EXHIBIT 10.18
SUBSCRIPTION AGREEMENT
THIS AGREEMENT made this 9th day of April, Two Thousand and Three between
Sterlite Industries (India) Ltd), a Company within the meaning of the Companies
Act, 1956 and having its Registered Office at X-00/0, Xxxxx XXXX Xxxxxxxxxx
Xxxx, Xxxx Xxxxxxxxxx - Maharashtra PIN- 431133 (hereinafter referred to as "The
Company" which expression shall unless it be repugnant to the subject or context
thereof, include its successors and assigns) of THE FIRST PART.
AND
LIFE INSURANCE CORPORATION OF INDIA, a Corporation established under the Life
Insurance Corporation Act, 1956 (XXXI of 1956) and having its Central Office at
"YOGAKSHEMA", Jeevan Bima Marg, Mumbai 400 021 (hereinafter referred to as "LIC"
- which expression shall, unless it be repugnant to the subject or context
thereof include its successors and assigns) of the SECOND PART.
ARTICLE - I
1.1. Wherever used in this Agreement, unless the context otherwise requires the
following terms shall have the following meanings:
a) "Act" means Companies Act, 1956 (1 of 1956) and includes any statutory
modifications thereto or any re-enactment thereof.
b) "Debentures" means:-
Tranch A - 40 Secured Redeemable Non Convertible Debentures of the face
value of Rs. One crore each aggregating Rs. 40 Crores.
Tranch B - 60 Secured Redeemable Non Convertible Debenture of the face
value of Rs. One crore each aggregating Rs. 60 Crores
c) "Debenture holders" means LIC or the holders of the Debentures for the time
being deriving their title to the Debentures.
d) "Debenture Trustees" means acting as the Trustees for the time being for
the holders of the Debentures.
e) "Gsec" rate means interest rates on Government Securities for corresponding
maturities under Public Xxxx Xxx, 0000.
ARTICLE - II
2.1 COMPANY'S REQUEST FOR FINANCIAL ASSISTANCE
The Company has approached LIC for financial assistance to augment long
term resources of the Company for General Corporate Purpose including reduction
of short term debt and LIC has agreed to advance financial assistance in the
form of subscription to Non-Convertible Privately Placed Debentures as mentioned
above hereinafter referred to as "The Debentures". In case the Company fails for
any reason to utilise the proceeds of the
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Debentures for the said purpose(s), LIC will be entitled to rescind / avoid the
contract on that ground and to call back the money, if any, paid towards
subscription of the said Debentures.
2.2 DEBENTURE SHALL RANK PARI PASSU
The Company shall ensure that the Debentures shall rank pari passu inter se
to all intents and purposes without any preference or priority of one over the
other.
2.3 TRUSTEES FOR DEBENTURE HOLDERS
At the request of the Company, M/s Western India Trustee & Executor Co.
Ltd., having its Registered Office at 000, Xxxxxxxxxx Xxxx, Xxxxxx- 415 001 and
having its office at 000/X, 00xx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx -
400 021 has agreed to act as the Trustees for the Debentureholders (hereinafter
referred to as "The Trustees") in respect of the Debentures agreed to be
subscribed hereunder.
ARTICLE - III
AGREEMENT AND TERMS OF ISSUE OF DEBENTURES
3.1 AMOUNT OF DEBENTURES TO BE ISSUED
The Company agrees to issue to LIC on private placement basis and LIC
agrees to subscribe to the Company's proposed issue of Debentures of the nominal
value of Rs. 100 Crores (Rupees One Hundred Crores only) on the terms and
conditions herein set forth and to the extent mentioned hereinbefore and
subsequently the company will make the allotment of said Debentures.
3.2 INTEREST ON DEBENTURES OUTSTANDING
The Company shall until the Debentures are redeemed or paid off pay to the
Debenture holders interest on the said Debentures respectively or such part
thereof as shall remain unpaid for the time being at the rate of interest giving
differential yield of 190 basis points over the Gsec rate of corresponding
maturity, Gsec determined two working days before the disbursement / reset date
and shall be payable annually from the drawdown date.
The interest / all other dues will be payable at the Registered Offices at
Mumbai of the Debenture Holders.
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that all interest
which shall accrue on the Debentures outstanding or any part thereof and for the
time being remaining unpaid and all other monies which have become payable under
these presents shall in case the same be not paid on the dates on which they
accrued due, carry compound interest at the same rate over and above the rates
of interest aforementioned computed from the respective dates of such interest
or monies accruing due and all such interests and further interests which have
become payable under these presents but not paid shall become payable upon the
footing of the compound interest with rests taken or made quarterly on the
respective dates provided and all such compound interest shall be a charge
secured by the Debentures.
PROVIDED HOWEVER, in the event of any default in the redemption of
Debentures or in the payment of interest amount, the Company shall pay to the
Holders of the Debentures, further interest at the rate of 2 (two) percent per
annum as and by way of liquidated damages for the period of default on the
amount of such defaulted instalment of redemption or of interest, upon the
footing of compound interest as aforesaid and all such compound interest shall
be a charge secured by the Debentures.
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ADDITIONAL INTEREST
The company has the provision to create security for the said debentures
within a period of 3 months from the date of allotment / disbursement. If the
Company fails to create security within this period, it shall pay additional
interest at the rate of 2% p. a. payable annually (along with the above interest
payment) on the outstanding amount of the Debentures from the expiry of three
months from the date of allotment till the creation of security to the
satisfaction of Debenture Holders.
3.3 RIGHT TO REVIEW THE RATE OF INTEREST
The Company agrees and undertakes that the Debenture Holder(s) shall have a
right to review the rate of interest after every three years as per the terms,
i.e., 190 basis points over the annualized Gsec rate of corresponding maturity.
The Company shall pay interest on the Debentures at the rate that may be
stipulated by the Debenture Holder(s) as a result of such review. The Company
also agrees and undertakes to obtain all necessary consents from the concerned
authorities in accordance with the then prevailing rules and regulations and to
sign all deeds and documents that may be required in this regard and to endorse
the revised interest rates on the Debenture Certificate as and when communicated
by the Debenture Holder(s).
