Exhibit 10.67
[CONFIDENTIAL TREATMENT REDACTED]
SHAREHOLDERS AGREEMENT
DATED
2 MAY, 2000
BETWEEN
ESSAR TELEHOLDINGS LIMITED
CGP INDIA INVESTMENTS LIMITED
MOBILVEST
CCII (MAURITIUS) INC
PRIME METALS LTD
EURO PACIFIC SECURITIES LTD
JAYKAY FINHOLDINGS (INDIA) PRIVATE LIMITED
AND
STERLING CELLULAR LIMITED
----------
in respect of
STERLING CELLULAR LIMITED
----------
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CONTENTS
1. DEFINITIONS AND INTERPRETATION............................................5
1.1 DEFINITIONS.......................................................5
1.2 INTERPRETATION....................................................8
2. EFFECTIVE DATE............................................................9
3. SHAREHOLDING PATTERN......................................................9
4. MEETINGS OF SHAREHOLDERS..................................................9
4.1 GENERAL MEETINGS..................................................9
4.2 QUORUM...........................................................10
5. DIRECTORS AND OFFICERS...................................................10
5.1 DIRECTORS OF THE COMPANY.........................................10
5.2 NOMINATED DIRECTORS TO BE ELECTED................................10
5.3 ALTERNATE DIRECTOR...............................................11
5.4 DIRECTORS FEES...................................................11
5.5 PLACE AND CALLING OF BOARD MEETINGS..............................11
5.6 RESOLUTION BY CIRCULATION........................................12
5.7 CHAIRMAN AND VICE CHAIRMAN.......................................12
5.8 EXECUTIVE COMMITTEE..............................................12
5.9 QUORUM FOR DIRECTORS MEETINGS....................................13
5.10 ATTENDANCE BY CONSULTANTS, ADVISERS AND NON VOTING ATTENDEES.....13
5.11 DECISIONS BY MAJORITY VOTE.......................................13
5.12 SECRETARY........................................................13
5.13 AUDITORS.........................................................13
5.14 ACCOUNTING YEAR..................................................13
6. MANAGEMENT...............................................................14
6.1 BUSINESS TO BE MANAGED BY BOARD..................................14
6.2 MANAGING DIRECTOR................................................14
6.3 PERFORMANCE OF MANAGING DIRECTOR.................................14
6.4 MAJORITY VOTES REQUIRED FOR CERTAIN BOARD MEETING................14
6.5 RESERVED DECISIONS...............................................15
7. BUSINESS PLAN & BUDGET...................................................16
7.1 BUSINESS PLAN & BUDGET...........................................16
7.2 BUDGET DETAILS...................................................16
8. INITIAL PUBLIC OFFERING..................................................17
9. FUNDING AND CAPITAL......................................................17
9.1 FUNDING OF THE COMPANY...........................................17
9.2 CAPITAL CONTRIBUTION.............................................17
9.3 DEBT FINANCING...................................................18
9.4 CREDIT SUPPORT...................................................18
10. TRANSFER OF SHARES.......................................................19
10.1 RESTRICTIONS ON TRANSFERS OF OWNERSHIP...........................19
10.2 NO MORTGAGE OR PLEDGE OF SHARES..................................19
10.3 PERMITTED TRANSFERS.............................................20
10.4 DEFAULT..........................................................20
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10.5 SALE OF SHARES ON DEFAULT........................................21
10.6 REPAYMENT OF SHAREHOLDER LOANS AND GUARANTEES....................22
10.7 TITLE AND COMPLETION OF SHARE TRANSFERS..........................23
10.8 RIGHTS OF FIRST REFUSAL..........................................23
10.9 TAG ALONG........................................................30
10.10 SECTORAL CAPS....................................................31
10.11 DEED OF ADHERENCE................................................32
11. FURTHER OBLIGATIONS OF THE PARTIES.......................................32
11.1 FURTHER ASSURANCE................................................32
11.2 DIRECTORS TO VOTE TO IMPLEMENT THIS AGREEMENT....................32
11.3 ACCOUNTING AND REPORTING.........................................32
11.4 EXCHANGE OF INFORMATION..........................................33
11.5 FAIR DEALINGS....................................................33
12. MAINTENANCE OF LICENCES, GOVERNMENT APPROVALS............................33
13. TERM, TERMINATION AND DISPUTES...........................................34
13.1 TERM.............................................................34
13.2 RIGHTS OF PARTIES ON WINDING UP..................................34
13.3 AGREEMENT TERMINATES ON WINDING UP...............................34
14. ARBITRATION AND CONSULTATION.............................................34
14.1 CONSULTATION.....................................................34
14.2 ARBITRATION......................................................35
15. CONFIDENTIALITY..........................................................36
15.1 AGREEMENT CONFIDENTIAL...........................................36
15.2 INJUNCTIVE RELIEF................................................36
15.3 SURVIVAL.........................................................36
16. AGREEMENT................................................................36
16.1 AGREEMENT TO PREVAIL.............................................36
16.2 AMENDMENT OF MEMORANDUM AND ARTICLES.............................37
17. NOTICES..................................................................37
18. MISCELLANEOUS............................................................38
18.1 LEGAL AND OTHER COSTS............................................38
18.2 COMPLETE AGREEMENT...............................................38
18.3 UNENFORCEABLE PROVISIONS.........................................39
18.4 NO PARTNERSHIP...................................................39
18.5 AMENDMENT IN WRITING:............................................39
18.6 NO ASSIGNMENT....................................................39
18.7 NO WAIVER........................................................39
18.8 COUNTERPARTS.....................................................39
18.9 GOVERNING LAW....................................................40
SCHEDULE A - FAIR VALUE.......................................................42
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SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made the __ day of May, 2000:
BETWEEN:
A. Essar Teleholdings Limited (earlier Sterling Computers Limited), a
company incorporated in India whose registered office is at 00,
Xxxxxxxxx Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 600 034, India ("Essar");
B. C.G.P. India Investments Limited, a company incorporated in Mauritius
whose registered office is at 4th floor Les Cascades Building, Xxxxx
Xxxxxx Street, Port Louis, , Mauritius ("CGP"); and
C. Mobilvest, a company incorporated in Mauritius whose registered office
is at 4th floor Les Cascades Building, Xxxxx Xxxxxx Street, Port Louis,
, Mauritius
D. CCII Mauritius Inc, a company incorporated in Mauritius whose registered
office is at 4th floor Les Cascades Building, Xxxxx Xxxxxx Street, Port
Louis, , Mauritius
E. Prime Metals Limited, a company incorporated in Mauritius whose
registered office is at 4th floor Les Cascades Building, Xxxxx Xxxxxx
Street, Port Louis, , Mauritius
F. Euro Pacific Securities Limited, a company incorporated in Mauritius
whose registered office is at 4th floor Les Cascades Building, Xxxxx
Xxxxxx Street, Port Louis, , Mauritius
G. Jaykay Finholdings (India) Private Limited, a company incorporated under
the Companies Act, 1956 whose registered office is at Bakhtawar 1st
Floor 000 Xxxxxxx Xxxxx, Xxxxxx - 000 000 , Xxxxx ("JKF").
X. Xxxxxxxx Cellular Limited, a company incorporated in India whose
registered office is at X-00, Xxxxx Xxxxxxxxxx Xxxx, Xxxxx XX, Xxx
Xxxxx, 110020_, India holding a license to provide cellular services in
New Delhi (the "Company");
(Each of the aforesaid shall be referred to as "Party" and collectively as
"Parties")
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WHEREAS:
A. The Company is a public company limited by shares, which holds the
license to provide cellular mobile services in the metro city of New
Delhi by virtue of the license agreement no. 842-22/93-TM dated
November 30, 1994.
B. The present shareholding of the Company is as follows:
Essar: 84,918,267 shares representing 49.03%
of the share capital;
Mobilvest: 56,298,182 shares representing 32.50%
of the share capital;
CCII (Mauritius) Inc.: 15,000,000 shares representing 8.66%
of the share capital;
Prime Metals Ltd.: 9,000,000 shares representing 5.20%
of the share capital;
Euro Pacific Securities Ltd.: 4,500,000 shares representing 2.6%
of the share capital;
JKF: 3,480,020 shares representing 2.01%
of the share capital.
C. Essar and JKF, being companies incorporated in India collectively hold
51.04% of the share capital of the Company, and the balance 48.96% of
the share capital of the Company is held by CGP indirectly through the
Mauritius Companies.
