to, on the Closing Date,
allot and issue to Venture Tech, free and clear of all Encumbrances (other than
Encumbrances resulting from actions of Venture Tech), 2,034,884 Equity Shares
(the "Subscribed Shares") and Venture Tech agrees to subscribe for the
Subscribed Shares from the Company in consideration for the Subscription Price
set out in this Agreement.
2.2 Subscription Price. The consideration payable by Venture Tech
for the Subscribed Shares shall be Rs. 168,980,000 (equivalent to USD 3.5
million as of the date hereof) payable in cash in immediately available funds
(the "Subscription Price") and against the receipt of the Subscription Price the
Company shall allot and cause the issuance of the Subscribed Shares. Venture
Tech agrees to deposit Rs. 33,796,000 (equivalent to USD 700000 as of the date
hereof) in escrow in terms of the Escrow Agreement executed between the parties
and attached to this Agreement as Exhibit G to this Agreement which shall be
released by the Escrow Agent along with the balance of the Subscription Price in
terms of Clause 5 of the Escrow Agreement between the parties.
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2.3 Closing. Unless this Agreement shall have terminated pursuant to
Article X, and subject to the satisfaction or waiver of the conditions set forth
in Articles V and VI, the closing of the subscription for the Subscribed Shares
(the "Closing") shall take place at the offices of the Company at 10:00 a.m.,
local time, on the same date as the Closing under the SAIF Subscription
Agreement shall occur (the "Closing Date") and Closing shall occur on that
Closing Date subject to satisfaction of the remaining Conditions.
2.4 Closing Date Activities. On the Closing Date,
(a) the Company shall deliver to Venture Tech:
(i) the certificates referred to in Sections 5.6 and
5.7;
(ii) the waivers, consents and confirmations referred to
in Sections 5.9 and 5.11;
(iii) the opinions of the Company's Indian counsel
referred to in Section 5.8; and
(iv) each Transaction Document to which it is
a party duly executed by the Company and stamped and each Transaction Document
to which each Person other than Venture Tech is a party duly executed by each
such Person and stamped;
(b) Venture Tech shall deliver to the Company each Transaction
Document to which it is a party duly executed by it;
(c) the Company shall procure that the following business is
transacted at a meeting of the Board of Directors and deliver a certified true
copy of such resolutions to Venture Tech:
(i) the directors of the Company shall approve the
allotment and issuance of the Subscribed Shares to Venture Tech and the
appointment of a director with the authority to authorize the issuance and
delivery of the Subscribed Shares as contemplated by this Agreement; and
(ii) the Persons nominated by Venture Tech for
appointment as directors of the Company under the Investor Rights Agreement
shall be appointed, such appointment to be effective immediately after Closing;
(d) the Company shall deliver to Venture Tech a certified true
copy of each of the Shareholder's resolutions passed which are contemplated by
the Conditions;
(e) subject to the satisfaction or waiver of the Conditions
and the Company's obligations under Section(a) to (d), Venture Tech shall
transfer, by wire transfer of immediately available funds, the Subscription
Price to the Company;
(f) contemporaneously upon the satisfaction of Venture Tech's
obligations under paragraph (e), the Company shall:
(i) allot and issue the Subscribed Shares to Venture
Tech;
(ii) duly register the Subscribed Shares in the name of
Venture Tech, in the Company's register of members;
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(iii) deliver to Venture Tech the certificate or
certificates duly completed and stamped in the name of Venture Tech representing
the Subscribed Shares; and
2.5 Closing. If any party is not capable of or does not comply with
its obligations under Section 2.4 hereof the other party may agree to extend the
Closing Date to such date that it deems necessary for the non-complying party to
comply with its obligations under this Agreement such date to be no later than
31 December 2002.
2.6 Post Closing Activities. Simultaneously with or immediately
after the Closing the Company shall make all such post-Closing filings with
Governmental Authorities required under Requirements of Law in relation to the
matters referred to in this Section 2 and Section 5 (including the filing of the
Restated Charter Documents with the Registrar of Companies, Hyderabad, India)
and upon request to provide evidence thereof to Venture Tech.
2.7 Payment in Full. Venture Tech shall be deemed to have paid its
Subscription Price by remittance of its Subscription Price in Rupees on or prior
to the Closing Date in accordance with Section 2.4(e).
2.8 Use of Proceeds. The Company shall use the proceeds from the
issuance of the Subscribed Shares to fund the capital expenditure and working
capital requirements of the Company in relation to its investment in broadband
projects including associated network assets, establishment and expansion of
cyber cafes, purchase of bandwidth capacity and related expenses. The use of the
Subscription Price shall in all material respects be in accordance with business
plans and budgets approved pursuant to the Investor Rights Agreement and
resolutions of the Board of Directors after Closing.
2.9 Venture Tech Second Tranche. Subject to the Closing of this
Agreement and the SAIF Subscription Agreement, the Purchaser, directly or
through its Affiliates, irrevocably and unconditionally agrees to make a further
subscription in the Company and the Company agrees to allot 2,034,884 Equity
Shares or equivalent ADSs as may be agreed by the parties for an aggregate
consideration of Rs. 168,980,000 or USD 3.5 million (calculated as of the date
hereof) having face value of Rs. 10 each, at a price of Rs. 83.04 (equivalent to
USD 1.72 as of the date hereof) per Equity Share or ADS on or prior to April 30,
2003.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Venture Tech in the
terms set forth in Schedule 2 hereto (the "Company Warranties"), and
acknowledges that Venture Tech in entering into this Agreement and acquiring the
Subscribed Shares and the Venture Tech Second Tranche is relying on such
representations and warranties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VENTURE TECH
Venture Tech hereby represents and warrants to the Company in the
terms set forth in Schedule 3 hereto (the "Venture Tech Warranties") and
acknowledges that the Company in entering into this Agreement is relying on such
representations and warranties.
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ARTICLE V
CONDITIONS TO THE OBLIGATION OF VENTURE TECH TO CLOSE
The obligation of Venture Tech to pay or cause to be paid the
Subscription Price for the Subscribed Shares at the Closing and to perform any
obligations hereunder shall be subject to the satisfaction or waiver by, Venture
Tech of the following conditions on or before the Closing Date. Notwithstanding
the foregoing, the impact of any of the following on Sections 7.3, 7.4, 7.5 and
7.6 of the Investor Rights Agreement shall not constitute a basis for Venture
Tech to elect not to close the transactions contemplated by this Agreement, (it
being understood that the parties shall use their reasonable best efforts to
maintain the rights and obligations of the parties set forth in the Transaction
Documents in accordance with Section 7.14 of the Investor Rights Agreement): (a)
the adoption of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "SOA Act"), (b) the proposal
or adoption of regulations by the Commission implementing the SOA Act, or (c)
amendments to the rules of the NASD to implement the SOA Act in a manner
substantially consistent with those made publicly available as of the date of
this Agreement by the NASD (as outlined in its press release dated September 13,
2002).
5.1 Representation and Warranties. The Company Warranties contained
in Schedule 2 hereof shall be true and correct in all material respects (except
for any such representations and warranties which are qualified by their terms
by a reference to materiality or material adverse effect, which representation
as so qualified shall be true and correct in all respects) at and on the Closing
Date as if made at and on such date.
5.2 Compliance with this Agreement. The Company shall have performed
and complied in all material respects with all of its obligations set forth
herein that are required to be performed by it on or before the Closing Date.
5.3 No Material Adverse Change. Since the date hereof, there shall
have been no material adverse change to the Condition of the Company.
5.4 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would reasonably be expected to (a) prohibit or restrict (i) the allotment
and issue of the Subscribed Shares or (ii) the consummation of the transactions
contemplated by the Transaction Documents, or (b) subject Venture Tech to any
material penalty or onerous condition under or pursuant to any Requirement of
Law if the Subscribed Shares were to be issued or purchased hereunder, or (c)
restrict the operation of the business of the Company as conducted on the date
hereof in a manner that would have a material adverse effect on the Condition of
the Company, or (d) adversely affect the continued listing and trading of the
ADSs on the Nasdaq as listed and traded on the date hereof.
5.5 No Litigation. No action, suit, proceeding, claim or dispute
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company or a party to a
Transaction Document which would, if adversely determined (a) have a material
adverse effect on the Condition of the Company (except as disclosed in the
Disclosure Documents)or (b) be reasonably be expected to have a material adverse
effect on the ability of the Company or any other party thereto to perform its
obligations under or contemplated by this Agreement or any of the other
Transaction Documents.
5.6 Officer's Certificate. Venture Tech shall have received a
certificate from the Company, in the form of Exhibit D1 dated the Closing Date,
and signed on behalf of the Company by the Managing Director and Chief Financial
Officer of the Company, acting in
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such capacities, certifying as to the matters set forth in Sections 5.1, 5.2,
5.3, 5.4, 5.5, 5.10, 5.11, 5.14, 5.16, 5.19 and 5.22.
