EXHIBIT 4.2
AMENDMENT NUMBER ONE TO
SHARE SUBSCRIPTION AND SHAREHOLDERS' AGREEMENT
RELATING TO XXXXXX INFOWAY LIMITED
Dated February 5, 1999
among
Xxxxxx Infoway Limited,
Xxxxxx Computer Services Limited,
South Asia Regional Fund and
Mr. B. Xxxxxxxxx Xxxx
Date of Amendment: September 14, 1999
1. Introduction. Xxxxxx Infoway Limited (the "Company"), Xxxxxx Computer
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Services Limited ("SCSL"), South Asia Regional Fund ("SARF") and Mr. B.
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Xxxxxxxxx Xxxx ("RAJU" and, collectively with the Company, SCSL and SARF, the
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"Parties") entered into a Share Subscription and Shareholders Agreement, dated
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as of February 5, 1999, a copy of which is attached hereto as Exhibit A (the
"Agreement"). The Parties now desire to amend the Agreement as set forth herein
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(the "Amendment"), it being expressly understood that this Amendment shall only
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become effective upon the terms and subject to the conditions set forth in
Section 11, and in all other instances the Agreement shall remain in full force
and effect without regard to this Amendment.
2. Amendments to Covenants. Section 5 of the Agreement entitled "Covenants" is
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amended as follows:
(a) Section 5.1.17 of the Agreement is deleted in its entirety and
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replaced with the following:
procure that its accounts are audited at least once in every financial year
in accordance with generally accepted accounting principles as applicable
in India by an accounting firm acceptable to SARF, it being understood that
the Indian affiliate of any of the "Big 5" accounting firms (including,
without limitation, the present auditors of the Company) shall be deemed to
be acceptable to SARF;
(b) The lead-in to Section 5.1.18 of the Agreement is deleted in
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its entirety and replaced with the following (it being understood that no
amendment is made in subsections 5.1.18.1 through 5.1.18.5):
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For so long as SARF owns at least 5.0% of the issued ordinary share
capital of the Company, furnish to SARF, upon SARF's request-;
(c) Section 5.2.3 of the Agreement is deleted in its entirety and
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replaced with the following:
procure that the Board of the Company at all times includes at least two
independent non-executive Directors (excluding any Director(s) designated
by SARF or the Sponsor);
(d) Section 6.1 of the Agreement is amended by deleting the
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term "7.5%" in the first line of such section and replacing it with "5.0%".
(e) Section 6.2 of the Agreement is deleted in its entirety and
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replaced with the following:
For so long as it owns at least 50.1% of the issued ordinary share capital
of the Company, 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 or 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 rights to such
nomination, removal or substitution, including voting in favor of such
nomination, removal or substitution both at shareholders meetings and Board
meetings.
(f) Section 6.3 of the Agreement is deleted in its entirety.
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(g) Section 6.4 of the Agreement is deleted in its entirety.
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(h) Section 6.10 of the Agreement is deleted in its entirety and
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replaced with the following:
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 or where such indemnification is not permitted by
applicable law. In addition the Company agrees to take out adequate
insurance, to the extent available in India on commercially reasonable
terms as determined in good faith by the Board of Directors, to cover such
damages.
3. Amendment to Financing. Section 8 of the Agreement entitled "Financing" is
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deleted in its entirety.
4. Amendment to Dividends. Section 9 of the Agreement entitled "Dividends" is
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deleted in its entirety.
5. Amendment to Enforcement of Company's Rights. Section 10 of the Agreement
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entitled "Enforcement of Company's Rights" is amended as follows:
Section 10.2 of the Agreement is deleted in its entirety.
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6. Amendment to Actions to be Taken by Board Resolution or by Shareholder
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Consent. Section 11 of the Agreement entitled "Actions to be Taken by Board
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Resolution or by Shareholder Consent" is deleted in its entirety.
7. Amendment to Listing. Section 13 of the Agreement entitled "Listing" is
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amended as follows:
13.1 The Company and the Sponsor severally undertake to use their
respective reasonable best efforts to obtain a Listing of the Shares by
making an IPO on the Bombay Stock Exchange ("BSE") or the National Stock
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Exchange ("NSE") as soon as reasonably practicable after such time as the
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Company has satisfied the applicable qualifications for Listing.
13.2 Subject to the provisions of this Agreement, the Company undertakes to
use its reasonable best efforts 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 making of the IPO or for obtaining a
Listing. The Sponsor and the Company further severally undertake to use
their reasonable 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 by a duly
established pricing committee of the Board of Directors of the Company with
one member thereof consisting of the Board designee of SARF.
13.5 The Company shall, if so required by SARF, enter into underwriting
agreements with underwriters for underwriting the Shares or other
securities offered in the IPO, which underwriters shall be approved by a
duly established pricing committee of the Board of Directors of the Company
with one member thereof consisting of the Board designee of SARF.
13.6 All costs incurred in connection with any public offering shall be met
by the Company. In respect of the Listing, the Company will comply with
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 fee, 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. Notwithstanding any other provision of this Subsection 13.6 to the
contrary, however, the Company shall not be obligated
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to incur underwriting discounts, brokerage commissions or similar costs
solely related to the sale of Shares for the account of any shareholder of
the Company.