D. This Agreement sets forth the arrangement between the parties for the
shareholding and management of the Company on an ongoing basis.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as
follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
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In this Agreement unless the context otherwise requires or expressly
provides, the following words shall have the following meanings
respectively:
"Accounting Year" shall have the meaning set forth in Clause 5.14
hereof;
"Act" or "Companies Act" shall mean the Companies Act, 1956 and/or any
statutory modifications amendments or re-enactments thereto from time to
time.
"Affiliate" means with respect to any Party, any other Person directly
or indirectly controlling, controlled by or under common control with
such Party. For purposes of this definition, the term "control"
(including with correlative meaning, the terms "controlled by" and
"under common control" with) as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management of that Person whether through ownership of
voting securities or otherwise;
"AGM" means an annual general meeting of the Company;
"Alternate Directors" means Directors appointed pursuant to Clause 5.3;
"Articles" means the articles of association of the Company for the time
being;
"Board" means the board of directors of the Company;
"Business Day" means a day on which scheduled banks are open for
business in India;
"Chief Executive Officer" means the chief executive officer of the
Company appointed pursuant to Clause 6.2
"CGP Director" means any Director nominated by CGP in accordance with
Clause 5.1(a);
"CGP Shares" means the Shares in the Company held by the Mauritius
Companies;
"Delhi Circle" means the telecommunications circle for the metropolitan
city of New Delhi including Gurgaon, Noida, Ghaziabad and Faridabad for
which the Company has been granted licence to provide cellular mobile
telephone services;
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"Directors" means the directors of the Company from time to time;
"Effective Date" shall have the meaning set forth in Clause 2 hereof;
"EGM" means an extraordinary general meeting of the Company;
"Essar Directors" means those Directors nominated by Essar in accordance
with Clause 5.1(a);
"Essar Shares" means the Shares held by Essar in the Company;
"Fair Value" has the meaning set out in Schedule A hereto;
"General Meeting" means an AGM or an EGM;
"Guarantee Call Option" shall have the meaning set forth in Clause 9.4
hereof;
"HMTL" means Xxxxxxxxx Xxx Telecom Limited, a company incorporated under
the Companies Act and having its registered office at first floor, DCW
Center, Stanrose House, New Prabhadevi Road, Mumbai, 400 025;
"High Value Contracts" mean contracts with a value greater than US $ 5
million entered into or to be entered into by the Company;
"IPO" means an initial public offering made in accordance with Clause 8;
"JKF Director" means the Director nominated by JKF in accordance with
Clause 5.1(a);
"JKF Shares" means the Shares held by JKF in the Company;
"Mauritius Companies" means Mobilvest, CCII (Mauritius) Inc, Prime
Metals Ltd. and Euro Pacific Securities Ltd.
"Memorandum" means the memorandum of association of the Company for the
time being;
"Mumbai Circle" means the telecommunications circle for the metropolitan
city of Mumbai, Navi Mumbai, Thane and the Kalyan Telephone district,
for which HMTL has been granted licence to provide cellular mobile
telephone services;
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"Original Director" shall have the meaning set forth in Clause 5.3
hereof;
"Reserved Decisions" shall have the meaning set forth in Clause 6.5
hereof;
"ROC" means the Registrar of Companies, Delhi and Haryana;
"Rs.", means Rupees, the lawful currency of India;
"Shareholder" means any of Essar, the Mauritius Companies JKF or any
direct holder of any issued Shares in the Company; and
"Shares" and "Shares in the Company" mean all classes of shares in the
capital of the Company or any class thereof, as the case may be and
includes any and all of the rights conferred on a person by the
ownership of such shares.
1.2 INTERPRETATION
(a) Heading and bold typeface are only for convenience and shall be
ignored for the purpose of interpretation;
(b) Unless the context of this Agreement otherwise requires;
(i) words using the singular number also include the plural
or singular number, respectively;
(ii) the terms "hereof, "hereto" and derivative or similar
words refer to this entire Agreement or specified
Clauses of this Agreement, as the case may be;
(iii) the term "Clause" refers to the specified clause of this
Agreement;
(iv) reference to any legislation or law or to any provision
thereof shall include references to any such law as it
may, after the date hereof, from time to time, be
amended, supplemented or re-enacted, and any reference
to statutory provision shall include any subordinate
legislation made from time to time under that provision;
(v) reference to the word "include" shall be construed
without limitation; and
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(vi) The Schedules and Exhibits hereto shall constitute an
integral part of this Agreement.
2. EFFECTIVE DATE
2.1 This Agreement shall take effect on the date (the "Effective
Date") of completion of the sale and purchase of 3,480,020
shares representing 2.01% of the total issued and paid-up share
capital of the Company from Essar to JKF.
2.2 On the Effective Date, the Parties shall ensure that the
Articles, in the form and manner attached hereto as Schedule 2
are adopted at a General Meeting, and the resolution adopting
the same shall be filed with the ROC. The Company shall take all
steps including issue of notices to the appropriate shareholders
of the Company, to ensure that an EGM is convened on the
Effective Date and the requisite resolutions are passed.
3. SHAREHOLDING PATTERN
Subject as elsewhere provided in this Agreement, the issued and paid-up
share capital of the Company shall be held, directly or indirectly in
the following manner:
Essar: 49.03%
CGP 48.96%
JKF: 2.01%
4. MEETINGS OF SHAREHOLDERS
4.1 GENERAL MEETINGS
An AGM of the Shareholders shall be held each calendar year within six
(6) months following the end of the previous Accounting Year of the
Company. The Board of Directors shall provide the Company's previous
Accounting Year's audited financial statements to all Shareholders at
least one (1) month before the AGM is held to approve and adopt the
audited financial statements. All other Shareholders' meetings, other
than the AGM shall be EGMs.
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4.2 QUORUM
The quorum for an AGM or EGM with respect to any agenda shall be at
least two (2) Shareholders present in person or through duly authorised
representative holding more than sixty percent (60%) of the total issued
and paid-up share capital of the Company. If the proposed AGM or EGM
with respect to any quorum is not validly constituted as required by
this Clause 4.2, or if such a quorum is not maintained throughout such
meeting, then the meeting shall be adjourned for a period of 7 days,
with notice of such adjournment to be provided to the Shareholders
within three (3) days of such adjournment. At the meeting held pursuant
to the adjournment, the shareholders present shall constitute the quorum
for the meeting. A quorum must be present at the beginning and
throughout the meeting.
5. DIRECTORS AND OFFICERS
5.1 DIRECTORS OF THE COMPANY
(a) Subject to the provisions of the Act, the Board shall comprise seven
Directors. Three Directors (the "CGP Directors") shall be nominated by
CGP, three Directors (the "Essar Directors") shall be nominated by Essar
and one Director (the "JKF Director") shall be nominated by JKF. The
Shareholder or CGP nominating a Director may by notice in writing to the
Company require the removal of such Director and nominate another person
as a Director to act in his/her place.
(b) If the holding, directly or indirectly, of CGP or Essar falls below 10%
of the issued and paid-up equity share capital of the Company, then they
shall have the right of nomination under this Clause 5.1, in respect of
one Director only..
(c) Three Directors shall be non-retiring Directors, one each of whom shall
be nominated by Essar, CGP and JKF.
5.2 NOMINATED DIRECTORS TO BE ELECTED
Subject to the provisions of the Act, each of the Parties undertake to
procure that the persons nominated in accordance with Clause 5.1 shall
be elected or re-elected as Directors or appointed to the Board as the
case may be. Furthermore, upon receipt of a written request from CGP,
Essar or JKF (as the case may be) to remove or not to re-elect any
Director nominated by them, the Parties shall procure the removal or
shall fail to re-elect such Director as so requested.
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5.3 ALTERNATE DIRECTOR
In the event that a Director (an "Original Director") is away for a
continuos period of not less than three (3) months from the state in
which the meetings of the Board of Directors are ordinarily held, the
Board shall appoint another Director (an "Alternate Director") for and
in place of the Original Director. The Board shall appoint only such
Alternate Director nominated by the Shareholder or CGP that nominated
the Original Director. The Alternate Director shall vacate office if and
when the Original Director returns to the state in which meetings of the
Board are ordinarily held. Upon the appointment of the Alternate
Director, the Company shall ensure compliance with the provisions of the
Act, including by filing necessary forms with the Registrar of
Companies. The Alternate Director shall be entitled to receive notice of
all meetings and to attend and vote at such meetings in place of the
Original Director and generally to perform all functions of the Original
Director in his absence.
5.4 DIRECTORS FEES
Subject to the provisions of the Act, the Directors shall not be paid
any fees for acting in their capacity as Directors. All Directors may,
subject to applicable restrictions if any under law, be remunerated
separately for the performance of special or executive duties approved
from time to time by the Board. All Directors will be entitled to be
paid or reimbursed their reasonable travelling, accommodation and
subsistence expenses incurred in attending meetings (Board/ general/ any
other committee meeting) and/or in the discharge of their duties as
Directors.
