AMENDED AND RESTATED BRIDGE LOAN AGREEMENT
This Amended and Restated Bridge Loan Agreement (this "Agreement") is made
as of May 24, 2001, by and between XxxXxx000.xxx Ltd., a Cayman Islands company
(the "Borrower"), NetCel360 Holdings Limited, a Cayman Islands company (the
"Parent"), NetCel360 Sdn Bhd, a Malaysian company (together with the Parent, the
"Guarantors"), the lenders set forth in Schedule 1A hereto (each, a "Tranche A
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Lender", and together, the "Tranche A Lenders") and the lenders set forth in
Schedule 1B hereto (each, a "Tranche B Lender", and together, the "Tranche B
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Lenders"). The Tranche A Lenders and the Tranche B Lenders are collectively
referred to as the "Lenders" and individually referred to as a "Lender."
WHEREAS, pursuant to that certain Bridge Loan Agreement, dated as of April
6, 2001 (as heretofore amended, modified or supplemented, the "Existing
Agreement"), among the Borrower, the Tranche A Lenders and the Guarantors, the
Borrower has heretofore borrowed from the Tranche A Lenders an aggregate
principal amount of US$2,250,000 (the "Tranche A Loans") in accordance with and
subject to the terms and conditions of the Existing Agreement;
WHEREAS, the Borrower wishes to borrow, and the Tranche B Lenders wish to
lend to the Borrower, up to US$3,000,000 (the "Tranche B Loans"; and together
with the Tranche A Loans, the "Loans") in accordance with and subject to the
terms and conditions of this Agreement; and
WHEREAS, the Borrower has asked the Lenders and Guarantors to amend and
restate the Existing Agreement in order, among other things, to extend the
maturity of the Tranche A Loans, to permit the Borrower to borrow the Tranche B
Loans and to permit the acquisition of certain Subsidiaries of the Parent (and
related assets) by Vsource Inc., a Delaware corporation ("Vsource"), or a
Subsidiary thereof, pursuant to that certain Acquisition Agreement of even date
herewith between the Parent and Vsource (the "Acquisition.")
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1
AGREEMENT OF LOAN AND GUARANTEE
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1.1 Tranche A Loan.
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(a) Each Tranche A Lender has heretofore made a Tranche A Loan to the
Borrower in the amount set forth next to such Lender's name in Schedule 1A (the
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aggregate of all such amounts being referred to as the "Tranche A Principal
Amount"). Subject to Section 3 of this Agreement, the Tranche A Principal
Amount shall be repaid in full on July 31, 2001, unless the Acquisition has been
completed on or prior to July 31, 2001, in which case the Tranche A Principal
Amount shall be repaid in full on December 31, 2001 (such due date, as
applicable, being referred to as the "Tranche A Maturity Date"). Each Tranche A
Loan shall be evidenced by a promissory note in the form set forth in Exhibit A
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hereto (each a "Tranche A Note" and collectively the "Tranche A Notes").
(b) Since April 11, 2001, interest has accrued on the outstanding
Tranche A Principal Amount at the rate of 5% per annum (the "Interest Rate") and
will continue to accrue at the Interest Rate from the date hereof. Subject to
Section 3.3(a), all accrued and unpaid interest is due and payable on the
Tranche A Maturity Date unless the Loan is repaid or exchanged on an earlier
date.
1.2 Tranche B Loans.
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(a) Each Tranche B Lender agrees to lend to the Borrower that amount
set forth next to such Lender's name in Schedule 1B (the aggregate of all such
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amounts being referred to as the "Tranche B Principal Amount"; and together with
the Tranche A Principal Amount, the "Principal Amount"). Subject to Section 3
of this Agreement, the Tranche B Principal Amount shall be repaid in full on
July 31, 2001, unless the Acquisition has been completed on or prior to July 31,
2001, in which case the Tranche B Principal Amount shall be repaid in full on
June 30, 2002 (such date, as applicable, being referred to as the "Tranche B
Maturity Date" and together with the Tranche A Maturity Date as the "Maturity
Dates"); provided that, unless the Tranche A Majority Lenders have elected to
extend the Tranche A Maturity Date pursuant to Section 3.1, no amount shall be
paid in respect of the Tranche B Loans unless and until the Borrower shall have
paid in full all due and owing amounts in respect of the Tranche A Loans. Each
Tranche B Loan shall be evidenced by a promissory note in the form set forth in
Exhibit B hereto (each, a "Tranche B Note"; and together with the Tranche A
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Notes, the "Notes").
(b) The Borrower may, from time to time after the Initial Disbursement
Date (as defined below) but prior to the date the Acquisition is consummated,
request the Tranche B Lenders to make additional loans (each such loan, an
"Optional Tranche B Loan") in an aggregate principal amount for all such loans
not to exceed $1,800,000 to the Borrower. Such request shall be made in writing
on a business day which is at least 5 business days prior to the requested date
of disbursement and such request shall be in a notice sent by the Borrower via
facsimile (with telephonic confirmation) to each of the Tranche B Lenders. Such
notice will state the following information: (i) the date of the requested
disbursement of the Optional Tranche B Loan and (ii) the aggregate amount of the
Optional Tranche B Loan being requested. Each Tranche B Lender shall indicate in
writing (delivered via facsimile, with telephonic confirmation) to the Borrower
by 12:00 p.m. of the business day immediately following the date on which the
Borrower makes its request, whether such Tranche B Lender is willing to lend any
portion of the requested Optional Tranche B Loan and, if so, the amount of such
Optional Tranche B Loan it is willing to lend (such amount being, solely in
respect of such requested Optional Tranche B Loan, such Tranche B Lender's
"Disbursement Commitment.") At least 3 business days prior to the date of the
requested disbursement of the Optional Tranche B Loan, the Borrower shall notify
those Tranche B Lenders which have Disbursement Commitments greater than zero of
the following:
(i) the aggregate amount of Disbursement Commitments,
(ii) whether the Borrower intends to borrow the requested Optional
Tranche B Loan, and
(iii) the portion of the Optional Tranche B Loan such Tranche B Lender
shall be required to lend (which shall equal (1) if the aggregate amount of
Disbursement Commitments is greater than the amount of the requested
Optional Tranche B Loan, the product of (A) the requested Optional Tranche
B Loan amount times (B) a quotient, (I) the numerator of which is such
Tranche B Lender's Disbursement Commitment and (II) the denominator of
which is the aggregate of all Tranche B Lenders' Disbursement Commitments
in respect of such requested Optional Tranche B Loan, (2) otherwise, such
Tranche B Lender's Disbursement Commitment.)
Any Optional Tranche B Loans made by any of the Tranche B Lenders to the
Borrower pursuant to this clause (b) shall constitute "Tranche B Loans" (other
than for Section 1.3(d) below), the principal amounts thereof shall be added to
the "Tranche B Principal Amount" and each such Optional Tranche B Loan shall be
evidenced by a Tranche B Note.
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(c) Interest shall accrue on the outstanding Tranche B Principal Amount
at the rate of 8% per annum from the Disbursement Date (as defined below), and,
subject to Section 3.3(b), is due and payable on the Tranche B Maturity Date
unless the Tranche B Loan is repaid or exchanged on an earlier date.
(d) Unless the Borrower otherwise directs, each Tranche B Lender shall
disburse its Tranche B Loan under clause (a) above to the Borrower on or prior
to May 29, 2001 (date of such disbursement being referred to as the "Initial
Disbursement Date"; and with each other date of disbursement under Section
1.3(b) above, a "Disbursement Date"), by wire transfer to the following account:
Beneficiary's Name: XxxXxx000.xxx Ltd
Beneficiary's Bank : Xxxxxxxx XX, Xxxxxxxxx
Beneficiary's Account: 815381017
Swift Code: XXXXXXXX
1.4 Guarantee and Indemnity.
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(a) Guarantee. The Guarantors have, as part of the Existing Agreement,
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guaranteed the due and punctual payment and performance of all of the
obligations of the Borrower (whether or not for the payment of money, and
including any obligation to pay damages for breach of contract) which are or may
become payable to the Tranche A Lenders or any of them pursuant to the Existing
Agreement and/or all other obligations thereby secured (the "Initial Secured
Obligations"). In consideration of the Lenders agreeing to make the Principal
Amount available to the Borrower upon the terms and conditions of this Agreement
and subject to Section 1.4(o) below, the Guarantors hereby jointly and severally
and unconditionally and irrevocably (i) affirm their guarantee of the Initial
Secured Obligations, and (ii) guarantee as a continuing obligation, the due and
punctual payment and performance of the Secured Obligations (as defined in
Section 1.4(d) below) in the currency in which the same is payable under the
terms of this Agreement and the due and punctual performance and observance by
the Borrower of all other obligations of the Borrower contained in this
Agreement, the Notes or the Debenture (collectively, the "Guarantee"),
notwithstanding any dispute between the Lenders and the Borrower, and if the
Borrower fails to pay any amount of the Secured Obligations when due the
Guarantors shall pay such amount to the Lenders in the required currency as
aforesaid forthwith upon receiving the written demand of the Tranche A Majority
Lenders (as defined below) or of the Tranche B Majority Lenders (as defined
below).
(b) Demands. Demands may be made under the Guarantee from time to time
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and may be enforced irrespective of whether any steps or proceedings are or will
be taken against the Borrower or any other person to recover the Principal
Amount or interest accrued thereon.
(c) Indemnity. Without prejudice to the guarantee contained in Section
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1.4(a), the Guarantors hereby jointly and severally and unconditionally and
irrevocably undertake, as a separate, primary, additional and continuing
obligation, to indemnify each Lender against all losses, liabilities, damages,
costs and expenses whatsoever arising out of any failure by the Borrower to make
due and punctual payment of the Secured Obligations or in the due and punctual
performance and observance of all other obligations under this Agreement, the
Notes or the Debenture. This indemnity shall remain in effect notwithstanding
that the guarantee under Section 1.4(a) may cease to be valid and enforceable
against the Guarantors for any reason whatsoever.
(d) Secured Obligations. For the purpose of this Agreement, "Secured
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Obligations" means any and all of the obligations of the Borrower (whether or
not for the payment of money, and including any obligation to pay damages for
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breach of contract) which are or may become payable to the Lenders or any of
them pursuant to this Agreement, the Notes or the Debenture and/or all other
obligations hereby secured.
(e) Continuing Guarantee. This Guarantee shall be a continuing
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guarantee and shall remain in full force and effect until the Secured
Obligations have been paid and performed in full, notwithstanding the insolvency
or liquidation or any incapacity or change in the constitution or status of the
Borrower or either or both of the Guarantors or any other person or any
intermediate settlement of account or other matter whatsoever. This Guarantee
is in addition to, and independent of, any security interest granted under
Section 1.4, or any guarantee or other security or right or remedy now or at any
time hereafter held by or available to the Lenders.
(f) Protective Clauses. Without limiting Section 1.4(e), neither the
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liability of either of the Guarantors nor the validity or enforceability of this
Guarantee shall be prejudiced, affected or discharged by:
(i) the granting of any time or indulgence to the Borrower or any
other person;
(ii) any variation or modification of this Agreement, the Notes or
the Debenture or any other document referred to herein or therein or related
thereto;
(iii) the invalidity or unenforceability of any obligation or
liability of any party under this Agreement, the Notes or the Debenture or any
other documents referred to herein or therein or related thereto;
(iv) any invalidity or irregularity in the execution of this
Agreement, the Notes or the Debenture or any other documents referred to herein
or therein or related thereto;
(v) any lack of capacity or deficiency in the powers of the
Borrower, any Guarantor or any other person to enter into or perform any of its
obligations under this Agreement, the Notes or the Debenture or any other
documents referred to herein or therein or related thereto or any irregularity
in the exercise thereof or any lack of authority by any person purporting to act
on behalf of the Borrower, the Guarantors or such other person;
(vi) the insolvency, bankruptcy or liquidation or any incapacity,
disability or limitation or any change in the constitution or status of the
Borrower or either or both of the Guarantors or any other person;
(vii) any other security document, security interest, guarantee or
other security or right or remedy being or becoming held by or available to any
Lender or by any other person or by any of the same being or becoming wholly or
partly void, voidable, unenforceable or impaired or by any Lender at any time
releasing, refraining from enforcing, varying or in any other way dealing with
any of the same or any power, right or remedy any Lender may now or hereafter
have from or against the Borrower or any other person;
(viii) any waiver, exercise, omission to exercise, compromise,
renewal or release of any rights against the Borrower or any other person or any
compromise, arrangement or settlement with any of the same; or
(ix) any act, omission, event or circumstance which would or may
but for this provision operate to prejudice, affect or discharge this Guarantee
or the liability of the Guarantors hereunder.
(g) Taxes and Other Deductions.
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(i) Funds. All payments to be made by the Guarantors or any other
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person under this Guarantee shall be made in full in immediately available U.S.
Dollars without any set off or consideration whatsoever, free and clear of any
Taxes, deductions or withholdings save as required by law.
