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BETWEEN
AND
AND
MARCH 25, 2008
3. CORPORATE STRUCTURE 2
8. DISTRIBUTION OF RETURNS 2
19. NOTICES 2
20. MISCELLANEOUS 2
ANNEX 1 –PROPERTY 2
BETWEEN
AND
AND
WHEREAS:
B. Pursuant to the Subscription Agreement, the Parties are desirous of entering into this
Agreement to set forth their mutual understanding and agreement as to their rights
and obligations as Shareholders and with regard to the capitalisation, organisation,
management and operation of the Company, which shall come into effect from the
Closing Date.
1.1 Definitions
In this Agreement, unless the context otherwise requires, the following words and
expressions shall bear the meanings ascribed to them below:
(a) “Additional Shares” shall have the meaning ascribed to the term in
Clause 1.50;
(b) "Affiliate" of a Person (the "Subject Person") means (i) in the case of any
Subject Person other than a natural person, any other Person that, either
directly or indirectly through one or more intermediate Persons, Controls, is
Controlled by or is under common Control with the Subject Person, and (ii) in
the case of any Subject Person that is a natural person, any other Person
that, either directly or indirectly through one or more intermediate Persons,
controls, is controlled by or is under common control with the Subject Person
or who is a spouse, son or daughter of the Subject Person;
(d) “Annual Lease Rental” shall mean the amount payable over a period of one
year as lease rentals for the Leased Portion net of any maintenance charges,
taxes and property levies;
(e) “Applicable Percentage” shall mean the higher of (i) 11% and (ii) 3.5
percent above the prevailing interest rates offered on 5 year Government of
India securities at the applicable point of time;
(g) “Available Surplus” shall have the meaning ascribed to the term in Clause
1.30;
(j) “Business Plan” shall mean the annual business plan of the Company as
prepared, approved and amended from time to time in accordance with
Clauses 1.13 and 1.14 and other applicable provisions of this Agreement;
(l) “Call Option” shall have the meaning ascribed to the term in Clause 1.53(1)
(a)’
(m) “Chairman” shall mean the Chairman of the Company, being the nominee
Director of the Partner;
(n) “Class B Shares” shall have the meaning ascribed to them under the
Subscription Agreement.
(o) “Closing” shall have the meaning ascribed to the term in the Subscription
Agreement;
(p) “Closing Date” shall have the meaning ascribed to the term in the
Subscription Agreement;
(q) “Completion” shall mean the completion of construction of the Project, lease,
sale or other disposal of all assets comprising the Project and the completion
of marketing and sales programme as per the Business Plan.
(r) “Control” in relation to a Person, shall mean any of: (i) the legal or beneficial
ownership directly or indirectly of more than 50% of the voting securities of
such Person or, (ii) controlling the majority of the composition of the board of
directors of the Person or, (iii) the power to direct the management or policies
of such Person by contract or otherwise. The terms “Controlling” and
“Controlled” shall be construed accordingly.
(s) “Conveyance Deed” shall mean the deed of sale and purchase of the
Property to be executed by the Seller in favour of the Company;
(t) “Deed of Adherence” shall mean a deed substantially in the form set forth in
Annex 2;
(u) “Design Brief” shall have the meaning ascribed to the term in Clause 1.16
(v) “Development Plan” shall have the meaning ascribed to the term in Clause
1.15
(w) “Director” shall mean a director of the Company, being a nominee of the
Investor or the Partner, on the Board;
(x) “Drag Along Notice” shall have the meaning ascribed to the term in Clause
1.54(1)(b);
(y) “Financial Consultant” shall have the meaning ascribed to the term in
Clause 1.28(1)(d);
(z) “Financial Year” shall have the meaning ascribed to the term in
Clause 1.25;
(aa) “Final Valuer” shall have the meaning ascribed to the term in Clause 1.57(1)
(c);
(bb) “FMV” shall mean the fair market price of any shares calculated in
accordance with the FMV Price;
(cc) “FMV Price” shall have the meaning ascribed to the term in Clause 1.57(1)
(c);
(ff) “Internal Rate of Return” or “IRR” shall mean the discount rate that, (i) when
applied to the Investor’s investment in the Company (determined as of the
first day of the week in which the investment is made) and (ii) any payments
made out to the Investor (determined on the last day of the week in which
such repayment or distribution is made) would result in the net present value
of that stream of repayments and distributions, to be zero. All such
repayments and distributions to the Investor referred to in (ii) shall be
calculated net of all Indian income and distribution taxes and fees levied on
the Investor in Indian Rupees.
(hh) “Investor Director” shall mean a Director appointed by the Investor under
and in accordance with this Agreement;
(ii) “Investor Shares” shall mean the Class A Shares held by the Investor at the
relevant point in time;
(jj) “Key Managerial Personnel” shall mean heads of all departments of the
Company, including Chief Operations Officer, Chief Financial Officer,
Marketing Head and Head of Human Resources;
(kk) "Laws" shall mean all laws, ordinance, statutes, rules, orders, decrees,
injunctions, licences, permits, approvals, authorisations, consents, waivers,
privileges, agreements and regulations of any Governmental Authority having
jurisdiction over the relevant matter as such are in effect as of the date hereof
or as may be amended, modified, enacted or revoked from time to time
hereafter;
(ll) “Leased Portion” shall have the meaning ascribed to the term in
Clause 1.31(1)(b)(i)(bb).
(mm) “Managing Director” shall mean the managing director of the Company,
being the nominee Director of the Partner;
(oo) “Outstanding Partner Amount” shall have the meaning ascribed to the term
in Clause 1.23(1)(b);
(pp) "Person" shall mean any natural person, limited or unlimited liability
company, corporation, general partnership, limited partnership,
proprietorship, trust, union, association, court, tribunal, agency, government,
ministry, department, commission, self-regulatory organisation, arbitrator,
board, or other entity, enterprise, authority, or business organisation;
(ss) “Party” shall bear a reference to the Investor, the Company or the Partner, as
the case may be, and “Parties” shall bear a collective reference to all such
persons;
(tt) “Partner Director” shall mean a Director appointed by the Partner under and
in accordance with this Agreement;
(uu) “Partner Shares” shall mean the Class B Shares held by the Partner at the
relevant point in time;
(ww) “Project Consultant” shall mean the consultant who may be appointed by
the Investor in relation to the Project;
(xx) “Property” shall mean the parcel of land admeasuring 41,952.84 sq. mts
(forty one thousand nine hundred and fifty two point eight four square meters)
or thereabouts, situated at Pune, Maharashtra and more particularly detailed
in Annex I hereto.
