Term Sheet - Drafting
Term Sheet for Subscription of Seed Preference Shares of ABC Startups Advisory Pvt Ltd.,
The purpose of this Term Sheet (“Term Sheet”) is to confirm our interest regarding an investment by the Investor (as defined hereinafter) in the Company (as defined hereinafter). The structure and key terms of a proposed investment by the Investor (as defined hereinafter) in the Company is presented in this Term Sheet.
This Term Sheet is solely for discussion purposes and does not constitute a legally binding agreement or a contract.
As confirmed via Annexure II (the “Investors)
ABC Startups Advisory Services Pvt Ltd., (the “Company”), a Company registered in India and that holds the complete IP, brand and business of ABC Ventures
Amount of Investment
Total new investment (‘’Investment’’) will be INR 1,20,00,000 (Rupees One Crore Twenty Lakhs only).
Compulsorily Convertible Preference Shares of face value INR 10 each
The total pre money valuation of the Company for the purpose of Investor would be INR 6,00,00,000 (Rupees Six Crores Only)
No of Preference Shares
As per calculation to be detailed in annexure and as per the Investor’s invested amount
Price per Preference share
INR 6000 each (Face Value at INR 10 each issued at a premium of INR 5990 each)
The offer period is from 1st April 2015 to 30th June 2015. Closing shall take place on 30th June 2015 or earlier based on the decision of the founders.
Use of Proceeds
The Investment will be used by the Company as detailed out in the Business cum operating plan approved by the Board of Directors in consultation with the Investors and as may be amended from time to time by the Company's board of directors and for general corporate purposes.
The shareholding pattern of the Company post consummation of the Investment (on a fully diluted basis) is as set forth in Annexure 1
The company has earmarked 10.00% of equity on fully diluted basis before investment to incentivize strategic partners, advisors and employees. This shall be either transferred to the ESOP pool immediately or in future, the founders will transfer their equity proportionately to incentivize employees for up to the said percent of equity without diluting new investors.
Douglas who has joined us recently has been categorized as co-founder and has been allocated equity prior to this round. This has been detailed in the Cap Table as Annexure 1.
91springboard solutions has been categorized as a strategic partner and has been allocated equity prior to this round. This has been detailed in the Cap Table as Annexure 1.
Tag Along Rights
In the event the Founders sell their shares to a third party, INVESTOR would have a right to sell its preference shares on the same terms to the same party. The Tag Along Right shall be a pro-rata right so long as the total number of shares transferred by the Founders is less than 50% of their shareholding in the company. If any shares in addition to the above are proposed to be transferred, INVESTOR shall have the first option to sell their shares to the proposed purchaser.
No shareholder of any class can create an encumbrance on their shares without the approval of the Board of Directors of the Company and the prior written consent of the Investors.
All INVESTORs (including previous Investors) are entitled to a liquidation preference and shall have a preference over the other shareholders of the Company. The total proceeds from liquidation remaining after discharging the liabilities of the company, shall be distributed as follows. INVESTOR shall be entitled to first receive;
(I) the Purchase Price plus any due and unpaid dividends from the proceeds (“Liquidation Preference”)
(II) subsequent to the payment of amount of Liquidation Preference above, the Investor will participate in any further proceeds in proportion to their then Shareholding of the Company on an as-converted basis, pro rata, along with other shareholders of the Company (“Participation Amount”). This amount shall be adjusted for the amount paid as per Clause (i) above.
The Liquidation Preference shall be due upon a Liquidation Event. A “Liquidation Event” shall mean any liquidation, dissolution or winding up of the Company, the departure of Founders before the second anniversary of the investment as well as a merger, acquisition, change of control, consolidation, or other transaction or series of transactions in which the Company’s shareholders prior to such transaction or transactions will not retain a majority of the voting power of the surviving entity, or a sale, lease, license or other transfer of all or a substantial amount of the Company’s assets.
Right to Maintain proportionate shares
In the event the Company offers any fresh equity, in any form whatsoever, to a new investor (not including shares/options issued as a part of an ESOP), INVESTOR will have an option to subscribe shares so as to maintain its percentage holding in the company. Such purchase shall be at the same price as offered to the new investor.
INVESTOR shall have an option to convert the INVESTOR Preference Shares in part or full Equity Share with a 1:1 conversion ratio at any time by requesting the company.
Shares held by the Founders are already subject to reverse vesting provisions over four years as follows: 25% to vest at a cliff in the end of the first year of joining of a founder. The remaining 75% shall vest quarterly over the next three years (“the Vesting Period”) from then.
If a Founder decides to leave the Company at any time before such period, the locked/unvested shares would have to be sold back at face value to the remaining continuing founders in the same ratio as their proportionate shares. These shares shall be utilized by the founders to find an appropriate replacement for the leaving founder on best effort basis.
Accelerated Vesting: In case of acquisition or merger of the company, all the shares of the founders shall be vested prior to the date of acquisition or merger.
Investor Decision Making
All the decision required with respect to “All-Investors” (current round and previous investors) shall be implemented as a group decision on basis of decision agreed to by the simple majority of All Investors on basis of their pro-rata holding. All investors agree to abide by such decisions and this shall be coordinated by the board of the Company.
If the Company issues new securities at a price lower than that of the current round, then the Company shall compensate INVESTOR by issuing further shares or by changing the conversion ratio such that total value of INVESTOR Shareholding is above its investment amount. This shall be done on basis of Weighted Average Anti-Dilution formula.
The Preference Shares shall rank pari passu with the existing equity shares with respect tao all share activities including, but not limited to, voting rights, dividend rights and bonus shares.
So long as INVESTOR investment subsists, the Company shall deliver to INVESTOR the following information
(a) Audited annual financial statements within 90 days of the end of the financial year
(b) Unaudited Quarterly (and year-to-date) financial statements
(c) Quarterly MIS report in the specified format detailing the progress made by the company
In addition to the above INVESTOR will also have standard inspection rights available to investors in India.
Other than with respect to the delivery of audited annual and unaudited quarterly financial statements, these provisions shall terminate upon a Qualified IPO.
INVESTOR shall have an option to convert the INVESTOR Preference Shares in part or in full Equity Share with 1:1 conversion ratio at any time by requesting the company.
The company would bear the expenses incurred in connection with this fund raising including legal documentation
Promoters and the Companies agree that they shall not start any other project anywhere or invest in any other project or another entity engaged in identical, similar or related work, during the currency of this Agreement or for a period of 2 years from separation, in case the Promoter ceases to be a Promoter in the Companies.
The Investors agree to keep all negotiations with the Company/Founders on a confidential basis, including this Term Sheet. Sharing the Term Sheet or its key terms with any external party will constitute a serious breach to the interests of the Company.
This Term Sheet shall be governed by and construed in accordance with the laws of India.
The intent of this Term Sheet is to describe, for negotiation purposes only, some of the key terms of the proposed financing. Except for the provisions entitled “Confidentiality” and “Exclusivity”, this Term Sheet is not intended to be a binding agreement between INVESTOR and the Company with respect to the subject matter hereof. A binding agreement will not occur unless and until all necessary corporate approvals have been obtained and the parties have approved, executed and delivered the appropriate definitive agreements.
Tricks of trade : crafting of Private Equity Term sheet...Founders vs Funders ( investors)
Trick #1: Vendor Financing
You want to sell 50% equity for $14 million, but I only want to pay $10 million. Okay, let’s compromise.
In good faith, and because I’m feeling particularly generous, I’m willing to go to $14 million. But, because I’m new to your business, and don’t know it as intimately as you, I’ll pay $7m now, and $7m in 5 years.
Essentially, I’m agreeing to pay you the full $14 million, but you’re lending me $7m for 5 years. This is called vendor finance. To sweeten the deal, I may even offer to pay you a (very) low rate of interest.
So, what’s the real value of the deal? About $9.8 million based on a 20% discount rate (i.e. my fund’s expected return or opportunity cost for those funds). In the end, I’m paying even less than the original amount and you think you’re getting much more.
Trick #2: Contingent Earn-Outs
Same example as above: you want $14 million for 50%, I want to pay $10 million. Let’s compromise.
In good faith … and because I’m new to your business … I’ll give you $7 million now, but pay the other $7 million (an earn-out) in 2 years, if you hit $10 million EBITDA.
There are two elements here: time value of money and contingent payments. Let’s say the business is currently doing $6 million EBITDA and there’s no debt. You think I’m offering to pay a 4.7x multiple. (14 x 2)/6 = 4.666.
But, if earnings remain at $6 million, I’ve only paid $7 million, which is a 2.3x multiple. If the business grows, but only to $9 million, I’ve still only paid $7 million, which is a 1.6x multiple (7 x 2)/9. But, even if you do hit $10 million in EBITDA, and I have to pay the other $7 million (discounted by 2 years), I’ve effectively only paid a 2.4x multiple (remember the second payment is discount by two years).
I’m paying almost half the amount you think I’m paying.
Trick #3: Company-Paid Earn-Outs
In addition to the previous concepts (of time value of money and contingent payments), an investor can demand that the company be liable for the earn-out. If you only hold a minority stake, you may miss the significance of this.
Let’s apply this to the example from trick #2.
To meet your $14 million asking price, we will pay $7 million now and the company will pay $7 million contingent upon EBITDA of $10 million next year.
With the right wording, you’ll be surprised how easy it is to miss that the company (not investor) is paying the earn-out.
If the company hits the $10 million EBITDA target, the private equity investor is really only paying $3.5 million of the earn-out because they only own 50% of equity. You’re paying the other $3.5 million. So the investor is paying $7 million + $3.5 million (further discounted for 2 years) for the business which equals a 1.9x multiple.
Trick #4: Equity Clawbacks and Ratchets
We investors know that as a business owner, you’re way too optimistic. If you’re not optimistic, then we don’t want to invest in you. We can use this to our advantage.
Your business is growing quickly, which is partly why we’re talking. Let’s imagine your business is doing $1 million EBITDA and you want $5 million for 50% (so, a 10x multiple). You keep telling me you’ll do over $2 million EBITDA next year.