5.5 PLACE AND CALLING OF BOARD MEETINGS
Board meetings shall be held at such places, in or outside of India as
the Board may determine and failing any such determination at the
Company's registered office in Delhi. Board meetings shall be held at
least once every three months and at least four times in each year. Any
Director may call a meeting of the Board. Unless the requirement of
notice is waived by all Directors, fourteen days written notice (or such
shorter period as all the Directors may agree) of Board meetings shall
be given to all Directors and their Alternate Directors. Each notice of
a meeting of the Board shall contain inter alia, an agenda specifying in
reasonable detail the matters to be discussed at the relevant meeting
and shall be accompanied by all necessary written information. Where a
Board meeting is adjourned, it shall be reconvened on a day seven
Business Days from the original date at the same place and time unless
the Board decides otherwise. Notices and
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minutes of Board meetings shall be given to each Director at their last
known address, whether resident in India or abroad.
5.6 RESOLUTION BY CIRCULATION
Subject to the provisions of the Act, resolutions of the Board may be
passed by circulation, if the resolution has been circulated in draft,
together with necessary papers, if any, to all the Directors, then in
India or outside India, and has been signed by a majority of the
Directors, provided that in respect of matters contained in Clause 6.4
hereof, the resolution should be signed by at least one Essar Director
and one CGP Director. Such resolutions may be signed by the Directors as
single documents or in counterparts.
5.7 CHAIRMAN AND VICE CHAIRMAN
The Chairman of the Board shall be nominated by CGP from amongst the
Directors of the Company nominated by CGP. The Vice-Chairman of the
Board shall be nominated by Essar from amongst the Directors of the
Company nominated by Essar. Each of the Shareholders shall ensure
(including by exercise of their respective voting rights) the
appointment of the CGP nominee as the Chairman and the Essar nominee as
the Vice-Chairman. The Chairman of the Board shall preside as chairman
of each meeting of the Board at which he is present and in his absence
the Vice Chairman shall preside as Chairman of the meeting. In the
absence of the Chairman and the Vice-Chairman, the Directors attending
the meeting shall elect a Director from amongst themselves to chair the
meeting. In the event of any equality of votes, the chairman of the
meeting shall not have a second or casting vote. Neither Essar or CGP
shall have the right to nominate the Chairman or Vice-Chairman, as the
case may be, if it ceases to have the right to nominate more than one
Director pursuant to Clause 5.1(b).
5.8 EXECUTIVE COMMITTEE
The Board shall have the power to appoint an Executive Committee and
delegate the powers to such Committee for the day to day management of
the Company, provided that no delegation shall be made to the Executive
Committee in respect of the matters contained in Clause 6.4 hereof. The
exercise of powers of management by the Committee shall be subject to
the overall supervision of the Board.
The Executive Committee shall consist of the Chief Executive Officer
("CEO"), Chief Financial Officer ("CFO"), Chief Commercial Officer
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("CCO"), Chief Marketing Officer ("CMO"), and Chief Technical Officer
("CTO"), each of whom shall be nominated by CGP.
5.9 QUORUM FOR DIRECTORS MEETINGS
The quorum for meetings of the Board shall be 4 (Four) Directors
consisting of at least one Director each nominated by Essar, CGP and
JKF, excluding interested Directors. If a quorum is not present, the
meeting shall be adjourned for seven Business Days at the same place and
time and if no quorum is then present the Directors present shall form a
quorum.
5.10 ATTENDANCE BY CONSULTANTS, ADVISERS AND NON VOTING ATTENDEES
If the Board so authorises or requests, auditors, consultants, and
advisers of the Company (in addition to those who also act for any one
or more of the Directors in a personal capacity) and employees of the
Company shall be permitted to attend and speak at meetings of the Board,
but not to vote.
5.11 DECISIONS BY MAJORITY VOTE
Subject to Clause 6.4 hereof and except as otherwise provided in the
Act, all decisions of the Board shall be taken by a majority of the
Directors present and voting a meeting of the Board, or as the case may
be, the directors voting by way of a circular resolution.
5.12 SECRETARY
The secretary of the Company shall be such person as shall from time to
time be determined by the Board.
5.13 AUDITORS
The auditors of the Company shall be PriceWaterhouseCoopers. or such
international and reputable firm of accountants as shall from time to
time be recommended by the Board.
5.14 ACCOUNTING YEAR
The accounting year of the Company (the "Accounting Year") shall end on
31st March each year or such other date as the Parties shall agree and
the Company in general meeting shall resolve.
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6. MANAGEMENT
6.1 BUSINESS TO BE MANAGED BY BOARD
The Board shall be responsible for the management of the business of the
Company and determining the overall policies and objectives of the
Company. The Board shall delegate responsibility for managing the day to
day operations of the Company to either the CEO or the Executive
Committee on such terms as the Board deems desirable and subject always
to the terms of this Agreement.
6.2 CEO
In addition to the Directors appointed under Clause 5.1, CGP shall
nominate and the Board shall appoint a CEO of the Company, provided
that:
(a) any candidate for the post shall have the requisite technical
qualifications and provided that prior to such nomination CGP
shall consult Essar; and
(b) any appointment thereof shall be subject to Board approval.
6.3 PERFORMANCE OF CEO
The CEO shall be responsible for the day to day operations of the
Company subject to the overall control of the Board. The Parties
recognise that the CEO will manage the business and affairs of the
Company and that his performance shall be the subject matter of a
consultative process and joint review of the Board.
6.4 MAJORITY VOTES REQUIRED FOR CERTAIN BOARD MEETING
Notwithstanding any other provision in this Agreement, the Shareholders
and CGP agree that the following matters shall not be implemented in
respect of the Company without the passing of a resolution of the
Directors present and voting, on the issue at a Board Meeting of the
Company, which resolution is approved by at least one of the Essar
Directors (for so long as Essar holds at least 10% of the issued and
paid up share capital of the Company) and at least one of the CGP
Directors (for so long as CGP holds at least 10% of the issued and paid
up share capital of the Company), excluding interested Directors who are
prohibited at law to vote thereon:
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(a) approval of the annual business plan of the Company where such
business plan is not within guidelines agreed between the
Parties;
(b) merger and/or consolidation of the Company or its business with
another company or acquisition of the substantial part of the
business or assets of another company;
(c) entry into a new business not carried on by the Company as at
the date of this Agreement;
(d) sale of a substantial part of the business or assets of the
Company;
(e) transactions between the Company and any Shareholder or its
Affiliate;
(f) execution of High Value Contracts which have not been
contemplated in the business plan or budget;
(g) execution of any agreement between the Company and any
Shareholder or its Affiliate;
(h) liquidation, winding up of the Company; and
(i) amendment to the Memorandum or Articles of the Company.
6.5 RESERVED DECISIONS
Decisions of the Board under sub-clauses (a) and (f) of Clause 6.4.
shall be referred to "Reserved Decisions". In the event of the Board
being unable to agree on any Reserved Decision within seven (7) days of
the Board meeting, the following procedures shall apply:
(a) A summary of the facts surrounding the disputed Reserved
Decision shall be sent by the Company to one of the Directors
nominated by each of Essar, CGP and JKF ("Concerned Directors");
(b) Within seven (7) days of the receipt of such summary, the
Concerned Directors shall meet and discuss the disputed Reserved
Decision and shall take all steps and to reach a consensus
acceptable to theShareholders and CGP;
(c) If the Concerned Directors are unable to reach a consensus in
the manner set forth in sub-clause (b) above within a further
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period of fourteen (14) days, then the matter shall be referred
back to the Board where a simple majority shall be all that is
required to decide the matter;
(d) In the event that either CGP or Essar have an objection to the
decision reached in the manner set out in clause (c) above, it
may give a notice to the other Shareholders and the Company and
CGP (if applicable) within 14 days of such a decision being
taken in accordance with clause (c), of its continuing
objection. The Shareholders the Company and CGP shall then
attempt to complete an IPO of the Company, if the prevailing
market conditions so permit, within six months from the expiry
of the 14 day period notice given by CGP or Essar pursuant to
this sub clause.
(e) In the event of that Essar still disputes the decision and the
IPO has not been effected within the aforesaid six month period,
for any reason whatsoever Essar shall have a right to sell the
Essar Shares to CGP or to its designated nominee (and CGP or its
designated nominee shall be obligated to purchase the Essar
Shares) at a price which is 10% less than Fair Value of the
Essar Shares, as determined in the manner set out in Schedule A.