3.4 COMPUTATION OF INTEREST AND OTHER CHARGES
In all cases in which it shall be necessary to compute the amount of
interest or any other charges which shall have accrued under this Agreement for
even periods of 3 months such computation shall be made on an annual basis. In
all other cases, such computation shall be on a daily basis using a 365 days
factor.
3.5 TERMS OF SUBSCRIPTION
The Company agrees that on LIC making an application for Rs. 100 Crores
(Rupees One hundred crores only) face value of Debentures, their commitment to
subscribe to the proposed Debentures will be deemed to have been fully
discharged and the Company shall issue such allotment letter as may be deemed
necessary.
3.6 MODE OF SUBSCRIPTION
The payment to be made by LIC to the Company under or in terms of this
Agreement shall be by crossed account payee cheque(s) favoring the Company drawn
on LIC's Bankers in Mumbai and such payments shall begin to accrue as and from
the date of the cheque(s).
3.7 REPAYMENT
The Company agrees and undertakes to redeem the Debentures at the end of
seven years for Tranch A and at the end of ten years for Tranch B from the date
of allotment.
The Debenture Holders may at the request of the Company in suitable
circumstances and also in the absolute discretion of the Debenture Holders,
subject to the Statutory Guidelines as may be applicable for the purpose, revise
/ postpone the redemption of the Debentures or any part thereof outstanding for
the time being or any instalments of redemption of the said debentures or any
part thereof upon such terms and conditions as may be decided.
If for any reason the amount of the Debentures finally subscribed for by the
Debenture Holders is less than the amount of the Debentures agreed to be
subscribed, the instalment(s) of redemption will be reduced proportionately but
will however be payable on the due date as specified.
3.8 PREMATURE REPAYMENT
The Company shall have no right to redeem the outstanding Debentures in
full or in part before the end of 3 years from the date of allotment of
Debentures. In case the Debenture Holders agree to accept premature repayment
which shall, however, be entirely at the sole discretion of the Debenture
Holders, the acceptance shall be subject to such
terms and conditions including payment of premium, if any, as may be stipulated
by the Debenture Holders in this behalf. In case the Company intends to redeem
the Debentures after 3 years from the date of allotment of Debentures, prior
notice of 3 months to the Corporation shall be given subject to such terms and
conditions including payment of premium, if any, as may be stipulated by the
Debenture Holders in this behalf.
3.9 DEBENTURE CERTIFICATE
The Company shall issue Debenture Certificate/s to the Debenture Holder/s
after making necessary compliance to the provisions of Section 113 (1) of The
Companies Act, 1956 read with the Companies (Issue of Share Certificate) Rules
1960. The Company shall arrange to issue this certificate in demat form.
3.10 APPROPRIATION OF PAYMENTS
Unless otherwise agreed to by the Debentureholders, any payments by the
Company under the said Subscription Agreement / Trustee Agreement and / or other
documents executed for the subscription to Debentures and creation of security
therefore shall be appropriated in the following manner, viz.,
(i) First, towards commitment fees;
(ii) Secondly, towards costs, charges and expenses and other monies and also the
remuneration payable by the Company to the Debenture Trustees;
(iii) Thirdly, towards further interest in case of default and compound
interest;
(iv) Fourthly, towards interest; and
(v) Lastly, towords redemption of principal amount of the Debentures due and
payable by the Company to Debentureholders.
ARTICLE - IV
SECURITY
4.1 SECURITY FOR THE DEBENTURES
The Debentures together with interest, costs, and all other monies,
expenses, as also fees payable to the Debentures Trustees shall be secured by;
[a] (i) Equitable Mortgage by deposit / release and re-deposit of Title Deeds or
by extension to cover the immovable properties of the Company including plant
and machinery, spares, tools and accessories, both present and future, which
shall be kept adequately insured on the basis of replacement cost; and
(ii) A first charge by way of hypothecation of all the movable properties
of the Company - both present and future - (save and except book debts) subject
to prior charges created / to be created in favour of all the Company's bankers
on its stocks of raw materials, finished and semi finished goods, consumable
stores for securing borrowings for working capital requirements.
OR
[a] (i) A Legal / English Mortgage over all the immovable properties of the
Company - wherever situated - including plant and machinery, spares, tools and
accessories, both present and future, which shall be kept adequately insured on
the basis of replacement cost; and
(ii) A floating charge on all the other movable assets of the Company
subject to prior charges, if any, created in favour of all the Company's bankers
for securing borrowings for working capital requirements.
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RANKING
The above mortgage and charges shall rank pari passu with the charges created /
to be created in respect of the existing loans / term borrowings / Debentures as
per Schedule I attached.
EXCLUSIONS:
The mortgage / charges as mentioned above shall not include / extend to, as
a First Mortgage or Charge, to the specified assets described in Schedule - II
hereto. However, as soon as the subsisting charge(s) on the assets specified in
the said Schedule are satisfied by the Company, such of those assets shall
automatically become part and parcel of the properties charged / conveyed, by
way of a First Charge to the Debenture Holders / Agents & Trustees.
4.2 EXECUTION OF DOCUMENTS AND CREATION OF SECURITY
The Company shall execute all relevant documents and create security for
the said Debentures as stated above within a period of 3 months from the date of
allotment / disbursement.
In case the Company fails to create security as mentioned above, additional
interest at the rate of 2% (two per cent) p.a. payable annually (along with
coupon) shall be payable from the date of allotment of NCD till the date of
creation of security on the outstanding amount of Debentures till such creation
of security and issue of the Debentures Certificates to the satisfaction of the
Debenture Holders.
In case the Company fails to create the security even after the expiry of
12 months from the date of allotment, the Company shall, within 21 days
thereafter, convene the meeting of the Debenture Holders to explain the reasons
for the delay in creation of the security and indicate the date by which the
security would be created.
4.3 The Company shall at all time maintain a minimum security cover of 1.25
times of its net fixed assets over all the long term loans and / or Debentures
outstanding including the Debentures issued to the Debenture Holder/s and any
other borrowings which may have a charge over the fixed assets of the Company,
besides the assets having exclusive charge, if any.