Okay, I’ll meet your number ($5 million), but due to information asymmetry, I want an equity ratchet. To show you’re confident in maintaining earnings, the equity ratchet will reduce your equity by 1% for every $10,000 that your EBITDA is below $2 million for the next year.
I’ve played to your optimism and challenged you to doubt your own numbers. If you say no to the ratchet, it puts your faith in your own business in question. So you agree.
Next year comes around, but after protracted financial crisis, which you weathered quite well, your books (with the help of my financial accounting experts) only show EBITDA of $1.5m. Sure, you’ll likely do $2.5 million next year, but that’s inconsequential.
Guess what, you only owned 50% of your business, and given the ratchet terms, you’ve lost your business. (You did $500k below target, 500/10k = 50, 50 x 1% = 50%.)
You did very well to earn $1.5 million during a crisis, but you never considered losing your business. You also didn’t realise the importance of our definition of EBITDA in the term sheet. Maybe you really did $2.1 million by your old definition, but that doesn’t matter now.
Next year the business does $3 million EBITDA, I now own 100%, so I effectively paid 1.7x instead of 10x.
Frequently used Terms and conditions of Private Equity Agreements
Contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price
First Refusal Rights
A negotiated obligation of the company or existing investors to offer shares to the company or other existing investors at fair market value or a previously negotiated price, prior to selling shares to new investors.
A majority shareholders' right, obligating shareholders whose shares are bound into the shareholders' agreement to sell their shares into an offer the majority wishes to execute
Tag-Along Rights / Rights of Co-Sale
A minority shareholder protection affording the right to include their shares in any sale of control and at the offered price.
XYZ PRIVATE EQUITY LIMITED
ABC. COMPANY LIMITED
Dated 5th day of March 2006
This INVESTMENT AGREEMENT (the “Agreement”) is made as of the 5th day of March, 2006, by and between:
(1) XYZ PRIVATE EQUITY LIMITED (“XYZ”), a company incorporated and existing under the laws of Mauritius and having its principal office XYZ
(2) ABC COMPANY LIMITED (the “Company”), a company incorporated and existing under the Companies Act, 1956 and having its registered office ABC.s address
(3) MR. B., Chairman of the Company (“Promoter No. 1”), Indian inhabitant, B.s address
XYZ s are hereinafter individually referred to as “Investor” and collectively referred to as the “Investors”. Mr.B are hereinafter collectively referred to as “Promoters”. The Promoters and the persons listed at Schedule “B” hereto are hereinafter collectively referred to as the “Promoter Group”.
W H E R E A S:
A. The Company is engaged in the business of carrying out construction activities
B. The Promoter Group is the legal and beneficial owner of 10,146,429 fully paid up equity shares constituting 100% of the issued and paid up equity share capital of Company.
C. At the request of the Company and the Promoters, the Investors (by themselves and/or through their nominees) are desirous of investing aggregate amount of up to Rupees One Thousand Five Hundred Million (Rs. 1,500 million) in the Company, of which Rupees Six Hundred and Sixty Million (Rs. 660 million) is by way of purchase of existing equity shares from Promoters and Rupees Eighty Hundred and Forty Million (Rs. 840 million) by way of subscription to preferential issue and allotment by Company to Investors of fresh equity shares of Company.
D. On and after the Investors’ investment in the Company, the Investors would hold certain rights in relation to the management and affairs of the Company as set out in this Agreement, and the relationship between the Investors and the Promoter would be governed by the terms of this Agreement.
NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the parties, intending to be legally bound agree as follows:
The capitalized terms used in this Agreement shall have the meanings ascribed to them at Schedule “A” to this Agreement.
2.1 Issue and Subscription of Issued Shares. Subject to the terms and conditions of this Agreement the Company shall issue and allot to the Investors within thirty (30) days of Closing and Investors, relying on, inter alia, the several Warranties and undertakings contained in this Agreement, shall subscribe for and acquire the Issued Shares free from all Liens and with all rights and benefits appertaining to the Issued Shares and with all dividends declared in respect of the Issued Shares with effect from and after Closing.
2.2 Subscription Price. The aggregate amount payable by Investors for acquisition of the Issued Shares shall be Indian Rupees Eighty Four Crores (INR 84 Crores) (“Subscription Price”). The Subscription Price shall be respectively paid by XYZ as follows:
2.2.1 An amount aggregating to Indian Rupees Fifty Six Crores (INR 56 Crores) for all of XYZ Equity Shares at a price of Indian Rupees (INR 705) per equity share; and
2.2.2 An amount aggregating to Indian Rupees Twenty Eight Crores (INR 28 Crores) for all of Tattersalls Equity Shares at a price of Indian Rupees Seven Hundred and Five (INR 705) per share.
The Subscription Price shall be fixed and firm and shall not be subject to escalation unless mutually agreed in writing between the Parties hereto.
and Purchase of Transfer Shares. Subject to the terms and conditions of this Agreement, Promoters as legal and beneficial owners shall sell the Transfer Shares and Investors, relying on, inter alia, the several Warranties and undertakings contained in this Agreement, shall purchase the Transfer Shares free from all Liens and with all rights and benefits appertaining to the Transfer Shares and with all dividends declared in respect of the Transfer Shares with effect from and after Closing. Company shall within thirty (30) days of lodging the Transfer Shares arrange to transfer and make available the corresponding share certificates to the Investors. Sale
2.4 Share Transfer Price. The aggregate amount payable by Investors for acquisition of the Transfer Shares shall be Indian Rupees Sixty Six Crores (INR 66 Crores) (“Share Transfer Price”). The Share Transfer Price shall be respectively paid by XYZ as follows:
2.4.1 An amount aggregating to Indian Rupees Forty Four Crores (INR 44 Crores) for all of XYZ Transfer Shares at a price of Indian Rupees Seven Hundred and Five (INR 705) per equity share; and
2.4.2 An amount aggregating to Indian Rupees Twenty Two Crores (INR 22 Crores) for all of Investor2 Transfer Shares at a price of Indian Rupees Seven Hundred and Five (INR 705) per equity share.
The Share Transfer Price shall be fixed and firm and shall not be subject to escalation unless mutually agreed in writing between the Parties hereto.
2.5 Investment Amount. The aggregate amount payable by the Investors for acquisition of Issued Shares and Transfer Shares (“Investment Amount”) shall comprise of Subscription Price and Share Transfer Price.
2.6 Payment Mechanism. All payments to be made under this Agreement shall be paid in Indian Rupees and shall be made by way of pay order or banker’s draft drawn on a licensed bank in
or by way of telegraphic transfer of funds to such account as may be notified to Investors. India
2.7 Use of Investment Amount. Company shall and Promoters shall ensure that Company shall use the Investment Amount for and in strict compliance of Use of Proceeds Schedule set out at Schedule “C” of this Agreement or in such other manner as may be previously approved in writing by the Investor.
2.8 Consequences of failure to transfer/allot. If after Investor pays the Investment Amount to Company or Promoters, Promoters and/or Company’s failure to transfer or allot to Investors any shares despite Investors being in compliance with its duties and obligations under this Agreement, Investors shall, without prejudice to its other rights and remedies in law or under this Agreement, shall be entitled to require the Company and Promoters to refund the amounts invested and in addition, Company and Promoters shall be jointly and severally liable to pay to Investor an amount of Fifteen Percent per annum (15% p.a.) of such amounts invested.
2.9 Stock activities. The Investor Shares shall rank pari passu with the existing issued equity shares of Company with respect to all stock activities including but not limited to voting rights, dividends and rights issuance.
3.1 Warranties of Company and Promoters. Company and Promoters, jointly and severally, hereby make the Warranties set out at Schedule “D” to Investors. Company and Promoters, jointly and severally, represent and warrant to Investors that the statements contained in Schedule “D” are true and correct, except as specifically disclosed in a document of even date and delivered to Investors referring to the Warranties in Schedule “D” of this Agreement (the “Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in Schedule “D”, and the disclosure in any such numbered and lettered section of the Disclosure Schedule shall qualify only the corresponding subsection in Schedule “D” (except to the extent disclosure in any numbered and lettered section of the Disclosure Schedule is specifically cross-referenced in another numbered and lettered section of the Disclosure Schedule).
3.2 Representations and Warranties of Investors. Investors hereby makes the representations and warranties set out at Schedule “E” to Company.
3.3 Additional provisions in relation to Warranties.
3.3.1 Reliance on Warranties. Company and Promoters jointly and severally acknowledge that Investors have entered into this Agreement in reliance upon, inter alia, the Warranties. Save as expressly otherwise provided in this Agreement, the Warranties shall be separate and independent and shall not be limited by reference to any thing in this Agreement and claims may be made whether or not Investors prior to or after signing this Agreement knew or could have discovered (whether by any investigation made by it or on its behalf into the affairs of Company or otherwise) that any of the Warranties has not been complied with or is otherwise untrue or misleading.
3.3.2 Separate Warranties. Each of the Warranties shall be separate and independent and shall not be limited by reference to any other Warranty or by anything in this Agreement.
3.3.3 No Breach or Non-Fulfillment of Warranties. Company and Promoters jointly and severally undertake that they shall not do or permit, or omit to or permit any act, matter, thing or circumstance which would constitute a breach or non-fulfillment of any of the Warranties or which would mean that any such Warranty is untrue, inaccurate or misleading, either at the date of this Agreement or at Closing.
3.3.4 Survival of Warranties. The Warranties contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall continue in force until the expiry of a period of six (6) months of receiving an audit report from the Statutory Auditor appointed in accordance with Section 220.127.116.11 for the period ended June 30, 2006 or September 30, 2006, whichever is earlier.
3.3.5 Consequences of breach of Warranties. If prior to Closing:
18.104.22.168 It shall be found that any of the Warranties on the part of Promoters or Company are untrue or misleading in any respect, Investors shall be entitled by notice in writing to Promoters and Company to forthwith terminate this Agreement but failure to exercise this right shall not constitute a waiver of any other rights of Investors arising out of any breach of any of the Warranties and shall not prejudice any other rights and remedies of Investors.
22.214.171.124 Any event shall occur (other than an event constituting or giving rise to a breach of any of the Warranties) which affects or is likely to cause a Material Adverse Effect to Company, Investors shall be entitled by notice in writing to Promoters and Company to forthwith terminate this Agreement.
