EXHIBIT 10.19
OPTION AGREEMENT
THIS OPTION AGREEMENT ("this Agreement" or "these presents") entered into this
18th day of February, 2005 among:
(1) STERLITE INDUSTRIES (India) LIMITED, a public limited company incorporated
under the Companies Act, 1956 (1 of 1956) and having its Registered Office
at X/00/0 Xxxxx, XXXX Xxx. Xxxx, Xxxxxxxxxx (hereinafter referred to as
"Option Seller" or Sterlite", which expression shall, unless repugnant to
or inconsistent with the context, mean and include its successors and
permitted assigns); and
(2) INDIA FOILS LIMITED, a public limited company incorporated under the
Companies Act, 1956 (1 of 1956) and having its Registered Office at 0,
Xxxxxx Xxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxx- 700 058 (hereinafter referred
to as "the Obligor" or India Foils ", which expression shall, unless
repugnant to or inconsistent with the context, mean and include its
successors and permitted assigns); and
(3) ICICI Bank Limited, a company incorporated under the Companies Act, 1956
and licensed as a Bank under the Banking Regulation Act, 1949 and having
its registered office at "Landmark", Race Course Circle, Vadodara 390
007(hereinafter referred to as "Option Buyer" or "ICICI", which expression
(4) shall, unless the context otherwise requires, be deemed to include its
successors and permitted assigns).
(The Option Seller, the Option Buyer and the Obligor are hereinafter
collectively referred to as the "Parties" and individually as a "Party")
WHEREAS:
(a) By a Loan Agreement dated the 8th day of February, 2005 read with the Note
of Amendment dated February 08, 2005 signed between ICICI and the Obligor,
ICICI has lent and advanced or agreed to lend and advance a Rupee Term Loan
of Rs.1020.00 million ("the Facility) to the Obligor. The aforesaid Loan
Agreement read with the said Note of Amendment is hereinafter referred to
"the Loan Agreement".
(b) One of the conditions in the Loan agreement is that on payment of a one
time option fee of Rs. 2.0 million of the facility to the Option Seller,
the Option Seller shall grant an option to the Option Buyer to require the
Option Seller to purchase from the Option Buyer the Receivables under the
Loan Agreement on the terms and conditions more particularly described
herein.
(c) The Loan Agreement is inter alia secured by a Corporate Guarantee dated
8th February 2005 issued by Sterlite in favour of ICICI.
NOW THEREFORE, the Parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 Capitalised terms used in this Agreement shall have the meanings set forth
below:
"Effective Date"" means the date of execution of the Option Agreement.
"Debt Equity Ratio"" means total of secured loans, unsecured loans and
working capital bank finance divided by the total equity share capital and
reserves.
"Tangible networth" means Paid up share Capital + free Reserves -
Revaluation Reserves - Intangible assets.
"Option Fees" means the fees aggregating to Rs. 2.0 million payable by the
Option Buyer to the Option Seller on the Effective Date.
"Option Price"" means an amount equivalent to the amount of Receivables on
the Exercise Date.
"Option Exercise Date"" means the date on which the Option is exercised by
the Option Buyer
"Put Notice" means the notice given /to be given by ICICI in terms of
Sections 2.1 hereof.
"Put Option" shall have the meaning assigned to it in Sections 2.1 hereof.
"Put Option Events" means occurrence of any of the following events:
(i) Any delay or default in payment of any amounts in relation to the
Loan agreement by the Obligor;
(ii) Occurrence of any Event of Default under the Loan Agreement;
(iii) Payment default by Option Seller to any of its creditors
resulting in any legal proceedings and not resolved in a period
of thirty days.
(iv) If shareholding of the Vedanta Resources Public Limited Company
reduces below 51% of the paid up capital of the Option seller
(v) Obligor/any other person seeking to suspend/stay the operation of
the Loan agreement/any rights, obligations/ liabilities accruing
to ICICI in relation to the Loan agreement and performance of the
obligations under the Loan Agreement by the Obligor in any manner
whatsoever.
