EXHIBIT 10.67
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THIS AGREEMENT is made at Mumbai as of the day 23 of July 2002 AMONG:
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED, a company incorporated under
the laws of India and having its registered office at 1st Floor, Sakhar Bhavan,
Nariman Point, Mumbai 400 021, ("PURCHASER" which expression shall unless
repugnant to the context thereof include its successors and permitted assigns);
and
PIONEER INVESTMENT MANAGEMENT, INC. a company incorporated under the laws of
Delaware and having its principal office at 60, State Street, Boston,
Massachusetts, U.S.A (hereinafter referred to as "VENDOR" or "PIONEER" which
expression shall unless repugnant to the context thereof include its
successors).
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WHEREAS:
A. The Pioneer ITI AMC Limited a company incorporated under the Companies Act
1956 and having its registered office at Century Centre 75 TTK Road,
Chennai - 600018 (the AMC), is the asset management company to the Pioneer
ITI Mutual Fund, a mutual fund set up and registered with the Securities
and Exchange Board of India ("SEBI") under the SEBI (Mutual Funds)
Regulations, 1996.
B. The Investment Trust of India Limited, a company incorporated under the
provisions of the Indian Companies Act, 1913 and having its registered
office at "Mashkur", 1, Krishnama Road, Nungambakkam Chennai - 600 034,
India ("ITI") and Pioneer, collectively as on the date hereof hold 95.3 %
of the shares of AMC and the Employee Shareholders hold 4.7 % of the shares
of AMC.
C. Pursuant to a Memorandum of Understanding dated 17th March 2002 entered
into amongst the Purchaser, ITI and Pioneer (the "MOU"), ITI and Pioneer
agreed to sell and the Purchaser agreed to purchase the AMC Shares held by
ITI and Pioneer on certain terms and conditions and the manner set out
herein. It was also agreed that the Trustee Shareholders would be procured
to sell to the Purchaser, or its nominee, the Trustee Company Shares at the
same time or immediately after the Completion.
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D. Simultaneously the Purchaser had also entered into a memorandum of
understanding dated 17th March 2002 with the Employee Shareholders (defined
herein below) of the AMC (the "Employees MOU") for the purchase of their
shares in the AMC.
E. Subsequently the Purchaser also entered into an escrow agreement dated 20th
March 2002 with ITI, Pioneer and the Escrow Agent (the "MOU Escrow
Agreement") and pursuant thereto deposited the MOU Escrow Amount by way of
earnest money with the Escrow Agent on the terms and conditions set out
therein.
F. The Purchaser has conducted a due diligence of the affairs of the AMC and
the Trustee Company pursuant to and in accordance with the terms of the MOU
and is desirous of acquiring the Vendor's AMC Shares held by the Vendor in
the AMC on the terms and conditions set out herein.
G. Simultaneously the Purchaser has also entered into separate Share Purchase
Agreements each dated 23 July 2002 with ITI and the Employee Shareholders
for the purchase of the respective shares held by them in the AMC.