13.7 SARF agrees that, upon Listing or sale of the Shares held by it, SARF
will give warranties and/or indemnities to any underwriter, broker, Stock
Exchange, any other Competent Authority or other person as to the title of
its shares and similar matters as is customary under prevailing commercial
practice for institutional investors which do not enjoy management control,
direct supervision or information except as an outside non-management
director, and the Company and Sponsor agree that SARF shall in no
circumstances be construed as a promoter under applicable law.
13.8 The Sponsor and the Company shall use their respective reasonable best
efforts to 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. To the extent that the
Company seeks to list its shares on any exchange other than a recognized
stock exchange in India or the United States of America, the provisions of
this Clause 13 will apply to such listing.
13.9 From and after (but conditioned upon) the execution of a Registration
Rights Agreement by and between the Company, SARF and Sterling Commerce,
Inc., dated as of September 14, 1999 (the "Registration Rights Agreement"),
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such agreement shall apply exclusively with respect to any resale of Shares
owned by SARF in the United States of America, including any related (a)
registration of such Shares and/or related American Depositary Shares with
the United States Securities and Exchange Commission and (b) listing on any
United States stock exchange or automated quotation system, such as Nasdaq,
and the previously applicable provisions of this Agreement, including this
Clause 13, shall thereafter cease to apply with respect to the sale of
shares in the United States, except for Section 13.10.
13.10 At such time as a market is created in the United States of America
for American Depositary Shares representing equity shares of the Company,
the Company, the Sponsor and SARF will use their respective reasonable best
efforts to obtain all Government of India and other approvals required for
SARF to deposit the equity shares acquired by it from the Company with the
depositary and receive in exchange therefor American Depositary Receipts
evidencing American Depositary Shares.
8. Amendment Exit Options. Section 16 of the Agreement entitled "Exit
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Options" is amended as follows:
(a) the following shall be added to the end of Section 16.2.1 after the
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word "sale" and before the semi-colon: "(it being understood that the
requirements of this Section 16.2.1 shall be deemed satisfied if at
any time (i) the Company's Shares, or related American Depositary
Shares ("ADSs"), are approved for listing on the BSE, NSE, New York
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Stock
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Exchange or Nasdaq National Market and (ii) there shall have been
obtained all Government of India and other approvals required for SARF
to deposit the equity shares acquired by it from the Company with the
depositary and receive in exchange therefor American Depositary
Receipts evidencing ADSs)".
(b) A period shall be placed at the end of Section 16.2.2 after the word
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"conditions" and Section 16.2.3 shall be deleted.
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(c) Section 16.4 shall be amended by inserting a period after the word
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"possible" on the third line, and deleting the balance of the section.
(d) A new Section 16.5 shall be added as follows:
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In connection with the offering in the United States of ADSs representing
Shares of the Company (the "ADS Offering"), SARF shall not, directly or
indirectly, transfer, sell, assign, pledge, hypothecate, encumber or
otherwise dispose of any Shares, or any pecuniary interest therein, for a
period of 180 days after the date on which the ADS Offering is consummated,
except with the prior written consent of the underwriters for the ADS
Offering. To carry out the intent and purposes of this Section 16.5, SARF
shall, at the request of the underwriters for the ADS Offering, enter into
a "lockup agreement" containing customary provisions with the
representatives of such underwriters.
9. Amendment to Covenants Not to Compete. Section 17 of the Agreement entitled
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"Covenants Not to Compete" is amended as follows:
The following shall be deleted from Section 17.1.1: "or the business
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carried on by the Company in relation to electronic commerce and internet
business".
10. Warrant Exercise. SARF hereby exercises the warrants held by it to purchase
600,000 Shares, such exercise to be effective only upon the successful
completion of the ADS Offering prior to December 31, 1999. The Company
hereby accepts such exercise. The parties agree that because the exercise
price of the warrants can not be calculated unless and until the ADS
Offering is completed, SARF may, and hereby agrees to, remit to the Company
the exercise price for the warrants not later than the fifth business days
after the closing of the ADS Offering. Such remittance will be in official
funds paid to a bank account designated by the Company. For purposes of
calculating such period, business days shall mean days in which commercial
banks and stock exchanges are generally open for business in London,
England.
11. Effectiveness of This Amendment. This Amendment, except for new Sections
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13.9, 13.10 and 16.5, shall become effective upon the consummation of the
ADS Offering if, but only if, such offering is completed prior to December
31, 1999. Section 13.9 shall become effective upon execution of the
Registration Rights Agreement, and Sections 13.10 and 16.5 shall become
effective upon the execution of this Amendment and the consummation of the
ADS Offering if, but
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only if, such offering is completed prior to December 31, 1999. In all
other instances, the Agreement shall remain in full force and effect
without regard to this Amendment.
(Signature Page Follows)
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Intending to be legally bound and for the purpose of evidencing their
approval of this Amendment, the undersigned, constituting all of the
shareholders of the Company, hereby approve and adopt this Amendment.
XXXXXX INFOWAY LIMITED
/s/ X. Xxxxxxx
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Name: X. Xxxxxxx
Title: Chief Executive Officer
XXXXXX COMPUTER SERVICES LIMITED
/s/ B. Xxxxxxxxx Xxxx
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Name: B. Xxxxxxxxx Xxxx
Title: Chairman
SOUTH ASIA REGIONAL FUND
[illegible]
_________________________
Name:
Title:
/s/ B. Xxxxxxxxx Xxxx
_________________________
B. Xxxxxxxxx Xxxx
/s/ X. Xxxxxxx
_________________________
X. Xxxxxxx
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