(ii) Taxes. If at any time either Guarantor or any other person
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is required to make any deduction or withholding in respect of Taxes (as defined
below) or otherwise from any payment due under this Guarantee for the account of
any Lender, the sum due from such Guarantor in respect of such payment shall be
increased to the extent necessary to ensure that, after the making of such
deduction or withholdings, each Lender receives on the due date for such payment
(and retains, free from and clear of any Taxes or otherwise) a net sum equal to
the sum which it would have received had no such deduction or withholding been
required to be made and such Guarantor shall indemnify each Lender against any
losses or costs incurred by any of them by reason of any failure of such
Guarantor to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such payment. Such
Guarantor shall promptly deliver to the Lenders any receipts, certificates or
other proof evidencing the amounts (if any) paid or payable in respect of any
deduction or withholding as aforesaid. "Taxes" shall mean taxes, charges, fees,
levies or other assessments of any nature, including, without limitation, sales,
value added, use, excise, real or personal property, withholding, stamp or other
taxes, customs, duties or landing fees or other government charges however
designated, now or hereafter imposed, collected or assessed by, or payable to,
any taxing authority of any country and shall include interest, penalties and
additions imposed, collected or assessed or payable with respect to such amount.
(h) Costs, Charges and Expenses. Each of the Guarantors shall from
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time to time forthwith on demand of the Tranche A Majority Lenders or Tranche B
Majority Lenders pay to or reimburse the Lenders for all costs, charges and
expenses (including legal and other fees on a full indemnity basis) incurred by
any Tranche A Lenders (in the case of demands by the Tranche A Majority Lenders)
or any Tranche B Lenders (in the case of demands by the Tranche B Majority
Lenders) in connection with exercising any of their rights or powers hereunder
or in suing for or seeking to recover any sums due hereunder or otherwise
preserving or enforcing their rights hereunder or in defending any claims
brought against them in respect of this Guarantee or in releasing or
re-assigning this Guarantee upon payment of all moneys hereby secured and until
payment of the same in full, all such costs, charges and expenses shall be
secured by this Guarantee.
(i) Undertakings. Each Guarantor hereby undertakes and agrees
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jointly and severally with the Lenders that the undertakings in this Section 1.4
shall remain in force throughout the continuance of this Guarantee and so long
as the Secured Obligations or any part thereof remains owing.
(j) Further Indemnities.
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(i) General Indemnity. The Guarantors hereby jointly and
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severally undertakes with the Lenders to indemnify and keep indemnified the
Lenders and each of them from and against all costs, charges and expenses which
the Lenders shall incur in connection with the exercise of any powers conferred
by this Guarantee or the perfection, preservation or enforcement of the security
created by this Guarantee.
(ii) Currency Indemnity. If an amount due to any Lender from
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either Guarantor in one currency (the "first currency") is received by such
Lender in another currency (the "second currency"), such Guarantor's obligations
to such Lender in respect of such amount shall only be discharged to the extent
that such Lender may purchase the first currency with the second currency in
accordance with its normal banking practice. If the amount of the first
currency which may be so purchased (after deducting any costs of exchange and
any other related costs) is less than the amount so due, such Guarantor shall
indemnify such Lender against the shortfall.
(k) Unrestricted Right of Enforcement
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The Guarantee may be enforced without any Lender first having made any
demand or had recourse to any other security or rights or taking any other steps
or proceedings against the Borrower, either or both of the Guarantors or any
other person and may be enforced for any balance due after resorting to any one
or more other means of obtaining payment or discharge of the monies, obligations
and liabilities hereby secured.
(l) Discharge and Release
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Notwithstanding any discharge, release or settlement from time to time
between any Lender and the Guarantors, if any security, disposition or payment
granted or made to the Tranche A Majority Lenders, the Tranche B Majority
Lenders or any Lender in respect of the Secured Obligations by the Guarantors or
any other person is avoided or set aside or ordered to be surrendered, paid
away, refunded or reduced by virtue of any provision, law or enactment relating
to bankruptcy, insolvency, liquidation, winding-up, composition or arrangement
for the time being in force or for any other reason, the Tranche A Majority
Lenders and the Tranche B Majority Lenders shall be entitled hereafter to
enforce this Agreement as if no such discharge, release or settlement had
occurred.
(m) Amendment
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Any amendment or waiver of any provision of the Guarantee and any
waiver of any default under this Agreement shall only by effective if made in
writing and signed by the Tranche A Majority Lenders and the Tranche B Majority
Lenders.
(n) Evidence of Debt
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Any statement of account signed as correct by the Tranche A Majority
Lenders (in respect of the Tranche A Loans) or the Tranche B Majority Lenders
(in respect of the Tranche B Loans) showing any amount due under this Agreement,
the Notes or the Debenture or under the Guarantee shall, in the absence of
manifest error, be conclusive evidence of the amount so due.
(o) Release of Parent
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Upon the consummation of the Acquisition in accordance with its
terms, including the full assumption by Vsource of Parent's obligations
hereunder (including under this Section 1.4), (i) the Parent shall be released
from its obligations under this Section 1.4 and the Borrower shall execute such
releases as shall be reasonably requested by the Parent to evidence the same and
(ii) the term "Guarantors" shall thereafter no longer include the Parent, but
shall include Vsource.
1.5 Security Interest. The Guarantee is secured by a fixed and floating
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charge over the Collateral in favor of the Lenders under that certain Debenture
dated April 6, 2001 in the form attached as Exhibit C hereto (as amended,
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supplemented or modified from time to time, including the amendment described in
Section 8.11, the "Debenture") executed by NetCel360 Sdn Bhd. By its execution
hereof, NetCel360 Sdn Bhd affirms that such fixed and floating charge is, and
shall remain, in full force and effect.
SECTION 2
CONDITIONS PRECEDENT
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2.1 Conditions Precedent to Tranche B Loans. The obligations of each
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Tranche B Lender to make a Tranche B Loan hereunder (including, if it has
elected in its sole discretion, to make any Optional Tranche B Loans hereunder)
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on a Disbursement Date (including the Initial Disbursement Date) are subject to
the fulfillment, on or before such Disbursement Date, of each of the following
conditions:
(a) Representations and Warranties. Each of the representations and
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warranties made by the Borrower and the Guarantors in this Agreement shall be
true and correct in all material respects on and as of such Disbursement Date as
though such representation or warranty was made on and as of such Disbursement
Date, and any representation or warranty made as of a specified date earlier
than such Disbursement Date shall have been true and correct in all material
respects on and as of such earlier date.
(b) Performance. The Borrower and the Guarantors shall each have
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performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement and the Debenture to be so performed
or complied with by it at or before such Disbursement Date.
(c) Consents, Waivers and Approvals.
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(i) All consents, approvals and actions of, filings with and
notices to any third party, governmental or regulatory authority necessary to
permit the Borrower and the Guarantors to perform their obligations under this
Agreement and the Debenture and to consummate the transactions contemplated
hereby shall have been duly obtained, made or given, and shall be in full force
and effect.
(ii) The Borrower and the Guarantors shall have obtained any and
all consents, permits and waivers, if any, necessary or appropriate for entering
into and consummation of the transactions contemplated by this Agreement that
are required under the Second Amended and Restated Shareholders Agreement
between the Parent and the Investors specified therein, dated April 11, 2001
(the "Existing Shareholder Agreement"), the Parent's Third Amended and Restated
Memorandum and Articles of Association, as amended on April 11, 2001 (the
"Existing Articles") and the respective memorandum and articles of association
or similar charter documents of the Borrower and NetCel360 Sdn Bhd.
(d) Proceedings and Documents. All corporate and other proceedings in
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connection with the transactions contemplated under this Agreement and the
Debenture and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Lenders, and they shall have received all such
counterpart originals and certified or other copies of such documents as they
may reasonably request.
(e) Note. Each Lender shall have received a copy of its Note duly
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executed and delivered by the Borrower and the Guarantors, and the note issued
in respect of the Tranche A Loans under the Existing Agreement shall have been
delivered to the Borrower for cancellation.
(f) Events of Default. As of such Disbursement Date, each of the
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Borrower and the Guarantors shall be in compliance with all the terms and
provisions set forth herein on its part to be observed or performed, and neither
any Event of Default (as defined in Section 7 of this Agreement), nor any event
which upon notice or lapse of time or both would constitute such an Event of
Default, shall have occurred and be continuing.
(g) Affirmation of Security. NetCel360 Sdn Bhd shall have taken all
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steps necessary to perfect the Lenders' security interest in the Collateral.
(h) No Material Adverse Change. As of such Disbursement Date, there
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shall not have been, since the date hereof, any material adverse change in the
condition, financial, legal and regulatory environment over the business of the
Borrower or the Guarantors or otherwise, or in the earnings, business affairs or
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business prospects of the Borrower or the Guarantors or any of their
Subsidiaries (as defined below) whether or not arising in the ordinary course of
business.
(i) Opinion of Counsel. The Lenders shall have received an opinion of
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Xxxxxx and Xxxxxx Asia, Cayman Islands counsel to the Borrower and the Parent,
substantially in the form of Exhibit E-1 hereto, and Xxxx and Partners, Malaysia
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counsel to NetCel360 Sdn Bhd, substantially in the form of Exhibit E-2 hereto.
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(j) Corporate Documents. The Borrower and the Guarantors shall have
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delivered or made available to the Lenders or their counsel, certified copies of
all corporate documents of the Borrower, the Guarantors and the Subsidiaries as
the Lenders shall reasonably request.
(k) Legal Investment. On the date of such Disbursement Date, the
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making of the Loans and the provision of the Guarantee shall be legally
permitted by all laws and regulations to which the Borrower and the Guarantors
are subject, and there shall be no action, suit, proceeding, inquiry or
investigation brought by any governmental or regulatory agency or body, domestic
or foreign, pending, or, to the knowledge of the Borrower or the Guarantors,
threatened, against the Borrower or the Guarantors which would prevent the
Borrower or the Guarantors from entering into or consummating the transactions
contemplated by this Agreement or the Debenture.
(l) Parent Shareholders Approval. With respect to Asia Internet
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Investment Group I, LLC only, the Acquisition shall have been approved by the
appropriate resolutions of the shareholders of the Parent in accordance with
applicable law.
2.2 Conditions Precedent to Effectiveness of Amendment and Restatement.
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This Agreement, and the amendment and restatement of the Existing Agreement
effected hereby, shall be effective upon the receipt by the Borrower of
counterparts (either facsimile or original) hereof executed by the Lenders and
the Guarantors.
SECTION 3
TERMS OF CONVERSION, EXCHANGE OR REPAYMENT
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3.1 Series D Conversion.
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(a) If a Transfer does not occur on or prior to July 31, 2001, the
Tranche A Majority Lenders, may elect to, on behalf of all of the Tranche A
Lenders, upon provision of written notice to the Borrower: (i) demand immediate
repayment in full of the outstanding Tranche A Principal Amount and all interest
accrued thereon, to the accounts identified by each Tranche A Lender; (ii)
extend the Tranche A Maturity Date (with respect to Tranche A Loans); or (iii)
convert any or all of the outstanding Tranche A Principal Amount and all
interest accrued thereon into shares of the Parent's next round of equity
financing (the "Series D Shares"). "Transfer" shall mean (w) the Acquisition
being consummated in accordance with its terms, (x) a merger of the Parent with
a third party (an "Acquiror"), (y) a sale of shares of the Parent to an Acquiror
resulting in a Change of Control (as defined in the Existing Shareholders
Agreement), or (z) any transaction in which all or substantially all of the
assets of the Parent, including shares of the Subsidiaries, are sold to an
Acquiror. "Tranche A Majority Lenders" shall mean those Lenders to whom 66% or
more of the outstanding Tranche A Principal Amount is owed; provided, that if
any single Tranche A Lender would constitute a Tranche A Majority Lender, then
Tranche A Majority Lender shall mean such Tranche A Lender and at least one
other Tranche A Lender. "Tranche B Majority Lenders" shall mean those Lenders to
whom 66% or more of the outstanding Tranche B Principal Amount is owed;
provided, that if any single Tranche B Lender would constitute a Tranche B
Majority Lender, then Tranche B Majority Lender shall mean such Tranche B Lender
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and at least one other Tranche B Lender. For purposes of the definitions of
"Tranche A Majority Lenders" and "Tranche B Majority Lenders", Xxxxxx Xxxxx and
Xxxxxx Xxxxx, and their respective successors and assigns, shall constitute a
single Lender.
(b) If a Transfer does not occur on or prior to July 31, 2001 and the
Tranche A Majority Lenders elect to convert all, but not less than all, of the
outstanding Tranche A Principal Amount and interest accrued thereon into Series
D Shares in accordance with Section 3.1(a)(iii), then on the agreed conversion
date the Parent shall issue and deliver to the Tranche A Lenders a certificate
or certificates for the number of Series D Shares issuable upon the conversion.
Upon the issuance of certificates in accordance with either clause (i) or clause
(ii) of this sub-paragraph (b), the conversion shall be deemed to have been
effected, the related reduction in the respective Tranche A Principal Amount
shall be deemed to have been made, and the person(s) in whose name(s) any
certificate(s) for Series D Shares, as the case may be, shall be issuable upon
such conversion shall be deemed to have become the holder(s) of record of such
shares. After receiving delivery of the certificate or certificates
representing the Series D shares, the Tranche A Majority Lenders on behalf of
the Tranche A Lenders shall surrender the Tranche A Notes to the Borrower and
the Guarantors for cancellation.