The revaluation of assets would not be taken into account for determining
the minimum security cover as above.
4.4. If the Trustees and the Debenture Holders are of the opinion that at any
time during the subsistence of this Agreement the security provided by the
Company has become inadequate to cover the Debentures then outstanding, the
Company shall provide and furnish to the Trustees to their satisfaction such
additional security as may be acceptable to the Trustees to cover such
deficiency.
4.5 ACQUISITION OF ADDITIONAL IMMOVABLE PROPERTIES
So long as any moneys remain due and outstanding to the Debenture Holders,
the Company undertakes to notify the Debenture Holders / Trustees in writing of
all its acquisitions of immovable properties and as soon as practicable
thereafter shall make out a marketable title to the Trustees by way of first
charge in such form and manner as may be decided by the Trustees / Debenture
Holders in case the security cover falls below the minimum stipulated ratio.
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4.6 CLEARANCES
In case any of the Company's assets are charged in favour of the financial
institution(s) / bank(s) / other lender(s), the Company shall furnish a suitable
No Objection Letter from such lender(s) agreeing to cede pari-passu charge to
secure the Debentures.
4.7 CHANGE IN SECURITY
Any changes in the manner of creation of security or details of
documentation for the said Debentures shall be only with the prior written
approval of the Debenture Holders.
4.8 FURTHER BORROWINGS
The Company shall be entitled to make further issue of Debentures and / or
raise loans or raise further funds from time to time from such persons / banks /
financial institutions or bodies corporate or any other agency. However, until
the Debentures are fully redeemed, the Company shall not create any mortgage or
charges on any of the aforesaid property or assets without obtaining prior
written approval of the Debenture Holders/Trustees of the debentures.
ARTICLE - V
COMPANY'S WARRANTIES
5.1 Save and except to the extent already disclosed in writing by the Company to
LIC the Company hereby warrants and undertakes as follows:-
A) APPLICATION FOR FINANCIAL ASSISTANCE
The application to LIC for financial assistance for the aforesaid purposes
and the information furnished by the Company to LIC from time to time, is true
and correct and shall be deemed to form part of the representations and
warranties on the basis of which LIC has agreed to subscribe to the privately
placed debentures.
B) CHARGES AND ENCUMBRANCES
Except as disclosed in the application for financial assistance to LIC,
there are no mortgages, charges, lispendens or liens or other encumbrances or
any rights of way, light or water or other easements or right of support on the
whole or any part of the undertaking, property or assets.
C) LITIGATION
The Company is not a party to any litigation of a material character and
that the Company is not aware of any facts likely to give rise to such
litigation or to material claims against the company.
D) DISCLOSURE OF FACTS
The Company shall disclose all facts relating to its properties.
E) DISCLOSURE OF DEFECTS IN PROPERTY ETC.
The Company is not aware of any document, judgment or legal process or
other charges or any latent or patent defects affecting the title of the
property or of any material defects in the property of in its title which has
remained undisclosed and / or which may prejudicial affect the Debenture
Holders.
F) PUBLIC SCHEMES AFFECTING COMPANY'S PROPERTIES
None of the properties is included in or affected by any of the schemes of
Central / State Government or of the improvement trust or any other public body
or by alignment, widening of construction of road under any scheme of the
Central / State Government or of any Corporation, Municipal Committee, Gram
Panchayat, etc.
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INFRINGEMENT OF LOCAL LAWS
No suit is pending in the Magistrate's Court or in any other court of law
in respect of the properties offered as security to the Debenture Holders nor
has the Company been served with any notice for infringing the provisions of the
Municipal Act or any Act relating to local bodies or Gram Panchayat or with any
other process under any of these Acts.
G) DUE PAYMENT OF PUBLIC AND OTHER DEMANDS
The Company has paid all public demands such as Income Tax, Corporation Tax
and all other taxes and revenues and any other statutory dues payable to the
Government of India or to the Government of any state or to any local or other
authority and that at present no arrears of such taxes, revenues and dues are
due and outstanding.
H) FINANCIAL POSITION
The Company has furnished an audited balance sheet as at March 31, 2002.
The financial position of the Company at the said date is correctly disclosed by
the said balance sheet and since that date the financial position of the Company
not been affected by losses or other material changes.
I) ARRANGEMENTS FOR MEETING SHORTFALL
The Company undertakes to LIC that they shall take the responsibility for
making arrangements satisfactory to LIC for meeting shortfall, if any, in the
resource of the Company for working capital. The funds brought in to meet the
shortfall in the resources of the Company for working capital shall be in such
form and manner as may be required by LIC and shall not involve any charge or
lien or other interest in the assets of the Company. In the event of such funds
being brought in by way of unsecured loans / deposits, they shall not be
withdrawn nor shall the Company repay the same without the prior written
approval of LIC. The Company shall also not pay any interest on such unsecured
loans / deposits if at the time of such payment there is a default in the
repayment of Debentures subscribed by LIC and interest due thereon and owing by
the Company to LIC under this Agreement.
J) COMPLIANCE OF PROVISIONS OF COMPANIES ACT IN RELATION TO BORROWINGS
The Company states and confirm that its borrowing conform to section
293(1)(d) of the Companies Act, 1956 as applicable.
K) DELIVERY OF BOARD RESOLUTION AUTHORISING EXECUTIONMENTS
The Company has delivered a certified copy of the resolution of its Board
of Directors authorising the execution of this Agreement and also such other
documents as the Company may be called upon by LIC to execute for the purpose of
creating the security in favour of Trustees as stipulated in Article IV hereof.
L) CONFLICT WITH MEMORANDUM AND ARTICLES OF ASSOCIATION
Nothing in this Deed conflicts with the Memorandum and Articles of
Association of the Company.
ARTICLE - VI
CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FINANCIAL ASSISTANCE.
6.1 The obligation of the Debenture holders to subscribe to the Debentures under
these presents shall be subject to the observance of and performance by the
Company of all its obligations and undertakings to be observed and performed
under this Agreement and to the satisfaction, prior to such subscription, of the
following further condition:
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A) SECURITY IN FAVOUR OF THE TRUSTEES
The Company shall create a security in favour of the Trustees as stipulated
in Article - IV hereof to secure the Debentures proposed to be issued to the
Debenture Holders.