Conduct of Business of Company. During the period from the date of this Agreement and up to the Closing, Promoters and Company agree (except to the extent expressly contemplated by this Agreement or as consented to in writing by Investors) that Company shall and Promoters shall cause Company to and shall ensure that Company shall, (a) carry on its business in the Ordinary Course of Business in substantially the same manner as heretofore conducted; (b) pay its Indebtedness and Taxes when due; (c) pay or perform other obligations when due; and (d) use all reasonable efforts to preserve intact its present business organizations, keep available the services of its present officers and employees and preserve its relationship with suppliers, customers, lessors, licensors and others having business dealings with it. Promoters and Company agree to promptly notify Investors of any event or occurrence not in the Ordinary Course of Business, and of any event which could reasonably be expected to have a Material Adverse Effect.
5. CONDITIONS PRECEDENT & CONDITION SUBSEQUENT
5.1 Conditions Precedent to Closing:
5.1.1 Conditions of Investors obligations at Closing. Except where herein noted, the obligations of Investors under Section 2 of this Agreement are subject to the fulfillment on or before the Closing of each of the conditions set out at Schedule “F” to this Agreement.
5.1.2 Conditions of Company’s and Promoter’s obligations at Closing. Except where herein noted, the obligations of Company and Promoters to Investors under Section 2 of this Agreement are subject to the fulfillment on or before the Closing of each of the conditions set out at Schedule “G” by Investors.
5.2 Conditions Subsequent to Closing:
5.2.1 Business Transfer: Within six (6) months from the Closing, the Company shall and the Promoters shall ensure that the Company shall ensure transfer of: (a) Steel and Casting Unit; (b) Advances; and (c) Investment, to Promoters or their nominee(s).
5.2.2 Transfer of Power Unit: Within six (6) months from the Closing, the Company and the Promoters shall ensure that the Company shall obtain approvals from Transmission Corporation of Andhra Pradesh Limited, approval from appropriate authority under Electricity Act, 2003 and such other regulatory approvals as may be required for transfer of the said Power Unit to Promoter or their nominee(s).
5.2.3 Built Operate Transfer (“BOT”) Projects: Within twelve (12) months from the Closing, or such other extended period as is approved by the Investors, the Company shall and the Promoters shall ensure that the Company shall form a Wholly Owned Subsidiary to function under overall control of the Company and undertake all BOT projects through one or more special purpose vehicles. The Company shall endeavor to transfer existing BOT projects to the Wholly Owned Subsidiary after obtaining requisite approvals.
5.2.4 Employee Policies. Company shall and Promoters shall ensure that Company shall have reasonable and acceptable policies towards its working environment in accordance with prevailing market standards.
5.2.5 Compliance with Employment Laws. The Company shall and the Promoters shall ensure that the Company shall comply with Applicable Laws relating to employment.
5.2.6 Employment Contract: Company shall and Promoters shall ensure that Company shall execute appropriate employment contracts with its key managerial personnel identified by the Investor.
5.2.7 Appointments. Within six (6) months of the Closing, the Company shall appoint:
126.96.36.199 Statutory Auditors of repute mutually acceptable to the Investors and the Company. However, Company shall make best efforts to appoint such mutually acceptable Statutory Auditor for audit of financial statements for the financial year ended
March 31, 2006;
188.8.131.52 A whole time company secretary cum compliance officer, who would be in charge of corporate laws and all other compliances of Company;
184.108.40.206 A specialised HR personnel to assists the Company in all HR areas; and
220.127.116.11 A specialized IT consultant to assist the Company in building-up IT operations and support systems suitable for its business operations.
5.2.8 Secretarial Compliance. The Company shall ensure secretarial compliance and corporate governance in accordance with Applicable Law and best industry practices. On expiry of six (6) months after the Closing, the Company Secretary of the Company shall provide to Investor a secretarial compliance certificate confirming that the minutes books and statutory registers of the Company are updated and comply with all Applicable Laws.
5.2.9 Insurance Policies.
18.104.22.168 Company shall and Promoters shall ensure that Company shall take adequate insurance cover to insure its properties against accidents, thefts, acts of God and service liability.
22.214.171.124 Company shall and Promoters shall ensure that Company shall obtain adequate insurance policies for all its employees as statutorily required under Applicable Laws.
126.96.36.199 Company shall and Promoters shall ensure that Company shall procure an acceptable key man insurance policy for its Chairman and Managing Director.
5.2.10 Ethical Business Practices. Company shall and Promoters shall ensure that the business practices of Company are ethical and in accordance with Applicable Laws. The Company shall indemnify the Investor Director in accordance with sections 201 and 633 of the Companies Act 1956.
5.2.11 Other Terms. In the event any of the Company’s existing Shareholders are entitled to any rights, privileges or protection on terms more favorable than those herein afforded to the Investor Shares, the Investors shall be entitled to the benefit of such more favourable terms.
6.1 Closing. Subject to the early termination of this Agreement pursuant to Section 17 hereof, the closing of issue and allotment of the Issued Shares and transfer of Transfer Shares (the “Closing”) shall take place at a mutually agreed time and place, fifteen (15) days after the satisfaction or waiver of the conditions precedent set forth in Section 5.1.1 and Section 5.1.2 hereof, or at such other time and place as Company, Promoters and Investors shall mutually agree.
6.2 Deliveries of Company and Promoters. Company and Promoters shall make the deliveries listed at Schedule “H” to Investors at the Closing.
6.3 Deliveries of Investors. On or prior to the Closing, Investors shall deliver the Investment Amount to Company in accordance with Section 2.6.
7.1 Access/Information. From and after the date hereof up to Closing , Company and Promoters shall, and Promoters shall cause Company to, afford to and permit Investors, access to the Company’s respective personnel, properties, books, contracts, commitments, financial and operating data and records (including information regarding any pending or threatened Proceedings to which Promoters or Company is, or reasonably expects to be, a party) and to discuss the business, affairs, operations, finances, regulatory status and other matters related to the acquisition of Investor Shares with Promoters and Company. The parties agree that the disclosure of information and documents by Promoters and Company to Investors pursuant to this Agreement shall not relieve Promoters or Company of any obligation pursuant hereto or create any obligation on the part of Investors to proceed with the transactions contemplated under this Agreement.
7.2 Publicity. Except as required by Applicable Law, Company, Promoters and Investors (or any of their respective Affiliates) shall not, and Promoters shall cause Company not to, without the prior written consent of Investors, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement. Prior to making any public disclosure required by Applicable Law, the disclosing party shall consult with the other parties hereto, to the extent feasible, as to the content and timing of such public announcement or press release.
7.3 Further Assurances. As soon as reasonably practicable after the Closing, Company shall and Promoters shall cause Company to, file such documents with any Government Authorities and take such other actions as may be required to reflect the issue, allotment and delivery of the Investor Shares to Investors and the consummation of the transactions contemplated by this Agreement.
7.4 Non-Competition. As further consideration for Investor’s agreement to subscribe for and acquire the Investor Shares pursuant to this Agreement, Promoters agree that, except as expressly consented to by Investors in writing, they shall not at any time after the date of the Closing, directly engage in any Covered Activity that is in direct competition to the Company’s business activities or detrimental to the interest of the Company.
7.5.1 Each party hereto hereby agrees that any information obtained by such party (the “Receiving Party”) which is, or would reasonably be perceived to be, proprietary to any other party hereto (the “Designated Party”) or otherwise confidential, will not be disclosed without the prior written consent of the Designated Party; provided that any information shall not be deemed proprietary or confidential if (i) such information is now or subsequently becomes generally known or available by publication, commercial use or otherwise, through no fault of the Receiving Party; (ii) such information was previously known by the Receiving Party at the time of disclosure from a source other than the Designated Party without violation of an obligation of confidentiality; (iii) such information is independently developed by the Receiving Party without the use of any confidential or proprietary information; (iv) such information is lawfully obtained by the Receiving Party from a third party without violation of a confidentiality obligation; or (v) the Designated Party agrees in writing that such information may be disclosed by the Receiving Party.
7.5.2 Notwithstanding Section 7.5.1 above (i) each party hereto may disclose such information to its legal counsel, bankers and accountants (provided that such party shall remain liable for the compliance by such persons with the provisions hereof); (ii) such information may also be disclosed to Investors lenders or Investors shareholders (provided that Investors shall remain liable for the compliance by such Persons with the provisions hereof); (iii) each party hereto may disclose such information as required by Applicable Law, provided that, to the extent permitted by Applicable Law, the other party is given prompt written notice and opportunity to object as soon as practicable prior to disclosure; and (iv) each party may disclose such information when necessary to enforce such party’s rights hereunder.
7.6 Additional shares by Preferential Allotment. If the Company decides to issue by way of preferential allotment, additional shares or Securities convertible into equity shares to any third party investor, the Investors will have the first right to subscribe to such number of additional shares or Securities convertible into shares, at the same valuation as being offered to other investors such that the each Investor’s percentile shareholding in the Company remains the same as it was prior to such issue of additional shares. This right shall be exercised by the Investors within fifteen (15) days of the notice received from the Company for issued of such additional shares.
7.7 Monitoring. The Company shall and the Promoters shall ensure that the Company shall ensure that the physical progress as well as the expenditure incurred on the project is communicated to the Board on quarterly basis.
7.8 Pledging of Investor Shares. Investors shall not be required to pledge their shares or provide other support to any third party, including without limitation lenders of the Company.
7.9 Necessary Actions. From and after the date hereof, Company shall and Promoters shall cause Company to satisfy each of the conditions to closing contained in Section 5.1.1. At the Closing, Company shall and Promoters shall cause Company to, take all and any actions necessary or appropriate in connection with the consummation of the transactions contemplated under this Agreement in accordance with the terms of this Agreement.
8.1 Amendment of Articles of Association. Within thirty (30) days from Closing, Company shall convene a meeting of its shareholders and shall take all the necessary steps required to amend the Articles of Association of Company to reflect the form of the Articles of Association set out at Schedule “I” to this Agreement. Promoters agrees to vote on their shares and ensure the Promoter Group also votes on their respective shares in favor of the amendment of the Articles of Association to reflect the form of the Articles of Association set out at Schedule “I” to this Agreement.