5.7 Secretary's Certificate. Venture Tech shall have received a
certificate from the Company in the form set out in Exhibit D2, dated the
Closing Date and signed on behalf of the Company by the Secretary of the Company
acting in such capacity, certifying (a) that the Company is duly incorporated
and validly existing at such date, (b) that the attached copies of the Charter
Documents, resolutions of the Board of Directors and resolutions of the
Shareholders approving this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect and (c)
as to the incumbency and specimen signature of each officer of the Company
executing this Agreement, each other Transaction Document and any other document
delivered in connection herewith on behalf of the Company.
5.8 Opinions of Counsel. Venture Tech shall have received an opinion
of M.G. Ramachanderan, Indian counsel to the Company, dated the Closing Date,
relating to the transactions contemplated by or referred to herein,
substantially in the form attached hereto as Exhibit B and otherwise in a form
reasonably satisfactory to Venture Tech (and including customary exceptions and
exclusions).
5.9 Waiver of Existing Rights. Venture Tech shall have received all
waivers, consents or other documents required to vest in the Venture Tech the
respective full legal and beneficial title to the Subscribed Shares and to
enable Venture Tech to procure the Subscribed Shares to be registered in the
name of Venture Tech including but not limited to pursuant to all Requirements
of Law as to the allotment and issue of the Subscribed Shares.
5.10 Restated Charter Documents. The form of the Restated Charter
Documents shall have been approved by all necessary action of the Board of
Directors and Shareholders such that the Restated Charter Documents are adopted
immediately on the Closing.
5.11 Consents. All consents of Governmental Authorities in respect
of Requirements of Law and third parties pursuant to contract or otherwise which
may be required to complete the transactions contemplated by the Transaction
Documents and to perform the Transaction Documents shall have been obtained and
be in full force and effect without any conditions having been imposed on such
consents other than, in the case of Governmental Authorities, standard
conditions applicable to all such consents given by such Governmental
Authorities which would not reasonably be expected to have a material adverse
effect on the Condition of the Company or Venture Tech, and Venture Tech shall
have been furnished with appropriate evidence thereof and all such applicable
standard conditions to be satisfied prior to Closing shall have been satisfied
without any action being taken or threatened which would have a material adverse
effect on Venture Tech or a material adverse effect on the Condition of the
Company. Such consents shall include, without limitation, all relevant consents
and approvals of: (a) the Reserve Bank of India, (b) the Foreign Investment
Promotion Board of India, and (c) the NASD in relation to the transactions
contemplated hereby and the performance of the Transaction Documents (including
Section 7 of the Investor Rights Agreement).
5.12 Board of Directors. One nominee of Venture Tech shall have been
duly elected to the Board of Directors effective immediately following Closing
and another nominee of Venture Tech shall be duly elected to the Board of
Directors immediately upon the subscription of the Venture Tech Second Tranche.
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5.13 Executed Transaction Documents. Each Transaction Document shall
have been delivered to Venture Tech duly executed by each party thereto other
than Venture Tech.
5.14 Continued Listing. There shall be no proposal or requirement by
the NASD for the delisting of the ADSs from the Nasdaq or the cessation or
suspension of trading of the ADSs on the Nasdaq or for the trading of the ADSs
on an NASD conducted market other than the Nasdaq National Market.
5.15 SAIF Subscription. Concurrently with the Closing, SAIF shall
close the subscription of 7,558,140 Equity Shares for US$ 13.0 million in the
form of ADSs, as contemplated by the Investor Rights Agreement and the SAIF
Subscription Agreement such that SAIF is the legal owner of such Shares.
5.16 Satisfactory Financial Performance. The financial performance
of the Company during the period from 1 July 2002 to 30 September 2002 shall
have met the metrics set forth in a letter signed by SAIF and the Company dated
October 7, 2002 in accordance with U.S. GAAP.
5.17 Senior Executive Confirmation. Each of the senior officers and
employees of the Company identified in writing by SAIF prior to the date hereof
shall have entered into an agreement substantially in the form attached hereto
as Exhibit C.
5.18 Employee Share Option Scheme. The Company shall have amended
the ESOP in form and substance satisfactory to Venture Tech such that all Equity
Shares and Equity Share Equivalents that have or may be issued to employees,
officers, directors and consultants under such plan do not exceed in aggregate
5%of the Equity Shares, on a fully diluted basis, immediately after the Closing.
5.19 Performance of Closing Covenants. The Company shall have
performed each of its obligations under Sections 2.4(a), (c) and (d) of this
Agreement.
5.20 Authorization of Issuance. The Company shall have taken all
necessary actions to authorize the issuance and/or transfer of the Subscribed
Shares in accordance with all applicable Requirements of Law, subject to payment
of the Subscription Price.
5.21 Stockholder Approval. The shareholders of the Company entitled
to vote at the extraordinary general meeting convened in connection with the
transactions contemplated by this Agreement shall have approved all matters
required to be approved in connection with such transactions under any
Requirement of Law, including, without limitation, (a) the adoption of the
Restated Charter Documents and (b) the waiver of preemptive rights under the
Companies Act, 1956 of India.
The Company shall use its best commercial efforts to procure that
each of the conditions in this Article V are complied with (unless waived by
Venture Tech) as soon as reasonably practicable and not later than December 31,
2002 and shall continue to use such best commercial efforts thereafter if such
compliance or waiver is not achieved by that date and until such date as this
Agreement is terminated in accordance with Article X.
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ARTICLE VI
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligations of the Company to allot and issue the Subscribed
Shares to Venture Tech shall be subject to the satisfaction, or waiver by, the
Company of the following conditions with respect to Venture Tech on or before
the Closing Date provided that the Company shall not be entitled to rely on any
such Condition if its acts or omissions have contributed to that Condition not
being satisfied. Notwithstanding the foregoing, impact of any of the following
on Sections 7.3, 7.4, 7.5 and 7.6 of the Investor Rights Agreement shall not
constitute a basis for the Company to elect not to close the transactions
contemplated by this Agreement, (it being understood that the parties shall use
their reasonable best efforts to maintain the rights and obligations of the
parties set forth in the Transaction Documents in accordance with Section 7.14
of the Investor Rights Agreement): (a) the adoption of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 (the "SOA Act"), (b) the proposal or adoption of regulations by the
Commission implementing the SOA Act, or (c) amendments to the rules of the NASD
to implement the SOA Act in a manner substantially consistent with those made
publicly available as of the date of this Agreement by the NASD (as outlined in
its press release dated September 13, 2002).
6.1 Representation and Warranties. The Venture Tech Warranties
contained in Schedule 3 hereof shall be true and correct in all material
respects with respect to Venture Tech at and on the Closing Date as if made at
and on such date.
6.2 Compliance with this Agreement. Venture Tech shall have
performed and complied in all material respects with all of its obligations set
forth herein that are required to be performed by it on or before the Closing
Date.
6.3 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would reasonably be expected to (a) prohibit or restrict (i) the allotment
and issue of the Subscribed Shares or (ii) the consummation of the transactions
contemplated by the Transaction Documents, or (b) subject the Company to any
material penalty or onerous condition under or pursuant to any Requirement of
Law if the Subscribed Shares were to be issued or purchased hereunder, or (c)
restrict the operation of the business of the Company as conducted on the date
hereof in a manner that would have a material adverse effect on the Condition of
the Company, or (d) adversely affect the continued listing and trading of the
ADSs on the Nasdaq as listed and traded on the date hereof.
6.4 Officer's Certificate. The Company shall have received a
certificate from Venture Tech, dated the Closing Date, and signed on behalf of
Venture Tech by a director or representative officer of Venture Tech, acting in
that capacity, certifying as to the matters set forth in Sections 6.1 and 6.2.
6.5 Secretary's Certificate. The Company shall have received a
certificate from Venture Tech, dated the Closing Date and signed on behalf of
Venture Tech by the secretary or a director of Venture Tech acting in that
capacity, certifying (a) that Venture Tech is duly incorporated and validly
existing at such date, (b) that the corporate approvals approving this Agreement
and each of the other Transaction Documents and the transactions contemplated
hereby and thereby, are all true, complete and correct and remain unamended and
in full force and effect and (c) as to the incumbency and specimen signature of
each officer of Venture Tech executing this Agreement, each other Transaction
Document and any other document delivered in connection herewith on behalf of
Venture Tech.
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6.5 Stockholder Approval. The shareholders of the Company entitled
to vote at the extraordinary general meeting convened in connection with the
transactions contemplated by this Agreement shall have approved all matters
required to be approved in connection with such transactions under any
Requirement of Law, including, without limitation, (a) the adoption of the
Restated Charter Documents, (b) the waiver of preemptive rights under the
Companies Act, 1956 of India.