B) TITLE
The Company shall have made out a good and marketable title free from
encumbrances to its properties to the satisfaction of the Trustees and Debenture
Holders and that there are no subsisting mortgages, charges, or encumbrances
thereon and has satisfied that necessary approvals under the Urban Land (Ceiling
and Regulation) Act, 1976 have been obtained or will be obtained to the
satisfaction of the Debenture holders and / or their advocates.
C) COMPLIANCE OF PROVISIONS OF COMPANIES ACT IN RELATION TO CREATION OF
SECURITY
The Company shall have produced or undertakes to produce the requisite
resolution of its General Body in terms of Section 293 (1) (a) of the Companies
Act, 1956, where applicable, for creating the mortgage and charge referred to in
Article IV hereof.
The Company shall, upon notice from the Debenture Holders pay or reimburse
to the Debenture Holders all legal charges, costs and expenses in any way
incurred by them in connection with or relating to this transaction including
cost of investigation of title, searches, travelling allowance, drafting,
stamping and registration of the documents.
6.2 OTHER CONDITIONS FOR DISBURSEMENT
The obligation of LIC to subscribe to the privately placed Debenture of Rs.
100 Crore shall also be subject to the following conditions:
A) NON-EXISTENCE OF EVENT OF DEFAULT
The company shall satisfy the Debenture Holders that no event of default as
defined in Article IX hereof and no event which, with the lapse of time as
specified in the said Article IX would become an event of default shall have
happened and be continuing.
B) The Company shall satisfy the Debenture Holders that all consents,
approval, etc. as are necessary for the issue of Debentures have been
obtained from the appropriate authorities and are effective and in force.
C) RIGHT TO SEEK MODIFICATION
The Company shall agree to review the terms and conditions relating to any
monetary benefits (on pro rata basis wherever applicable) available to the
existing Debenture Holders in case the Central Government announces in future
any modification / amendment / revision in the guidelines for the purpose of
issue of Debentures by Public Limited Companies.
D) STATUTORY AND OTHER APPROVALS
The Company shall obtain the approval of the Government of India or any
other prescribed authority in their behalf on the basis of the terms and
conditions stipulated herein before the issue of the Debentures is made by the
Company, if applicable.
E) DEBENTURE REDEMPTION RESERVE
The Company shall create Debenture Redemption Reserve (DRR) out of its
profits before distribution of any dividend and transfer to it suitable amounts
in accordance with Government guidelines issued from time to time and in force
during the currency of the Debentures. The Company shall submit to the Trustees
and Financial Institutions a Certificate duly certified by the Auditors
certifying that the Company has transferred a suitable sum to DRR at the end of
each financial year.
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F) RIGHT OF DISCLOSURE IN THE EVENT OF DEFAULT
The company hereby agrees that the Life Insurance Corporation of India
shall have an unqualified right to disclose / publish the names of the Company
and its directors as defaulters, in the event of the Company committing default
in the repayment of instalment of the Debentures or payment of interest on the
due dates and to disclose the name of the Company and its directors to the
Reserve Bank of India (RBI). The disclosure shall be in such manner and through
such medium as the Life Insurance Corporation of India / RBI in their absolute
discretion may think fit.
ARTICLE - VII
COVENANTS AND TERMS OF APPLY DURING THE CURRENCY OF THIS DEED
7.1 PARTICULAR AFFIRMATIVE COVENANTS
Unless the Debenture Holders shall otherwise agree, the Company shall:
A) UTILISATION OF PROCEEDS OF THE ISSUE
Use the proceeds of the issue for the purpose as sanctioned and accordingly
the Company shall furnish us a Certificate of Utilisation of the proceeds duly
signed by the Auditor. The proceeds of the Debentures shall not be utilised by
the Company for the purpose of financing / replenishing funds or acquiring
shares/securities of other Companies."
B) INSURANCE
(i) Subject to the rights of the Company's banks over the Banker's Goods,
insure and keep insured in the joint names of the Debenture Trustees and of the
Company or any other person or institution having an insurable interest in the
properties of the assets to be mortgaged as are of an insurable nature against
loss or damage by fire, flood, earthquake, xxxxx, xxxxxxx lighting, explosion
and other acts of God and also by riot or other civil commotion or revolution as
also by acts of enemies during war or other risks of war or emergency or risk of
falling air crafts or such of them including marine risks or such other risks as
may be required by the Trustees / Debenture Holders from time to time on the
basis of replacement cost in an insurance office or offices and the Company
shall duly pay all premia or other sums payable for the purpose and effect
renewal of such insurance and deliver, to and leave with Trustees or every such
policy or insurance and the receipt for the last premium payable thereunder.
ii) Agree that, in the event of failure on the part of the Company to
insure the properties or to pay the insurance premia or other sums referred to
above, the Trustees may, but shall not be obliged to, get the properties insured
or pay the insurance premia and other sums referred to above, as the case may
be, and the Company shall forthwith on receipt of a notice of demand from the
Debentures Trustees reimburse them all sums so paid by them together with
interest thereon at the same rate as specified in Section 3.2. hereof in respect
of the financial assistance with quarterly rests from the date of payment and
until such reimbursement by the Company the same shall be debited to the
Company's Loan account and shall stand secured under the security created in
terms of Article IV hereof.
C) ADVERSE CHANGES IN PROFITS AND PRODUCTION
Promptly inform the Debenture Holders of the happening of any labour
strikes, lock-outs, shut-downs, fires or other similar happenings etc. likely to
have an adverse effect on Company's or business and of any material changes in
the rate of production or sales of the Company with an explanation of the
reasons therefore.
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D) MAINTENANCE OF PROPERTY
Maintain its property in good condition and will make all necessary
repairs, additions and improvements thereto.
