EXHIBIT 4.1
[Indian Currency -- 100 Rupee Note]
==============================================================================
DATED FEBRUARY 5, 1999
▇▇▇▇▇▇ INFOWAY LIMITED
and
▇▇▇▇▇▇ COMPUTER SERVICES LIMITED
and
SOUTH ASIA REGIONAL FUND
and
MR B ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
________________________________________
SHARE SUBSCRIPTION AND SHAREHOLDERS'
AGREEMENT
relating to ▇▇▇▇▇▇ Infoway Limited
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PARTIES
(1) ▇▇▇▇▇▇ INFOWAY LIMITED ("the Company")
(2) ▇▇▇▇▇▇ COMPUTER SERVICES LIMITED ("the Sponsor")
(3) SOUTH ASIA REGIONAL FUND ("SARF")
(4) MR B ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ("MR ▇▇▇▇▇▇▇▇▇ ▇▇▇▇")
Section Page
1. INTERPRETATION...................................................... 5
2. REPRESENTATIONS AND WARRANTIES...................................... 5
3. CONDITIONS PRECEDENT................................................ 5
4. SUBSCRIPTION........................................................ 6
5. COVENANTS........................................................... 7
6. DIRECTORS AND MANAGEMENT............................................ 14
7. PROVISION OF SERVICES............................................... 16
8. FINANCING........................................................... 16
9. DIVIDENDS........................................................... 17
10. ENFORCEMENT OF COMPANY'S RIGHTS..................................... 17
11. ACTIONS TO BE TAKEN BY BOARD RESOLUTION OR BY SHAREHOLDER CONSENT... 18
12. DEALING IN SHARES................................................... 22
13. LISTING............................................................. 23
14. TAG ALONG PROVISIONS................................................ 25
15. WARRANTS............................................................ 26
16. EXIT OPTIONS........................................................ 29
17. COVENANTS NOT TO COMPETE............................................ 31
18. COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES..................... 33
19. TERMINATION......................................................... 33
20. CONFIDENTIALITY..................................................... 34
21. COSTS............................................................... 36
22. ARBITRATION......................................................... 36
23. MISCELLANEOUS....................................................... 39
24. SCHEDULES 1 to 9.................................................... 44
25. APPENDICES.......................................................... 80
THIS AGREEMENT is made by way of deed the day of 1998
BETWEEN -
(1) ▇▇▇▇▇▇ INFOWAY LIMITED whose registered office is at Mayfair Centre, ▇.▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ Pin Code 500 003 ("the Company");
(2) ▇▇▇▇▇▇ COMPUTER SERVICES LIMITED, whose registered office is at Mayfair
Centre, S.P. Road, Secunderabad, Andhra Pradesh, India 500 003 a company
based in Hyderabad, India ("the Sponsor");
(3) SOUTH ASIA REGIONAL FUND a company, incorporated in Mauritius and having
its registered office at Les Cascades Building, ▇▇▇▇▇ ▇▇▇▇▇▇ Street, Port
Louis, Mauritius ("SARF"); and
(4) MR B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, son of ▇▇. ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ Raju, aged about 42
years, presently residing at ▇▇▇▇ # ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, A.P., India 500 003 ("Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇").
WHEREAS -
A The Company intends to carry out the Project described in Schedule 1.
B The Company has estimated that as at 1st day of August 1998 the cost of
the Project would amount to Rs 504.50 million made up as shown in Part I
of Schedule 2 and the Company intends to finance such cost in the manner
shown in Part II of that Schedule.
C SARF has agreed to subscribe and pay in cash for 3,000,000 (Three million)
Shares of 10 Rs each in the capital of the Company at a price of 70 Rs per
Share subject to and upon the terms hereinafter appearing.
D The Sponsor has agreed to subscribe and pay in cash for 750,000 (Seven
Hundred and Fifty Thousand) Shares of 10 Rs each in the capital of the
Company at a price of 70 Rs per Share subject to and upon the terms
hereinafter appearing.
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E The parties have also agreed to enter into certain commitments and to
regulate the exercise of their rights in relation to the Company in
the manner hereinafter appearing.
I INTERPRETATION
1.1 Terms used in this Agreement shall, except where the context otherwise
requires, have the meaning set out in Schedule 7.
2 REPRESENTATIONS AND WARRANTIES
2.1 The Company and the Sponsor acknowledge that SARF has entered into
this Agreement in reliance on the warranties and representations by
the Company and the Sponsor set out in Schedule 5 and the Company and
the Sponsor hereby accordingly jointly and severally represent and
warrant to SARF that the statements set out in Schedule 5 are true and
accurate.
3. CONDITIONS PRECEDENT
3.1 The obligations of SARF to the Company hereunder are subject to the
condition that SARF shall have received all of the documents, items
and evidence specified in Schedule 3, in each case in form and
substance satisfactory to SARF, or, as the case may be, shall be
satisfied as to the matters therein specified and that SARF shall have
notified the Company in writing of such satisfaction. In addition the
Sponsor and the Company agree that the representations and the
Warranties referred to in Clause 2.1 will be repeated mutatis mutandis
for the benefit of SARF immediately prior to the subscription for the
Shares by SARF referred to in Clause 4.
3.2. If any of the conditions referred to in Clause 3.1 are waived or
deferred by SARF, SARF may attach to such waiver or deferral such
requirements and further on other conditions as SARF thinks fit.
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3.3 If any of the conditions referred to in Clause 3.1 shall not have been
fulfilled to SARF's satisfaction before the expiry of 90 days from the
date of hereof for such extended period as SARF may approve in
writing, any obligations on the part of SARF then subsisting under
this Agreement shall cease.
4. SUBSCRIPTION
4.1 The Sponsor and SARF (subject to Clauses 3.1 and 4.2) each undertake
for the benefit of the other and the Company to subscribe for, and
against payment in full of the relative Subscription Monies, and the
Company undertakes for the benefit of each of the Shareholders to
allot or to procure the allotment of, the following Shares -
Applicant No. of ordinary 10 Rs Shares
Sponsor 750,000
SARF 3,000,000
4.2 SARF shall not be required to subscribe for the Shares specified
opposite its name in Clause 4.1 until the Sponsor shall have
subscribed and paid in full for all of the Shares specified opposite
its name in Clause 4.1 and such Shares have been allotted to it.
4.3 Promptly following the allotment of Shares to the Sponsor and subject
to Clause 3, SARF shall pay the Subscription Monies due from it.
4.4 The Company shall allot and issue to the relevant Shareholder the
Shares (credited as fully paid) subscribed for, free of all
encumbrances of any kind and deliver to each Shareholder share
certificates constituting valid title to the Shares subscribed for by
such Shareholder pursuant to the terms of this Agreement, such
certificates to be denominated in lots of 50,000 Shares. In addition,
the Company will furnish the relevant Shareholder with evidence
satisfactory to that Shareholder, that all necessary corporate
formalities (including registration in the register of members of the
Company) in connection with the issue of such Shares have been
completed, and, will deliver a statement giving details of the entire
issued share capital of the
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Company and the amount paid up thereon as at the date of issue
referred to in this Clause 4.4.
4.5. The Subscription Monies received pursuant to Clause 4.1 shall be
exclusively applied by the Company towards the Project.
4.6. On execution of this Agreement the Company will forthwith pay to (a)
SARF a Documentation fee of US$17,500 and (b) CDC Advisors Private
Limited an Advisory fee of the Indian Rupee equivalent of US$17,500,
calculated by reference to the average middle spot price for buying
Indian Rupees from Barclays Bank plc (London) on the business day
immediately preceding, the date of execution of this Agreement.
5 COVENANTS
5.1 Without prejudice to the provisions of Clause 11 the Company will, and
the Sponsor will procure that the Company will:
5.1.1 carry out and complete the Project with due diligence and efficiency
and in accordance with sound commercial, financial and business
practices;
5.1.2 except as SARF may otherwise agree in writing, cause all subscription
moneys paid by SARF and the Sponsor hereunder to be applied
exclusively to the cost of the Project;
5.1.3 furnish to SARF promptly upon their preparation all programmes, plans,
specifications, reports and contract documents relating to the Project
or business of the Company (or any part thereof) and any material
modifications thereof in such detail as SARF shall request;
5.1.4 retain until at least one year after the Closing Date all records
(including payroll records, invoices, bills and receipts) evidencing
expenditure on account of the Project;
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5.1.5 promptly after completion of the Project but in any event not later
than 30 days after the Closing Date or such later date as may be
agreed for this purpose between the Company and SARF, prepare and
furnish to SARF at the Company's expense a report of such scope and in
such detail as SARF shall reasonably request on the execution and
initial operation of the Project, the cost and the benefits derived
and to be derived therefrom, and the performance by the Company of its
obligations under this Agreement;
5.1.6 at the request of SARF exchange views with SARF with regard to the
progress of the Project and the performance of the Company's
obligations under this Agreement;
5.1.7 promptly inform SARF of any circumstance or event which interferes or
threatens to interfere with the carrying out of the Project or the
performance by the Company of any of its obligations hereunder or
which will increase or threaten to increase materially the estimated
cost of the Project;
5.1.8 maintain ecological, environmental and occupational health and safety
standards satisfactory to SARF and in accordance with World Bank
Environmental and Safety Guidelines and with the laws and guidelines
of India relevant to its operations, and furnish to SARF an annual
compliance report thereon within 3 months after the end of each
Financial Year;
5.1.9 carry on its undertaking properly and efficiently and in accordance
with sound administrative, business and financial practices and pay
promptly all Taxes and relevant fees;
5.1.10 in accordance with sound commercial practice and in a form to be
acceptable to SARF, insure and keep adequately insured its business
and assets to their full reinstatement value against fire, accidental
damage, storm and flood and all such risks as should prudently be
insured against or as SARF may reasonably require with reputable
insurers acceptable to SARF;
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5.1.11 to the extent such insurance is available to the Company in India,
insure against any and all losses and costs incurred (whether pursuant
to litigation or otherwise) in relation to claims made by customers
relating to any problems associated with the Company being Year 2000
Compliant;
5.1.12 within 14 days after the end of each Financial Year submit to SARF a
certificate showing the assets insured pursuant to Clause 5.1.10 and
5.1.11, the respective amounts of cover for such assets, the risks
insured against and the names of the insurers together with any
excesses and exclusions to which any such insurance may be subject;
5.1.13 keep such of its assets as are of a repairable nature in good repair
and condition;
5.1.14 take all steps within its powers to obtain, maintain and when
necessary renew all rights, powers, privileges, licences, consents,
approvals and agreements the benefit of which it may enjoy from time
to time and which may be of material benefit to it or the Project and
defend any action, claim or other proceedings in any court or tribunal
which may be brought against it by any person including, but without
limitation all intellectual property licenses and the Internet
Services Provisions Licence ("ISPL") granted by the Government of
India to the Company dated 820 - 49/98 - LR dated Nov 12, 1998;
5.1.15 promptly inform SARF of, any default or any breach of any loan
agreement or other agreement or arrangements which would have a
material effect on the business of the Company (and of the steps if
any being taken to remedy the same), any material adverse financial
condition of the Company or the Project, any event likely to lead to
such a change and any major litigation which has commenced or which
is, to the best of the Company's knowledge or belief, threatened
against the Company;
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5.1.16 operate a proper and efficient accounting system and maintain books of
account and other records (in the English language) adequate to
reflect truly and fairly, and in conformity with generally accepted
accounting principles consistently applied, the financial position of
the Company;
5.1.17 procure that its accounts are audited at least twice in every
financial year by auditors acceptable to SARF. The Company will cause
the auditors of the Company to directly communicate with SARF to
provide specific financial and accounting information sought by SARF
(substantially in the form set out in Schedule 6);
5.1.18 furnish to SARF-
5.1.18.1 within thirty (30) days of the end of each quarter of each Financial
Year, two copies of each of (a) the management accounts of the Company
for such quarter; (b) a balance sheet showing the Company's state of
affairs at the end of such quarter and (c) a report on the physical
and financial progress and prospects of the Company's operations
(including the Project) at the end of the quarter;
5.1.18.2 as soon as they are available and in any case within 6 calendar weeks
after the end of each half yearly audit accounting period of the
Company, two copies of each of (a) the audited accounts of the Company
for such half yearly period, (b) the auditors' report thereon (such
report to include separate confirmation to SARF from the auditors of
the Company as to the matters referred to in paragraph 6 of Schedule
3) and (c) any management letter or other document referred to
therein;
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5.18.1.3 copies of any other report or communication received by the Company
from its auditors relating to the financial position or affairs of the
Company which is of a material nature;
5.1.18.4 at least 1 calendar month before the beginning of each Financial Year,
two copies of each of (a) the Company's projected balance sheets at
the beginning and end of such Financial Year, (b) estimated quarterly
trading and profit and loss accounts for such Financial Year, (c) a
quarterly statement of the physical and financial programme and basic
assumptions on which items (a) and (b) are based (d) a statement
showing, the estimated source and application of funds for such
Financial Year, and (e) a business and operations plan complete with
marketing plans, product launch and manpower plan; all of the above to
be prepared taking into consideration anticipated exchange rate
movements;
5.1.18.5 forthwith on request such further information concerning the Company's
operations and affairs as SARF may from time to time reasonably
request;
5.1.19 permit duly authorised representatives and agents of SARF at any time
and from time to time (on reasonable notice - except where SARF
suspects that the Company is involved in fraudulent or similar
activity where SARF will not be required to provide notice) to have
access to and to inspect the Company's land and premises and its
accounting and other records and permit such representatives and
agents to take copies of or extracts from any such accounting and
other records as aforesaid;
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5.1.20 employ suitable qualified and experienced staff in adequate numbers
and obtain such technical, financial and other advice as may from time
to time be necessary to ensure the efficient conduct of its
operations;
5.1.21 comply at all times with all applicable laws, rules, regulations,
authorisations and licences relating to the Project, the Company's
undertaking and the allotment and issue of Shares and/or Warrants
contemplated by this Agreement;
5.1.22 comply in all respects with the terms and conditions of all
Environmental Licences and all Environmental Laws which in either case
affect the Project;
5.1.23 promptly upon receipt of all notifications of the same notify SARF of
any claim, notice or other communication received by it in respect of
any actual or alleged breach of any Environmental Law or Environmental
Licence which in either case affects the Project;
5.1.24 at all times ensure that the Memorandum of Association and Articles of
Association of the Company are consistent with the provisions of this
Agreement (including inter alia for the avoidance of doubt taking
forthwith all steps necessary to incorporate the provisions of Clauses
6, 9, 11, 12, 14 and 15 of this Agreement into the Articles of
Association of the Company) (including in addition making any
necessary amendments requested by SARF); and
5.1.25 take all necessary steps to ensure that the Warrants once issued
remain exercisable in accordance with their terms.