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(vi) The breach of the following financial covenants by the Option
Seller:
(a) The Debt-Equity ratio of the Option Seller shall always be
less than 2:1
(b) The interest coverage ratio of the Option Seller shall
always be more than 2:1.
(c) The Tangible Networth of the Option Seller shall always be
above Rs. 14.00 billion.
(d) The ratio of total secured debt to Tangible Networth shall
not exceed 1.5:1.
(vii) a default, event of default or other similar event or condition
(however described) under the Put Option Agreement and other
related deeds and documents;
(viii) any representation made by the Option Seller is found to be
false or incorrect in any respect;
(ix) failure or inability of the Option Seller to comply with or
perform any agreement or condition or undertaking or obligation
as set forth herein and other related deeds and documents;
(x) if any bankruptcy, insolvency, liquidation or winding up
proceedings has been initiated against the Option Seller/Obligor
by any third party and continues for a period beyond one month
from the date of such proceedings being admitted into a court of
law or any other appropriate authority,
(xi) if the Option Seller is unable to pay its debts within the
meaning of Section 434 of the Companies Act, 1956 or has filed a
petition for insolvency/ liquidation;
(xii) any special resolution is passed resolving that the Option
Seller/Obligor be wound up voluntarily;
(xiii) the Option Seller is amalgamated with any other body corporate
or any other body corporate is amalgamated with the Option Seller
outside the Vedanta Group without the prior permission of the
Option Buyer;
(xiv) the Option Seller is amalgamated with any other body corporate
or any other body corporate is amalgamated with the Option Seller
within Vedanta Group resulting in a CRISIL rating downgrade.
(xv) any petition for winding up of the Option Seller/Obligor is filed
in any competent Court and such petition has not been stayed or
dismissed within a period of 30 days after the same has been
filed.
(xvi) the Option Seller is prevented by any competent regulatory
agency from carrying on the business which is presently being
carried on by it;
(xvii) breach of any of the conditions specified in any of the
transaction Documentation;
(xviii) the Option Seller has taken or suffered to be taken any action
for its reconstruction (including a reference being made in
respect of the Option Seller to BIFR under the provisions of Sick
Industrial Companies (Special Provisions) Act, 1985 or to any
other authority or person under any other law for the time being
force, or from time to time) and/or change in management,
liquidation or dissolution;
(xix) a Receiver or Liquidator has been appointed or allowed to be
appointed of all or any part of the undertaking of the Option
Seller
(xx) if an attachment or restraint has been levied on the Option
Seller's properties or any part thereof or certificate
proceedings have been taken or commenced for recovery of any dues
from the Option Seller and the
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Option Seller does not take effective steps to the satisfaction
of Option Buyer for the cancellation of such attachment,
restraint or certificate proceedings;
(xxii) extra-ordinary circumstances have occurred which, in the
opinion of the Option Buyer, make it improbable for the Option
Seller, to fulfil its/their obligations under the Put Option
Agreement respectively.
"RECEIVABLES": All amounts outstanding, due and payable under the Loan
Agreement.
"Vedanta group": Vedanta Resources plc through its associates and subsidiaries.
1.2 Capitalised expressions used but not defined herein shall have the same
meanings assigned to them in the Loan Agreement.
2. PUT OPTION
In consideration if ICICI paying the Option fee of Rs. 2.0 to the Option
Seller, the Option Seller hereby grants and confers upon ICICI the option
(Put option) on the terms contained herein :
2.1 At any time during the tenure of this Agreement, upon occurrence of any Put
Option Event, the Option Seller shall immediately notify the Option Buyer
of the occurrence of such an event.