7. BUSINESS PLAN & BUDGET
7.1 BUSINESS PLAN & BUDGET
The Company shall prepare at least two months prior to the close of each
Accounting Year and the Board shall review, amend and, if deemed
appropriate, approve prior to the close of such Accounting year a
business plan and a budget comprised of a balance sheet, profit and loss
statement, cash flow statement, capital expenditure statement and
funding requirements schedule covering the five year period commencing
at the close of such Accounting Year. The Parties agree that the broad
guidelines for drawing up the business plan include having a best in
class network and customer service platform, best branding, sufficient
cash requirement to tackle competition and with an initial focus on
voice telephony to be followed by data business.
7.2 BUDGET DETAILS
The budget shall be in sufficient detail to provide the Directors with
information sufficient to facilitate their approval.
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8. [***]
9. FUNDING AND CAPITAL
9.1 FUNDING OF THE COMPANY
Unless otherwise determined by the Board, the funds required by the
Company shall be provided first, by the Company's cash flow, secondly,
by external borrowings in accordance with Clause 9.3, thirdly, by
shareholders loans and lastly, by the issue of additional share capital.
The additional share capital shall either be equity or preference. The
debt-equity ratio shall be determined by the Board from time to time. If
further funding is required, the Shareholders shall provide such further
funding pro rata on the basis of their respective shareholding in the
Company.
9.2 CAPITAL CONTRIBUTION
(a) Based on the funding requirements of the Company, the CEO shall
determine when equity capital calls are to be made, and shall
make a recommendation to the Board for making equity capital
calls. The Board may, from time to time, pass resolutions
calling for equity capital contributions to the Company (each
such contribution a "Capital Contribution") from the
Shareholders which will result in the Company receiving the
amount of cash determined by the Board to be necessary to fund
the business needs of the Company to support growth requirements
(each such resolution, a "Cash Call"). Each Capital Contribution
pursuant to this Clause 9.2 shall be made by the Shareholders in
the form of a subscription to Shares. The Shareholders shall
make such Capital Contributions in proportion to their
respective holdings of the total issued and paid-up share
capital of the Company at the time of the applicable Cash Call.
Unless otherwise specified by the Board of Directors, each
Capital Contribution shall be payable by the Shareholders in
Rupees, on the date specified in the applicable Cash Call, by
wire transfer to the account of the Company specified in such
Cash Call.
(b) If any Shareholder does not pay or procure payment of its
ratable portion of any Capital Contribution required to be made
pursuant to sub-clause (a) above within thirty (30) days from
the date of the applicable Cash Call (or such other extended
17
period as may be required to obtain necessary regulatory
approvals), each of the other Shareholders if it has paid its
ratable portion of such Capital Contribution, has the option to
pay or ensure that its designee pays a pro-rata share of such
non-paying Shareholder's portion in the form of a subscription
of Shares, thereby increasing its respective holdings of the
total issued and paid-up share capital of the Company, and
decreasing the percentage holdings of the non-paying
Shareholder's holding in the total issued and paid-up capital of
the Company. The valuation for the issue of the Shares pursuant
to this Clause 9.2 shall be as agreed to between the Parties, or
if the Parties cannot reach an agreement within 14 days, Fair
Value determined in the manner set forth in Schedule A.
9.3 DEBT FINANCING
In the event that the financing is done through external borrowing by
the Company, the Parties shall take all reasonable steps to ensure that
the debt is subject to the following conditions:
(a) that the debt is without recourse to the Shareholders; or
(b) where the lenders do not accept a non recourse loan or where the
terms of the non recourse loan are not on reasonable commercial
terms acceptable to the Board and therefore the debt involves
recourse to the Shareholders, the Shareholders shall provide
corporate guarantees for their respective Shares on a pro rata
basis.
9.4 CREDIT SUPPORT
In the event that the corporate guarantee(s) provided by the
Shareholders in accordance with Clause 9.3(b) are not acceptable to the
lenders, then the CEO shall determine whether it may be appropriate to
procure further guarantees from the Shareholders that are acceptable to
the lenders or to make equity capital calls in the manner set forth in
Clause 9.2 above. In the event that the CEO determines that further
guarantees are to be procured from the Shareholders on a pro rata basis,
and any Shareholder cannot provide such guarantees, then the Board may
call upon any other Shareholder(s) to guarantee or support the entire
amount of the debt financing, provided that the Shareholder providing
such support shall be entitled to the option ("Guarantee Call Option")
either directly or through a designee to purchase Shares of the
defaulting Shareholder in the following manner and to the following
extent:
18
(a) the number of shares for which the option to apply to be equal
to a number so as to ensure that the Shareholder exercising the
Guarantee Call Option holds such percentage of the Shares of the
Company upon exercising the Guarantee Call Option as it would
have held had an equity call for the amount of the credit
support been made at the time of providing the credit support;
(b) the price of the Shares to be sold if the non-defaulting
Shareholder exercises the Guarantee Call Option shall be 10%
above the Fair Value at the time of providing the credit
support. Fair Value shall be as determined in the manner set out
in Schedule A;
(c) the non-defaulting Shareholder exercising the Guarantee Call
Option may exercise such Guarantee Call Option at any time
provided the non-defaulting Shareholder provides at least 15
Business Days' notice of its intention to exercise the Guarantee
Call Option to the defaulting Shareholder. The defaulting
Shareholder shall have the right to terminate the Guarantee Call
Option at any time, including during such notice period, by
providing its share of credit support in accordance with this
Clause 9.4.
10. TRANSFER OF SHARES
10.1 RESTRICTIONS ON TRANSFERS OF OWNERSHIP
No rights conferred by the ownership of a Share may be transferred
separately from legal title to the Share itself and no Share can be
transferred other than pursuant to the provisions of this Agreement. Any
transfer of Shares not made in accordance with the provisions of this
Agreement shall be null and void ab initio.
10.2 NO MORTGAGE OR PLEDGE OF SHARES
Each of the Shareholders, hereby undertakes with the others that during
the continuance of this Agreement it shall not, without the prior
written consent of the other Shareholders (which may be given in their
sole discretion and subject to such terms and conditions as they may
deem fit):
(a) mortgage, charge, pledge or otherwise encumber the whole or any
part of its Shares; or
19
(b) assign or otherwise purport to deal with the beneficial interest
therein or any right in relation thereto separately from the
legal interest,
provided that the Mauritius Companies and JKF shall not unreasonably
withhold their consent to a pledge of the Essar Shares if the pledge is
required to refinance the loan provided to Essar on the Effective Date
by GE Capital Services India and the party taking the pledge
acknowledges the fact that the Essar Shares are subject to the terms of
this Agreement.
10.3 PERMITTED TRANSFERS
Subject to Clause 10.11 hereof, any Shareholder may transfer its Shares
to an Affiliate thereof, so long as the transferee has executed an
instrument agreeing to be bound by the terms of this Agreement.
10.4 DEFAULT
A Shareholder shall be in default for the purposes of Clause 10.5 if:
(a) it breaches Clause 10.1;
(b) it breaches Clause 10.2;
(c) it commits a material breach of any provision of this Agreement
and fails to remedy such breach within 30 days of being required
in writing to do so by any other Shareholder;
(d) it becomes bankrupt or insolvent or stops payment to or makes an
arrangement with its creditors generally, or any resolution is
passed for its winding up or bankruptcy (other than a winding up
for the purpose of reconstruction or amalgamation) or any
petition or proceedings to winding up that Shareholder has been
admitted by a competent court of law (and such petition or
proceeding is not disputed in good faith) or it ceases to exist
or there is an attachment of or the levy of execution on a
substantial part of the assets or business of that Shareholder
which is not remedied within 120 days, or an encumbrancer takes
possession of or a receiver, trustee, administrator or similar
officer is appointed over all or substantial part of its assets
or business; or
20
(e) it breaches Clause 13.
10.5 SALE OF SHARES ON DEFAULT
If any Shareholder is in default within the meaning of Clause 10.4 (the
"Defaulting Party") the other Shareholders or any of them (not including
the Company or any Affiliate of the Defaulting Party) (the
"Non-Defaulting Parties") may within 30 days of becoming aware of such
default give the Defaulting Party, written notice of the default
("Disposal Notice") requiring the Defaulting Party to transfer all of
its Shares (the "Disposal Shares") to the Non-Defaulting Party or its
designee at 10% less than the Fair Value determined in the manner set
forth in Schedule A , and the Disposal Shares shall then be promptly
transferred to the Non-Defaulting Party or its designee. In the event of
more than one Disposal Notices being served, any transfer of Shares
thereby resulting shall be pro-rata to the existing respective
shareholdings in the Company of the Non-Defaulting Parties in question.