5.2 Unless agreed to the contrary by SARF, the Sponsor will:
5.2.1 provide a guarantee for all the long term debt related obligations of
the Company when required to do so by the Company;
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5.2.2 not share any resources with the Company and will build and maintain
the Company's business independently of its own;
5.2.3 procure that the Board of the Company comprises a majority of
independent non-executive Directors agreeable to SARF;
5.2.4 unconditionally and indefinitely allow the Company to use the Brand
name "▇▇▇▇▇▇" ("the Brand Name"), together with any associated logos,
copyrights and ancillary rights, (being registered in India) free of
charge, so long as SCSL continues to be the largest shareholder of the
Company;
5.3 The Sponsor hereby agrees -
5.3.1 to immediately advise SARF on becoming aware of the occurrence of or
the likelihood of an occurrence of any of the events set out in Clause
16.1;
5.3.2 to the listing, and sale of such number of its Shares as SARF may
require pursuant to Clause 16.2, and will take all steps necessary
(corporate and otherwise) to comply with such request including but
not limited to complying with any requests, rules and regulations of
the relevant stock exchange; and
5.3.3 that if SARF decides to exercise the Exit Option set out in Clause
16.2.2, to carry out all actions reasonably in its control, to
facilitate such a trade sale; and
5.3.4 to take all steps necessary to alter the Articles of Association of
the Company (including voting in favour of such alteration) in
accordance with Clause 5.1.24.
5.4 Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ hereby agrees -
5.4.1 to immediately advise SARF on becoming aware of the occurrence of or
the likelihood of an occurrence of any of the events set out in Clause
16.1;
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5.4.2 to cause the listing and sale of such number of Shares of the Company
in which the Sponsor is interested as SARF may require pursuant to
Clause 16.2 and will take all steps necessary (corporate or otherwise)
to comply with such request including, but not limited to complying
with any requests, rules and regulations of the relevant stock
exchange; and
5.4.3 that if SARF decides to exercise the Exit Option set out in Clause
16.2.2, to carry out all actions reasonably in his control, to
facilitate such trade sale.
6 DIRECTORS AND MANAGEMENT
6.1 SARF shall, for so long as it owns at least 7.5% of the issued
ordinary share capital of the Company be entitled, by notice in
writing to the Company, to nominate one Director to the Board of the
Company and to require the removal or substitution of any such
Director appointed by it. The Sponsor hereby agrees at all times to
take all actions necessary or appropriate to enable SARF to exercise
its right to such nomination, removal or substitution, including by
voting in favour of any such nomination, removal or substitution both
at shareholders' meetings and Board meetings.
6.2 The Sponsor shall be entitled, by notice in writing to the Company, to
nominate 4 (four) Directors of the Board of the Company and to require
the removal of substitution of any such Director approved by it. SARF
hereby agrees at all times to take all actions necessary and
appropriate to enable the Sponsor to exercise its right to such
nomination, removal or substitution, including voting in favour of
such nomination, removal or substitution both at shareholders meetings
and Board meetings.
6.3 Unless otherwise agreed by all the Shareholders, the maximum number of
Directors of the Company, excluding nominees of financial institutions
or banks in terms of loan agreements with the Company, will be twelve
Directors and the minimum number of Directors of the Company will be
three Directors.
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6.4 The Shareholders shall procure that the Board comprises of a majority
of independent non executive Directors. For the avoidance of doubt an
independent Director means a Director who is not a nominee of SARF or
the Sponsor.
6.5 At the time of the completion of any sale, assignment, transfer or
other disposition pursuant to the terms hereof of all of the Shares
held by a Shareholder the Shareholder shall procure the resignation of
each director nominated by it.
6.6 Unless the parties agree to the contrary, if a Shareholder sells,
assigns, transfers or otherwise disposes of sonic but not all of its
Shares, such transferee shall not be entitled to appoint any director
unless and until all of the transferring Shareholder's original
holding (determined as of the date hereof) is transferred to it and
references to a Shareholder in this Clause 6 shall be construed as a
reference to the transferring Shareholder only.
6.7 A Shareholder removing a nominee Director shall be responsible for and
agrees with the other Shareholder (contracting for itself and as
trustee for the Company) to indemnify the other Shareholder and the
Company against all losses, liabilities and costs which the other
Shareholder or the Company may incur arising out of, or in connection
with, any claim by the director for wrongful or unfair dismissal or
redundancy or other compensation arising out of the director's removal
or loss of office.
6.8 The quorum for a meeting of the Board shall be no less than 3
Directors. The Company will, and the Sponsor will procure that the
Company prepares an agenda for each meeting of the Board of the
Company, providing full details of the matters to be considered, and
details of all resolutions proposed to be passed at the relevant
meeting of the Board. Such agenda will be sent to all of the Directors
along with all documents or notes relating to such Board meeting, at
least 15 Business Days before the date of the relevant Board meeting.
The Parties hereto agree that the Board will not be entitled to
transact any business or pass any resolution other than as set out
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in the agenda at such meeting of the Board unless the Director
nominated by SARF is present at such meeting.
6.9 SARF shall have the right through its nominated Director to
participate on all Board committees, including, without limitation,
the executive committee, the audit and finance committee and the
remuneration committee.
6.10 The Company shall indemnify the Director and officers nominated by
SARF from time to time against all losses, claims, liabilities, costs
or other expense arising from the performance of their duties
(hereinafter "damages") except where such damages arise as a result of
fraud, willful misconduct or gross negligence on the part of such
Director or officer seeking, such indemnity. In addition the Company
agrees to take out adequate insurance, to the extent available in
India, to cover such damages.
6.11 The Company agrees to provide at least 15 Business Days notice of
meetings of the Board to those entitled to attend Board meetings.
6.12 The Sponsor and the Company agree that the Director nominated by SARF
will not be required to retire by rotation and that such Director will
not be required to hold any qualifying Shares in the Company and that
they will procure that the Articles of Association of the Company
reflect the provisions of this Clause.
7 PROVISION OF SERVICES
7.1 Except as set out herein, any services to be provided by or to the
Company by or to the Sponsor, and any agreements between the Company
and the Sponsor shall be on an arms-length basis.
8 FINANCING
8.1 Should the Company at any time and from time to time determine that
the funds available to the Company from the sources specified in the
Financial Plan shall not be or may not be sufficient (i) to complete
the Project, and/or (ii) to enable the Company to meet its financial
obligations, and/or (iii) to
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meet cash losses arising in the Company's operations from the date
hereof to the Financial Year of the Company ending in 2001, (each a
"Deficiency") whether as a result of an increase in the estimated cost
(including, but without limitation, cost of overruns) of the Project
or of a shortfall in the Financial Plan, the Company may at any time
during the period of three calendar years commencing with the date
hereof issue by facsimile, a notice to the Sponsor specifying the
relevant Deficiency. For the duration of this period the Sponsor
undertakes to provide funding to the Company in an amount equal to the
Deficiency in such manner and on such terms acceptable to SARF in
writing from time to time. Any such funding provided under this clause
will not be repayable until SARF ceases to hold any Shares in the
Company.
9 DIVIDENDS
9.1 Each Shareholder shall procure that, subject to the making of proper
and prudent reserves and provisions to meet ongoing and planned
capital expenditure and increases in working capital as in the opinion
of the Board ought reasonably to be made, substantially all of the
profits available for distribution (as determined in accordance with
the laws of India) in respect of each Financial Year during the term
of this Agreement is distributed by the Company to the Company's
Shareholders by way of dividends within six months of the end of the
Company's financial year.
10 ENFORCEMENT OF COMPANY'S RIGHTS
10.1 In the event that the Company has a right of action against any
Shareholder (or any associated company of such) in respect of a breach
of this Agreement a committee of directors (other than those appointed
by such Shareholder) shall be formed immediately after such breach.
10.2 In the event that the Company has a right of action against all
Shareholders, such committee shall include directors appointed by each
Shareholder, subject to Clause 6.
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10.3 Such committee shall have full authority on behalf of the Company to
take any action it considers appropriate in respect of such claim and
the Shareholders shall take all steps within their power (subject to
complying with the provisions of Clause 22) to give effect to the
provisions of this Clause 10.
11 ACTIONS TO BE TAKEN BY BOARD RESOLUTION OR BY SHAREHOLDER CONSENT
11.1 Without prejudice to the provisions of Clause 5, any decision relating
to any of the following matters shall as required under the Company's
▇▇▇ ▇▇▇▇ or any other applicable law in force in India, require
approval of SCSL and SARF at the Shareholders' meeting or as
appropriate the approval of the Board of Directors including the vote
in favour of or consent in writing to the relevant matter by SARF's
nominated Director;
11.1.1 any change in the Memorandum and Articles of Association of the
Company;
11.1.2 any change in the capital structure of the Company (including, but
without limitation, any consolidation, sub-division, reconstruction or
conversion of the Company's share capital) or the issue of further
shares (of whatever class) or equity interest or the creation of any
options, warrants (except for the Warrants referred to in Clause 15)
or employee stock options, other rights to subscribe for, acquire or
call for Shares or redemption or purchase by the Company of Shares or
a reduction in the share capital of the Company or in any way
alteration of the rights attaching to the share capital of the
Company;
11.1.3 the issue by the Company of any debenture or loan stock (whether
secured or unsecured) or the creation of any mortgage, charge, lien,
encumbrance or other third party right over any of the Company's
assets or the giving by the Company of any guarantee or indemnity to
or becoming a surety for any third party;
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11.1.4 any arrangement for any joint venture or partnership (or than
agreements relating to arrangements with resellers or marketing
partners for the development of Web Sites and such other
products/services managed on a day to day basis by the Company as
authorised by the Board) or for the acquisition of the whole or
substantially, the whole of the assets and undertaking of the Company
or an acquisition by the Company of any part of (or the whole of) the
issued share capital, stock, or interest or of the assets and
undertakings (or any rights over the same) of another company;
11.1.5 the declaration of any dividend by the Company or the making of any
distribution of the Company's share capital or the purchase,
redemption or any kind of acquisition of any of the Company's shares
or capital stock or any warrant or option over the same;
11.1.6 approval or amendment of annual operating plans or budgets or any
activity outside the scope of the annual budget of the Company;
11.1.7 any change in the nature or material modification of the Project or
change in the business undertaken by the Company;
11.1.8 the merger, acquisition or winding up of the Company or participation
in any scheme of reconstruction or any settlement whatsoever involving
the Company, or any liquidation or dissolution of the Company;
11.1.9 the making of any loan or the creation, renewal or extension of any
borrowings or indebtedness by the Company or the granting of any
credit (other than credit given in the normal course of the Company's
business) in excess of the equivalent value in the relevant currency
of US $50,000 (or such revised limit as SARF may agree from time to
time in writing with the Company) by the Company;
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11.1.10 the appointment, remuneration, compensation, transfer and discharge of
any Director, or employee earning in excess of the equivalent value in
the relevant currency of US $50,000 a year;
11.1.11 the acquisition or construction or lease of items of tangible or
intangible property involving an estimated expenditure of the
equivalent value in the relevant currency of US$100,000 or more in
each individual case (or such revised limit as SARF may agree from
time to time in writing with the Company), which is not expressly
authorised in the approved budget referred to in Clause 11.1.6 above;
11.1.12 any transaction by the Company with any Shareholder or any associated
company of any Shareholder or any Directors of the Company and/or the
Sponsor and/or members of their respective families and/or associated
companies of such Directors;
11.1.13 any obligation of the Company outside the normal course of trading
which could involve the payment by it, in cash or otherwise, of
amounts in excess of the equivalent value in the relevant currency of
US$100,000 (or such revised limit as SARF may agree from time to time
in writing with the Company) in the aggregate in any 12 month period;
11.1.14 the assignment, sale or other disposal, lease or lending in any 12
month period of any asset or related group of assets of the Company
having a net book value in aggregate of the equivalent value in the
relevant currency of US$100,000 or more;
11.1.15 any change in the Company's accounting policies or the Company's
auditors, bankers, Financial Year or bank mandates;
11.1.16 the establishment of any retirement benefit scheme in relation to the
Company's employees, or the making of any contribution to any third
party scheme for the provision of retirement benefits;
20
11.1.17 any expenditures or commitments for expenditures in any Financial Year
exceeding in aggregate the equivalent value in the relevant currency
of US$150,000 (or such revised limit as SARF may agree from time to
time in writing with the Company) which is not expressly authorised in
the approved budget referred to in Clause 11.1.6 above;
11.1.18 the granting or entering into of any licence, sub-licence, agreement
or similar arrangement concerning any part of the name of the Company
or any of the Company's intellectual property rights;
11.1.19 the making, granting or allowing of any claim, disclaimer, surrender,
election or consent for taxation purposes in excess of the equivalent
value in the relevant currency of US$25,000 (or such revised limit as
SARF may agree from time to time in writing with the Company);
11.1.20 the Company entering into the occupation, purchase, sale, transfer,
lease or licence of any freehold or leasehold property, with an
individual aggregate annual cost to the Company of more than the
equivalent value in the relevant currency of US$50,000 (or such
revised limit as SARF may agree from time to time in writing with the
Company);
11.1.21 the Company forming or having any Subsidiary or holding or acquiring
any shares, stock or interest in any company (wherever incorporated)
or any rights over the same;
11.1.22 early repayment of any moneys advanced to the Company pursuant to any
term loan agreement;
11.1.23 appointing any Director (executive or non executive) or any shadow
director of the Company (other than those nominated by the Sponsor) or
appointing any committee of the Board or delegating any of the powers
of the Board to any committee;
21
11.1.24 the Company establishing any bonus, profit sharing, share option or
other incentive scheme for any director or employee of the Company;
11.1.25 write off of any amounts of money or otherwise due and owing to the
Company;
11.1.26 the pricing, quantum, timing of an initial public offering ("IPO"),
and identity of the lead managers, at the time of the IPO, subject to
the provisions of Clause 13 hereof,
11.1.27 the giving by the Company of any power of attorney not in the ordinary
course of business; and
11.1.28 any modification of any significant commercial contracts or business
agreements.