6.6 Consents. All consents of Governmental Authorities in respect of
Requirements of Law and third parties pursuant to contract or otherwise which
may be required to complete the transactions contemplated by the Transaction
Documents and to perform the Transaction Documents shall have been obtained and
be in full force and effect without any conditions having been imposed on such
consents other than, in the case of Governmental Authorities, standard
conditions applicable to all such consents given by such Governmental
Authorities which would not reasonably be expected to have a material adverse
effect on the Condition of the Company, and all such applicable standard
conditions to be satisfied prior to Closing shall have been satisfied without
any action being taken or threatened which would have a material adverse effect
on the Condition of the Company. Such consents shall include, without
limitation, all relevant consents and approvals of: (a) the Reserve Bank of
India, (b) the Foreign Investment Promotion Board of India, and (c) the NASD in
relation to the transactions contemplated hereby and the performance of the
Transaction Documents (including Section 7 of the Investor Rights Agreement).
6.7 Executed Transaction Documents. Each Transaction Document shall
have been delivered to the Company duly executed by all parties thereto other
than the Company.
6.8 Performance of Closing Covenants. Venture Tech shall have
performed each of its obligations under Sections 2.4(b) and (e) of this
Agreement.
Venture Tech shall use its best commercial efforts to procure
that each of the conditions in this Article VI (other than Sections 6.3, 6.6 and
6.7) are complied with (unless waived by the Company) as soon as reasonably
practicable and not later than December 31, 2002 and shall continue to use such
best commercial efforts thereafter if such compliance or waiver is not achieved
by that date and until such date as this Agreement is terminated in accordance
with Article X.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article
VII, the Company, on one hand, and Venture Tech, on the other hand, (each, an
"Indemnifying Party") agrees to indemnify, defend and hold harmless Venture
Tech, on one hand, and the Company, on the other hand, and in each case its
respective Affiliates and its respective officers, directors, agents, employees,
subsidiaries, partners, members and controlling persons (each, an "Indemnified
Party") to the fullest extent permitted by law from and against any and all
losses, Claims, or written threats thereof (including, without limitation, any
Claim by a third party), damages, expenses (including reasonable fees,
disbursements and other charges of counsel incurred by the Indemnified Party in
any action between the Indemnifying Party and the Indemnified Party or between
the Indemnified Party and any third party or otherwise) or other liabilities
(collectively, "Losses") resulting from or arising out of (i) any breach of any
representation or warranty, covenant or agreement by the Indemnifying Party in
this Agreement or (ii) any litigation, suit, proceeding or claim referred to in
the Disclosure Documents or otherwise relating to circumstances occurring before
the date hereof where all such litigations, suits, proceedings or claims in
aggregate cause a Loss to the Company exceeding USD 1 million (net of insurance
recoveries). In connection with the obligation of the Indemnifying Party to
indemnify for expenses as set forth above, the Indemnifying Party shall, upon
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presentation of appropriate invoices containing reasonable detail, reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel incurred by the Indemnified Party in
any action between the Indemnifying Party and the Indemnified Party or between
the Indemnified Party and any third party) as they are incurred by such
Indemnified Party; provided, however, that if an Indemnified Party is reimbursed
under this Article VII for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Losses in
question resulted primarily from the willful misconduct or gross negligence of
such Indemnified Party.
7.2 Notification. Each Indemnified Party under this Article VII
shall, as soon as practicable after the receipt of notice of the commencement of
any Claim against such Indemnified Party in respect of which indemnity may be
sought from the Indemnifying Party under this Article VII, notify the
Indemnifying Party in writing of the commencement thereof. The failure of any
Indemnified Party to so notify the Indemnifying party of any such action shall
not affect the rights to indemnification hereunder, except and only to the
extent that the Indemnifying Party demonstrates actual material damage caused by
such failure. In case any such Claim shall be brought against any Indemnified
Party, and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to assume the defense thereof at its
own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any Claim in which both the
Indemnifying Party, on the one hand, and an Indemnified Party, on the other
hand, are, or are reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel and to control its own defense
of such Claim if, in the reasonable opinion of counsel to such Indemnified
Party, either (x) one or more defenses are available to the Indemnified Party
that are not available to the Indemnifying Party or (y) a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that the Indemnifying Party (i)
shall not be liable for the fees and expenses of more than one counsel to all
Indemnified Parties and (ii) shall reimburse the Indemnified Parties for all of
such fees and expenses of such counsel incurred in any action between the
Indemnifying Party and the Indemnified Parties or between the Indemnified
Parties and any third party, as such expenses are incurred. The Indemnifying
Party agrees that it will not, without the prior written consent of the
Indemnified Party (not to be unreasonably withheld), settle, compromise or
consent to the entry of any judgment in any pending or threatened Claim relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising or that may arise out of such
Claim. The Indemnifying Party shall not be liable for any settlement of any
Claim effected against an Indemnified Party without its written consent, which
consent shall not be unreasonably withheld. The rights accorded to an
Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise;
provided, however, that notwithstanding the foregoing or anything to the
contrary contained in this Agreement, nothing in this Article VII shall restrict
or limit any rights that any Indemnified Party may have to seek equitable
relief.
7.3 Contribution. If the indemnification provided for in this
Article VII from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other
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things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 7.1 and 7.2,
any legal or other fees, charges or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
7.4 Survival of Indemnification. Any Claim for indemnification
pursuant to Article VII must be initiated on or before 31 December 2003.
7.5 Limitation. Notwithstanding any other provision of this
Agreement to the contrary, no party shall be entitled to recover for (a) any
Losses in excess of the Subscription Price; and (b) a Loss for a claim that a
representation or warranty is untrue where such warranty was true at the date
hereof and becomes untrue after the date hereof and prior to Closing (other than
as a result of an intentional or negligent act or omission) and the party making
such warranty had notified the other party in writing in accordance with Section
8.2 of such fact at least 5 Business Days prior to the Closing Date and the
other party elected to proceed to Closing; or (c) a breach of any
representation, warranty, covenant or agreement of the other party (other than
as a result of an intentional act or omission) if Closing does not occur.
ARTICLE VIII
AFFIRMATIVE AND NEGATIVE COVENANTS
The Company hereby covenants and agrees with Venture Tech as
follows:
8.1 Subscribed Shares. The Company acknowledges and agrees that at
Closing the Subscribed Shares issued by the Company shall confer on Venture Tech
absolute legal and beneficial title to the Subscribed Shares free of
Encumbrances.
8.2 Between Signing and Closing. From the date hereof
until the date of Closing the Company:
(a) shall use its reasonable best efforts to conduct its
business in a manner so as to ensure that the Company Warranties shall continue
to be true and correct from the date of this Agreement and at all times until
and on the Closing Date as if made on and as of the Closing Date other than any
warranty expressly limited to an earlier date; and
(b) shall use its reasonable best efforts to conduct its
business in a manner so as to assure that no material adverse effect occurs in
respect of the Condition of the Company.
8.3 Notice. The Company shall give Venture Tech prompt and complete
notice of any event, condition or circumstance occurring from the date hereof
until the Closing Date that would constitute a violation or breach of any
Company Warranty if such Company Warranty (other than any warranty expressly
limited to an earlier date) was made as of any date from the date hereof until
the Closing Date, or that would constitute a violation or breach of any terms
and conditions contained in this Agreement. Venture Tech shall give the Company
prompt and complete notice of any event, condition or circumstance occurring
from the date hereof until the Closing Date that would constitute a violation or
breach of any Venture Tech Warranty if such Venture Tech Warranty (other than
any warranty expressly limited to an earlier date) was made as of any date from
the date hereof until the Closing Date, or that would
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constitute a violation or breach of any terms and conditions contained in this
Agreement. If a party becomes aware of any such breach or violation of the other
party and the other party is not aware of such breach or violation that party
shall notify the other party of such breach or violation.
8.4 No Determination as to Fairness. Venture Tech acknowledges that
no federal agency (including the Commission), state agency or foreign agency has
made or will make any finding or determination as to the fairness of an
investment in the Subscribed Shares (including as to the purchase price).
ARTICLE IX
EXCLUSIVITY
Between the date hereof and the first to occur of (a) the date of
Closing (b) the date this Agreement is terminated in accordance with the terms
hereof and (c) 31 December, 2002; the Company shall not, directly or indirectly,
through any associate, adviser, representative or agent take any action to
solicit, initiate, seek, entertain, encourage or support any inquiry, proposal
or offer from, furnish any information to or participate in any negotiations or
discussions with, any third party, or enter into any agreement or arrangement
regarding any subscription for issue, allotment, sale of or other disposition of
any interest in any Equity Shares or Equity Share Equivalents of the Company or
otherwise attempt to issue, sell or transfer any of the Equity Shares or Equity
Share Equivalents of the Company other than to Venture Tech.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated prior to the
Closing in respect of the issuance and purchase of Subscribed Shares of Venture
Tech as follows:
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Company and Venture Tech;
(aa) simultaneously with the termination of the SAIF Subscription
Agreement;
(b) at the election of the Company or Venture Tech by written
notice to the other parties hereto after 5:00 p.m., New York time, on 31
December, 2002, if the Closing shall not have occurred, unless such date is
extended by the mutual written consent of the Company and Venture Tech;
provided, however, that the right to terminate this Agreement under this Section
10.1(b) shall not be available until February 28, 2003 to any party whose
intentional breach of any representation, warranty, covenant or agreement under
this Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date;
(c) at the election of the Company, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of Venture Tech contained in this Agreement, which breach has not been
cured within fifteen (15) Business Days of notice to Venture Tech of such
breach; or
(d) at the election of Venture Tech, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company contained
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in this Agreement, which breach has not been cured within fifteen (15) Business
Days notice to the Company of such breach.