In order to facilitate such sale and transfer the following shall apply:
(a) 30 days after the receipt by the Defaulting Party of the
Disposal Notice, the Directors in the Company appointed by the
Non-Defaulting Parties or its Affiliates (the "Non-Defaulting
Directors") shall be constituted the agent of the registered
owner of the Disposal Shares, for the sale of the Disposal
Shares to the Non Defaulting Party or Parties or its designees.
(b) Within 7 days after the expiry of the 30 day period referred to
in Clause 10.5 (a) above, the Non-Defaulting Directors shall
execute in the name and on behalf of the registered owners
thereof, and deliver to the Non-Defaulting Parties, a transfer
of the Disposal Shares to the Non-Defaulting Parties or its
designee in exchange for cashiers or bank cheques in favour of
the registered owners of the Disposal Shares at 10% less than
the Fair Value. The Non-Defaulting Directors shall hold the
cheques to the order of the registered owners of the Disposal
Shares, once such Shares have been registered in the name of the
Non-Defaulting Party or its designee.
(c) Notwithstanding the provisions of Clauses 5.9, 5.11 and 6.4, the
Directors of the Company nominated by the Non-Defaulting Parties
shall constitute a quorum for passing a resolution to register
the transfer of the Disposal Shares to the transferee.
(d) In the event that Government and regulatory approvals are needed
for the transfer of the Disposal Shares to the
21
Non-Defaulting Party or its designee, the time for transfer and
payment for such Shares shall be extended while such approval is
being actively sought by the Non-Defaulting Party or its
designee.
(e) In the event that the Non-Defaulting Party or one of its
Affiliates is unable to take up any of the Disposal Shares due
to Indian law or foreign investment regulations, such
Non-Defaulting Party shall be entitled to nominate any third
party acceptable under Indian law to acquire such Disposal
Shares.
(f) The Defaulting Party agrees not to take any actions to prevent
or delay the transfer and registration of the Disposal Shares.
The rights of the Non Defaulting Parties under this Clause 10.5 shall be
in addition to and without prejudice to their rights to claim damages
and other remedies against the Defaulting Party.
10.6 REPAYMENT OF SHAREHOLDER LOANS AND GUARANTEES
In the event of any transfer of Shares consequent on a default and
unless otherwise agreed:
(a) any shareholder loans advanced by the Defaulting Party or any of
its Affiliates shall, notwithstanding the terms of such loan, be
repaid :
(i) by the Company at the later of the original repayment
date or the first anniversary of the date of such
transfer; or
(ii) by an assignment or novation of all or part of such
loan(s) to the Non-Defaulting Party or its designee at
the face value plus the accumulated interest on the
loans to the Non-Defaulting Party or its designee, as
may be agreed between the Non-Defaulting Party and the
Company. Any interest agreed to be paid by the Company
in respect of such loan(s) shall continue to accrue
until payment shall be made in full but not otherwise;
(b) the Non Defaulting Parties shall use reasonable endeavours to
procure the release of any shareholder guarantee given by the
Defaulting Party or any of its Affiliates for the benefit of the
Company.
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10.7 TITLE AND COMPLETION OF SHARE TRANSFERS
All transfers of Shares shall be effected by the transferor selling as
beneficial and legal owner free and clear of all liens, charges and
encumbrances and together with all rights attaching thereto, and upon
completion, the transferor shall deliver to the transferee, forms of
transfer in respect of the relevant Shares duly executed by the
transferor in favour of the transferee together with the relevant share
certificates and shall vote on the Board to register the transferee as
the owner of the Shares against payment by the transferee of the price
due in respect thereof. Subject to this Clause 10.7 the Parties shall
thereupon do or procure to be done all such acts and things as may be
necessary to give full effect to the transfer and the registration
thereof.
10.8 RIGHTS OF FIRST REFUSAL
10.8.1 Essar Shares
(a) Should Essar wish to transfer any Shares (except for the
transfer of Shares permitted in Clause 10.3), it shall offer
them to the Mauritius Companies and JKF or their designees, in
proportion to their respective shareholdings in the Company, by
serving a transfer notice ("Essar Transfer Notice") on them
stating the number of Shares ("Essar Offer Shares") which it
proposes to sell and whether any shareholder loans or part
thereof are to be sold as condition of the sale of the Essar
Offer Shares together with:
(i) the price and other terms, if any, at which it is
willing to sell Essar Offer Shares and shareholder
loans, such price not being higher or the terms more
onerous than those to any bona fide third person
offering to buy the Essar Offer Shares or, in the case
of shareholder loans such price being not higher than
the face value of such loans plus the accumulated
interest thereon, if any;
(ii) such details of the terms of any bona fide offer it has
received to purchase the Essar Offer Shares and the
shareholder loans, if any, as may be reasonably
necessary for the Mauritius Companies and JKF to
determine the price and other terms of such offer ;
(iii) the identity of the person making the offer ("Essar
Prospective Purchaser") and of its ultimate parent
23
company and beneficial owner and/ or the true buyer (if
known to be different).
(b) Within 21 days after the Essar Transfer Notice is given any of
the Mauritius Companies and JKF may:
(i) if the Essar Transfer Notice is accompanied by details
of a bona fide offer, require Essar to produce to it
such further evidence as it may reasonably require to
enable it to establish the bona fides of the offer by
the Essar Prospective Purchaser;
(ii) if the Essar Transfer Notice is not accompanied by
details of a bona fide offer, serve on Essar and the
Company a notice requiring the Fair Value of the Essar
Offer Shares to be determined ("Essar Valuation
Notice");
(c) Each of the Mauritius Companies and JKF shall be entitled within
a period of 21 days after any Essar Transfer Notice is given or
within a period of 7 days after the date of provision to them of
such further evidence or information as may be requested under
Clause 10.8.1(b)(i) as the case may be (whichever is the later),
to serve a purchase notice ("Essar Purchase Notice") on Essar
stating:
(i) that it wishes to purchase the Essar Offer Shares and
the shareholder loans if any at the price and on the
other terms stated in the Essar Transfer Notice; or
(ii) that it declines the Essar Offer Shares.
(d) Subject to clauses 10.8.1 (e) and (f), if Essar has not received
Essar Purchase Notice (or Notices) under the terms of Clause
10.8.1(c) (i) in respect of the total number of Essar Offer
Shares or having received the same has not within 30 days
thereafter received the price for the Essar Offer Shares in
return for a transfer complying with Clause 10.7, it shall be
entitled to sell all, but not less than all, of the Essar Offer
Shares not so purchased to the Essar Prospective Purchaser if
there is any, otherwise to any person at not less than the price
and on the terms no less onerous than those set out in the Essar
Transfer Notice provided that if such sale is not completed
within 90 days after the expiry of the relevant time period
referred to in Clause 10.8.1(c), subject to any extension
thereof under Clause 10.10(c) hereof, the right to sell the
Essar Offer Shares to the Essar Prospective Purchaser or any
other person shall lapse.
24
(e) In the event that a Essar Valuation Notice is served under the
provisions of Clause 10.8.1(b) (ii) then, the provisions of
Schedule A shall apply. On determination of the Fair Value in
accordance with such schedule, the Company shall forthwith upon
receipt of the valuers'(as defined in Schedule A below)
determination notify Essar, the Mauritius Companies and JKF
thereof and then each of the Mauritius Companies and JKF shall
have the option within 14 days of the Company's notice under
this Clause 10.8.1(e) to serve a purchase notice ("Essar
Purchase Notice") on Essar stating the Essar Offer Shares and
shareholder loans (if any) which it wishes to purchase.
(f) In respect of Clause 10.8.1(e) hereof, if Essar has not received
Essar Purchase Notice (or Notices) in respect of the total
number of Essar Offer Shares or having received the same has not
within 30 days thereafter received the total price for the Essar
Offer Shares in return for a transfer complying with Clause
10.7, Essar shall be entitled to sell all but not part of the
Essar Offer Shares not so purchased to any person at a price not
less than that represented by the Fair Value, provided that if
such sale is not completed within 90 days after the expiry of
the relevant time period referred to in Clause 10.8.1(b)(ii)
subject to any extension thereof under Clause 10.10(c) the right
to sell the Offer Shares shall lapse.