12 DEALING IN SHARES
12.1 The Sponsor shall not except with the prior written consent of SARF or
in accordance with this Agreement.
12.1.1 pledge, mortgage, charge or otherwise encumber any of its Shares,
options or warrants or any interest in any such Shares, options or
warrants;
12.1.2 transfer, dispose of or grant an option over any of its Shares or any
interest (legal or beneficial) in any such Shares, options, or
warrants; or
12.1.3 enter into any agreement in respect of the votes attached to any of
its Shares, options, or warrants.
12.2 The Company shall procure that each share certificate issued by it
will carry the following statement -
"Any" disposition, transfer, charge of or dealing in any other manner
in the Shares represented by this certificate is restricted by a
Shareholders
22
Agreement dated _____________ and made between the Company, South Asia Regional
Fund and ▇▇▇▇▇▇ Computer Services Limited and Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇."
12.3 The Shareholders and the Company shall procure that the Board only
approves for registration a transfer of Shares, warrants or options
carried Out in accordance with the provisions of this Agreement.
12.4 Subject to Clause 12.3, if a Shareholder sells, transfers, assigns or
otherwise disposes of all of its Shares, warrants or options it shall
be released from its obligations hereunder except for those contained
in Clauses 17 (if appropriate), 20, 22, and 23.1 to 23.3.
12.5 If any Shareholder ("the Transferor") transfers any Shares, warrants
or options owned by it in accordance with the provisions of this
Agreement other than to the other Shareholder(s) (such person(s)
hereinafter called "the Transferee(s)") such transfer shall be made
upon the condition that the Transferee(s) shall execute a Deed of
Adherence, substantially in the form as set out in Schedule 8 by
which, on and as of the date on which such Shares, warrants or options
are transferred to it, the Transferee(s) shall become subject to the
same obligations and shall be entitled to the same rights as bound and
accrued to the Transferor pursuant to this Agreement.
13 LISTING
13.1 The Company and the Sponsor severally undertake to obtain a Listing of
the Shares by making an IPO on the Bombay Stock Exchange ("BSE") or
the National Stock Exchange ("NSE") on or before March 31, 2003.
13.2 Subject to the provisions of this Agreement, the Company undertakes to
cause the existing Shares of the Company to be listed and take such
steps as are necessary (either by way of a fresh issue of Shares
and/or by causing the existing issued Shares to be sold) to obtain a
Listing. The Sponsor and the Company severally undertake to ensure
compliance with all applicable regulations, and guidelines in force at
the relevant date in relation to the
23
making of the IPO or for obtaining a Listing. The Sponsor and the
Company further severally undertake to use their best efforts to
obtain all necessary consents and approvals required for the making of
the IPO or for obtaining a Listing.
13.3 SARF will have the option to offer part or all of its Shares for an
offer for Sale at the time of the IPO. For the avoidance of doubt, the
balance of Shares necessary to meet all Listing requirements shall be
provided either by way of a fresh issue of Shares and/or by the
Sponsor's Shares being offered for sale.
13.4 The quantum, price and timing of the IPO shall be decided only with
the prior written consent of SARF.
13.5 The Company shall, if so required by SARF, enter into underwriting
agreements with underwriters, acceptable to SARF, for underwriting the
Shares or other securities offered in the IPO.
13.6 All costs incurred in relation to the IPO shall be met by the Company.
In respect of the Listing. the Company will comply with all ongoing
Listing costs and requirements including inter alia, payment of all
present and future costs relating to the Listing and, sponsorship,
underwriting fees, listing fees, merchant bankers fees, bankers fees,
brokerage, commission and any other costs that may be incurred due to
the changes/modifications of the law and regulations for the time
being in force.
13.7 The Company and the Sponsor agree that SARF shall not, upon Listing or
sale of the Shares held by it, be required to give any warranties or
indemnities to any underwriter, broker, Stock Exchange, any other
Competent Authority or other person except as to title of its shares,
and SARF shall in no circumstances be construed as a promoter under
applicable law.
13.8 The Sponsor and the Company shall ensure fulfillment of all listing
requirements to the satisfaction of the Stock Exchanges and Securities
Exchange Board of India and/or any other regulatory/statutory
authority.
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13.9 If for any reason the Company fails to qualify for a listing on the
BSE, the NSE or another recognised Stock Exchange in India or the
United States of America approved by SARF the Company may seek to list
the Shares on any other recognised Stock Exchange anywhere in the
world, provided that the listing of the Shares of any other Stock
Exchange shall require the prior written consent of SARF. For the
avoidance of doubt, for the purposes of this Clause 13, if the Company
seeks to list its shares of any exchange other than a recognised stock
exchange in India or the United States of America, the provisions of
this Clause 13 will apply to such listing.
14 TAG ALONG PROVISIONS
14.1 For the purposes of this Clause 14 -
14.1.1 "Buyer" means any person and/or a nominee of such person;
14.1.2 the "Tag Along, Price" shall mean the higher of -
14.1.2.1 the highest consideration offered for each Share the proposed transfer
of which has led to the offer;
14.1.2.2 the highest consideration paid by the Buyer for any Share in the
twelve months up to the relevant offer.
14.2 Notwithstanding any other provisions of this Agreement (including, but
not limited to Clause 12), the Sponsor shall not be entitled to
transfer any Shares (which term for the purposes of this Clause 14
will include any warrants or options) to a Buyer unless it shall have
first procured that the Buyer makes a written offer (open for
acceptance for a period of at least 28 days and with adequate security
as to the performance of its obligations) to purchase all of the
Shares held by SARF at the Tag Along Price per Share. Any such offer
shall be on terms that the consideration shall be payable in cash in
full without any set off within 21 days of acceptance of the offer.
14.3 The Sponsor shall procure that the Buyer shall complete the purchase
from SARF of all of its Shares before or at the same time as the Buyer
completes the purchase of Shares from the Sponsor. The Shareholders
shall procure
25
that the Directors shall not register any transfer to the Buyer and
the Buyer shall not be entitled to exercise or direct the exercise of
any rights in respect of any Shares to be transferred to the Buyer
until in each case the Buyer has fulfilled all his obligations
pursuant to this Clause 14 and Clause 12.5.
15 WARRANTS
15.1 The issue of Warrants and subscription rights and all matters related
thereto specified in this Clause 15 shall be subject to all applicable
laws, rules and regulations in force in India at the date of signing
of this Agreement.
15.2 Conditional upon SARF or the Sponsor (as the case may be) subscribing
and paying in full for the number of Shares set out opposite their
respective names in Clause 4.1, and the Company obtaining necessary
approvals for the issue of Warrants, the Company hereby agrees and
undertakes to issue Warrants to SARF and the Sponsor as set out in
Clause 15-.3 below ("Warrants"). Each Warrant shall entitle the
registered holder thereof a right to subscribe (the "Subscription
Right(s)") for one fully paid Share in the capital of the Company at
any time during the Warrant Exercise Period or as provided in Clause
15.2.2. for the Warrant Exercise Price on the following conditions
(and those conditions endorsed on the Warrant Certificate
substantially in the form set out in Schedule 9) (together the
"Conditions"):
15.2.1 The Warrant exercise price (the "Warrant Exercise Price") per Share
will be calculated by applying, at the "Warrant Exercise Date"
(hereinafter defined), a multiple of eight to the fully diluted
earnings per Share calculated using the latest annual audited accounts
of the Company. The term "fully diluted" shall for the purposes of
this Clause mean that the number of Shares used to calculate the
earnings per Share will be the number of Shares that would be in issue
if all the warrants and options (for the avoidance of doubt, this will
include all Employee and Management Share Option Schemes) in issue at
the Warrant Exercise Date were converted into Shares, subject to a
minimum
26
price of the higher of (a) 66% of the fair market value of a Share on
the Warrant Exercise Date, fair market value being arrived at by
taking the mean price per Share determined by three reputable merchant
banks acceptable to the Shareholders at that time ("Fair Market
Value") and (b) the par value of Shares subscribed. If the
Shareholders cannot agree on three reputable merchant banks, the
President for the time-being of the International ▇▇▇▇▇▇▇▇ of
Commerce, India will select and appoint such remaining reputable
Merchant Bankers as may be required, at the request of any of the
parties hereto and any costs associated therewith will be payable by
the Company;
15.2.2 The Warrants will be exercisable at any time between 30 June 2001 and
30 June 2003 (the "Warrant Exercise Period") or if the Sponsor sells
any of its Shares prior to 30 June 2001, or on a date not later than
the date on which the Company files an application for Listing or
petitions wind up voluntarily, by serving a written notice (the
"Warrant Exercise Notice") on the Company substantially in the form,
set out in Schedule 9 stating the Warrant Exercise Price and number of
Warrants being exercised and enclosing a cheque (or other form of
payment acceptable to the Company and SARF and/or the Sponsor as
appropriate) for the relevant sum the date of receipt of the notice
together with the Warrants and the cheque towards payment of the
appropriate amount shall be the "Warrant Exercise Date." The Warrants
can only be exercised during the Warrant Exercise Period, or under any
of the other circumstances set out at the beginning of this Clause
15.2.2., failing which the relevant Warrants will lapse and cease to
have any further effect. Once a notice exercising the Warrant has been
given, such notice may not be withdrawn except with written consent of
the Company. The Warrants shall have to be exercised in not more than
3 (three) tranches by the Warrantholders.
27
15.3 The number of Warrants to be issued by the Company pursuant to and on
the terms and conditions set out in Clause 15.2 will be -
SARF - 600,000
Sponsor - 150,000
15.4 Each Warrantholder will be entitled to Warrant Certificates in such
denominations as SARF and/or the Sponsor may request in the form or
substantially in the form shown in Schedule 9.
15.5 All Warrant Certificates shall be issued under the Seal of the Company
or under a seal adopted for that purpose in accordance with the Articles
of Association of the Company.
15.6 The Conditions of the Warrants and the Warrants shall be binding upon
the Company and the Warrantholders and all persons claiming through or
under them respectively.
15.7 Without prejudice to the generality of Clause 15.5 the Company shall
upon exercise of all or any of the Subscription Rights from time to time
during the Warrant Exercise Period or in accordance with Clause 15.2.2
allot and issue the appropriate number of Shares in accordance with this
Agreement and the Conditions but subject to applicable laws and
regulations in India at the date of this Agreement. The Warrants once
exercised by the Warrantholders shall be cancelled forthwith by the
Company.
15.8 The Company covenants with SARF and the Sponsor that so long as any of
the Subscription Rights remain exercisable:
15.8.1 all Shares allotted and issued on exercise of the Subscription Rights
shall rank pari passu in all respects with the fully paid Shares in the
Company and shall accordingly entitle the holders to participate in full
in all dividends or other distributions paid or made on in respect of
the Shares from the relevant Warrant Exercise Date; and
28
15.8.2 it will send to each Warrantholder, at the same time as the same are
sent to the holders of Shares, its audited accounts and all other
notices, reports and communications despatched by it to the holders of
the Shares generally.