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NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following meaning:
"ACCOUNTS" means the unaudited balance sheet of the AMC and its Subsidiary,
for the period ending the Accounts Date which shall be audited prior to
Completion, and the audited statements of profit and loss and cash flows of
the AMC and its Subsidiary, ended on such date and as disclosed;
"ACCOUNTS DATE" means March 31, 2002;
"AFFILIATE" of a Person (the "Subject Person") means (i) in the case of a
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 a Subject Person that is a natural Person, any other
Person that, either directly or indirectly through one or more intermediate
Persons, is controlled by the Subject Person. For purposes of this
definition, "control" means the power to direct the management or policies
of a Person, whether through the ownership of over 50% of the voting power
of such Person, through the power to appoint over half of the members of
the board of directors or similar governing body of such Person, through
contractual arrangements or otherwise;
"AMC SHARES" means collectively the:
(i) Vendor's AMC Shares; and
(ii) ITI's AMC Shares; and
(iii) Employee Shares;
"AMC PURCHASE PRICE" means Rs. 1,038,676,652.00 (Rupees One thousand thirty
eight million six seventy six thousand six hundred fifty two only) payable
to the Vendor;
"ARBITRATION BOARD" shall have the meaning set forth in Clause 14.2;
"ASSETS" means all assets, rights and privileges of any nature and all
goodwill associated therewith of the AMC, all Intellectual Property,
Equipment and Software, and rights in respect of the Immovable property;
"BASIC DOCUMENTS" means, collectively, the Charter Documents, the
Memorandum of Association and Articles of Association of the Trustee
Company, the Investment Management Agreement dated 23rd July 1993
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executed amongst the AMC and the Trustee Company, the Trust Deed dated 29th
July 1993 amongst ITI and the Trustees including the variations thereto,
and the Custodian Agreement dated 19th April 2001 amongst the AMC and the
Trustee Company and Deutsche Bank AG;
"BOARD" means the board of directors of the AMC;
"CLAIMS" means the reimbursement and or payment of claims that have arisen
or may arise to the AMC, and which have been agreed to be set off against
the Retention Amount in accordance with the SPA Escrow Agreement;
"CHARTER DOCUMENTS" means the Articles of Association and the Memorandum of
Association of the AMC;
"COMPLETION" means the completion of the sale and purchase of the Vendor's
AMC Shares pursuant to Clause 4.1, which completion shall occur
simultaneous with the completion of sale and purchase of the ITI's AMC
Shares, the Employee Shares and the Trustee Company Shares;
"COMPLETION DATE" shall have the same meaning as set out in Clause 4;
"CONTRACTS" means all contracts, agreements, licenses, engagements, leases,
financial instruments, purchase orders, commitments and other contractual
arrangements entered into by the AMC;
"DISCLOSURE LETTER" shall have the same meaning as ascribed to in Clause
6.3;
"EMPLOYEE SHAREHOLDERS" means the other shareholders of the AMC who hold
shares of the AMC and whose names have been listed in Schedule 1 hereto;
"EMPLOYEE SHARES" means 3,69,600 fully paid equity shares of Rs 10/- each,
representing 4.7% of the issued capital of the AMC, held by the Employee
Shareholders;
"ENCUMBRANCE" means (i) any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, deed of trust, title retention,
security interest or other encumbrance of any kind securing, or conferring
any priority of payment in respect of, any obligation of any Person,
including without limitation any right granted by a transaction which, in
legal terms, is not the granting of security but which has an economic or
financial effect similar to the granting of security under applicable law,
(ii) any proxy, power of attorney, voting trust agreement, interest,
option, right of first offer, or refusal or transfer restriction in favour
of any Person, and (iii) any adverse claim as to title, possession or use;
"EQUIPMENT" means all the plant and machinery, tools and equipment,
vehicles and office furniture, computer equipment (including without
limitation servers, personal computers, mainframes, modems, screens,
terminals, keyboards,
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disks, printers, cabling and associated and peripheral electronic
equipment) and other tangible assets, but excluding Software;
"ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior Partners,
Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia building, 123
M. G. Road, Mumbai 400 023 (which expression shall mean to include their
respective successors);
"FIPB" means the Foreign Investment Promotion Board of the Ministry of
Industry of India;
"FUND" means the Pioneer ITI Mutual Fund, a mutual fund set up and