(g) (i) In the event of there being more than one Essar Purchase
Notice served on Essar, the Parties serving such
Purchase Notice shall be entitled to purchase the Essar
Offer Shares in proportion to the size of their
respective shareholdings in the Company. If more than
one Essar Purchase Notice is served on Essar, Essar
shall so inform the Company which shall allocate the
Essar Offer Shares to such Parties who have served a
Essar Purchase Notice, in proportion to their
shareholdings in the Company. The Company shall
forthwith give notice of such allocations to Essar and
such Parties, and Essar shall be bound upon payment to
transfer the Essar Offer Shares so allocated to such
Parties; provided that Essar shall not be bound to
transfer the Essar Offer Shares to any purchaser unless
it has received payment in full for all such Essar Offer
Shares.
(ii) Provided that nothing in this Clause 10.8.1 shall apply
in respect of an IPO, including any restructuring
required
25
prior to an IPO or by virtue of any governmental
guidelines or requirements.
10.8.2 CGP Shares
(a) Should any of the Mauritius Companies (the "Transferor MC") wish
to transfer any Shares (except for the transfer of Shares
permitted in Clause 10.3), it shall offer them to Essar and JKF
or their designees, in proportion to their shareholdings in the
Company, by serving a transfer notice ("MC Transfer Notice") on
them stating the number of Shares ("MC Offer Shares") which it
proposes to sell and whether any shareholder loans or part
thereof are to be sold as condition of the sale of the MCOffer
Shares together with:
(i) the price and other terms, if any, at which it is
willing to sell its MC Offer Shares and shareholder
loans, such price not being higher or the terms more
onerous than those to any bona fide third person
offering to buy the MC Offer Shares or, in the case of
shareholders loans such price not being higher than the
face value of such loans and the accumulated interest
thereon, if any;
(ii) such details of the terms of any bona fide offer it has
received to purchase the MC Offer Shares and the
shareholder loans if any as may be reasonably necessary
for Essar and JKF to determine the price and other terms
of such offer ;
(iii) the identity of the person making the offer ("MC
Prospective Purchaser") of its ultimate parent company
and beneficial owner and/ or the true buyer (if known to
be different).
(b) Within 21 days after the MC Transfer Notice is given any of
Essar and JKF may:
(i) if the MC Transfer Notice is accompanied by details of a
bona fide offer, require the Transferor MC to produce to
it such further evidence as it may reasonably require to
enable it to establish the bona fides of the offer by
the MC Prospective Purchaser;
(ii) if the MC Transfer Notice is not accompanied by details
of a bona fide offer, serve on the Transferor MC and the
26
Company a notice requiring the Fair Value of the MC
Offer Shares to be determined ("MCValuation Notice").
(c) Each of Essar and JFK shall be entitled within a period of 21
days after any MC Transfer Notice is given or within a period of
7 days after the date of provision to them of such further
evidence or information as may be requested under 10.8.2(b) (i)
as the case may be (whichever is the later), to serve a purchase
notice ("MC Purchase Notice") on the Transferor MC stating:
(i) that it wishes to purchase the MC Offer Shares and the
shareholder loans if any, at the price stated in the MC
Transfer Notice; or
(ii) that it declines the MC Offer Shares.
(d) Subject to Clauses 10.8.2 (e) and (f), if the Transferor MC has
not received a MC Purchase Notice (or Notices) under the terms
of Clause 10.8.2(c) in respet of the total number of MC Offer
Shares or having received the same has not within 30 days,
thereafter received the price for the MC Offer Shares in return
for a transfer complying with Clause 10.7, it shall be entitled
to sell all, but not less than all, of the MC Offer Shares not
so purchased to the MC Prospective Purchaser if there is any,
otherwise to any person at not less than the price and on terms
no less onerous than those set out in the MC Transfer Notice
provided that if such sale is not completed within 90 days after
the expiry of the relevant time period referred to in Clause
10.8.2 (c), subject to any extension thereof under Clause
10.10(c) hereof, the right to sell the MC Offer Shares to the MC
Prospective Purchaser or any other person shall lapse.
(e) In the event that a MC Valuation Notice is served under the
provisions of Clause 10.8.2(b) (ii) then, the provisions of
Schedule A shall apply. On determination of the Fair Value in
accordance with such schedule, the Company shall forthwith upon
receipt of the valuers' determination notify the Transferor MC,
Essar and JKF thereof and then each of Essar and JKF shall have
the option within 14 days of the Company's notice under this
Clause 10.8.2 (e) to serve a purchase notice ("MC Purchase
Notice") on the Transferor MC stating the MC Offer Shares and
shareholder loans (if any) it wishes to purchase.
(f) In respect of Clause 10.8.2 (e) hereof, if the Transferor MC has
not received a MC Purchase Notice (or Notices) in respect of the
total number of MC Offer Shares or having received the
27
same has not within 30 days thereafter received the total price
for the MC Offer Shares in return for a transfer complying with
Clause 10.7, the Transferor MC shall be entitled to sell all but
not part of the MC Offer Shares not so purchased to any person
at a price not less than that represented by the Fair Value,
provided that if such sale is not completed within 90 days after
the expiry of the relevant time period referred to in Clause
10.8.2 (b)(ii) subject to any extension thereof under Clause
10.10(c) the right to sell the MC Offer Shares shall lapse.
(g) (i) In the event of there being more than one Purchase
Notice served on the Transferor MC, the Parties serving
such Purchase Notice shall be entitled to purchase the
MC Offer Shares in proportion to the size of their
respective shareholdings in the Company. If more than
one Purchase Noticeis served on the Transferor MC, the
Transferor MC shall so inform the Company which shall
allocate the MC Offer Shares to such Parties who have
served a MC Purchase Notice, in proportion to their
shareholdings in the Company. The Company shall
forthwith give notice of such allocations to the
Transferor MC and such Parties, and the Transferor MC
shall be bound upon payment to transfer the MC Offer
Shares so allocated to such Parties, provided that the
Transferor MC shall not be bound to transfer the MC
Offer Shares to any purchaser unless it has received
payment in full for such MC Offer Shares.
(ii) Provided that nothing in this Clause 10.8.2 shall apply
in respect of an IPO, including any restructuring
required prior to an IPO or by virtue of any
governmental guidelines or requirements.
10.8.3 JKF Shares
(a) Should JKF wish to transfer any Shares (except for the transfer
of Shares permitted in Clause 10.3), it shall offer them to the
Mauritius Companies by serving a transfer notice ("Transfer
Notice") on the Mauritius Companies stating the number of Shares
("Offer Shares") which it proposes to sell and whether any
shareholder loans or part thereof are to be sold as condition of
the sale of the Offer Shares together with:
(i) the price and other terms, if any, at which it is
willing to sell its Offer Shares and shareholder loans,
such price not
28
being higher or the terms more onerous than those to any
bona fide third person offering to buy the Offer Shares
or, in the case of shareholders loans, such price not
being higher than the face value of such loans and the
accumulated interest thereon, if any;
(ii) full details of the terms of any bona fide offer it has
received to purchase the Offer Shares, if any; and
(iii) the identity of the person making the offer
("Prospective Purchaser") and its ultimate parent
company and beneficial owner and/or the true buyer (if
know to be different).
(b) Within 21 days after the Transfer Notice is given, any
of the Mauritius Companies may, (i) if the Transfer
Notice is accompanied by details of a bona fide offer,
require JKF to produce to it such further evidence as it
may reasonably require to enable it to establish the
bona fides of the offer by the Prospective Purchaser; or
(ii) if the Transfer Notice is not accompanied by
details of a bona fide offer, serve on JKF and the
Company a notice requiring the Fair Value of the Offer
Shares to be determined in the manner set forth in
Schedule A hereto ("Valuation Notice");
(c) Each of the Mauritius Companies shall be entitled within
a period of 21 days after any Transfer Notice is given
or wihtin a period of 7 days after the date of provision
to it of such further evidence or information as may be
requested under Clause 10.8.3 (b) (i) as the case may be
(whichever is the later) to serve a purchase notice
("Purchase Notice") on JKF
(i) stating that it wishes to purchase the Offer Shares and
shareholder loans at the price stated in the Transfer
Notice; or
(ii) that it declines the Offer Shares.
(d) In the event that a Valuation Notice is served under the
provision of Clause 10.8.3(b)(ii) then the provisions of
Schedule A shall apply. On determination of the Fair Value in
accordance with such schedule, the Company shall forthwith upon
receipt of the Valuers' determination notify JKF and the
Mauritius Companies thereof and then each of the Mauritius
29
Companies shall have the option within 14 days of the Company's
notice under this Clause 10.8.3(d) to serve a purchase notice
(the "Purchase Notice") on JKF stating the Offer Shares and
shareholder loans (if any) it wishes to purchase.