2.2 Provided however, upon occurrence of any of the Put Option Events herein
above the Option Seller shall be entitled to rectify the breach/defaults
within 25 days of the notification of such event(s) by ICICI. After the
expiry of the aforesaid period, the Option Buyer shall be entitled to
notify Option Seller by issuing a written notice (Put Notice) requiring the
Option Seller to purchase the Receivables. The Option Seller shall, on or
before the 15th day from the date of issue of Put Option notice, purchase
the Receivables and simultaneously make payment of the Option Price to the
Option Buyer.
2.2 In the event of delay / default in payment of the Option Price within the
stipulated time period, the Option Seller will pay the Option Price
together with interest thereon @IBAR+8% per month (hereinafter referred to
as the Default Rate) for the duration of the delay/ default. For the
purpose of this clause ICICI Bank Benchmark Advance Rate (IBAR) shall mean
and include the percentage rate per annum decided by the Bank from time to
time and announced / notified by the Bank from time to time as its
benchmark prime lending rate.
2.3 The delivery of the Put Notice shall constitute an irrevocable binding
agreement and obligation on Sterlite to buy from ICICI all the Receivables
upon payment of the Option Price by Sterlite and to execute the requisite
document(s) to ensure the assignment of the Receivables to the Option
Seller in the form and manner as specified by ICICI. The delivery of the
Put Notice shall constitute a binding agreement and obligation of the
Option Seller to buy from the Option Buyer all the Receivables upon payment
of the Option Price to the Option Buyer.
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2.4 A certificate in writing signed by a duly authorised official of the Option
Buyer shall be conclusive evidence against the Option Seller of the Option
Price and all other amounts due and payable to the Option Buyer from the
Option Seller.
2.5 The Put Notice shall specify:
(i) the Option Price;
(ii) the Settlement Date
(iii) location for the settlement in Mumbai.
2.6 On the Settlement Date:
(a) Option Seller shall pay/make, or cause to be paid/made to the Option
Buyer an amount equivalent to the Option Price in Rupees along with
all other monies payable by the Option Seller to the Option Buyer in
respect of the said Put Option Notice.;
(b) Option Seller shall execute the requisite document(s) to ensure the
assignment of the receivables as aforesaid and forward the same to the
Option Buyer ;
(c) The Option Seller shall pay to the Option Buyer an amount equivalent
to the Option Price along with all other monies payable under this
agreement by the Option Seller to the Option Buyer which shall
constitute full and final discharge of the Option Seller hereunder;
(d) In the event of delay on the part of the Option Seller in making
payments to the Option Buyer and/or in respect of any costs charges,
expenses, taxes, duties etc. as contemplated herein (including by way
of indemnity), the Option Seller shall without prejudice to the Option
Buyer's rights under the Put Option Agreement pay the defaulted
amounts together with interest at the Default Rate computed from the
date on which such amounts become due and payable till the date on
which they are actually paid in full.
2.7 All transactions contemplated by this Agreement to be consummated on the
Settlement Date as aforesaid shall be deemed to occur simultaneously and no
such single transaction shall be consummated unless all such transactions
are consummated.
2.8 The Option Seller shall not, until all monies due and payable by the Option
Seller to the Option Buyer under the Put Option Agreement are paid in full,
without the prior written approval of the Option Buyer:
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(a) contract, create, incur, assume or suffer to exist any indebtedness in
any manner, in all such cases when such indebtedness causes the
debt-equity ratio of the option seller to exceed 2:1 and the same
shall be tested on a semi-annual basis;
(b) undertake or permit any merger, de-merger, consolidation
reorganization outside the Vedanta Group (within the Vedanta group if
it results in a CRISIL rating downgrade), scheme or arrangement or
compromise with its creditors or shareholders or effect any scheme of
amalgamation or reconstruction.
(c) Allow the ratio of total secured debt to tangible net worth to exceed
1.5:1.
(d) engage in any business activity / project (other than the ongoing
projects) so as to have a material adverse effect on its ability to
perform its obligations hereunder;
(e) make any alteration or amendment in its constitutional documents so as
to have a material adverse effect on its ability to perform its
obligations hereunder, other than in the normal course of business.