15.9 Warrants shall be transferable by instrument of transfer in any usual or
common form or such other form as may be approved by the Directors. For
this purpose, the Company shall maintain a Register in accordance with
applicable laws and regulations. Transfers of Warrants must be executed
by both the transferor and the transferee. The provisions of the
Company's Articles of Association for the time being in relation to the
registration, transmission and transfer of Shares and the register of
members shall apply, mutatis mutandis, to the registration, transmission
and transfer of the Warrants and the Register and shall have full effect
as if the same had been incorporated herein. For the avoidance of doubt
SARF may sell some or all of the Warrants owned by it at any time.
15.10 The Parties agree to procure as soon as possible that all steps
necessary for the Company to lawfully issue the Warrants shall be taken,
including, but without limitation amending the Articles of Association
of the Company.
15.11 All conditions and rights contained under Clauses 12, 14 and 16 shall
apply mutatis mutandis to any issued but unexercised Warrants as if the
Warrants were Shares.
16 EXIT OPTIONS
16.1 Notwithstanding SARF's right to sell its Shares at any given point of
time or anything to the contrary contained elsewhere in this Agreement,
the Sponsor hereby agrees that SARF shall also have the right to sell
its Shares and terminate this Agreement and exercise the option (the
"Exit Option") as set forth in Clause 16.2 hereof, on the occurrence of
any of the following events:
29
16.1.1 any material breach of this Agreement by the Company and/or the Sponsor
which is not remedied within 45 Business Days of receipt of written
notice from SARF;
16.1.2 the bankruptcy or insolvency of the Sponsor or for the suspension or
termination of its operations or any resolution is proposed for the
distribution of any of its assets among all or any of its creditors;
16.1.3 there is no IPO made on or before March 31, 2003 or such later date as
may be agreed between SARF, the Sponsor and the Company;
16.1.4 Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ceases to be the Chairman of the Sponsor;
16.1.5 there is a Change in Control of the Sponsor; or
16.1.6 the Sponsor ceases to be a public listed company on the NSE/BSE or other
recognised stock exchange.
16.2 If SARF becomes entitled to exercise the Exit Option above, SARF may, at
its option:
16.2.1 require the Sponsor to, and Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ to procure, that the
Sponsor makes available for sale the requisite number of its Shares
which, along with SARF's shareholding, meets the minimum listing
requirements on the BSE or the NSE or other recognized stock exchange in
India or the United States of America or other stock exchange (subject
to Clause 16.3), through an offer for sale to the public, and the
Company shall bear the cost of making the offer for sale; and/or
16.2.2 sell its holding to a trade buyer or financial investor, in which case
the Sponsor will, and Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ will procure, that he and the
Sponsor will undertake all necessary steps to facilitate and make happen
such a sale including, the Sponsor will make available the necessary
number of its Shares, which when combined with all of the shares owned
by SARF at that point in
30
time, will give the trade buyer/financial investor at least 25.1%
shareholding in the Company, and both SARF and the Sponsor will sell
their shares on the same terms and conditions; and/or
16.2.3 require the Company to buy back all of SARF's Shares, or such number of
SARF's Shares as are permitted under Indian law, at a price per Share
agreed between SARF and the Company, or failing such agreement at Fair
Market Value.
16.3 The Parties agree that except to the extent that SARF's rights pursuant
to this Agreement are inconsistent with Listing requirements, all of
SARF's rights pursuant hereunder shall continue in full force and effect
following Listing. SARF and the Sponsor shall have the obligation to
accord consent to the amendment of the Articles of Association of the
Company for the purpose of Listing only to the extent necessary for
Listing and such as the Sponsor's and SARF's legal counsel in
consultation with Company's legal advisors shall agree, and SARF and the
Sponsor undertake to vote in favour of such modifications.
16.4 If SARF exercises its Exit Option, the Company agrees to use its best
endeavours to procure or effect the provisions of clause 16.2 as soon as
possible including, but without limitation in the case of Clause 16.2.3,
obtaining SARF's approval prior to any capital expenditure or other
deployment of funds in the event that the Company cannot buy back all of
SARF's shares.
17 COVENANTS NOT TO COMPETE
17.1 While SARF or any associated company of SARF is the holder of any
Shares, and for the period set out in Clause 17.2, the Sponsor shall not
without the prior written consent of SARF either alone or jointly with,
through (which includes by ownership of any Share, direct or indirect
control) or on behalf of (whether as director, partner, consultant,
manager, employee, agent or otherwise) any person, directly or
indirectly -
31
17.1.1 carry on or be engaged or concerned or interested (or seek to take such
action) in any business which is in competition with the Project or the
business carried on by the Company in relation to electronic commerce
and internet business (the "Restricted Business") as carried on at any
time during the term of this Agreement anywhere in the world, nor seek
to, directly or indirectly, procure orders from or do business or
contract with any person who is or has been a customer or, (in such a
way as to adversely affect the Company) a contractor or supplier of the
Company at any time during the term of this Agreement;
17.1.2 in connection with any business competing with the Project or the
business carried on by the Company in relation to the Restricted
Business during the term of this Agreement engage or employ, or contact
with a view to doing so, any person who has been an employee, officer or
manager of the Company at any time during the term of this Agreement;
17.1.3 do or say anything which is harmful to the reputation of the Company or
materially affects its existing business relationship with any person;
with the intent that each of these restrictions shall constitute an
entirely separate and independent restriction on the Sponsor and any
associated company of the Sponsor.
17.2 The restrictions in Clause 17.1 shall apply also for a period of 12
calendar months from the date on which the Sponsor or any associated
company of the Sponsor ceases to be legally and/or beneficially
interested in any Share (the "Cessation Date") in all cases by
references to either the Project or the business of the Company or
customers, employees, officers, managers or contracting parties of the
Company at the Cessation Date, as the context may require.
32
17.3 The Parties undertake to use their best endeavours to procure that the
restrictions set out in this Clause 17 will apply mutatis mutandis to
the Directors and, senior employees earning in excess of the relevant
currency equivalent of US$30,000 per annum (or such revised limit as
SARF may agree from time to time in writing with the Company), of the
Company.
17.4 The restrictions contained in respect of Clauses 17.1 and 17.2 above are
considered reasonable by the Parties but in the event that any such
restrictions shall be found to be void but would be valid if some part
or parts thereof were deleted or the period or area of application
reduced, such restrictions shall apply with such modifications as may be
necessary to make it valid and effective.
18 COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES
18.1 Each Shareholder and the Company undertakes to the others that it shall
take (or shall cause to be taken) all practicable steps and actions
including, without limitation, the exercise of votes it directly or
indirectly controls at meetings of the Board and general meetings of the
Company necessary or appropriate to ensure that the terms of this
Agreement are complied with and to procure that the Board and the
Company complies expeditiously and efficiently with its obligations and
that it shall do all such other acts and things as may be necessary or
desirable to implement this Agreement.
18.2 Each Shareholder and the Company undertakes to the others to amend the
Articles of Association of the Company so that each and every provision
(subject to Clause 18.1) shall be enforceable by the Shareholders as
between themselves in whatever capacity.
19 TERMINATION
19.1 This Agreement shall remain in full force and effect as between the
Shareholders and the Company until the earlier of -
19.1.1 Without prejudice to Clause 16, the acquisition by one Shareholder or a
Buyer of all the Shares held by the other Shareholder(s); or
33
19.1.2 the agreement of all the parties that it be terminated.
19.2 For the avoidance of doubt, in the event of a transfer of Shares in
accordance with this Agreement, unless expressly stipulated to the
contrary herein, this Agreement shall not terminate but shall continue
in full force and effect.
19.3 Termination of this Agreement shall be without prejudice to any accrued
rights or obligations of the Parties up to the date of termination.
20 CONFIDENTIALITY
20.1 During the term of this Agreement and for the period of two years after
termination or expiration of this Agreement for any reason whatsoever,
the Receiving Party shall -
20.1.1 keep the Confidential Information confidential;
20.1.2 not disclose the Confidential Information to any other person other than
with the prior written consent of the Disclosing Party or in accordance
with Clauses 20.2 and 20.3; and
20.1.3 not use the Confidential Information for any purpose other than the
performance of its obligations under this Agreement.
20.2 During the term of this Agreement the Receiving Party may disclose the
Confidential Information to its directors, officers or employees (or
employees, directors, and officers of its holding company, subsidiaries,
or group companies ), and advisors including for the avoidance of doubt
in the case of the Company, the Company's financiers and/or bankers,
(the "Recipient") to the extent that it is necessary for the purposes of
this Agreement.
20.3 The Receiving Party shall procure that each Recipient is made aware of
and complies with all the Receiving Party's obligations of
confidentiality under this Agreement as if the Recipient was a party to
this Agreement.
34
20.4 The obligations contained in Clauses 20.1 to 20.3 shall not apply to any
Confidential Information which -
20.4.1 is at the date of this Agreement or at any time after the date of this
Agreement comes into the public domain other than through breach of this
Agreement by the Receiving Party or any Recipient;
20.4.2 can be shown by the Receiving Party to the reasonable satisfaction of
the Disclosing Party to have been known to the Receiving Party prior to
it being disclosed by the Disclosing Party to the Receiving Party;
20.4.3 subsequently comes lawfully into the possession of the Receiving Party
from a third party;
20.4.4 is required by law to be disclosed to any person who is authorised by
law to receive the same;
20.4.5 is required to be disclosed by the regulations of any recognised
exchange upon which the share capital of the Disclosing Party is listed
or is proposed to be listed from time to time;
20.4.6 is disclosed to a court, arbitrator or administrative tribunal in the
course of proceedings before it to which the Disclosing Party is a party
in a case where disclosure is required by such proceedings.
20.5 For the purposes of this Clause, "Confidential Information" means all
information of a confidential nature disclosed in writing by one party
(the "Disclosing Party) to any other party (the "Receiving Party")
whether before or after the date of this Agreement.
35
21 COSTS
21.1 Except as otherwise provided herein, each party will bear its own costs
arising out of or incidental to the negotiation, preparation, execution
and implementation by it of this Agreement and of all other documents
referred to in it.
22. ARBITRATION
22.1 Except as expressly stated herein, any and all claims, disputes,
questions or controversies involving the parties and arising out of or
in connection with this Agreement, or the execution, interpretation,
validity, performance, breach or termination hereof (including, without
limitation, the provisions of this Clause 22) (collectively, "Disputes")
which cannot be finally resolved by the Parties within sixty (60)
calendar days of the arising of a Dispute by amicable negotiation and
conciliation shall first be submitted for settlement by informal
arbitration to an arbitral panel consisting of one member of the Board
of Directors (or any nominee thereof) of each of SARF and the Sponsor.
If any such panel, negotiating in good faith, is unable to resolve and
settle the dispute within sixty (60) calendar days after the Dispute is
first submitted to it, then any representative on such panel shall be
entitled to cause the Dispute to be submitted for settlement pursuant to
the terms of Section 22.2 hereof.
22.2 Any Dispute which is not settled after an attempt by the parties to the
Dispute at amicable negotiations and conciliation under Section 22.1
shall be resolved by final and binding arbitration. The arbitration
shall be held in Singapore in accordance with the Rules of United
Nations Commission for International Trade Law ("UNCITRAL Rules") as
then existing and shall be heard and determined by an arbitral tribunal
composed of three (3) arbitrators. Each of the Shareholders shall
appoint one arbitrator, and both of such arbitrators shall appoint a
third arbitrator who shall serve as the Chairman of such arbitral
tribunal, provided that such third arbitrator is not a citizen of the
United Kingdom or India. If either Shareholder fails or decides against
appointing an arbitrator within a period of thirty (30) days
36
after the appointment of the first arbitrator, or if the arbitrators
designated by the Shareholders fail or otherwise are unable to appoint
the third arbitrator within (30) days of the appointment of the second
arbitrator, then the remaining arbitrator(s) shall be selected by the
President of the International Chamber of Commerce, Singapore, which
shall act as the appointing authority.
22.2.1 All arbitration proceedings shall be conducted in the English language
and the arbitral award (the "Award") shall be rendered no later than six
(6) months from the commencement of the arbitration or as otherwise
provided by the UNCITRAL Rules, unless otherwise extended by the
arbitral tribunal for no more than an additional six (6) months for
reasons that are just and equitable. In connection with the arbitration
proceedings, the parties hereby agree to co-operate in good faith with
each other and the arbitral tribunal and to use their respective best
efforts to respond promptly to any reasonable discovery demand made by
any party and the arbitral tribunal.
22.2.2 Except as otherwise required by law or any applicable stock exchange
rules and regulations, the arbitral proceedings and the Award shall not
be made public without the joint consent of the parties to the Dispute
and each such party shall maintain the confidentiality of such
proceedings or the Award, unless otherwise permitted by the other party
in writing. The costs of the arbitration shall be borne by the parties
to the Dispute in accordance with the applicable provisions stipulated
in the UNCITRAL Rules. Unless the Award provides for non-monetary
remedies, any such Award shall be made and shall be promptly payable in
US Dollars or other designated currency net of any tax or other
deduction. The Award shall include interest from the date of any breach
or other violation of this Agreement and the rate of such interest shall
be specified by the arbitral tribunal and shall be calculated from the
date of any such breach or other
37
violation to the date when the Award is paid in full; provided, however,
-------- -------
that in no event shall such interest rate be lower than the prime
commercial lending rate announced by Citibank, NA at its principal
office at New York, United States of America for ninety (90) day loans
extended to responsible commercial borrowers.