(e) If JKF has not received a Purchase Notice (or Notices) for the
Offer Shares or having received the same has not within 30 days
thereafter received the total price for the Offer Shares from
the relevant Mauritius Companies in return for a transfer
complying with Clause 10.7, JKF shall offer the Offer Shares to
Essar and the terms of this Clause 10.8.3 (a) to (d) shall apply
mutatis mutandis, in respect of such offer to Essar.
(f) If JKF has not received a Purchase Notice for the Offer Shares
or having received the same has not within 30 days thereafter
received the total price for the Offer Shares from Essar in
return for a transfer complying with Clause 10.7, JKF shall be
entitled to sell all but not part of the Offer Shares to the
Prospective Purchase at a price not less than the price and on
terms no less onerous than those set out in the Transfer Notice
provided that if such sale is not completed within 90 days after
the expiry of the relevant time period referred to in Clause
10.8.3 (b) (ii) subject to any extension thereof under Clause
10.10 (c) the right to sell the Offer Shares shall lapse.
10.9 TAG ALONG
Subject to Clause 10.10 hereof, in the event that the Mauritius
Companies intend to sell more than 80% of their aggregate shareholdings
in the Company (the "Sale Shares") otherwise than as permitted by Clause
10.3 hereof:
(a) they shall notify Essar in writing stipulating the principal
terms and conditions of any such sale, particularly as to the
price and time scale thereof (the "Sale Notice");
(b) Essar may, by written notice to the Mauritius Companies, within
21 days or such longer reasonable period permitted by the
timescale shown by the Sale Notice, exercise it rights under
this Clause 10.9 to the effect that it wishes to dispose of a
number of the Shares equal to the parties respective
shareholding in the Company (pro rata the number of Sale Shares
in question) in the context of the sale contemplated by the Sale
Notice;
30
(c) The Mauritius Companies shall procure that the intended
purchaser of the Sale Shares shall extend its offer to purchase
the same to the Essar Shares, on terms no less favourable than
those relating to the Sale Shares;
(d) Essar shall thereafter co-operate with the Mauritius Companies
and do all things necessary to effect completion of a sale of
the Essar Shares substantially on the terms contemplated by the
Sale Notice;
Provided that:
(i) it is hereby agreed and acknowledged that all negotiations in
respect of a sale under the provisions of this Clause 10.9 shall
be conducted by the Mauritius Companies who, however, shall take
due note of any reasonable requests of Essar in regard thereto;
(ii) the tag along rights under this Clause 10.9 shall be in
compliance with the relevant Government of India regulations;
and
(iii) in the event that any such sale does not proceed to completion
for whatever reason, neither party shall have any claim against
the other in respect thereof, whether for damages, costs or
otherwise.
10.10 SECTORAL CAPS
It is hereby agreed that:
(a) the Parties shall do all things necessary to ensure that any
exercise of the rights comprised in this Clause 10 hereof shall
not give rise to any breach of the sectoral caps of the
Government of India then in force relating to foreign investment
in the telecom sector; and
(b) any sale or transfer contemplated under the provisions of this
Clause 10 shall be subject to any necessary Government or
regulatory approvals, whether in respect of the said sectoral
caps or otherwise; and
(c) any time limit imposed by the provisions of this Clause 10 shall
be extended pro tanto in respect of any period reasonably
necessary to obtain any approval under Clause 10.10 (b) hereof.
31
Provided that, the parties shall use all reasonable endeavours
to expedite the obtaining of any such approvals; and
(d) If any Shareholder is unable to take up any Shares to be
transferred in accordance with the provisions of this Agreement
or any part thereof due to Indian law or foreign investment
regulations, such Shareholder shall be entitled to nominate any
third party acceptable under such law to purchase such Shares or
any part thereof.
10.11 DEED OF ADHERENCE
If Shares are being transferred in accordance with the provisions of
this Agreement to any party not already bound by the terms of this
Agreement, then the Shareholder transferring those Shares must procure
prior to such transfer that such transferee, agrees to be bound by this
Agreement by signing a deed of adherence in a form approved by the
Board.
11. FURTHER OBLIGATIONS OF THE PARTIES
11.1 FURTHER ASSURANCE
The Parties shall do and execute or procure to be done and execute all
such further acts, deeds, things and documents as may be necessary to
give full effect to the terms of this Agreement.
11.2 DIRECTORS TO VOTE TO IMPLEMENT THIS AGREEMENT
Each of the Shareholders and CGP shall procure that any Director
nominated by it, shall exercise or refrain from exercising any voting
rights so as to ensure the passing of any resolution necessary to give
full effect to the provisions of this Agreement.
11.3 ACCOUNTING AND REPORTING
Each of the Shareholders shall (to the extent it is within its power to
do so) procure that the Company will and the Company shall:
(a) prepare business plans and budgets as set out in Clause 7.1;
(b) keep true and accurate books of accounts and records in
accordance with Indian and internationally accepted accounting
practice and procedure and in accordance with Indian law and
procure that such books and records are audited by the auditors
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annually as soon as possible after the end of each financial
year;
(c) upon reasonable written notice to the Company allow the
Shareholders or their authorised representatives or professional
advisers and the Directors, the right during normal business
hours to inspect the books, accounting records and any documents
or records of the Company, to make extracts and copies therefrom
at their own expense, and to have full access to all its
property and assets; and
(d) supply to each Director, such regular management and financial
information in English as is customary and as they may from time
to time reasonably require Including monthly financial reports,
monthly operating reports and status of various compliances.
11.4 EXCHANGE OF INFORMATION
Each of the Parties shall promptly notify each other and the Company, of
all or any matters coming to its notice which may affect the title to or
enjoyment of the Company's premises, licences, authorisations, assets or
property or the conduct of its business, and of all notifications,
orders, demand and other communication received from any government or
other authority in relation to the Company's business, licences,
authorisations, assets or property.
11.5 FAIR DEALINGS
All dealings between the Company and any Party or any Affiliate of a
Party shall be on a fair and equitable basis and at arm's length.
12. MAINTENANCE OF LICENCES, GOVERNMENT APPROVALS
Each of the Parties shall (to the extent it is within its power to do
so) procure that the Company shall :
(a) use its best endeavours to obtain and maintain in full force and
effect all governmental or other approvals, consents, licences,
authorisations, declarations, filings and registrations as may
be required or advisable for the carrying on of its business
("Relevant Authorisations"); and
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(b) obtain and keep in effect such new or additional Relevant
Authorisations as may become necessary for the carrying on of
its business.
13. TERM, TERMINATION AND DISPUTES
13.1 TERM
This Agreement shall continue in force from the date hereof, until a
Shareholder ceases to hold any Shares in the Company or unless
terminated by six months written notice upon mutual consent of Essar,
CGP and JKF.
13.2 RIGHTS OF PARTIES ON WINDING UP
The Parties may prove in the winding-up of the Company to the maximum
extent permitted by law for all sums due or to fall due to them
respectively from the Company and shall exercise all rights of set off
and generally do all such other acts and things as may be available to
them in order to obtain the maximum receipts and recoveries.
13.3 AGREEMENT TERMINATES ON WINDING UP
In the event of the winding up of the Company, this Agreement shall
terminate and all of the terms of this Agreement shall cease to bind the
Parties. Termination of this Agreement shall not affect the rights of
any Party to exercise its rights in respect of any breach of this
Agreement by any or all of the Parties prior to the winding up of the
Company. In the event of any Party ceasing to have any legal or
beneficial interest in any Shares, the terms of this Agreement shall
cease to bind such Party (except Clause 13 which shall continue to bind
such Party) without prejudice to the rights of the other Parties to
exercise their rights in respect of any breach of this Agreement by the
departing Party prior to its ceasing to have any such interest, and if
none of its Subsidiaries own any Shares, the Party ceasing to have such
interest shall cause the Directors and CEO(if any) nominated by it to
resign immediately.
14. ARBITRATION AND CONSULTATION
14.1 CONSULTATION
In the case of any dispute arising out of or in connection with this
Agreement or its performance, including any question regarding its
34
existence, validity or termination, the Parties shall first endeavour to
reach an amicable settlement through mutual consultations and
negotiations. If the Parties are unable to reach an amicable settlement
within 30 Banking Days from the date on which the dispute arose (except
as to any matter for which express provisions are made in this
Agreement), any of the Parties may make a reference to arbitration in
accordance with Clause 14.2 hereof.
14.2 ARBITRATION
(a) In the absence of any settlement of disputes under Clause 14.1
above, any and all disputes or differences arising out of or in
connection with this Agreement or its performance shall be
submitted to arbitration at the request of a Party upon written
notice to that effect to the other Party/ Parties and such
arbitration shall be conducted in accordance with the Indian
Arbitration and Conciliation Act, 1996 (the "Arbitration Act")
by a panel consisting of three (3) arbitrators.
(b) While submitting the dispute or difference to arbitration in
accordance with sub-clause (a) above, the Party, while so
submitting shall, in its notice, specify the name of one
arbitrator appointed by it. Within 30 days of the receipt of
notice, the other Parties shall appoint an arbitrator. The third
arbitrator (who will act as the chairman) shall be nominated by
the two arbitrators appointed as aforesaid or, failing such
nomination within 30 days of the appointment of the second
arbitrator, shall be appointed in accordance with the
Arbitration Act. Each of the arbitrators shall be either a
retired judge of the Supreme Court of India or retired judge of
one of the high Court of India or a reputed member of the Bar
Council of India having at least 15 years of experience as an
advocate.
(c) The language of the arbitration shall be English. The venue of
the arbitration shall be at Mumbai, India.
(d) The Parties agree that the award of the arbitrators shall be
final and binding upon the Parties, and that none of the Parties
shall be entitled to commence or maintain any action in a court
of law upon any matter in dispute arising from or in relation to
this Agreement, except for the enforcement of an arbitral award
granted pursuant to this Clause if required.
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15. CONFIDENTIALITY
15.1 AGREEMENT CONFIDENTIAL
The Parties agree to keep secret and confidential and not to disclose,
except to the extent required by law or any regulatory authority, to any
third party without the prior written consent of Essar, CGP, the
Mauritius Companies and JKF any information (including the information
as to the execution of this Agreement) or documents (including this
Agreement and other related agreements that the Parties may execute)
relating to the operation of the business of the Company.
Any formal press or other public announcement in writing relating to
this Agreement or any of its terms shall be in a form previously agreed
Essar, CGP and JKF.
15.2 INJUNCTIVE RELIEF
The obligations cast upon the Parties by this Clause 15 are extremely
valuable, for which no adequate monetary compensation may be available,
and accordingly performance of the said obligations by the other Party
forms the very substance of this Agreement and goes to its very root and
intent for which the aggrieved Party shall be, notwithstanding any other
stipulation in this Agreement (including the arbitration provision),
entitled to injunctive relief from the appropriate law courts in the
event of the failure of the other Party to perform the said obligations.
15.3 SURVIVAL
The rights, duties and obligations contained in this Clause 15 shall
survive termination of this Agreement or the winding up of the Company.
16. [***]
17. AGREEMENT
17.1 AGREEMENT TO PREVAIL
If any provision of the Memorandum or the Articles at any time conflicts
with any provision of this Agreement then, to the extent permitted by
Indian law, as between the Parties the provisions of this Agreement
shall prevail.
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17.2 AMENDMENT OF MEMORANDUM AND ARTICLES
Each of the Parties hereby undertakes that it shall whenever necessary
exercise all voting and other rights and powers available to it to
procure the amendment of the Memorandum and Articles to the extent
necessary to permit the Company and its affairs to be operated as
provided herein so that the same are consistent with the provisions of
this Agreement.
18. NOTICES
Any notice to be given by any Party to this Agreement should be in
writing and shall be deemed duly served if delivered personally or sent
by fax or by prepaid registered post (airmail in the case of
international mail) to the addressee at the address or fax number set
opposite its name below or at such other address or fax number as the
Party to be served may have notified as its address or fax number for
service:
Essar Teleholdings Limited
To: the Registered Office address stated above
(to the attention of the Director )
Copy to:
Tel: (91-11)
Fax: (91 11)
Attn: Director
CGP and the Mauritius Companies:
To:
Port Louis, Mauritius
Attn: Company Secretary;
Copy to: Xxxxxxxxx Telecommunications
International Limited
18/F Two Harbourfront
00 Xxx Xxxx Xxxxxx,
Xxxxxxx, Xxxxxxx,
Tel: (000) 0000 0000
Fax: (000) 0000 0000
Attn.: The Group Managing Director
37
JKF:
To: the Registered Office address stated above
Attn : The Chairman
Sterling Cellular Limited
To: the Registered Office address stated above
Attn: Company Secretary
Copy to:
New Delhi- 1100___.
Attn: CEO
Any notice sent by fax shall be deemed served on confirmation of good
receipt in the case of a fax, and any notice served by registered post
shall be deemed served 10 days after posting airmail, whether to an
address in India or an address outside India. In proving the service of
any notice it will be sufficient to prove, in the case of service by
registered post, that such letter was properly stamped, registered,
addressed and placed in the post.
19. MISCELLANEOUS
19.1 LEGAL AND OTHER COSTS
Each Party shall be responsible for the legal fees, costs and expenses
incurred by it in the preparation, negotiation and execution of this
Agreement.
19.2 COMPLETE AGREEMENT
This Agreement, and any agreements to be entered into pursuant thereto
embody all the terms and conditions agreed upon between the Parties and
as from the Effective Date supersedes and cancels in all respects all
previous correspondence, understandings, agreements and
38
underlings (if any) between the Parties with respect to the subject
matter hereof, whether such be written or oral.
19.3 UNENFORCEABLE PROVISIONS
In the event that any provision contained in this Agreement or any part
thereof shall for any reason be held to be invalid or unenforceable in
any respect under the laws of India, such invalidity or unenforceability
shall not affect any other provisions of this Agreement or the remaining
parts thereof which shall then be construed as if such unenforceable
provision or part thereof had never been contained herein.
19.4 NO PARTNERSHIP
Nothing herein shall be taken to constitute or create a partnership
among any of the Parties. No Party shall be deemed to be the agent of
the other and none of the Parties shall have any authority to bind the
other Party in any way except as provided in this Agreement.
19.5 AMENDMENT IN WRITING:
This Agreement shall not be varied amended or supplemented except by a
written instrument signed by or on behalf of all the Parties to be
bound.
19.6 NO ASSIGNMENT
Without prejudice to the provisions of Clause 10, this Agreement is
personal to the Parties and is not capable of being assigned in whole or
in part by any Party.
19.7 NO WAIVER
Failure of any Party at any time to require performance by any other
Party of any provision of this Agreement shall in no way affect the
right of such Party to require performance of that or any other
provision, and any waiver by such Party of any breach of this Agreement
shall not be construed as a waiver by such Party of any continuing or
succeeding breach of such provision a waiver of the provision itself or
a waiver of any other right under this Agreement.
19.8 COUNTERPARTS
This Agreement may be executed in several counterparts, and any single
counterpart or set of counterparts, signed in either case by all
39
of the Parties shall be deemed to be an original, and all taken together
shall constitute one and the same instrument.
19.9 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of India.
IN WITNESS WHEREOF this Agreement was executed by the Parties on the day and
year first above written.
SIGNED BY
for and on behalf of
ESSAR TELEHOLDINGS LIMITED
in the presence of:
SIGNED BY
for and on behalf of
CGP.
in the presence of:
SIGNED BY
for and on behalf of
MOBILVEST
in the presence of:
SIGNED BY
for and on behalf of
CCII MAURITIUS INC
in the presence of:
40
SIGNED BY
for and on behalf of
PRIME METALS LIMITED
in the presence of:
SIGNED BY
for and on behalf of
EURO PACIFIC SECURITIES LIMITED
in the presence of:
SIGNED BY
for and on behalf of
JKF PRIVATE LIMITED
in the presence of:
SIGNED BY
for and on behalf of
STERLING CELLULAR LIMITED
in the presence of:
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SCHEDULE A - FAIR VALUE
Where Fair Value falls to be determined under this Agreement in relation to any
Shares, it shall be the average of the two valuations provided by overseas
offices of Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx. The valuation by Xxxxxxx Sachs and
Xxxxxx Xxxxxxx ("the Valuers") shall be done in accordance with the following
provisions of this Schedule:
1 The Valuers shall be jointly instructed by the Shareholder whose Shares
are to be transferred ("Transferor") and the intending purchaser to
value the Shares on the basis of an arm's length sale between a willing
buyer with the funds to buy and a willing seller.
2. The Valuers shall be directed to advise the Company and the relevant
Parties of their determination of the fair value of the Shares within 45
days or as soon as practicable thereafter.
3. The decision of the Valuers shall be final and binding on the Parties
and they shall be deemed to act as experts and not as arbitrators.
4. The costs of the Valuers shall be borne equally by the Parties
requesting the determination of the Fair Value.
5. Each of the Transferor and the other such Parties shall be entitled to
make such written submissions as the Valuers may accept and each of them
and the Valuers shall have such access to the books and records of the
Company as shall be reasonably required in connection with such
determination.
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EXHIBIT - A
[Form of Articles of the Company]
43