If this Agreement so terminates in respect of the issuance and
purchase of the Subscribed Shares by Venture Tech, it shall become null and void
and have no further force or effect in respect of that issuance and purchase,
except as provided in Section 10.2 and the moneys deposited in escrow under the
Escrow Agreement shall be dealt with in the manner set out in the Escrow
Agreement.
10.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement shall
become void and of no further force and effect; in respect of the relevant
issuance to and purchase by Venture Tech except for the provisions of Article
VII but subject to the limitations in Section 7.5 and this Section 10.2;
provided, however, that (a) none of the parties hereto shall have any liability
in respect of a termination of this Agreement pursuant to Section 10.1(a) or
Section 10.1(b) except in the case of intentional breach by that party; and (b)
nothing shall relieve any of the parties from liability for actual damages
resulting from a termination of this Agreement pursuant to Section 10.1(c) or
10.1(d) as a result of an intentional or negligent breach of warranty or
covenant]; and provided, further, that none of the parties hereto shall have any
liability for speculative, indirect, unforeseeable or consequential damages or
lost profits resulting from any legal action relating to any termination of this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to Venture Tech:
Venture Tech Solutions Private Limited
▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 600 113
with a copy to:
▇.▇.▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(▇) if to the Company:
▇▇▇▇▇▇ Infoway Limited
Tidel Park, 2nd Floor
No. ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ - ▇▇▇▇▇▇
Telecopy:
Attention:
with a copy to:
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▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and
M.G. Ramachanderan
B12, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇
Telecopy: (▇▇) ▇▇-▇▇▇-▇▇▇▇
All such notices, demands and other communications shall be deemed
to have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; and when
receipt is mechanically acknowledged, if telecopied. Any party may by notice
given in accordance with this Section 11.1 designate another address or Person
for receipt of notices hereunder.
11.2 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to compliance with applicable
securities laws to the reasonable satisfaction of the Company and the terms and
conditions thereof, Venture Tech may assign any of its rights under this
Agreement or the other Transaction Documents to any of its respective Affiliates
upon the giving of five days prior written notice to the Company. The Company
may not assign any of its rights under this Agreement without the written
consent of Venture Tech. Except as provided in Article VII, no Person other than
the parties hereto and their successors and permitted assigns is intended to be
a beneficiary of this Agreement.
11.3 Amendment and Waiver.
(a) No failure or delay on the part of the Company or Venture
Tech in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or Venture Tech at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or Venture Tech from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and Venture Tech and (ii) only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances.
11.4 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.5 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF INDIA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS TO LAW OF ANY JURISDICTION.
11.7 Arbitration.
(a) Any dispute or claim arising out of or in connection with
or relating to this Agreement, or the breach, termination or invalidity hereof
(including the validity, scope and enforceability of this arbitration
provision), shall be finally resolved by arbitration by the International
Chamber of Commerce ("ICC") or its successor pursuant to the ICC's then
prevailing Rules of Arbitration of the International Chamber of Commerce (the
"Rules") and as are in force at the time of any such arbitration and as may be
amended by the rest of this Section 10.2. For the purpose of such arbitration,
there shall be three arbitrators appointed in accordance with the Rules
("Arbitration Board").
(b) The place of arbitration shall be Chennai, India. All
arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any such dispute or claim strictly in accordance with
the governing law specified in Section 11.6. Judgment upon any arbitral award
rendered hereunder may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement, as the case may be.
(c) The parties agree to facilitate the arbitration by (i)
cooperating in good faith to expedite (to the maximum extent practicable) the
conduct of the arbitration, (ii) making available to one another and to the
Arbitration Board for inspection and extraction all documents, books, records,
and personnel under their control or under the control of a person controlling
or controlled by such party if determined by the Arbitration Board to be
relevant to the dispute, (iii) conducting arbitration hearings to the greater
extent possible on successive business days and (iv) using their best efforts to
observe the time periods established by the rules of the ICC or by the
Arbitration Board for the submission of evidence and briefs.
(d) The costs and expenses of the arbitration, including,
without limitation, the fees of the arbitration, including, without limitation,
the fees of the Arbitration Board, shall be borne equally by each party to the
dispute or claim, and each party shall pay its own fees, disbursements and other
charges of its counsel.
Any award made by the Arbitration Board shall be final and binding on each of
the parties that were parties to the dispute. The parties expressly agree to
waive the applicability of any laws and regulations that would otherwise give
the right to appeal the decisions of the Arbitration Board so that there shall
be no appeal to any court of law for the award of the Arbitration Board, and a
Party shall not challenge or resist the enforcement action taken by any other
Party in whose favor an award of the Arbitration Board was given.
11.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
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11.10 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, and the other Transaction Documents are intended by the
parties hereto as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, representations, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, and the other
Transaction Documents supersede all prior agreements and understandings between
the parties hereto with respect to such subject matter.
11.11 Fees. The Company shall pay 100% of the legal fees and
expenses of Venture Tech, including all fees and expenses of Venture Tech's
Indian legal counsel subject to a limit agreed to between Venture Tech and the
Company in a private letter.
11.12 Public Announcements. Following the date hereof, the Company
shall be permitted to issue a press release relating to the Transaction
Documents and the transactions contemplated thereby to the extent necessary to
comply with its obligations under Requirements of Law. Venture Tech shall have
the opportunity to review and comment on such press release prior to its
issuance, which review and comment shall be provided as expeditiously as
possible to Venture Tech, and such press release shall be in form and substance
reasonably satisfactory to Venture Tech. Except as set forth in the previous
sentence, neither the Company nor Venture Tech will issue any press release or
make any public statements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties
hereto, except to the extent such party reasonably believes such press release
or public statement is required by applicable law or stock market regulations;
provided, however, that the Company and Venture Tech may make reasonable public
statements consistent with prior public statements otherwise permitted under
this Section 11.12; and provided further, that Venture Tech may disclose on its
worldwide web page, the name of the Company, the name of the Chief Executive
Officer of the Company, a brief description of the business of the Company, the
Company's logo and the aggregate amount of Venture Tech' investment in the
Company.
11.13 Further Assurances. Each of the parties hereto shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Subscription Agreement on the date first written above.
▇▇▇▇▇▇ INFOWAY LIMITED
By: /s/ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇. ▇▇▇▇▇▇▇
Title: Managing Director
VENTURE TECH SOLUTIONS PRIVATE LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
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Schedule 1
Particulars of the Company
PART A -- THE COMPANY
1. Registered office 2nd Floor,
Mayfair Centre, 1-8-303/36
S.P. Road
Secunderabad Andhra Pradesh
India 500 003
2. Date of incorporation : December 12, 1995
Incorporation Number : 01-22562
Place of Incorporation : Andhra Pradesh
3. Directors : Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇. ▇▇▇▇▇▇▇
Mr. T.H. ▇▇▇▇▇▇▇▇
Mr. C. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇. ▇▇▇▇▇▇▇▇▇▇
4. Secretary : Mr. R. Ramachanderan
5. Share Capital: Authorized : 35,000,000
Issued and paid up : 23,202,176
6. Shareholders as of Date Hereof
holding more than 2% of the
Company's share capital:
Registered Shareholder No. of Shares Type of Shares
-------------------------------- ------------- --------------
▇▇▇▇▇▇ Computer Services Limited 12,182,600 Equity Shares
South Asia Regional Fund 3,600,000 Equity Shares
Sterling Commerce 481,000 Equity Shares
Holders of Equity Share Equivalents No. of Shares Type of Shares
----------------------------------- ------------- -------------
Nil
-------------------------------------
-------------------------------------
7. Auditors : KPMG India
8. Financial Year End : March 31
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PART B - SUBSIDIARIES OF THE COMPANY
Name of the Subsidiary % of Shareholding
---------------------------------------------- ------------------
1. Wholly- and Majority-owned Subsidiaries
▇▇▇▇▇▇ Education Services Ltd. 100%
Safescrypt Ltd. 100%
Indiaworld Communications Ltd. 100%
▇▇▇▇▇▇ Institute of E-Business Ltd. 100%
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. 100%
▇▇▇▇▇▇ Webexchange Ltd. 100%
▇▇▇▇▇▇▇.▇▇▇ India Private Limited 100%
▇-▇▇▇▇.▇▇▇ Limited 100%
Sify PlasticsCommerce Ltd. 53%
Sify Baron Net Devices Ltd. 51%
2. Other Subsidiaries
Refco-Sify India Private Limited 40%
Cricinfo Limited 25%
3. Subsidiary of ▇▇▇▇▇▇ Education Services
▇▇▇▇▇▇▇▇▇.▇▇▇ Limited 76%
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Schedule 2
Company Warranties
In this Schedule, capitalized terms have the meanings set forth in this
Agreement.