E) NOTICE OF WINDING UP OR OTHER LEGAL PROCESS
Promptly inform the Debenture Holders if it has notice of any application
for winding up having been made or of any statutory notice of winding up under
the provisions of the Companies Act, 1956 or any other notice any other Acts or
otherwise of any suit or legal process intended to be filed / initiated against
the Company and affecting the title to the properties of the Company is received
by the Company or a Receiver is appointed of any of its properties or business
or undertaking.
F) LOSS / DAMAGE BY UNCOVERED RISKS
Promptly inform the Debenture Holders of any loss or damage which the
Company may suffer due to any force major circumstances of act of God, such as
earthquake, flood, tempest or typhoon, etc. against which he Company may not
have insured its properties.
7.2 PROPORTIONATE PRE-PAYMENT ON THE HAPPENING OF CERTAIN EVENTS
The Company shall not prepay any Debentures / Loans availed of by it from
any other party without redeeming the debentures subscribed by Debenture
Holder/s pursuant to this agreement. If for any reason, the Company is required
to prepay any debentures / loans, it shall make proportionate prepayment of the
said debentures pursuant to this agreement as well subject to such conditions as
may be stipulated by the Debenture Holder(s).
7.3 CHARGES AND OTHER EXPENSES
The Company shall pay all costs, including legal costs, charges and
expenses in any way incurred by any of the Debenture Holders, including
travelling and other allowances and such additional stamp duty, other duties,
taxes, charges and other penalties if any when the Company is required to pay
according to the laws for the time being in force in the State in which its
properties are situated or otherwise and in the event of the Company failing to
pay such stamp duty, other duties, taxes and penalties, as aforesaid, the
Debenture Holders will be at liberty (but shall not be obliged) to pay the same
and the Company shall reimburse the same to Debenture Holders on demand with
interest thereon at the same rate as on defaulted instalments in respect of the
Debentures specified in clause 3.2 hereof with quarterly rests from the date of
payment and until such reimbursement by the Company, the same shall stand
secured under the security created in terms of Article IV hereof.
7.4 ALTERATIONS IN MEMORANDUM AND ARTICLES OF ASSOCIATION
The Company shall of its own accord make such alternations and additions to
its Memorandum & Articles of Association as are necessary to make them conform
to this Agreement. The Company shall in addition, also carry out whenever called
upon by the Debenture Holders to do so, such further alternations and addition
to its Memorandum and Articles of Association as may be deemed necessary in the
opinion of the Debenture Holders to safeguard its interests.
7.5 NEGATIVE COVENANTS
Unless the Debenture holders shall otherwise agree, the Company shall not:-
A) DIVIDEND
Declare and / or pay any dividend to any of its shareholders, whether
equity or preference, during any financial year unless the Company has paid to
the Debenture Holders the instalment of principal, if any, interest, commitment
charges, costs, charges and other moneys payable under this agreement up to and
during that year or has made provisions satisfactory to the Debenture Holders
for making such payment.
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B) CHARGES
Create or permit any charges or lien on any assets of the Company
except as provided in Article - IV hereof. For the purpose of this clause, the
term 'Lien' shall include mortgages, pledges, shares, privileges and priorities
of any kind and the term 'aspects' shall include revenues and property of any
kind.
C) AMENDMENT OF MEMORANDUM AND THE ARTICLES OF ASSOCIATION
Amend its Memorandum & Articles of Association or alter its capital
structure except as specified herein.
D) MERGER, CONSOLIDATION ETC.
Undertake or permit any merger, consolidation, reorganisation, scheme
of arrangements or compromise with its Creditors or shareholders or effect any
scheme of amalgamation or reconstruction.
E) INVESTMENT BY THE COMPANY
Make any investment by way of deposits, loans, share capital etc. in
any manner except in the ordinary course of business.
F) REVALUATION OF ASSETS
Revalue its assets.
G) TRADING ACTIVITY
Carry on any general trading activity other than the sale of its own
product.
7.6 A) LOANS AND DEBENTURES
The Company shall not except with the prior approval in writing of the
Debenture Holders raise any loan secured or unsecured, issue any debentures or
accept any deposits from public or otherwise issue any equity or preference
capital, change the capital structure, create any charge on its assets or give
any guarantee save and except the followings:-
i) Accept deposits from stockists in the normal course of business, and
ii) Accept public deposits subject to the ceiling prescribed under section 58A
of the Companies Act and the RBI Guidelines.
iii) Borrowings secured & unsecured in the normal course of business
B) PROVIDED HOWEVER, THE COMPANY MAY:
i) BANK FACILITIES
Obtain from Bank(s) unsecured loans, overdraft, cash credit or other
facilities in the ordinary course of business.
ii) UNSECURED LOANS
Obtain unsecured loans from the promoters / directors or from other
within limits to be approved by the Debenture Holders and at such rate of
interest and on such conditions as may be stipulated by the Debenture Holders.
7.7 FUTURE ARRANGEMENT
i) If an event of default as specified in 9.1 hereof shall have happened
the Company shall appoint to the satisfaction of the Debenture Holders the
following personnel of proper qualification and experience namely full time
Managing Director / Manager as defined in the Companies Xxx 0000 or Financial
Controller. The appointment / reappointment of the said personnel as also the
terms and remuneration of such appointment / reappointment or any change in
their office or remuneration shall be subject to the prior approval in writing
of the Debenture Holders;
ii) The Company shall satisfy the Debenture Holders that it has appointed /
will appoint technical, financial and executive staff of proper qualifications
and experience for the key posts;
iii) The Company shall prepare and furnish to the Debenture Holder an
organisation chart showing the name of the senior executives in its employ,
their duties and responsibilities, etc. and shall also keep the Debenture
Holders informed of the change in the composition of the Board of Directors and
of the senior executives and when brought about in organisation.
iv) In case the Company is not regular or if there is a default in the
payment of instalment or interest or if the business of the Company is conducted
in a manner opposed to public policy or in the opinion of the Debenture Holders
in a manner prejudicial to the interests of the Debenture Holders, the Debenture
Holders shall have the right to review the management set up or organisation of
the company and to require the Company to restructure the management set up or
organisation in a manner considered suitable by the Debenture Holders and the
Company shall comply with the same.