8.2 Inconsistencies. Promoters hereby agrees that in the event of any ambiguity or inconsistency regarding the rights and obligations of Investors in the Memorandum and Articles of Association of Company and this Agreement, subject to Applicable Law, Promoters undertakes to amend the Memorandum and Articles of Association of Company to bring them in consonance with this Agreement.
9.1 Board of Directors.
9.1.1 Composition of the Board.
188.8.131.52 At all times during the subsistence of this Agreement, Investors shall have a right to jointly nominate one (1) director on the Board of Company (“Investor Director”). Notwithstanding anything contrary set out in this Agreement, the right to nominate a director shall be lost if:
(a) at any time the joint shareholding of Investors fall below 10% of the issued and paid-up share capital of the Company; or
(b) any of the Investors propose to invest in any entity which is a Direct Competitor with the business of the Company and the Investor wishes to appoint its representative director on the board of such entity.
The provisions of this Section 184.108.40.206 shall survive the termination of this Agreement
220.127.116.11 Investor Director shall have all powers and privileges, in line with other non-executive directors on the Board.
18.104.22.168 If at any time the Companies Act, 1956 or any other Applicable Law should require an increase or decrease in the number of directors constituting the Board, such increase or decrease shall be effected in a way that ensures that Investor Director continues to be on the Board in accordance with the provisions of this Agreement. However, the maximum Board strength shall be twelve (12) directors with half of the Board constituting of independent directors appointed in consultation with the Investors.
22.214.171.124 Subject to Applicable Law, all the directors of Company (save and except the Managing Director, the Investor Director, the Executive Directors) shall be liable to retire by rotation in accordance with the Articles of Association of Company.
9.1.2 Qualification Shares. A Director need not hold any qualification Shares.
9.1.3 Chairman of the Board. Mr. B. shall be the Executive Chairman of the Board.
9.1.4 Vacancies. If any Director resigns, vacates or is removed from office before his term expires, the resulting casual vacancy may be filled by a nominee of the shareholder who originally nominated the Director vacating office, but any person so nominated, shall retain his office only so long as the vacating Director would have retained the same, if no vacancy had occurred.
9.1.5 Alternate Director. In the event that any Director (an “Original Director”) is away for a continuous period of more than (3) months from the state in which the meetings of the Board are ordinarily held, the Board shall appoint another Director (an “Alternate Director”) for and in place of the Original Director. The Board shall only appoint such Alternate Director nominated by the Shareholder that nominated the Original Director who shall be deemed to be nominated by the Original Director for this purpose. Such Alternate Director shall be entitled to receive all materials supplied to Directors and shall also be entitled to attend all meetings of the Board and committees thereof in the absence of the Original Director.
9.1.6 Liability of Investor Director.
126.96.36.199 Promoters and Company expressly agree that Investor Director will be non-executive Directors.
188.8.131.52 Promoters and Company expressly agree and undertake that Investor Director shall not be in charge of, or responsible for the day to day management of Company and shall not be deemed to be “officers in default” as the term is defined in the Companies Act, 1956 and shall accordingly not be liable for any default or failure of Company in complying with the provisions of any Applicable Laws.
184.108.40.206 Promoters and Company expressly agree that Investor Director shall not be identified as officers in default of Company or occupier of any premises used by Company or an employer of the employees of Company.
220.127.116.11 Promoters and Company expressly agree that Investors shall not be construed as a “promoter” nor as a person acting in concert with them.
9.1.7 Voting for appointment of Director. Promoters shall vote their Shares of Company for the election of all persons nominated to be directors of Company by Investors in accordance with the Section 18.104.22.168.
9.1.8 Withdrawal/Vacation of Nomination. Investors shall at any time be entitled to provide written notice to the Board withdrawing its nomination of any Investor Director including Alternate Director. Such written notice shall take immediate effect. On receipt of such written notice, Promoters shall be bound to cause their Directors to vote in favor of the removal of Investor Director whose candidature is withdrawn by Investors. However, the position of Investor Director shall stand vacated immediately if their shareholding individually or collectively falls below the limits indicated in Section 22.214.171.124.
9.2 Board Meetings.
9.2.1 Number of Board Meetings. The Board shall meet at least once in every calendar quarter. Meetings of the Board shall ordinarily be held at
. A Board meeting may also be held by teleconference or video conferencing and/or the presence of a Director at a meeting shall be recorded if he/she is present over telephone or video conferencing, if such meeting or presence, as the case may be, is not contrary to law. Hyderabad, India
9.2.2 Convening meetings of the Board. Any Director may, and the secretary of Company, if so appointed, shall on the requisition of a Director, summon a meeting of the Board, in accordance with the notice and other requirements set out in this Section 9.2.
9.2.3 Notice for Board Meetings. At least ten (10) days prior written notice shall be given to each of the Directors of any meeting of the Board or a committee. Every notice to Investor Director shall also be sent to one of its designated addresses in
. A meeting of the Board or a committee may be held at shorter notice with the written consent (which may be signified by letter, facsimile or e-mail with receipt acknowledged) of a majority of directors including Investor Director. India
9.2.4 Quorum for Board meeting. A quorum of the Board shall be one-third of its total strength which shall include Investor Director and Chairman or Managing Director (at the commencement and throughout the duration of the meeting). Provided however that in the absence of a quorum, the meeting shall stand adjourned to the same day in the next week at the same place and at the same time, and the quorum in such adjourned meeting shall be any three (3) directors.
9.2.5 Decisions of the Board. Subject to Section 9.4, all decisions of the Board shall require the affirmative vote of a majority of the Directors at a duly convened meeting and/or adjourned meeting of the Board at which a quorum is present. In the event there is a vacancy on the Board and an individual has been designated to fill such vacancy, the first order of business shall be to fill such vacancy.
9.2.6 Circular Resolution. Subject to Section 9.4 and except for those actions required by the Companies Act, 1956 to be determined at a meeting of the Board, all decisions of the Board may be taken by circular resolution. The notice period for any circular resolution shall be ten (10) days. The draft of the resolution must be circulated to all Directors including Investor Director and as regards Investor Director a copy shall also be sent to one of its designated addresses in
. Each circular resolution must be in writing and would get passed by majority and only when signed by each and every Director. It is being clarified that in case of circular resolution the majority consent of the Board shall be necessary and not of the Directors then in India . India
9.2.7 Committees of the Board. The Parties agree that as and when Company constitutes any non-statutory special committee or any committee dealing with all or any of the Specified Matters, Investors shall have the right to nominate one (1) representative on such committee.
9.2.8 Rights of Investors. Investor Director shall have the right to attend all review meetings and/or major strategy meetings of the Board or any committee of directors of Company.
9.3.1 General Meetings. An annual general meeting of the shareholders of Company shall be held within six (6) months of the end of each financial year of Company. Subject to the foregoing, the Board or the Parties may convene an extraordinary general meeting of the shareholders of Company whenever they deem appropriate.
9.3.2 Notice for General Meetings. At least Twenty-one (21) days prior written notice of every annual general meeting of shareholders shall be given to all shareholders whose names appear on the register of members of Company. In case of Investors, a copy of the notice should also be sent to an address in
designated by Investors. A meeting of the shareholders may be called by giving shorter notice with the prior written consent of Investors. India
9.3.3 Contents of Notice. The notice to shareholders shall specify the place, date and time of the meeting. Every notice convening a meeting of the shareholders shall set forth in full and sufficient detail the business to be transacted thereat, and no business shall be transacted at such meeting unless the same has been stated in the notice convening the meeting.
9.3.4 Chairman for General Meeting. The Chairman of the Board shall be the Chairman for all general meetings.
9.3.5 Proxies. Any shareholder of Company may appoint another Person as his proxy (and in case of a corporate shareholder, an authorized representative) to attend a meeting and vote thereat on such shareholder’s behalf, provided that the power given to such proxy must be in writing.
9.3.6 Quorum for General Meetings. The quorum for a general meeting shall be constituted in accordance with the provisions of the Companies Act, provided that all Specified Matters listed in Schedule “J” hereto shall only be taken up at a general meeting at which an authorized representative of the Investors is present.
9.3.7 Decision Making. Except as otherwise required by the Applicable Law and Section 9.4, all decisions of the shareholders of Company shall be made by simple majority of the shareholders at a duly convened meeting or adjourned meeting at which a quorum is present.
9.4 Consent Rights. Notwithstanding anything contained in this Agreement, from the date of execution until the subsistence of this Agreement:
9.4.1 Each of the Specified Matters as contained in Schedule “J” hereto shall be decided by Company only through a resolution of its Board or shareholders, as the case may be.
9.4.2 No resolution or decision shall be passed or taken by the Board or the shareholders of Company with respect to any of the Specified Matters unless:
126.96.36.199 Such resolution or decision is approved by a majority of the Board of Company, which majority includes the affirmative vote of the Investor Director,
188.8.131.52 Such resolution is approved in writing by Investor Director, or
184.108.40.206 Investors acting through the Investor Director, by himself or through his proxy, votes in favor of such resolution at a general meeting of Company.
9.5.1 Promoters and Investors undertake to ensure that they, their representatives and proxies representing them at the general meetings of the shareholders of Company shall at all times exercise their votes and through their respective appointed/nominated directors (or alternate directors) at Board meetings and otherwise, act in such manner so as to comply with, and to fully and effectually implement the spirit, intent and specific provisions of this Agreement.
9.5.2 If a resolution contrary to the terms of this Agreement is passed at any meeting of shareholders or at any meeting of the Board or any committee thereof, such resolution shall be null and void.
9.6 Avoidance of Conflict; Necessary Actions. Promoters and Investors shall vote all of its shares, and shall take all other actions necessary, to (i) ensure that Company's Certificate of Incorporation, Memorandum of Association and Articles of Association facilitate and do not at any time conflict with any provision of this Agreement, and (ii) to ensure compliance by Company of its obligations hereunder.
9.7 Support of Amalgamation Opportunities. Promoters and Company undertake to take best endeavors and not to unreasonably withhold or intentionally impede opportunities that may be proposed by the Board of Company for possible mergers, acquisitions and/or amalgamations of/by/into other entities engaged in related lines of activities. Such transactions proposed by the Board of Company may be in consideration for cash, stock in another entity, or a combination of both.
9.8 Management and Control. The overall management and control of the operations of the Company shall continue to vest with the Promoters. Chairman and Managing Director of the Company shall continue to be Promoters or their nominees and the Promoters shall continue to have the right to appoint all key managerial personnel of the Company.
10. TRANSFER OF SHARES
10.1 Restrictions on Transfer on Promoter Group. Promoter Group shall not be permitted and shall not agree to do any of the following during the continuance of this Agreement except: (a) if required under this Agreement, or (b) with the prior written consent of Investors, which consent shall not be unreasonably withheld by the Investors:
10.1.1 Transfer or exchange any Shares of Company at a price lower than the cost of acquisition of shares of Investors;
10.1.2 Transfer or exchange any Shares other than in compliance with this Section 10; or
10.1.3 Lien any Shares otherwise than in the Ordinary Course of Business of Company. This excludes: (a) the existing 2,700,000 shares of the Promoter Group pledged with Industrial and Development Bank of
, and (b) additional shares with aggregate value of INR 500 million that may be required to be pledged with lenders in relation to the proposed Business Restructuring. India
10.2 Restrictions on Transfer on Investors. Investors shall not be permitted and shall not agree to do any of the following:
10.2.1 Transfer any Investor Shares of the Company to a Direct Competitor of the Company before or after the Initial Public Offering provided however that, after the Initial Public Offer, the Investors may sell the Investor Shares to any purchaser through the random order matching system of the stock exchanges on which the shares of the Company are listed;
10.2.2 After the Initial Public Offering shall not: (i) transfer any Investor Shares of the Company otherwise than through the random order matching system of the stock exchanges on which the shares are listed; and (ii) shall not transfer 5% or more of the issued and paid-up share capital of the Company by way of block deal to any individual shareholder. Provided however that (i) and (ii) shall not be applicable to any transfer of Investor Shares to FIIs, Mutual Fund, Private Equity Fund or a Venture Capital Fund as defined under the rules and regulations of Securities and Exchange Board of India.
10.3 Standstill. For so long as this Agreement remains in effect, the Promoters shall ensure that they individually or collectively with Promoter Group continue to legally and beneficially hold at least 51% shares of the Company.
10.4.1 Notice of Transfer. On Promoter Group proposing to transfer any or all of their Shares of Company (the “Offered Shares”), Promoter Group shall make bonafide offer of such Shares to Investors to purchase the Offered Shares at a price and terms offered by a proposed purchaser (“Offer Price”) .
10.4.2 Option of Investors. Within Fifteen (15) days after receipt of the Offer from Promoters, Investors shall have the option, exercisable in its sole discretion to:
10.4.2.1 Refuse to purchase the Offered Shares within a period of Seven 7 days in which case the Promoters shall sell or transfer at his discretion the Offered Shares to the proposed Purchaser; or
10.4.2.2 Purchase all of the Offered Shares at the Offer Price within a period of Seven 7 days of exercising such option; or
10.4.2.3 Sell a proportionate amount of its shares of Company to the proposed Purchaser at the Offer Price on the same terms offered to the Promoters; or
10.4.2.4 Do none of 10.4.2.1, 10.4.2.2, or 10.4.2.3 above in which case the Promoter shall sell or transfer at his discretion the Offered Shares to the proposed Purchaser.
10.4.3 Deed of Adherence. Any transfer of Offered Shares pursuant to Section 10.4 shall be subject to prior execution by the purchaser of Deed of Adherence.
10.5 Transfer of Shares by Investor(s). Investor(s) shall have the right to sell all or any of the Investor Shares of Company as and when it desires subject to compliance with the provisions of this Section.
10.5.1 Lock-in after Closing. Other than in connection with an Initial Public Offering, Investor(s) shall not be entitled to sell or transfer all or any of the Investor Shares for a period nine (9) months after the Closing.
10.5.2 Right of First Refusal of Promoters. If Investors directly or indirectly, at any time during the subsistence of this Agreement, enters into an agreement (whether oral or written) to sell or otherwise transfer all or any Investor Shares acquired pursuant to this Agreement to any third party (other than to Qualified Institutional Buyer(s) as defined by SEBI) (the “Transferee”), Promoters shall have a right of first refusal to buy the shares on terms and conditions as offered to such Transferee, whereupon the following procedure shall apply:
10.5.2.1 Investor shall deliver a written notice (the "Transfer Notice") to Promoters at least Seven (7) days prior to the planned date of such transfer (the “Transfer Date”). The Transfer Notice shall contain (i) the identity of the Transferee and (ii) the price per Share.
10.5.2.2 Promoters shall notify the Investor in writing (the “Purchase Notice”) no later than the Transfer Date of his intent to purchase all shares on offer. If no such Purchase Notice shall have been received by Investor, Promoters shall be deemed to have refused to exercise his right of first refusal, in which event Investor may execute the transfer in favor of the Transferee.
10.6 Assignment of Rights. Any transfer or sale by Investors of all (and not a part being less than the whole) of the Issued Shares shall automatically result in the assignment of all of Investors rights under this Agreement to the buyer, and on purchase of such shares all of Investors rights under this Agreement shall be deemed to be assigned to the buyer and the buyer shall acquire all of the rights of Investors under this Agreement. The Articles of Association of Company shall be amended to confirm with this Section.
10.7 Approval of Company. Subject to Applicable Law, Company shall be bound to approve and implement any and all transfers of Shares by Investors in accordance with the terms of this Agreement within Thirty (30) days of receipt of the share transfer forms and share certificates from Investors.
10.8.1 For the purpose of a Initial Public Offering, Promoters expressly agrees and undertakes to offer his shares for restriction on transfer and lock-in as applicable to Promoters shares under the guidelines of SEBI or any other statutory or regulatory authority from time to time, whether in India and/or outside India and shall ensure that the Investor Shares shall not be subject to any such restriction.
10.8.2 The Parties understand and agree that Investors shall not be deemed and/or construed and/or referred to in any context and/or mentioned in any context to be a “promoters” of Company in connection with any Initial Public Offering, and accordingly, various requirements and regulations applicable to “promoters” (including requirements in connection with “lock-in” period applicable to the shares) prescribed by Applicable Laws and guidelines in connection with public offerings shall apply only to Promoters and not to Investors.
10.9 Invalid Transfers. Company shall refuse to register any transfer or other disposition of Shares purported to be made by Promoters or Investors in breach of any of the provisions herein contained. The Parties shall cause their nominees on the Board to cast their votes in such a manner as to ensure that Company registers all transfers made in accordance with this Agreement.
10.10 Transfer to Affiliates. Notwithstanding anything contrary set out in this Agreement, Promoters or Investors may transfer Shares of Company to any of their Affiliates, subject to the prior fulfillment of the following conditions:
10.10.1Such Affiliate shall previously sign a Deed of Adherence;
10.10.2Prior to any such Affiliate ceasing to be an Affiliate of Promoters or Investors, as the case may be, all of the Shares of Company held by such Affiliate shall be transferred to Promoters or Investors (as the case may be) or to another Affiliate of Promoters and/or Investors;
10.10.3Promoters or Investors (as the case may be) shall guarantee the performance by such Affiliate of its duties, obligations and liabilities under this Agreement;
10.10.4All the provisions of this Agreement that apply to Promoters or Investor (as the case may be) shall apply to such Affiliate to the same extent.
10.11 Government Approvals. It is hereby agreed that:
10.11.1 Any sale or transfer contemplated under the provisions of this Agreement shall be subject to any necessary approvals from Government Authority; and
10.11.2 Any time limit imposed by the provisions of this Agreement shall be extended in respect of any period reasonably necessary to obtain any government or regulatory approval, provided that, the Parties shall use all reasonable endeavors to expedite the obtaining of any such approvals.
11.1 Discussions with Investors. Company shall permit any person designated by Investors in writing to discuss the affairs, finances and accounts of Company with Company’s officers and other principal executives at such time as may reasonably be requested, and all books, records, accounts, documents and vouchers relating to the business and the affairs of Company shall at such time be open to the inspection of any such person, who may make such copies thereof or extracts there from as such person may deem appropriate.
11.2 Information of Company. Company shall furnish and Promoters shall ensure that Company furnishes to Investors and/or its assignees/nominees the following information as regards Company:
11.2.1 Quarterly, semi-annual and unaudited annual financial statements shall be furnished to Investors within sixty (60) days of the end of each quarter, half-year and annual period.
11.2.2 Audited annual financial statements shall be furnished to Investors within one hundred and twenty (120) days of the end of each financial year of Company. The financial statements should be accompanied by a report from the CEO/MD of Company and the discussion of key issues and variances beyond 10% of the budget with a comparative statement of the previous period.
11.2.3 MIS information/reports (in standard/agreed format) within thirty (30) days of the end of each month shall be sent to Investors.
11.2.4 Investor Director shall have the right to attend monthly review meetings and/or major strategy meetings of the Board/Committee of Directors of Company.
11.3 Annual Operating Budget & Business Plan.
11.3.1 Preparation of annual operating budget & business plan. Company, Promoters and Investors acknowledge that the business of Company will be conducted in accordance with an annual operating budget and business plan. Each annual operating budget and business plan shall be prepared under the direction and supervision of the Chairman of Company. The initial annual operating budget and business plan of Company shall be prepared and finalized by Company with Promoters and Investors within thirty (30) days after the date of execution of this Agreement.
11.3.2 Approval of annual operating budget & business plan. The annual operating budget and business plan shall be approved by the Board of Company. The annual operating budget and business plan may be amended only by a resolution of the Board of Company.
11.3.3 Other budgets. Prior approval of the Board shall also be required for the following budgets which shall be prepared by Company:
220.127.116.11 Estimated sources and applications of funds;
18.104.22.168 Estimated profit and loss account;
22.214.171.124 Estimated balance sheet; and
126.96.36.199 Detailed assumptions underlining the forecasts for the above.
11.3.4 Variances to annual operating budget & business plan. Any proposed variance to the annual operating budget, business plan or estimations stated above along with reasons for such variance shall be brought to the immediate attention of the Board and shall not be implemented without the prior written consent of Investors.
11.4 Financial and accounting records. Company shall maintain true and accurate financial and accounting records of all operations in accordance with Indian GAAP, and in accordance with all relevant Indian statutory and accounting standards and the policies from time to time adopted by the Board. The financial statements and accounts of Company shall be prepared in English and shall be audited on an annual basis.
11.5 Inspection & Audit Rights of Investors. Company shall, on receiving a request from Investors at the Investors expense provide as soon as practicable to Investors copies of any documents, secretarial, accounting or other records which are maintained by Company as may be required by Investors. Investors shall have full and complete access to the premises, records, accounts, documents of Company and its subsidiaries with rights, by itself or through its authorised representatives, to inspect such accounts, records and documents at the Investors expense.
12.1 Company shall make its best endeavor to complete an Initial Public Offering within Thirty-Six (36) months after the Closing, and the issue price in respect of such Initial Public Offering shall not be less than the
cost of acquisition of Issued Shares by the Investors. Infrastructure Development Finance Company Ltd or any other mutually acceptable reputed merchant banker shall be appointed for conducting the Initial Public Offering. The valuation, timing, mode and exchange of the listing shall be decided by the Company and Promoters in consultation with the Investors.
12.2 On Company conducting an Initial Public Offering, Investors shall have preference over the Promoters to sell all or any of the Investor Shares of the Company under such Initial Public Offering.
12.3 The Company shall undertake to bear all expenses for the Initial Public Offering.
13.1 Buy-back Events. Notwithstanding the provisions of Section 12 above (but subject to force majeure events), Investors shall have the right to require Company to buy-back all of the Investors Shares if the Company is blacklisted by National Highway Authorities of India.
13.2 Transfer Notice. The rights of Investors under Section 13.1 shall be exercised by a written notice (“Transfer Notice”) from Investors exercising such right to Promoters and Company.
13.3 On exercise of Investors right under Section 13.2 above, Company shall, to the extent permissible by Applicable Law, implement the buy-back of shares within twelve (12) months of receipt of the Transfer Notice and deliver entire buy-back price to Investors (or its designee) against delivery of the shares.
13.4 Transfer Price. The transfer price in respect of Investors right under Section 13.1 shall be such price as may be agreed between Company and Investors but not less than a price that provides to Investors a IRR of ten percent (10%) on its aggregate investment in Company.
13.5 Promoters and Company hereby agrees to abide by the directions of Investors and undertakes to do or procure all necessary things and execute all necessary forms, documents and agreements to implement such directions.
13.6 General. Promoters and Company agree to do and execute all such acts and deeds as may be necessary to facilitate the exercise of Investors rights under Section 13.1.
14.1 Liquidity Preference Events. means one or more of the following events:
14.1.1 Any voluntary or involuntary dissolution, liquidation, sale of substantially whole of the Company’s assets or winding-up of the Company;
14.1.2 A merger, acquisition, change of control, strategic sale, consolidation, or other transaction or series of transactions in which the Company’s shareholders prior to such transaction or transactions will not retain a majority of the voting power of the surviving Company; or
14.1.3 A sale, lease, license or transfer of all or substantially whole of the Company’s assets, or any similar transaction.
14.2 Preference to Investors. In case of Liquidity Preference Event, subject to the Applicable Laws and the availability of funds with the Company, the Investors shall be eligible to receive a preferential payment from the assets of the Company in cash or kind. To the extent of funds available thereof, the Investors shall receive an amount that shall provide the Investors higher of:
14.2.1 their investment in the Company with 10% IRR; or
14.2.2 the amount which would be distributed to the Investors if all amounts available were distributed among all the Shareholders of the Company (including the Investors) in proportion to the equity shares held by each of them.
15.1 Indemnification by Company and Promoters.
15.1.1 Company and Promoters, jointly and severally, shall indemnify and keep indemnified and hold harmless Investors and each of its Affiliates (collectively, the “Investors Indemnified Parties”), from and against any and all losses, penalties, judgments, suits, costs, claims, liabilities, assessments, damages and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) which are actually incurred by, imposed upon or asserted against any of Investors Indemnified Parties (collectively, “Losses”), directly as a result of, relating to or arising out of (i) the breach of Section 188.8.131.52 (Appointment of Statutory Auditors), Section 5.2.9 (Insurance Policies), Section 9.1.1 (Composition of Board), Section 9.2.4 (Quorum for Board meetings), Section 10 (Transfer of Shares), Section 12 (IPO), Section 13 (Buy-Back), Section 14 (Liquidity Preference) this Agreement, and (ii) breach of any Warranty or any representation made by Company or Promoters in this Agreement; (iii) breach of any Applicable Laws or directions of any Government Authority by Company or Promoters before or at any time after Closing, (iv) any inquiries, investigations, proceedings, notices or other issues initiated by any Government Authority against Company or Promoters before or at any time after Closing and (v) any breach or default by Company under any agreements entered by it with any of its lenders.
15.1.2 Limitation of Liability. The Company and Promoters will not be obligated or required to indemnify the Investor from and against any loss under this Agreement (i) unless the Company and the Promoters are given written notice within ninety (90) days of knowledge of such breach by such Investor,and (ii) unless and until the cumulative aggregate amount of the Investor’s Losses equal or exceeds Rs. 50 million (the "Aggregate Liability Threshold”). After the Investor’s losses exceed the Aggregate Liability Threshold, the Company and Promoters shall pay all loss, including any Purchaser losses that are less than the Aggregate Liability Threshold; provided however, that in calculating the Investor Losses for purposes of any Losses in respect of any individual event or occurrence that is less than Rs. 5 million (the "De-Minimis Losses") shall be excluded in their entirety and the Company and Promoters shall have no liability whatsoever to the Investors for any such De-Minimis Losses.
15.1.3 Maximum Liability: (i) Company’s obligation to indemnify Investors under Section 15.1.1 shall not exceed an amount equal to the Investment Amount (“Company’s Maximum Liability”), and (ii) the Promoters obligation to indemnify Investors under Section 15.1.1 not exceed Rupees Sixteen (INR 16) Crores, which indemnity shall trigger to the extent required to top up the indemnity awarded to the Investors or the Company’s Maximum Liability, whichever is less. Subject to (i) and (ii) of this Section 15.1.3 it is clarified that the aggregate liability of both Company and the Promoters shall not exceed the Investment Amount.
15.1.4 The Company and the Promoters shall not be liable in respect of the following:
(i) Voluntary Acts, etc. In respect of any matter, act, omission or circumstances (or any combination thereof) occurred because of: (a) any voluntary act, omission or transaction of the Investors or its directors, employees or agents or successors in title on or after the Closing, and (b) the passing of, or any change in, or change in interpretation of any Applicable Law on or after the Closing.
(ii) Insurance. In respect of any claim to the extent that any losses arising from such claim are covered by a policy of insurance in force on the date of this Agreement.
(iii) No Indirect Losses. In respect of any indirect, contingent or consequential damages or Losses of any kind (including but not limited to loss of profits, loss of revenue regardless of the legal theory on which the claim is based).
15.1.5 Subsequent Recovery. If the Investors pay an amount in discharge of any claim under this Agreement and the Investors subsequently recovers (whether by payment, discount, credit, relief or otherwise) from a third party a sum which is referable to the subject matter of the claim and which would not otherwise have been received by the Investors, the Investors shall pay, to the Company and the Promoters an amount equal to (i) the sum recovered from the third party less any reasonable costs and expenses incurred in obtaining such recovery or (ii) if less, the amount previously paid by the Company and the Promoters to the Investors.
15.1.6 Notice of Remedy. If a failure by the Company and the Promoters to perform their obligations under this Agreement is capable of being remedied, the investors shall not be entitled to compensation for any breach unless the Company and the Promoters are given written notice of such failure and fail to remedy such breach within ninety (90) days of such notice.
15.2 Indemnification by Investor. Each Investor hereby severally agrees to indemnify, defend and hold Promoters and Company harmless from and against all losses, penalties, judgments, suits, costs, claims, Liabilities, assessments, Damages and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) asserted against, imposed upon or incurred by Promoters or Company by reason of or resulting from any breach or inaccuracy of any representation, warranty or covenant of such Investor set forth in this Agreement.
15.3 Procedure for Indemnification.
15.3.1 The Indemnified Party shall give notice to the Indemnifying Part of any Claim, specifying in reasonable detail the factual basis for the Claim, the amount thereof, estimated in good faith, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Claim shall have occurred.
15.3.2 With respect to Claim solely between the parties hereto, following receipt of written notice from the Indemnified Party of a Claim, the Indemnifying Party shall have fifteen (15) days to make such investigation of the Claim as the Indemnifying Party deems necessary or desirable, and the Indemnified Party agrees to make available to the Indemnifying Party to substantiate the Claim. If the Indemnified Party and the Indemnifying Party agree at or prior to the expiration of the fifteen (15) day period to the validity and amount of such Claim, or if the Indemnifying Party fails to notify the Indemnified Party of any dispute with respect to the validity or amount of such Claim within such fifteen (15) day period, the Indemnifying Party shall immediately pay to the Indemnified Party the full amount of the Claim, subject to the terms hereof. If the Indemnified Party and the Indemnifying Part do not agree within the fifteen (15) day period, the Indemnifying Party shall immediately pay to the Indemnified Party the amount of such Claim to the extent the parties agree or remains undisputed, and the Indemnified Party may seek appropriate remedy at law or equity, as applicable, subject to the limitations hereof, with respect to any portion of its Claim not paid by the Indemnifying Party hereunder.
15.4 Third Party Claims. The obligations and liabilities of each party to this Agreement under Section 15.1 hereof related to Third Party Claims shall be subject to the following terms and conditions:
15.4.1 At any time after receipt of notice of any Third Party Claim asserted against, imposed upon or incurred by an Indemnified Party, the Indemnified Party shall notify the Indemnifying Party of such claim in writing. The Indemnifying Party shall be entitled, at its own expenses, to participate in and, upon written request from the Indemnified Party, shall undertake the defense thereof in good faith by counsel of the Indemnifying Party’s own choosing, which counsel shall be satisfactory to the Indemnified Party; provided, however, that (i) the Indemnified Party shall at all times have the option, at its own expense, to participate fully therein (without controlling such action) and (ii) if in the Indemnified Party’s judgment a conflict of interest exists between such Indemnified Party shall be entitled to select counsel of its own choosing reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party shall be obligated to pay the fees and expenses of such counsel.
15.4.2 If within fifteen (15) days after written notice to the Indemnified Party of the Indemnifying Party’s intention to undertake the defense of any Third Party Claim the Indemnifying Party shall fail to defend the Indemnified Party against such Third Party Claim, the Indemnified Party will have the right (but not the obligation) to undertake the defense and/or enter into a compromise or settlement of such Third Party Claim on behalf of, and for the account and at the risk of, the Indemnifying Party.
15.4.3 Each Party hereto shall provide the Indemnified Party with access to all records and documents within such party’s possession, custody or control relating to any Third Party Claim, and shall otherwise co-operate with the Indemnified Party with respect to any Third Party Claim.
15.5 Other Rights and Remedies Not Affected. The indemnification rights of the parties under this Section 15 are independent of, and in addition to, such rights and remedies as the parties may have at law or in equity or otherwise for any misrepresentations, breach of warranty or failure to fulfill any agreement or covenant hereunder on the part of any party hereto, including the right to seek specific performance, rescission, restitution or other injunctive relief, none of which rights or remedies shall be affected or diminished thereby.
Sections 1, 2, 3, 4, 5.1, 6, 7 and 15 to 19 of this Agreement shall enter into effect from the date of execution by all the parties and Sections 5.2 and 8 to 14 shall come into effect from the Closing, and all shall continue in force for: (a) as long as Investors together hold at least ten percent (10%) of the issued and paid-up share capital of the Company, (b) or till the Company achieves Initial Public Offering or (c) its termination according to the provisions of this Agreement whichever is earlier.
17.1 Grounds for Termination. This Agreement may be terminated at any time prior to Closing upon the occurrence of any of the following events:
17.1.1 By mutual written consent of Company, Investors and Promoters;
17.1.2 By Investors or Promoters, if the Closing shall not have occurred on or before March 31, 2006; provided, however, that the right to terminate this Agreement under this Section 17.1 shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date.
17.1.3 By Investors only, upon written notice to Promoters and Company, if there shall have been (x) a breach of any Warranty on the part of Company or Promoters set forth in this Agreement, or if any Warranty of Company or Promoters shall have become untrue in any respect, or (y) a breach by Company or Promoters of any of its covenants or agreements hereunder and such breach is not cured within fifteen (15) days after notice thereof by Investors.
17.1.4 By Investors only, upon written notice to Promoters and Company, if any Government Authority shall have issued any judgment, injunction, order, ruling or decree or taken any other action restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement.
17.1.5 By Investors only, in the event that Company or Promoters becomes or is declared insolvent or bankrupt, makes an assignment for the benefit of all or substantially all of its creditors, enters into an agreement for the composition, extension or readjustment of all or substantially all or of its obligations, or becomes the subject of any Proceedings related to its liquidation or insolvency or for the appointment of a receiver or similar officer.
17.1.6 By Investors only, without derogating from the rights of Investors under this Agreement, if Company or Promoters notifies Investors under Section 3.3.3 of this Agreement that an event shall have occurred or a matter shall have arisen which results or may result in any of the Warranties being unfulfilled, untrue, misleading or incorrect in any respect at Closing.
17.2 Effect of Termination.
17.2.1 In the event of termination of this Agreement as provided in Section 17.1, this Agreement shall forthwith become void and there shall be no continuing Liability or obligation on the part of any Party pursuant hereto except with respect to any Damages incurred or suffered by a Party as a result of the breach prior to the date of termination by any other Party of any of its representations, Warranties, covenants or agreements set forth in this Agreement. Any termination of this Agreement shall not relieve any Party hereto from any Liability for any breach of its obligations hereunder occurring prior to such termination.
17.2.2 In the event of termination of this Agreement as provided in Section 17.1 each Party shall (i) redeliver (or cause to be redelivered) all documents, work papers and other materials relating to the transactions contemplated hereby to the Party from whom such materials were obtained, (ii) to the extent practicable, withdraw from the Government Authority or other Person to which made all filings, applications and other submissions relating to the transactions contemplated hereby as to which termination has occurred.
18.1 Grounds for Termination. This Agreement may be terminated after Closing as follows:
18.1.1 If so agreed in writing by Company, Promoters and Investors;
18.1.2 On the date of successful completion of an Initial Public Offering by Company, provided that, in the event that the shares of Company are not listed for trading on the stock exchanges, mutually agreed between the Company and the Investors, within Six (6) months after the date of filing the Draft Red Herring Prospectus with SEBI, this Agreement shall be deemed to have continued in full force and effect and shall continue to be fully binding on Company and Promoters;
18.1.3 By Promoters, if Investors jointly cease to hold at least 10 percent of the issued and paid-up share capital of the Company;
18.1.4 By Investors with immediate effect by notice in writing to the other Parties if Company is declared insolvent, bankrupt, industrially sick, or enters into a compromise or any arrangement with its creditors, or in the event that a trustee, receiver or liquidator is appointed to take over all or a substantial part of the assets of Company or if Company is liquidated or dissolved;
18.1.5 With respect to Promoters or Investors, if either Promoters or Investors is declared insolvent, bankrupt, industrially sick, or enters into a compromise or any arrangement with its creditors, or in the event that a trustee, receiver or liquidator is appointed to take over all or a substantial part of the assets of the Defaulting Party or the Defaulting Party is liquidated or dissolved, the other Party that continues in existence may by written notice terminate this Agreement with immediate effect;
18.1.6 Effect of Termination. In the event of termination of this Agreement as provided in this Section, and subject to the provisions of Section 3.3.4, this Agreement shall forthwith become void and there shall be no continuing Liability or obligation on the part of any Party pursuant hereto except with respect to any Damages incurred or suffered by a Party as a result of the breach prior to the date of termination by any other Party of any of its representations, Warranties, covenants or agreements set forth in this Agreement. Any termination of this Agreement shall not relieve any Party hereto from any Liability for any breach of its obligations hereunder occurring prior to such termination
19.1 General Interpretative Principles.
19.1.1 Reference in this Agreement to Schedules, Annexes, Articles, and Sections are to Schedules, Annexes, Articles and Sections of this Agreement.
19.1.2 The Schedules are an essential part of this Agreement and the contents of the Schedules shall have the same effect as if contained in the body of this Agreement.
19.1.3 The table of contents and headings in this Agreement are inserted for convenience only and shall not affect its construction.
19.1.4 References in this Agreement to any statute or statutory provision include a reference to such statute or statutory provision as from time to time amended, modified, re-enacted, extended, consolidated or replaced (whether before or after the ate of this Agreement) and to any subordinate legislation made from time to time under the statute or statutory provision.
19.1.5 Reference to this Agreement or to any other document include a reference to this Agreement or such other document as varied, amended, modified, novated or supplemented from time to time.
19.1.6 Another grammatical form of a defined word or expression has a corresponding meaning.
19.1.7 The singular includes the plural and vice versa, and a gender includes other genders.
19.1.8 References to “Persons” include individuals, bodies corporate, associations, partnerships, trusts or agencies, whether or not having a separate legal personality.
19.1.9 References to the word “include” or “including: are to be construed without limitation.
19.1.10References to times of day are to
time unless otherwise indicated and references to a day are to a period of 24 hours running from . Hyderabad, India
19.1.11References in this Agreement to any Party shall include, or be deemed to be references to (as may be appropriate) its respective successors, personal representatives and permitted assignees or transferees.
19.1.12In this Agreement, any undertaking by a Party not to do or to omit to do any act or thing includes an undertaking not to allow, cause or assist in the doing of or omission of such act or thing.
19.2 Successors and Assigns.
19.2.1 The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.
19.2.2 Promoters and Company shall not assign this Agreement or any of their rights or obligations hereunder without the prior written consent of Investors.
19.2.3 Investors may at any time assign this Agreement and any of its rights and obligations hereunder to any Affiliate of Investors without the consent of Promoters.
19.2.4 Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided herein.
19.3.1 Except as provided in Section 19.3.2, the parties hereto irrevocably agree that any dispute, controversy or claim arising out of, relating to or in connection with this Agreement (including any provision of any exhibit, annex or schedule hereto) or the existence, breach, termination or validity hereof (a “Dispute”) shall be finally settled by arbitration. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The arbitration shall be held at Mumbai and shall be conducted by three (3) arbitrators. For purpose of appointing such arbitrators, Investors, on the one hand, and Promoters, on the other hand, shall each appoint one arbitrator, and the third arbitrator, who shall be the chairperson, shall be selected by the two party-appointed arbitrators. In the event that any party fails to appoint an arbitrator within fifteen (15) days after receipt of written notice of the other party’s intention to refer a Dispute to arbitration, or in the event of the two party-appointed arbitrators failing to identify the third arbitrator within fifteen (15) days after the two party-appointed arbitrators are selected such arbitrator shall be appointed by a Court of competent jurisdiction on an application initiated by any party. An arbitral tribunal thus constituted is herein referred to as a “Tribunal”. In the event an appointed arbitrator my not continue to act as an arbitrator of a Tribunal, then the party (or the two appointed arbitrators, in the case of the third arbitrator) that appointed such arbitrator shall have the right to appoint a replacement arbitrator in accordance with the provisions of this Section 19.3.2.
19.3.2 Nothing in this Section 19.3.2 shall prevent the parties from obtaining relief from a court of competent jurisdiction in the form of provisional or conservatory measures (including, without limitation, preliminary injunctions to prevent breaches hereof). Any request for such provisional measures by a party to a court shall not be deemed a waiver of this agreement to arbitrate. In addition, the Tribunal may, at the request of a party, order provisional or conservatory measures (including, without limitation, preliminary injunctions to prevent breaches hereof) and the parties shall be able to enforce the terms and provisions of such orders in any court having jurisdiction.
19.3.3 Unless the parties otherwise agree, all submissions and awards in relation to arbitration under this Agreement shall be made in English and all arbitration proceedings and all pleadings shall be in English. Original documents in English or any other language may be submitted as evidence in their original language. Witnesses not fluent in English may give evidence in their native tongue (with appropriate translation). Original documents in a language other than English shall be submitted as evidence in English translation accompanied by the original or true copy thereof.
19.3.4 Each party to arbitration hereunder shall pay its own legal fees and expenses incurred in connection with the arbitration and the expenses of any witness produced by it. The cost of any stenographic record and all transcripts thereof shall be prorated equally among all parties ordering copies and shall be paid by such parties directly to the reporting agency. All other expenses of the arbitrators and the expenses of any witness or the cost of any proof produced at the request of the arbitrator shall be borne as determined by the Tribunal.
19.3.5 Any award in connection with any arbitration proceeding hereunder shall be final, binding and not subject to appeal, and any judgment upon such award may be entered and enforced in any court of competent jurisdiction. To the extent permitted by Applicable Law, the parties hereby waive all challenge to any award of the Tribunal under this Section 19.3.5.
19.4 Governing Law. This Agreement shall be governed by and construed under the laws of
, without regard to the conflicts of law provisions thereof. India
19.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Each party hereto will receive by delivery or facsimile transmission a duplicate original of the Agreement executed bye ach party, and each party agrees that the delivery of the Agreement by facsimile transmission will be deemed to be an original of the Agreement so transmitted.
19.6 Titles and Subtitles. The titles, subtitles and headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
19.7.1 All notices, requests, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand; (ii) on the date of transmission when set by facsimile transmission during normal business hours with telephone confirmation of receipt; (iii) three (3) days after dispatch when sent by a reputable courier service that maintains records of receipt; or (iv) seven (7) days after dispatch when sent by first class or airmail letter, provided, however, that in any such case, such communication is addressed provided in Section 19.7.2.
19.7.2 All notices, requests, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be addressed as follows:
or to such other addresses any party shall have designated by notice in the foregoing manner to the other parties.
19.8 Amendments and Waivers. This Agreement may be modified, supplemented or amended only by a written instrument executed by the parties hereto. No waiver of any provisions, condition or covenant of this Agreement shall be effective as against the waiving party unless such waiver is in a writing signed by the waiving party. Waiver by a party as provided in this Section 19.8 shall not be construed as or constitute either a continuing waiver of such provision, condition or covenant or a waiver of any other provision, condition or covenant hereof. The failure of any party at any time to require performance by the other party of any provision, condition or covenant of this Agreement shall in no way affect its right thereafter to enforce the provision, condition or covenant or any other provision condition or covenant.
19.9 Severability. If any covenant or provision hereof its determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other covenant or provision, each of which is hereby declared to be separate and distinct. If any provisions of this Agreement are so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. If any provision of this Agreement is declared invalid or unenforceable for any reason other than over-breadth, the offending provision will be modified so as to maintain the essential benefits of the bargain among the parties hereto to the maximum extent possible, consistent with law and public policy.
19.10 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any holder of any of the Shares upon any breach or default of an of Promoter under this Agreement, shall impair any such right, power or remedy of such holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit consent or approval of any kind or character on the part of any holder of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative.
19.11.1Company shall bear reasonable due diligence costs (upto a maximum of INR 2.5 million) incurred by Investors and its consultants including but not limited to costs for legal opinion, documentation, legal expenses, stamp charges, etc.
19.11.2Subject to Section 19.11.1, each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.
19.12 Further Assurance. From and after the Closing, each party shall from time to time, at the request of any other party and without further cost or expense to such requesting party, execute and deliver such other instruments of conveyance and transfer and take such other actions as such other party may reasonably request in order more effectively to carry out this Agreement and the other agreements specified herein.
19.13 Survival. This Section and the following provisions of this Agreement shall survive termination to the extent applicable: Sections 3.3.4 to the extent stated therein, Section 7.5, Section 10.2,Section 10.8, Section 17.2 , Section 18.1.6 and this Section 19.13.
19.14 Entire Agreement. This Agreement (together with the Disclosure Schedule, the Exhibits, and the other agreements expressly identified in this Agreement) constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof, and supercedes all prior agreements and understanding of the parties, oral and written, with respect to such subject matter.
19.15 Representation by Signatories. Each signatory to this Agreement represents and warrants that he is duly authorized by the party for and on whose behalf he is signing this Agreement to execute the same in a manner binding upon the said party and that all corporate approvals and procedures necessary for vesting such authority on his have been duly obtained and complied with.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Investment Agreement as of the date first above written.
XYZ Private Equity Limited
By: _______________________________ By: _____________________________
Name: Name Mr. B.
|HNIs Invest In Ed-Tech Startup Schoolguru|
|Schoolguru, a technology-led specialized academic services organization, has raised about R20 Cr in Series A round led by high net-worth investors (HNIs) from India and the US.|
|Organic Food Marketplace Naturally Yours Secures Funding|
|Online organic food brands marketplace Naturally Yours, has raised an undisclosed amount in seed round from angel investor Sanjay Mehta.|
|Health Tech Startup Welcome Cure Raises Funds|
|Mumbai based Welcome Cure Pvt Ltd, which owns and operates an online health portalwelcomecure.com, has raised about R40 Cr ($6 Mn) in Pre Series A round from two angel investors.|
VC | Technology
DocPlexus.in, an online platform which connects healthcare professionals from India, has raised about R4.6 Cr ($700 K) from ) from Uniqorn Ventures and Austria based ASP Consulting.
VC | Agro/Food & Beverage
Gurgaon-based company Tipping Mr Pink Pvt Ltd, which runs QSR chain and online ordering portal Burger Singh, has secured about R3.2 Cr ($500 K) in bridge round of funding from a clutch of angel investors.
M&A | Technology
Business process management and technology startup Antworks, has acquired US based healthcare applications service provider, Benchmark Systems, in an all cash deal, estimated at about R33 Cr.
VC | Learning
SportyBeans, which runs multi-sports programmes for children, has raised an undisclosed amount for a minority stake from Yuvraj Singh’s VC Fund YouWeCan Ventures.
Quick service restaurants other than pizza chains
Bangalore-based HO Food Services Pvt Ltd, the company that owns and operates the quick service restaurant (QSR) chain Mani's Dum Biryani, raised Rs 2 crore ($3,19,488) in funding from Navlok Ventures in September 2013. Last year SAIF Partners last year invested Rs 40 crore in TMA Hospitality Services, which owns Ammi's Biryani, a Bangalore-based QSR chain. Another report in Times of India points out that Kolkata's Shiraz - famous for its e Awadhi biryani — is talking to private equity investors to expand nationally, and overseas. Take the case of Thalapakatti Biryani, Dindigul. Born in a small town in Tamil Nadu, they are now expanding aggressively in Tamil Nadu. And with restaurants promising that that biryani can reach your home faster than a pizza, it's also the pricing that makes it a serious challenger in the galloping fast food industry. A regular plate of non-vegetarian biryani retails at approximately Rs 150-170 across the country, while a medium pizza would set one back by Rs 500. "Biryani lends itself very well to a chain format, as it is easier to standardise and needs limited last-minute cooking. Also, it has a nationwide and international appeal, can be served both as a vegetarian and a non-vegetarian delicacy, and forms a meal with limited add-ons. It is among the Indian cuisine options that could compete with burgers, pizzas and chicken items.
Disruptive media startup Oximity
Angel investors Ronnie Screwvalaand K Ganesh have seed funded Oximity, a global online media startup for user-generated news. These Indian investors are joining a growing list of venture capitalists and HNIs betting on disruptive media startups such as First Look Media, Upworthy and Vox Media.
Oximity — co-founded by former Wall Street banker Sanjay Goel and German IT entrepreneur Christian Hapke — connects sources of news directly to readers in over 180 languages globally. The US-based startup rides on technology to create a large network of self-empowered news writers and readers - redefining the way news is generated, curated and distributed worldwide.
"Technology has reached a point where the news industry is waiting to be disrupted. The existing paradigms will become obsolete but not the skills of the people (in it) that have been honed over the years. We want to redeploy those skills without the legacy of fixed costs associated with traditional media, in a completely re-engineered model for news," said Goel, who founded the much-talked about Silicon Valley startup Ideas.com way back in 1999.
Started six months ago, Oximity has more than 2,500 writers generating 700 news stories daily. Its writers and readers are spread across 200 countries, while the company has existing offices or staff in Berlin (Germany), London (UK), San Francisco (USA), Ramallah (Palestine), Moscow (Russia) and Guangzhou (China).
Users can write stories for themselves or on behalf of their organizations. Oximity helps in monetizing their content while charging users on a 'freemium' model — free basic services and top up charges for the rest — which has been employed by publications like The Economist for digital editions.
"We see this as a platform to take news to niche audiences wherever they are globally. By facilitating automatic as well as manual translation, Oximity is removing language as a barrier to the flow of news information across borders," said Ganesh, one of the lead investors, who built and sold startups like CustomerAsset, Marketics and TutorVista in the past. Oximity has already brought on board several user-generated news networks that sprung up from Brazil to Sudan to India.
Screwvala said startups like Oximity could lead the democratization of news industry. "The news media landscape is changing and we believe Oximity can be a dominant player," added Screwvala, who turned investor after selling UTV Communications to Walt Disney in a blockbuster deal. AppLabs founder Shashi Reddi and Anand Ranganathan , who founded Efficient Frontiers acquired by Adobe, are other co-investors in Oximity.
The Valley investors have traditionally been not enthused about media startups. But that is changing as some high-profile billionaires step into a global media industry in crisis, hoping to better its fortunes around technology and expanding internet access.
eBay founder Pierre Omidyar bankrolled First Look Media, which has the high-profile ex-Guardian journalist Glenn Greenwald famous for reporting on the leaked NSA documents at the forefront. Accel Partners and the estate of Apple founder Steve Jobs invested in Vox Media, owner of Verge and news reader Circa. Upworthy raised $8 million from Spark capital, an early backer of Tumblr.
The biggest investor entry was Amazon founder Jeff Bezos acquiring The Washington Post for $250 million last year.