SHARE HOLDERS AGREEMENT
THIS SHARE HOLDERS AGREEMENT (this " Agreement") is executed on this ____ day of __________,
BETWEEN
_______________ LTD., a limited company duly incorporated under the companies Act and having its registered office at ____________ ("Indian Company"),
AND
___________________, a corporation organized under the laws of the _______________ and having its registered address at __________ ("Foreign Company")
(each of the foregoing parties being hereinafter referred to individually as a "Principal Shareholder" and collectively as the "Principal Shareholders") and, solely for the purposes of Articles 2, 8 and 12 hereof, ___________, an Affiliate corporation of FOREIGN COMPANY organized under the laws of the State of ____, ("Affiliate");
WITNESSETH:
WHEREAS Indian Company, acting through the shareholders shown on the attached Schedule 1 (the "Promoters") has formed _______, a limited company duly incorporated under the Companies Act and having its registered address at __________ (the "Company"), for which a Certificate of Incorporation was issued on _______ pursuant to the Memorandum and Articles of Association dated _________;
WHEREAS Indian Company and FOREIGN COMPANY have agreed to subscribe to become the Principal Shareholders in the Company at the respective percentage of equity shareholdings set forth opposite their names on schedule 2 attached hereto;
WHEREAS Indian Company and FOREIGN COMPANY intend to conduct through the Company all aspects of the business of ______________ as provided for herein;
WHEREAS each of the Principal Shareholders has agreed to be bound by the terms and conditions set forth in this Agreement, which provides for, among other things, the responsibilities of the Principal Shareholders in connection with fulfillment of the objectives of the Company, the captain structure of the company, mutual restrictions on the transfer of Shares and corporate governance; and
WHEREAS, AFFILIATE intends to support and be responsible for certain obligations of FOREIGN COMPANY under this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants and promises contained in this Agreement, the Principal Shareholders (and, in respect of Articles 2, 8 and 12, AFFILIATE) agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, each of the following terms shall have the meaning set forth below unless a contrary intention appears form the context:
"Agreement" shall mean this Agreement as may be amended or supplemented from time to time in accordance with the requirements contained herein.
"Affiliate" shall mean, with respect to any Person, any other Person who (a) owns or controls the first Person, (b) is owned or controlled by the first Person or (c) is under common control or ownership with the first Person, where "own" means ownership of more than fifty percent (50%) of the equity interests or rights to distributions on account of equity of the Person and "control" means the power to direct the day to day management or policies of the Person, whether through the ownership of voting securities, by contract or otherwise.
"Annual Budget" shall have the meaning set forth in Section 7.2 of this Agreement.
"Articles of Association" shall mean the Articles of Association of the Company as may be amended or supplemented form time to time.
"Auditor" shall have the meaning set forth in Section 9.6 hereof.
"Board of directors" shall mean the Board of directors of the Company.
"Break-up Value" shall mean the aggregate break-up value as determined from the audited balance sheet as of the date under consideration. The break-up value shall be the total sum of paid -up value, reserves and undistributed profits, minus accumulated losses, if any, deferred revenues and potential liabilities (including reserves representing a fair estimate of (I) existing potential liabilities not provided for in audited balance sheets and (ii) account exposure and other associated liabilities arising out of, or that could reasonably be expected to result from, the circumstances which give rise to the determination of such break-up value shall be divided by the total number of paid -up shares constitution the then paid-up capital.
"Business Day" shall mean a day other than a Saturday, Sunday or a statutory holiday in India or any other day on which commercial banks in ________________ (India as well as Foreign Country to which the Foreign Company belongs) are authorized or required by law to be closed.
"Chairman" shall have the meaning set forth in Section 6.3 hereof.
"Companies Act" shall mean the Indian Companies Act of 1956, as amended.
"Corporate Documents" shall mean the Memorandum of Association and the Articles of Association.
"Effective Date" shall mean the date of the execution of this Agreement.
"FIPB" shall mean the FOREIGN INVESTMENT PROMOTION BOARD.
"GAAP" shall have the meaning set forth in Section 9.5 hereof.
"GOI" shall mean the Government of India, including any agency, ministry, department, instrumentality, court, tribunal or legislative body thereof.
"Initial Budget and Business Plan" shall mean, on the Effective Date, one or more other financial institutions as mutually agreed by Indian Company and FOREIGN COMPANY to whom Shares of the Company will be issued or whom the Company shall form time to time designate to purchase shares, subject to the execution of a Subscription Agreement.
"Managing Director" shall mean the designated Managing director of the company as appointed by the Board of Directors in accordance with Section 6.12 of this Agreement.
"Memorandum of Association" shall mean the Memorandum of association of the Company as may be amended or supplemented from time to time.
"Minimum Ownership Interest" shall have the meaning set forth in subsection 4.3 (c) hereof.
"Month" shall mean a calendar month.
"Offer Price" shall have the meaning set forth in subsection 5.2 (a) hereof:
"Offered Shares " shall have the meaning set forth in subsection 5.2 (a) hereof;
"Option Notice" shall have the meaning set forth in subsection 5.2 (a) hereof.
"Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, unincorporated organization or similar entity, or a governmental authority.
"Preference Shares" shall mean those shares issued by the company form time to time that will have a preferential right over the other classes of Shares in accordance with the requirements of the Companies Act.
"President" shall mean the President of the company as may be appointed by the Board of Directors.
"Principal Shareholders" shall mean Indian Company and FOREIGN COMPANY and any of their respective beneficial successors in interest, permitted transferees and assigns who may become party to this Agreement by addendum, amendment or otherwise.
"Promoters" shall have the meaning set forth in the first recital of this Agreement.
"Pro Rata" shall mean, with respect to either money or shares as the context requires, the ratio of shares owned by a Principal shareholder exercising its rights or fulfilling its obligations under this Agreement to the Shares owned by all Principal shareholders exercising such rights or fulfilling such obligations.
"RBI" shall mean the Reserve Bank of India.
"ROI" shall mean the Republic of India.
"Selling Principal Shareholder" shall have the meaning set forth in subsection 5.2 (a) hereof.
"Shares" shall mean the equity shares of the Company.
"Subscription Agreement" shall mean an agreement for subscription for shares in The Company, in a form as mutually agreed by the Principal Shareholders.
"Suitable Investor" shall mean a Person (other than an affiliate or the Institutional Investors to be mutually agreed by the Principal shareholders to whom shares of the Company will be issued from time to time, subject to the execution of a Subscription Agreement).
"Term" shall have the meaning set forth in Section 3.1 hereof.
"Third-Party Transferee" shall have the meaning set forth in subsection 5.2.
and
"Transfer" shall mean, with respect to any Shares, any direct or indirect transfer, sale, transfer, assignment, pledge, hypothecation, encumbrance or other disposition by any Person of such shares;
ARTICLE 2
PURPOSE AND CONSTRUCTION
2.1 ‘Principal Shareholders Rights and Obligation’
(a) This agreement is intended to set forth the purpose and objectives of the Company and the Principal Shareholders rights and obligations among themselves and with respect to the Company.
(b) Indian Company confirms that the copies of the Corporate Documents attached hereto as Schedule 3 are accurate and complete copies of the Corporate Documents as in full force and effect on the Effective Date. The Principal Shareholders shall cause the Memorandum of Association and Articles of Association as in effect on the date hereof to be amended as required consistent with the terms of this Agreement.
2.2 Closely Held Company. During the Term hereof, the Principal Shareholders intend for the Company to be a Closely Held Company under the Companies Act. Accordingly, the right to Transfer shares shall be restricted in the manner and to the extent set forth in this Agreement and the subscription Agreement.
2.3 Purpose of Company
(a) Subject to the terms and conditions of this Agreement and to the Initial Budget and Business Plan and all subsequent Annual Budgets, the Principal Shareholders acknowledge and agree that the primary purposes of the Company shall be to undertake:
(i)
(ii)
(iii)
(iv)
(b) The Company may also undertake the following secondary activities, subject to the conditions of section 6.9 hereof;
(i)
(ii)
(A)
(B)
(C)
(D)
(c) The Principal Shareholders shall use their best efforts at all times to promote the business and activities of the Company.
(d) The Principal shareholders shall manage the company through the Board of Directors to achieve sustainable relationships and long-term profitability.
(e) The Principal Shareholders undertake to engage in all other necessary or desirable activities and efforts to assist the Company in fulfilling its purpose and objective as stated in this Agreement and complying with all applicable laws, rules, and regulations in accordance with Companies Act.
(f) Indian Company acknowledges that FOREIGN COMPANY’s investment in Company as a Principal Shareholder is subject to receipt of all necessary approvals under the law and regulations of the ______________ (the foreign country) and to receipt of FIPB approval for foreign investment and RBI approval as to the subscription for shares an nomination of directors, and agrees to provide all reasonable assistance that may be required by FOREIGN COMPANY in connection therewith.
(g) All applications and other documents concerning the Principal Shareholders and the Company that are required to be submitted to any authorities of the GOI shall not be submitted unless reviewed and approved by the Board of Directors, other than routine documents or reports submitted in the ordinary course of business.
2.4 Responsibilities. The Principal Shareholders agree that in order to fulfill the objects of the Company:
(a) Indian Company shall assist in the following area:
(i) providing facilities, resources and services for the Company’s offices and operations;
(ii) Providing the capital funding for bona fide business expenses necessary to incorporate the Company and initially operate the business, up to Rs. ___ million to be credited toward the capital contribution required from Indian Company pursuant to Section 4.3 hereof in respect of its subscription for Shares; provided that if the subscription for shares hereunder fails to occur, FOREIGN COMPANY agrees to reimburse Indian Company for its pro rata share of such expenses;
(iii) Marketing of the company ‘s services in India:
(iv) To the best of its ability, obtaining of all necessary permits, licenses and other authorizations form the GOI, in so far as these are or become necessary for the purposes of establishing and operating the Company; and
(v) Assisting foreign personnel or other foreign employees of the Company in particular in obtaining the necessary official authorizations, including appropriate visas, work permits and residence permits.
(b) Indian Company shall also use reasonable commercial efforts to cause the financial institutions or other Institutional Investors or qualified Person to assist in providing:
(i) Funds for operation of the Company;
(ii) Coordination with FOREIGN COMPANY for systems, procedures, policies and approval procedures for the Company;
(iii) A legal framework and documentation, with respect to policy, in coordination with the officer appointed pursuant to Section 6.13 hereof;
(iv) Coordination with the RBI and other authorities of the GOI in Bombay:
(v) Marketing of the Company’s services; and
(vi) Training of personnel.
(c) AFFILIATE, for itself and on behalf of FOREIGN COMPANY, shall assist through on-shore and off-shore activities in the following areas:
(i) Providing advice on software and system support;
(ii) Providing technical know-how procedures and documentation;
(iii) Training of Company personnel;
(iv) Providing personnel to draft, implement and monitor the Company’s policies;
(v) International sourcing and resources for finding new business leads internationally;
(vi) Providing other technology, processes, procedures and services as required and agreed by the Principal Shareholders; and
(vii) Arranging finances for export factoring.
2.5 Principal Shareholder Services. Indian Company and FOREIGN COMPANY (through itself or an Affiliate) shall each maintain certain management and service abilities, know-how, marketing and other skills so as to assist the Company on an on going basis to achieve its business purpose. The Company shall provide for payment for such skill and services (including those skills and services provided for in Section 2.4 hereof and all out-of-pocket expenses) as approved by the Board of Director’s on a case-to-case basis. Except as provided for herein, the Company shall not be obligated to enter into any agreements or arrangements with any Principal Shareholder or Affiliate thereof regarding the supply of services and /or goods, The Board of Directors shall, at all times, retain the discretion to contract with third Persons fore the provision of goods and services.
ARTICLE 3
TERM
3.1 Term . The term (the "Term") of this Agreement shall commence on the Effective Date and shall expire upon the earlier of (i) the dissolution or liquidation of the Company, (ii) consummation of an initial public offering, except to the extent provided in subsection 4.3 (d) hereof, (iii) the mutual Agreement of the Principal Shareholders and (iv) termination of this Agreement pursuant to Section 10.2 hereof.
ARTICLE 4
CAPITAL STRUCTURE OF COMPANY
4.1 Authorized Share Capital. As of the date hereof, Indian Company confirms that the authorised share capital of the Company is Rs. ________________ (Rupees ________________ only) divided into ________________ equity shares of Rs. 10 each (Rs. Ten only). Indian Company further represents that there are no other authorized, issued or outstanding Shares or classes or Series of Shares, options, warrants or rights to purchase Shares of or any securities convertible into or exchangeable for, any class or Shares of the Company. Each subscribed and fully paid-up Share entitles the Principal shareholder thereof to a single vote.
4.2 Classes of Shares. There shall initially be only one class of issued and outstanding shares. However, the Company retrains the option under the Articles of Association to issue Preference Shares at a later date in accordance with applicable and the terms of this Agreement.
4.3 Subscription and Equity Participation. (a) The subscription amounts and shareholding percentage of the Principal shareholders in the company shall be as set forth on Schedule 2. The principal Shareholders agree that ___________ shall be the initial Institutional Investor, holding the shareholding percentage of the Company set forth on Schedule 2. Unless otherwise agreed by the Principal Shareholders, the Institutional Investors shall not own more than ____% of the outstanding shares of the Company and the Suitable Investors singularly or in the aggregate shall not won more than ____% of the outstanding Shares of the Company. All purchases of Shares by the principal Shareholders shall be made pursuant to this Agreement. All purchases of Shares by Institutional Investors or other Suitable Investors shall be made pursuant to a Subscription Agreement.
(b) Indian Company acknowledges that FOREIGN COMPANY’s subscription and equity participation in the Company is subject to receipt of approvals from the FIPB and the RBI and any necessary approvals required under applicable laws and regulations of the _____________.
(i) Within ninety (90) days of the receipt of the necessary approvals for the making of the Principal Shareholders’ initial capital contribution, Indian Company shall cause the Promoters to cause the Company to complete all formalities, including, but not limited to, issuing to the Principal Shareholders, the Institutional Investors (upon execution of their respective Subscription Agreement) and any other Suitable investors, (upon execution of their respective Subscription Agreements), the relevant, respective Share certificates against receipt of their necessary subscription amounts, such shares to be issued free and clear of any right, lien, encumbrance or claim whatsoever, and Indian Company shall further cause the recording of such shareholdings in the Company shareholders’ register. Indian Company shall cause the Promoters to Transfer their Shares to Indian Company, such aggregate Shares to be included in determining Indian Company’s shareholding percentage set forth on schedule 2.
(ii) In the event that FOREIGN COMPANY or the company (A) fails to obtain approval from the RBI or other appropriate GOI authorities to engage in international factoring operations within eighteen (18) months form the Effective Date or (B) any policies of the GOI having the force of law, or the laws or regulations of the _____________, require FOREIGN COMPANY to divest part or all of its Shares in the Company, then, in each such case, FOREIGN COMPANY shall be entitled or transfer its Shares in the Company, to its nominee. If such arrangement is not effective to obtain the necessary GOI approvals to engage in __________ or is not permitted by such policies or applicable laws or regulations, as determined in FOREIGN COMPANY’s sole discretion, then Indian Company shall be obligated to purchase FOREIGN COMPANY’s existing shareholding at the greater of (x) the par value or (y) the Break-Up Value.
(c) Each Principal Shareholder shall at all times maintain a minimum shareholding percentage in Company of ___%, or, if less, such lower percentage fully permissible by applicable laws to which such Principal shareholder is subject or as otherwise agreed by the other Principal Shareholders in writing (the "Minimum Ownership Interest") or prohibited by applicable law.
(d) In the event that the Company offers Shares in a public offering, the shareholding percentages of the Principal Shareholders in Company shall not be less than their Minimum Ownership Interests, subject to subsection 4.3(c). In such case, unless otherwise agreed by the Principal Shareholders, this Agreement will survive with respect to and among the Principal Shareholders, with such amendments or modifications as shall be mutually agreed to by the Principal Shareholders.
4.4 Newly-issued shares. (a) The Company shall not issue or agree to issue any Share unless the Company Shall have first obtained the consent of the Principal Shareholders pursuant to section 6.9 hereof. Upon receipt of such consent, all newly-issued Shares shall be subject to the right of the existing shareholders to purchase such Shares under the Companies Act. The rights of any shareholder with respect to any specific issue of Shares by the Company may be waived by such shareholder in accordance with the Companies Act including an irrevocable waiver of its rights in regard to such Shares under its Subscription Agreement.
(b) In the event any shareholder elects not to purchase any of the newly-issued Shares or has waived its rights in respect thereof, the Principal Shareholders shall have the right to purchase such non-purchasing shareholder’s Shares pro rata. This process shall continue until all of the Principal Shareholders have had an opportunity to purchase all the newly-issued Shares.
4.5 Additional Shares. The Principal Shareholders shall have the right to purchase additional Shares, pro rata, in accordance with the terms of this Agreement, any Subscription Agreement and applicable law.
ARTICLE 5
RESTRICTIONS ON TRANSFER OF SHARES
5.1 Restrictions on Share Transfer. During the Term of this Agreement, no Principal Shareholder may Transfer any or all of its Shares; now on hereafter owned by it, other than pursuant to the terms of this Agreement.,
5.2 Right of First Refusal. (a) If any Principal Shareholder shall otherwise desire to effect a Transfer of any or all of its Shares, then it (the "Selling Principal shareholder") shall give notice to the non-selling Principal Shareholder (s) and the Company of such proposed Transfer (the "Option Notice"). The Option Notice shall describe the proposed transferee (the "Third-Party Transferee"), the number of shares proposed to be transferred (the "Offered Shares"), the price per share (the "Offer Price"), evidence of the Third-Party transferee’s financial ability to pay the price per share of the Offered Shares and all other material terms and conditions of the proposed Transfer, and also shall be accompanied by a copy of the firm offer of the Third-Party Transferee to purchase the Offered Shares at the Offer Price, stating that such offer shall be irrevocable for a period of thirty (30) days.
(b) For a period of fifteen (15) consecutive days following its receipt of such Option Notice , the non-selling Principal Shareholder (s) shall have the irrevocable option, subject to the condition set forth in subsection 5.2 (c) below , to purchase, pro rata, the Offered Shares at the Offer Price.
(c) Notwithstanding the foregoing, the Selling principal Shareholder shall not be required to sell any of the Offered Shares to the participating Principal Shareholder (s) pursuant to the options described in subsection 5.2 (b) above unless an irrevocable option has been expressly exercised by the participating Principal Shareholder (s) to purchase all of the Offered Shares.
(d) In the event that the participating Principal shareholder (s) exercises its option to purchase all of the Offered Shares pursuant to subsection 5.2 (b) above, then a closing shall be held with respect to such purchase within fifteen (15) days after the date upon which the options shall have been exercised by the participating Principal Shareholder (s) to purchase all of the Offered Shares or on such other date as the Selling Principal Shareholder and the participating Principal Shareholder (s) shall mutually agree. Upon such closing, the Selling Principal Shareholder shall deliver to the participating principal Shareholder (s) certificates representing the Offered Shares, which Shares shall be free and clear of any right, lien, encumbrance or claim whatsoever together with the full rights which the Selling Principal Shareholder had in relation to such Shares, endorsed in the name of the transferee, against receipt of payment in accordance with the terms contained in the Option Notice.
(e) In the event that the non-selling Principal shareholder(s) has not exercised its option to purchase, in the aggregate, all of the Offered Shares pursuant to subsection 5.2 (b), the Selling principal Shareholder shall, within fifteen (15) days after the expiration of the option period, sell all (but not less than all) of the Offered Shares to the Third-Party Transferee at the Offer Price and otherwise in accordance with Section 5.3 hereof and on terms no more favorable than those set forth in the Option Notice. A failure to complete such sale to the Third-Party Transferee shall be considered a breach of a material obligation by the Selling Principal shareholder in accordance with Section 10.1 hereof. Subject to the provisions of Section 10.2 hereof, Offered Shares not sold to the Third-Party Transferee shall remain further subject to this Article 5 in all respects.
(f) Subject to Section 5.8, the Board of Directors shall register the Transfer in the name of the purchasing Shareholder or the Third -Party Transferee, as the case may be.
5.3 Conditions to Transfer. Any Transfer permitted by this Article 5 is subject to the fulfillment at or prior to the consummation thereof, of each of the following conditions:
(a) The transferee and Selling Principal Shareholder shall enter into an instrument of transfer pursuant to which (I) the transferee shall have adopted and agreed in writing to be bound buy the provisions of this Agreement and agreed to pay all reasonable legal expenses incurred by the Company in the preparation of all documents and instruments necessary to effect such transfer and amend this agreement, (ii) the transferee shall have acknowledged and expressly agreed to assume all liabilities and obligations of the Selling Principal Shareholder hereunder and (iii) the transferee shall have entered into the commitment to this Agreement referred to in section 13.16 and such amendments or addendum’s shall have become effective;
(b) All necessary approvals from the GOI or any other government authority in the ___________ (foreign country) or otherwise having jurisdiction over the Company or any of the Principal Shareholders shall have been obtained;
(c) Such transaction will not violate GOI or ___________(foreign country) federal, state or local securities, banking or other applicable laws or regulations of any governmental agency or authority with jurisdiction over the Company or any of the Principal Shareholders, and will be in compliance with an applicable requirements and provisions thereunder; and
(d) Such transaction is not prohibited by and does not violate the Company’s Corporate Documents, or any contract, agreement or instrument to which the Company is a party or by which its property is bound.
5.4 Limited Transfer. Subject to it Minimum Ownership Interests, prior to an initial public offering, any Principal Shareholder may Transfer a limited number of Shares to Institutional Investors or Suitable Investors, subject to compliance with this Article 5 (other than subsection 5.3 (a) ) and the execution of a Subscription Agreement by the transferee of such Shares.
5.5 Transfer to Affiliates. Notwithstanding the provisions of section 5.3 hereof , any principal Shareholder may Transfer its Shares, or any portion thereof, to an Affiliate entity of Indian Company or FOREIGN COMPANY, as appropriate, subject to compliance with Sections 5.3 and 5.7 hereof.
5.6 Nominee. The rights of the Principal Shareholders under this Article 5 shall be non-assignable except that FOREIGN COMPANY shall, at any time as a consequence of the circumstances set forth in clause 4.3 (b) (ii), be entitled to assign its rights to the extent required to the nominee selected in its sole discretion.
5.7 Transferee Qualifications. The Principal Shareholders covenant that they shall not Transfer or permit to be Transferred any Shares to a competing party or to any Person who does not have the financial capability to satisfy its financial commitments to the Company does not recognize any such competing party or Person as a Principal Shareholder in the Company.
5.8 Refusal To Register. The Board of Directors shall refuse to register any sale, assignment, transfer or other disposal of shares which does not comply with the provisions of this Article 5.
ARTICLE 6
CORPORATE GOVERNANCE
6.1 Board of Directors. The Board of Directors shall consist of seven (7) directors who shall be elected upon the completion of the Share subscription set forth in Section 4.3 hereof. The Principal Shareholders agree to vote all Shares owned of record or beneficially by them, with respect to which they are entitled to exercise any voting power and to the full extent of such voting power, whether such shares are presently owned or may be voted by them or such voting power, whether such shares are presently owned or may be voted by them or become owned or may be voted by the during the Term of this Agreement, as follows: (a) in favour of electing two (2) representatives designated by Indian Company so long as Indian Company and its Affiliates collectively own its Minimum Ownership Interest; and (b) in favor of electing two (2) representatives designated by FOREIGN COMPANY, so long as FOREIGN COMPANY and its Affiliates collectively own its Minimum Ownership Interest. Any Principal Shareholder (including its Affiliates) which ceases to own the requisite number of share to designate directors under this Section 6.1 shall promptly take all actions necessary to remove its designee (s).
6.2 Selection of Additional Directors. Except as provided in Section 6.1 above, all other directors shall be appointed by the Board of Directors, as constituted.
6.3 Chairman. The chairman of the Board of Directors (the "Chairman") shall be elected by the Board of Directors for the term designated by the Board of Directors. The Chairman shall be permitted to succeed himself in the event the Board of Directors re-elects him. In the event the Chairman does not, for whatever reason, complete such term, the Board of Directors may appoint a successor Chairman to complete the balance of the term. the Chairman shall not be entitled to a casting vote.
6.4 Vacancies. If a vacancy occurs on the board of Directors for any reason as to a director designated and elected pursuant to Section 6.1, the principal shareholder that nominated the departing director, in accordance with Section 6.1 above, shall cause their representatives on the Board of Directors to nominate a replacement for such directorship and the Principal Shareholder that nominated the departing director, in accordance with Section 6.1 above ,shall cause their representatives on the Board of Directors to nominate a replacement for such directorship and the Principal Shareholders agree to cause their respective nominee directors to vote, without exception, for the election of such director as set forth in Section 6.1. If a vacancy occurs on the Board of directors as to a director elected pursuant to Section 6.2, the vacancy shall be filled according to the provisions of the Companies Act. The term of office for replacement directors shall be for the remainder of the original term of the departing director.
6.5 Removal of Directors. Except in accordance with the requirements of the Companies Act, no Principal Shareholder shall vote to remove the nominees of other Principal shareholder, unless such removal is at the request of the Principal Shareholder that nominated such nominee for election to the Board of Directors, in which case each Principal Shareholder shall vote for such removal.
6.6 Board of Directors Meetings and Voting. There shall be at least one (1) regular meeting of the Board of Directors each calendar quarter. Except as provided by this Section 6.6 and by Section 6.9 hereof, decisions shall be taken by a simple majority of a properly constituted quorum of the Board of Directors on any matters on which the Board of Directors is empowered to act by the Corporate Documents or applicable law. For purposes of this Section 6.6,a quorum shall consist of one third (1/3) of the Board of Directors and shall include at least one (1) nominee director from each Principal shareholder (including its Affiliates). No decision shall be taken by the Board of Directors unless an affirmative vote of at least one of the nominee directors of each Principal Shareholder (including its Affiliates) is cast in favor of such decision. A clear written notice of every meeting of the Board or Directors shall be given at least seven (7) days in advance to every director present for the time being in India at his address in India.
However, in the case of directors residing outside of India, notice of every meeting of the Board of Directors shall also be given to such directors at their registered addresses in India. Such notice shall be accompanied by the agenda setting out the business proposed to be transacted at the meeting of the Board of Directors. Notice of the meetings of the Boards of Directors shall be given to all directors in writing by telex, facsimile or cable and confirmed in writing by overnight courier service.
6.7 Board of Directors expenses; Alternate Directors. Reasonable expenses of a director incurred in India and for business class airfare to India to attend any Board of directors meeting shall be reimbursed by the Company. The Board of Directors shall appoint alternate directors or such other persons as may be allowed under the Companies Act, to act in the absence of the original director who is absent from the place where the Board of Directors meetings are being held for a period exceeding three (3) months. If such original director was nominated by a Principal shareholder, then the person so appointed shall be selected by the Principal shareholder who had nominated the original director.
6.8 Indemnification of Directors. Subject to Section w01 of the Companies Act, each Person who was or is at any time a party or is threatened to be made a party to , or is involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such Person is or was director of the Company, that Person shall be indemnified and held harmless by the Company to the fullest extent permitted by applicable law, except to the extent that any loss or expense incurred by such director is determined by a court of competent jurisdiction to have resulted form the director’s gross negligence pr willful misconduct. the right to indemnification conferred by this Section 6.8 shall also include the payment by the Company of expenses incurred in connection with any such action, suit or proceeding in advance of its final disposition with any such action, suit or proceeding in advance of its final disposition to the fullest extent permitted by applicable law.
6.9 Shareholder Meetings and Voting. Shareholders’ meetings shall be called in accordance with the provisions of Companies Act. The shareholders’ meetings may also be called by a resolution passed by the Board of Directors. The Board of Directors shall notify each shareholder in writing of the time and place of each shareholders’ meeting at least twenty-one (21) days in advance and shall include with such notice a copy of the proposed agenda and the relevant; necessary documentation. The composition of the shareholders’ meeting and the validity of the resolutions adopted at the shareholders’ meeting shall be governed by the Corporate Documents and applicable law. Shareholder decisions hall be made by a simple majority of the outstanding and issued Shares, provided, however, that a vote representing seventy-five percent (75%) of the issued and outstanding shares (unless a higher percentage is required by applicable law) shall be required with respect to the following matters:
(a) amendments to the Corporate Documents or any other changes to the rights of Shareholder;
(b) diversification of the Company into a line of business unrelated to the activities specified in subsections 2.3 (a) and 2.3 (b);
(c) authorization, issuance, reduction or sale of Shares or any Preference, Shares;
(d) the sale, transfer or lease of all or substantially all of the assets of the Company;
(e) the winding-up, dissolution or liquidation of the Company, except as otherwise required by applicable law;
(f) the filing of a voluntary petition in bankruptcy or consenting to the filing of an involuntary petition;
(g) the merger, consolidation or amalgamation of the Company with any other Person;
(h) the issuance of shares in connection with a rights offering of consideration other than for case; and
(I) all other matters required by applicable law to be approved by at least seventy-five percent (75%) (or as otherwise required by applicable law) of the Shareholders present and entitled to vote at a meeting.
6.10 Circulation. A decision which may be taken at any meeting of the Board of Directors may also be taken by circulation in accordance with applicable law.
6.11 Principal Shareholder Access . Principal Shareholder, or their designated accounting agents, shall be permitted, at their own expense, to visit during regular business hours upon prior written notice to the Company any of the premises where the business of the Company is conducted and to have reasonable access to the Company’s books and records, in accordance with applicable law.
6.12 Appointment and /Responsibilities of Managing Director. The Board of Directors shall appoint the Managing Director, who shall carry out the day-to-day business of the Company and the representation thereof conformity with the resolutions, guidelines, policies and instructions adopted by the Board of Directors, as well as in conformity with the provisions and the spirit of this agreement, the Corporate Documents, the operating policy statement of the Company and all provisions of applicable law. The Managing Director shall be responsible for preparing and submitting to the Board of Directors:
(a) a monthly activities report;
(b) the monthly financial reports, as required under Section 9.6: and
(c) the Annual Budget as defined in Section 7.2.
6.13 Officers. In addition to the Managing Director , the Company may have such other officers as the Board of Directors shall from time to time determine. The Board of Directors may from time to time establish, increase, reduce or otherwise modify the duties of the Managing Director and the other officers of the Company. The Managing director and each officer shall hold office for such period as the Board of Directors may decide unless he is removed or resigns earlier. The Managing Director and any officer may be re-appointed at the conclusion of his or her term and any officer may removed at any time by the Board or Directors for any reason with or without cause. Notwithstanding the foregoing, FOREIGN COMPANY shall be entitled to nominate a representative who shall be on secondment from FOREIGN COMPANY, AFFILIATE or its Affiliates and who shall be appointed by the Board of Directors with the responsibilities of a credit officer in respect of credit policies and procedures for the Company and for other matters FOREIGN COMPANY and the Board of Directors may mutually agree. The Managing Director or any other officer may resign at any time upon written notice to the Board of Directors.
6.14 Meetings. Unless otherwise agreed by the unanimous consent of the Board of Directors, all Board of Directors meetings shall be held in India.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Each Principal Shareholder and AFFILIATE represents and warrants as provided herein to the other Principal shareholders under this Agreement and to the Company as of the Effective Date as follows:
7.1 Organization. It is duly organized and validly existing and in good standing under the law of the jurisdiction of its formation.
7.2 Authorization. It is authorized to enter into and perform this Agreement and this Agreement, when executed, will be duly and validly authorized, executed, and delivered and will constitute a valid and binding obligation enforceable in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, reorganization, moratorium or similar laws affecting creditors rights generally and the application of general principles of equity (regardless of whether considered in a proceeding at law or in equity).
7.3 Conflicts. The execution and delivery of this agreement and the consummation of the transactions contemplated here by do not (a) contravene its organizational or corporate documents, (b) contravene any law, rule, regulation, ruling, order, judgment or decree, (c) conflict with, breach or constitute a default under or permit the termination of or acceleration of any obligation under any agreement or instrument to which it is a party or which binds or affects it or its property or assets, or (d) require any consent or authorization that has not been obtained other than those specifically contemplated herein. Indian Company further represents and warrants that, as of the Effective Date, the Company has not entered into or become bound by any contracts or agreements, incurred or become liable for any indebtedness or other actual or contingent liabilities, or granted, suffered or incurred any mortgages, liens, security interests or other encumbrances of any kind.
7.4 Litigation. There are no actions, suits claims, proceedings, or investigations pending or to its knowledge, threatened against it, or to its knowledge, the Company, whether at law or in equity, or before by any national, federal, provincial, departmental, state, municipal or other governmental authority, agency or instrumentality which threaten or question the validity or enforceability of this Agreement or which individually or in the aggregate would, if adversely determined, have a material adverse effect on it, the Company or the investments, decrees, injunctions, or orders of any court, governmental authority; agency, instrumentality or arbitrator against it, or to its knowledge, the company, which individually or in the aggregate would have a material adverse effect on it, the Company or the investment of any other Principal Shareholder herein.
7.5 Liens. No Person has any right ,title, lien or other interest in or to any Shares owned by it an that none of such Shares has been pledged, hypothecated or otherwise encumbered by in and such shares are free and clear of all liens and claims of any Person.
7.6 Options. Except for the rights under this Agreement, no options, warrants or rights to purchase equity shares of, or securities convertible into or exchangeable for any class or series in the share capital of the Company have been issued or are outstanding.
ARTICLE 8
CONVENANTS
Each Principal Shareholder hereby covenants and agrees, acting for itself or, if applicable, acting by through its nominees to the Board of Directors, as follows:
8.1 Corporate Documents. Each Principal Shareholder shall vote all the Shares owned or held of record by such Principal Shareholder at any regular or special meeting of shareholders of the Company and shall take, to the extent permitted by applicable law, all action necessary, to ensure that the Corporate documents and all corporate actions do not, at any time, conflict with the provisions of this Agreement.
8.2 No Inconsistent Agreements. No Principal Shareholder to this Agreement shall enter into any agreement with respect to shares or securities of the Company which is inconsistent with the rights granted to Principal Shareholder pursuant to this Agreement.
8.3 Provision of Information. Each Principal Shareholder shall cause its nominees to the Board of directors to keep all Principal shareholders informed of any material circumstances or decisions of which such nominees are aware that might be of significance for the Principal Shareholders’ assessment of the value of their shareholdings in the Company.
8.4 Dividend Distribution. Each principal Shareholder shall cause its nominees to the Board of Directors to adhere to a dividend policy for the Company which shall optimize the dividends to the Principal Shareholders from the profits of the Company with consideration given to the current performance and future growth prospects of the Company.
8.5 Accurate Books and Records. Each Principal Shareholder shall cause its nominees to the Board of Directors to keep or cause to the keep or cause to be kept and maintained on behalf of the Company at the principal office of the Company, or such other office as the Principals Shareholders shall be entered, fully and accurately, each and every transaction of the Company. The Company’s books and records shall accurately reflect the financial condition of the Company and the results of its operations in conformity with the generally accepted accounting principles of ________ , to the extent applicable in India and with appropriate reconciliation’s to ____ if otherwise.
8.6 Financial Reports. Each Principal Shareholder shall cause its nominees to the Board of Directors to provide or cause to be provided to each Principal Shareholder within ten (10) days following the end of each Month, with an un-audited income statement, balance sheet and statement of cash flows for the period then ended and year to date in a standard form to be agreed upon by the Board of Directors, and within ninety (90) days following the end of each fiscal year with an audited income statement, balance sheet and statement of cash flows and an analysis and report of the capital contributions made by and distributions made to each Principal Shareholder, certified by an independent auditor of international standing (the "Auditor"). The Managing Director, as directed by the Board of Directors or reasonably requested by any Principal Shareholder, shall cause to be prepared and delivered to each Principal Shareholder from time to time such other information, which shall be prepared by the Auditor or the appropriate officers or employees of the Company but which need not be audited, as shall be necessary for the preparation of such Principal Shareholder’s tax returns. Each principal Shareholder shall receive copies of any material reports, certificates or similar documents provided by the Company to or received by the Company form the GOI. All reports, records or other documents which are to be furnished to a Principal Shareholder pursuant to this Article shall be furnished in the English language.
8.7 Banks. All receipt and income of the Company shall be deposited in such bank accounts at such banks as shall be approved from time to time by the Board of Directors. The funds in the Company bank accounts shall be used solely for the business of the Company and to make distributions to the Principal Shareholders as provided herein. Withdrawals from the accounts at such banks shall be made only upon the signatures of such persons as may form time to time be designated by the Board of Directors.
8.8 Proper Business Practices .
(a) Each Principal Shareholder shall comply with all laws applicable to its performance of this Agreement, including laws dealing with improper or illegal payments, gifts or gratuities, and any securities laws relation to the transfer of Shares. In any event, each Principal Shareholder agrees not to pay, promise to pay or authorize the payment of any money or anything of value, directly or indirectly, to any person (whether a governmental official or private individual) for the purpose of illegally or improperly inducing any official or any political party or official thereof to make a buying decision or illegally or improperly to assist the Company or any principal Shareholder there of in obtaining or retaining business, or to take any other improper action favorable to the Company or any Principal Shareholder, Furthermore, each Principal shareholder agrees that it will not take any action or fail to take any action, which act or failure to act would subject any other party to the Agreement to liability under the laws of its country of domicile dealing with improper payments as described in this subsection 9.8 (a).
(b) No agent or representative shall be engaged directly or indirectly by any principal shareholder on behalf of the Company without the unanimous prior written consent of the principal Shareholder, Each Principal Shareholder agrees that it will take all reasonable steps to assure that any agent of representative hired to represent such Principal Shareholder in connection with the company will comply with all laws which apply to activities and obligations of such Principal Shareholder under this Agreement including, but not limited to, those laws an obligations dealing with improper payments as described in subsection 9.8 (a) above. Each Principal Shareholder represents, warrants and covenants to the other Principal Shareholder , on its own behalf and on behalf of each of its Affiliates, to comply with the provisions of this Section 9.8 in connection with the Company with the same effect as if it were named therein.
(c) each Principal Shareholder shall, within sixty (60) days of the written request of any other Principal Shareholders, provide the requesting shareholder with a certification to the effect that it has not made any payments, directly or indirectly, in violation of subsection 9.8(a) above.
8.9 Performance of Agreement During the continuance of this Agreement each of the Principal Shareholders shall, so long as it or any or its Affiliates holds any Shares in the Capital of the Company, act on its own behalf and shall cause the Company to act, in good faith and in such a manner so as to ensure that, unless all the Principal Shareholders agree to the contrary in writing:
(a) this Agreement is duly performed, observed and ratified by the Company.
(b) the purpose and objectives of the Company are achieved ;
(c) the company observes the provisions of its Corporate Documents which shall be in accordance with this Agreement : and
(d) no principal Shareholder takes or pursues any course of action for the purpose of having the Company wound up or dissolved.
8.10 No Violation of Law. During the continuance of this Agreement, none of the Principal Shareholder shall perform, of cause to Company to perform, either directly or indirectly, any obligation or provision of this Agreement of the Corporate Documents to the extent that such performance shall or may result in a violation of any applicable law of the ROI or __________(foreign country).
8.11 Insurance. The Principal Shareholders shall cause the Company to maintain, with a well-established and reputable insurer, adequate insurance against all risks usually insured against by companies carrying on the same or a similar business and (without prejudice to the generality of the foregoing) for the full replacement or reimbursement value of all its movable assets of an insurable nature, including, but not limited to:
(a) contractual and warranty liability;
(b) property and casualty insurance; and
(c) political risk.
8.12 Publicity (a) Upon the execution of this Agreement by the Principal Shareholders hereto, a joint announcement will be made about the Company, its objects and its scope of activities.
(b) After the Effective Date, the Company shall be entitled to use the Designation " A Joint Venture between ____________and Indian Company " or similar designation on its letterhead and other advertising material.
(c) The contents and timing of any other press release or announcement shall require the prior written approval of each of the Principal Shareholders, provided that this Section 9.12 shall not prevent any Principal Shareholder from making any announcement which it is required to make by any applicable law or competent judicial, governmental or other authority having jurisdiction over such Principal Shareholder or its property, except in respect of subsection 9.12(b) above, neither the company, any shareholder not any other Person (other than FOREIGN COMPANY and its Affiliates) shall be entitled to incorporate the name ______________ or similar derivation in any commercial usage without FOREIGN COMPANY’s express written consent.
ARTICLE 9
DEFAULTS AND REMEDIES
9.1 Defaults. A Principal Shareholder shall be in default under this Agreement if such Principal Shareholder (a) fails to perform any material obligation under this case may be, from the other Principal Shareholders, (b) subject to subsection 4.3 (b) in the case of FOREIGN COMPANY, fails to subscribe for its allocated Shares, (c) ceases to operate or terminates its business affairs, (d) institutes an insolvency proceeding under applicable law, or (e) permits the entry of any order against it for winding up, the appointment of a receiver or for relief under bankruptcy or similar statutes in any relevant jurisdiction.
9.2 Remedies In the event a principal Shareholder I in default under this Agreement, the non-defaulting Principal Shareholders shall have the right to subscribe for such defaulting Principal Shareholder to another shareholder or a new shareholder at the lesser of (I) par value, (ii) the Break-up Value as determined by the Auditor, and (iii) the average market value on the lead Stock Exchange calculated over the three months prior to the default, for such Shares, and defaulting Principal Shareholder shall be obligated to Transfer its Shares accordingly and to surrender all of its rights with respect to such Shares and in and to the Company. Upon the completion of such compulsory Transfer, this Agreement shall automatically terminate with respect to the defaulting Principal Shareholder . the defaulting principal Shareholder shall have a twenty (20) day grace period within which to cure the default before any remedy under this Section 10.2 may be exercised by the non-defaulting Principal Shareholder. The Board of Directors shall cause the Company to take all actions necessary to implement the provisions of this Section 10.2 upon the decision of the non-defaulting Principal Shareholder hereunder.
ARTICLE 10
DISPUTE RESOLUTION
10.1 Informal Discussions. In the event of a dispute between the Company and one or both Principal Shareholders, or a dispute between Principal Shareholders, arising out of or in connection with this Agreement, each party to the dispute shall designate in writing to the other party (ies) to the dispute a representative who shall be authorized to resolve such dispute in an equitable manner. If the designated representatives are unable to resolve a dispute within thirty (30) days of their designation, then any party to the dispute shall have the absolute right to proceed to binding arbitration under Section 11.2 hereof.
10.2 Binding Arbitration Any dispute referred to arbitration pursuant to this Article 11 shall be conducted in accordance with the Arbitration Rules of the International Chamber of Commerce as in effect on the date hereof or as otherwise agreed upon by the Principal Shareholders, and shall be conducted in the ________________. The arbitral tribunal shall consist of three (3) arbitrators. The claimant and the respondent in the dispute shall each appoint one (1) arbitrator. The two-(2) arbitrators so appointed shall appoint the third arbitrator who shall serve as the chairman of the arbitral tribunal. If a party to the dispute fails to appoint its arbitrator within a period of ten (10) days after receiving notice of the arbitration, or if the two (2) arbitrators appointed cannot agree upon the third arbitrator, then such arbitrator shall be appointed pursuant to the procedures of the International Chamber of Commerce, or as otherwise agreed by the parties, and shall be under the management thereof. In the event that the International Chamber of Commerce is required or requested to appoint an arbitrator, it shall appoint only a person with experience in international commercial agreements. No arbitrators shall be a present or former employee or agent of, or consultant or counsel to, any Principal Shareholder or any Affiliate thereof or any authority of the GOI. The arbitrators shall meet within five (5) Business Days of the date the third arbitrator is selected and shall take all action necessary action to render a decision within thirty (30) days. The arbitrators shall decide the dispute by majority of the arbitral tribunal and shall state in writing the reasons for its decision. Any monetary award of the arbitral tribunal shall be denominated and payable in ____________. The Principal Shareholder hereby waive any rights to appeal or to review of such award by any court or tribunal. The Principal Shareholders further undertake to carry out without delay the provisions of any arbitral award or decision and each agrees that any such award or decision may be enforced by any court or tribunal having jurisdiction. The costs of such arbitration shall be determined and allocated between the parties by the arbitral tribunal in its award. Unless otherwise agreed in writing, the Principal Shareholders shall continue to perform their respective obligations under this Agreement during the tendency of any proceeding by the parties in accordance with this Article 11.
ARTICLE 11
PROPER LAW OF THE AGREEMENT; AFFILIATE OBLIGATIONS; SURVIVAL
11.1 Proper Law of the Agreement. This Agreement shall be governed by the laws of the ROI.
11.2 AFFILIATE Obligations AFFILIATE by its signature hereto agrees to satisfy or cause to be satisfied the obligations of FOREIGN COMPANY and (and any Affiliate transferee) under Sections 2.4 (c) and 4.3 of this Agreement.
11.3 Survival. Any termination of this Agreement notwithstanding, Article 11 and Sections 9.8 and 13.14 shall survive the termination of this Agreement and shall remain in full force and effect in accordance with their terms.
ARTICLE 12
MISCELLANEOUS
12.1 Amendment Modification and Waiver. Any amendment variation, modification or waiver of any of the terms and conditions of this Agreement shall only be valid and effective if signed in writing by all the Principal Shareholders and AFFILIATE.
12.2 Benefit of Agreement and Assignment. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Principal Shareholders and their respective successors and assigns.
12.3 Waiver No failure or delay on the part of any Principal Shareholder in exercising any right, power or privilege hereunder and no course of dealing between the Principal Shareholders shall operate as a wavier thereof; nor shall nay single or partial exercise or any right, power or privilege hereunder preclude any other right , power of privilege hereunder. The rights powers and remedies herein expressly provided are cumulative and not exclusive of principal Shareholders’ other rights, powers and remedies, if any. No notice to or demand on any party hereto in any case shall entitle any Principal Shareholder to any other or further notice or demand in similar or other circumstances (other than as specifically required pursuant to the provisions of this Agreement) or constitute a waiver of the rights of any Principal Shareholder to any other or further action in any circumstances without notice or demand.