22.2.3 All notices and other communications by one party to the Dispute to the
other or by the arbitral tribunal to any of the Parties in connection
with the arbitration hereunder shall be in accordance with the
provisions of Clauses 23.1 to 23.3.
22.2.4 The parties expressly understand and agree that the award shall be the
sole, exclusive, final and binding remedy between them regarding any and
all Disputes presented to the arbitral tribunal. Application shall be
made to any court having jurisdiction over the party (or its assets)
against whom the Award is rendered for a judicial acceptance of the
Award and an order of enforcement. The Parties acknowledge and agree
that this Agreement and any Award pursuant hereto shall be governed by
the 1958 New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards and the Indian Arbitration and Conciliation Act,
1996.
22.3 Neither the existence of any Dispute nor the fact that any arbitration
is pending hereunder, shall relieve any of the parties of their
respective obligations under this Agreement.
22.4 Each party hereby agrees that all of the transactions contemplated by
this Agreement shall constitute and shall be deemed to constitute
commercial activities. To the extent that any party may be entitled in
any jurisdiction whatsoever to claim immunity, whether characterized as
sovereign or otherwise, from litigation, execution, set-off, attachment
or other legal process of any nature whatsoever, it hereby expressly and
irrevocably waives such immunity.
38
23 MISCELLANEOUS
23.1 All notices and other communications to be given under this Agreement
shall be made in writing and by letter or facsimile transmission (save
as otherwise stated) and shall be deemed to be duly given or made when
delivered (in the case of personal delivery), when despatched (in the
case of facsimile transmission, provided that the sender has received a
receipt indicating proper transmission) or, in the case of a letter, 10
Business Days after being deposited in the post (by the quickest mail
available), postage prepaid, to such party at its address or facsimile
number specified in Clause 23.2, or at such other address or facsimile
number as such party may hereafter specify for such purposes to the
other by notice in writing.
23.2 The addresses referred to in Clause 23.1 are -
23.2.1 in the case of a notice given to the Company -
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ 600 015
Facsimile number: (▇▇) ▇▇ ▇▇▇ ▇▇▇▇
With a copy to
Mayfair Centre, S.P. Road
Secunderabad, Andhra Pradesh
India 500 003
Fax Number - (▇▇) ▇▇ ▇▇▇ ▇▇▇
23.2.2 in the case of a notice given to SARF -
Les Cascades Building
▇▇▇▇▇ ▇▇▇▇▇▇ Street
Port Louis
Mauritius
Facsimile number: (▇▇▇) ▇▇▇ ▇▇▇▇
39
with a copy to-
Commonwealth ▇▇▇ Development Corporation
One ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Facsimile number: (▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇; and
CDC Advisors PVT Ltd
Thapar Niketan
7/4 Brunton Road
Bangalore - 560 025
Facsimile number: (▇▇) ▇▇ ▇▇▇ ▇▇▇▇
23.2.3 in the case of a notice given to the Sponsor.
Mayfair Centre, S.P. Road
Secunderabad, Andhra Pradesh
India 500 003
Fax number: (▇▇) ▇▇ ▇▇▇ ▇▇▇
23.2.4 In the case a notice given to Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
Hyderabad 500 033
India
Facsimile number:_____________
23.3 A notice or other communication received on a day other than a business
day, or after business hours in the place of receipt, shall be deemed to
be given on the next following business day in such place.
23.4 If there is any conflict or inconsistency between the provisions of this
Agreement and the Memorandum and Articles of Association of the Company,
this Agreement shall prevail so far as permitted under Indian law.
Nothing in this Agreement shall be deemed to constitute an amendment of
the Memorandum and Articles of Association of the Company or any
previous articles of association of the Company.
40
23.5 Nothing in this Agreement or in any document referred to in it shall
constitute any of the parties a partner of any other, nor shall the
execution, completion and implementation of this Agreement confer on any
party any power to bind or impose any obligations to any third parties
on any other party or to pledge the credit of any other party.
23.6 None of the parties hereto may assign any of their respective rights or
obligations under this Agreement nor any of the documents referred to in
this Agreement in whole or in part (otherwise than pursuant to a
transfer of Shares in accordance in all respects with the provisions and
requirements of this Agreement).
23.7 Any provision in this Agreement which is or may become prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction without prejudice to the foregoing. The parties will
immediately negotiate in good faith to replace such provision with a
proviso which is not prohibited or unenforceable and has, as far as
possible, the same legal and commercial effect as that which it
replaces.
23.8 The Company, Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and the Sponsor severally undertake, at
the request and cost of SARF, to execute or procure the execution of
such documents and do or procure the doing of such acts and things that
SARF may reasonably require for the purpose of giving to SARF the full
benefit of all the provisions of this Agreement or any document related
thereto.
23.9 Save as SARF may otherwise agree, all notices, certificates, reports,
information and documents given to SARF pursuant to this Agreement shall
be in the English language.
23.10 This Agreement may be executed in several counterparts, each of which
shall be an original but all of which shall together constitute one and
the same instrument.
41
23.11 This Agreement represents the entire agreement between the parties and
shall supersede and extinguish any previous drafts, agreements or
understandings between all or any of the parties (whether oral or in
writing) relating to the subject matter herein, except to the extent
that the same are repeated in this Agreement.
23.12 Rights etc. cumulative and other matters -
23.12.1 The rights, powers, privileges and remedies provided in this Agreement
are cumulative and are not exclusive of any rights, powers, privileges
or remedies provided by law or otherwise.
23.12.2 No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or
affect the exercise thereof or operate as a waiver thereof in whole or
in part.
23.12.3 No single or partial exercise of any right, power, privilege or remedy
under this Agreement shall prevent any further or other exercise thereof
or the exercise of any other right, power, privilege or remedy.
23.13 Release of Warrantors -
23.13.1 SARF may release or compromise the liability of Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, the
Sponsor or the Company hereunder without affecting the liability of the
other.
23.14 All payments including dividends to be made by the Company hereunder
shall be made in US$ and -
23.14.1 Without set-off or counterclaim; and
23.14.2 Free and clear of and without deduction or withholding for or on account
of Taxes unless the Company is compelled by law to make payment subject
to such Taxes.
42
23.15 All Taxes payable by the Company hereunder in respect of this Agreement
shall be paid by the Company when due and in any event prior to the date
on which penalties attach thereto. The Company agrees to indemnify SARF
respect of all such Taxes. In addition, if any Taxes imposed, levied or
assessed in any jurisdiction, or amounts in respect thereof, must be
deducted or withheld from any amounts payable or paid by the Company
hereunder, the Company shall, subject as aforesaid, pay such additional
amounts as may be necessary to ensure that SARF receives a net amount
equal to the full amount which it would have received had payment not
been made subject to such Tax and shall promptly pay the full amount to
be deducted to the relevant Taxation authorities.
23.16 This Agreement and its performance shall be governed by and construed in
all respects in accordance with the laws of the Republic of India.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as a
deed on the day and year first above written.
EXECUTED on the date --- herein above )
under the Seal of [▇▇▇▇▇▇ Infoway Limited Seal]
▇▇▇▇▇▇ INFOWAY LIMITED )
by Ramaria R. and )
---------- ------------ )
EXECUTED on the date --- herein above )
Under the Seal of [▇▇▇▇▇▇ Computer Services Ltd.
▇▇▇▇▇▇ COMPUTER SERVICES ) SEAL]
LIMITED )
by B. Rama Raju and
------------- ------------ )
THE COMMON SEAL OF SOUTH )
ASIA REGIONAL FUND WAS )
AFFIXED HERETO IN THE PRESENCE )
OF )
acting by [ ] )
Director and [ ] Director/Secretary ) [South Asia Regional Fund Seal]
to the Board
SIGNED BY MR B ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ )
AS HIS DEED in the presence of ) [illegible]
43
SCHEDULE 1
(referred to in Recital A)
Description of the Project
Setting up a value added network servicing across 25 cities in India for the
purpose of offering information technology connectivity, electronic commerce and
internet solutions in accordance with the Financial Plan set out in Schedule 2
Part (II).
44
SCHEDULE 2
(referred to in Recital B)
PART I
Estimated Cost of the Project
----------------------------------------------------------------------------
Project Cost Rsm US$m
----------------------------------------------------------------------------
Premises 58.9 1.38
Network Related Expenses 48.4 1.14
Hardware and Software 159.5 3.75
Misc equipment 52.9 1.24
Investment for ISP 114.7 2.69
Pre-operating expenses 48.5 1.14
Margin on working capital 13.0 0.30
Contingencies 8.6 2.02
Total 504.5 11.87
----------------------------------------------------------------------------
45
SCHEDULE 2
(referred to in Recital B)
PART II
Financial Plan
Financial plan: Number of Shares (m) Total Cost (Rs)(m)
Party
Existing Shareholding
Sponsor & ▇▇. ▇▇▇▇▇▇ 12.00 120.00
Number of Shares to be
subscribed
Sponsor 0.75 52.50
SARF 3.00 210.00
Total 15.75 382.50
Term Debt Amount (Rs)(m)
Exim Bank of 122.00
India/Citibank
Total 504.50
46
SCHEDULE 3
(referred to in Clause 3.2)
Conditions Precedent
The conditions precedent referred to in Clause 3.1 are -
1. the grant and continuance in force of all governmental, government
agencies, RBI, corporate, creditors, shareholders and other permissions,
licences (including the ISPL), consents, registrations and authorisations
requisite under the laws of India to render this Agreement legal, valid,
binding and enforceable and to enable the Company to allot and issue,
Shares and to issue Warrants to SARF on the terms of this Agreement, to
perform its other obligations under this Agreement, and to carry out its
business and construct and operate the Project, the compliance by the
Company with all conditions attaching to each such permission, licence,
consent, registration and authorisation and the provision to SARF of
certified true copies thereof;
2 receipt by SARF in form and substance satisfactory to SARF, of a
certificate from the Auditors of the Company certifying that the Sponsor
has irrevocably and unconditionally subscribed and paid in full for
750,000 ordinary 10 Rs Shares in the Capital of the Company (for a
consideration of Rs52.5m);
3. the Memorandum & Articles of Association of the Company, (including for
the avoidance of doubt the inclusion of the provisions of Clauses 6, 9,
11, 12, 14 and 15 mutatis mutandis into the Articles of Association of the
Company) as well as all relevant corporate documents necessary for
approving the same, shall be in form and substance satisfactory to SARF
and the Company shall have provided a certified true copy of each to SARF;
4 the making of arrangements satisfactory to SARF for the installation by
the Company of efficient cost control, management information and
accounting systems;
5 the receipt by SARF of the following documents in form and substance
satisfactory to SARF -
47
5.1 a certified copy of one or more resolutions of the Board and of the Board
of the Sponsor authorising the execution and performance of this
Agreement, any other documents and instruments contemplated hereby and
specifying therein a person or persons authorised to execute each such
agreement, document or instrument and to make any communications or
execute or certify any other document on behalf of the Company and
authorising the Board to allot and issue Shares and the Warrants in
sufficient numbers to enable the Company to comply with its obligations to
SARF under this Agreement;
5.2 a certificate of the Chairman of the Company or Company Secretary of the
Company setting out the names and signatures of the person or persons
authorised to execute this Agreement and to make any communications or
execute or certify any document on behalf of the Company;
5.3 a satisfactory opinion from SARF's legal counsel in India, substantially
in the form set out in Schedule 4;
5.4 a certified true copy of the insurance policy or policies referred to in
Clause 5.1.10 and 5.1.11 of this Agreement;
5.5 a certified true copy of the Memorandum & Articles of Association of the
Sponsor.
6 the Company shall have appointed auditors acceptable to SARF, shall have
provided to SARF evidence of the acceptance by such auditors of such
appointment and shall have authorised such auditors to communicate
directly with SARF (substantially in the form set out in Schedule 6) and
the Company shall have furnished a copy of such authorisation to SARF;
7 the valid and effective execution of this Agreement and such other
documentation as SARF may advise the Company of in writing;
8 agreement to have been reached on the composition of the Board between the
Sponsor, the Company and SARF;
48
9 a plan satisfactory to SARF to have been put in place by the Company for
the ISP Division of the Company, including without limitation, systems for
monitoring the performance and development of this business unit;
10 the Company to have supplied copies of the employment/service contracts of
such of the management of the Company as SARF shall request in writing.
For ▇▇▇▇▇▇ INFOWAY LIMITED
AUTHORISED SIGNATORY.
49
SCHEDULE 4
(referred to in paragraph 5.3 of Schedule 3)
Form of Legal Opinion
We refer to the Share Subscription and Shareholders Agreement ("▇▇▇ ▇▇▇") dated
_______________ between ▇▇▇▇▇▇ Infoway Limited ("the Company"), ▇▇▇▇▇▇ Computer
Services Limited ("the Sponsor"), Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and "South Asia Regional
Fund".