7.8 Listing of the Debentures:
The Company shall get the aforesaid debentures listed on the wholesale debt
market segment of the National Stock Exchange within three months from the date
of allotment.
All expense, costs, charges incurred for the purpose of listing of the
Debentures, as also for making the offer for sale of Debentures shall be borne
and paid by the Company.
7.9 The Company shall not without prior permission of Debenture holders sanction
interest free loan or loans to subsidiary companies or to the companies sanction
loan or loans at a rate of interest lower than the rate of interest payable to
debenture holders.
ARTICLE - VIII
REPORTS
8.1 i) SUBMISSION OF ANNUAL AUDITED BALANCE SHEETS
The Company shall submit to LIC within thirty days after the date when
they are approved by the Board of Directors of the Company copies of the annual
audited balance sheet, and trading and profit and loss Account of the Company.
ii) NOTICES, CIRCULARS AND MINUTES OF BOARD MEETINGS AND SHAREHOLDERS
MEETINGS
The Company shall submit to LIC and Debenture Trustees copies of all
notices, circulars and minutes and proceedings of all the Meetings of the Board
of Directors and of Shareholders simultaneously with the issuance thereof to the
Directors and shareholders as the case may be.
iii) LIST OF LARGEST SHAREHOLDERS
The Company shall submit to LIC and Debenture Trustees within sixty
days following the termination of each financial year, a current list according
to the records of the Company, of the ten largest shareholders of each class of
share capital of the Company and the number of shares held by each.
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ARTICLE - IX
REMEDIES
9.1. EVENTS OF DEFAULT
If one or more of the events specified in this clause (hereinafter called
'events of default') shall have happened, then the Debenture Holders by a notice
in writing to the Company may declare all the Debentures outstanding and all
accrued interest thereon to be due and upon such declaration the same shall
thereupon become due and payable forthwith and the security created in terms of
Article - IV hereof shall become enforceable (anything in this Agreement to the
contrary notwithstanding):-
A) DEFAULT IN REDEMPTION OF DEBENTURES
Default shall have occurred in the redemption of the Debentures as and
when the same shall have become due and payable.
B) DEFAULT IN PAYMENT OF INTEREST
Default shall have been committed by the Company in the payment of any
instalment of interest on the Debenture and such default shall have continued
for a period of thirty days.
C) ARREARS OF INTEREST
Interest amounting to at least Rs. 500/- shall have been in arrears
and unpaid for thirty days after becoming due.
D) DEFAULT IN PERFORMANCE OF COVENANTS AND CONDITIONS
Default shall have accrued in the performance of any other covenants,
conditions or agreements on the part of the Company under this Agreement or any
other deed between the Company and the Debenture Holders / Trustees and such
default shall have continued for a period of thirty days after notice in writing
thereof has been given to the Company by the Debenture Holders / Trustees.
E) SUPPLY OF MISLEADING INFORMATION
Any information given by the Company in its application to LIC for
financial assistance by way of subscription to privately placed Debentures is
found to be misleading or incorrect in any material respect or any warranty
referred in hereinbefore is found to be incorrect.
F) INABILITY TO PAY DEBTS
If there is reasonable apprehension that the Company is unable to pay
its debts or proceedings for taking it into liquidation either voluntarily or
compulsorily may be or have been commenced in respect thereof.
G) INADEQUATE INSURANCE
If the properties and assets offered as security to the Trustees /
Debenture Holders for the Debentures are not insured and kept insured by the
Company or depreciate in value to such an extent that in the opinion of the
Debenture Holders / Trustees further security to the satisfaction of the
Debenture Holders / Trustees should be given and such security is not given.
H) SALE, DISPOSAL AND REMOVAL OF ASSETS
If without the prior approval of the Trustees and Debenture Holders
any land, buildings, structures, plant and machinery of the Company are sold,
disposed of, charged
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encumbered or alienated or the said buildings, structures, machinery, plant or
other equipment are removed, pulled down or demolished.
I) PROCEEDINGS AGAINST COMPANY
The Company shall have voluntarily or involuntarily become the subject
of proceedings under bankruptcy or insolvency law.
J) INABILITY TO PAY DEBTS ON MATURITY
The Company is unable or has admitted in writing its inability to pay
its debts as they mature.
K) LIQUIDATION OR DISSOLUTION OF COMPANY
The Company has taken or suffered any action to be taken for its
reorganisation, liquidation or dissolution.
L) APPOINTMENT OF RECEIVER OR LIQUIDATOR
A receiver or liquidator is appointed or allowed to be appointed of
all or any part of the undertaking of the Company.
M) ATTACHMENT OR DISTRAINT ON MORTGAGED PROPERTIES
If an attachment or distraint is levied on the mortgaged properties or
any part thereof and / or certificate proceedings are taken or commenced for
recovery of any dues from the Company.
9.2 CONSEQUENCES OF DEFAULT
On the happening of any of the events of default, in addition to the rights
specified in Section 8.1 hereof, the Debenture Holders shall have the following
further rights; the Debenture Holders shall be entitled to appoint and remove
from time to time whole time Directors on the Board of Directors of the Company
during the currency of this agreement (such Director/s are hereinafter referred
to as 'the whole-time Nominee Director/s'). The Company procure an undertaking
from such persons as may be specified by the Debenture Holders to the effect
that they shall support where necessary the appointment of whole-time nominee
Director/s at meetings of the Board and of the shareholders. Such whole-time
Nominee Director/s shall exercise such powers and duties as may be approved by
the Debenture Holders and have such rights as are usually exercised by or are
available to a whole-time Director, in the management of the affairs of the
Company. Such whole-time nominee Director/s shall not be required to hold
qualification shares, nor be liable to retire by rotation and shall be entitled
to receive such remuneration, fees, commission and monies as may be approved by
the Debenture Holders. Such Whole-time Nominee Director/s shall have the right
to receive notices and attend all general meetings and Board Meetings or any
Committee(s) of the Company of which they are members.
Any expenses that may be incurred by the Debenture Holders or such
Whole-time Nominee Director/s in connection with their appointment or
Directorship shall be paid or reimbursed by the Company to the Debenture Holders
or as the case may be, to such Whole-time Nominee Director.
9.3 APPOINTMENT OF NOMINEE DIRECTOR
On behalf of the Debenture Holders, only in the event of default, Debenture
Trustee shall have a right to appoint a Debenture Director on the Board of
Directors of the Company (hereinafter referred to as 'the Debenture Director').
The right to appoint the Debenture Director shall be exercised by the Debenture
trustees as per the statutory guidelines as may be applicable for the purpose in
consultation with the participating Debenture Holders.
In case of default in payment of interest/principal on the due date(s) each
of the Institutional Debenture Holders shall have a right to appoint a Nominee
Director on the Board of Directors of the Company.
14
The Nominee Director appointed pursuant to above Clauses shall not be
liable to retire by rotation nor shall be required to hold any qualification
shares. The Company shall take steps to amend its Articles of Association, if
necessary.
9.4 APPOINTMENT OF CHARTERED ACCOUNTANTS
The Company agrees that the Debenture Holders shall have the right to
appoint, whenever they consider necessary, any Chartered Accountant / Cost
Accountant or firm of Chartered Accountants (hereinafter referred to as 'The
Auditors') for carrying out any specific assignment/s to examine the financial
and / or cost accounting systems and procedures adopted by the Company for the
working of its undertaking or concurrent / internal auditors. Such Auditor/s
shall give their reports to each of the Debenture Holders. The Company shall
give full cooperation and provide the necessary assistance to the Auditor/s or
firm so appointed by the Debenture Holders in carrying out his / their
examination. The costs, charges and expenses including professional fees and
travelling and other expenses for such examination shall be payable by the
Company and shall on demand be reimbursed to them by the Company together with
interest thereon at the same rate as on defaulted instalments in respect of
Debentures specified in Clause 3.2 hereof with quarterly rests from the date of
payment and until such reimbursement the same shall be secured under the
security created in terms of Articles thereof.
9.5 DISSOLUTION
If the Company shall be voluntarily or involuntarily dissolved or become
bankrupt or insolvent or in the happenings of any of the events of default, the
principal of and all accrued interest on the Debentures shall thereupon become
due and payable forthwith (anything in this Agreement to the contrary
notwithstanding).
9.6 NOTICE TO EACH OF THE DEBENTURE HOLDERS ON DEFAULT
If any event of default or any event which, after the notice, or lapse of
time, or both would constitute an event of default shall have happened, the
Company shall forthwith give the Debenture Holders notice thereof in writing,
specifying the nature of such event of default or of such event.
9.7 EXPENSES OF PRESERVATION OF ASSETS OF THE COMPANY & OF COLLECTION
All costs incurred by the Debenture holders after an event of default has
occurred, in connection with:
i) Preservation of the assets of the undertaking of the Company (whether
then or thereafter existing); or
ii) Collection of amounts due under this Agreement, shall stand secured
under the security created in terms of Article IV hereof.
ARTICLE - X
CANCELLATION, SUSPENSION AND TERMINATION
10.1 SUSPENSION
LIC may suspend its financial assistance to the Company at any time with
respect to its subscription to Debentures without assigning any reasons thereof
on the happening of the following:
A) NON COMPLIANCE OF TERMS AND CONDITIONS
Upon failure by the Company to carry out all or any of the terms included
in this Agreement or on the happening of any event of default referred to in
Article - IX hereinbefore.
15
B) EXTRA ORDINARY SITUATION
If any extra ordinary situation shall make it improbable that the Company
would be able to perform its obligations under this Agreement.
C) ASSIGNMENT OR TRANSFER OF PROPERTIES TO RECEIVER, ASSIGNEE, ETC.
If the Company shall take or permit to be taken any action or proceedings
whereby any of its properties shall or may be assigned or, in any manner,
transferred or delivered to any receiver, assignee, liquidator or other person
whether appointed by the Company or by any Court of Law whereby such property
shall or may be distributed among the creditors of the Company or the Company
suffers any charge to be created over its properties in any legal proceedings.
D) CHANGE IN COMPANY'S SET UP
If any change in the Company's set up has taken place which in the opinion
of the Debenture Holders (which will be final and binding on the Company), would
adversely affect the conduct of the Company's business or the financial position
of the efficiency of the Company's management and / or personnel.
ARTICLE XI
INSPECTION
As from the date of the said Deed and so long as any Debentures remain
outstanding, the Company shall permit the Debenture Holders and their authorised
representatives to carry out technical and legal inspections both during the
construction and operation periods of the Project and to inspect all records,
registers and accounts of the Company. Any such representatives of the said
Debenture Holders shall have free access at all reasonable times to any part of
the Company's factory and to its records, registers and accounts and to all
schedules, cost, estimates, plans and specifications relative to the plant and
shall receive full co-operation and assistance from the employees of the
Company. The cost of such inspection shall be borne and paid by the Company on
demand and until payment the same shall carry interest at the same rate as on
defaulted instalments in respect of the Debentures specified in Clauses 3.2
hereof with quarterly rests and shall stand secured under the security created
in terms of Article - IV hereof.
ARTICLE XII
WAIVER
12.1 WAIVER NOT TO IMPAIR THE RIGHTS OF THE DEBENTURE HOLDERS
No delay in exercising, or omission to exercise any right, power or remedy
accruing to the Debenture Holders upon any default under this Agreement,
Mortgage Deed or any other agreement or document shall impair any such right,
power of remedy or shall be construed to be a waiver thereof or any acquiescence
in such default, nor shall the action or inaction of the Debenture Holders in
respect of any default or any acquiescence by it in any default affect or impair
any right, power or remedy of the Debenture Holders in respect of any other
default.
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ARTICLE XIII
13. AGREEMENT TO BECOME EFFECTIVE FROM THE DATE OF EXECUTION
The Agreement shall become binding on the Company and Debenture Holders on
and from the date of this Agreement first above written. It shall be in force
till all the debentures proposed to be issued have been issued, allotted and
redeemed in full.
ARTICLE XIV
MISCELLANEOUS
14.1 PLACE AND MODE OF PAYMENT BY COMPANY
All monies due and payable by the Company to the Debenture Holders under or
in terms of this agreement shall be paid by cheque or bank draft drawn on a
scheduled bank at Mumbai or at such places as may be specified by the Debenture
Holders. Credit for all payment by cheque/bank draft will be given only on
realisation thereof by the respective Debenture Holders or on the due dates to
which the payment relates, whichever is later.
14.2 SERVICE OF NOTICE
Any notice or request required or permitted to be given or made under this
Agreement to the Debenture Holders or to the Company shall be in writing. Such
notice or request shall be deemed to have been duly given or made when it shall
be delivered by hand, registered post or telegram to the party to which it is
required or permitted to be given or made at such party's designated address.
14.3 GUIDELINES
The Company shall abide by and comply with the guidelines issued by the
Government of India in respect of the issue of Debentures by public limited
companies and such other guidelines as may be issued by the Government of India
or any prescribed authority in their behalf from time to time.
14.4 HEADINGS
The Headings of the Articles and Sections and the table of contents,
margins and footnotes are inserted for convenience of reference only and not
deem to affect the construction of the provisions of this agreement.
14.5 SAVINGS CLAUSE
A) In the event of complete collapse or dislocation of the business on the
Financial markets of our country due to war, insurrection, or any other serious
or sustained political or industrial disturbance, sustained political or
industrial disturbance, or if the whole present basis of the Stock Exchange
prices in our country should undergo a substantial change through the occurance
of some catastrophe or similar even prior to the subscription of the said
Debentures, the Corporation shall have the exclusive option of terminating the
commitment / offer under this letter even if the above terms have been accepted
by the company and/or Advance Subscription has been granted by the Corporation.
On exercising such options, the Corporation shall be free from all the
obligations arising out of the commitment and the company shall immediately
thereupon refund the advance subscription (if any) together with interest
thereon to the Corporation.
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B) TERMS STIPULATED BY THE OTHER PARTICIPATING FINANCIAL INSTITUTIONS.
In case any of the Debenture Holder(s) impose any special condition(s)
not included herein, or in case any of the terms offered by the Company to the
other Debenture Holder(s) is more favourable to them than the terms on which LIC
has agreed to subscribe to the said Debentures, such of those conditions as may
be considered appropriate by LIC shall apply to the said Debentures subscribed /
to be subscribed by LIC as if the Company had agreed to them with LIC.
C) This document may be read in conjunction with the Trustees Agreement and
Letter of Sanction and it is specifically agreed between the Debenture Holders
and the Company that in case of any repugnancy, inconsistency or where there is
any conflict between the conditions as are stipulated in the Subscription
Agreement and the Trustee Agreement, the provisions as contained in the
Subscription Agreement and Letter of Sanction shall prevail and override the
provisions of the Trustee Agreement.
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IN WITNESS WHEREOF The Parties have caused this Agreement to be executed on the
day, month and year first above written.
The Common Seal of Sterlite Industries
(I) Ltd has been affixed, pursuant to /s/ Xxxxx Xxxxxxx
the Resolutions passed at the Meetings
of the Board of Directors of the Company
held on 29.01.2003 in the presence of /s/ Deepak Harlalkar
Shri Xxxxx Xxxxxxx & Shri Deepak
Harlalkar of the Company who have, in
token thereof, affixed their respective
signatures hereto.
The Common Seal of LIFE INSURANCE
CORPORATION OF INDIA was hereunto
affixed in the presence of Shri X. Xxxxx /s/ Mohan Xxx
Xxx its Secretary (Investments) who has
set his own signature hereto in token of
the Seal having been affixed.
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SCHEDULE - I
(Forming part of the Subscription Agreement)
CHARGES RANKING PARRI PASSU
(Referred to in Article IV, Clause 4.1)
TOTAL PRINCIPAL AMOUNT
NAME OF HOLDER OF SECURITY SECURITY OF INDEBTEDNESS SECURED
-------------------------- -------- -----------------------
(RUPEES, IN MILLIONS)
United Bank of India (as Pari Passu First charge on the immovable
Trustee) for non convertible properties of the Borrower [Illegible] &
debentures: Silvassa in the form of a joint mortgage by
deposit of title deeds by the Borrower in
favour of United Bank of India, as
trustee.
Series II 470.0
Series III 400.0
Series V 50.0
Series VIII 500.0
Series IX 250.0
------
1670.0
------
ICICI Bank Limited (formerly Pari passu charge and mortgage on the 53.1
known as ICICI Limited) immovable properties of the Borrower at
Lonawala, [Illegible] & Silvassa by the
Borrower in favour of ICICI Bank Limited and
hypothecation of all movable assets
except debts, both present and future,
subject to prior charge in favour of the
Borrower's bankers, by the Borrower in
favour of ICICI Bank Limited.
ICICI Bank Limited (formerly Pari passu first charge on the immovable 3950.0
known as ICICI Limited), properties of the Borrower at [Illegible] & (US$81 Mn)
against guarantee assistance Silvassa in the form of a joint mortgage by
for US$81,000,000 FRN with deposit of title deeds by the Borrower in
applicable interest. favour of ICICI Bank Limited.
The Western India Trustee Pari passu first charge on the immovable 1015.0
And Executor Co. Ltd. properties of the Borrower at [Illegible] &
(subsidiary of the United Silvassa in the form of a joint mortgage by
Western Bank Limited). deposit of title deeds by the Borrower
in favour of The Western India Trustee And
For Non-Convertible Executor Co. Ltd.
Debentures
Development Bank of Pari passu first charge on the immovable 2423.0
Singapore properties of the Borrower at [Illegible] & (US$19.65 Mn &
Silvassa in the form of a joint mortgage by JPY3570 Mn)
For ECB deposit of title deeds by the Borrower in
favour of Development Bank of Singapore
Union Bank of India Pari passu first charge on the immovable 1207.0
properties of the Borrower at [Illegible] & (US$25 Mn)
For FCNR(B) Silvassa in the form of a joint mortgage by
deposit of title deeds by the Borrower in
favour of Union Bank of India.
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