12.4 Exchanges and Recapitalization. In the event that any new Shares issued in respect of, in exchange for, or in substitution of any Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to Principal Shareholders or any other change in capital structure of the Company, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the Principal Shareholders under this Agreement.
12.5 Counterparts. This agreement may be executed in any number of counterparts and by the different Principal shareholders on separate counterparts, each of which when so execute shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the Principal Shareholders shall be retained by the Company.
12.6 Headings Descriptive. The headings of the Articles, sections and subsections of this Agreement are included for convenience only and shall not in any way alter the meaning or construction of any provision of this Agreement.
12.7 Severability If any provision hereof in invalid or unenforceable in any jurisdiction, the, to the fullest extent permitted by law, (a) the other provisions of this Agreement shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Principal Shareholder in respect and including any provision hereof which is invalid or unenforceable as nearly as may be possible, and (b) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.
12.8 Entire Agreement This Agreement represents the entire agreement with respect to matters referred to herein, and no other prior or contemporaneous agreement or understanding, whether written or oral, shall be binding on the Principal Shareholders hereto.
12.9 Notices. Notice shall be in writing and shall be sent by facsimile and by registered mail (return receipt requested) or by overnight courier to the address specified on the signature pages hereof or to such other address as a Principal Shareholder or AFFILIATE may specify in writing.
12.10 Remedies Cumulative . Each right, power and remedy provided for herein or now or hereafter existing at law, in equity, by statue or otherwise, shall be cumulative, and the exercise or the forbearance of exercise by any Principal Shareholder of one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by such Principal Shareholder of any or all of such other rights, powers or remedies.
13.11 Further Assurances . Each Principal Shareholder hereto shall cooperate and shall take such further reasonable action as may be necessary and shall execute and deliver such further documents as may be reasonably requested by the other Principal Shareholder hereto in order to carry out the intent and accomplish the purposes of this Agreement and of the Company.
13.12 Governmental Approvals. This Agreement shall be subject to the approval of the GOI. In case any provision of this Agreement is not approved by the GOI, then the Principal Shareholders shall agree to make such amendments that shall be acceptable to such appropriate authority without altering the purpose or intention of the Agreement, or failing such amendment, to take all such other steps and to do such other things, including the execution of any other agreements as may be necessary, to achieve the intent and purpose of such of the provisions of this Agreement as may not have been found acceptable by the authorities of the GOI.
13.13 Relationship of the Principal Shareholders. No Principal Shareholder shall be liable for the acts of the other which are unauthorized, contrary to Agreement or outside the scope of the business activities of the Company. No Principal Shareholder is the agent of any other and no commitments or contract obligations to third parties shall be binding unless approved and authorized as provided herein.
13.14 Non-Competition. (a) Except upon the termination of a Principal Shareholder’s status as a Principal Shareholder due to a default thereunder, the occurrence of which will cause the provisions of this Article to not be binding on the non-defaulting Principal Shareholder vis-a-vis the defaulting Principal Shareholder, each of the Principal Shareholders agrees that during the term of this Agreement for such principal Shareholder and for a period of three (3) years following termination of its status as a Principal Shareholder, it will not, without the written consent of the other Principal Shareholder, directly or indirectly or through its Affiliates, associate with any other Person to compete in India with the business of the Company.
(b) No Principal Shareholder and no entity controlled by or under common control with any Principal Shareholder shall, without a written waiver of objection form the Board of Directors and the written consent of the other Principal Shareholder , solicit, directly or indirectly, any existing clients of the Company or any clients the company may hereafter acquire before the termination of this Agreement, with a view to providing services to them in India substantially similar to those provided by the Company in India at any time while such Principal Shareholder is a Principal Shareholder in Company or during a three (3) year period following termination of its status as a Principal Shareholder; provided, however, that this Section shall not apply in the event the Company is liquidated.
(c) No Principal Shareholder and no entity controlled by or under common authority with the Board or with any Principal Shareholder shall, without a written waiver of objection form the Board of Director and the written consent of the other Principal Shareholder, solicit for employment, or employ, directly or indirectly, any individual currently or hereafter employed by the Company at any time while such Principal Shareholder is a Principal Shareholder in the Company or during a three (3) year period following termination of its status as a Principal Shareholder; Provided, however, that this Section shall not prevent any Principal Shareholder form soliciting an employee of the Company who was an employee of such Principal Shareholder prior to being employed by the Company or whose employment by the Company was initiated and proposed directly by such Principal Shareholder.
(d) In the event any Principal Shareholder sells, Transfers or assigns all of the Shares in the company owned by such Principal Shareholder , the remaining Principal Shareholder shall cause the Company to delete as soon as is practicable the name of such Principal Shareholder from any names under which the Company does business including all letterhead and advertising materials.
13.15 Costs and Expenses Except to the extent not subject to indemnification under Section 6.8 here of , all costs and expenses of any Principal Shareholder, up to a maximum of ____________, for the legal and other professional assistance incurred in respect of the negotiation and execution of this Agreement shall be reimbursable to such Principal Shareholder by the Company.
13.16 Promoters; New Shareholders (a) With respect to any Promoters who continue to hold Shares upon completion of the Share subscription set out in Section 4.3. Subscription Agreement.
(b) Any Principal Shareholder nominating an Institutional Investor or Suitable Investor to purchase Shares of the Company (by Transfer or otherwise) in accordance with the terms of this Agreement, shall cause such Person to execute a Subscription Agreement as a condition to such purchase. Any principal Shareholder who transfers its Shares pursuant to this Agreement shall cause such new Principal Shareholder to be bound by this Agreement by an appropriate addendum or amendment as may be rendered necessary thereby.
13.17 Language.. As among the Principal Shareholders, and as between the Principal Shareholders and the Company, the English language version of this Agreement and any reports or documents provided hereunder shall govern.
13.18 Inconsistent Provisions. The Principal Shareholders hereby agree that, to the extent any provision in the Corporate Documents conflicts with any provisions of this Agreement, the provisions of the Corporate Documents shall control; provided, however, that the Principal Shareholders agree to promptly amend the Corporate Documents to reconcile any such conflict, to the extent possible.
IN WITNESS WHEREOF, both the parties hereto have duly executed this agreement on the day and year first above written :
SCHEDULE 1 PROMOTERS
SCHEDULE 2 SHAREHOLDER SUBSCRIPTIONS IN THE COMPANY
SCHEDULE 3 CORPORATE DOCUMENTS
_____________________
FOREIGN COMPANY
______________________
INDIAN COMPANY
WITNESSES :
1.
2.