Words used in this opinion which are defined in the SSA have the respective
meanings set out therein.
For the purposes of giving this opinion we have examined executed originals or
copies which have been certified by the Secretary of the Company as being true,
complete and up to date copies of the following documents -
(a) Minutes of a Meeting of the Board of Directors of the Company and the
Sponsor dated [ ];
(b) the Memorandum & Articles of Association of the Company and the Sponsor;
(c) the SSA;
(d) [relevant consents and approvals].
We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such records, certificates, resolutions and other documents
as we have considered necessary or appropriate and have carried out such
searches as we have deemed relevant and necessary as the basis for the opinion
expressed below.
This opinion relates only to the laws of India as in force at the date of this
opinion and we express no opinion as to the laws of any other jurisdiction. For
the purposes of giving this opinion, we have assumed -
50
(a) the authenticity of all seals, or signatures and of any duty stamp or
marking and the completeness and conformity to originals of all copy
documents submitted to us;
(b) that insofar as any obligation under any of the documents referred to
above is to be performed in any jurisdiction outside India, its
performance will not be illegal or ineffective by virtue of the law of
that jurisdiction.
(c) that there are no provisions of the laws of any jurisdiction other than
those of India which would be contravened by the execution, delivery or
performance of any of the documents referred to above;
(d) that any document executed after the date of this opinion is executed in
the form of the draft examined by us.
On the basis of the foregoing assumptions we are of the opinion as follows -
1 The Company is a deemed public company, and the Sponsor is a public
company listed on the BSE and the NSE and both are duly incorporated and
validly existing and in good standing under the laws of India and have
power to own their property and assets, to carry on their business as
presently conducted, to implement and carry out the Project and to enter
into and perform their respective obligations under the SSA.
2 The Company and the Sponsor have taken all necessary corporate action to
authorise the execution and performance of their respective obligations of
the SSA.
3 The SSA has been duly executed and delivered by the Company and the
Sponsor, and constitutes legal, valid and binding obligations of the
Company and Sponsor enforceable in India in accordance with their express
terms.
4 Neither the execution and delivery of the SSA nor the compliance with the
terms of such Agreement will contravene any law or legal requirement of
India nor will it violate the Memorandum and Articles of Association of
the Company nor the Sponsor or any of the terms, conditions or provisions
of, or constitute a default or require any consent under, any indenture,
agreement or other instrument to which the Company or the Sponsor are a
party or by which they are bound or violate any
51
of the terms or provisions of any judgment, decree or order or any statute, rule
or regulation applicable to the Company, the Sponsor or the Project.
5 All permissions, licences, consents (including, but without limitation all
RBI consents and approvals), registrations and other authorisations for
the time being required under the laws of India to authorise the
subscription, the allotment and issue of Shares and the issue of Warrants
pursuant to the SSA or the carrying out and completion of the Project or
for the validity or enforceability of the SSA, have been obtained and are
in full force and effect.
6 The Company has an authorised share capital of Rs 170,000,000 comprised of
17,000,000 shares of Rs 10/-each and has an issued share capital of
120,002,300/- There are no rights of pre-emption in favour of existing
shareholders which would apply in relation to the allotment and issue of
Shares to SARF under the SSA.
Except as required by the laws of India and notified to SARF, it is not
necessary or advisable that this Agreement be filed, registered, recorded
or enrolled with any court, public office or other authority in any
jurisdiction or that any documentary, registration or similar Tax or duty
be paid on or in relation to any such Agreement.
[The opinions set out above are subject to the following qualifications -
52
SCHEDULE 5
(referred to in Clause 2.1)
Representations and Warranties
1 The Company is a deemed public company, and the Sponsor is a public
company listed on the NSE and the BSE, both are duly incorporated and
validly existing and in good standing under the laws of India and have
power to own their respective properties and assets, to carry on their
respective businesses as presently conducted or proposed to be conducted,
to implement and carry out the Project, to enter into and perform their
respective obligations under this Agreement and for the Company to allot
and issue any shares or warrants to be issued pursuant to this Agreement.
2 The Company and the Sponsor have taken all necessary corporate action to
authorise the execution of this Agreement.
3 The report and financial statements of the Company for the period ended 30
September 1998 have been prepared in accordance with generally accepted
accounting principles and practices consistently applied and give a true
and fair view of the financial condition, assets and liabilities of the
Company at the date to which such financial statements have been prepared
and since that date there has been no material adverse change in the
financial condition or the business, assets or operations of the Company.
4 This Agreement has been duly executed and delivered by the Company and the
Sponsor, constitutes legal, valid and binding obligations of the Company
and the Sponsor respectively and is enforceable in accordance with its
express terms.
5 Neither the execution and delivery of this Agreement nor the compliance
with the terms of such Agreement will violate the Memorandum and Articles
of Association Company, nor will it violate the Memorandum and Articles of
Association of the Sponsor or any of the terms, conditions or provisions
of, or constitute a default or require any consent under, any indenture,
agreement or other instrument to which the Company or the Sponsor is a
party or by which it is bound or violate any of the terms or provisions of
any judgement, decree or order or any statute, rule or regulation
applicable to the Sponsor, the Company or the Project.
53
6 The Company is not in breach of or in default under any agreement
(including but without limit any financing agreement) to which it is a
party or by which it is bound to an extent or in a manner which might have
a material adverse effect of the business or financial condition of the
Company.
7 All permissions, licences, consents, registrations and authorisations and
other approvals for the time being required under the laws of India to
authorise the Subscription and allotment and issue of Shares and the
Warrants under this Agreement and the carrying out and completion of the
Project and for the validity or enforceability of this Agreement, have
been obtained and are in full force and effect including but without
limitation the Internet Services Provision Licence ("ISPL") with the
Government of India.
8 The Company is not engaged in any significant litigation or arbitration
proceedings and is not aware of any facts likely to give rise to any
significant litigation or arbitration proceedings.
9 In any proceedings taken in its jurisdiction of incorporation in relation
to this Agreement, it will not be entitled to claim for itself or any of
its assets immunity from suit, execution, attachment or other legal
process.
10 The Company is not in default in the payment of any due and payable taxes,
interest or penalties, or in the filing, registration or recording of any
document or in breach of any legal or statutory obligation or requirement
of the Company or of the Project.
11 Except as required by the laws of India and notified to SARF, it is not
necessary or advisable that this Agreement be filed, registered, recorded
or enrolled with any court, public office or other authority in any
jurisdiction or that any documentary, registration or similar Tax or duty
be paid on or in relation to any such Agreement. To the extent that any
such amounts are payable, the Company warrants that such amounts shall be
paid by it.
12 For the purposes of paragraphs 12 and 13 the following words shall have
the following meanings -
54
12.1.1 "Encumbrance" means any interest or equity of any Person (including any
right to acquire, option or right of pre-emption); any mortgage,
charge, pledge, lien, assignment, hypothecation, security interest
(including any created by law), title retention or other security
arrangement or agreement; and any rental, hire purchase, credit sale or
other agreement for payment of deferred terms.
12.1.2 "Hardware" means any computer equipment used by or for the benefit of
the company at any time including, without limitation, parts of
computer equipment such as firmware, screens, terminals, keyboards,
disks and including without limitation, cabling and other peripheral
and associated electronic equipment but excluding all software.
12.1.3 "Intellectual property" means patents, trade marks, service marks,
rights (registered or unregistered) in any designs; applications for
any of the foregoing, trade or business names; copyright (including
rights in computer software) and topography rights; know-how; secret
formulae and processes; lists of suppliers and customers and other
confidential and proprietary knowledge and information; rights
protecting goodwill and reputation; database rights such things and all
rights and forms of protection of a similar nature to any of the
foregoing or having equivalent effect anywhere in the world and all
rights under licences and consents in respect of any of the rights and
forms of protection mentioned in this definition.
12.1.4 "Intellectual Property Agreements" means agreements or arrangements
relating in any way whether wholly or partly to Intellectual Property.
12.1.5 "Listed Intellectual Property" means the intellectual property referred
to in the list annexed at Appendix A to this Agreement.
12.1.6 "Listed Intellectual Property Agreements" means the Intellectual
Property Agreements set out in the list annexed at Appendix B to this
Agreement.
55
12.1.7 "Software" means any set of instructions for execution by a computer
processor used by or for the benefit of the Company at any time
irrespective of application, language or medium.
12.1.8 "Software Products" means any software and associated documentation and
materials, which is now or has at any previous time been supplied by the
Company.
12.2 The Company and/or the Sponsor is/are the sole legal and beneficial
owner/s free from Encumbrances of the Listed Intellectual Property and
(where such property is capable of registration) the registered
proprietor thereof and (save for copyrights and unregistered design
rights not included in the Listed Intellectual Property) owns no other
Intellectual Property.
12.3 Save as may appear from the Listed Intellectual Property Agreements no
person has been authorised to make any use whatsoever of any
Intellectual Property owned by the Company.
12.4 Save as may appear from the Listed Intellectual Property Agreements all
the Intellectual Property used by the Company and/or Sponsor is owned by
it and it does not use any Intellectual Property in respect of which any
third party has any right, title or interest.
12.5 All the Intellectual Property rights owned or used by the Company and/or
Sponsor are valid and enforceable and nothing has been done, omitted or
permitted whereby any of them has ceased or might cease to be valid and
enforceable.
12.6 None of the processes or products of the Company infringes any
Intellectual Property or any right of any other person relating to
Intellectual Property or involves the unlicensed use of confidential
information disclosed to the Company by any person in circumstances
which might entitle that person to make a claim against the Company.
12.7 None of the Listed Intellectual Property is being used, claimed, applied
for, opposed or attached by any person.
56
12.8 The Company and the Sponsor are not aware of any infringement of the
Listed Intellectual Property or of any rights relating to it by any
person.
12.9 There are no outstanding claims against the Company or the Sponsor for
infringement of any Intellectual Property or of any rights relating to
it used (or which has been used) by the Company or the Sponsor and
during the last three years no such claims have been settled by the
giving of undertakings which remain in force. Neither the Company nor
the Sponsor has received any actual or threatened claim that any of the
Listed Intellectual Property is invalid nor is the Company or the
Sponsor aware of any reason why any patents should be amended.
12.10 Confidential information and know-how used by the Company and the
Sponsor is kept strictly confidential and the Company and the Sponsor
operates and fully comply with procedures which maintain such
confidentiality. The Company and the Sponsor are not aware of any such
confidentiality having been breached. The Company and the Sponsor have
not disclosed (except in the ordinary Course of the Company's business)
any of the Company's know-how, trade secrets or list of customers to
any other person.
12.11 All application and renewal fees, costs, charges, taxes and other steps
required for the maintenance or protection of the Listed Intellectual
Property have been duly paid on time or taken and none of such rights
are subject to any existing challenge or attach by a third party or
competent authority and there are no outstanding patent office or trade
marks registry deadlines which expire within three months of the date
of this Agreement.
12.12 The Listed Intellectual Property Agreements are all the intellectual
property agreements to which the Company is a party and each of them is
valid and binding and the Company and/or the Sponsor is/are not in
breach of any of the provisions of such agreements.
57
12.13 All current advertising, marketing and sales promotions by the Company
and the Sponsor comply with all applicable codes of practice and self-
regulatory schemes. Neither the Company nor the Sponsor has been
disciplined under any scheme or code in respect of any such
advertising, marketing or sales promotion and no complaint has been
made against it in respect thereof and there are no outstanding
complaints or disciplinary proceedings against the company in respect
thereof.
12.14 All persons retained or employed by the Company who, in the course of
their work for the Company will or might reasonably be expected to
bring into existence Intellectual Property or things protected by
Intellectual Property are, so far as is reasonably practicable,
individually bound by agreements with the Company whereby all
Intellectual Property which such persons may bring into existence
during their work for the Company vets in the Company and all such
agreements contain terms which, so far as is reasonably practicable,
prevent such persons disclosing any confidential information about the
Company and its business.
12.15 None of the Intellectual Property owned or used by the Company is
subject to compulsory licensing or the granting of any licences of
right nor, so far as the Company is aware, will it become so by
operation of law.
12.16 The Company does not use on its letterhead, brochures, sales literature
or vehicles nor does it otherwise carry on its business under any name
other than its corporate name.
13 Computer Systems
13.1 The Hardware has been satisfactorily maintained and supported and has
the benefit of an appropriate maintenance and support agreement
terminable by the contractor by not less than 24 months notice.
58
13.2 The Hardware and Software have adequate capability and capacity for the
projected requirements of the Company for not less than one year
following the date of this Agreement for the processing and other
functions required to be performed for the purposes of the business of
the Company and the Project.
13.3 Disaster recovery plans are in effect and are adequate to ensure that
the Hardware, Software and data can be replaced or substituted without
material disruption to the business of the Company.
13.4 In the event that any person providing maintenance or support services
for the hardware, Software and Data 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.
13.5 The Company has sufficient technically competent and trained employees
to ensure proper, handling, operation, monitoring and use of its
computer systems.
13.6 The Company has adequate procedures to ensure internal and external
security of the Hardware, Software and Data, including (without
limitation) procedures for preventing unauthorised access, preventing
the introduction of a virus, taking and storing on-site and off-site
back-up copies of Software and Data.