1. Corporate Existence and Power. The Company and each of its Significant
Subsidiaries (a) has been duly incorporated and is duly organized and
validly existing under the laws of its relevant jurisdiction of
incorporation; (b) has all requisite power and authority to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is proposed to be,
engaged; (c) is duly qualified as a foreign corporation, licensed and in
good standing under the laws of each jurisdiction in which its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Documents, except with
respect to clauses (b) through (c) as would not, individually or in the
aggregate, be reasonably expected to have a material adverse effect on
the Condition of the Company.
2. Authorization; No Contravention. The execution, delivery and
performance, by the Company of this Agreement and each of the other
Transaction Documents and the transactions contemplated hereby and
thereby (a) have been duly authorized by all necessary corporate action
of the Company; (b) do not contravene the terms of the Charter
Documents; (c) do not violate, conflict with or result in any breach,
default or contravention of (or with due notice or lapse of time or both
would result in any breach, default or contravention of), or the
creation of any Encumbrance under, any Material Contract of the Company
or any Requirement of Law applicable to the Company; and (d) do not
violate any Orders against, or binding upon the Company.
3. Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of
whether considered in a proceeding at law or in equity).
4. Charter Documents. The copies of the Existing Charter Documents and
Restated Charter Documents and the charter documents of the Company's
Significant Subsidiaries (the "Subsidiaries Charter Documents") have
been delivered to Venture Tech are true and complete and comply with all
applicable Requirements of Law. All legal and procedural requirements
and other formalities concerning the approval, amendment and filing of
the Existing Charter Documents, the Restated Charter Documents (at or
prior to Closing) and the Subsidiaries Charter Documents have been duly
and properly complied with. The Company has complied with all the
provisions of the Existing Charter Documents and each Significant
Subsidiary has complied with all provisions of the relevant Subsidiaries
Charter Documents and in each case has not entered into any transaction
in breach of such charter documents or agreed with any Person to amend
such charter documents, except as contemplated by this Agreement.
5. Corporate Records. The statutory books, minute books, register of
members and all books of account of the Company and each of its
Significant Subsidiaries have been properly and accurately maintained in
all material respects, are written up-to-date, contain full and accurate
records of all resolutions passed by the directors and the
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shareholders of entity and all issuances and transfers of shares or
other securities of such entity (other than the transfers of ADSs) and
neither the Company nor, to the best knowledge of the Company, any Group
Company has received any notice of any application or intended
application for rectification of its register of members.
6. Governmental Authorization; Third Party Consents. Except as specified in
Section 5.11(a) to (c) no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person (including, without
limitation, the Reserve Bank of India and the Foreign Investment
Promotion Board of India), and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the
execution, delivery or performance (including, without limitation, the
sale, issuance and delivery of the Subscribed Shares) by, or enforcement
against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby, except as
would not, individually or in the aggregate, be reasonably expected to
have a material adverse effect on the Condition of the Company.
7. Litigation. Except as Disclosed in the Disclosure Documents, there are
no Claims pending or, to the best knowledge of the Company, threatened,
at law, in equity, in arbitration or before any Governmental Authority
against any Group Company nor is the Company aware that there is any
basis for any of the foregoing that may in aggregate have a material
adverse effect on the Condition of the Company. The foregoing includes,
without limitation, Claims pending or, to the best knowledge of the
Company, threatened involving the prior employment of any of any Group
Company's employees, their use in connection with the Group's business
of any information or techniques allegedly proprietary to any of their
former employers or their obligations under any agreements with prior
employers. No Order has been issued by any court or other Governmental
Authority against the Company purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any of the other
Transaction Documents.
8. Insolvency. No Order has been made and no resolution has been passed for
the winding up of the Company or any of its Significant Subsidiaries or
for a provisional liquidator to be appointed in respect of any of them
and no petition has been presented and no meeting has been convened for
the purpose of winding up any of the Company or any of its Significant
Subsidiaries. No receiver has been appointed in respect of the Company
or any of its Significant Subsidiaries or all or any of the Assets of
the Company, any Significant Subsidiary, or, to the best knowledge of
the Company, any other Group Company. To the best knowledge of the
Company after due inquiry, no distress, execution or other process has
been levied on any of the Assets of any Group Company and no Group
Company is insolvent or unable to pay its debts as they fall due.
9. Compliance with Laws. (a) The Company and each of its Significant
Subsidiaries is in material compliance with all material Requirements of
Law and all Orders applicable to them. There is no existing or, to the
Company's knowledge, proposed Requirement of Law which could reasonably
be expected to prohibit or restrict the Company or any Significant
Subsidiary, from, or otherwise have a material adverse effect on the
Condition of the Company in conducting its business in any jurisdiction
in which it now conducts or proposes, to conduct its business. (b) (i)
The Company and each of its Significant Subsidiaries have all material
licenses, permits and approvals of any Governmental Authority
(collectively, "Permits") that are necessary for the conduct of the
business of the Company and each Significant Subsidiary; (ii) such
Permits are in full force and effect; and (iii) there are no material
violations are or have been recorded in respect of any material Permit.
(c) No material expenditure is presently required by
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the Company or any of its Significant Subsidiaries to comply with any
existing Requirement of Law or Order, except for the transactions
contemplated by this Agreement.
10. Foreign Corrupt Practices ▇▇▇ ▇▇▇▇ of the U.S. Congress (as amended)
(the "FCPA"). Neither the Company nor any Significant Subsidiary has
made, directly or indirectly, any payment or promise to pay, or gift or
promise to give, or authorized such a promise or gift, of any money or
anything of value, directly or indirectly, to: (a) any foreign official
(as such term is defined in the FCPA) for the purpose of influencing any
such official or inducing him or her to use his or her influence to
affect any act or decision of foreign government, or any agency or
subdivision thereof; or (b) any political party or official thereof or
candidate for political office for the purpose of influencing any
official act of decision of such party, official or candidate or
inducing such party, official or candidate to use his, her or its
influence to affect any act or decision of a government or agency or
subdivision thereof, in the case of both (a) and (b) above in order to
assist the Company to obtain or retain business for, or direct business
to the Company in violation of the FCPA.
11. Compliance with Indian Requirements of Law. The Company and each of its
Significant Subsidiaries has materially complied with all its
registration requirements and Indian Requirements of Law, including
without limitation, the Shops and Establishments Acts of various states,
the Electricity Act, the Employers State Insurance Act and the Provident
Funds Scheme.
12. Capitalization. (a) On the Closing Date, after giving effect to the
transactions contemplated by this Agreement, the authorized share
capital of the Company shall consist of 37,500,000 Equity Shares, of
which 32,795,200 shares are issued and outstanding and 13,491,543 ADSs
are issued and outstanding as of the date hereof. Schedule 1 sets forth,
as of the date hereof, a true and complete list of (x) the shareholders
legally or beneficially owning the Company's Restricted Shares and
Equity Share Equivalents or to the knowledge of the Company,
beneficially owning ADSs comprising more than 2% of the Equity Shares
and, opposite the name of each shareholder, the amount of all
outstanding share capital and Equity Share Equivalents owned by such
shareholder and (y) the holders of Equity Share Equivalents and,
opposite the name of each such holder, the amount of all Equity Share
Equivalents owned by such holder. As of the date of this Agreement,
1,200,000 Equity Shares have been reserved for issuance under the ESOP,
of which 551,140 Equity Share Equivalents have been granted and 200
Equity Shares have been issued. Except for (i) the ESOP Reserve (ii)
preemptive rights under section 81(1A) of the Indian Companies Act (iii)
the issuance of 7,558,140 Equity Shares to SAIF as contemplated in the
SAIF Subscription Agreement, (iv) the purchase of 2,034,884 Equity
Shares by Venture Tech pursuant to this Agreement on the Closing Date
and (v) the issuance of 2,034,883 Equity Shares to Venture Tech on or
before 30 April, 2003, there are no options, warrants, conversion
privileges, subscription or purchase rights or other rights presently
outstanding to purchase or otherwise acquire (x) any authorized but
unissued, unauthorized or treasury shares of the Company's share
capital, (y) any Equity Share Equivalents or (z) any other securities of
the Company and there are no commitments, contracts, agreements,
arrangements or understandings by the Company to issue any shares of the
Company's share capital or any Equity Share Equivalents or other
securities of the Company. The (x) Subscribed Shares are duly
authorized, and will be allotted and issued in compliance with the
Restated Charter Documents to Venture Tech after payment therefor and
will be validly issued, fully paid and non-assessable, and will be
issued in compliance with the applicable Requirements of Law and foreign
securities laws and not subject to any preemptive rights or similar
rights that have not been satisfied and will be free and clear of all
other Encumbrances (other than those
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created by Venture Tech or imposed by the Investor Rights Agreement).