(zz) “Shares” an equity share in the Company of the face value of Rs. 10 fully
paid-up;
(aaa) “Subscription Agreement” shall have the meaning ascribed to the term in
Recital A;
(bbb) “Target Project Completion Date” shall have the meaning ascribed to the
term in Clause 1.10(d);
(ccc) “Transfer” shall mean any sale, transfer, assignment, disposition, or creation
of any Encumbrance over or other transfer, whether directly or indirectly, and
by whatever means, of all or any portion of the Shares.
(eee) “Valuers” shall have the meaning ascribed to the term in Clause 1.57(1)(c).
1.2 Interpretation
(a) words importing the singular include the plural and vice versa;
(b) reference to Laws shall include laws as may, from time to time, be enacted
amended, supplemented or re-enacted;
(f) the headings in this Agreement are for reference only and shall not affect the
interpretation or construction hereof;
(h) capitalised terms used but not defined in this Agreement shall have the
meaning ascribed to the term in the Subscription Agreement.
1.3 Term
This Agreement shall come into force only on the Closing Date and shall, continue to
be valid and in force up to the earlier of the following:
(a) the date on which the Partner ceases to hold any Shares; or
(b) the date on which the Investor ceases to hold any Shares; or
1.4 Objectives
The objectives of the Parties in entering into this Agreement are as follows:
(a) to use their respective business skills, know how, experience and expertise to
establish, develop, operate and manage the Project;
(b) to outline the method of management and operation of the Company; and
(c) to ensure that the Project yields maximum value to the Company and its
Shareholders.
1. the Company is in conformity with the various terms and provisions of the
Transaction Documents;
3. CORPORATE STRUCTURE
As of the Closing Date and upon the issue and allotment of the Investor Shares and
Partner Shares in accordance with the Subscription Agreement, the Partner and the
Investor will collectively hold the entire issued and paid-up equity share capital of the
Company. The authorised, issued and paid-up equity share capital of the Company
as of that date will be as follows:
Prior to Closing:
(a) Prior to Closing, the Partner’s Shareholding is 9,999 (nine thousand nine
hundred and ninety nine) Shares, constituting 99.99% of the aggregate
Shareholding in the Company towards a contribution of Rs. 99,990 (ninety
nine thousand nine hundred and ninety) made by the Partner. The Partner
agrees to consolidate the Shareholding of the Company such that, upon
Closing, the Investor and the Partner are the only Shareholders of the
Company.
At Closing:
(d) At Closing, the Partner shall contribute Rs. 9,95,18,000 (Rupees nine crore
ninety five lakhs eighteen thousand) for 10,000 (ten thousand) fully paid
Class ‘B’ Equity Shares of Rs. 10 (Rupees Ten) each which together with the
Class B Shares held by the Partner prior to Closing Date will constitute 10%
of the aggregate shareholding in the Company on the Closing Date. The
Partner shall also contribute Rs. 2,48,79,500 (Rupees two crore forty eight
lakhs seventy nine thousand five hundred) as Partner Share Application
Money (as defined in the Subscription Agreement), which shall be converted
into Class B Shares in accordance with Clause 1.48
In addition to their obligations under this Agreement, the Partner will also be
responsible for:
(b) ensuring that the Project is established, developed, operated and managed in
accordance with the terms of the Transaction Documents subject to the
provisions of Clause 12; and
(c) making available its expertise and necessary human and technical resources
for the Project.
(a) The Partner confirms that the Investor shall not be required to create any
Encumbrance over the Investor Shares or any other securities of the
Company held by it, or provide any guarantee or any other security or other
support to any third party, including but not limited to the lenders of the
Company, in relation to the Project or otherwise.
(i) within 3 (three) months from the Closing Date, the Company will
establish an internal control system, comprising of policies,
processes and such other features as are necessary or advisable to
ensure (A) the Company’s effective and efficient operation by
enabling it to manage significant business, operational, financial,
compliance and other risks to achieve the Company’s objectives,
(B) the quality of the Company’s internal and external reporting; and
(C) compliance by the Company with applicable Laws;
(ii) within 3 (three) months from the Closing Date, the Company shall
appoint a reputed chartered accountant/ firm of chartered
accountants as the Company’s internal auditors.
1.10 The Partner agrees and acknowledges that it shall be responsible for the
implementation of the Project and Completion, and that the Project will be carried out
by the Partner on terms and conditions as specified in the Transaction Documents.
The responsibilities of the Partner will include:
(a) obtaining all the approvals and authorisations necessary for the Project
including sanctioned plans and environmental clearances within a period of
12 (twelve) months from the Closing Date;
(b) making available to the Company its technical know-how, brand usage and
expertise in real estate development and construction, including without
limitation, with respect to the administration and management of the Project
and the Company, statutory approvals, marketing and sales etc;
1.11 The Partner will commence, execute and construct the Project in strict conformance
with the development specifications and the quality standards included in the
Development Plan. In this regard the Partner shall exercise a duty of care and
diligence and perform its obligations with the care and discipline as is expected from
a firm of international repute. The Investor, at its sole discretion, will be entitled to
select and cause the Company to appoint a third party (the “Project Consultant”) to
monitor the development of the Project and costs in relation to the Project. It is
agreed that the costs of such Project Consultant will be borne by the Company.