13.7 Where any of the records of the Company are stored electronically, the
Company is the owner of all hardware and software licences necessary to
enable it to keep, copy, maintain and use such records in the course of
its business and does not share any hardware or software relating to
the records with any person.
13.8 The Company has all the rights necessary (including rights over the
source code if available) to obtain, without undue expense or delay,
modified versions of the Software which are required at any time to
improve in any regard the operation and/or efficiency of the Software.
59
13.9 The Company owns, and is in possession and control of, original copies
of all the manuals, guides, instruction books and technical documents
(including any corrections and updates) required to operate effectively
the Hardware and Software.
13.10 The Hardware and Software have never unduly interrupted or hindered the
running or operation of the Company's business, and have no defects in
operation which so affect the Company's business.
13.11 The Hardware is the absolute property of the Company free from
encumbrances except to the extent disclosed by the Company in Appendix
C;
13.12 All Hardware, Software, Software Products and other equipment used by
the Company is Year 2000 Compliant.
13.13 "Year 2000 Compliant" means the ability to provide all the following
functions:
13.13.1 accurate processing of all date information whether before, during or
after 01 January 2000, including, without limitation, accepting date
input, providing accurate date output and performing accurate
calculations involving dates or portions of dates;
13.13.2 performing all processing accurately, efficiently and without
interruption before, during and after 01 January 2000 without any
change in operations, or in any input or output procedures;
13.13.3 processing date input accurately in a way that does not create any
ambiguity as to century;
13.13.4 storing, retrieving and processing date information accurately and in a
manner that does not create any ambiguity as to century; and
60
13.13.5 presenting all date output information accurately and in a manner that
does not create any ambiguity as to century.
14 The Company has disclosed to SARF in writing all information, estimates
and forecasts relevant for the disclosure to a person contemplating
making an equity investment in the Company. All information, estimates
and forecasts so disclosed were prepared with due care and the Company
is not aware of any reason why any such information, estimate or
forecast should now be altered in any material respect.
15 As at the date of this Agreement-
15.1 the [authorised/issued] share capital of the Company is [ ],
divided into [ ] ordinary shares of [ ] each par value,
which are [all] [issued], outstanding and fully paid;
15.2 immediately prior to the execution of this Agreement all of the shares
referred to in paragraph 15 are legally and beneficially owned by the
Sponsor;
15.3 there are no agreements or arrangements in force which provide for the
present or future allotment, issue or transfer of, or grant to any
person the right (whether conditional or otherwise) to call for the
allotment, issue or transfer of any share or loan capital of the
Company [(including any option or right of pre-emption or conversion)
there are no rights of pre-emption in favour of existing shareholders
which would apply in relation to the allotment and issue of Shares to
SARF under this Agreement] [OR] [all rights of pre-emption in favour of
existing shareholders have been duly disapplied for the purposes of
permitting the allotment and issue of Shares to SARF under this
Agreement];
16 Save as expressly disclosed to SARF, no indebtedness, mortgage, charge,
pledge, lien or other Encumbrance exists over all or any of the present
or future revenues, undertaking or assets of the Company and there is
no subsisting agreement on the part of the Company to create any such
mortgage, charge, pledge, lien or
61
Encumbrance. The Company has not incurred, assumed or permitted to
exist any indebtedness which has not been disclosed to SARF; and
17 The Company is lawfully entitled to issue the Warrants and any such
issue of Warrants will be intra ▇▇▇▇▇.
62
SCHEDULE 6
(referred to in Schedule 3, paragraph 6)
Form of Authorisation from the Company to its Auditors
[LETTERHEAD OF THE COMPANY]
To: The Auditors
[Address]
[Date]
Dear Sirs,
We hereby authorise and request you to give to Commonwealth Development
Corporation ("SARF") of One ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, all
such information as SARF may reasonably request with regard to the financial
statements of ▇▇▇▇▇▇ Infoway Limited ("the Company"), both audited and
unaudited, which the Company has agreed to supply under the terms of the
Shareholders and Share Subscription Agreement between the Company, ▇▇▇▇▇▇
Computer Services Limited, Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and SARF dated [
19 ] ("the SARF Shareholders and Share Subscription Agreement"). For your
information, we enclose a copy of the SARF Shareholders and Share Subscription
Agreement.
We authorise you to send the audited accounts of the Company to SARF to enable
us to satisfy certain obligations to SARF under the SARF Shareholders and Share
Subscription Agreement. When submitting the same to SARF, you are also requested
to send, at the same time, a copy of your full report on such accounts in a form
acceptable to SARF. Your attention is also drawn to the information,
certificates, reports and confirmation to be provided by you pursuant to Clause
5.1.18 of the SARF Shareholders and Share Subscription Agreement. Please note
that under Clause 5.1.18.3 of the SARF Shareholders and Share Subscription
Agreement, the Company is obliged to provide SARF with a copy of any report or
communication sent by the auditors to the Company its relation to the financial
position or affairs of the Company which is of a material
63
nature. You are accordingly hereby also requested to submit the same to
SARF in accordance with the SARF Shareholders and Share Subscription
Agreement.
For our records, please ensure that you send to us a copy of every letter
which you receive from SARF immediately upon receipt and a copy of each
reply made by you immediately upon issue thereof.
Yours faithfully
for and on behalf of
▇▇▇▇▇▇ Infoway Limited
copied to - CDC Advisors ▇▇▇▇▇▇▇ ▇▇▇
▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
Fax - ▇▇▇ ▇▇▇▇▇▇▇
Enc - SARF Share Subscription Agreement
64
Schedule 7
Definitions and Interpretation
In this Agreement, except where the context otherwise requires -
"Board" means the Board of Directors of the Company as constituted from time to
time;
"Business Day" means a day on which banks are open for business (including
dealings in foreign currency deposits and exchange) in India and, in the context
of a payment being made to or from a bank in a place other than India, such
other place;
"Brand Name" shall bear the meaning ascribed to it in Clause 5.2.4;
"CDC Advisors Private Ltd" means CDC Advisors Private Ltd, a company
incorporated under the Company's ▇▇▇ ▇▇▇▇ and having its registered office at
▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Pin Code 110 003.
"SARF Group" means SARF and its Subsidiaries for the time being;
"Change of Control" when applied to the Sponsor shall be deemed to have occurred
if (a) Mr. B ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ceases to be on the board of directors of the
Sponsor, and/or (b) the Sponsor is the subject of a successful takeover, and/or
(c) any person acquires (directly or indirectly) or becomes the owner (legally
or beneficially) of (either by way of a single acquisition or over a period of
time by way of multiple acquisitions) 25.1 % or more of the issued share capital
of the Sponsor after the date hereof;
"Closing Date" means 31.10.99 or such later date as SARF and the Company may
agree in writing;
"Company", "Sponsor", "Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇", and "SARF" shall bear the
respective meanings assigned to those expressions at the beginning of this
Agreement and in each case shall include the successors in title and permitted
assigns of the party in question;
"Conditions" shall bear the meaning set out in Clause 15.2;
"Dangerous Substance" means any natural or artificial substance which may give
rise to material risk of causing harm to man or other living organism or
damaging the
65
environment including any controlled, special hazard, toxic, radioactive or
dangerous waste;
"Director" means a director of the Company from time to time;
"Environmental Law" means any law, common law, regulation, directive, treaty,
code of best practice, constitution, or the like concerning the protection of
human health, the environment or the condition of the workplace or the
generation, transportation, storage, treatment, processing or disposal of any
Dangerous Substance;
"Environmental Licenses" means any permit, license, authorisation, consent or
other approval required by any Environmental Law;
"Fair Market Value" shall bear the meaning set out in Clause 15.2.1;
"Financial Year" means the financial year of the Company commencing on April 1
every year and ending on March 31 of the following year, or such other financial
year of the Company as the Company may, with SARF's prior consent, from time to
time legally designate as its financial year;
"ISPL" shall bear the meaning set out in Schedule 5, paragraph 7;
"Listing" means the unconditional admission of the Shares to the official list
of either the NSE, the BSE or such other recognised stock exchange in India or
the United States of America approved by SARF;
"Project" shall bear the meaning set out in Schedule 1;
"Register" means the register of Warrant holders required to be maintained
pursuant to Clause 15.9;
"RBI" means the Reserve Bank of India;
"Rupees" or "Rs" means Indian rupees, the lawful currency for India for the time
being.
"SEBI" means the Securities and Exchange Board of India, a body established
under the provisions of the Securities and Exchange Board of India Act, 1992;
66
"Shareholders" means SARF and the Sponsor or any purchaser or transferee of
Shares in accordance with this Agreement and individually a "Shareholder";
"Shares" means ordinary shares in the capital of the Company having a par value
of Rs10 each;
"Shareholding Percentage" means in relation to a Shareholder, a fraction the
numerator of which is the total number of Shares held by the Shareholder and the
denominator of which is the total number of Shares (including Shares held by
that Shareholder):
(a) in issue; or
(b) where the reference requires something to be apportioned between a
number of Shareholders, held by those Shareholders;
(c) which fraction is expressed as a percentage.
"Stock Exchanges" means the NSE, the BSE or such other recognised stock exchange
in India or the United States of America or other stock exchanges as envisaged
by Clause 13.9, as approved by SARF;
"Subscription Monies" means, in respect of:
the Sponsor: Rs52.50m
SARF: Rs210m
"Subsidiary" of a company or corporation means any company or corporation:
(a) which is controlled, directly or indirectly, by the first mentioned
company or corporation; or
(b) more than half the issued share capital of which is beneficially owned,
directly or indirectly, by the first mentioned company or corporation; or
(c) which is a subsidiary of another subsidiary of the first mentioned company
or corporation;
67
"Taxes means all present and future income and other taxes, levies, rates,
imposts, duties, deductions, charges and withholdings whatsoever imposed by any
authority having power to tax and all penalties, fines, surcharges, interest or
other payments on or in respect thereof and "Tax" and "Taxation" shall be
construed accordingly.
"Warrantholder" means on the Company granting Warrants to SARF and the Sponsor
in accordance with Clause 15, SARF and the Sponsor or, if the Company does not
grant Warrants to either of SARF or the Sponsor if they fail to fulfill the
condition attaching to Clause 15, then SARF/the Sponsor as appropriate;
"Warrants", "Warrant Exercise Price", "Warrant Exercise Period", "Exercise
Date", "Subscription Right(s)", "Warrant Exercise Notice" and "Warrant Exercise
Date" shall each bear the meaning set out in Clause 15.
"Web Sites" means software developed by the Company or its marketing agents for
creating customer business information and service so that it can be positioned
on the Internet.
"Year 2000 Compliant" shall bear the meaning set out in Schedule 5, Clause 13.
Unless the context or the express provisions of this Agreement otherwise require
(a) words importing the singular shall include the plural and vice versa;
(b) references to persons shall include any firm, company, corporation,
government, state or agency of a state or any association or partnership
(whether or not having separate legal personality) of two or more of the
foregoing and any other legal entity;
(c) the expressions "hereof", "herein" and similar expressions shall be
construed as references to this Agreement as a whole and not be limited to
the particular Clause or provision in which the relevant expression
appears;
(d) a company or corporation is to be treated as another's "associated
company" at a given time if at that time one of the two has control of the
other or both are under the control of the same person or persons; and
68
(e) a company or corporation shall be treated as being controlled by another
if that other company or corporation is able to direct its affairs and/or
to control the composition of its Board of Directors or equivalent body;
(f) references to Recitals, Sections, Clauses, Schedules and paragraphs are
references to, respectively, Recitals, Sections, Clauses of and Schedules
and paragraphs to this Agreement;
(g) the Index hereto and headings herein shall not affect the construction of
this Agreement;
(h) any reference to any agreement or document shall be construed as a
reference to such agreement or document as the same may have been amended,
varied, supplemented or novated in writing at the relevant time in
accordance with the requirements of such agreement or document and, if
applicable, of this Agreement with respect to amendments;
(i) this Agreement is divided into Sections and the Sections are divided into
Clauses; and
(j) where, unless expressly stipulated to the contrary, there is a reference
to "equivalent value of the relevant currency", such value will be
calculated by reference to the average middle spot price for buying the
relevant currency from Barclays Bank Plc on the Business Day immediately
preceding the date of calculation of the sum referred to.
69
SCHEDULE 8
Form of Deed of Adherence
THIS DEED OF ADHERENCE is made on [ ]
BY
[insert name of New Shareholder] of [insert address of New Shareholder] (the
"New Shareholder") in favour of the persons whose names are set out in the
Schedule to this Deed ("Existing Shareholders") and is supplemental to the Share
Subscription and Shareholders' Agreement dated [ ] 1998 between (1)
▇▇▇▇▇▇ Computer Services Limited, (2) B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, (3) South Asia Regional
Fund and (4) ▇▇▇▇▇▇ Infoway Limited (the Company) (the "Agreement").
THE NEW SHAREHOLDER UNDERTAKES AS FOLLOWS -
1 The New Shareholder confirms that it has read a copy of the Agreement and
the Articles of Association of the Company, and covenants with each person
named in the Schedule to this Deed (each Existing Shareholder agreeing as
follows) to be subject to the same obligations and entitled to the same
rights as the party whose Shares the New Shareholder has/will acquire and
to otherwise perform and be bound by all the terms of the Agreement as if
the New Shareholder were named in the agreement as a party thereto. The
Parties hereto agree to take all steps necessary to give effect to the
provisions of this Deed.