All of the issued and outstanding Equity Shares are all duly authorized,
validly issued, fully paid and non-assessable, and were issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws. (b) particulars
of the Subsidiaries of the Company are set forth in Part B of Schedule 1
hereto.
13. No Default or Breach; Material Contracts. Neither the Company nor any of
its Significant Subsidiaries is in default under any Material Contract
nor, to the Company's knowledge, does any condition exist that with
notice or lapse of time or both would constitute a default thereunder.
To the Company's knowledge, (a) no other party to any such Material
Contract is in default thereunder and (b) there exists no condition that
with notice or lapse of time or both would constitute a default by such
other party thereunder.
14. Title to Properties. The Company and each of its Significant
Subsidiaries has good title in fee simple to, or holds interests as
lessee under leases in full force and effect in, all real property owned
or leased by it and material to its business.
15. NASDAQ Compliance. The ADSs are registered pursuant to Section 12(g) of
the Exchange Act, and are listed on Nasdaq and the Company has taken no
action designed to, or reasonably likely to have the effect of,
terminating the registration of the ADSs under the Exchange Act or
delisting of the ADSs from the Nasdaq. Except as Disclosed in the
Disclosure Documents, the Company has complied in all material respects
with all requirements of the NASD with respect to the issuance of the
Subscribed Shares and the ADSs and the listing thereof on the Nasdaq.
Neither the Company nor any other Group Company, nor to the best
knowledge of the Company, any Affiliate of the Company nor any
Shareholder and its Affiliate, has taken and will, in violation of
applicable Requirement of Law, take, any action outside the ordinary
course of business designed to or that might reasonably be expected to
cause or result in unlawful manipulation of the price of the ADSs. The
Company has made, or shall make as soon as practical after the Closing,
to the extent required by a Requirement of Law or regulation or
otherwise, (a) a filing of a Form D pursuant to Commission Regulation D,
(b) any required filings pursuant to state "blue sky" laws, and (c) any
required filings or notifications regarding the listing of additional
shares on the Nasdaq.
16. SEC Reports and Financial Statements. (a) As of the respective dates of
their filing with the Securities and Exchange Commission of the United
States (the "Commission"), all reports, registration statements and
other filings, together with any amendments thereto, filed by the
Company with the Commission (the "SEC Reports"), complied in all
material respects with the applicable requirements of the Securities
Act, the Exchange Act, and the rules and regulations of the Commission
promulgated thereunder, except as disclosed in the SEC Reports. Except
as Disclosed in the SEC Reports, the SEC Reports did not at the time
they were filed with the Commission, 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 the
light of the circumstances under which they were made, not misleading.
The Company has (i) delivered or made available to Venture Tech true and
complete copies of, or will make available on Venture Tech's request,
(x) all correspondence (which is material, substantive or otherwise
relevant to Venture Tech in connection with its investment in the
Subscribed Shares) relating to the Company between the Commission, the
NASD and/or the United States Attorneys Office and the Company or its
legal counsel and accountants since April 1, 2001 (other than routine
Commission filing package cover letters) and (y) all material
correspondence between the Company or its counsel and the Company's
auditors since April 1, 2001, relating to any audit, financial review or
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preparation of financial statements of the Company (other than
correspondence which the Company reasonably believes is subject to a
privilege). The Company is not aware of any issues raised by the
Commission with respect to any of the SEC Reports, other than those
disclosed in the SEC Reports; and (b) Except as disclosed in the SEC
Reports, the consolidated financial statements of the Company
(including, in each case, any related schedules or notes thereto)
contained in or incorporated by reference in the SEC Reports [and any
such reports, registration statements and other filings to be filed by
the Company with the Commission prior to the Closing Date] (the
"Financial Statements") (i) have been prepared in accordance with the
published rules and regulations of the Commission and U.S. GAAP
consistently applied during the periods involved (except as may be
indicated in the notes thereto) and (ii) fairly present in all material
respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof and the consolidated
results of operations, statements of stockholders' equity and cash flows
for the periods indicated, except that any unaudited interim financial
statements were or will be subject to normal and recurring year-end
adjustments and may omit footnote disclosure as permitted by regulations
of the Commission.
17. Taxes. (a) The Company and each Significant Subsidiary has paid all
Taxes which have come due and are required to be paid by it through the
date hereof, and all deficiencies or other additions to Taxes, interest
and penalties owed by it in connection with any such Taxes, other than
Taxes being disputed by the Company or any Significant Subsidiary in
good faith for which adequate reserves have been made in accordance with
U.S. GAAP and Indian GAAP (as applicable); (b) the Company and each
Significant Subsidiary has timely filed or caused to be filed all
returns for Taxes that it is required to file on and through the date
hereof (including all applicable extensions), and all such Tax returns
are accurate and complete in all material respects; (c) with respect to
all Tax returns of such Company, (i) to the best knowledge of the
Company, there is no unassessed Tax deficiency proposed or threatened
against the Company or a Significant Subsidiary and (ii) no audit is in
progress with respect to any return for Taxes, no extension of time is
in force with respect to any date on which any return for Taxes was or
is to be filed and no waiver or agreement is in force for the extension
of time for the assessment or payment of any Tax; (d) all provisions for
Tax liabilities of the Company with respect to the Financial Statements
have been made in accordance with U.S. GAAP and Indian GAAP consistently
applied, and all liabilities for Taxes of the Company attributable to
periods prior to or ending on the Closing Date have been adequately
provided for on the Financial Statements; (e) there are no Encumbrances
for Taxes on the Assets of the Company or a Significant Subsidiary;
and (f) to the knowledge of the Company, no imposition of,
re-assessment, loss of concession, clawback or increase in Taxes has or
is to be proposed by a Governmental Authority in respect of the Company
or a Significant Subsidiary or which will result from the transactions
contemplated by this Agreement.
18. Liabilities. Neither the Company nor any of its Significant Subsidiaries
has any direct or indirect obligation or liability (the "Liabilities")
other than (a) Liabilities fully and adequately reflected or reserved
against it on the Financial Statements, as the case may be, and (b)
Liabilities incurred between June 30, 2002 and Closing in the ordinary
and the normal course of business.
19. No Material Adverse Change; Ordinary Course of Business. Since June 30,
2002 (a) there has not been any material adverse effect, nor , to the
knowledge of the Company, is any such change reasonably expected, on the
Condition of the Company, (b) the Company has conducted its business
consistent with past practice in all material respects, (c) Company has
not increased the compensation of any of its officers or the rate of pay
of any of its employees, except as part of regular compensation
increases in
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the ordinary course of business, (d) no Group Company has entered into,
created or assumed any Encumbrance on a material asset of any Group
Company other than in the ordinary course of business, (e) there has not
occurred a material adverse effect on any Group Company's accounting
principles or practice except as required by reason of a change in U.S.
GAAP, (f) the Company has not sold or otherwise disposed of any material
part of its assets (or any interest therein) or contracted to do so
except in the ordinary course of business; (g) there has been no
amendment to the Existing Charter Documents or any other charter
documents of the Company, except by the adoption of the Restated Charter
Documents; (h) the Company has not acquired material assets (or any
interest therein) or contracted to do so, otherwise than in the ordinary
course of its business; (i) the Company has not declared, paid or made
any dividend or distribution; (j) the Company has not issued any
securities of the Company of any kind other than as permitted pursuant
to this Agreement and pursuant to the ESOP; (k) the Company has not
undertaken or accepted any contract that would prevent the performance
of the transactions contemplated in this Agreement and in the other
Transaction Documents; (l) the Company has not undertaken any buyback of
shares of the Company of any kind or reduction of its share capital; and
(m) the Company has not registered any transfer of shares or any kind of
securities of the Company.
20. Investment Company. The Company is not and is not controlled by or
affiliated with an "investment company" within the meaning of the
Reserve Bank of India ▇▇▇ ▇▇▇▇, as amended.
21. Private Offering. Neither the Company nor, to the best knowledge of the
Company, any of its Affiliates or any Person acting on its or their
behalf has, directly or indirectly, conducted any general solicitation
or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Equity Shares offered
and sold hereby. Assuming the accuracy of the representations and
warranties of SAIF set forth in the SAIF Subscription Agreement and of
VentureTech in this Agreement, no registration of the Subscribed Shares,
pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws, will be required by the offer, sale or issuance of
the Subscribed Shares.
22. Labor Relations. No labor dispute with employees of the Company exist
and, to the Company's knowledge, there is no existing or imminent labor
disturbance by the employees of any of any Group Company's principal
suppliers, customers or contractors.
23. Employee Benefit Plans. Part 1 of the Disclosure Documents hereto lists
each Plan that the Company maintains or to which the Company contributes
(the "Company Plans"). The Company has no liability under any Plans
other than the Company Plans.
24. Title to Assets. Each Group Company owns and has valid title to all of
its properties and assets material to its business and reflected as
owned on the Financial Statements or its financial statements, as the
case may be, or so described in any Schedule hereto (collectively, the
"Assets"), in each case free and clear of all Encumbrances, except for
immaterial Encumbrances. Neither the Company nor any of its Significant
Subsidiaries has leased back any of their Assets.