3.2 No Fractional Shares. No fractional shares shall be issued on
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conversion of the Tranche A Notes. If any fractional shares would result from
conversion of the Tranche A Principal Amount attributable to a Tranche A Lender,
the Borrower shall pay the cash value thereof to such Tranche A Lender based on
the respective conversion price.
3.3 Discharge of Notes. (a) If the Acquisition is consummated prior
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to July 31, 2001 in accordance with its terms, then the Borrower may, at its
sole discretion, elect to discharge all of its obligations (including without
limitation in respect of principal, interest and fees) in respect of the Tranche
A Loans by
(i) delivery of a notice by no later than December 15, 2001 (a
"Tranche A Tender Notice") to the Tranche A Lenders setting forth the
aggregate amount of Vsource's cash and cash equivalents (determined on a
consolidated basis) (the "Available Cash") and electing to discharge its
obligations by delivery of shares of Vsource common stock as described in
paragraph (ii); and:
(ii) tendering to each Tranche A Lender within fifteen (15) days after
the date of the Tranche A Tender Notice such number of shares of the common
stock of Vsource, equal to such Tranche A Lender's then outstanding Tranche
A Principal Amount and accrued and unpaid interest divided by 0.20 (the
"Tranche A Exchange Factor");
provided, that, if on the date of such Tranche A Tender Notice by the Borrower,
the aggregate amount of Vsource's Available Cash is greater than $7,000,000,
then by written notice to the Borrower within twelve (12) days after delivery of
the Tranche A Tender Notice by the Borrower, each Tranche A Lender, may, at its
sole discretion, elect to receive in lieu of such shares of common stock of
Vsource a cash payment from the Borrower in an aggregate amount equal to the
product of (x) such Tranche A Lender's then outstanding Tranche A Principal
Amount plus accrued and unpaid interest thereon multiplied by (y) 0.5; provided,
however, that Xxxxxxx Xxxxx, Xxxxxx Xxxxx and Asia Internet Investment Group I,
LLC (and their respective successors and assigns) shall not be entitled to
exercise the right to receive a cash payment set forth in this proviso. Any
payment due to a Tranche A Lender pursuant to the foregoing proviso shall be
payable on the date which is six (6) months following such Tranche A Lender's
election.
(b) If the Acquisition is consummated prior to July 31, 2001 in accordance
with its terms, then on or before the earlier of:
-9-
(i) thirty (30) days after the completion of a rights offering to the
shareholders of Vsource (the "Rights Offering"), or
(ii) the date which is (30) days after the stockholders meeting at
which the shareholders of Vsource approve the issuance of shares of Vsource
common stock to the Lenders in connection with this Section 3.3, if Vsource
has not announced or commenced a Rights Offering by such date,
the Borrower may, at its sole discretion and without the need of any consent of
the Tranche B Lenders, elect to discharge all of its obligations (including
without limitation in respect of principal, interest and fees) in respect of the
Tranche B Loans by tendering to each Tranche B Lender such number of shares of
the common stock of Vsource, equal to such Tranche B Lender's then outstanding
Tranche B Principal Amount and accrued and unpaid interest divided by 0.10 (the
"Tranche B Exchange Factor"; and together with the Tranche A Exchange Factor,
the "Exchange Factors").
(c) The Borrower will ensure that all shares of common stock of Vsource
issued pursuant to Sections 3.3(a) and 3.3(b), if any, will be duly and validly
issued, fully-paid and non-assessable, and free and clear of all encumbrances,
liens, mortgages and any other rights of third parties whatsoever.
(d) No fractional shares shall be issued on exchange of the Loans as
provided in this Section 3.3. If any fractional shares would result from
exchange of the Principal Amount and accrued and unpaid interest attributable to
a Lender, the Borrower shall pay the cash value thereof to such Lender based on
the respective Exchange Factor.
(e) In order for the Borrower to exercise its exchange rights under
this Section 3.3, the Borrower shall contemporaneously agree with Vsource, for
the benefit of the Lenders, that the Lenders shall be entitled to the
registration rights with respect to the common stock of Vsource received by the
Lenders which are set forth on Exhibit F hereto.
----------
(f) The exchange rights of the Borrower under this Section 3.3, and the
Exchange Factors, shall be subject to the anti-dilution protections set forth on
Exhibit G hereto.
----------
(g) If the Borrower has not discharged the Tranche B Loans under this
Section 3.3 prior to the Tranche B Maturity Date, the Borrower shall pay the
Tranche B Lenders, in discharge of its obligations in respect of the Tranche B
Loans, an aggregate amount (to be ratably distributed to the Tranche B Lenders
in accordance with the respect Tranche B Principal Amounts of the Loans) equal
to three (3) multiplied by the Tranche B Principal Amount plus accrued and
unpaid interest thereon.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE BORROWER AND THE GUARANTORS
-----------------------------------------------------------------
4.1 Representations and Warranties by the Borrower and Guarantors. The
-------------------------------------------------------------
Borrower and the Guarantors jointly and severally represent and warrant to each
of the Lenders as of the date hereof and as of each Disbursement Date as
follows:
(a) Good Standing of the Borrower and the Guarantors. Each of the
-----------------------------------------------------
Borrower and the Guarantors has been duly incorporated as a company limited by
shares under the laws of its jurisdiction of incorporation and is validly
existing and in good standing under the laws of such jurisdiction (meaning that
it has not failed to make any filing with any government authority of such
jurisdiction or to pay any government fee or tax of such jurisdiction which
might make it liable to be struck off the relevant registry of companies of such
-10-
jurisdiction and thereby cease to exist under the laws of such jurisdiction) and
has corporate power and authority to own, lease and operate its properties and
to conduct its business in the manner presently conducted and to enter into and
perform its obligations under this Agreement and the Debenture; and each of the
Borrower and the Guarantors is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
to be in good standing would not result individually or in the aggregate in a
material adverse effect on its business, property, results of operation,
financial condition or business prospects, or ability to perform its obligations
under this Agreement or the Debenture ("Material Adverse Effect").
(b) Capitalization. The authorized, issued and outstanding share
--------------
capital of the Borrower and each of the Guarantors as of the date hereof is as
set forth in Schedule 4.1(b) hereto. The shares of issued and outstanding share
---------------
capital of each of the Borrower and the Guarantors have been duly authorized and
validly issued and are fully paid and non-assessable; none of the outstanding
shares of share capital of the Borrower or the Guarantors have been issued in
violation of the pre-emptive or other similar rights of any person or in
violation of any applicable securities laws or regulations. Save as otherwise
specified in Schedule 4.1(b) hereto and prior to the issuance of shares as
----------------
contemplated under Section 3 hereof, there are no outstanding (i) shares or
other voting securities of the Borrower or the Guarantors, (ii) securities
convertible into or exchangeable for shares or voting securities of the Borrower
or the Guarantors, or (iii) options (other than those issued to employees
pursuant to the Parent's Amended and Restated 2001 Stock Option Plan), warrants,
conversion or pre-emption rights (other than those provided under the Existing
Shareholders Agreement or the Existing Articles) or other rights to acquire
shares from the Borrower or either Guarantor, and no shares of the Borrower or
either Guarantor, or shares issuable upon exercise of any outstanding options,
warrants or other rights, or other shares issuable by the Borrower or either
Guarantor, are subject to any pre-emptive rights, rights of first refusal or
other rights to subscribe or purchase such shares (whether in favor of the
Borrower, the Guarantors or any other persons) (other than those provided under
the Existing Shareholders Agreement and the Existing Articles). Except as set
out in Schedule 4.1(b), there are no outstanding obligations of the Borrower or
---------------
either Guarantor to issue or deliver or to repurchase, redeem or otherwise
acquire any securities.
(c) Authorization of Agreements. This Agreement, the Debenture and the
---------------------------
Notes have been duly authorized, this Agreement and the Debenture have been, and
the Notes will be, executed and delivered by the Borrower and the Guarantors, as
applicable, and this Agreement and the Debenture constitute, and the Notes when
executed and delivered will constitute, valid and legally binding obligations of
each such party, enforceable in accordance with their terms.
(d) Security Interest. Pursuant to the Debenture, the Lenders have an
------------------
effective, valid, legally binding and enforceable fixed and floating charge in
the Collateral. Such fixed and floating charge will, as of such Disbursement
Date, be superior and prior to the rights of all third persons now existing or
hereafter arising whether by way of mortgage, lien, security interests,
encumbrance, assignment or otherwise.
(e) Absence of Defaults and Conflicts. None of the Borrower, the
-------------------------------------
Guarantors nor any of their respective Subsidiaries (as defined below) is in
violation of its constitutional documents or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which it is a party or by which it may
be bound, or to which any of its property or assets is subject, except for such
violations or defaults that would not individually or in the aggregate result in
a Material Adverse Effect; and the execution, delivery and performance of this
Agreement, the Notes and the Debenture and the consummation of the transactions
contemplated herein and in the Notes and the Debenture, and compliance by the
Borrower and the Guarantors with their respective obligations hereunder and
under the Notes and the Debenture have been duly authorized by all necessary
corporate action, do not require the consent of any person (except such consents
-11-
as have been obtained) and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default under any such contract, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument referred to
above, or, other than under the Debenture, result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Borrower
or the Guarantors (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not individually or in the aggregate result
in a Material Adverse Effect) or permit any person to exercise any rights of
pre-emption (except such as has been exercised or waived under the Existing
Shareholders Agreement and the Existing Articles) or to terminate, accelerate
the performance required by, or accelerate the maturity of any indebtedness or
obligation of the Borrower or either Guarantor, nor will such action result in
any violation of the provisions of the Existing Articles or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Borrower or the Guarantors or any of their respective assets,
properties or operations.
(f) Absence of Labor Dispute. None of the Borrower or the Guarantors
--------------------------
is bound by or subject to any contract, commitment or arrangement with any labor
union, and, to the Borrower's and the Guarantor's knowledge, no labor union has
requested, sought or attempted to represent any employees, representatives or
agents of the Borrower or the Guarantors. There is no strike or other labor
dispute involving the Borrower or the Guarantors pending nor, to the Borrower's
or the Guarantor's knowledge, threatened, nor is the Borrower or either
Guarantor aware of any labor organization activity involving its employees, and
none of the Borrower or the Guarantors is aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers, customers or contractors. To the best of the Borrower's and the
Guarantors' knowledge, no employee of the Borrower or the Guarantors is or will
be in violation of any judgment, decree or order, or any term of any employment
contract, patent disclosure agreement, or other contract or agreement relating
to the relationship of any such employee with the Borrower, a Guarantor or any
other party because of the nature of the business conducted or to be conducted
by the Borrower or the Guarantor or to the use by the employee of his best
efforts with respect to such business. Except as set forth in Schedule 4.1(f),
---------------
none of the Borrower and the Guarantors is a party to or bound by any currently
effective employment contract (other than contracts that can be terminated on an
at-will basis upon specified notice), deferred compensation agreement, bonus
plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement other than its management incentive plan, team
incentive plan and sales and consulting incentive plan. The Borrower is not
aware that any officer or key employee, or any group of key employees, intends
to terminate their employment with the Borrower, nor does the Borrower have a
present intention to terminate the employment of any of the foregoing. Subject
to general principles related to wrongful termination of employees, the
employment of each officer and employee of the Borrower is terminable at the
will of the Borrower.
(g) Absence of Proceedings. There is no action, suit, proceeding,
------------------------
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Borrower
or the Guarantors, threatened, against or affecting the Borrower or the
Guarantors, any of their shareholders, directors, officers or agents, or any
Subsidiary which might reasonably be expected individually or in the aggregate
to result in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Borrower, the
Guarantors or any Subsidiaries or the consummation of the transactions
contemplated in this Agreement or the Debenture or the performance by the
Borrower or the Guarantors of their respective obligations hereunder.
(h) Possession of Intellectual Property. Each of the Borrower, the
--------------------------------------
Guarantors and the Subsidiaries have all rights in the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures, directly or through agreements with other parties), trademarks,
-12-
service marks, trade names, Internet domain names or other intellectual property
necessary to carry on its existing and prospective business activities. As of
the date hereof, the existing and proposed business operations of the Borrower,
the Guarantors and the Subsidiaries do not and will not foreseeably infringe,
respectively, on the intellectual property rights of third parties.
(i) Absence of Further Requirements. No filing with, or authorization,
-------------------------------
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Borrower or either Guarantor of its obligations hereunder in
connection with the performing any of its obligations under this Agreement or
the Debenture, except such as have been obtained on the date hereof or will be
obtained on or prior to such Disbursement Date or as may be properly obtained
subsequent to such Disbursement Date.
(j) Possession of Licenses and Permits. The Borrower, the Guarantors
------------------------------------
and each of the Subsidiaries possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses") issued
by regulatory agencies or bodies in any applicable jurisdiction necessary to
conduct the business now operated by them; the Borrower, the Guarantors and each
of the Subsidiaries is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply individually or in
the aggregate would not have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect individually or in the aggregate would not have a Material
Adverse Effect; none of the Governmental Licenses is at present subject to any
legal challenge by any person or review by any governmental authority and
neither the Borrower, either Guarantor nor any of the Subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, if the subject of an unfavorable decision, ruling
or finding, would result individually or in the aggregate in a Material Adverse
Effect.