registered with the Securities and Exchange Board of India, and includes
all the mutual fund schemes floated there under;
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof; any supranational or trade agency, department, agency or
instrumentality of any government or political subdivision thereof;
departments, bodies, regulatory authorities, government authorities, any
court or arbitral tribunal; and the governing body of any -securities
exchange or other securities self-regulatory body;
"IMMOVABLE PROPERTY" means the immovable properties owned, leased, licensed
and or occupied by the AMC;
"INTELLECTUAL PROPERTY" means all letters patent, trademarks, service
marks, registered designs, domain names and utility models, copyrights,
inventions, confidential information, brand names, database rights,
know-how and business names and any similar rights situated in any country
and the benefit (subject to the burden) of any of the foregoing (in each
case whether registered or unregistered and including applications for the
grant of any of the foregoing and the right to apply for any of the
foregoing in any part of the world) owned by the AMC, Trustee or the Fund;
"IP LICENSES" shall have the meaning set forth in Clause 10.9 of Schedule
3;
"ITI'S AMC SHARES" means, 37,65,762 fully paid equity shares of Rs 10/-
each, representing 47.7 % of the issued capital of the AMC;
"LIABILITIES" means all indebtedness and other liabilities of any nature
whatsoever, actual or contingent, and whether or not of a nature required
to be disclosed in the accounts of the AMC and its Subsidiary;
"LITIGATION" shall have the meaning set forth in Clause 6.3 of Schedule 3;
"MANAGEMENT ACCOUNTS" means the un-audited balance sheet of the AMC and its
Subsidiary and the un-audited statements of income and cash flows for
period ending June 30, 2002;
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"MATERIAL CONTRACTS" shall have the meaning set forth in Clause 7.2 of
Schedule 3;
"MOU ESCROW AGREEMENT" means the escrow agreement dated 20 th March 2002
between the Vendor, ITI, the Purchaser and the Escrow Agent;
"MOU ESCROW AMOUNT" means the rupee equivalent of Rs. 28,27,50,000/-
(Rupees Twenty eight crores twenty seven lakhs and fifty thousand only)
deposited with the Escrow Agent under the MOU Escrow Agreement;
"OWNERSHIP" means, at any time ownership of the Shares on a fully diluted
basis, assuming the exercise, conversion or exchange of all options,
warrants and other securities exercisable for or convertible or
exchangeable into Shares regardless of whether such options, warrants or
other securities are currently exercisable, convertible or exchangeable at
such time;
"PARTIES" means the Vendor and the Purchaser and "PARTY" means any of them;
"PERSON" means any individual, firm, company, Governmental Authority, joint
venture, association, partnership or other entity (whether or not having
separate legal personality);
"PURCHASER'S WARRANTIES" means the representations, warranties and
undertakings of the Purchaser set forth in Schedule 2;
"REGULATIONS" means the SEBI (Mutual Fund) Regulations 1996 and as amended
from time to time;
"RELATED PARTY" means with respect to the AMC or a Subsidiary, as the case
may be, (i) any shareholder of the AMC or such Subsidiary, (ii) any
director of the AMC or such Subsidiary, (iii) any Senior Executive of the
AMC or such Subsidiary, (iv) any Person in which any shareholder, director
or Senior Executive of the AMC or such Subsidiary has any shareholding
interest, other than a passive shareholding of less than 10% in a publicly
listed company, and (vi) any other Affiliate of the AMC or such Subsidiary
or of a shareholder or director of the AMC or such Subsidiary;
"RETENTION AMOUNT" means an amount of Rs. 462,982,500.00 (Rupees Four sixty
two million nine eighty two thousand five hundred only) to be used for
setting off and or reimbursing the AMC against the Claims in accordance
with the SPA Escrow Agreement;
"RETENTION PERIOD" means the period commencing from the Completion and
ending at the later of 30 days after (i) the completion and communication
to the Purchaser of the findings of the SEBI appointed external audit for
the period ending 31st March 2003 or (ii) the statutory annual financial
audit for the financial period ending 31st March 2003, which shall be
completed no later than September 30 2003;
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"Rs." means Indian Rupees, the lawful currency of India;
"SEBI" means Securities Exchange Board of India;
"SENIOR EXECUTIVE" means the employees of the AMC whose names have been set
out in Schedule 4;
"SHAREHOLDERS' AGREEMENT" means the shareholders' agreement, entered into
by the AMC, Pioneering Management Corporation and ITI dated 8th October
1993;
"SHARES" means the equity shares of the par value Rs. 10/- per share in the
issued and paid up capital of the AMC;