25. Intellectual Property. (a) Except as Disclosed in the Disclosure
Documents, the Company and its Significant Subsidiaries own, or have the
license or right to use, all of, the Copyrights, Patents, Trade Secrets,
Trademarks, Internet Assets, Software, domain names and other
proprietary rights (collectively, "Intellectual Property") that are used
in connection with their business as presently conducted provided that
SCS
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7
may terminate the Company's right to use the name "▇▇▇▇▇▇" as set out in
the Disclosure Documents (b) the Disclosure Documents sets forth all of
the material Intellectual Property owned by, and filings and
applications for any Intellectual Property filed by, the Company. (c)
None of the Intellectual Property listed on the Disclosure Documents is
subject to any outstanding Order, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand is pending or
threatened, which challenges the validity, enforceability, use or
ownership of the item. (d) the Disclosure Documents sets forth all
material Intellectual Property licenses, sublicenses, distributor
agreements and other agreements under which the Company is either a
licensor, licensee or distributor, except such licenses, sublicenses and
other agreements relating to off-the-shelf software, which is
commercially available on a retail basis and used solely on the
computers of the Company. The Company has substantially performed all
obligations imposed upon it thereunder, and to the Company's knowledge
no other party thereto is in breach of or default thereunder in any
respect, nor to the Company's knowledge is there any event which with
notice or lapse of time or both would constitute a default thereunder.
All of the Intellectual Property licenses listed on the Disclosure
Documents are valid, enforceable and in full force and effect, and to
the knowledge of the Company will continue to be so on identical terms
immediately following the Closing except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity relating to enforceability (regardless of whether considered in a
proceeding at law or in equity). (e) To the Company's knowledge no
Person is infringing upon or otherwise violating any material
Intellectual Property rights of the Company. (f) To the Company's
knowledge, no former employer of any employee of any Group Company, and
no current or former client of any consultant of any Group Company, has
made a claim against the a Group Company or against any other Person,
that such employee or such consultant is utilizing Intellectual Property
of such former employer or client. (g) Except as set forth on the
Disclosure Documents, the Company is not a party to or bound by any
license or other agreement requiring the payment by the Company of any
royalty payment, excluding such agreements relating to software licensed
for use solely on the computers of the Company. (h) To the best
knowledge of the Company, none of the Trade Secrets, wherever located,
the value of which is contingent upon maintenance of confidentiality
thereof, has been disclosed to any Person other than employees,
representatives and agents of any Group Company, except as required
pursuant to the filing of a patent application by Company. (i) It is not
necessary for the Company's business nor to the best knowledge of the
Company, any other Group Member's business to use any Intellectual
Property owned by any director, officer, employee or consultant of any
Group Company (or persons any Group Company presently intends to hire).
26. Computer Systems. The Company has sufficient, technically competent and
trained employees to ensure proper, handling, operation, monitoring and
use of its computer systems.
(a) All computer equipment presently used by the Company including
server hardware and parts of computer equipment such as
firmware, screens, terminals, keyboards, disks including
communications equipment, terminals and hook-ups that interface
with third party computer system, cabling and other peripheral
and associated electronic equipment (the "Hardware") and all
Software has been satisfactorily maintained and supported,
provide redundancy and meet industry standards in India relating
to high availability.
(b) Disaster recovery plans are in effect and are designed and
reasonably adequate to ensure that the Hardware, Software and
databases can be replaced or
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8
substituted without material disruption to the business of the
Company. In the event that any Person providing maintenance or
support services for the Hardware, Software and databases ceases
or is unable to do so, the Company has all necessary rights and
information to procure the carrying out of such services by
employees or by a third party without undue expense or delay.
(c) The Company has procedures designed to ensure internal and
external security of the Hardware, Software and databases,
including procedures for preventing unauthorized access,
preventing the introduction of a virus, taking and storing
on-site and at secure off-site location(s) back-up copies of
material Software and databases.
(d) Where any of the records of the Company are stored
electronically, the Company or such person to whom it has
contracted to maintain such records is the owner of all material
Hardware and material Software licences necessary to enable it
to keep, copy, maintain and use such records in the course of
its business.
27. Privacy of Customer Information. The Company does not use any of the
customer information it receives through its website or otherwise in an
unlawful manner, or in a manner violative of the Company's privacy
policy or the privacy rights of its customers. The Company has not
collected any customer information through its website in an unlawful
manner or in violation of its privacy policy. The Company has adequate
security measures in place to protect the customer information it
receives through its website and which it stores in its computer systems
from illegal use by third parties or use by third parties in a manner
violative of the rights of privacy of its customers. The Company
represents to its customers that it assures complete security as to the
customer information it receives through its website.
28. Related Party Transactions. Except as Disclosed in the Disclosure
Documents, there are no contracts between the Company or any of its
Subsidiaries on the one hand and any Related Parties of any Group
Company or a shareholder of a Group Company or a Group Company's
shareholder's Related Parties on the other hand, excluding Subsidiaries
of the Company, (collectively "Related Persons") involving more than
$60,000 per year. Except as disclosed in the Disclosure Documents, to
the Company's knowledge no Related Person is Indebted to any Group
Company, nor is the Company Indebted (or committed to make loans or
extend or guarantee credit) to any such Related Person. Except as
Disclosed in the Disclosure Documents, to the Company's knowledge no
such Related Person has any direct or indirect ownership in any business
entity with which a Group Company is affiliated or with which a Group
Company has a business relationship, or any business entity that
competes with a Group Company, other than passive shareholdings of less
than 5% in publicly listed companies. Except as Disclosed in the
Disclosure Documents, to the Company's knowledge no such Related Person
is, directly or indirectly, interested in any contract with any Group
Company or owns, directly or indirectly, in whole or in part, any
tangible or intangible property that any Group Company has used, or that
any Group Company will use, except as disclosed in the conduct of
business. Except as disclosed in the Disclosure Documents, to the
Company's knowledge no Related Person is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent or
customer of, or lender to or borrower from, any Group Company that is
majority controlled by the Company. To the best knowledge of the
Company, no Related Person has any cause of action or other claim
whatsoever against, or owes or has advanced any amount to, any Group
Company that is majority controlled by the Company, except for claims in
the ordinary course of business such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters and
agreements existing on the date hereof.
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9
29. Trade Relations. There exists no actual or, to the Company's knowledge,
threatened termination, cancellation or limitation of, or any adverse
modification or to change in, the business relationship of the Company,
or the business of the Company, with any customer or supplier or any
group of customers or suppliers whose purchases or inventories provided
to the Company's business are individually or in the aggregate material
to the Condition of the Company, and the Company is not aware of any
present condition or state of fact or circumstances that would adversely
affect the Condition of the Company or prevent the Company from
conducting such business relationships or such business with any such
customer, supplier or group of customers or suppliers in the same manner
as heretofore conducted by the Company.
30. Outstanding Borrowing. The Disclosure Documents sets forth the amount of
all indebtedness of the Company not reflected in the Financial
Statements as of the date hereof, the Encumbrances that relate to such
indebtedness and that encumber the Assets and the name of each lender
thereof. No indebtedness is entitled to any voting rights in any matters
voted upon the holders of the Equity Shares. No indebtedness of the
Company has become due or payable or is now due and payable, before its
normal or originally stated maturity and no demand or other notice
requiring the payment or repayment of money before its normal or
originally stated maturity has been received by the Company. No event or
circumstance has occurred or may occur with the giving of notice or
lapse of time which may entitle any person to require the payment or
repayment of any indebtedness of the Company before its normal or
originally stated maturity.
31. Insurance. The Disclosure Documents list all of the insurance policies
held by or on behalf of the Company, with the effective date and
coverage amounts indicated thereon. Such policies and binders are valid
and enforceable in accordance with their terms and are in full force and
effect and cover all reasonable risks associated with the Company's
business that are customarily insured against in the industry in such
amounts as are customary in the industry. None of such policies will be
affected by, or terminate or lapse by reason of, any transaction
contemplated by this Agreement or any of the other Transaction
Documents.
32. Environmental Matters. The Company is in material compliance with all
applicable Environmental Laws. There is no civil, criminal or
administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending
or, to the Company's knowledge, threatened against the Company pursuant
to Environmental Laws; and there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements,
actions or plans which could reasonably be expected to prevent
compliance with, or which have given rise to or will give rise to
liability under, Environmental Laws, in each case except as would not
reasonably be expected to have a material adverse effect on the
Condition of the Company.
33. Broker's, Finder's or Similar Fees. There are no brokerage commissions,
finder's fees or similar fees or commissions payable by the Company in
connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Company or any action
taken by any such Person.
34. Advertising. To the best knowledge of the Company after due inquiry,
current advertising, marketing and sales promotions by each Group
Company comply with all applicable codes of practice and self-regulatory
schemes. No Group Company has been disciplined under any scheme or code
in respect of any such advertising, marketing or sales promotion and to
the best knowledge of the Company, no complaint
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has been made against it in respect thereof and there are no outstanding
material complaints or disciplinary proceedings against any Group
Company in respect thereof.