(k) Private Placement. Neither the Borrower, either Guarantor nor any
------------------
affiliate (as defined in Rule 405 under the Securities Act) thereof has (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Notes in a manner that would require the
registration under the U.S. Securities Act of 1933 (the "Securities Act") of the
Notes or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Rule 502(c) of Regulation D under the Securities Act) or
any directed selling efforts (as defined under the Securities Act) in the United
States in connection with the offer and sale of the Notes.
(l) Subsidiaries. Each subsidiary of the Parent, meaning any
------------
corporation in which the Parent, directly or indirectly, beneficially owns more
than 50% of the equity interest in, or the voting control of, such company
(each, a "Subsidiary"), is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation and has full corporate power
and authority to own, lease and operate its properties, conduct its business as
and to the extent now conducted. All of the outstanding shares of capital stock
of each Subsidiary have been duly authorized and validly issued, are fully paid
and nonassessable, and, except as set out in Schedule 4.1(l), are owned,
---------------
beneficially and of record, by the Parent or Subsidiaries wholly owned by the
Parent free and clear of all liens, charges, encumbrances, options, rights of
pre-emption and third party rights whatsoever (collectively, "Liens"). A
complete list of all Subsidiaries and other holdings of the Parent is set out in
Schedule 4.1(l). Save as set out in that schedule, neither the Borrower nor
----------------
either Guarantor owns, directly or indirectly, any of the capital stock or
voting stock of any other company or corporation.
(m) Tax, Records and Returns. (A) Each of the Borrower, the Guarantors
------------------------
and the Subsidiaries has duly filed all returns, computations, notices and
information required to be made or provided by it for any tax purpose and the
same have been made or given within the requisite periods and on a proper basis
and when made were true and accurate and are up to date and none of them is or
likely to be the subject of any dispute with any tax authority exceeding
US$50,000 in the aggregate.
-13-
(B) Each of the Borrower, the Guarantors and the Subsidiaries
has paid when due, and has withheld, deducted and accounted to the relevant tax
authorities for, all tax, including provisional taxation, which it has become
liable to pay, withhold, deduct or account for on or before the date hereof and
within the one year period prior to the date hereof neither the Borrower, the
Guarantors, any Subsidiary nor any director or officer thereof has paid or
become liable to pay any fine, penalty, surcharge or interest in relation to tax
in relation to the activities of the Borrower, the Guarantors or any Subsidiary,
except where the failure to do so would not result in a liability exceeding
US$50,000 in the aggregate.
(n) Title to Property. (A) None of the Borrower, the Guarantors and
-------------------
the Subsidiaries owns any real property.
(B) All of the leases and subleases material to the business of
the Borrower, the Guarantors and the Subsidiaries are in full force and effect,
the Borrower, the Guarantors and the Subsidiaries are each in compliance with
each of them and none of the Borrower, the Guarantors or any Subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Borrower, the Guarantors or any Subsidiary under
any of the leases or subleases mentioned above, or affecting or questioning the
rights of the Borrower, the Guarantors or such Subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease.
(C) Each of the Borrower, the Guarantors and the Subsidiaries has
good and marketable title to its assets, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (a) those resulting from
taxes which have not yet become delinquent, and (b) those that have otherwise
arisen in the ordinary course of business.
(o) [intentionally left blank]
(p) Contracts. (A) There are no contracts or obligations, agreements,
---------
arrangements or concerted practices involving the Borrower, the Guarantors or
any Subsidiary and no practices in which the Borrower, either Guarantor or any
Subsidiary is engaged, which are void, illegal, unenforceable, registrable or
notifiable under or which contravene any fair trading or anti-trust legislation
or regulations of the law of any jurisdiction in which the Borrower, the
Guarantors or any of the Subsidiaries conducts its business or sells its
services nor has the Borrower, either Guarantor or any Subsidiary received any
threat or complaint or request for information or investigation in relation to
or in connection with any such legislation or regulations, except to the extent
such contracts or obligations, agreements, arrangements or concerted practices
would not have a Material Adverse Effect.
(B) With respect to each material contract, commitment,
arrangement, understanding, tender and bid involving the Borrower, a Guarantor
or any Subsidiary:
(1) each of the Borrower, the Guarantors and each Subsidiary
has duly authorized, executed and delivered such contract ,and the Borrower, the
Guarantors and each Subsidiary has duly performed and complied in all material
respects with each of its obligations thereunder;
(2) neither the Borrower, the Guarantors nor any Subsidiary
is under any material obligation which cannot readily be fulfilled, performed or
discharged by it on time and without undue or unusual expenditure of effort or
loss;
(3) to the best of the Borrower's and the Guarantors'
knowledge, after due enquiry, there are no grounds for rescission, avoidance,
repudiation or termination and neither the Borrower, the Guarantors nor any
Subsidiary has received any notice of rescission or termination; and
-14-
(4) to the best of the Borrower's and the Guarantor's
knowledge, the obligations of the other parties thereto form valid obligations
of such other parties, and none of such other parties is in default thereunder,
except where such default would not have a Material Adverse Effect.
(q) Affiliate Transactions. (i) Except for the Loans, there is no
-----------------------
indebtedness between the Borrower, either Guarantor or any Subsidiary, on the
one hand, and any officer, director, shareholder or Affiliate (as defined in
Rule 405 under the Securities Act) of the Borrower, the Guarantors or any
Subsidiary or any relative of such persons, or any entity in which any of such
shareholder, director or officer of the Borrower, the Guarantors or a Subsidiary
has an interest, other than a passive shareholding of less than 5% in a publicly
listed company, on the other, (ii) neither any such officer, director,
shareholder or Affiliate provides or causes to be provided any assets, services
(other than those in the capacity of officer or director of the Borrower, a
Guarantor or any Subsidiary) or facilities to the Borrower, the Guarantors or
any Subsidiary which are individually or in the aggregate material to the
business or condition of the Borrower or the Guarantors and (iii) except as set
forth in Schedule 4.1(q), neither the Borrower, the Guarantors nor any
----------------
Subsidiary provides or causes to be provided any assets or facilities to any
such officer, director, shareholder or Affiliate which are individually or in
the aggregate material to the business or condition of the Borrower or the
Guarantors.
(r) Minute Books. The statutory books, minute books and registers of
-------------
members of the Borrower, the Guarantors and the Subsidiaries made available to
the Lenders are true and complete and have been properly and accurately
maintained in all material respects and contain full and accurate records of all
resolutions passed by the directors and shareholders of the Borrower, the
Guarantors and the Subsidiaries. The copies of the charter documents of the
Borrower, the Guarantors and the Subsidiaries (having attached thereto copies of
all such resolutions that are by law required to be attached thereto and all
amendments made to date) that have been delivered to the Lenders are true and
complete. All legal and procedural requirements and other formalities
concerning such charter documents have been duly and properly complied with in
all material respects.
(s) Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by the Borrower and the
Guarantors directly without the intervention of any person on behalf of the
Borrower or the Guarantors in such manner as to give rise to any valid claim by
any person against the Lenders (or any of them), the Borrower, the Guarantors or
any Subsidiary for a finder's fee, brokerage commission or similar payment.
(t) Disclosure. Neither this Agreement, the Notes or the Debenture,
----------
nor any other statements or certificates made or delivered in connection
herewith or therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading.
(u) Financial Statements. The audited consolidated financial
---------------------
statements of the Parent as of and for the year ended December 31, 2000 (the
"Financial Statements") and the unaudited consolidated financial statements of
the Parent as of and for the three months ended March 31, 2001 (the "Interim
Financial Statements"), which have been made available to the Lenders, are
correct in all material respects and have been prepared in accordance with US
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated and consistent with each other, and present
fairly the consolidated financial condition and consolidated operating results
of the Parent of the dates and during the periods indicated therein, subject, in
the case of the Interim Financial Statements, to normal year-end adjustments,
which will not be material in amount or significance. Except as set forth in
the Financial Statements or the Interim Financial Statements or arising in the
ordinary course of business since April 1, 2001, none of the Borrower or either
of the Guarantors has (A) incurred any liabilities of any nature (matured or
unmatured, fixed or contingent) or (B) made any material disposal of assets,
-15-
suffered any loss or material damage of any assets, waived any valuable rights,
made any material change in any material contract to which it is a party or
declared or paid any dividends. Since April 1, 2001, (1) there has been no
material adverse change in the financial or trading position or prospects of the
Borrower, the Guarantors or the Subsidiaries; and (2) the business of each of
the Borrower, the Guarantors and the Subsidiaries has in all material respects
been carried on in the ordinary course of such business.
(v) Dissolution or Winding-up. No steps have been taken by the
---------------------------
Borrower, either Guarantor or any Subsidiary, nor have any orders been made or
legal proceedings been started or threatened for the dissolution or winding-up,
or for the appointment of a receiver, trustee, judicial manager or similar
officer, of the Borrower, the Guarantors or any Subsidiary, its assets or any of
them. Neither the Borrower, the Guarantors nor any Subsidiary is unable to pay
its debts as they fall due.
(w) Confidentiality Provision. Each officer and employee of the
--------------------------
Borrower, the Guarantors or the Subsidiaries is subject to an employment
agreement with confidentiality provisions substantially to the effect set forth
in Schedule 4.1(w).
----------------
(x) Non-Competition Agreements. Neither the Borrower, the Guarantors
---------------------------
nor any of its Subsidiaries is a party to any non-competition or other agreement
or subject to any duty which restricts the scope of, or the jurisdictions in
which the Borrower, the Guarantors or the relevant Subsidiary may carry on, its
business.
(y) Insurance. Each of the Borrower, the Guarantors and the
---------
Subsidiaries has maintained adequate insurance coverage against risks normally
insured against by companies carrying on a similar business in the geographic
area in which such company carries on its business, and in particular has
maintained all insurance required by statute.
(z) No Other Representations. Notwithstanding anything to the contrary
------------------------
contained in this Agreement, it is the explicit intent of each party hereto that
none of the Borrower or the Guarantors is making any representation or warranty
whatsoever, express or implied, except those representations, and warranties
contained in this Section 4.1.
(aa) Taxes on Payments. All payments to be made by the Borrower or the
-----------------
Guarantors under this Agreement, the Notes or the Debenture, may be made by them
free and clear of, and without deduction for, taxes and no deductions or
withholdings are required to be made therefrom.
(bb) Pari passu Ranking. The obligations of the Borrower hereunder
--------------------
rank at least pari passu with all its other present and future unsecured and
unsubordinated obligations save for any obligations mandatorily preferred by law
and not by contract.
(cc) No Immunity. Each of the Borrower and the Guarantors is generally
-----------
subject to civil and commercial law and to legal proceedings and none of them
nor any of their respective assets or revenues is entitled to any immunity or
privilege (sovereign or otherwise) from any set-off, judgment, execution,
attachment or other legal process.
(dd) Security Interests over Assets. Save as may be permitted or
---------------------------------
contemplated by this Agreement and the Debenture, no Security Interest (as
defined below) exists over all or any of the present or future revenues or
assets of the Borrower or either of the Guarantors. For the purpose of this
Agreement, "Security Interest" means any mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, security interest or other
-16-
encumbrance of any kind securing or conferring any priority of payment in
respect of any obligation of any person and includes any right granted by a
transaction which, in legal terms, is not the granting of security but which has
an economic or financial effect similar to the granting of security in each case
under any applicable law.
(ee) Choice of Law. In any proceedings taken in the State of Delaware
--------------
in relation to this Agreement, the Notes or the Debenture, the choice of the
laws of the State of Delaware as the governing law of this Agreement and the
Notes and any judgment obtained in the State of Delaware would be recognised and
enforced.
4.2 Representations and Warranties Continue. The representations and
-----------------------------------------
warranties in Section 4.1 shall be deemed to be repeated by the Borrower and
each Guarantor throughout the continuance of this Agreement as if made, with
reference to the facts and circumstances existing from time to time.
SECTION 5
COVENANTS OF THE BORROWER AND THE GUARANTORS
--------------------------------------------
5.1 Covenants of the Borrower. Until such time as the Acquisition
-----------------------------
shall have been consummated in accordance with its terms, each Borrower and
Guarantor covenants with the Lenders as follows:
(a) Interim Period. During the period from the date of this Agreement
---------------
to the Initial Disbursement Date (the "Interim Period"), none of the Borrower,
the Guarantors or the Subsidiaries shall carry on its business in a manner, do,
allow or procure any act or omission which would constitute a breach of or
render inaccurate or misleading any of the representations and warranties under
Section 4.1 except for entering into or consummating the Acquisition. The
Borrower or the Guarantors shall give the Lenders prompt notice of any event,
condition or circumstance during the Interim Period that would constitute a
violation or breach of any of such representations and warranties if such
representations and warranties were made as of any day during the Interim
Period, or would constitute a violation or breach of any terms and conditions
contained in this Agreement. In addition, during the Interim Period, other than
entering into or consummating the Acquisition, none of the Borrower or the
Guarantors shall permit, with respect to itself or any Subsidiary, any: (i)
material change in key personnel, (ii) disposal of material assets, (iii) change
in its auditors or its financial year end, (iv) amendment to its charter
documents (except for the adoption of amendments to the Existing Articles
necessary to effect the sale and issuance of the Series C Shares), (v)
acquisition of assets or contracting to do so otherwise than in the ordinary
course of business, (vi) entering into of arrangements that are not on an arm's
length basis and in the ordinary course of business, (vii) lending or borrowing
of money or providing any security or indemnity except under this Agreement and
the Debenture or in the ordinary course of business and (viii) declaration or
payment of dividends or issuance of securities of any kind.