2.9 In consideration of conferring the Put Option the Option fees aggregating
to Rs.2.0 million shall be paid by the Option Buyer to the Option Seller on
the Effective Date, which the Option Seller hereby confirms is sufficient
and valid consideration.
2.10 This Agreement shall come into force from the date hereof.
2.11 The Put Option can be exercised on one or more occasions, and the Option
Buyer can call upon the Option Seller to buy any part/whole of the
receivables from time to time.
3. REPRESENTATIONS WARRANTIES AND COVENANTS AND UNDERTAKINGS
The OPTION SELLER hereby represents and warrants and covenants that:
a) The Option Seller represents and warrants that the debt equity ratio of the
Option Seller as on March 31, 2004 is 1.68:1.
b) The Option Seller shall, during the currency of this Agreement ensure that
the following Financial Covenants, are met at all time:
i. The debt-equity ratio of the Option Seller shall always be less than
2:1
ii. The interest coverage ratio of the Option Seller shall always be more
than 2:1.
iii. The Tangible Net worth of the Option Seller shall always be above Rs.
14.00 billion.
iv. The ratio of total secured debt to Tangible Net worth shall not exceed
1.5:1.
c) The Option Seller shall provide monitoring report on a semi annual basis to
the Option Buyer in such formats as may be specified by ICICI from time to
time;
d) The Option Seller shall promptly:
(i) notify the Option Buyer upon becoming aware, having used best
endeavours, of the occurrence of any Put Option Event;
(ii) notify the Option Buyer of any action or steps taken or legal
proceedings started by or against it in any court of law for its
winding-up, dissolution, liquidation, administration or
re-organisation including a reference being made in respect of the
Option Seller to BIFR under the provisions
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of Sick Industrial Companies (Special Provisions) Act, 1985 or to any
other authority or person under any other law for the time being
force, or from time to time or for the appointment of a Receiver,
administrator, administrative receiver, trustee or similar officer of
the Option Seller or any or all of its assets;
(iii) notify the Option Buyer of any material litigation, arbitration,
administrative or other proceedings initiated or threatened against
the Option Seller or any of its assets;
(iv) deliver to the Option Buyer its duly audited annual accounts;
e) The Option Seller shall do all acts, deeds and things (at its own costs and
expenses) to forthwith:
(I) procure stay or dismissal of the legal proceedings started against it
in any court of law for its winding-up, dissolution, bankruptcy and
liquidation, or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer or a reference
being made in respect of the Option Seller to BIFR under the
provisions of Sick Industrial Companies (Special Provisions) Act, 1985
or to any other authority or person under any other law for the time
being force, or from time to time;
(II) Procure stay or dismissal of the attachment or restraint levied on the
Option Seller's properties or any part thereof or certificate
proceedings taken or commenced for recovery of any dues from the
Option Seller;
f) The Option Seller has full power and authority for the execution,
performance and delivery of the Put Option Agreement
g) This Agreement does not violate any law, order or judgement of any court or
any statutory/regulatory authority or any contractual agreement binding on
the Option Seller and constitutes a legal, valid and binding obligation on
the Option Seller, enforceable in accordance with terms hereof;
h) The execution delivery and performance of this Agreement or any transaction
contemplated herein have been duly authorised by all necessary corporate
action in accordance with terms hereof;
i) All authorisations, consents, approvals and licenses required for the
execution, delivery and performance of this Agreement have been duly
obtained or granted and are in full force and effect.
j) No Put Option Event has occurred and continuing and is continuing.
k) There is no pending or, threatened suit against the Option Seller,or any
action, suit or proceedings at law or before any court or agency that is
likely to have a material adverse effect on its ability to perform its
obligations hereunder.
l) The Option Seller shall comply with all applicable laws and orders to which
it may be subject, to in connection with the performance of its obligations
under the Put Option Agreement.
m) The Option Seller shall maintain in full force and effect all consents and
authorisations that are required to be obtained by it with respect to the
Put Option/ Put Option Agreement and will obtain any consent/ authorisation
that may become necessary in the future.