1.12 The Partner will ensure that the Partner engages adequate number of employees,
professionals and consultants from time to time as may be required for the
implementation of the Project, as may be mutually agreed between the Investor and
the Partner. The persons so engaged shall not be employees of the Company and
the Partner shall be responsible for ensuring that all applicable Laws relating to the
employment or engagement of the employees, professionals and consultants for the
purpose of the development of the Project are complied with and hereby indemnifies
the Investor and the Company against any liability that may arise due to a failure of
the Partner to comply with such Laws. It is however clarified that all costs related to
the Project execution will be borne by the Company.
1.13 The Project shall be developed in accordance with the Business Plan. Each Business
Plan shall be on a Project wide basis, in a form and manner and containing such
details as may be agreed to by the Shareholders in writing. The Partner shall procure
and the Company shall present for approval and adoption by the Board no later than
60 (sixty) days from the Closing Date, a proposed Business Plan for the Project for
the Financial Year 2008-09. In the event the Company is not able to present for
1.14 The Partner shall procure and the Company shall prepare a proposed Business Plan
for the Company for each subsequent Financial Year at least 60 (sixty) calendar days
prior to the end of the preceding Financial Year and shall provide the Investor and the
Investor Directors with a copy of such proposed Business Plan to be presented for
approval by the Investor and adoption by the Board, and the vote with respect to such
approval and adoption shall occur prior to the end of the preceding Financial Year. In
the event that the Partner fails to submit a Business Plan, the Board shall apply the
1.15 The Partner shall prepare a Development Plan in a form and manner satisfactory to
the Investor within 90 (ninety) days of the Closing Date or such other date as may be
mutually agreed upon between the Investor and the Partner. The Development Plan
shall allow sufficient time for mobilisation and commencement of works on Site in
accordance with the Development Plan. The Development Plan shall contain all
information required for the development of the Project, including but not be limited
to:
(a) Statement of Development intent Designer/s, contractor/s, supplier/s,
procurement strategy;
(b) Marketing & Sales strategy;
(c) Area schedule;
(d) Financial model/ business case;
(e) Environmental guidelines;
(f) Sustainability guidelines;
(g) Quality guidelines;
(h) Safety guidelines;
(i) Development programme;
(j) Architectural,
(k) Structural,
(l) Mechanical and electrical planning performance criteria;
(m) Planning & staging strategy.
1.16 Upon the finalization of the Development Plan, the Partner shall also prepare a
Design Brief containing complete details under the heads specified hereunder, which
shall be provided to the Company for its review and approval. The Company shall
within 14 days of the Design Brief and the Development Plan being submitted,
approve the same or require modifications, which modifications shall be caused to be
carried out by the Partner forthwith. The Design Brief shall include a final and
complete set of drawings and specifications to permit construction of the project on a
phase wise basis. Such interim plans and specifications shall be presented to the
Investor periodically, for review and approval and finalised within thirty (30) days
there from or as may be mutually agreed upon. When the interim plans and
specifications are presented to the Investor for review, the Investor shall have fifteen
(15) days to conduct its review and to suggest any changes thereto, which changes
shall be carried out by the Partner forthwith. The Design Brief shall include:
1.18 The Partner shall procure that the all books, papers and records of the Company and
all books, papers and records relating to the Project are, during normal business
hours, available for inspection by the Investor or its authorised representative and the
Partner shall provide full cooperation and assistance in this regard and shall also
provide the Investor with such copies, extracts and memoranda of such documents
and material as may be sought for by the Investor or its authorised representative.
1.19 The Partner shall procure that the Company keeps the Property, its assets and the
Project adequately insured in amounts representing their full replacement or
reinstatement value with a reputable insurance company, against all risks (including
fire, earthquake, damage, injury, third party loss and loss of profits) as are generally
insured against by responsible companies in the same industry and such other risks
as may be reasonably required by the Shareholders and/or any lender of the
Company.
1.20 The Partner shall procure that the Company shall, within 30 (thirty) calendar days of
the execution of this Agreement, obtain a ‘Directors & officers’ insurance policy for the
benefit of the Directors, the value of which shall be determined by the Board. The
Company shall, during the validity of this Agreement, bear the cost of all premia due
in respect of such insurance policy. The Partner agrees that the value of an insurance
policy per Investor Director shall be not less than the Indian Rupee equivalent of
USD 1,000,000 (United States Dollars One Million).
1.21 The Partner shall exercise its rights and powers so that the Company will maintain
and duly administer the internal control system established pursuant to Clause 1.9(1)
(b)(i), to ensure the fulfilment of the intention of the Parties under the said Clause.
Unless otherwise agreed in writing by the Investor, the Investor Amount and the
Partner Amount shall be applied only for the following purposes:
(a) Partial funding of the acquisition by the Company of ownership interest in the
Property to the extent of Rs.112,17,47,500 (Rupees one hundred and twelve
crores seventeen lacs forty seven thousand five hundred) by payment to the
Seller in accordance with the Conveyance Deed in addition to the stamp
duty, brokerage, legal fees and other incidental expenses in relation thereto;
(b) funding the initial development costs of the Property and any other expenses
in relation to the formation of the Company; and
(a) The Parties intend that post the investment of the Investor Amount, the
Company should be self financing and should make its best efforts to obtain
additional funds by debt from third parties without recourse to its
(b) The Parties agree that that the cost of the Property is Rs.167,42,50,000/-
(Rupees one hundred sixty seven crores forty two lacs fifty thousand)
including the amount of Rs. 15,00,00,000 (Rupees fifteen crores) paid as
security deposit by the Partners (the “Outstanding Partner Amount”) but
exclusive of stamp duty and brokerage. Pursuant to the partial funding as
contemplated under Clause 1.22(1)(a), a further amount of Rs. 55,25,02,500
(Rupees fifty five crores twenty five lacs two thousand five hundred) will be
due and payable to the Seller upon the delivery of complete possession of
the Property, .
(c) In the event that the Company is not able to raise funds in the manner
contemplated in Clause 1.23(1)(a), for the purposes mentioned in Clauses
1.23(1)(a) and 1.23(1)(b), the Investor and the Partner shall contribute the
same in the form of additional equity funding to the extent and in the manner
contemplated in Clause 13.
The Parties agree that the Outstanding Partner Amount has been paid by the Partner
as a security deposit to enable the purchase of the Property and the Company shall
refund this amount in full within a period of 4 (four) days from the Closing Date.
The Company shall have its financial year beginning on the first day of April of a
calendar year and ending on the last day of March in the succeeding calendar year,
unless otherwise mutually agreed between the Parties in writing (“Financial Year”).
1.26 Auditors
The Company shall adopt the GAAP in relation to its financial statements.
(a) The Company shall maintain proper books of account and records in order to
provide financial statements drawn up in compliance with all relevant Indian
(b) The Partner shall procure that the Company shall promptly provide to each
Director:
(c) The Partner agrees and undertakes to keep confidential and shall procure
that its Representatives (as hereinafter defined) will provide such information
on strictly a need to know basis, keep confidential at all times all information
and documents under Clause 1.28(1)(b) and shall not use or disclose such
information for any purpose, except with the prior written consent of the
Investor.
(d) The Investor shall have the right (but not the obligation), to appoint the Chief
Financial Officer (“CFO”), who shall be responsible for the day to day
financial management of the Company and will be a joint signatory of the
Company. In the event that the Company has not appointed a CFO as above,
the Investor shall have the right to appoint a qualified and competent person
to act as the Financial Consultant to the Company (“Financial Consultant”).
The Partner and the Company shall cause the Auditor to co-operate with and
provide any information requested by the Financial Consultant. At the sole
option of the Investor, the Financial Consultant may have joint signing
authority for any release of moneys by the Company. The cost of the
Financial Consultant shall be paid for by the Company. The Financial
Consultant shall be actively involved with the day to day activities of the
Company.
(b) All the proceeds received from the sale / lease of units in the Project will be
received by way of cheques favouring the Collection Account which will be
set up by the Parties in the manner contemplated under the Subscription
Agreement with a reputed bank and shall be appropriately accounted for. The
Investor and the Promoters will be joint signatory for the Collection Account.
The Collection Account will be used only for distributions to Shareholders and
for funding the Construction Account.
8. DISTRIBUTION OF RETURNS
(a) The Board shall adopt a policy of distributing to the Shareholders, on a pari
passu basis in proportion to their respective Shareholding in the Company, all
distributable cash balances available to the Company generated by the
operations of the Business, consistent with prudent financial management
and having regard to Applicable Law, the Business Plan, taxation, working
capital and operational requirements of the Company and the terms of any
financing agreements under which the Company has borrowed funds in
relation to the Project (“Available Surplus”). The Investor and the Partner
will co-operate to ensure judicious use of mechanisms including buy back of
Shares, capital reduction, liquidation or any other means permitted by
applicable Laws, for the purpose of making the distributions to the
Shareholders to minimise the incidence of taxes on the Company and on the
Shareholders. Each Party shall be solely liable or responsible to bear and
pay the corporate income tax or any other tax payable on their respective
incomes, earned by them by way of dividend or otherwise, from out of the
business of and/or distributions by the Company.
(b) The Board may, subject to and in accordance with applicable Laws, at any
time declare and pay interim dividends to the Shareholders which shall be
paid from the Company’s net profits determined from the most recent interim
un-audited financial statements of the Company.
1.31 Promote
Such that the returns to the Investor and the returns to the Partner stand in
the ratio of 90:10; and
Such that the returns to the Investor and the returns to the Partner stand in
the ratio of 67:33.
Post the achievement of the First Hurdle, the Company shall take all steps to
vary the rights attached to the Class B Shares in order that the distributions
calculated in accordance with this Clause 1.31(1)(a)(ii) are achieved.
Notional Promote
(b) Upon Completion of the Project, in the event that any part of the Project
remains unsold, then the rights of the Class B Shares will be varied such that
the Class B Shares will be entitled to a higher proportion of the distributions
by the Company computed in the proportion of Notional Partner Promote to
the Deemed Free Cash Flows. Upon the computation of the Notional Partner
Promote, all distributions to be made to the Partner will be 10% plus the
Notional Partner Promote and the remainder shall be distributed to the
Investor.
(aa) all amounts available for distribution to the Investor and the
Promoter at the time of computation of the Deemed Free
Cash Flows; plus
(ii) “Notional Partner Promote” shall mean Deemed Free Cash flows
as reduced by Deemed Investor IRR and thereafter multiplied by
23%.
Upon the computation of the Notional Partner Promote, all distributions to be made to
the Partner will be 10% plus the Notional Partner Promote and the remainder shall be
distributed to the Investor.
The Board shall be responsible for the overall direction, supervision and management
of the Company. The Parties shall exercise their respective voting rights and shall
cause the Directors nominated by them to exercise their powers, in a manner so as to
ensure compliance with this Clause 9.
(a) The office of Chairman shall be held by a Partner Director (“Chairman”). The
Chairman shall have no casting vote either in a general meeting of the
Company or at any meeting of the Board. In addition to the duties under the
Act, the Chairman shall be entitled to preside over all meetings of the Board
or committees thereof and at all shareholder meetings of the Company. In the
absence of the Chairman at a meeting of the Board or committee or the
shareholders, the Directors present shall nominate one of the Partner
Directors to act as the Chairman of such meeting.
(a) On Closing, and so long as the Investor and the Partner hold any shares in
the Company, the Board shall consist of atleast 5 (five) Directors, of whom 3
(three) shall be Investor Directors and 2 (two) shall be Partner Directors. The
Investor shall have the option to nominate 1 (one) more Investor Director to
the Board, in which case the Board shall consist of 6 (six) Directors, of whom
4 (four) shall be Investor Directors and 2 (two) shall be Partner Directors.
(b) The Investor shall, additionally, be entitled to nominate and maintain one
non-voting observer on the Board. The observer shall be entitled to receive
notice of and attend all Board meetings, but shall not be entitled to vote at
such meetings. Further, the observer shall be provided all information and
materials provided to a Director, whether under this Agreement or under
applicable Law.
(a) The Directors shall not be required to hold any qualification Shares.
(b) Each Director shall be entitled to cast 1 (one) vote at any Board meeting and
in respect of all circular resolutions proposed to be passed.
(a) The Partner and the Investor shall be entitled by notices in writing to the
Company at its registered office to appoint, remove or replace their
respective nominee Directors. In the event of a casual vacancy arising on
account of the resignation of a nominee Director or the office of a nominee
Director becoming vacant for any reason, the Party who has appointed such
Director shall be entitled to fill the vacancy. The Parties shall exercise all their
(b) The Party removing or replacing its nominee Director shall indemnify and
keep indemnified the Company against any liability suffered by the Company
a result of such nominee Director’s removal from office or replacement.
(c) Each Party shall be entitled in accordance with the Act, through its nominee
Director, to nominate an alternate in his place, and the Board shall, on receipt
of a notice in this regard, appoint such nominated person as an alternate
Director. The Directors shall also be entitled to remove and replace their
nominated alternate Director and nominate another in his place.
(d) An alternate Director shall be entitled to receive notice of all meetings of the
Board, to attend and vote at any such meeting at which the Director for whom
he acts as an alternate is not personally present, to exercise and discharge
all the functions, powers and duties as a Director.
(e) An alternate Director shall, in addition to any ground under the Act on which
he vacates his office, automatically vacate his office as an alternate Director
if the Director for whom he is appointed ceases to be a Director.
(a) The Partner and the Company shall jointly establish a project control group
(“PCG”) comprising 2 representatives of the Company, who will be nominated
by the Investor, and 2 of the Partner.
(b) The Partner and the Company shall agree upon a meeting schedule for the
PCG ensuring that meetings are held at least once every calendar month
through the duration of the development of the Project.
(c) The PCG will be a forum for the discussion, review and approval by the SPV
of matters of cost, design, quality and programme including, and the PCG
report shall include but not be limited to, the following:
(d) The PCG shall issue a monthly report in a format satisfactory to the Investor.
All policy decisions regarding lease or sales including pricing in relation to the Project
shall be taken by the Partner and the Investor (it being clarified that these decisions
shall be applicable for an identified period of time and not on a case to case basis) at
Board meetings or as may be mutually agreed upon.
1.39 The Board shall meet at such intervals as may be necessary to discharge its duties,
but in any case in accordance with the Act, the Articles and this Agreement. In
addition to physical meetings of the Board, the Board may, subject to applicable Law,
resolve and act by circulation of resolutions.
1.40 At least 5 (five) Business Days’ prior written notice of each Board meeting shall be
given to each Director at his address in India or elsewhere notified to the Company in
writing, unless in any particular case all Directors agree in writing to a shorter notice
period. Every such notice shall contain an agenda identifying sufficient details of the
business to be transacted with all necessary accompanying papers and no item shall
be transacted at any such meeting of the Board unless the same has been stated in
full and in sufficient detail in the notice convening the meeting, provided however, that
with the unanimous consent of all the Directors present at the meeting, any item or
business, other than items covered under the affirmative rights referred to Clause 12,
not included in the agenda may be transacted at the meeting.
1.41 The quorum at meetings of the Board shall be 2 (two) Directors, one of whom shall be
an Investor Director. If there is no quorum within 30 (thirty) minutes of the time
specified in the notice calling the Board meeting, the meeting shall stand adjourned to
the same day of the immediately following week at the same time and place (if such
day is not a Business Day, then the meeting shall be held on the next Business Day
at the same time and place). If there is no quorum within 30 (thirty) minutes of the
appointed time for such adjourned meeting, then the Directors present (not being less
than two) shall constitute quorum. The meetings will be subject to the provisions of
Clause 12 and the rights of the Investor therein.
1.42 The CFO or the Financial Consultant appointed by the Investor may be invited, at the
sole discretion of the Investor to be present in any meeting of the Board, committee
or Shareholders, but shall not be entitled to vote.
1.43 Notwithstanding the provisions of Clause 1.40, to the extent permitted by the Act, a
resolution by circulation shall be as valid and effectual as a resolution duly passed at
a meeting of the Directors called and held provided it has been circulated in draft
form, together with the relevant papers, if any, to all the Directors and has been
approved by a majority of the Directors entitled to vote thereon. It is clarified that in
case of a circular resolution, the requirement of affirmative votes, as provided in
Clause 12, shall be applicable.
1.44 Subject to Clause 12, all resolutions in relation to the Company which are required by
applicable Laws to be referred to or passed by Shareholders must be passed by the
majority required under applicable Laws for such matters in respect of which a
resolution is required.
1.46 The quorum for a general meeting of the Shareholders shall be arrived at in
accordance with the Act, provided that there shall be no quorum unless the Investor
is present throughout the meeting. If there is no quorum within 30 (thirty) minutes of
the time specified in the notice calling the Shareholders’ meeting, then the meeting
shall stand adjourned to the same day of the immediately following week at the same
time and place (if such day is not a Business Day, then the meeting shall be held on
the next Business Day at the same time and place). If there is no quorum within 30
(thirty) minutes of the appointed time for such adjourned meeting, then the
Shareholders present shall constitute quorum, provided that no matters requiring the
affirmative votes of the Investor pursuant to Clause 12 shall be discussed or voted
upon at any Shareholders’ meeting which the Investor’s representative shall not have
attended.
1.47 The Company shall not take any of the following actions unless such actions have
been approved by an Investor Director/ authorised representative, and if such matter
requires the approval of the Shareholders of the Company, unless the Investor shall
have voted in favour of the relevant resolution. Notwithstanding any provision to the
contrary in this Agreement, no resolution passed with respect to any of the following
matters shall be valid unless it has received the affirmative vote of an Investor
Director/ authorised representative:
In respect of the matters set out above, all decisions of the Company, insofar as the
decisions relate to any subsidiary of the Company will not be valid, unless the
Investor Director consents to the same; provided always that the Company itself has
the requisite power and authority to decide such matter in respect of such subsidiary,
whether by reason of majority ownership or control of the board of directors of the
subsidiary or otherwise.
1.48 It is agreed that the Company is likely to require a sum of Rs. 24,87,95,000 (Rupees
twenty four crores eighty seven lakhs ninety five thousand), which will be contributed
by the Investor and the Partner in the ratio of 90:10. The Investor and the Partner
have already brought in this amount by way of Investor Share Application Money and
Partner Share Application Money. Upon receiving written notice from the Investor, the
Company shall issue 45,000 (forty five thousand) Class A Equity Shares to the
Investor and 5,000 (five thousand) Class B Shares to the Partner. In the event that
the notice as contemplated under this Clause is not issued by the Investor within 5
(five) months from the date of Closing, the Investor Share Application Money and the
Partner Share Application Money shall be refunded forthwith.
1.49 It is agreed that should the Company require an additional equity funding for the
purposes contemplated in Clause 1.23 above, subject to a maximum of
Rs. 50,00,00,000 (Rupees fifty crores), such requirement would be funded by the
Investor and the Partner in the ratio of 90:10, and failure by the Partner to fund the
above requirement would amount to a default under Clause 15 of this Agreement.
1.51 Any such additional equity capital infusion into the Company for Additional Shares will
be funded by the Investor and the Partner in proportion to their respective ownership
percentages in the Company. In case one of the Parties is unable to fund its
proportionate share, the other Party shall have the right to fund such shortfall at a
33% discount to the FMV and the shareholding of the non-funding Party in the
Company shall be accordingly diluted. The Partner agrees that the Investor shall
have the discretion to nominate its Affiliate or a third party to subscribe to such
additional Shares.
1.52 Transfers
The Partner agrees that so long as the Investor holds any Shares in the Company,
neither the Partner nor any of its Affiliates shall directly or indirectly Transfer any
Shares without the prior written consent of the Investor. The Investor agrees that till
the Completion, it shall not transfer its shares to another real estate developer.
(a) Post Completion, the Investor shall have the right but not the obligation to
purchase all but not less than all the shares held by the Partners based on
the FMV (the “Call Option”).
(b) In such an event, the Investor shall send a written notice (the “Call Notice”)
to the Partner, informing the Partner of its intention to purchase the Shares
held by the Partner. Upon receipt of the Call Notice by the Partner, the
Partner and the Investor shall forthwith (not being later than 15 days from
receipt of the Call Notice) complete all steps as may be necessary to give
effect to the proposed transfer of Shares as specified in the Call Notice.
(a) Post Completion, if the Investor or its Affiliates intend to sell their Shares to
any non affiliated third Party, the Investor will have the right to require the
Partner to sell its entire shareholding in the Company to the third party at the
same terms as those being offered to the Investor or its Affiliate. This right
shall be exercised by the Investor only in the event of the Investor or its
Affiliates selling and / or transferring all and not less than all its Shares in the
Company.
(b) In such an event, the Investor shall send a written notice (the “Drag Along
Notice”) to the Partner, informing the Partner of its intention to sell its Shares.
Upon receipt of the Drag Along Notice by the Partner, the Partner and the
Investor shall forthwith initiate and complete such steps (not being later than
15 (fifteen) days from receipt of the Drag Along Notice) initiate such steps as
may be necessary for the determination of FMV of the Partner Shares, and if
the price offered to the Investor or its Affiliates is greater than or equal to
FMV of the Partner Shares, then the Partner shall initiate all such steps as
may be necessary to give effect to the proposed transfer of Shares as
specified in the Drag Along Notice, within a period of 15 (fifteen) days from
the date of determination of the FMV of the Partner Shares.
(d) All Share certificates issued to the Shareholders by the Company, shall bear
the following legend, as well as any other legends required under applicable
Law:
(i) delay of more than 6 (six) months beyond the Target Project
Completion Date;
(iii) failure of the Company to obtain all the approvals necessary for the
proposed development of the first phase of the Project over that
(iv) failure of the Company to obtain all the approvals necessary for the
proposed development of the second phase of the Project over that
portion of the Property over which possession is to provided within 12
(twelve) months from the execution of the Conveyance Deed, within
9 (nine) months from the date on which possession is given to the
Company; and
(a) Upon the occurrence of an event of default under Clause 1.56, and unless
such default is waived by the Investor, all rights conferred on the Partner in
the Company, whether by virtue of this Agreement or otherwise, shall be
terminated and Partner shall be required to sell all shares held by it to the
Investor or a nominee of the Investor at a price being an amount equivalent
to 75% (seventy five percent) of the FMV of the Partner Shares.
(b) Any stamp duty or transfer taxes or fees payable on the transfer of the
Shares by the Partner shall be borne and paid by the Partner.
(c) For the purposes of this Agreement, “FMV” shall mean the fair market value
of Shares as determined by a firm of chartered accountants of recognised
international standing (the “Valuers”) as set forth in this Clause and based,
inter alia, on a valuation of the freehold and leasehold interest of all
immoveable property owned or used by the Company, as determined by a
reputed international property consultant. The FMV Price shall be determined
on the basis of a whole company valuation. The Partner and Investor shall
each at their cost appoint a Valuer and, subject to the foregoing sentence,
the Valuers shall independently determine the value of the Shares within a
period of 30 (thirty) days of the date of their appointment. In the event
Valuers do not agree upon an FMV Price, the FMV Price would be the
average of the values for the FMV Prices calculated by the Valuers, if all such
FMV Prices are within a range of (i.e., above or below) 5% (five percent) of
the average of the FMV Prices calculated by the Valuers. If any of the FMV
Prices calculated by a Valuer is not within a range of above or below 5% (five
percent) of the average of the FMV Prices calculated by the Valuers, then the
Valuers would have a further 15 (fifteen) days to agree to a mutually
acceptable FMV Price. In the event the Valuers fail to agree on a mutually
acceptable FMV Price, then the Parties shall jointly appoint another valuer
(“Final Valuer”) within a period of 14 (fourteen) days thereafter. The cost of
the Final Valuer will be by the Parties that originally appointed the Valuers in
proportion to shareholding. The Final Valuer will provide its determination of
the FMV Price on the same basis as set out herein within a period of 30
(thirty) days. The FMV Price determined by the Final Valuer shall be final
and binding on the Parties. The Valuer and the Final Valuer shall act as
experts and not as arbitrators.
The provisions of Clause 14 shall not apply in case of an exercise of rights under this
Clause 1.57.
(a) In the event the Partner or an Affiliate of the Partner intends to have its
shares listed on any recognised stock exchange, the Partner shall intimate
(b) On such a merger being contemplated, in order for the share swap ratio
for the merger to be determined, the shares of the Company and the Listing
Entity shall be valued using a common methodology.
(c) The scheme of merger shall be jointly drafted by the Company and the
Listing Entity and the Parties shall use their best efforts to ensure that a
scheme for merger is structured in a manner that is most tax efficient for the
Investor and its Affiliates.
(a) The Investor will not be required, solely as a result of its status as an
investor in the Company, to (a) file an income tax return in any jurisdiction in
respect of income derived from the Company (other than in connection with
an application for a refund of, benefit of a tax treaty for, exemption from or
reduced rates in withholding or similar taxes), or (b) to pay tax in such
jurisdiction (other than tax withheld at the source of payment) in respect of
income derived from the Company.
(b) Until the Investor holds any shares in the Company, the Company is
treated as a corporation for U.S. federal income tax purposes.
(a) Neither the Company, nor any other Party hereto, to the knowledge of the
Company, its Directors, officers, agents, employees or Affiliates, is aware of
or, has taken any action or will take any action, directly or indirectly, that
would result in a violation by such persons of the (United States of America)
Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder; and the Company, the Subsidiaries and, to the
knowledge of the Company, its affiliates have instituted and maintain, and will
(b) The operations of the Company and each Party are, have been, and will
be, conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Bank Secrecy Act and
Internal Revenue Code, as amended, the money laundering statutes of all
applicable jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”); and
no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator or non-governmental authority involving the
Company or any of the Subsidiaries with respect to the Money Laundering
Laws is pending or, to the Company’s knowledge, threatened.
(c) Neither the Company or any other Party hereto, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the Proposed Investment, or
lend, contribute or otherwise make available such proceeds to any affiliate,
joint venture partner or other person or entity for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered
by OFAC, including any action with respect to any "Specially Designated
Nationals and Blocked Persons”, the list of which can be found at:
http://www.ustreas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf.
(d) The Company shall (i) keep accurate books and records and all
payments to third parties shall be supported by written detailed invoices, and
(ii) maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed and access to assets
permitted only in accordance with management’s authorisation and that
transactions and assets are recorded properly.
1.60 The Company has established and will continue to maintain policies, procedures and
controls that are reasonably designed to prohibit dealings with persons and countries
that are subject to trade sanctions and economic embargo programs enforced by the
United States Treasury Department’s Office of Foreign Asset Control. In addition, the
operations of the Company and its subsidiaries are, have been, and will be,
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of Indian law, as amended, the money laundering statutes, the
rules and regulations there under and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency in India.
1.61 The Partner and the Company agree to make or cause to be made a U.S. entity
classification election Form 8832 as requested by the Investor for the Company to be
treated as an entity that is fiscally transparent for U.S. Federal income tax purposes
1.62 If any dispute arises between the Parties hereto in relation to this Agreement, in
connection with the validity, interpretation, implementation or alleged material breach
of any provision of this Agreement or regarding a question as to whether the
termination of this Agreement has been valid, the Parties shall endeavour to settle
such dispute amicably.
1.63 In case of failure by the Parties to resolve the dispute in the manner set out above
within 30 (thirty) days from the date when the dispute arose, the dispute shall be
referred to a panel of three arbitrators, with the Partner appointing one arbitrator, the
1.64 The arbitrator's award shall be substantiated in writing and the Parties shall submit to
the arbitrators’ award which shall be enforceable in any competent Court of Law.
1.65 The provisions of this Clause shall survive termination of this Agreement.
19. NOTICES
1.66 Any notice and other communication provided for in this Agreement shall be in writing
and shall be first transmitted by facsimile/ electronic transmission and then confirmed
by internationally recognised courier service or registered mail, in the manner as
elected by the Party giving such notice to the following addresses:
1.67 All notices shall be deemed to have been validly given on (i) the Business Day
immediately after the date of transmission with confirmed answer back, if transmitted
1.68 Any Party may, from time to time, change its address or representative for receipt of
notices provided for in this Agreement by giving to the other Parties not less than 30
(thirty) days prior written notice.
20. MISCELLANEOUS
(a) it is duly registered and validly existing under relevant applicable Laws;
(b) it has the corporate power or otherwise has the legal capacity to enter into
and perform its obligations under this Agreement and to give effect to the
transactions contemplated in this Agreement and the Subscription
Agreement;
(c) this Agreement when executed shall constitute a valid and binding obligation
on the Parties. The Parties shall take all actions as may be necessary
(whether corporate, regulatory or otherwise) in an expeditious manner, to
facilitate the transactions contemplated under this Agreement and the
Subscription Agreement, within the timeframes stipulated for the relevant
purposes; and
(d) neither the execution and performance by it of this Agreement nor any
transaction contemplated under this Agreement will violate in any respect any
provision of:
1.70 INDEMNIFICATION
The Partner shall keep the Investor, its constituents and its nominees on the Board
(collectively the “Indemnified Parties”) fully indemnified and hold them harmless
against any loss or liability, costs or claims, actions or proceedings, that may arise
against the Indemnified Parties by reason of any failure on the part of the Partner or
the Company to discharge their liabilities/obligations under this Agreement or on
account of any acts of omissions or commissions in relation to the Business, the
Property or the Project. Further the Partner alone shall be solely and exclusively
liable and responsible to regulatory/ statutory authorities for the compliance of any of
the statutory requirements in relation to the Project, and shall keep the Indemnified
Parties indemnified and hold them harmless against any loss or liability, costs or
claims, actions or proceedings that may arise in this regard.
1.71 Confidentiality
The Parties agree to keep the terms and conditions of this Agreement and all related
documents (including the identity of any Party hereto) confidential. Provided that
nothing contained above shall apply to any disclosure (i) for the purpose of giving
effect to the terms and conditions of this Agreement or related documents, or (ii) in
The Parties shall not make, and shall not permit any of their respective directors,
managers, employees, officers, or Affiliates, legal, financial and professional advisors
and bankers to make any public announcement about the subject matter of this
Agreement or the nature of the relationships or arrangements hereunder or the affairs
of a Party from time to time, whether in the form of a press release or otherwise,
without first consulting with each of the others and obtaining the other Parties prior
written consent and providing each of the other Parties a reasonable opportunity to
review and comment on any such required disclosure. Notwithstanding the foregoing,
the Parties may mutually agree to a policy or procedure in relation to making a public
announcement from time to time.
The provisions of this Agreement shall, in all respects, be governed by, and
construed in accordance with the laws of India. Subject to Clause 18, each Party
agrees that the courts at Pune shall have the exclusive jurisdiction to settle any claim
or matter arising under this Agreement.
In the event that a Party commits a default of the terms of this Agreement then, the
non-defaulting Parties shall be entitled to such remedies, including remedies by way
of Damages and/or specific performance, as may be permitted under applicable
Laws, in addition to its rights and remedies under this Agreement.
(a) The Partner agrees that it will discharge all its obligations in a timely manner
and that it shall not be entitled to any extension of time whatsoever for the
performance of its obligations, except for a delay in performing its obligations
as regards the development of the Project under Clause 5 on the grounds of
a Force Majeure Event.
(b) The Partner shall be entitled to claim the occurrence of a Force Majeure
Event only if it has promptly notifed the Investor and the Company of the
occurrence of the force majeure event and the effect on its ability to perform
its obligations and the Partner undertakes all efforts to mitigate the impact of
the Force Majeure Event on performance of its obligations under this
Agreement
1.76 Waiver
1.77 Entirety
The Transaction Documents constitute the entire agreement between the Parties with
respect to the subject matter hereof to the exclusion of all other understandings and
assurances, either written or oral, including the Memorandum of Terms executed
between the Company and/or the Partners and the Investor.
1.78 Conflict
In the case of any discrepancy or conflict among the provisions of this Agreement and
the Articles, the provisions of this Agreement shall prevail.
1.79 Assignment
No Party shall be entitled to assign or otherwise deal with this Agreement or any right
hereunder without the prior written consent of each of the other Parties, provided that
the Investor shall be entitled to assign any or all of rights and obligations under this
Agreement to its Affiliate without the prior consent of the other Parties.
1.80 Severability
(a) The Company shall pay the costs and expenses incurred by the Parties in
connection with the entering into and completion of this Agreement.
1.82 Survival
The Provisions of Clauses 1, 15, 18, 19 and 20 shall survive the expiry or termination
of this Agreement.
1.83 Counterparts
This Agreement may be executed in any number of counterparts and all of which
taken together shall constitute one and the same instrument. The Parties may enter
into this Agreement by signing any such counterpart.
1.84 Amendment
1.85 Relationship
Nothing in this Agreement shall constitute a partnership between any of the Parties or
be deemed to constitute a Party to be the agent of any other Party for any purpose
___________________________________
___________________________________
Name :
Name : Mahesh Bansilal Laddha
Designation :
Designation :Director
BY THE “Company”
___________________________________
Designation :Director
All that piece or parcel of land, hereditaments and premises admeasuring 41,952.84 sq. mtrs.
(Forty One Thousand Nine Hundred and Fifty Two decimal eight four Square Meters) or
thereabouts of land located at Milepost No. 4, Ahmednagar Road, Pune 411 014, comprising
of portions admeasuring 38,691.44 square meters and 1,449.40 square meters out of land
bearing Survey Number 207 Hissa No. 1A, Village Lohegaon and a portion admeasuring
1,812 square meters out of the land bearing Survey Number 33 Hissa No.2A/1, Village
Vadgaonsheri both the said Villages situated within the Registration Sub District of Taluka
Haveli, District Pune and within the limits of the Municipal Corporation of Pune and falling in
the “industrial” zone under the Development Plan for the City of Pune
1. (the “Company”);
AND
WHEREAS:
A. The Selling Shareholder[s], the Company [and the Continuing Shareholder] are
parties to a Shareholders Agreement dated • (the “Agreement”).
B. The New Shareholder proposes to purchase Shares of Rs. 10 each in the capital
of the Company from the Selling Shareholder in terms of a dated on or about
executed between them.
C. This Deed is made by the New Shareholder in compliance with the Agreement.
Capitalised terms used but not defined in this Deed will have the respective meanings
given to them in the Agreement.
1. The New Shareholder confirms that it has been supplied a complete copy of the
Agreement on or prior to the execution of this Deed and has fully understood the
terms thereof.
2. The New Shareholder agrees to hold the Shares referred to in recital B above subject
to the Agreement and the Memorandum and Articles.
3. The New Shareholder undertakes to the Continuing Shareholders and the Company
to be bound by the Agreement in all respects as if the New Shareholder was a party
to the Agreement and named in it as a Shareholder and to observe and perform duly
and punctually all the provisions and obligations of the Agreement applicable to or
binding on it under and in accordance with the Agreement.
5. This Deed is made for the benefit of (i) the Parties to the Agreement, and (ii) every
other person who after the date of the Agreement (and whether before or after the
execution of this Deed) assumes any rights or obligations under the Agreement or
adheres to it.
7. This Deed may be executed in any number of counterparts, all of which taken
together shall constitute one and the same deed and any party may enter into this
deed by executing a counterpart.
8. This Deed is governed by and shall be construed in accordance with Indian law.
IN WITNESS WHEREOF this deed has been executed and has been delivered on the
date which appears first on page 1.