2 This Deed (and any dispute controversy, proceedings or claim arising out
of or in any way relating to this Deed or its formation) shall be governed
by and construed in accordance with the laws of India.
70
3 Any and all claims, disputes, questions or controversies involving the
parties and arising out of or in connection with this Deed, or the
execution, interpretation, validity, performance, breach or termination
hereof (including, without limitation, the provisions of this Section 3
collectively, "Disputes") which cannot be finally resolved by the parties
within sixty (60) calendar days of the arising of a Dispute by amicable
negotiation and conciliation shall first be submitted for settlement by
informal arbitration to an arbitral panel consisting of one member of the
Board of Directors (or any nominee thereof) of each of the Related
Subscribers and the New Shareholder. If any such panel, negotiating in
good faith, is unable to resolve and settle the dispute within sixty (60)
calendar days after the Dispute is first submitted to it, then any
representative of such panel shall be entitled to cause the Dispute to be
submitted for settlement pursuant to the terms of Section 3.1 hereof.
3.1 Any Dispute which is not settled after an attempt by the parties to the
Dispute at amicable negotiations and conciliation under Section 3 shall be
resolved by final and binding arbitration. The arbitration shall be held
in Singapore in accordance with the Rules of United Nations Commission for
International Trade Law ("UNICITRAL Rules") as then existing and shall be
heard and determined by an arbitral tribunal composed of three (3)
arbitrators. Each of the Related Subscribers and the New Shareholder
shall appoint one arbitrator, and both of such arbitrators shall appoint a
third arbitrator who shall serve as the Chairman of such arbitral
tribunal, provided that such third arbitrator is not a citizen of the
United Kingdom or India. If any of the Related Subscribers or the New
Shareholder fails or decides against appointing an arbitrator within a
period of thirty (30) days after the appointment of the first arbitrator,
or if the arbitrators designated by the Related Subscriber or New
Shareholder fail or otherwise are unable to appoint the third arbitrator
within (30) days of the appointment of the second arbitrator, then the
remaining arbitrator(s) shall be selected by the President of the
International Chamber of Commerce, Singapore, which shall act as the
appointing authority.
71
3.2 All arbitration proceedings shall be conducted in the English language and
the arbitral award (the "Award") shall be rendered no later thin six (6
months from the commencement of the arbitration or as otherwise provided
by the UNICITRAL Rules, unless otherwise extended by the arbitral tribunal
for no more than an additional six (6) months for reasons that are just
and equitable. In connection with the arbitration proceedings, the
parties hereby agree to co-operate in good faith with each other and the
arbitral tribunal and to use their respective best efforts to respond
promptly to any reasonable discovery demand made by any party and the
arbitral tribunal.
3.3 Except as otherwise required by law or any applicable stock exchange rules
and regulations, the arbitral proceedings and the Award shall not be made
public without the joint consent of the parties to the Dispute and each
such party shall maintain the confidentiality of such proceedings or the
Award, unless otherwise permitted by the other party in writing. The
costs of the arbitration shall be borne by the parties to the Dispute in
accordance with the applicable provisions stipulated in the UNCITRAL
Rules. Unless the Award provides for non-monetary remedies, any such
Award shall be made and shall be promptly payable in US Dollars or other
Designated Currency net of any tax or other deduction. The Award shall
include interest from the date of any breach or other violation of this
Deed and the rate of such interest shall be specified by the arbitral
tribunal and shall be calculated from the date of any such breach or other
violation to the date when the Award is paid in full; provided, however,
that in no event shall such interest rate be lower than the prime
commercial lending rate announced by Citibank, NA at its principal office
at New York, United States of America for ninety (90) day loans extended
to responsible commercial borrowers.
3.4 All notices and other communications by one party to the Dispute to the
other or by the arbitral tribunal to any of the parties in connection with
the arbitration hereunder shall be in accordance with the provisions of
Clauses 23.1 to 23.3 of the Agreement save for the fact that the New
Shareholder's details are contained at the start of this Deed.
72
3.5 The parties expressly understand and agree that the award shall be the
sole, exclusive, final and binding remedy between them regarding any and
all Disputes presented to the arbitral tribunal. Application shall be
made to any court having jurisdiction over the party (or its assets)
against whom the Award is rendered for a judicial acceptance of the Award
and an order of enforcement. The parties acknowledge and agree that this
Deed and any Award pursuant hereto shall be governed by the 1958 New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
and the [Indian] Arbitration and Conciliation Act, 1996.
3.6 Neither the existence of any Dispute nor the fact that any arbitration is
pending hereunder, shall relieve any of the parties of their respective
obligations under this Deed.
3.7 Each party hereby agrees that all of the transactions contemplated by this
Deed shall constitute and shall be deemed to constitute commercial
activities. To the extent that any party may be entitled in any
jurisdiction whatsoever to claim immunity, whether characterised as
sovereign or otherwise, from litigation, execution, set-off, attachment or
other legal process of any nature whatsoever, it hereby expressly and
irrevocably waives such immunity.
4 Terms defined in the Agreement shall, except where otherwise indicated
herein, have the same meanings as those set out in the Agreement.
IN WITNESS whereof this Deed has been executed by the New Shareholder and the
Existing Shareholders and is intended to be and is hereby delivered on the date
first above written.
[Schedule to Deed to include all parties (including by way of earlier Deeds of
Adherence) to the Agreement]
73
SCHEDULE 9
Form of Registered Warrant Certificate
[Face]
CERTIFICATE NUMBER OF TOTAL
NUMBER WARRANTS EXERCISE MONEYS
▇▇▇▇▇▇ INFOWAY LIMITED
REGISTERED WARRANTS TO SUBSCRIBE FOR SHARES
THIS IS TO CERTIFY that the undermentioned person(s) is/are the registered
holder(s) of the number of Warrants specified below and is/are entitled, upon
and subject to the conditions set out below and on the reverse hereof and in a
Share Subscription and Shareholders Agreement between ▇▇▇▇▇▇ Infoway Limited
(the "Company"), ▇▇▇▇▇▇ Computer Services Limited, South Asia Regional Fund and
Mr. B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ dated [ ] 1998 (the "SSA") on any of the Warrant
Exercise Date(s) or as otherwise set out in the SSA to subscribe in respect of
each Warrant at the Warrant Exercise Price per Warrant specified below for fully
paid Share(s) of ▇▇▇▇▇▇ Infoway Limited.
Number of Warrants:
Warrant Exercise Price per Warrant: As set out in the SSA.
[Name and address of Warrantholder]
Terms not defined herein shall bear the meaning set out in the SSA.
GIVEN under the Seal of ▇▇▇▇▇▇ Infoway Limited on this day of 199 .
NO TRANSFER OF THE WHOLE OR ANY PORTION OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE WILL BE REGISTERED UNLESS ACCOMPANIED BY THIS CERTIFICATE.
REGISTRAR:
74
CONDITIONS
1. Definitions
1.1 In those conditions terms defined in the SSA shall have the same meaning
herein.
2. Exercise of Subscription Rights
2.1 Subject to the provisions hereof and to compliance with all fiscal and
other laws and regulations applicable thereto the registered holder of the
Warrants represented by this Warrant certificate shall have the right,
which may be exercised in whole or in part at any time during the Warrant
Exercise Period, or as otherwise specified in the SSA under to subscribe
for fully paid Shares at the Warrant Exercise Price per Share, subject to
and in accordance with the SSA.
2.2 As soon as practicable after the relevant allotment of Shares under this
condition (and not later than 14 days after the relevant Warrant Exercise
Date) the Company will or will procure the issue free of charge to the
Warrantholder(s) of the Warrant represented by this Warrant certificate:
2.2.1 a certificate (or certificates) for the relevant Shares in the name(s) of
such Warrantholder(s);
2.2.2 (if applicable) a balancing Warrant certificate in the registered form in
the name(s) of such Warrantholder(s) in respect of any Subscription Rights
represented by this Warrant certificate and remaining unexercised; and
2.3 The certificate(s) for Shares arising on the exercise of the Subscription
Rights, the balancing Warrant certificate (if any) will be available for
collection at the registered office of the Company or, if so requested,
will be sent by registered mail to the address specified in the Warrant
Exercise Notice at the risk of that person.
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3. Registered Warrants
The Warrants are issued in registered form. The Company shall be entitled
to treat the registered holder of any Warrant as the absolute owner
thereof and accordingly shall not, except as ordered by a Court of
competent jurisdiction or required by law, be bound to recognise any
equitable or other claim to or interest in such Warrant on the part of any
other person, whether or not it shall have express or other notice
thereof.
4. Transfer, Transmission and Register
4.1 Warrants are transferable, by instrument of transfer in any usual or
common form or in any other form which may be approved by the Directors.
The Company shall maintain the Register accordingly. The Register may be
as required or permitted under Indian law or regulation to be closed from
time to time. Transfers of Warrants must be executed by both the
transferor and the transferee. The provisions of the Company's Articles
of Association relating to the registration, transmissions and transfer of
Shares and the register of members shall, mutatis mutandis, apply to the
registration, transmission and transfer of the Warrants and the Register.
5. Purchase and Cancellation
5.1 The Company or any of its Subsidiaries may so far as permitted by law in
India (subject to the agreement of SARF if it is desirous of selling) at
any time purchase Warrants from SARF. All Warrants purchased as aforesaid
shall be cancelled forthwith and may not be reissued or re-sold.
6. Replacement of Warrant Certificates
If a Warrant Certificate is mutilated, defaced, lost or destroyed, it may,
at the discretion of the Company, be replaced at the principal office of
the Registrar on payment of such costs as may be incurred in connection
therewith and on such terms as to evidence, indemnity and/or security as
the Company may require. Mutilated or defaced Warrant certificates must be
surrendered before replacements will be issued.
76
7. Rights of Warrantholders on winding up
The SSA provides that if an effective resolution is passed for the winding
up of the Company, then Warrantholders may have certain options.
8. Governing Law
The Warrants are governed by and will be construed in accordance with the
laws of India.
9. The Warrants are (in addition to the above conditions) issued subject to
the terms and conditions set out in a Shareholders and Share Subscription
Agreement between ▇▇▇▇, ▇▇▇▇▇▇ Computer Services Ltd and ▇▇▇▇▇▇ Infoway
Ltd dated [ ] 1998.
77
EXERCISE NOTICE
(To be executed and lodged with the Registrar to exercise the Subscription
Rights represented by this Warrant certificate)
To: ▇▇▇▇▇▇ Infoway Limited
(the "Company")
Terms not defined herein shall have the same meaning as in the SSA (as defined
below). The undersigned, being the duly registered holder(s) of the Warrant(s)
represented by this Warrant certificate:-
(A) hereby irrevocably elect(s) to exercise the Subscription Rights in respect
of [ ] Warrants represented by this Warrant certificate and to
subscribe for the relevant number of Shares in the capital of the Company
at the applicable Warrant Exercise Price, and agree(s) to accept such
Shares on the terms of the Memorandum of Association and Articles of
Association of the Company and subject to the rights and restrictions set
out in the Share Subscription and Shareholders Agreement between South
Asia Regional Fund, ▇▇▇▇▇▇ Computer Services Limited, Mr. B. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇ Infoway Limited dated [ ] 1998 ("SSA");
(B) make(s) payment in full for such Shares by sending herewith a cheque,
draft or money order drawn on a bank account in India for value no later
than the relevant Warrant Exercise Date, for the full amount of [ ]
[(NOTE (1)];and
(C) request(s) that a certificate for such Shares and a balancing Warrant
certificate (if any) in registered form in respect of any Subscription
Rights represented by this Warrant certificate and remaining unexercised
be issued in the name(s) of the person(s) whose name(s) stand(s) in the
Register of
78
Warrantholders as the Warrantholder(s) of the Warrant(s) represented by
this Warrant certificate and such certificate(s), be sent by post at the
risk of such Warrantholder(s) to the address of such Warrantholder(s).
Dated:
Signature(s)
NOTES:-
(1) Cheques, drafts or money orders should be drawn in Rupees on a bank
account in India or such other place as may be determined by the Directors
and be made payable to ▇▇▇▇▇▇ Infoway Limited.
(2) In the case of a joint holding, all joint holders must sign.
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APPENDICES
List of Registered Intellectual Property and Intellectual Property Agreements
Intellectual Property
▇▇▇▇▇▇ - brand name and logo Applied for registration in the name of ▇▇▇▇▇▇
Computer Services Ltd. in India
Intellectual Property Agreements
1) International Electronic Commerce Agreement dated February 14, 1997
between "Sterling Commerce International Inc., a Delaware, USA corporation
and "▇▇▇▇▇▇ Infoway Ltd".
2) Agreement dated June - 1997 between Open Market Inc. Massachusetts, USA
and "▇▇▇▇▇▇ Infoway Ltd".
3) Agreement dated April 18, 1997 between "Compuserve Inc"., Columbus, Ohio,
USA and "▇▇▇▇▇▇ Infoway Ltd"; and
4) Agreement dated November 12, 1998 between "ELIASCHEM", Israel and "▇▇▇▇▇▇
Infoway Ltd".
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