35. Disclosure. To the best knowledge of the Company, this Agreement and the
documents and certificates furnished to Venture Tech by the Company
hereunder (including, without limitation, the Disclosure Documents),
taken as a whole, do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the
circumstances under which they were made, misleading.
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Schedule 3
Venture Tech Warranties
In this Schedule, capitalized terms have the meanings set forth in this
Agreement.
1.1 Existence and Power. Venture Tech (a) is a company duly organized
and validly existing under the laws of the jurisdiction of its formation and (b)
has the requisite power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents to
which it is a party.
1.2 Authorization; No Contravention. Subject to satisfaction of the
Conditions, the execution, delivery and performance by Venture Tech of this
Agreement and each of the other Transaction Documents to which it is a party and
the transactions contemplated hereby and thereby, (a) have been duly authorized
by all necessary as the case may be, action, (b) do not contravene the terms of
Venture Tech's organizational documents, or any amendment thereof, and (c) do
not violate, conflict with or result in any breach or contravention of, or the
creation of any Encumbrance under, any Material Contract of Venture Tech or any
Requirement of Law applicable to Venture Tech, and (d) do not violate any Orders
of any Governmental Authority against, or binding upon, Venture Tech.
1.3 Governmental Authorization; Third Party Consents. Subject to
satisfaction of the Conditions, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under any
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the subscription of the
Subscribed Shares) by, or enforcement against, Venture Tech of this Agreement
and each of the other Transaction Documents to which it is a party or the
transactions contemplated hereby and thereby.
1.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which it is a party have been duly executed and delivered by
Venture Tech and constitutes the legal, valid and binding obligations of Venture
Tech, as the case may be, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
1.5 Purchase Entirely for Own Account. Venture Tech is acquiring the
Subscribed Shares for investment for Venture Tech's own account and not with the
view to, or for resale in connection with, any distribution thereof in the
United States, except for transfers to affiliated fund partnerships or following
registration thereof under the Securities Act or as otherwise permitted under
the Securities Act. Venture Tech understands that, as at Closing, the issuance
of the Subscribed Shares shall not have been registered under the Securities Act
by reason if a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent as expressed herein. Venture Tech further represents that
it does not have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participation to any third Person with respect
to any of the Subscribed Shares other than pursuant to the Investor Rights
Agreement.
Confidential
1.6 Access to Data. Venture Tech has received and reviewed the
Disclosure Documents (including the SARF Subscription Agreement and the SARF
Registration Rights Agreement).
1.7 Access to necessary funds. As of the date of Closing, Venture Tech
shall have available cash sufficient to complete the transactions contemplated
by this Agreement, and at the Closing Venture Tech will have available all of
the funds necessary to purchase the Subscribed Shares and to perform its other
obligations under this Agreement. As of the date of the Venture Tech Second
Tranche on or before April 30, 2003, Venture Tech shall have available cash
sufficient to complete the transactions contemplated by this Agreement, and
Venture Tech will have available all of the funds necessary to purchase the
Subscribed Shares and to perform its other obligations under this Agreement.
1.8 Investment Representations, Warranties and Covenants by Non-U.S.
Persons.
Each Investor who is a Non-U.S. person (as that term is defined in
Section 1.8 ( c) of this Agreement) hereby represents and warrants to the
Company as follows:
(a) This Agreement is made by the Company with such Investor who is a
Non-U.S. person in reliance upon such Non-U.S. person's representations,
warranties and covenants made in this Section 1.8.
(b) Such Non-U.S. person has been advised and acknowledges that:
(i) the Subscribed Shares and the Venture Tech Second Tranche have not
been, and when issued, may not be registered under the Securities Act, the
securities laws of any state of the United States or the securities laws of any
other country;
(ii) In issuing and selling the Subscribed Shares and the Venture Tech
Second Tranche to such Non-U.S. person pursuant hereto, the company is relying
upon the "safe harbor" provided by Regulation S and/or on Section 4(2) under the
Securities Act;
(iii) it is condition to the availability of the Regulation S "safe
harbor" that the Subscribed Shares and the underlying shares of Common Stock not
be offered or sold in the United States or to a U.S. person until the expiration
of a period of one year following the Closing Date; and
(iv) notwithstanding the foregoing, prior to the expiration of one year
after the Closing Date (the "RESTRICTED PERIOD"), the Subscribed Shares and the
Venture Tech Second Tranche may be offered and sold by the holder thereof only
if such offer and sale is made in compliance with the terms of this Agreement
and either; (A) if the offer or sale is within the United States or to or for
the account of a U.S. person (as such terms are defined in Regulation S), the
securities are offered and sold pursuant to an effective registration statement
or pursuant to Rule 144 under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act; or (B) the offer and
sale is outside the United States and to other than a U.S. person.
(c ) As used herein, the term "United States" means and include the
United States of America, its territories and possessions, any State of the
United States, and the District of Columbia, and the term "U.S. person" (as
defined in Regulation S) means:
(i) a natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) any estate of which any executor or administrator is a
U.S. person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the
United States;
(vi) any non discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(vii) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(viii) a corporation or partnership organized under the laws of
any foreign jurisdiction and formed by a U.S. person principally for the purpose
of investing in securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited investors (as defined in
Rule 501 (a) under the Securities Act) who are not natural persons, estates or
trusts.
As used herein, the term "Non-U.S. person" means any person who
is not a U.S. person or is deemed not to be a U.S. person under Rule 902(k)(2)
of the Securities Act.
(d) Such Non-U.S. person agrees that with respect to the Subscribed
Shares and the Venture Tech Second Tranche until the expiration of the
Restricted Period:
(i) such Non-U.S. person, its agents or its representatives have
not and will not solicit offers to buy, offer for sale or sell any of the
Subscribed Shares or any beneficial interest therein in the United States or to
or for the account of a U.S. person during the Restricted Period; and
(ii) notwithstanding the foregoing, prior to the expiration of
the Restricted Period, Subscribed Shares and the Venture Tech Second Tranche may
be offered and sold by the holder thereof only if such offer and sale is made in
compliance with the terms of this Agreement and either: (A) if the offer or
sale is within the United States or to or for the account of a U.S. person (as
such terms are defined in Regulation S) the securities are offered and sold
pursuant to an effective registration statement or pursuant to Rule 144 under
the Securities Act or pursuant to an exemption from the registration
requirements the Securities Act; or (B) the offer and sale is outside the United
States and to other than a U.S. person; and
(iii) such Non-U.S. person shall not engage in hedging
transactions will regard to the Subscribed Shares and the Venture Tech Second
Tranche unless in compliance with the Securities Act.
The foregoing restrictions are binding upon subsequent transferees of
the Subscribed Shares and the Venture Tech Second Tranche, except for
transferees pursuant to an effective registration statement. Such Non-U.S.
person agree that after the Restricted Period, the Subscribed Shares and the
Venture Tech Second Tranche may be offered or sold within the United States or
to or the account of a U.S. person only pursuant to applicable securities laws.
(e) Such Non-U.S. person has not engaged, nor is it aware that any party
has engaged, and such Non-U.S. person will not engage or cause any third party
to engage, in any directed selling efforts (as such term is defined in
Regulation S) in the United States with respect to the Shares, Subscribed Shares
and the Venture Tech Second Tranche.
(f) Such Non-U.S. person: (i) is domiciled and has its principal place
of business outside the United States; (ii) certifies it is not a U.S. person
and is not acquiring the Subscribed Shares and the Venture Tech Second Tranche
for the account or benefit of any U.S.
person; and (iii) at the time of the Closing Date, the Non-U.S. person or
persons acting on Non-U.S. person's behalf in connection therewith will be
located outside the United States.
(g) At the time of offering to such Non-U.S.person and communication of
such Non-U.S. person's order to purchase the Subscribed Shares and the Venture
Tech Second Tranche and at the time of such Non-U.S. Person's execution of this
Agreement, the Non-U.S. person or persons acting on Non-U.S. person's behalf
connection therewith were located outside the United States.
(h) Such Non-U.S. person is not a "distributor" (as defined in
Regulation S) or "dealer" (as defined in the Securities Act).
(i) Such Non-U.S. person acknowledges that the Company shall make a
notation in its stock books regarding the restrictions or transfer set forth in
this Section 1.8 and shall transfer such shares on the books of the Company only
to the extent consistent therewith.
In particular, such Non-U.S. person acknowledges that the Company shall
refuse to register any transfer of the Subscribed shares and the Venture Tech
Second Tranche not made in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act or pursuant to an available
exemption from registration.
(j) Such Investor understands and agrees that each certificate held by
such Non-US person representing the Subscribed Shares and the Venture Tech
Second Tranche, or any equity shares usable upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall bear
the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THIS CERTIFICATE
MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT AS A CONDITION
PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER TRANSFER OF ANY
INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE