EXHIBIT 99.1
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SUBSCRIPTION AGREEMENT
by and between
XXXXXX INFOWAY LIMITED
and
SAIF INVESTMENT COMPANY LIMITED
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Dated: October 7, 2002
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Confidential
Final Draft - October 7, 2002
Table of Contents
Page
ARTICLE I DEFINITIONS.............................................................. 1
ARTICLE II SUBSCRIPTION FOR EQUITY SHARES........................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SAIF.................................. 11
ARTICLE V CONDITIONS TO THE OBLIGATION OF SAIF TO CLOSE........................... 11
ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE.................... 14
ARTICLE VII INDEMNIFICATION......................................................... 15
ARTICLE VIII AFFIRMATIVE AND NEGATIVE COVENANTS...................................... 17
ARTICLE IX EXCLUSIVITY............................................................. 19
ARTICLE X TERMINATION OF AGREEMENT................................................ 19
ARTICLE XI MISCELLANEOUS........................................................... 20
SCHEDULES
Schedule 1 Particulars of the Company
Schedule 2 Company Warranties
Schedule 3 SAIF Warranties
EXHIBITS
A Form of Registration Rights Agreement
B Form of Indemnification Deed
C1 Form of Company Indian Counsel Opinion
C2 Form of Company U.S. Counsel Opinion
D Form of Executive Letter
E Closing Certificates
F Disclosure Documents
G Existing Charter Documents
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Final Draft - October 7, 2002
SUBSCRIPTION AGREEMENT, dated October 7, 2002 (this "Agreement"), by and
between:
1. XXXXXX INFOWAY LIMITED, a company incorporated under the laws of India and
having its principal office at Tidel Park, 2nd Floor, No. 0 Xxxxx Xxxx Xxxx,
Xxxxxxxx, Xxxxxxx - 000000 (the "Company"); and
2. SAIF INVESTMENT COMPANY LIMITED, a company incorporated in Mauritius and
having its registered office at Suite 000, Xx. Xxxxx Xxxxx, Xx. Denis Street,
Port Louis, Republic of Mauritius ("SAIF").
WHEREAS,
(A) The Company has an authorized share capital of 35,000,000 Equity Shares (as
defined herein) of which 23,202,176 Equity Shares are issued and outstanding on
the date of this Agreement, and following completion of the transactions
contemplated hereby and by the VentureTech Subscription Agreement (as defined
herein), will have an authorized share capital of 37,500,000 made up of
32,795,200 Equity Shares issued and outstanding (prior to the VentureTech Second
Tranche as defined in the Investor Rights Agreement) and 34,830,083 Equity
Shares issued and outstanding (after the VentureTech Second Tranche). 13,491,543
ADSs (as defined herein) of the Company are listed and are traded on The Nasdaq
National Market and each ADS presently represents one Equity Share. The
underlying Equity Shares representing such ADSs are held by the Depositary Bank
(as defined herein) pursuant to the Deposit Agreement (as defined herein).
Further details of the particulars of the Company are set forth in Part A of
Schedule 1.
(B) Upon the terms and conditions of this Agreement, the Company and SAIF have
agreed that the Company shall allot and issue to the Depositary Bank and the
Depositary Bank shall subscribe for and purchase 7,558,140 Subscribed Shares (as
defined herein) representing approximately 21.7% of the total issued and
outstanding share capital of the Company, and 20.6% of the Company on a fully
diluted basis after the VentureTech Second Tranche, for a purchase price per
Equity Share of US$1.72 comprising an aggregate purchase price of US$13.0
million in cash, in exchange for the Depositary Bank issuing to SAIF ADRs (as
defined herein) representing the Subscribed Shares.
(C) Upon the terms and conditions of the VentureTech Share Purchase Agreement
(as defined herein) (a) VentureTech (as defined herein) shall subscribe for
2,034,883 Equity Shares of the Company for a purchase price per Equity Share of
US$1.72 comprising an aggregate consideration of US$3.5 million on the same date
as the issuance and allotment to SAIF referred to in Recital B and (b)
VentureTech shall subscribe for 2,034,883 Equity Shares of the Company for a
purchase price per Equity Share of US$1.72 comprising an aggregate consideration
of US$3.5 million, on or before 30 April 2003.
(D) The parties acknowledge the existence of the SARF Stockholders Agreement and
SARF Registration Agreement as defined in the Investor Rights Agreement (as
defined herein).
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
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"ADR Facility" means the ADR facility with the Depositary Bank
established by the Company pursuant to the Deposit Agreement and subsequently as
amended or replaced from time to time.
"ADRs" mean American Depositary Receipts representing ADSs.
"ADSs" mean the American Depositary Shares, issued under the Deposit
Agreement, each of which presently represents one Equity Share.
"Affiliate" shall mean in relation to a person ("Subject Person"), a
person directly or indirectly Controlling, Controlled by or under common Control
with that Subject Person and shall include any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Arbitration Board" has the meaning set forth in Section 11.7(a) of this
Agreement.
"Assets" has the meaning set forth in Section 24 of Schedule 2 hereto.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the State of New York or Chennai, India are
authorized or required by law or executive order to close.
"Claims" means all actions, suits proceedings, claims, complaints
disputes, arbitrations or investigations pending, at law, in equity or before
any Governmental Authority or competent court.
"Closing" has the meaning set forth in Section 2.3 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.3 of this
Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended, or any successor statute thereto.
"Commission" means the United States Securities and Exchange Commission
or any similar agency then having jurisdiction to enforce the Exchange Act and
the Securities Act.
"Commonly Controlled Entity" means any entity which is under common
control with the Company within the meaning of Code Section 414(b), (c), (m),
(o) or (t).
"Company" has the meaning set forth in the preamble to this Agreement,
the particulars of which as of the date hereof are set forth in Schedule 1
hereto.
"Company Plans" has the meaning set forth in Section 23 of Schedule 2
hereto.
"Company Warranties" has the meaning set forth in Article III of this
Agreement.
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"Condition of the Company" means the assets, business, properties,
operations or financial condition of the Company; provided, however, that none
of the following shall be deemed (either alone or in combination) to constitute,
and none of the following shall be taken in to account in determining whether
there has been a material adverse effect on the Condition of the Company: (a) a
decline in the trading price of the ADSs on the Nasdaq; or (b) a general decline
in economic conditions in India; or (c) a general decline in the economic
conditions affecting India's Internet and telecommunications sector that does
not have a disproportionate adverse impact on the Company.
"Conditions" means the conditions set forth in Articles V and VI of this
Agreement.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and includes (x) ownership directly or indirectly of 50% or more of the shares
in issue or other equity interests of such person, or (y) possession directly or
indirectly of 50% or more of the voting power of such person, and the terms
"Controlling" and "Controlled" have meanings correlative to the foregoing.
"Copyrights" means any copyright registrations and applications for
registration thereof, and any non-registered copyrights of India, the United
States or any other jurisdiction.
"Deed of Undertaking" means the Deed of Undertaking to Support
Transactions between SCS, SAIF, VentureTech and the Company dated the date
hereof.
"Deposit Agreement" means the agreement between the Company and the
Depositary Bank in relation to the establishment of the ADR Facility, dated
October 18, 1999 which is Exhibit D hereto and filed as an Exhibit to the
Company's registration statement on Form F-6, as amended or replaced from time
to time.
"Depositary Bank" means Citibank, N.A., as appointed under the Deposit
Agreement.
"Directors" means the directors of the Company whose names appear on the
register of directors of the Company.
"Disclosed" means fully and fairly disclosed by the Company in this
Agreement or the Disclosure Documents.
"Disclosure Documents" means Exhibit F which contains the disclosures of
the Company in relation to the Company Warranties comprising the documents
listed in Exhibit F hereto in the form copies of such listed documents have been
delivered by the Company to SAIF prior to the signing of this Agreement by SAIF.
"Employee Share Option Scheme" or "ESOP" shall mean the employee stock
ownership plans of the Company entitled the Associate Stock Option Plan 1999,
the Associate Stock Option Plan 2000 and any further stock option plans approved
by stockholders of the Company from time to time including any modifications
thereof, as approved in accordance with this Agreement.
"Encumbrance" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or
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preferential arrangement of any kind or nature whatsoever (excluding preferred
stock and equity related preferences).
"Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
"Equity Share Equivalents" means any debenture, preference share, option
or warrant or any other security or obligation which is by its terms, directly
or indirectly convertible into or, exchangeable or exercisable for Equity
Shares, and any option, warrant or other subscription or purchase right with
respect to Equity Shares or any other security referred to in this definition.
"Equity Shares" means the ordinary equity shares, par value Rs.10 per
share, of the Company as subdivided, consolidated or converted from time to
time.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
"Existing Charter Documents" means the Memorandum and Articles of
Association of the Company as at the date hereof as set out in Exhibit F to this
Agreement.
"FCPA" has the meaning set forth in Section 10 of Schedule 2 hereto.
"Financial Statements" has the meaning set forth in Section 16 of
Schedule 2 hereto.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" means the group of companies comprising the Company and its
Subsidiaries. The term "Group Company" shall be construed accordingly.
"Hardware" has the meaning set forth in Section 26 of Schedule 2 hereto.
"ICC" has the meaning set forth in Section 11.7(a) of this Agreement.
"Indemnification Deed" means the Indemnification Deed between the
Company and each Director in the form attached hereto as Exhibit B.
"Indemnified Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Indian GAAP" means generally accepted accounting principles in India
from time to time.
"Intellectual Property" has the meaning set forth in Section 25 of
Schedule 2 hereto.
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"Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in an to any text, graphics, audio and video files and html and other
code incorporated in such sites.
"Investor Rights Agreement" means the Investor Rights Agreement dated
the date hereof among the Company, SAIF and the other parties that are
signatories thereto and effective as at, but subject to the occurrence of, the
Closing.
"Liabilities" has the meaning set forth in Section 18 of Schedule 2
hereto.
"Losses" has the meaning set forth in Section 7.1 of this Agreement.
"Material Contracts" means, in relation to the Company, any security
issued by the Company or any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument to which the Company is a party or
by which it or any of its property is bound and which (i) involves an aggregate
amount equal to or in excess of US$500,000, or (ii) in the case of the Company,
is otherwise material to the Condition of the Company; or (iii) is a material
contract pursuant to Item 10 of Item 601 of Regulation S-K.
"NASD" means the National Association of Securities Dealers Inc and its
affiliate The Nasdaq Stock Market, Inc.
"Orders" means any judgment, injunction, writ, award, decree or order of
any nature of any Governmental Authority or competent court.
"Patents" means any patents and patent applications in India and the
United States including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Permits" has the meaning set forth in Section 9 of Schedule 2 hereto.
"Person" means any individual, corporation, company, partnership,
limited liability company, joint venture, association or trust of any other
entity or organization.
"Plan" means any employee benefit plan, arrangement, policy, program,
agreement or commitment (whether or not an employee plan within the meaning of
Section 3(3) of ERISA), including any employment, consulting or deferred
compensation agreement, executive compensation, bonus, incentive, pension,
profit-sharing, savings, retirement, stock option, stock purchase or severance
pay plan, any life, health, disability or accident insurance plan, whether oral
or written, whether or not subject to ERISA, as to which the Company or any
Commonly Controlled Entity has or in the future could have any director or
indirect, actual or contingent liability.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date hereof in the form attached hereto as Exhibit A among the Company
and SAIF and certain other parties identified therein and effective as at, but
subject to the occurrence of, the Closing.
"Regulation S" means Regulation S adopted by the Commission under the
Securities Act.
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"Related Party" of a person ("Subject Person") means (a) any shareholder
holding more than 10% of the voting interests in the Subject Person or an
Affiliate of the Subject Person; (b) any director or officer of a person
referred to in paragraph (a); (c) any Relative of a natural person referred to
in paragraph (a) or (b); (d) any person in which a person referred to in
paragraph (a) or (b) or (c) has any interest, other than a passive shareholding
of less than 5% in a publicly listed company, and (vi) any Company under
equivalent management to the Company or which is or whose management is
accustomed to act in accordance with the directions of one or more of the
Directors, Shareholders or any other Affiliate of the Company.
"Relative" of a natural person means any spouse, parent, grandparent,
child, grandchild and sibling of such person.
"Requirements of Law" means, as to any Person, any law, statute, treaty,
rule, regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority or
stock exchange (including, without limitation, the NASD), in each case
applicable or binding upon such Person or any of its property or to which such
Person or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.
"Restated Charter Documents" means the Memorandum of Association and
Amended and Restated Articles of Association of the Company reflecting the terms
set forth in the Investor Rights Agreement in a form acceptable to SAIF and to
be adopted on the Closing.
"Rs." means Indian Rupees, the lawful currency of India.
"Rules" has the meaning set forth in Section 11.7(a) of this Agreement.
"SAIF" has the meaning set forth in the preamble to this Agreement.
"SAIF Warranties" has the meaning set forth in Article IV of this
Agreement.
"SCS" means Xxxxxx Computer Services Limited.
"SEC Reports" has the meaning set forth in Section 16 of Schedule 2
hereto.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Shareholders" means the shareholders of the Company whose names appear
on the register of members of the Company.
"Significant Subsidiary" shall have the meaning set forth in Regulation
S-X under the United States federal securities laws.
"Software" means any computer software programs, source code, object
code, data and documentation, including any computer software programs that
incorporate and run the Company's pricing models, formulae and algorithms.
"Subscribed ADSs" has the meaning set forth in Section 2.1 of this
Agreement.
"Subscribed Shares" has the meaning set forth in Section 2.1 of this
Agreement.
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"Subscription Price" has the meaning set forth in Section 2.2 of this
Agreement.
"Subsidiary" means any subsidiary of the Company. Part B of Schedule 1
hereto contains a list of the Company's Subsidiaries.
"Taxes" means any federal, state, provincial, county, local, foreign and
other taxes (including income, profits, windfall profits, alternative, minimum,
accumulated earnings, personal holding company, capital stock, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, employment,
unemployment compensation, payroll and property taxes, import duties, octroi,
and stamp duty and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Transaction Documents" means, collectively, this Agreement, the
Investor Rights Agreement, the Registration Rights Agreement, the Restated
Charter Documents, the Indemnification Deed for the SAIF Directors, the Deed of
Undertaking and the VentureTech Subscription Agreement.
"US GAAP" means generally accepted accounting principles in the United
States from time to time.
"US$" or "US Dollars" means United States Dollars, the lawful currency
of the United States of America.
"VentureTech" has the meaning set forth in the Investor Rights
Agreement.
"VentureTech Subscription Agreement" means the subscription agreement
dated the date hereof between VentureTech as purchaser and the Company as issuer
in relation to the issue of Equity Shares by the Company by VentureTech.
1.2 Interpretation. In this Agreement, unless the context
otherwise requires:
(a) Accounts. Any reference to a balance sheet, profit and
loss statement or other financial statement or accounts shall include a
reference to any note thereto.
(b) Directly or Indirectly. The phrase "directly or
indirectly" means directly, or indirectly through one or more intermediate
persons or through contractual or other legal arrangements, and "direct or
indirect" has the correlative meaning.
(c) Gender and Number. Unless the context otherwise
requires, all words (whether gender-specific or gender neutral) shall be deemed
to include each of the masculine, feminine and neuter genders, and words
importing the singular include the plural and vice versa.
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(d) Headings. Headings are included for convenience only
and shall not affect the construction of any provision of this Agreement.
(e) Include not Limiting. "Include," "including," "are
inclusive of" and similar expressions are not expressions of limitation and
shall be construed as if followed by the words "without limitation."
(f) Statutory References. A reference to a statute or
statutory provision includes, to the extent applicable at any relevant time:
(i) that statute or statutory provision as from
time to time consolidated, modified, re-enacted or replaced by any other statute
or statutory provision;
(ii) any repealed statute or statutory provision
which it re-enacts (with or without modification); and
(iii) any subordinate legislation or regulation
made under the relevant statute or statutory provision.
(g) Time. If a period of time is specified and dates from
a given day or the day of a given act or event, such period shall be calculated
exclusive of that day. If the day on or by which something must be done is not a
Business Day, that thing must be done on or by the Business Day immediately
following such day. References to a time of day shall be references to Indian
Standard time.
(h) Share Calculations. In calculations of share numbers,
(i) references to a "fully diluted basis" mean that the calculation is to be
made assuming that all outstanding options, warrants and other Equity Share
Equivalents (whether or not by their terms then currently convertible,
exercisable or exchangeable), have been so converted, exercised or exchanged,
and the transactions contemplated by the Buyback Agreement is completed and (ii)
references to a "non-diluted basis" mean that the calculation is to be made
taking into account only Equity Shares then in issue.
(i) Where a matter is expressed to be to the "knowledge"
of the Company such knowledge shall assume reasonable enquiry has been
undertaken.
ARTICLE II
SUBSCRIPTION FOR EQUITY SHARES
2.1 Subscription for Subscribed Shares. Upon the terms and
subject to the conditions herein set forth, the Company agrees to, on the
Closing Date, allot and issue to the Depositary Bank (at the direction of SAIF),
free and clear of all Encumbrances (other than Encumbrances resulting from
actions of SAIF), 7,558,140 Equity Shares (the "Subscribed Shares") and SAIF
agrees to procure the Depositary Bank to subscribe for the Subscribed Shares
from the Company in consideration for the issue of ADSs, representing Equity
Shares at the ratio then prevalent in the market between ADS and Equity Shares,
to SAIF (the "Subscribed ADSs").
2.2 Subscription Price. The consideration payable by SAIF for the
Subscribed Shares and the Subscribed ADSs shall be US$1.72 per Equity Share
comprising an aggregate payment of US$13 million payable in cash in immediately
available funds (the "Subscription Price") and against the receipt of the
Subscription Price the Company shall allot and cause the issuance of the
Subscribed Shares.
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2.3 Closing. Unless this Agreement shall have terminated pursuant
to Article X, and subject to the satisfaction or waiver of the conditions set
forth in Articles V and VI, the closing of the subscription for the Subscribed
Shares (the "Closing") shall take place at the offices of the Company at 10:00
a.m., local time, on the fifth Business Day following the satisfaction or waiver
of the conditions set forth in sections 5.11 and 5.22 ("Primary Conditions
Satisfaction Date") or at such other time, place and date that the Company and
SAIF may agree in writing or as extended under section 2.5 (the "Closing Date")
and Closing shall occur on that Closing Date subject to satisfaction of the
remaining Conditions.
2.4 Closing Date Activities. On the Closing Date,
(a) the Company shall deliver to SAIF:
(i) the certificates referred to in Sections 5.6
and 5.7;
(ii) the waivers, consents and confirmations
referred to in Sections 5.9 and 5.11;
(iii) the opinions of the Company's United States
and Indian counsel referred to in Section 5.8; and
(iv) each Transaction Document to which it is a
party duly executed by the Company and stamped and each Transaction Document to
which each Person other than SAIF is a party duly executed by each such Person
and stamped;
(b) SAIF shall deliver to the Company each Transaction
Document to which it is a party duly executed by it;
(c) the Company shall procure that the following business
is transacted at a meeting of the Board of Directors conducted on or prior to
the Closing Date and deliver a certified true copy of such resolutions to SAIF:
(i) the directors of the Company shall approve the
allotment and issuance of the Subscribed Shares to the Depositary Bank and the
appointment of a director with the authority to authorize the issuance and
delivery of the Subscribed ADSs as contemplated by this Agreement; and
(ii) the two Persons nominated by SAIF for
appointment as directors of the Company under the Investor Rights Agreement
shall be appointed, such appointment to be effective immediately after Closing;
(d) the Company shall deliver to SAIF a certified true
copy of each of the Shareholder's resolutions passed which are contemplated by
the Conditions;
(e) subject to the satisfaction or waiver of the
Conditions and the Company's obligations under Section(a) to (d), SAIF shall
transfer, by wire transfer of immediately available funds, its Subscription
Price to the Depositary Bank to be held by the Depositary Bank in escrow for
SAIF and paid to the Company on SAIF's instructions;
(f) contemporaneously upon the satisfaction of SAIF's
obligations under paragraph (g), the Company shall:
(i) allot and issue the Subscribed Shares to the
Depositary Bank;
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(ii) duly register the Subscribed Shares in the
name of the Depositary Bank, in the Company's register of members;
(iii) deliver to the Depository Bank or, if
requested by SAIF, to the Depositary Bank's local custodian in India, the
certificate or certificates duly completed and stamped in the name of the
Depositary Bank representing the Subscribed Shares; and
(iv) authorise and procure the (A) allotment and
issuance to SAIF of the Subscribed ADSs in a manner that complies with the
Deposit Agreement; (B) the registration of SAIF as the legal and beneficial
owner of the Subscribed ADSs and the delivery to SAIF of ADRs representing the
Subscribed ADSs.
(g) contemporaneously with the satisfaction of the
Company's obligations under Section 2.4(f), SAIF shall issue written
instructions to the Depositary Bank authorizing the release of the Subscription
Price to the Company and shall procure the Depositary Bank to release the
Subscription Price to the Company.
2.5 Closing. If the any party is not capable of or does not
comply with its obligations under Section 2.4 hereof the other party may agree
to extend the Closing Date to such date that it deems necessary for the for the
non-complying party to comply with its obligations under this Agreement such
date to be no later than 31 December 2002.
2.6 Post Closing Activities. Simultaneously with or immediately
after the Closing the Company shall make all such post-Closing filings with
Governmental Authorities required under Requirements of Law in relation to the
matters referred to in this Section 2 and Section 5 (including the filing of the
Restated Charter Documents with the Registrar of Companies, Hyderabad, India)
and upon request provide evidence thereof to SAIF.
2.7 Payment in Full. SAIF shall be deemed to have paid its
Subscription Price by remittance of its Subscription Price in US Dollars on or
prior to the Closing Date in accordance with Section 2.4(e) regardless of the US
Dollar to Rs. exchange rate applied to such remittance by the receiving bank.
2.8 Use of Proceeds. The Company shall use the proceeds from the
issuance of the Subscribed Shares to fund the capital expenditure and working
capital requirements of the Company in relation to its investment in broadband
projects including associated network assets, establishment and expansion of
cyber cafes, purchase of bandwith capacity and related expenses. The use of the
Subscription Price shall in all material respects be in accordance with business
plans and budgets approved pursuant to the Investor Rights Agreement and
resolutions of the Board of Directors after Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to SAIF in the terms
set forth in Schedule 2 hereto (the "Company Warranties"), and acknowledges that
SAIF in entering into this Agreement and acquiring the Subscribed ADS and
causing the Depositary Bank to acquire the Subscribed ADS is relying on such
representations and warranties.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SAIF
SAIF hereby represents and warrants to the Company in the terms
set forth in Schedule 3 hereto (the "SAIF Warranties") and acknowledges that the
Company in entering into this Agreement is relying on such representations and
warranties.
ARTICLE V
CONDITIONS TO THE OBLIGATION OF SAIF TO CLOSE
The obligation of SAIF to pay or cause to be paid SAIF's
Subscription Price for the Subscribed Shares at the Closing and to perform any
obligations hereunder shall be subject to the satisfaction or waiver by, SAIF of
the following conditions on or before the Closing Date. Notwithstanding the
foregoing, the impact of any of the following on Sections 7.3, 7.4, 7.5 and 7.6
of the Investor Rights Agreement shall not constitute a basis for SAIF to elect
not to close the transactions contemplated by this Agreement (it being
understood that the parties shall use their reasonable best efforts to maintain
the rights and obligations of the parties set forth in the Transaction Documents
in accordance with Section 7.14 of the Investor Rights Agreement): (a) the
adoption of the Xxxxxxxx-Xxxxx Act of 2002 (the "SOA Act"), (b) the proposal or
adoption of regulations by the Commission implementing the SOA Act, or (c)
amendments to the rules of the NASD to implement the SOA Act and other matters
in a manner substantially consistent with these statements made publicly
available as of the date of this Agreement by the NASD (as outlined in its press
release dated September 13, 2002).
5.1 Representation and Warranties. The Company Warranties
contained in Schedule 2 hereof shall be true and correct in all material
respects (except for any such representations and warranties which are qualified
by their terms by a reference to materiality or material adverse effect, which
representation as so qualified shall be true and correct in all respects) at and
on the Closing Date as if made at and on such date.
5.2 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all of its obligations set
forth herein that are required to be performed by it on or before the Closing
Date.
5.3 No Material Adverse Change. Since the date hereof, there
shall have been no material adverse change to the Condition of the Company.
5.4 No Material Judgment or Order. There shall not be on the
Closing Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would reasonably be expected to (a) prohibit or restrict (i) the allotment
and issue of the Subscribed Shares or Subscribed ADSs or (ii) the consummation
of the transactions contemplated by the Transaction Documents, or (b) subject
SAIF or the Depositary Bank to any material penalty or onerous condition under
or pursuant to any Requirement of Law if the Subscribed Shares or Subscribed
ADSs were to be issued or purchased hereunder, or (c) restrict the operation of
the business of the Company as conducted on the date hereof in a manner that
would have a material adverse effect on the Condition of the Company, or (d)
adversely affect the continued listing and trading of the ADSs on the Nasdaq as
listed and traded on the date hereof.
5.5 No Litigation. No action, suit, proceeding, claim or dispute
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company or a party to a
Transaction Document which would, if adversely determined (a) have a material
adverse effect on the Condition of the Company (except as Disclosed in the
Disclosure Documents), or (b) be reasonably be expected to have a material
adverse effect on the ability of the Company or any other party thereto to
perform its
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obligations under or contemplated by this Agreement or any of the other
Transaction Documents.
5.6 Officer's Certificate. SAIF shall have received a certificate
from the Company, in the form of Exhibit E1 dated the Closing Date, and signed
on behalf of the Company by the Managing Director and Chief Financial Officer of
the Company, acting in such capacities, certifying as to the matters set forth
in Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.10, 5.11, 5.14, 5.16, 5.19 and 5.22.
5.7 Secretary's Certificate. SAIF shall have received a
certificate from the Company in the form set out in Xxxxxxx X0, dated the
Closing Date and signed on behalf of the Company by the Secretary of the Company
acting in such capacity, certifying (a) that the Company is duly incorporated
and validly existing at such date, (b) that the attached copies of the Charter
Documents, resolutions of the Board of Directors and resolutions of the
Shareholders approving this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect and (c)
as to the incumbency and specimen signature of each officer of the Company
executing this Agreement, each other Transaction Document and any other document
delivered in connection herewith on behalf of the Company.
5.8 Opinions of Counsel. SAIF shall have received an opinion of
M.G. Ramachanderan, Indian counsel to the Company and shall have received an
opinion of Xxxxxx & Xxxxxxx, United States counsel to the Company, dated the
Closing Date, relating to the transactions contemplated by or referred to
herein, substantially in the form attached hereto as Exhibit C and otherwise in
a form reasonably satisfactory to SAIF (and including customary exceptions and
exclusions).
5.9 Waiver of Existing Rights. SAIF shall have received all
waivers, consents or other documents required to vest in the Depositary Bank and
SAIF the respective full legal and beneficial title to the Subscribed Shares and
Subscribed ADSs and to enable SAIF to procure the Subscribed Shares to be
registered in the name of the Depositary Bank and the Subscribed ADS to be
registered in the name of SAIF including but not limited to pursuant to all
Requirements of Law as to the allotment and issue of the Subscribed Shares and
the Subscribed ADSs (subject only to SAIF's Subscription Price being received by
the Depositary Bank).
5.10 Restated Charter Documents. The form of the Restated Charter
Documents shall have been approved by all necessary action of the Board of
Directors and Shareholders such that the Restated Charter Documents are adopted
immediately on the Closing.
5.11 Consents. All consents of Governmental Authorities in
respect of Requirements of Law and third parties pursuant to contract or
otherwise which may be required to complete the transactions contemplated by the
Transaction Documents and to perform the Transaction Documents shall have been
obtained and be in full force and effect without any conditions having been
imposed on such consents other than, in the case of Governmental Authorities,
standard conditions applicable to all such consents given by such Governmental
Authorities which would not reasonably be expected to have a material adverse
effect on the Condition of the Company or SAIF, and SAIF shall have been
furnished with appropriate evidence thereof and all such applicable standard
conditions to be satisfied prior to Closing shall have been satisfied without
any action being taken or threatened which would have a material adverse effect
on SAIF or a material adverse effect on the Condition of the Company. Such
consents shall include, without limitation, all relevant consents and approvals
of: (a) the Reserve Bank of India, (b) the Foreign Investment Promotion Board of
India, and (c) the
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NASD in relation to the transactions contemplated hereby and the performance of
the Transaction Documents (including Section 7 of the Investor Rights
Agreement).
5.12 Board of Directors. Two nominees of SAIF shall have been
duly elected to the Board of Directors effective immediately following Closing.
5.13 Executed Transaction Documents. Each Transaction Document
shall have been delivered to SAIF duly executed by each party thereto other than
SAIF.
5.14 Continued Listing. There shall be no proposal or requirement
by the NASD for the delisting of the ADSs from the Nasdaq or the cessation or
suspension of trading of the ADSs on the Nasdaq or for the trading of the ADSs
on an NASD conducted market other than the Nasdaq National Market.
5.15 First Tranche Subscription by VentureTech. Concurrently with
the Closing, the Company and VentureTech shall close the first tranche of the
subscription of Equity Shares by VentureTech in the aggregate first tranche
amount of 2,034,883 Equity Shares for US$1.72 per Equity Share comprising US$3.5
million (as converted using a US$ to Rs. exchange rate of 48.35), as
contemplated by the Investor Rights Agreement and the VentureTech Subscription
Agreement such that VentureTech is the legal owner of such Shares.
5.16 Satisfactory Financial Performance. The financial
performance of the Company during the period from 1 July 2002 to 30 September
2002 shall have met the metrics set forth in the letter signed by SAIF and the
Company dated October 7, 2002, in accordance with U.S. GAAP.
5.17 Senior Executive Confirmation . Each of the senior officers
and employees of the Company identified in writing by SAIF prior to the date
hereof shall have entered into an agreement substantially in the form attached
hereto as Exhibit E.
5.18 Employee Share Option Scheme. The Company shall have amended
the ESOP in form and substance satisfactory to SAIF such that all Equity Shares
and Equity Share Equivalents that have or may be issued to employees, officers,
directors and consultants under such plan do not exceed in aggregate 5% of the
Equity Shares, on a fully diluted basis, immediately after the Closing.
5.19 Performance of Closing Covenants. The Company shall have
performed each of its obligations under Sections 2.4(a), (c) and (d) of this
Agreement.
5.20 Authorization of Issuance. The Company and the Depositary
Bank shall have taken all necessary actions to authorize the issuance and/or
transfer of the Subscribed Shares and the Subscribed ADS in accordance with all
applicable Requirements of Law, subject to payment of the Subscription Price.
5.21 Registration Statement. The Company shall have fully
completed ready for submission to the Commission and signed and dated the
Business Day after Closing a registration statement registering the resale of
the Subscribed Shares under and in compliance with the Securities Act.
5.22 Stockholder Approval. The shareholders of the Company
entitled to vote at the extraordinary general meeting convened in connection
with the transactions contemplated by this Agreement shall have approved all
matters required to be approved in connection with such transactions under any
Requirement of Law, including, without limitation, (a) the adoption of the
Restated Charter Documents, (b) the waiver of preemptive
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rights under the Companies Act, 1956 of India and (c) approval of the
transaction as required by the Company's listing agreement with Nasdaq.
The Company shall use its best commercial efforts to procure that
each of the conditions in this Article V are complied with (unless waived by
SAIF) as soon as reasonably practicable and not later than December 31, 2002 and
shall continue to use such best commercial efforts thereafter if such compliance
or waiver is not achieved by that date and until such date as this Agreement is
terminated in accordance with Article X.
ARTICLE VI
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligations of the Company to allot and issue the Subscribed
Shares to SAIF shall be subject to the satisfaction, or waiver by, the Company
of the following conditions with respect to SAIF on or before the Closing Date
provided that the Company shall not be entitled to rely on any such Condition if
its acts or omissions have contributed to that Condition not being satisfied.
Notwithstanding the foregoing, the impact of any of the following on Sections
7.3, 7.4, 7.5 and 7.6 of the Investor Rights Agreement shall not constitute a
basis for the Company to elect not to close the transactions contemplated by
this Agreement (it being understood that the parties shall use their reasonable
best efforts to maintain the rights and obligations of the parties set forth in
the Transaction Documents in accordance with Section 7.14 of the Investor Rights
Agreement): (a) the adoption of the Xxxxxxxx-Xxxxx Act of 2002 (the "SOA Act"),
(b) the proposal or adoption of regulations by the Commission implementing the
SOA Act, or (c) amendments to the rules of the NASD to implement the SOA Act and
other matters in a manner substantially consistent with these statements made
publicly available as of the date of this Agreement by the NASD (as outlined in
its press release dated September 13, 2002).
6.1 Representation and Warranties. The SAIF Warranties contained
in Schedule 3 hereof shall be true and correct in all material respects with
respect to SAIF at and on the Closing Date as if made at and on such date.
6.2 Compliance with this Agreement. SAIF shall have performed and
complied in all material respects with all of its obligations set forth herein
that are required to be performed by it on or before the Closing Date.
6.3 No Material Judgment or Order. There shall not be on the
Closing Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would reasonably be expected to (a) prohibit or restrict (i) the allotment
and issue of the Subscribed Shares or Subscribed ADSs or (ii) the consummation
of the transactions contemplated by the Transaction Documents, or (b) subject
the Company or the Depositary Bank to any material penalty or onerous condition
under or pursuant to any Requirement of Law if the Subscribed Shares or
Subscribed ADSs were to be issued or purchased hereunder, or (c) restrict the
operation of the business of the Company as conducted on the date hereof in a
manner that would have a material adverse effect on the Condition of the
Company, or (d) adversely affect the continued listing and trading of the ADSs
on the Nasdaq as listed and traded on the date hereof.
6.4 Officer's Certificate. The Company shall have received a
certificate from SAIF, dated the Closing Date, and signed on behalf of SAIF by a
director or representative officer of SAIF, acting in that capacity, certifying
as to the matters set forth in Sections 6.1 and 6.2.
6.5 Secretary's Certificate. The Company shall have received a
certificate from SAIF, dated the Closing Date and signed on behalf of SAIF by
the secretary or a director
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of SAIF acting in that capacity, certifying (a) that SAIF is duly incorporated
and validly existing at such date, (b) that the corporate approvals approving
this Agreement and each of the other Transaction Documents and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
unamended and in full force and effect and (c) as to the incumbency and specimen
signature of each officer of SAIF executing this Agreement, each other
Transaction Document and any other document delivered in connection herewith on
behalf of SAIF.
6.6 Stockholder Approval. The stockholders of the Company
entitled to vote at the extraordinary general meeting convened in connection
with the transactions contemplated by this Agreement shall have approved all
matters required to be approved in connection with such transactions under any
Requirement of Law, including, without limitation, (a) the adoption of the
Restated Charter Documents and (b) the waiver of preemptive rights under the
Companies Act, 1956 of India and (c) approval of the transaction as required by
the Company's listing agreement with Nasdaq.
6.7 Consents. All consents of Governmental Authorities in respect
of Requirements of Law and third parties pursuant to contract or otherwise which
may be required to complete the transactions contemplated by the Transaction
Documents and to perform the Transaction Documents shall have been obtained and
be in full force and effect without any conditions having been imposed on such
consents other than, in the case of Governmental Authorities, standard
conditions applicable to all such consents given by such Governmental
Authorities which would not reasonably be expected to have a material adverse
effect on the Condition of the Company, and all such applicable standard
conditions to be satisfied prior to Closing shall have been satisfied without
any action being taken or threatened which would have a material adverse effect
on the Condition of the Company. Such consents shall include, without
limitation, all relevant consents and approvals of: (a) the Reserve Bank of
India, (b) the Foreign Investment Promotion Board of India, and (c) the NASD in
relation to the transactions contemplated hereby and the performance of the
Transaction Documents (including Section 7 of the Investor Rights Agreement).
6.8 Executed Transaction Documents. Each Transaction Document
shall have been delivered to the Company duly executed by all parties thereto
other than the Company.
6.9 Performance of Closing Covenants. SAIF shall have performed
each of its obligations under Sections 2.4(b) and (e) of this Agreement.
SAIF shall use its best commercial efforts to procure that
each of the conditions in this Article VI (other than Sections 6.3, 6.6 and 6.7)
are complied with (unless waived by the Company) as soon as reasonably
practicable and not later than December 31, 2002 and shall continue to use such
best commercial efforts thereafter if such compliance or waiver is not achieved
by that date and until such date as this Agreement is terminated in accordance
with Article X.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article
VII, the Company, on one hand, and SAIF on the other hand, (each, an
"Indemnifying Party") agrees to indemnify, defend and hold harmless SAIF, on one
hand, and the Company, on the other hand, and in each case its respective
Affiliates and its respective officers, directors, agents, employees,
subsidiaries, partners, members and controlling persons (each, an "Indemnified
Party") to the fullest extent permitted by law from and against any and all
losses, Claims, or written threats thereof (including, without limitation, any
Claim by a third party), damages,
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expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "Losses") resulting from or
arising out of (i) any breach of any representation or warranty, covenant or
agreement by the Indemnifying Party in this Agreement or (ii) any litigation,
suit, proceeding or claim referred to in the Disclosure Documents or otherwise
relating to circumstances occurring before the date hereof where all such
litigations, suits, proceedings or claims in aggregate cause a Loss to the
Company exceeding $1 million (net of insurance recoveries). In connection with
the obligation of the Indemnifying Party to indemnify for expenses as set forth
above, the Indemnifying Party shall, upon presentation of appropriate invoices
containing reasonable detail, reimburse each Indemnified Party for all such
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party)
as they are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed under this Article VII for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.
7.2 Notification. Each Indemnified Party under this Article VII
shall, as soon as practicable after the receipt of notice of the commencement of
any Claim against such Indemnified Party in respect of which indemnity may be
sought from the Indemnifying Party under this Article VII, notify the
Indemnifying Party in writing of the commencement thereof. The failure of any
Indemnified Party to so notify the Indemnifying party of any such action shall
not affect the rights to indemnification hereunder, except and only to the
extent that the Indemnifying Party demonstrates actual material damage caused by
such failure. In case any such Claim shall be brought against any Indemnified
Party, and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to assume the defense thereof at its
own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any Claim in which both the
Indemnifying Party, on the one hand, and an Indemnified Party, on the other
hand, are, or are reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel and to control its own defense
of such Claim if, in the reasonable opinion of counsel to such Indemnified
Party, either (x) one or more defenses are available to the Indemnified Party
that are not available to the Indemnifying Party or (y) a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that the Indemnifying Party (i)
shall not be liable for the fees and expenses of more than one counsel to all
Indemnified Parties and (ii) shall reimburse the Indemnified Parties for all of
such fees and expenses of such counsel incurred in any action between the
Indemnifying Party and the Indemnified Parties or between the Indemnified
Parties and any third party, as such expenses are incurred. The Indemnifying
Party agrees that it will not, without the prior written consent of the
Indemnified Party (not to be unreasonably withheld), settle, compromise or
consent to the entry of any judgment in any pending or threatened Claim relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising or that may arise out of such
Claim. The Indemnifying Party shall not be liable for any settlement of any
Claim effected against an Indemnified Party without its written consent, which
consent shall not be unreasonably withheld. The rights accorded to an
Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise;
provided, however, that notwithstanding the foregoing or anything to the
contrary contained in this Agreement, nothing
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in this Article VII shall restrict or limit any rights that any Indemnified
Party may have to seek equitable relief.
7.3 Contribution. If the indemnification provided for in this
Article VII from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Sections 7.1 and 7.1, any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
7.4 Survival of Indemnification. Any Claim for indemnification
pursuant to Article VII must be initiated on or before 31 December 2003.
7.5 Limitation. Notwithstanding any other provision of this
Agreement to the contrary, no party shall be entitled to recover for (a) any
Losses in excess of the Subscription Price; and (b) a Loss for a claim that a
representation or warranty is untrue where such representation or warranty was
true at the date hereof and becomes untrue after the date hereof and prior to
Closing (other than as a result of an intentional act or omission) and the party
making such warranty had notified the other party in writing in accordance with
Section 8.2 of such fact at least 5 Business Days prior to the Closing Date and
the other party elected to proceed to Closing; or (c) a breach of any
representation, warranty, covenant or agreement of the other party (other than
as a result of an intentional act or omission) if Closing does not occur.
ARTICLE VIII
AFFIRMATIVE AND NEGATIVE COVENANTS
The Company hereby covenants and agrees with SAIF as follows:
8.1 ADR Facility. The Company acknowledges and agrees that at
Closing (a) the Subscribed Shares shall be deposited in the ADR Facility
pursuant to the Deposit Agreement, (b) there shall be no costs to SAIF for the
ADR Facility, except as expressly set out in the Deposit Agreement (c) the
Subscribed Shares shall be held by the Depositary Bank under the Deposit
Agreement; and (d) SAIF holds the beneficial title to the Subscribed Shares and
the legal title to the Subscribed ADSs.
8.2 Between Signing and Closing. From the date hereof until the
date of Closing the Company:
(a) shall use its reasonable best efforts to conduct its
business in a manner so as to ensure that the Company Warranties shall continue
to be true and correct from the date of this Agreement and at all times until
and on the Closing Date as if made on and as of the Closing Date other than any
warranty expressly limited to an earlier date; and
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(b) shall use its reasonable best efforts to conduct its
business in a manner so as to assure that no material adverse effect occurs in
respect of the Condition of the Company.
8.3 Notice. The Company shall give SAIF prompt and complete
notice of any event, condition or circumstance occurring from the date hereof
until the Closing Date that would constitute a violation or breach of any
Company Warranty if such Company Warranty (other than any warranty expressly
limited to an earlier date) was made as of any date from the date hereof until
the Closing Date, or that would constitute a violation or breach of any terms
and conditions contained in this Agreement. SAIF shall give the Company prompt
and complete notice of any event, condition or circumstance occurring from the
date hereof until the Closing Date that would constitute a violation or breach
of any SAIF Warranty if such SAIF Warranty (other than any warranty expressly
limited to an earlier date) was made as of any date from the date hereof until
the Closing Date, or that would constitute a violation or breach of any terms
and conditions contained in this Agreement. If a party becomes aware of any such
breach or violation of the other party and the other party is not aware of such
breach or violation that party shall notify the other party of such breach or
violation.
8.4 Rule 144. SAIF acknowledges that the Subscribed Shares and
the Subscribed ADSs cannot be sold in the United States unless subsequently
registered under the Securities Act or an exemption from such registration is
available. SAIF is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions. SAIF understands
and acknowledges that until the registration thereof under the Securities Act
the certificate evidencing its Subscribed Shares and the Subscribed ADSs will be
imprinted with the following legend The Company shall remove the following
legend from the Subscribed Shares if SAIF provides the Company with the written
opinion of SAIF's U.S. securities counsel (which counsel shall be reasonably
acceptable to the Company) to the effect that such legend is not required in
order to establish compliance with the provisions of the Securities Act.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"),
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE
ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
(INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTION AFFORDED BY
RULE 144).
THIS CERTIFICATE REPRESENTS "RESTRICTED ADSs" ISSUED UPON THE TERMS OF
SECTION 2.12 OF THE DEPOSIT AGREEMENT. THIS CERTIFICATE AND THE
RESTRICTED ADSs REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE FOR SUCH SALE OR
TRANSFER.
8.5 No Determination as to Fairness. SAIF acknowledges that no
federal agency (including the Commission), state agency or foreign agency has
made or will make any finding or determination as to the fairness of an
investment in the Subscribed Shares or the Subscribed ADSs (including as to the
purchase price).
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ARTICLE IX
EXCLUSIVITY
Between the date hereof and the first to occur of (a) the date of Closing (b)
the date this Agreement is terminated in accordance with the terms hereof and
(c) 31 December 2002; the Company shall not, directly or indirectly, through any
associate, adviser, representative or agent take any action to solicit,
initiate, seek, entertain, encourage or support any inquiry, proposal or offer
from, furnish any information to or participate in any negotiations or
discussions with, any third party, or enter into any agreement or arrangement
regarding any subscription for issue, allotment, sale of or other disposition of
any interest in any Equity Shares or Equity Share Equivalents of the Company or
otherwise attempt to issue, sell or transfer any of the Equity Shares or Equity
Share Equivalents of the Company other than to SAIF and Venture Tech (or their
respective Affiliates as contemplated by this Agreement).
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated prior to the
Closing in respect of the issuance and purchase of Subscribed Shares of SAIF as
follows:
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Company and SAIF;
(b) at the election of the Company or SAIF by written
notice to the other parties hereto after 5:00 p.m., New York time, on 31
December, 2002, if the Closing shall not have occurred, unless such date is
extended by the mutual written consent of the Company and SAIF; provided,
however, that the right to terminate this Agreement under this Section 10.1(b)
shall not be available until February 28, 2003 to any party whose intentional
breach of any representation, warranty, covenant or agreement under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date;
(c) at the election of the Company, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of SAIF contained in this Agreement, which breach has not been cured within
fifteen (15) Business Days of notice to SAIF of such breach; or
(d) at the election of SAIF, if there has been a material
breach of any representation, warranty, covenant or agreement on the part of the
Company contained in this Agreement, which breach has not been cured within
fifteen (15) Business Days notice to the Company of such breach.
If this Agreement so terminates in respect of the issuance and
purchase of the Subscribed Shares by SAIF, it shall become null and void and
have no further force or effect in respect of that issuance and purchase, except
as provided in Section 10.2 and any moneys previously paid by SAIF in respect of
the issue of Subscribed Shares shall immediately be repaid to it.
10.2 Survival. If this Agreement is terminated and the
transactions contemplated hereby are not consummated as described above, this
Agreement shall become void and of no further force and effect; in respect of
the relevant issuance to and purchase by SAIF except for the provisions of
Article VII but subject to the limitations in Section 7.5 and this Section 10.2;
provided, however, that (a) none of the parties hereto shall have any liability
in respect of a termination of this Agreement pursuant to Section 10.1(a) or
Section 10.1(b) except in the case of intentional breach by that party; and (b)
nothing shall relieve any of the parties from liability for actual damages
resulting from a termination of this Agreement
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pursuant to Section 10.1(c) or 10.1(d) as a result of an intentional breach of
warranty or covenant; and provided, further, that none of the parties hereto
shall have any liability for speculative, indirect, unforeseeable or
consequential damages or lost profits resulting from any legal action relating
to any termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
telecopier, courier service or personal delivery:
(a) if to SAIF:
c/o SB Asia Infrastructure Fund, L.P.
Suite 2115-2118, Two Xxxxxxx Xxxxx
00 Xxxxxxxxx
Xxxx Xxxx
Telecopy: (000) 0000-0000
Attention: Xxxxxxx H.P. Xxx, Esq.
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
00/X., Xxxx Xxxx Club Xxxxxxxx
0X Xxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Telecopy: (000) 0000-0000
Attention: Xxxxxxx Xxxxx, Esq.
(b) if to the Company:
Xxxxxx Infoway Limited
Tidel Park, 2nd Floor
No. 0 Xxxxx Xxxx Xxxx, Xxxxxxxx
Xxxxxxx - 000000
Telecopy:
Attention:
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
and
M.G. Ramachanderan
B12, Xxxxxxx Xxxxxx
Xxx Xxxxx 000 000
Xxxxx
Telecopy: (00) 00-000-0000
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21
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; and when receipt is
mechanically acknowledged, if telecopied. Any party may by notice given in
accordance with this Section 11.1 designate another address or Person for
receipt of notices hereunder.
11.2 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to compliance with applicable
securities laws to the reasonable satisfaction of the Company and the terms and
conditions thereof, SAIF may assign any of its rights under this Agreement or
the other Transaction Documents to any of its respective Affiliates upon the
giving of five days prior written notice to the Company. The Company may not
assign any of its rights under this Agreement without the written consent of
SAIF. Except as provided in Article VII, no Person other than the parties hereto
and their successors and permitted assigns is intended to be a beneficiary of
this Agreement.
11.3 Amendment and Waiver.
(a) No failure or delay on the part of the Company or SAIF
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
SAIF at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or SAIF from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by the Company and SAIF and (ii) only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances.
11.4 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.5 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF INDIA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS TO LAW OF ANY JURISDICTION.
11.7 Arbitration.
(a) Any dispute or claim arising out of or in connection
with or relating to this Agreement, or the breach, termination or invalidity
hereof (including the validity, scope and enforceability of this arbitration
provision), shall be finally resolved by arbitration by the International
Chamber of Commerce ("ICC") or its successor pursuant to the ICC's then
prevailing Rules of Arbitration of the International Chamber of Commerce (the
Confidential
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22
"Rules") and as are in force at the time of any such arbitration and as may be
amended by the rest of this Section 10.2. For the purpose of such arbitration,
there shall be three arbitrators appointed in accordance with the Rules
("Arbitration Board").
(b) The place of arbitration shall be in Singapore. All
arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any such dispute or claim strictly in accordance with
the governing law specified in Section 11.6. Judgment upon any arbitral award
rendered hereunder may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement, as the case may be.
(c) The parties agree to facilitate the arbitration by (i)
cooperating in good faith to expedite (to the maximum extent practicable) the
conduct of the arbitration, (ii) making available to one another and to the
Arbitration Board for inspection and extraction all documents, books, records,
and personnel under their control or under the control of a person controlling
or controlled by such party if determined by the Arbitration Board to be
relevant to the dispute, (iii) conducting arbitration hearings to the greater
extent possible on successive business days and (iv) using their best efforts to
observe the time periods established by the rules of the ICC or by the
Arbitration Board for the submission of evidence and briefs.
(d) The costs and expenses of the arbitration, including,
without limitation, the fees of the arbitration, including, without limitation,
the fees of the Arbitration Board, shall be borne equally by each party to the
dispute or claim, and each party shall pay its own fees, disbursements and other
charges of its counsel.
Any award made by the Arbitration Board shall be final and binding on each of
the parties that were parties to the dispute. The parties expressly agree to
waive the applicability of any laws and regulations that would otherwise give
the right to appeal the decisions of the Arbitration Board so that there shall
be no appeal to any court of law for the award of the Arbitration Board, and a
Party shall not challenge or resist the enforcement action taken by any other
Party in whose favor an award of the Arbitration Board was given.
11.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.9 Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement.
11.10 Entire Agreement. This Agreement, together with the
exhibits and schedules hereto, and the other Transaction Documents are intended
by the parties hereto as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, representations, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, and the other
Transaction Documents supersede all prior agreements and understandings between
the parties hereto with respect to such subject matter.
11.11 Fees. The Company shall pay 100% of the legal fees and
expenses of SAIF, including all fees and expenses of SAIF's international legal
counsel and its Indian legal counsel, not to exceed US$85,000 in the aggregate.
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11.12 Public Announcements. Following the date hereof, the
Company shall be permitted to issue a press release relating to the Transaction
Documents and the transactions contemplated thereby to the extent necessary to
comply with its obligations under Requirements of Law provided that such press
release shall not cause any delay in the date of effectiveness of the
registration statement referred to in Section 5.21. SAIF shall have the
opportunity to review and comment on such press release prior to its issuance,
which review and comment shall be provided as expeditiously as possible to SAIF,
and such press release shall be in form and substance reasonably satisfactory to
the SAIF. Except as set forth in the previous sentence, neither the Company nor
SAIF will issue any press release or make any public statements with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of the other parties hereto, except to the extent such party reasonably
believes such press release or public statement is required by applicable law or
stock market regulations; provided, however, that the Company and the Purchasers
may make reasonable public statements consistent with prior public statements
otherwise permitted under this Section 11.12; and provided further, that SAIF
may disclose on its worldwide web page, the name of the Company, the name of the
Chief Executive Officer of the Company, a brief description of the business of
the Company, the Company's logo and the aggregate amount of the Purchasers'
investment in the Company.
11.13 Further Assurances. Each of the parties hereto shall
execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions
by, or giving any notices to, or making any filings with, any Governmental
Authority or any other Person) as may be reasonably required or desirable to
carry out or to perform the provisions of this Agreement.
11.14 Legal Representation. It is acknowledged by the Company
that SAIF has retained Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx to act as its
counsel in connection with the transactions contemplated by the Transaction
Documents and that Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx has not acted as
counsel for any other party to any Transaction Document in connection with the
transactions contemplated by the Transaction Documents and that no such party
has the status of a client of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx for
conflict of interest or any other purposes as a result thereof.
[Remainder of page intentionally left blank]
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24
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Subscription Agreement on the date first written above.
XXXXXX INFOWAY LIMITED
By: /s/ X. Xxxxxxx
------------------------------------------
Name: X. Xxxxxxx
Title: Managing Director
SAIF INVESTMENT COMPANY LIMITED
By: /s/ Xxxxxx X. Xxx
------------------------------------------
Name: Xxxxxx X. Xxx
Title: Director
Confidential
Final Draft - October 7, 2002
Schedule 1
Particulars of the Company
PART A -- THE COMPANY
1. Registered office : 0xx Xxxxx
Xxxxxxx Xxxxxx, 0-0-000/00
X.X. Road
Secunderabad Andhra Pradesh
India 500 003
2. Date of incorporation : December 12, 1995
Incorporation Number : 01-22562
Place of Incorporation : Andhra Pradesh
3. Directors : Mr. B. Xxxxxxxxx Xxxx
Mr. Xxxxxx Xxxx
Xx. X. Xxxxxxx
Mr. T.H. Xxxxxxxx
Mr. C. Xxxxxxxxx Xxxx
Xx. X. Xxxxxxxxxx
4. Secretary : Mr. R. Ramachanderan
5. Share Capital: Authorized : 35,000,000
Issued and paid up : 23,202,176
6. Shareholders as of Date Hereof
holding more than 2% of the
Company's share capital:
Registered Shareholder No. of Shares Type of Shares
---------------------- ------------- --------------
Xxxxxx Computer Services Limited 12,182,600 Equity Shares
South Asia Regional Fund 3,600,000 Equity Shares
Sterling Commerce 481,000 Equity Shares
Holders of Equity Share Equivalents No. of Shares Type of Shares
----------------------------------- ------------- --------------
Nil
7. Auditors : KPMG India
8. Financial Year End : March 31
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PART B - SUBSIDIARIES OF THE COMPANY
Name of the Subsidiary % of Shareholding
---------------------- -----------------
1. WHOLLY- AND MAJORITY-OWNED SUBSIDIARIES
Xxxxxx Education Services Ltd. 100%
Safescrypt Ltd. 100%
Indiaworld Communications Ltd. 100%
Xxxxxx Institute of E-Business Ltd. 100%
XxxxxXxxxx.xxx Inc. 100%
Xxxxxx Webexchange Ltd. 100%
Xxxxxxx.xxx India Private Limited 100%
X-Xxxx.xxx Limited 100%
Sify PlasticsCommerce Ltd. 53%
Sify Baron Net Devices Ltd. 51%
2. OTHER SUBSIDIARIES
Refco-Sify India Private Limited 40%
Cricinfo Limited 25%
3. SUBSIDIARY OF XXXXXX EDUCATION SERVICES
Xxxxxxxxx.xxx Limited 76%
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Final Draft - October 7, 2002
Schedule 2
Company Warranties
In this Schedule, capitalized terms have the meanings set forth in this
Agreement.
1. Corporate Existence and Power. The Company and each of its
Significant Subsidiaries (a) has been duly incorporated and is duly organized
and validly existing under the laws of its relevant jurisdiction of
incorporation; (b) has all requisite power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is proposed to be, engaged; (c) is duly
qualified as a foreign corporation, licensed and in good standing under the laws
of each jurisdiction in which its ownership, lease or operation of property or
the conduct of its business requires such qualification and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents, except with
respect to clauses (b) through (c) as would not, individually or in the
aggregate, be reasonably expected to have a material adverse effect on the
Condition of the Company.
2. Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (a) have been
duly authorized by all necessary corporate action of the Company; (b) do not
contravene the terms of the Restated Charter Documents; (c) do not violate,
conflict with or result in any breach, default or contravention of (or with due
notice or lapse of time or both would result in any breach, default or
contravention of), or the creation of any Encumbrance under, any Material
Contract of the Company or any Requirement of Law applicable to the Company; and
(d) do not violate any Orders against, or binding upon the Company.
3. Binding Effect. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
4. Charter Documents. The copies of the Existing Charter
Documents and Restated Charter Documents and the charter documents of the
Company's Significant Subsidiaries (the "Subsidiaries Charter Documents") have
been delivered to SAIF are true and complete and comply with all applicable
Requirements of Law. All legal and procedural requirements and other formalities
concerning the approval, amendment and filing of the Existing Charter Documents,
the Restated Charter Documents (at or prior to Closing) and the Subsidiaries
Charter Documents have been duly and properly complied with. The Company has
complied with all the provisions of the Existing Charter Documents and each
Significant Subsidiary has complied with all provisions of the relevant
Subsidiaries Charter Documents and in each case has not entered into any
transaction in breach of such charter documents or agreed with any Person to
amend such charter documents, except as contemplated by this Agreement.
5. Corporate Records. The statutory books, minute books, register
of members and all books of account of the Company and each of its Significant
Subsidiaries have been properly and accurately maintained in all material
respects, are written up-to-date, contain full and accurate records of all
resolutions passed by the directors and the shareholders of entity and all
issuances and transfers of shares or other securities of such entity (other than
the transfers of ADSs) and neither the Company nor, to the best knowledge of the
Company, any
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2
Group Company has received any notice of any application or intended application
for rectification of its register of members.
6. Governmental Authorization; Third Party Consents. Except as
specified in Section 5.11(a) to (c) no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person (including, without limitation, the Reserve Bank
of India and the Foreign Investment Promotion Board of India), and no lapse of a
waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Subscribed Shares) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby, except as would
not, individually or in the aggregate, be reasonably expected to have a material
adverse effect on the Condition of the Company.
7. Litigation. Except as Disclosed in the Disclosure Documents,
there are no Claims pending or, to the best knowledge of the Company,
threatened, at law, in equity, in arbitration or before any Governmental
Authority against any Group Company nor is the Company aware that there is any
basis for any of the foregoing that may in aggregate have a material adverse
effect on the Condition of the Company. The foregoing includes, without
limitation, Claims pending or, to the best knowledge of the Company, threatened
involving the prior employment of any of any Group Company's employees, their
use in connection with the Group's business of any information or techniques
allegedly proprietary to any of their former employers or their obligations
under any agreements with prior employers. No Order has been issued by any court
or other Governmental Authority against the Company purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any of the
other Transaction Documents.
8. Insolvency. No Order has been made and no resolution has been
passed for the winding up of the Company or any of its Significant Subsidiaries
or for a provisional liquidator to be appointed in respect of any of them and no
petition has been presented and no meeting has been convened for the purpose of
winding up any of the Company or any of its Significant Subsidiaries. No
receiver has been appointed in respect of the Company or any of its Significant
Subsidiaries or all or any of the Assets of the Company, any Significant
Subsidiary, or, to the best knowledge of the Company, any other Group Company.
To the best knowledge of the Company after due inquiry, no distress, execution
or other process has been levied on any of the Assets of any Group Company and
no Group Company is insolvent or unable to pay its debts as they fall due.
9. Compliance with Laws. (a) The Company and each of its
Significant Subsidiaries is in material compliance with all material
Requirements of Law and all Orders applicable to them. There is no existing or,
to the Company's knowledge, proposed Requirement of Law which could reasonably
be expected to prohibit or restrict the Company or any Significant Subsidiary,
from, or otherwise have a material adverse effect on the Condition of the
Company in conducting its business in any jurisdiction in which it now conducts
or proposes, to conduct its business. (b) (i) The Company and each of its
Significant Subsidiaries have all material licenses, permits and approvals of
any Governmental Authority (collectively, "Permits") that are necessary for the
conduct of the business of the Company and each Significant Subsidiary; (ii)
such Permits are in full force and effect; and (iii) there are no material
violations are or have been recorded in respect of any material Permit. (c) No
material expenditure is presently required by the Company or any of its
Significant Subsidiaries to comply with any existing Requirement of Law or
Order, except for the transactions contemplated by this Agreement.
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3
10. Foreign Corrupt Practices Xxx 0000 of the U.S. Congress (as
amended) (the "FCPA"). Neither the Company nor any Significant Subsidiary has
made, directly or indirectly, any payment or promise to pay, or gift or promise
to give, or authorized such a promise or gift, of any money or anything of
value, directly or indirectly, to: (a) any foreign official (as such term is
defined in the FCPA) for the purpose of influencing any such official or
inducing him or her to use his or her influence to affect any act or decision of
foreign government, or any agency or subdivision thereof; or (b) any political
party or official thereof or candidate for political office for the purpose of
influencing any official act of decision of such party, official or candidate or
inducing such party, official or candidate to use his, her or its influence to
affect any act or decision of a government or agency or subdivision thereof, in
the case of both (a) and (b) above in order to assist the Company to obtain or
retain business for, or direct business to the Company in violation of the FCPA.
11. Compliance with Indian Requirements of Law. The Company and
each of its Significant Subsidiaries has materially complied with all its
registration requirements and Indian Requirements of Law, including without
limitation, the Shops and Establishments Acts of various states, the Electricity
Act, the Employers State Insurance Act and the Provident Funds Scheme.
12. Capitalization. (a) On the Closing Date, after giving effect
to the transactions contemplated by this Agreement, the authorized share capital
of the Company shall consist of 37,500,000 Equity Shares, of which 32,795,200
shares are issued and outstanding and 13,491,543 ADSs are issued and outstanding
as of the date hereof. Schedule 1 sets forth, as of the date hereof, a true and
complete list of (x) the shareholders legally or beneficially owning the
Company's Restricted Shares and Equity Share Equivalents or to the knowledge of
the Company, beneficially owning ADSs comprising more than 2% of the Equity
Shares and, opposite the name of each shareholder, the amount of all outstanding
share capital and Equity Share Equivalents owned by such shareholder and (y) the
holders of Equity Share Equivalents and, opposite the name of each such holder,
the amount of all Equity Share Equivalents owned by such holder. As of the date
of this Agreement, 1,200,000 Equity Shares have been reserved for issuance under
the ESOP ("ESOP Reserve"), of which 551,140 Equity Share Equivalents have been
issued and allotted and 200 Equity Shares have been issued. Except for (i) the
ESOP Reserve (ii) preemptive rights under section 81-1(A) of the Indian
Companies Act (iii) the issuance of 7,558,140 Equity Shares to SAIF as
contemplated in this Agreement, (iv) the issuance of 2,034,883 Equity Shares to
VentureTech pursuant to the VentureTech Subscription Agreement on the Closing
Date, and (v) the issuance of 2,034,883 Equity Shares to VentureTech on or
before 30 April, 2003, there are no options, warrants, conversion privileges,
subscription or purchase rights or other rights presently outstanding to
purchase or otherwise acquire (x) any authorized but unissued, unauthorized or
treasury shares of the Company's share capital, (y) any Equity Share Equivalents
or (z) any other securities of the Company and there are no commitments,
contracts, agreements, arrangements or understandings by the Company to issue
any shares of the Company's share capital or any Equity Share Equivalents or
other securities of the Company. The (x) Subscribed Shares are duly authorized,
and will be allotted and issued in compliance with the Restated Charter
Documents to the Depositary Bank after payment therefor and (y) the Subscribed
ADSs are duly authorised and will be allotted and issued in compliance with the
Deposit Agreement; and will be validly issued, fully paid and non-assessable,
assuming the truth and accuracy of all representations of each purchaser of
Subscribed ADSs pursuant to this Agreement, and will be issued in compliance
with the registration and qualification requirements of all applicable federal,
state and foreign securities laws and not subject to any preemptive rights or
similar rights that have not been satisfied and will be free and clear of all
other Encumbrances (other than those created by SAIF or imposed by the Investor
Rights Agreement). All of the issued and outstanding Equity Shares are all duly
authorized, validly issued, fully paid and non-assessable, and were issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign
Confidential
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4
securities laws. (b) particulars of the Subsidiaries of the Company are set
forth in Part B of Schedule 1 hereto.
13. No Default or Breach; Material Contracts. Neither the Company
nor any of its Significant Subsidiaries is in default under any Material
Contract nor, to the Company's knowledge, does any condition exist that with
notice or lapse of time or both would constitute a default thereunder. To the
Company's knowledge, (a) no other party to any such Material Contract is in
default thereunder and (b) there exists no condition that with notice or lapse
of time or both would constitute a default by such other party thereunder.
14. Title to Properties. The Company and each of its Significant
Subsidiaries has good title in fee simple to, or holds interests as lessee under
leases in full force and effect in, all real property owned or leased by it and
material to its business.
15. NASDAQ Compliance. The ADSs are registered pursuant to
Section 12(g) of the Exchange Act, and are listed on Nasdaq and the Company has
taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the ADSs under the Exchange Act or delisting of
the ADSs from the Nasdaq. Except as Disclosed in the Disclosure Documents, the
Company has complied in all material respects with all requirements of the NASD
with respect to the issuance of the Subscribed Shares and the ADSs and the
listing thereof on the Nasdaq. Neither the Company nor any other Group Company,
nor to the best knowledge of the Company, any Affiliate of the Company nor any
Shareholder and its Affiliate, has taken and will, in violation of applicable
Requirement of Law, take, any action outside the ordinary course of business
designed to or that might reasonably be expected to cause or result in unlawful
manipulation of the price of the ADSs. The Company has made, or shall make as
soon as practical after the Closing, to the extent required by a Requirement of
Law or regulation or otherwise, (a) a filing of a Form D pursuant to Commission
Regulation D, (b) any required filings pursuant to state "blue sky" laws, and
(c) any required filings or notifications regarding the listing of additional
shares on the Nasdaq.
16. SEC Reports and Financial Statements. (a) As of the
respective dates of their filing with the Securities and Exchange Commission of
the United States (the "Commission"), all reports, registration statements and
other filings, together with any amendments thereto, filed by the Company with
the Commission (the "SEC Reports"), complied in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations of the Commission promulgated thereunder, except as Disclosed in
the SEC Reports. Except as disclosed in the SEC Reports, the SEC Reports did not
at the time they were filed with the Commission, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company has (i)
delivered or made available to SAIF true and complete copies of, or will make
available on SAIF's request, (x) all correspondence (which is material,
substantive or otherwise relevant to SAIF in connection with its investment in
the Subscribed Shares) relating to the Company between the Commission, the NASD
and/or the United States Attorneys Office and the Company or its legal counsel
and accountants since April 1, 2001 (other than routine Commission filing
package cover letters) and (y) all material correspondence between the Company
or its counsel and the Company's auditors since April 1, 2001, relating to any
audit, financial review or preparation of financial statements of the Company
(other than correspondence which the Company reasonably believes is subject to a
privilege). The Company is not aware of any issues raised by the Commission with
respect to any of the SEC Reports, other than those disclosed in the SEC
Reports; and (b) Except as disclosed in the SEC Reports, the consolidated
financial statements of the Company (including, in each case, any related
schedules or notes thereto) contained in or incorporated by reference in the SEC
Reports and any such reports, registration statements and other filings to be
filed by the Company with the Commission prior to the Closing Date (the
"Financial Statements") (i)
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Final Draft - October 7, 2002
5
have been prepared in accordance with the published rules and regulations of the
Commission and U.S. GAAP consistently applied during the periods involved
(except as may be indicated in the notes thereto) and (ii) fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof and the consolidated results of
operations, statements of stockholders' equity and cash flows for the periods
indicated, except that any unaudited interim financial statements were or will
be subject to normal and recurring year-end adjustments and may omit footnote
disclosure as permitted by regulations of the Commission.
17. Taxes. (a) The Company and each Significant Subsidiary has
paid all Taxes which have come due and are required to be paid by it through the
date hereof, and all deficiencies or other additions to Taxes, interest and
penalties owed by it in connection with any such Taxes, other than Taxes being
disputed by the Company or any Significant Subsidiary in good faith for which
adequate reserves have been made in accordance with U.S. GAAP and Indian GAAP
(as applicable); (b) the Company and each Significant Subsidiary has timely
filed or caused to be filed all returns for Taxes that it is required to file on
and through the date hereof (including all applicable extensions), and all such
Tax returns are accurate and complete in all material respects; (c) with respect
to all Tax returns of such Company, (i) to the best knowledge of the Company,
there is no unassessed Tax deficiency proposed or threatened against the Company
or a Significant Subsidiary and (ii) no audit is in progress with respect to any
return for Taxes, no extension of time is in force with respect to any date on
which any return for Taxes was or is to be filed and no waiver or agreement is
in force for the extension of time for the assessment or payment of any Tax; (d)
all provisions for Tax liabilities of the Company with respect to the Financial
Statements have been made in accordance with U.S. GAAP and Indian GAAP
consistently applied, and all liabilities for Taxes of the Company attributable
to periods prior to or ending on the Closing Date have been adequately provided
for on the Financial Statements; (e) there are no Encumbrances for Taxes on the
Assets of the Company or a Significant Subsidiary; and (f) to the knowledge of
the Company no imposition of, re-assessment, loss of concession, clawback or
increase in Taxes has or is to be proposed by a Governmental Authority in
respect of the Company or a Significant Subsidiary or will result from the
transactions contemplated by this Agreement.
18. Liabilities. Neither the Company nor any of its Significant
Subsidiaries has any direct or indirect obligation or liability (the
"Liabilities") other than (a) Liabilities fully and adequately reflected or
reserved against it on the Financial Statements, as the case may be, and (b)
Liabilities incurred between June 30, 2002 and Closing in the ordinary and
normal course of business.
19. No Material Adverse Change; Ordinary Course of Business.
Since June 30, 2002 (a) there has not been any material adverse effect, nor to
the knowledge of the Company is any such change reasonably expected, on the
Condition of the Company, (b) the Company has conducted its business consistent
with past practice in all material respects, (c) Company has not increased the
compensation of any of its officers or the rate of pay of any of its employees,
except as part of regular compensation increases in the ordinary course of
business, (d) no Group Company has entered into, created or assumed any
Encumbrance on a material asset of any Group Company other than in the ordinary
course of business, (e) there has not occurred a material adverse effect on any
Group Company's accounting principles or practice except as required by reason
of a change in U.S. GAAP, (f) the Company has not sold or otherwise disposed of
any material part of its assets (or any interest therein) or contracted to do so
except in the ordinary course of business; (g) there has been no amendment to
the Existing Charter Documents or any other charter documents of the Company,
except by the adoption of the Restated Charter Documents; (h) the Company has
not acquired material assets (or any interest therein) or contracted to do so,
otherwise than in the ordinary course of its business; (i) the Company has not
declared, paid or made any dividend or distribution; (j) the Company has not
issued any securities of the Company of any kind other than as permitted
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pursuant to this Agreement and pursuant to the ESOP; (k) the Company has not
undertaken or accepted any contract that would prevent the performance of the
transactions contemplated in this Agreement and in the other Transaction
Documents; (l) the Company has not undertaken any buyback of shares of the
Company of any kind or reduction of its share capital; and (m) the Company has
not registered any transfer of shares or any kind of securities of the Company.
20. Investment Company. The Company is not and is not controlled
by or affiliated with an "investment company" within the meaning of the Reserve
Bank of India Xxx 0000, as amended.
21. Private Offering. Neither the Company nor, to the best
knowledge of the Company, any of its Affiliates or any Person acting on its or
their behalf has, directly or indirectly, conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Equity Shares offered and sold hereby. Assuming
the accuracy of the representations and warranties of SAIF set forth in Article
IV and of VentureTech in the VentureTech Purchase Agreement, no registration of
the Subscribed Shares, pursuant to the provisions of the Securities Act or any
state securities or "blue sky" laws, will be required by the offer, sale or
issuance of the Subscribed Shares.
22. Labor Relations. No labor dispute with employees of the
Company exist and, to the Company's knowledge, there is no existing or imminent
labor disturbance by the employees of any of any Group Company's principal
suppliers, customers or contractors.
23. Employee Benefit Plans. Part 1 of the Disclosure Documents
hereto lists each Plan that the Company maintains or to which the Company
contributes (the "Company Plans"). The Company has no liability under any Plans
other than the Company Plans.
24. Title to Assets. Each Group Company owns and has valid title
to all of its properties and assets material to its business and reflected as
owned on the Financial Statements or its financial statements, as the case may
be, or so described in any Schedule hereto (collectively, the "Assets"), in each
case free and clear of all Encumbrances, except for immaterial Encumbrances.
Neither the Company nor any of its Significant Subsidiaries has leased back any
of their Assets.
25. Intellectual Property. (a) Except as Disclosed in the
Disclosure Documents, the Company and its Significant Subsidiaries own, or have
the license or right to use, all of, the Copyrights, Patents, Trade Secrets,
Trademarks, Internet Assets, Software, domain names and other proprietary rights
(collectively, "Intellectual Property") that are used in connection with their
business as presently conducted provided that SCS may terminate the Company's
right to use the name "Xxxxxx" as set out in Part 1 of the Disclosure Documents
(b) the Disclosure Documents sets forth all of the material Intellectual
Property owned by, and filings and applications for any Intellectual Property
filed by, the Company. (c) None of the Intellectual Property listed on the
Disclosure Documents is subject to any outstanding Order, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand is
pending or threatened, which challenges the validity, enforceability, use or
ownership of the item. (d) the Disclosure Documents sets forth all material
Intellectual Property licenses, sublicenses, distributor agreements and other
agreements under which the Company is either a licensor, licensee or
distributor, except such licenses, sublicenses and other agreements relating to
off-the-shelf software, which is commercially available on a retail basis and
used solely on the computers of the Company. The Company has substantially
performed all obligations imposed upon it thereunder, and to the Company's
knowledge no other party thereto is in breach of or default thereunder in any
respect, nor to the Company's knowledge is there any event which with notice or
lapse of time or both would constitute a default thereunder. All of the
Intellectual Property licenses listed on the Disclosure Documents are valid,
enforceable and
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in full force and effect, and to the knowledge of the Company will continue to
be so on identical terms immediately following the Closing except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity). (e) To the Company's knowledge
no Person is infringing upon or otherwise violating any material Intellectual
Property rights of the Company. (f) To the Company's knowledge, no former
employer of any employee of any Group Company, and no current or former client
of any consultant of any Group Company, has made a claim against the a Group
Company or against any other Person, that such employee or such consultant is
utilizing Intellectual Property of such former employer or client. (g) Except as
set forth on the Disclosure Documents, the Company is not a party to or bound by
any license or other agreement requiring the payment by the Company of any
royalty payment, excluding such agreements relating to software licensed for use
solely on the computers of the Company. (h) To the best knowledge of the
Company, none of the Trade Secrets, wherever located, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any Person other than employees, representatives and agents of any Group
Company, except as required pursuant to the filing of a patent application by
Company. (i) It is not necessary for the Company's business nor to the best
knowledge of the Company, any other Group Member's business, to use any
Intellectual Property owned by any director, officer, employee or consultant of
any Group Company (or persons any Group Company presently intends to hire).
26. Computer Systems. The Company has sufficient, technically
competent and trained employees to ensure proper, handling, operation,
monitoring and use of its computer systems.
(a) All computer equipment presently used by the Company
including server hardware and parts of computer equipment such as firmware,
screens, terminals, keyboards, disks including communications equipment,
terminals and hook-ups that interface with third party computer system, cabling
and other peripheral and associated electronic equipment (the "Hardware") and
all Software has been satisfactorily maintained and supported, provide
redundancy and meet industry standards in India relating to high availability.
(b) Disaster recovery plans are in effect and are designed and
reasonably adequate to ensure that the Hardware, Software and databases can be
replaced or substituted without material disruption to the business of the
Company. In the event that any Person providing maintenance or support services
for the Hardware, Software and databases ceases or is unable to do so, the
Company has all necessary rights and information to procure the carrying out of
such services by employees or by a third party without undue expense or delay.
(c) The Company has procedures designed to ensure internal and
external security of the Hardware, Software and databases, including procedures
for preventing unauthorized access, preventing the introduction of a virus,
taking and storing on-site and at secure off-site location(s) back-up copies of
material Software and databases.
(d) Where any of the records of the Company are stored
electronically, the Company or such person to whom it has contracted to maintain
such records is the owner of all material Hardware and material Software
licences necessary to enable it to keep, copy, maintain and use such records in
the course of its business.
27. Privacy of Customer Information. The Company does not use any
of the customer information it receives through its website or otherwise in an
unlawful manner, or in a manner violative of the Company's privacy policy or the
privacy rights of its customers. The Company has not collected any customer
information through its website in an unlawful manner or in violation of its
privacy policy. The Company has adequate security measures in
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place to protect the customer information it receives through its website and
which it stores in its computer systems from illegal use by third parties or use
by third parties in a manner violative of the rights of privacy of its
customers. The Company represents to its customers that it assures complete
security as to the customer information it receives through its website.
28. Related Party Transactions. Except as Disclosed in the
Disclosure Documents, there are no contracts between the Company or any of its
Subsidiaries on the one hand and any Related Parties of any Group Company or a
shareholder of a Group Company or a Group Company's shareholder's Related
Parties on the other hand, excluding Subsidiaries of the Company, (collectively
"Related Persons") involving more than $60,000 per year. Except as disclosed in
the Disclosure Documents, to the Company's knowledge no Related Person is
Indebted to any Group Company, nor is the Company Indebted (or committed to make
loans or extend or guarantee credit) to any such Related Person. Except as
Disclosed in the Disclosure Documents, to the Company's knowledge no such
Related Person has any direct or indirect ownership in any business entity with
which a Group Company is affiliated or with which a Group Company has a business
relationship, or any business entity that competes with a Group Company, other
than passive shareholdings of less than 5% in publicly listed companies. Except
as Disclosed in the Disclosure Documents, to the Company's knowledge no such
Related Person is, directly or indirectly, interested in any contract with any
Group Company or owns, directly or indirectly, in whole or in part, any tangible
or intangible property that any Group Company has used, or that any Group
Company will use, except as disclosed in the conduct of business. Except as
disclosed in the Disclosure Documents, to the Company's knowledge no Related
Person is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent or customer of, or lender to or borrower from, any
Group Company that is majority controlled by the Company. To the best knowledge
of the Company, no Related Person has any cause of action or other claim
whatsoever against, or owes or has advanced any amount to, any Group Company
that is majority controlled by the Company, except for claims in the ordinary
course of business such as for accrued vacation pay, accrued benefits under
employee benefit plans, and similar matters and agreements existing on the date
hereof.
29. Trade Relations. There exists no actual or, to the Company's
knowledge, threatened termination, cancellation or limitation of, or any adverse
modification or to change in, the business relationship of the Company, or the
business of the Company, with any customer or supplier or any group of customers
or suppliers whose purchases or inventories provided to the Company's business
are individually or in the aggregate material to the Condition of the Company,
and the Company is not aware of any present condition or state of fact or
circumstances that would adversely affect the Condition of the Company or
prevent the Company from conducting such business relationships or such business
with any such customer, supplier or group of customers or suppliers in the same
manner as heretofore conducted by the Company.
30. Outstanding Borrowing. Part 1 of the Disclosure Documents
sets forth the amount of all indebtedness of the Company not reflected in the
Financial Statements as of the date hereof, the Encumbrances that relate to such
indebtedness and that encumber the Assets and the name of each lender thereof.
No indebtedness is entitled to any voting rights in any matters voted upon the
holders of the Equity Shares. No indebtedness of the Company has become due or
payable or is now due and payable, before its normal or originally stated
maturity and no demand or other notice requiring the payment or repayment of
money before its normal or originally stated maturity has been received by the
Company. No event or circumstance has occurred or may occur with the giving of
notice or lapse of time which may entitle any person to require the payment or
repayment of any indebtedness of the Company before its normal or originally
stated maturity.
31. Insurance. The Disclosure Documents list all of the insurance
policies held by or on behalf of the Company, with the effective date and
coverage amounts indicated
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thereon. Such policies and binders are valid and enforceable in accordance with
their terms and are in full force and effect and cover all reasonable risks
associated with the Company's business that are customarily insured against in
the industry in such amounts as are customary in the industry. None of such
policies will be affected by, or terminate or lapse by reason of, any
transaction contemplated by this Agreement or any of the other Transaction
Documents.
32. Environmental Matters. The Company is in material compliance
with all applicable Environmental Laws. There is no civil, criminal or
administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
Company's knowledge, threatened against the Company pursuant to Environmental
Laws; and there are no past or present events, conditions, circumstances,
activities, practices, incidents, agreements, actions or plans which could
reasonably be expected to prevent compliance with, or which have given rise to
or will give rise to liability under, Environmental Laws, in each case except as
would not reasonably be expected to have a material adverse effect on the
Condition of the Company.
33. Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any such
Person.
34. Advertising. To the best knowledge of the Company after due
inquiry, current advertising, marketing and sales promotions by each Group
Company comply with all applicable codes of practice and self-regulatory
schemes. No Group Company has been disciplined under any scheme or code in
respect of any such advertising, marketing or sales promotion and to the best
knowledge of the Company, no complaint has been made against it in respect
thereof and there are no outstanding material complaints or disciplinary
proceedings against any Group Company in respect thereof.
35. Disclosure. To the best knowledge of the Company, this
Agreement and the documents and certificates furnished to SAIF by the Company
hereunder (including, without limitation, the Disclosure Documents), taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made,
misleading.
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Schedule 3
SAIF Warranties
In this Schedule, capitalized terms have the meanings set forth in this
Agreement.
1.1 Existence and Power. SAIF (a) is a company duly organized and validly
existing under the laws of the jurisdiction of its formation and (b) has the
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents to which it is
a party.
1.2 Authorization; No Contravention. Subject to satisfaction of the Conditions,
the execution, delivery and performance by SAIF of this Agreement and each of
the other Transaction Documents to which it is a party and the transactions
contemplated hereby and thereby, (a) have been duly authorized by all necessary
as the case may be, action, (b) do not contravene the terms of SAIF's
organizational documents, or any amendment thereof, and (c) do not violate,
conflict with or result in any breach or contravention of, or the creation of
any Encumbrance under, any Material Contract of SAIF or any Requirement of Law
applicable to SAIF, and (d) do not violate any Orders of any Governmental
Authority against, or binding upon, SAIF.
1.3 Governmental Authorization; Third Party Consents. Subject to satisfaction of
the Conditions, no approval, consent, compliance, exemption, authorization or
other action by, or notice to, or filing with, any Governmental Authority or any
other Person, and no lapse of a waiting period under any Requirement of Law, is
necessary or required in connection with the execution, delivery or performance
(including, without limitation, the subscription of the Subscribed Shares) by,
or enforcement against, SAIF of this Agreement and each of the other Transaction
Documents to which it is a party or the transactions contemplated hereby and
thereby.
1.4 Binding Effect. This Agreement and each of the other Transaction Documents
to which it is a party have been duly executed and delivered by SAIF and
constitutes the legal, valid and binding obligations of SAIF enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
1.5 Experience; Accredited Investor. SAIF is experienced in evaluating companies
such as the Company, and has through its current officers such knowledge and
experience in financial and business matters that such Investor is capable of
evaluating the merits and risks of SAIF's prospective investment in the Company,
and has the ability to bear the economic risks of the investment. SAIF is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act.
1.6 Purchase Entirely for Own Account. SAIF is acquiring the Subscribed Shares
and the Subscribed ADSs for investment for SAIF's own account and not with the
view to, or for resale in connection with, any distribution thereof in the
United States, except for transfers to affiliated fund partnerships or following
registration thereof under the Securities Act or as otherwise permitted under
the Securities Act. SAIF understands that, as at Closing, the issuance of
neither the Subscribed Shares or the Subscribed ADSs shall have been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein. SAIF further
represents that it does not have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant
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participation to any third Person with respect to any of the Subscribed Shares
or the Subscribed ADSs other than pursuant to the Investor Rights Agreement.
1.7 Access to Data. SAIF has received and reviewed the Disclosure Documents
(including the SARF Subscription Agreement and SARF Registration Rights
Agreement).
1.8 Access to necessary funds. As of the date of Closing, SAIF shall have
available cash sufficient to complete the transactions contemplated by this
Agreement, and at the Closing SAIF will have available all of the funds
necessary to purchase the Subscribed Shares and the Subscribed ADSs and to
perform its other obligations under this Agreement.
1.9 Regulation S. The offer and purchase of the Subscribed Shares and the
Subscribed ADSs has at all times been conducted as an "offshore transaction", as
defined in Regulation S. SAIF is not a "U.S. person" within the meaning of
Regulation S. SAIF understands and acknowledges that no resale or distribution
of the Subscribed Shares or the Subscribed ADSs in the United States may be made
without compliance with applicable United States securities laws. The purchase
of the Subscribed Shares and the Subscribed ADS is not part of a plan or scheme
on the part of SAIF to evade the registration provisions of the Securities Act.
SAIF will not offer, sell or deliver the Subscribed Shares or the Subscribed
ADSs to or for the account of a US Person or for the benefit of any person whom
SAIF knows or reasonably believes to be a US Person prior to forty days after
the date hereof (and it will send to any dealer to whom it sells Subscribed
Shares or the Subscribed ADSs during such period a confirmation or other notice
setting forth the foregoing restrictions on offers and sales of the Subscribed
Shares and the Subscribed ADSs) otherwise than pursuant to an effective
registration of the Subscribed Shares or the Subscribed ADSs under the
Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act.
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