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4. MISCELLANEOUS
4.1 Costs and Charges
The Option Seller shall pay all costs, charges and expenses (including
taxes, stamp duty) and such other additional stamp duty, other duties,
taxes (including any taxes stamp duty charges and other duties which may
have any retrospective effect) charges and other penalties, if any relating
to the Loan Agreement, Put Option Agreement and other transaction documents
(including any document(s) pertaining to the Assignment of the receivables)
in connection with the transaction contemplated in such agreements /
documents, in a form and manner satisfactory to the Option Buyer, as per
the then prevailing applicable laws.
4.2 Notices
Any notice or other communication given pursuant to this Agreement must be
in writing and (a) delivered personally, (b) sent by facsimile transmission
(c) or sent by registered mail, postage prepaid, as follows:
If to Sterlite:
Sterlite Industries (India) Ltd.
Xxxxxxx, 00, Xxxxx Xxxx
Xxxxx Xxxxx (Xxxx), Xxxxxx - 000000
Fax : x0000 00000000
Attn: Mr. B Anand
Vice President
If to ICICI:
ICICI Bank Limited
XXXXX Xxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxxxx
Xxxxxx 000000
Fax : x00-00-0000000
Attn: Smt. Xxxxxxxxx Xxxxxxxxxxx
General Manager
If to INDIA FOILS:
India Foils Ltd.
0, Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxx - 700 058
Fax : x0000 0000000
Attn: Xx. Xxxxxxx Xxxxxxx
Head Finance & Co. Secretary
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All the notices and other communications required or permitted under this
Agreement that are addressed as provided in this Section 5.2 will :
(a) if delivered personally or by courier, be deemed given upon
delivery;
(b) if delivered by facsimile transmission, be deemed given when
electronically confirmed; and
(c) if sent by registered mail, be deemed given when received.
Any Party from time to time may change its address for the purpose of
notices to that Party by giving a similar notice specifying a new address,
but no such notice will be deemed to have been given until it is actually
received by the Party sought to be charged with the contents thereof.
4.3 Entire Agreement
This Agreement supersedes all prior discussions and agreements (whether
oral or written, including all correspondence) among all of the Parties or
some of the parties with respect to the subject matter of this Agreement,
and this Agreement contains sole and entire Agreement between the Parties
hereto with respect to the subject matter hereof.
4.4 Waiver
Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof. Such waiver must be in
writing and must be executed by an authorised officer of such party. A
waiver on one occasion will not be deemed to be a waiver of the same or
either under breach or non-fulfilment on a future occasion. All remedies,
either under this agreement, or by law or otherwise afforded, will be
cumulative and not alternative.
4.5 Amendment
This Agreement may be modified or amended only by writing duly executed by
or on behalf of each of the parties.
4.6 Assignment
The Option Seller shall not sell, assign encumber, transfer and/or dispose
in any manner the rights, title interest, benefits and /or obligations
under or pursuant to the Put Option Agreement to any person.
4.7 Severability
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under any present or future law, and if the rights or
PAGE 9
obligations under this Agreement of the parties will not be materially and
adversely affected thereby (a) such provision will be fully severable; (b)
this agreement will be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part hereof: and (c) the
remaining provisions of the agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom.
4.8 Dispute Resolution
(a) Any and all disputes or differences between the parties arising out of or
in connection with this Agreement or its performance shall, so far as it is
possible, be settled amicably between the Parties.
(b) All disputes arising out of this Agreement shall be subject to the
exclusive jurisdiction of the courts or tribunals of Mumbai.