(b) Stamp Tax. The Borrower and the Guarantors will pay (1) any stamp,
---------
issue, registration, documentary or other similar taxes and duties including
interest and penalties, payable on or in connection with the making of the Loans
and the Guarantee, creation, issue and offering of the Series D Shares or the
shares of Vsource, if any, received in the exchange described in Section 3.3, or
the execution or delivery of this Agreement or the Debenture; and (2) in
addition to any amount payable by the Borrower or the Guarantors under this
Agreement, any value added, turnover or similar tax payable in respect of that
amount.
(c) Material Changes. The Borrower and the Guarantors will forthwith
-----------------
notify the Lenders if, at any time prior to a Disbursement Date, anything occurs
which renders or may render untrue or incorrect in any respect any of the
representations and warranties contained in Section 4.1 or which breaches any of
the covenants given in Section 5.1(a).
-17-
(d) Perfection of Security. All such action as is necessary after the
-----------------------
Initial Disbursement Date to maintain the perfected security interest granted
with respect to the Collateral, including filing of the Debenture, Form 34, Form
40B and any other documents or instruments that are required with the Registrar
of Companies in Malaysia, shall be promptly taken by the Guarantors and the
Borrower.
(e) Duration. The undertakings in this Section 5 shall remain in force
--------
from and after the date hereof and so long as any sum remains payable under this
Agreement.
(f) Notification of Defaults. Each of the Borrower and the Guarantors
-------------------------
will notify the Lenders in writing of any Event of Default (as defined in
Section 7.1) forthwith upon the occurrence thereof.
(g) Consents. Each of the Borrower and the Guarantors will obtain and
--------
promptly renew from time to time and thereafter maintain in full force and
effect, and will comply with and promptly furnish certified copies to the
Lenders of, all such authorisations, approvals, consents, licences and
exemptions as may be required under any applicable law or regulation to enable
it to perform its obligations under this Agreement or required for the validity
or enforceability of this Agreement.
(h) Pari Passu Ranking. Each of the Borrower and the Guarantors
--------------------
undertakes that its obligations hereunder do and will at all times rank at least
pari passu with all of its other present and future unsecured obligations save
for any obligations preferred by law.
(i) Disposals. Except for entering into and consummating the
---------
Acquisition, each of the Borrower and the Guarantors will not and will procure
that no other Subsidiary, will either in a single transaction or in a series of
transactions whether related or not and whether voluntarily or involuntarily,
sell, transfer, lease or otherwise dispose of all or any substantial part of its
assets or revenues except pursuant to the Acquisition or except for any of the
following types of disposals provided such disposal does not adversely affect
the ability of the Borrower or the Guarantors to perform its obligations under
this Agreement:
(i) disposals made with the prior written consent of the Tranche A
Majority Lenders and the Tranche B Majority Lenders;
(ii) disposals of cash raised or borrowed for the purposes for
which such cash was raised or borrowed;
(iii) disposals of assets in exchange for other assets comparable
as to type and value;
(iv) disposals of any of its assets on terms whereby such asset is
leased to or re-acquired by the Borrower or Guarantor or any other Subsidiary;
(v) any distribution of the surplus assets of the Borrower, either
Guarantor or any Subsidiary in a liquidation or winding-up not involving
insolvency; or
(vi) the application of the proceeds of an issue of securities
(whether equitable or debt) for the purposes stated in the prospectus or other
offering document relating to that issue.
(j) Mergers.
-------
-18-
(i) Save for the Acquisition, none of the Borrower or the
Guarantors will without the prior written consent of the Tranche A Majority
Lenders and the Tranche B Majority Lenders enter into any merger or
consolidation with any entity or take any step with a view to dissolution,
liquidation or winding-up.
(ii) None of the Borrower or the Guarantors will, and will procure
that no Subsidiary will, without the prior written consent of the Tranche A
Majority Lenders and the Tranche B Majority Lenders, acquire any assets or
business or acquire or make any investment if such assets, business or
investment is substantial in relation to the Parent and its Subsidiaries taken
as a whole.
(k) Maintenance of status and franchises.
----------------------------------------
(i) Each of the Borrower and the Guarantors will do all such
things as are necessary to maintain its corporate existence in good standing and
to conduct its business in a proper and efficient manner and in compliance with
all laws, regulations, authorisations, agreements and obligations applicable to
it and pay all taxes imposed on it when due.
(ii) Each of the Borrower and the Guarantors will and will procure
that each Subsidiary will, ensure that it has the right and is duly qualified to
conduct its business as it is or is intended as at the date hereof to be
conducted in all applicable jurisdictions and will obtain and maintain all
franchises and rights necessary for the conduct of its business.
(l) Constitutional Documents. Each of the Borrower and the Guarantors
-------------------------
shall procure that no material amendment or supplement is made to their
respective memorandum of association or articles of association, if any, without
the prior written consent of the Tranche A Majority Lenders and the Tranche B
Majority Lenders such consent not to be unreasonably withheld or delayed.
(m) Share Capital. Except upon conversion of any class of convertible
--------------
securities currently issued and outstanding or redemption of the Parent's
shares following the Acquisition, each of the Borrower and the Guarantors will
not and procure that no Subsidiary will, without the prior written consent of
the Tranche A Majority Lenders and the Tranche B Majority Lenders, purchase or
redeem any of their respective issued shares or reduce their respective share
capital or make a distribution of assets or other capital distribution to their
respective shareholders.
(n) Dividends. Each of the Borrower and the Guarantors will not and
---------
will procure that no Subsidiary will, without the prior written consent of the
Tranche A Majority Lenders and the Tranche B Majority Lenders, pay any dividend
or make any other income distribution to their respective shareholders.
(o) Subsidiary or Investment. Except for acquisitions of assets or
--------------------------
businesses of customers in connection with the provision by the Parent or a
Subsidiary of outsourced services to such customer using such acquired assets or
businesses in an amount of US$5,000,000 or less, each of the Borrower and the
Guarantors will not without the prior written consent of the Tranche A Majority
Lenders and the Tranche B Majority Lenders, establish or acquire any subsidiary
or invest in any other entity the business of which is not within the core
business activity of the Parent and its Subsidiaries as shown in the latest
financial statements of the Parent supplied to the Lenders or provide financing
to any person except by way of trade credit in the ordinary course of its
business.
(p) Indebtedness. None of the Borrower or any Guarantor or any
------------
Subsidiary will incur or guarantee any indebtedness exceeding US$1,000,000 in
the aggregate without the prior written consent of the Tranche A Majority
Lenders and the Tranche B Majority Lenders.
-19-
(q) Lending. Each of the Borrower and the Guarantors will not and will
-------
procure that no Subsidiary will make or grant any loan or advance except as may
be necessary in the ordinary course of its business.
(r) Undertakings by the Parent. For so long as any Principal Amount
-----------------------------
shall remain outstanding, the Parent will:
(i) not make any repayment of capital or reduction of its stated
capital involving any repayment to its shareholders either in cash or in specie
(other than to shareholders having the right on a winding up of the Parent to
return of capital in priority to other shareholders);
(ii) not issue or pay up any securities by way of capitalisation
of profits other than (a) by the issue of shares to its shareholders or (b) by
the issue of shares in lieu of a cash dividend and in each case credited as
fully-paid out of distributable profits or (c) by the issue of fully-paid equity
share capital (other than the securities set forth in Schedule 4.1(b) (the
---------------
"Shares") to the holders of equity share capital of the same class;
(iii) not, unless the consent of the Tranche A Majority Lenders
and the Tranche B Majority Lenders has been obtained, in any way modify the
rights attaching to the Shares or create or issue or permit to be in issue any
other class of equity share capital carrying any right which is more favourable
than the corresponding right attaching to the Shares or attach any special
rights or privileges to any such other class of equity share capital;
(iv) procure that, unless the consent of the Tranche A Majority
Lenders and the Tranche B Majority Lenders has been obtained, no securities
(whether issued by the Parent or any Subsidiary) in issue at the date hereof
shall be exchanged for or converted into Shares except in accordance with the
terms of issue thereof; or
(v) will ensure that all Shares issued upon conversion of the Loan will
be duly and validly issued as fully-paid and non-assessable free and clear of
all encumbrances, liens, mortgages and any other rights of third parties
whatsoever.
(s) Taxation. All payments of interest in respect of the Loan will be
--------
made without withholding or deduction of or on account of any present or future
taxes, duties, assessments or governmental charges of whatever nature imposed or
levied by any authority unless the withholding or deduction of such taxes,
duties, assessments or governmental charges is required by law. In that event,
the Borrower will pay such additional amounts as may be necessary in order that
the net amounts received by the Lenders after such withholding or deduction
shall equal the respective amounts receivable in respect of the Loan in the
absence of such withholding or deduction.
(t) Issuance of New Notes. The Borrower and the Guarantors shall duly
-----------------------
execute and deliver to each of the Tranche A Lender a Note in exchange for the
note held by such Tranche A Lenders under the Existing Agreement.
SECTION 6
INVESTMENT REPRESENTATIONS
--------------------------
6.1 Each Lender (in respect of itself only and so that the relevant
Lender shall not in any circumstances be liable for any breach of any
representation, warranty or agreement set forth in this Section 6 hereto by or
in relation to any other Lender) hereby makes the representations, warranties
and agreements set forth below as of the date hereof and as of each Disbursement
-20-
Date. Each Lender acknowledges that the Borrower and the Guarantors are relying
upon the accuracy and completeness of the representations contained in this
Section 6 in complying with its obligations under applicable U.S. securities
laws.
(a) Experience. The Lender has, from time to time, evaluated
----------
investment in new, high technology companies and has experience in evaluating
and investing in new, high technology companies. Lender has such knowledge and
experience in financial and business matters that Lender is capable of
evaluating the merits and risks associated with the Loan and exchange of the
Loans into shares of the Parent or Vsource pursuant to the terms of this
Agreement and is capable of protecting Lender's interests in connection
therewith, and is able to afford a complete loss of Lender's investment in the
shares.
(b) Investment. Lender is acquiring its Note, and if such Note is
----------
converted Lender will be acquiring shares of the Parent or Vsource, for
investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof. Such Lender understands that neither
its Note, or the shares into which the Loan may be converted, has 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.
(c) Rule 144. Lender acknowledges that its Note and the shares into
---------
which the Loan may be converted must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Lender is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of securities purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Borrower and the Guarantors, the resale occurring not less than one year after a
party has purchased and paid for the securities to be sold, the sale being
through a "broker's transaction" or in transactions directly with a "market
maker" (as provided by Rule 144(f)) and the number of shares being sold during
any three-month period not exceeding applicable specified limitations. Such
Lender is aware that the conditions for resale set forth in Rule 144 have not
yet been satisfied with respect to Parent.
(d) No Public Market. Lender understands that no public market now
------------------
exists for any of the securities issued by the Borrower or the Guarantors and
that a public market may never exist for the Notes or any of the Parent's
shares.
(f) Resale Restrictions. Lender hereby agrees not to resell the debt
--------------------
securities received under this Agreement unless such securities are subsequently
registered under the Securities Act or an exemption therefrom is available. If
requested by the Borrower or the Guarantors, Lender shall furnish them with a
legal opinion reasonably satisfactory to them that a sale of such securities is
exempt from the requirements of registration under the Securities Act. It is
agreed that no such opinion will be required for sales made pursuant to Rule 144
except in unusual circumstances, and it is further agreed that no such opinion
will ever be required for transfers to Lender's affiliates (which shall be
deemed to be persons or entities controlling, controlled by or under common
control with Lender) or immediate family members of such affiliates.
(g) Access to Data. During the negotiation of the transactions
----------------
contemplated herein, Lender and its representatives have been afforded full and
free access to corporate books, financial statements, records, contracts,
documents and other information concerning the each of the Borrower and the
Guarantors and to its offices and facilities, have been afforded an opportunity
to ask such questions of the Borrower's and the Guarantors' officers, employees,
agents, accountants and representatives concerning the Borrower's and the
-21-
Guarantors' business, operations, financial condition, assets, liabilities and
other relevant matters as they have deemed necessary or desirable, and have been
given all such information as has been requested, in order to evaluate the
merits and risks of the prospective investments contemplated herein.
(h) Legends. It is understood that the Notes and the certificate(s) of
-------
any shares into which the Loan may be converted shall bear the legend
substantially as set forth below:
The securities represented hereby have not been registered
under the U.S. Securities Act of 1933, as amended, or under
the securities laws of any state of the United States. These
securities are subject to restrictions on transferability
and resale and may not be transferred or resold except as
permitted under the applicable securities laws. Investors
should be aware that they may be required to bear the
financial risks of this investment for an indefinite period
of time.
SECTION 7
EVENTS OF DEFAULT
-----------------
7.1 Upon the occurrence of any Event of Default, the outstanding
Principal Amount, any interest accrued thereon and the payments called for under
Section 3.3(g), shall forthwith be immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and the Lenders may exercise any and all rights and
remedies available to them under this Agreement, the Notes and the Debenture.