4.9 Indemnity
The Option Seller shall as its primary obligation indemnify the Option
Buyer, its successors, and assigns from time to time on demand by the
Option Buyer from and against any losses, damages, liabilities, suits,
claims, counterclaims, actions, penalties, expenses (including attorney's
fees and court costs), incurred by the Option Buyer as a result of (i) any
breach of the Option Seller's warranties, representations, covenants,
undertakings or agreement contained herein and other related documents; and
(ii) occurrence of a Put Option Event (iii) the obligations of the Option
Seller under or pursuant to the Put Option Agreement and other related
deeds and documents being or becoming void, voidable, unenforceable or
ineffective against the Option Seller, for any reason whatsoever, the
amount of such loss being the amount which the Option Buyer would otherwise
have been entitled to recover from the Option Seller under or pursuant to
the Put Option Agreement and other related deeds and documents.
The Option seller shall indemnify the Option Buyer for any stamp duties,
income tax and other levies that may become payable in connection with the
execution of the deeds and documents and pursuant to which the Option
Seller will purchase the Receivables or beneficial interest therein for the
due and timely compliance of the Option Seller's obligations under the Put
Option Agreement.
4.10 The Option Seller shall not disclose any of the terms and conditions
contained herein nor shall make any announcement to the public or to any
third party regarding the arrangements contemplated by the Put Option
Agreement and this term sheet without the prior written consent of the
Option Buyer.
4.11 This Agreement shall be valid and enforceable independently of the
Corporate Guarantee dated 08.02.05 issued by Sterlite in favour of ICICI
(whether capable of being invoked or performed) and also independently and
irrespective of whether
PAGE 10
reference being made in respect of the Option Seller and/or the Obligor to
BIFR under the provisions of Sick Industrial Companies (Special Provisions)
Act, 1985 or to any other authority or person under any other law for the
time being force, or from time to time.
4.12 Power of Attorney
The Option Seller hereby authorises the Option Buyer as its constituted
attorney to do all acts deeds and things for and on behalf of the Option
Seller to ensure the due and timely compliance of the Option Seller's
obligation under this Agreement in a form and manner satisfactory the
Option Buyer, including, without limitation:
1. to execute all deeds and documents including the execution of the
deeds and documents pursuant to which the Option Seller will purchase
the Receivables or beneficial interest therein;
2. to do all such acts, deeds and things as may be required and to make,
execute, sign, seal and deliver and cause to be registered (if
required) in favour of the Option Seller the deeds and documents as
mentioned in Section 5.10 (1) above;
3. to engage any lawyer, counsel or any other professional experts in any
court of law or before any arbitrator or authority for and on behalf,
and at the sole cost, of the Option Seller in respect of or in
connection with the or pursuant to this Agreement;
4. to appoint or remove any agent or agents with all or any of the powers
aforesaid;
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
day and year first hereinabove written as hereinafter appearing.
The Common Seal of STERLITE INDUSTRIES
(India) LIMITED has, pursuant to the
Resolution of its Business Committee of
Directors (duly authorised in that
behalf by the Board of Directors vide
their resolution dated 28th Jan. 05) /s/ Xxxxx Xxxxxxx
passed in that behalf on the 28th day of
January 2005, hereunto been affixed /s/ Xxxxxx Xxxxxx
in the presence of Shri Xxxxx Xxxxxxx -
Director of the Company who has signed
these presents in token thereof and Shri
Xxxxxx Xxxxxx, Director of the Company,
who has counter signed the same in token
thereof.
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Signed and Delivered on behalf of
ICICI Bank Limited, duly authorised
in that behalf, in the presence of:
By: (SIGNED)
---------------------------------
Name:
-------------------------------
Designation:
------------------------
Signed and Delivered on behalf of
INDIA FOILS LIMITED, withinnamed the
Obligor, duly authorised in that
behalf, in the presence of:
By: Xxxxxxxx Xxxxxxxxx /s/ Xxxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxxxx
Designation:
------------------------
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