An "Event of Default" shall mean the occurrence of any of the following events:
(a) Material breach of this Agreement, any Note or the Debenture, or
any default in the repayment of any other material indebtedness of the Borrower
or the Guarantors when the same shall be due and payable;
(b) Any proceeding shall be commenced by or against the Borrower or
either Guarantor under any bankruptcy or insolvency laws, or the Borrower or a
Guarantor shall take any action to authorize any of the foregoing; provided that
if such proceeding is not instituted by or on behalf of the Borrower or a
Guarantor (or acquiesced by them) there shall be an "Event of Default" only if
such proceeding shall remain unstayed for 60 days;
(c) Any judgment or order, or any series of judgments or orders, shall
have been entered against the Borrower or a Guarantor which would have a
material adverse effect upon the value of the collateral under the Debenture and
such judgment or order remains unstayed for a period of 30 or more consecutive
days;
(d) Any law, rule or regulation of any jurisdiction shall be enacted or
promulgated that shall have a material adverse affect on the ability of the
Borrower or a Guarantor or any Subsidiary to perform any of its obligations
hereunder or under the Notes or the Debenture, including, without limitation,
any moratorium or similar laws;
(e) This Agreement, any Note or the Debenture ceases to be the legal,
valid and binding obligation of the Borrower or the Guarantors enforceable in
accordance with its terms or the Lenders cease to have a perfected security
interest in the collateral under the Debenture;
-22-
(f) Any representation or warranty made or deemed to be made or
repeated by or in respect of the Borrower or either Guarantor in or pursuant to
this Agreement is or proves to have been incorrect or misleading in any material
respect;
(g) If the holder of any encumbrance takes possession or a receiver is
appointed of the whole or a material part of the assets, undertaking, property
or revenues of the Borrower or a Guarantor which constitutes part of the
collateral under the Debenture or any of them is or declares itself to
insolvent;
(h) A distress, execution or seizure before judgment is levied or
enforced upon or sued out against the whole or a material part of the property
of the Borrower or any Guarantor which constitutes part of the collateral under
the Debenture and is not discharged within 30 days thereof;
(i) if any other present or future indebtedness of the Borrower or any
Guarantor is not paid or met at its stated maturity (or within any applicable
period of grace) or by reason of default on the part of such Borrower or
Guarantor becomes due or capable of being declared due prior to its stated
maturity (or if payable or repayable on demand is not paid or repaid on demand
or within any applicable period of grace) or if any security for any such
indebtedness becomes enforceable;
(j) if the Borrower or any Guarantor fails to pay when due or expressed
to be due, any amounts payable by it under any present or future guarantee for
any moneys borrowed from or raised through a financial institution and, if
capable of remedy, is not remedied within any applicable grace period
thereunder;
(k) if a moratorium is agreed or declared in respect of any
indebtedness of the Borrower or any Guarantor;
(l) if any governmental authority or agency of any jurisdiction
condemns, siezes, compulsorily purchases or expropriates all or a substantial
part of the assets of the Borrower or any Guarantor or places any material
restriction on a material portion of the assets of such Borrower or Guarantor
whether by way of cancellation or revocation of, or the imposition of conditions
on, any licences of such companies, or otherwise howsoever;
(m) any event occurs which has an analogous effect to any of the events
referred to in paragraphs (a) to (l) above under the laws applicable to the
Borrower or a Guarantor; and
(n) any material adverse change in the financial position, business
operating condition (financial or otherwise) or prospects of the Borrower, any
Guarantor or any Subsidiary shall have occurred.;
provided, that if the Acquisition has occurred, "Event of Default" shall only
--------
mean the items listed in clauses (b), (c), (d), (e), (g), (h), (k) or (l).
SECTION 8
MISCELLANEOUS
-------------
8.1 Governing Law; Jurisdiction. This Agreement and the Notes shall be
---------------------------
governed by and construed under the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Delaware to the rights and duties of the parties. With respect to any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby, the parties hereto submit to the non-exclusive jurisdiction
-23-
of the federal courts located in Wilmington, Delaware or the courts of the State
of Delaware located in Wilmington, Delaware and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such suit, action or proceeding and waives any objection to venue
laid therein. For purposes of this Agreement, process in any such suit, action
or proceeding in any such courts may be served on the parties hereto anywhere in
the world, whether within or without Delaware.
8.2 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by Lender and the
making of the Loan contemplated hereby.
8.3 Successors and Assigns. Except as otherwise provided herein, the
------------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
8.4 Entire Agreement; Amendment. This Agreement and the other
-----------------------------
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and thereof
and supercedes and replaces any prior understanding or agreement, including with
respect to the Advance. No termination, revocation, waiver, modification,
amendment or supplement to this Agreement or any Note shall be binding unless
(i) in writing and signed by the Borrower and each of the Guarantors and (ii)
consented to in writing by the Tranche A Majority Lenders (in the case of the
Tranche A Loans) and by the Tranche B Majority Lenders (in the case of the
Tranche B Loans).
8.5 No Waiver. Each party to this Agreement shall have the absolute
----------
right to exercise or refrain from exercising any right or rights that such party
may have by reason of this Agreement, the Notes or the Debenture without such
refrain acting as a waiver or surrender of any right granted hereunder.
8.6 Notices, etc. Any notice or other communication (except payment)
--------------
required or permitted hereunder shall be in writing and shall be deemed to have
been given upon delivery if personally delivered or upon deposit in the United
States mail for mailing by certificate mail, postage prepaid, and addressed as
follows:
If to the Borrower or
either Guarantor: x/x XxxXxx000 Xxxx Xxxx Limited
0xx Xxxxx, XXX Xxxxxx, 000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Telephone: 000-0000-0000
Facsimile: 000-0000-0000
Attn: Xxxxxx Xxxxx
If to a Lender: In accordance with the contact details set forth alongside
such Lender's name in Schedule 1A or Schedule 1B, as applicable.
------------ ------------
8.7 Expenses. Each party shall bear its own expenses in connection
--------
herewith and with conversion or exchange of the Notes. If legal action is
brought to enforce or interpret the terms of this Agreement, the Notes or the
Debenture, the prevailing party shall be entitled to recover its reasonable
attorneys' fees, costs and necessary disbursements in connection therewith in
addition to any other relief to which such party may be entitled.
8.8 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
-24-
8.9 Severability. In the event that any provision of this Agreement or
------------
the Notes becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement or the Notes shall continue in
full force and effect without said provision.
8.10 Assignment. None of the Borrower or either Guarantor may assign
----------
this Agreement or any Note, or any of its rights and obligations hereunder or
thereunder, to any person other than an Acquiror without the prior written
consent of the Tranche A Majority Lenders and the Tranche B Majority Lenders;
provided, that Parent will have the right to assign this Agreement and any Note,
------
and its rights and obligations hereunder or thereunder to Vsource, and upon any
such assignment the Parent will have no further obligations under this Agreement
or any such Note whatsoever. No Lender may assign or transfer this Agreement or
any Note, or any of its rights and obligations hereunder or thereunder, to any
person without the prior delivery to the Borrower of a letter or other
instrument satisfactory to the Borrower signed by the proposed assignee or
transferee pursuant to which such proposed assignee or transferee makes each of
the representations, warranties and agreements set forth in Section 6 hereof
8.11 Amendment to Debenture. The Debenture, dated April 6, 2001,
------------------------
between NetCel360 Sdn Bhd and the Lenders named therein (each of whom is a party
to this Agreement) is hereby amended as set forth in Exhibit H hereto, and the
---------
parties hereby agree to execute such documents and do such things as may be
necessary to effect such amendment and to maintain the security interest
described in the Debenture.
-25-
The foregoing Amended and Restated Bridge Loan Agreement is hereby executed as
of the date first above written.
THE BORROWER:
XXXXXX000.XXX LIMITED
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
THE GUARANTORS:
NETCEL360 HOLDINGS LIMITED
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
NETCEL360 SDN BHD
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
THE LENDERS:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Address: x/x XxxXxx000 Xxxxxxx
0xx Xxxxx, XXX Centre
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
------------------------
Name: Xxxxxx Xxxxx
Address: x/x XxxXxx000 Xxxxxxx
0xx Xxxxx, XXX Centre
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
BAPEF INVESTMENTS XII LTD.
By: __________________________________
Name:
Title:
G5 PARTNERS, LP
By: MG5 LLC, as general partner
By: ______________________________
Name:
Title:
BAINLAB, INC.
By: __________________________________
Name:
Title:
XXXXXXX XXXXXXX
______________________________________
Name: Xxxxxxx Xxxxxxx
Address: x/x XXX Xxxxxxxxx Xxxxxxx
00 Xxxxx, Xxxx Xx Centre
0-0 Xxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
XXXXXXX XXXXXXXXXX
_______________________________________
Name: Xxxxxxx Xxxxxxxxxx
Address: c/o Credit Suisse First Boston
0 Xxxxxxx Xxxx
#00-00, #00-00
Xxxxxxxxx 000000
CSFB ASIANET TECH CO-INVESTORS, LTD.
By: __________________________________
Name:
Title:
CSFB ASIANET IEP, LTD.
By: __________________________________
Name:
Title:
CSFB ASIANET CO-INVESTORS, LTD.
By: __________________________________
Name:
Title:
XXXXXX XXXXXX
_______________________________________
Name:
Address:
ASIA INTERNET INVESTMENT GROUP I, LLC
By: Asia Investing Group, L.P, as Managing Member
By: Asia Investors Group, LLC, as General Partner
By: Mercantile Asia Investors, LP,
as Managing Member
By: Mercantile Asia, LLC, its General Manager
By: /s/ I. Xxxxxx Xxxxxxx
------------------------
Name:
Title:
NEW MEDIA INVESTORS VI, L.L.C.
By: ________________________________
Name:
Title:
SCHEDULE 1A
Tranche A Lenders List
Contact
-----------
Name of Lender Loan Amount Information
-------------- ------------ -----------
Xxxxxxx Xxxxx $ 000,000 x/x XxxXxx000 Xxxx Xxxx Limited
0xx Xxxxx, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Tel: 000-0000-0000
Fax: 000-0000-0000
Xxxxxx Xxxxx $ 000,000 x/x XxxXxx000 Xxxx Xxxx Limited
0xx Xxxxx, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Tel: 000-0000-0000
Fax: 000-0000-0000
BAPEF Investments XII, Ltd. $ 409,920 c/o International Private Equity Services Ltd.
X.X. Xxx 000
00-00 Xxxxxxxx Xxxx
Xxxxxxx, XX
XX00XX
Attn: Xxxxxx Xxxxxx
Tel: 00-0000-000-000
Fax: 00-0000-000-000
G5 Partners, LP $ 40,992 Xxx. 0000, Xxxxx 00
Xxxx Xxxx Xxxx View
00 Xxx Xxx Xxxxxxxxx Xxxx
Xxxx Xxxx
Attn: Xxxxxxx Xxxxxx
Tel: 000-0000-0000
Fax: 000-0000-0000
bainlab, Inc. $ 3,075 c/o Bain & Company, Inc.
Two Xxxxxx Place
Xxxxxx, XX 00000
XXX
Attn: Xxxxxxx X. Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxxxx $ 18,000 c/o DHL International HK Ltd.
00/X, Xxxx Xx Centre
0-0 Xxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: Xxxxxxx Xxxxxxx, CEO
Tel: 000-0000-0000
Fax: 000-0000-0000
Xxxxxxx Xxxxxxxxxx $ 31,500 c/o Credit Suisse First Boston
0 Xxxxxxx Xxxx
#00-00, #00-00
Xxxxxxxxx 000000
Attn: Xxxxxxx Xxxxxxxxxx
Tel: 00-000-0000
Fax: 00-0000-0000
Contact
-----------
Name of Lender Loan Amount Information
-------------- ------------ -----------
CSFB AsiaNet Tech Co-Investors, Ltd. $ 44,117 x/x Xxxxxx Xxxxxx Xxxxx Xxxxxx Xxxx Xxxx Branch
CSFB AsiaNet IEP, Ltd. $ 115,675 00/X, Xxx Xxxxxxxx Xxxxxx
XXXX AsiaNet Co-Investors, Ltd. $ 19,548 Central
Hong Kong
Attn: Xxxxx Xxxxxx
Xxxxxxx Xxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
copy to:
Credit Suisse First Boston Advisory Partners, LLC
Eleven Madison Avenue, 26th Floor
New York, NY 10010-3629
Attn: Xxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
copy to:
Credit Suisse First Boston
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Xxxxxx $ 22,500 c/o Castletop Capital
0000 Xxxxx xx xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
XXX
Tel: 000-000-0000
Fax: 000-000-0000
Asia Internet Investment Group I, LLC $ 44,012 c/o Mercantile Equity Partners
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
XXX
Attn: Xxxxxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
New Media Investors VI, L.C.C. $ 43,042 c/o Jenzabar, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXX
Attn: Xxxxxx X. Xxxxxx, Xx.
Tel: 000-000-0000
Fax: 000-000 0000
SCHEDULE IB
Tranche B Lenders List
Contact
-----------
Name of Lender Loan Amount Information
-------------- ------------ -----------
Xxxxxxx Xxxxx $ 712,500 c/o NetCel360 Limited
0xx Xxxxx, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Tel: 000-0000-0000
Fax: 000-0000-0000
Xxxxxx Xxxxx $ 237,500 c/o NetCel360 Limited
0xx Xxxxx, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Tel: 000-0000-0000
Fax: 000-0000-0000
Asia Internet Investment Group I, LLC $ 250,000 c/o Mercantile Equity Partners
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
XXX
Attn: Xxxxxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
EXHIBIT A
FORM OF TRANCHE A NOTE
----------------------
The securities represented hereby have not been registered under the
U.S. Securities Act of 1933, as amended, or under the securities laws
of any state of the United States. These securities are subject to
restrictions on transferability and resale and may not be transferred
or resold except as permitted under the applicable securities laws.
Investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time.
CONVERTIBLE PROMISSORY NOTE
US$[*]
Principal Amount May __, 2001
XxxXxx000.xxx Limited, a Cayman Islands company (the "Obligor"), for value
received, hereby promises to pay to the order of the Tranche A Lenders set forth
in Schedule 1A to the Amended and Restated Bridge Loan Agreement dated as of the
same date hereof (the "Agreement") on the Tranche A Maturity Date the principal
amount set next to each Tranche A Lender's name in such Schedule 1A, which in
aggregate is US$2,500,000 (the "Tranche A Principal Amount"), unless this
Tranche A Note is repaid or converted before that date pursuant to the terms
hereunder or under the Agreement. Interest shall accrue on the outstanding
Tranche A Principal Amount at the rate of 5% per annum from the date hereof and
is due and payable on the Tranche A Maturity Date unless this Tranche A Note is
repaid or converted before that date pursuant to the terms hereunder. Any terms
not defined in this Tranche A Note shall have the meaning set forth in the Loan
Agreement unless otherwise indicated.
In consideration of the Tranche A Lenders agreeing to make the Tranche A
Principal Amount available to the Borrower upon the terms and conditions of this
Agreement, the Guarantors hereby jointly and severally and unconditionally and
irrevocably guarantee, as a continuing obligation, the due and punctual payment
and performance of the Secured Obligations in the currency and respective
currencies in which the same is payable under the terms of this Agreement and
the due and punctual performance and observance by the Borrower of all other
obligations of the Borrower contained in this Tranche A Note, the Loan Agreement
or the Debenture, notwithstanding any dispute between the Tranche A Lenders and
the Borrower, and if the Borrower fails to pay any amount of the Secured
Obligations when due the Guarantors shall pay such amount to the Tranche Lenders
in the required currency as aforesaid forthwith upon receiving the Tranche A
Majority Lenders' first written demand. The Guarantee shall be secured by a
fixed and floating charge over the Collateral in favor of the Lenders granted
under a Debenture entered into by NetCel360 Sdn Bhd.
The Obligor and the Guarantors waive the rights of presentment, demand for
performance, protest, notice of protest, and notice of dishonor. No delay on
the part of the Tranche A Lenders in exercising any right hereunder shall
operate as waiver of such right under this Tranche A Note. This Tranche A Note
is being delivered and shall be construed in accordance with the internal laws
of the State of Delaware without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
AS OBLIGOR:
XXXXXX000.XXX LIMITED
By:_____________________________
Name:___________________________
Title:__________________________
AS GUARANTORS:
NETCEL360 HOLDINGS LIMITED
By:_____________________________
Name:___________________________
Title:__________________________
NETCEL360 SDN BHD
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT B
FORM OF TRANCHE B NOTE
----------------------
The securities represented hereby have not been registered under the
U.S. Securities Act of 1933, as amended, or under the securities laws
of any state of the United States. These securities are subject to
restrictions on transferability and resale and may not be transferred
or resold except as permitted under the applicable securities laws.
Investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time.
CONVERTIBLE PROMISSORY NOTE
US$[*]
Principal Amount May __, 2001
XxxXxx000.xxx Limited, a Cayman Islands company (the "Obligor"), for value
received, hereby promises to pay to the order of the Tranche B Lenders set forth
in Schedule 1B to the Amended and Restated Bridge Loan Agreement dated as of the
same date hereof (the "Agreement") on the Tranche B Maturity Date the principal
amount set next to each Tranche A Lender's name in such Schedule 1B, which in
aggregate is US$________ (the "Tranche B Principal Amount"), unless this Tranche
B Note is repaid or converted before that date pursuant to the terms hereunder
or under the Agreement. Interest shall accrue on the outstanding Tranche B
Principal Amount at the rate of 5% per annum from the date hereof and is due and
payable on the Tranche B Maturity Date unless this Tranche B Note is repaid or
converted before that date pursuant to the terms hereunder. Any terms not
defined in this Tranche B Note shall have the meaning set forth in the Loan
Agreement unless otherwise indicated.
In consideration of the Tranche B Lenders agreeing to make the Tranche B
Principal Amount available to the Borrower upon the terms and conditions of this
Agreement, the Guarantors hereby jointly and severally and unconditionally and
irrevocably guarantee, as a continuing obligation, the due and punctual payment
and performance of the Secured Obligations in the currency and respective
currencies in which the same is payable under the terms of this Agreement and
the due and punctual performance and observance by the Borrower of all other
obligations of the Borrower contained in this Tranche B Note, the Loan Agreement
or the Debenture, notwithstanding any dispute between the Tranche B Lenders and
the Borrower, and if the Borrower fails to pay any amount of the Secured
Obligations when due the Guarantors shall pay such amount to the Tranche Lenders
in the required currency as aforesaid forthwith upon receiving the Tranche B
Majority Lenders' first written demand. The Guarantee shall be secured by a
fixed and floating charge over the Collateral in favor of the Lenders granted
under a Debenture entered into by NetCel360 Sdn Bhd.
The Obligor and the Guarantors waive the rights of presentment, demand for
performance, protest, notice of protest, and notice of dishonor. No delay on
the part of the Tranche B Lenders in exercising any right hereunder shall
operate as waiver of such right under this Tranche B Note. This Tranche B Note
is being delivered and shall be construed in accordance with the internal laws
of the State of Delaware without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
AS OBLIGOR:
XXXXXX000.XXX LIMITED
By:_____________________________
Name:___________________________
Title:__________________________
AS GUARANTORS:
NETCEL360 HOLDINGS LIMITED
By:_____________________________
Name:___________________________
Title:__________________________
NETCEL360 SDN BHD
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT F
REGISTRATION RIGHTS
-------------------
Section 1.1 Definitions. The following terms when used in this Exhibit F
-----------
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Holder" shall mean any Lender.
"Registrable Securities" shall mean any shares of Common Stock of Vsource
issued to a Lender pursuant to Section 3.3 of this Agreement (the "Shares") held
by a Holder and any equity securities of Vsource issued or issuable with respect
to Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization and held by a Holder; provided, however, that any share of such
securities shall cease to be a Registrable Security when (i) a registration
statement covering such Registrable Security has been declared effective by the
Commission and such securities have been disposed of pursuant to such effective
registration statement or (ii) such securities are distributed to the public
pursuant to Rule 144 (or any similar or successor provision then in force) under
the Securities Act.
Section 1.2 Registration Procedures. Vsource shall:
------------------------
(a) Prepare and file with the Commission a registration statement with
respect to the Registrable Securities (which registration statement may also
include securities held by other holders of Vsource Common Stock) within the
later of (a) six (6) months after the closing of the Acquisition, and (b) one
(1) month after an issuance of Vsource common stock pursuant to Section 3.3, and
use its reasonable efforts to (A) have such registration statement declared
effective within two (2) months after such registration statement was required
to be filed, and (B) cause the registration statement to remain effective until
the earlier of (i) the date when all Registrable Securities have been sold, or
(ii) one (1) year after such registration statement is declared effective
(unless Vsource is, and remains, eligible to use Form S-3 or any successor
short-form form registration statement, in which case the period shall be 2
years) provided however, that such 1-year period (or 2-year period as the case
may be) shall be extended for a period of time equal to the period the Holders
refrain from selling any securities included in such registration at the request
of an underwriter of Vsource Common Stock (or other securities of Vsource)
pursuant to Section 1.5 and for a period of time equal to the period during
which Registrable Securities could not be sold pursuant to a notice delivered by
Vsource pursuant to Section 1.2(d);
(b) Use its reasonable efforts to prepare and file with the Securities and
Exchange Commission (the "Commission") such amendments and supplements
(including post-effective amendments) to such registration statements and the
prospectuses used in connection therewith as may be necessary to keep the
registration statements effective for the period referred to in clause (a) and
comply with the provisions of the Securities Act of 1933, as amended (the
"Securities Act") with respect to the disposition of all securities covered by
the registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in the registration
statement;
(c) Furnish to each Holder of Registrable Securities such number of
copies of the registration statement, each amendment and supplement thereto
(including post-effective amendments), the prospectus included in the
registration statement (including each preliminary prospectus) and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(d) Notify each Holder of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and promptly prepare and file a supplement or amendment
(including post-effective amendments) to the prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(e) Cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange or market on which similar
securities issued by Vsource are then listed, if any;
(f) Use reasonable efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that (a) if Vsource's shares are no longer listed on a national securities
exchange or traded on the Nasdaq national market then the Holders may only
request such registration and qualification in up to 10 jurisdictions and (b)
Vsource shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions unless Vsource is already subject to service in
such jurisdiction and except as may be required by the Securities Act; and
(g) Advise each seller of such Registrable Securities, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued.
Section 1.3 Registration Expenses.
----------------------
(a) All expenses incident to Vsource's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for Vsource, reasonable fees and disbursements of one counsel for the Holders
and all independent certified public accountants, and other Persons retained by
Vsource (all such expenses being herein called "Registration Expenses"), shall
be borne by Vsource, and Vsource shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by Vsource are then listed or on the NASD
automated quotation system if the common stock of Vsource is listed on any such
exchange or system.
(b) To the extent Registration Expenses are not required to be paid by
Vsource, each Holder of securities included in any registration hereunder shall
pay those Registration Expenses allocable to the registration of the Holder's
securities so included, and any Registration Expenses not so allocable shall be
borne by all sellers of securities included in the registration
Section 1.4 Indemnification.
---------------
(a) Vsource agrees to indemnify, to the extent permitted by law, each
Holder of Registrable Securities, its affiliates and their respective officers,
directors, employees and agents, as the case may be, and each Person who
controls the Holder (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement under which Registrable Securities were registered, any prospectus or
preliminary prospectus contained therein or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to Vsource by such Holder expressly for use therein as
provided in Section 1.4(b) below.
(b) In connection with any registration statement in which a Holder of
Registrable Securities is participating, each Holder shall furnish to Vsource in
writing such information and affidavits as Vsource reasonably requests for use
in connection with any such registration statement or prospectus and, to the
extent permitted by law, shall indemnify Vsource, its directors and officers and
each Person who controls Vsource (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by the Holder;
provided, however, that such Holder shall not be liable in any such case to the
extent that any alleged losses or damages result from the failure of Vsource to
promptly amend or take action to correct or supplement any such registration
statement or prospectus on the basis of corrected or supplemental information
provided in writing by such Holder to Vsource expressly for such purpose;
provided, further, that the obligation to indemnify shall be individual to each
Holder and shall be limited to the net amount of proceeds received by the Holder
from the sale of Registrable Securities pursuant to the registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided, however, that the failure of any indemnified
party to give notice shall not relieve the indemnifying party of its obligations
under this Section 1.4, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice) and (ii) permit the
indemnifying party to assume and undertake the defense of such claim with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party of its election to undertake and assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without the
indemnifying party's advance written consent (but such consent shall not be
unreasonably withheld). The indemnifying party shall not consent to a
settlement of, or the entry of any judgment arising from, any third party claim,
unless (i) the settlement or judgment is solely for money damages and the
indemnifying party admits in writing its liability to hold the indemnified party
harmless from and against any losses, damages, expenses and liabilities arising
out of such settlement or judgment or (ii) the indemnified party consents
thereto, which consent shall not be unreasonably withheld. An indemnifying
party who elects not to assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by the indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party, a conflict of interest may exist between the
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Section 1.4 shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. Vsource also
agrees to make such provisions as are reasonably requested by any indemnified
party for contribution to the party in the event Vsource's indemnification is
unavailable for any reason.
(e) If the indemnification provided for in paragraphs (a) and (b) of this
Section 1.4 is unavailable or insufficient to hold harmless an indemnified party
under such paragraphs in respect of any losses, claims, damages, liabilities and
expenses in respect thereof referred to therein, then each indemnifying party
shall in lieu of indemnifying such indemnified party contribute to the amount
paid or payable by such indemnified party as a result of such losses, losses,
claims, damages, liabilities or expenses in such proportion as appropriate to
reflect the relative fault of Vsource, on the one hand, and the sellers of such
Registrable Securities on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations, including the
failure to give any notice under paragraph (c) of this Section 1.4. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact relates to information
supplied by Vsource, on the one hand, or the sellers of such Registrable
Securities on the other hand, and to the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Vsource and the sellers of Registrable Securities agree that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation (even if all of the sellers of such
Registrable Securities were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or action in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, no seller of such
Registrable Securities shall be required to contribute any amount in excess of
the total proceeds received from the sale of such seller's Registrable
Securities.
Section 1.5 Lockup Agreement. Each Holder agrees in connection with any
-----------------
underwritten public sale or distribution of the Common Stock by Vsource pursuant
to a registration statement filed with the Commission, that upon the request of
Vsource, such Holder shall not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
without the prior written consent of Vsource, for such period of time (not to
exceed 180 days after the effective date of such registration statement) as
Vsource may reasonably request, provided, that all officers and directors of
Vsource, all securityholders who hold at least one percent of the Vsource Common
Stock, on a fully-diluted basis, and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
Notwithstanding the foregoing, the obligations described in this Section 1.5
shall not apply to a registration relating solely to employee benefit plans on
Form S-1 or Form S-8 or similar forms which may be promulgated in the future, or
a registration relating solely to an Commission Rule 145 transaction on Form S-4
or similar forms which may be promulgated in the future.
Section 1.6 Reports Under Securities Exchange. With a view to making
------------------------------------
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time period a Holder to sell securities of Vsource to the public without
registration or pursuant to a registration on Form S-3, Vsource agrees to use
its reasonable efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Commission Rule 144, so long as Vsource remains
subject to the periodic reporting requirements under Sections 13 or 15(d)
of the Exchange Act;
(b) take such action as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities;
(c) file with the Commission in a timely manner all reports and other
documents required of Vsource under the Securities Act and the Exchange
Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by Vsource as to
whether it has complied with the reporting requirements of Commission Rule
144, the Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy
of the most recent annual or quarterly report of Vsource and such other
reports and documents so filed by Vsource , and (iii) such other
information as may be reasonably requested in availing any Holder of any
rule or regulation of the Commission which permits the selling of any such
securities without registration or pursuant to such form.
Section 1.7 Termination. Except for Section 1.4 which shall survive
-----------
indefinitely, the provisions of this Exhibit F shall terminate with respect to
each Holder of Registrable Securities on the earlier of (a) the date that there
are no longer any Registrable Securities, and (b) the date when no shares of
Vsource's common stock are registered under the Exchange Act and Vsource is no
longer required to make any filings under the Exchange Act.
References to Sections in the Exhibit F refer to Sections in this Exhibit F and
not to Sections in the Agreement.
EXHIBIT G
ANTI-DILUTION PROTECTIONS
-------------------------
(a) EXCHANGE FACTOR ADJUSTMENTS. The Exchange Factors shall be subject to the
following adjustments:
(1) Adjustment for Stock Splits and Combinations. If Vsource, Inc. (the
-----------------------------------------------
"Corporation") at any time or from time to time after May __, 2001
(the "Pricing Date") effects a subdivision of the common stock of the
Corporation (the "Common Stock"), by stock split or otherwise, the
Exchange Factors then in effect immediately before that subdivision
shall each be proportionately decreased; and, conversely, if the
Corporation at any time or from time to time after the Pricing Date
combines the outstanding shares of Common Stock, by reverse stock
split or otherwise, the Exchange Factors then in effect immediately
before that combination shall be proportionately increased. Any
adjustment under this Clause (a)(1) shall become effective at the
close of business on the date the subdivision or combination becomes
effective.
(2) Adjustment for Certain Dividends and Distributions. In the event the
----------------------------------------------------
Corporation at any time or from time to time after the Pricing Date
either makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such
event the Exchange Factors then in effect shall be decreased as of the
time of such issuance or, in the event such a record date is fixed, as
of the close of business on such record date, by multiplying the
Exchange Factors then in effect by a fraction (a) the numerator of
which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance on the
close of business on such record date, and (b) the denominator of
which shall be (i) the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus (ii) the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend
is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Exchange Factors shall be recomputed
accordingly as of the close of business on such record date or date
fixed therefor and thereafter the Exchange Factors shall be adjusted
pursuant to this Clause (a)(2) as of the time of actual payment of
such dividend or distribution. For purposes of the foregoing formula,
"the total number of shares of Common Stock issued and outstanding" on
a particular date shall include shares of Common Stock issuable upon
conversion of stock or securities convertible into Common Stock and
the exercise of warrants, options or rights for the purchase of Common
Stock which are outstanding on such date.
(3) Adjustments for Other Dividends and Distributions. In the event the
------------------------------------------------------
Corporation at any time or from time to time after the Pricing Date
makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common
Stock, then and in each such event, provision shall be made so that
each Lender, to the extent the Borrower determines to exercise its
exchange rights under Section 3.3, shall receive upon conversion
thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation
which it would have received had such Lender's Loans been converted
into Common Stock as of the date of such event and had it thereafter,
during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as
aforesaid during such period, subject to all other adjustments called
for during such period hereunder with respect to the rights of such
Lender.
(4) Adjustment for Recapitalization, Reclassification, or Exchange. If the
--------------------------------------------------------------
Common Stock issuable upon the exchange of the Loans is changed into
the same or a different number of shares of any class or classes of
stock of the Corporation, whether by recapitalization,
reclassification or other exchange (other than a subdivision or
combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in
this Clause (a)), then and in any such event each Lender shall be
entitled, if the Borrower elects to exercise its exchange rights under
Section 3.3, to receive in exchange for its Loans the kind and amount
of stock and other securities and property receivable upon such
recapitalization, reclassification or other exchange by holders of the
number of shares of Common Stock into which the Loans then owed to
such Lender could be exchanged immediately prior to such
recapitalization, reclassification or other exchange, all subject to
further adjustment as provided herein.
(5) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
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time or from time to time there is a capital reorganization of the
Common Stock (other than a subdivision or combination of shares or a
stock dividend or a recapitalization, reclassification or other
exchange of shares, provided for elsewhere in this Clause (a)) or a
merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the
Corporation's assets to any other person, then, as a part of such
capital reorganization, merger, consolidation or sale, provision shall
be made so that each Lender shall thereafter be entitled, to the
extent that the Borrower elects to exercise its exchange rights under
Section 3.3, to receive upon exchange of such Lender's Loans the
number of shares of stock or other securities or property of the
Corporation, or of the successor corporation resulting from such
capital reorganization, merger, consolidation or sale, to which a
holder of the number of shares of Common Stock deliverable upon such
exercise would have been entitled on such capital reorganization,
merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this
Clause (a) with respect to the rights of each Lender, if the Borrower
elects to exercise its exchange rights under Section 3.3, after the
capital reorganization, merger, consolidation or sale to the end that
the provisions of this Clause (a) (including the number of shares
deliverable upon conversion or exchange of the Loans) shall continue
to be applicable after that event and shall be as nearly equivalent to
the provisions hereof as may be practicable.
(6) Sale of Shares Below Exchange Factor. (A) If at any time or from time
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to time after the Pricing Date, the Corporation issues or sells, or is
deemed by the express provisions of this Clause (a)(6) to have issued
or sold, Additional Shares of Common Stock (as hereinafter defined),
other than as a dividend or other distribution on any class of stock
as provided in Clause (a)(2) and other than upon a subdivision or
combination of shares of Common Stock as provided in Clause (a)(1),
for an Effective Price (as hereinafter defined) less than the then
existing Tranche B Exchange Factor, then and in each such case the
then existing Exchange Factors shall be reduced to an amount equal to
such Effective Price; and
(B) For the purpose of making any adjustment required under this
Clause (a)(6), the consideration received by the Corporation for
any issue or sale of securities shall (A) to the extent it
consists of cash be computed at the amount of cash received by
the Corporation, (B) to the extent it consists of property other
than cash, be computed at the fair value of that property as
determined in good faith by the Board, and (C) if Additional
Shares of Common Stock, Convertible Securities (as hereinafter
defined) or rights or options to purchase either Additional
Shares of Common Stock or Convertible Securities are issued or
sold together with other stock or securities or other assets of
the Corporation for a consideration which covers both, be
computed as the portion of the consideration so received that may
be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options.
(C) For the purpose of the adjustment required under this Clause
(a)(6), if the Corporation issues or sells any rights or options
for the purchase of, or stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock
or securities being hereinafter referred to as "Convertible
Securities") and if the Effective Price of such Additional Shares
of Common Stock is less than the Tranche B Exchange Factor then
in effect, then in each case the Corporation shall be deemed to
have issued at the time of the issuance of such rights or options
or Convertible Securities the maximum number of Additional Shares
of Common Stock issuable upon exercise or conversion thereof and
to have received as consideration for the issuance of such shares
an amount equal to the total amount of the consideration, if any,
received by the Corporation for the issuance of such rights or
options or Convertible Securities, plus, in the case of such
rights or options, the minimum amounts of consideration, if any,
payable to the Corporation upon the exercise of such rights or
options, plus, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the Corporation
(other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities) upon the conversion
thereof. No further adjustment of the Exchange Factor, adjusted
upon the issuance of such rights, options or Convertible
Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible
Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall
expire without having been exercised, the Exchange Factors as
adjusted upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the Exchange Factors which
would have been in effect had an adjustment been made on the
basis that the only Additional Shares of Common Stock so issued
were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold
for the consideration actually received by the Corporation upon
such exercise, plus the consideration, if any, actually received
by the Corporation for the granting of all such rights or
options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities
actually converted, plus the consideration, if any, actually
received by the Corporation (other than by cancellation of
liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities.
(D) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation after the Pricing Date,
whether or not subsequently reacquired or retired by the
Corporation, other than: (A) shares of Common Stock issued upon
conversion of the Loans or any other options or warrants or
convertible securities outstanding or issuable on the Pricing
Date; (B) shares of Common Stock issuable or issued to the
directors, officers and employees of or consultants to the
Corporation; (C) shares of Common Stock issuable or issued as
part of an acquisition by the Corporation of all of or certain
assets (including technology rights) or shares of another company
or entity whether through a purchase, merger, exchange,
reorganization or the like; (D) shares of Common Stock issuable
or issued pursuant to equipment financing or leasing
arrangements; or (E) shares issued in a public offering of the
Corporation's securities. The "Effective Price" of Additional
Shares of Common Stock shall mean the quotient determined by
dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the
Corporation under this Clause (a)(6), into the aggregate
consideration received, or deemed to have been received by the
Corporation for such issue under this Clause (a)(6), for such
Additional Shares of Common Stock. "Other Securities" with
respect to an issue or sale of Additional Shares of Common Stock
shall mean (i) preferred stock, debentures and notes convertible
into Common Stock, and (ii) options or warrants to purchase
Common Stock at a price that is no greater than 95% of the
Effective Price of such issue or sale of Additional Shares of
Common Stock. The "number of shares of Common Stock underlying
Other Securities" on a particular date shall mean the number of
shares of Common Stock issuable upon the exercise or conversion,
as the case may be, of such Other Securities at the close of
business on such date but only to the extent that (i) the holders
thereof have the fully vested legal right to exercise or convert
such Other Securities on such date and to retain the Common Stock
issued upon such exercise or conversion or (ii) in the case of
the Loans, the Borrower has the right to convert such Loans to
Common Stock under Section 3.3; it being understood that for
purposes of determining the "number of shares of Common Stock
underlying Other Securities" in respect of the Tranche A Loans,
the applicable Exchange Factor shall, solely for purposes of this
Clause (a)(6)(A)(I) be the Tranche B Exchange Factor.
(7) Upon the occurrence of each adjustment or readjustment of the Exchange
Factor, the Borrower at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and
shall prepare and furnish to the Lenders a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based.
EXHIBIT H
AMENDMENT TO DEBENTURE
----------------------
The recitals set forth in the Debenture, dated April 6, 2001, between
NetCell 360 Sdn Bhd and the Lenders named therein are hereby amended and
restated as follows:
WHEREAS:
(A) By a Bridge Loan Agreement (the "Existing Loan Agreement") executed between
XxxXxx000.xxx Limited, a Cayman Islands company (the "Borrower), NetCel360
Holdings Limited (the "Parent"), the Chargor and the Lenders as of April
16, 2001, the Lenders extended to the Borrower a loan (the "Existing Loan")
in United States Dollars of USD 2,250,000 upon the terms and conditions set
out therein.
(B) By and Amended and Restated Loan Agreement (the "Loan Agreement") executed
between the Borrower, the Parent and the Lenders as of the same date
hereof, certain of the Lenders have agreed to extend to the Borrower a loan
(the "New Loan") in United States Dollars of up to 3,000,000 upon the terms
and conditions set forth therein. The Existing Loan and the New Loan are
hereinafter referred to collectively as the "Loan".
(C) In consideration of the Lenders having agreed to make the Loan to the
Borrower, the Parent and the Chargor have agreed to unconditionally and
irrevocably guarantee, on a joint and several basis, repayment of the
principal amount of the Loan and interest accrued thereon on the time and
date specified for such payment in the Loan Agreement, and the Chargor ahs
agreed to execute and deliver to and in favour of the Lenders, this Deed,
as amended, supplement or modified from time to time (the "Deed"), upon the
terms and conditions herein.
The following Schedules and Exhibits to the Amended and Restated Bridge
Loan Agreement have not been filed as part of this Form 8-K. The Company agrees
to furnish supplementally to the Commission, upon request, a copy of all omitted
schedules.
Schedule Description
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4.1(b) Authorized, Issued and Outstanding Capital Stock
4.1(l) Subsidiaries and Other Holdings
4.1(q) Assets and Services Provided to Employees
4.1(w) Confidentiality Provisions
Exhibit Description
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C From of Debenture
Exhibit E-1 Opinion of Cayman Islands Counsel
Exhibit E-2 Opinion of Malaysian Counsel