"SOFTWARE" means any set of instructions for execution by microprocessor,
irrespective of application, language or medium;
"SPA ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior
Partners, Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia
building, 123 M. G. Road, Mumbai 400 023 (which expression shall mean to
include their respective successors);
"SPA ESCROW ACCOUNT" means the fixed deposit account opened by the SPA
Escrow Agent with the SPA Escrow Bank designated as "Anand S Bhatt a/c
Templeton- Pioneer" in accordance with the terms of the SPA Escrow
Agreement;
"SPA ESCROW AMOUNT" means a sum of Rs. 220,442,758 (Rupees Two hundred
twenty million four forty two thousand seven hundred fifty eight only)
deposited by the Purchaser with the SPA Escrow Agent that shall be an
amount equal to 47.6% of the Retention Amount;
"SPA ESCROW AGREEMENT" means the agreement in an agreed form to be entered
into, on the Completion, by the Purchaser with ITI, the Vendor, The
Employee Shareholders and the SPA Escrow Agent;
"SPA ESCROW BANK" means Citibank NA, D.N. Road, Mumbai 400 001;
"SUBSIDIARY" means any company, partnership or other legal entity in which
the AMC owns, directly or indirectly, greater than 50% of the equity
interest or voting power;
"TAXATION" means all forms of taxation and statutory, governmental, state,
provincial, local governmental or municipal impositions, duties,
contributions and levies of India whenever imposed and whether chargeable
directly or primarily against or attributable directly or primarily to the
AMC or its subsidiary and all penalties, charges, costs and interest
relating thereto;
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"TRANSACTION" means the acquisition of the AMC Shares by the Purchaser and
the Trustee Company Shares by the nominee of the Purchaser;
"TRUSTEE OR TRUSTEE COMPANY" means the Pioneer ITI Mutual Fund Private
Limited a private company incorporated under the Companies Act 1956 and
having its registered address at 117, Nungambakkam High Road, Chennai -600
034 and which is the trustee of the Mutual Fund;
"TRUSTEE COMPANY SHARES" means the shares of the Trustee Company held by
the Trustee Shareholders;
"TRUSTEE SHAREHOLDERS" means the shareholders of the Trustee Company;
"VENDOR'S AMC SHARES": means 37,58,603 fully paid equity shares of Rs 10/-
each, representing 47.6% of the issued capital of the AMC held by Pioneer;
"VENDOR'S WARRANTIES" means the representations, warranties and
undertakings of the Vendor as set forth in Schedule 3;
"WARRANTIES" means collectively the Vendor Warranties set out in the
Schedule 3 and the Purchaser's Warranties set out in Schedule 2 and
"Warranty" means any of them;
"WARRANTY PERIOD" means a period of 2 years from the Completion Date.
1.2 INTERPRETATION
In this Agreement
(a) Any reference herein to any Clause, Schedule, Exhibit or Annex is to
such Clause, Schedule, Exhibit or Annex to this Agreement unless the
context otherwise requires. The Schedules, Exhibits and Annexes to
this Agreement including this interpretation Clause shall be deemed to
form part of this Agreement;
(b) References to a Party shall, where the context permits, include such
Party's respective successors, legal representatives and permitted
assigns;
(c) The headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(d) Unless the context requires otherwise, words importing the singular
include the plural and vice versa, and pronouns importing a gender
include each of the masculine, feminine and neuter genders;
(e) References to the knowledge, information, belief or awareness of any
Person shall be deemed to include the knowledge, information, belief
or
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awareness such Person would have if such Person had made reasonable
inquiries;
(f) Any reference to a statutory provision shall include any subordinate
legislation and such provision as from time to time modified or
re-enacted or consolidated whether before or after the date of this
Agreement so far as such modification, re-enactment or consolidation
applies or is capable of applying to any transactions entered into
under this Agreement prior to Completion and (as from time to time
modified, re-enacted or consolidated) which such provision has
directly or indirectly replaced;
(g) Any reference to "accounts" shall include the directors' and auditors'
reports, relevant balance sheets and profit and loss accounts and
related notes together with all documents which are or would be
required by law to be annexed to such accounts before such accounts
are laid before the company in general meeting in respect of the
accounting reference period in question; and
(h) References to this Agreement shall include the Recitals and Schedules
to it and references to Clauses and Schedules are to Clauses of and
schedules to this Agreement.
2. SALE AND PURCHASE OF SHARES
2.1 Subject to the terms of this Agreement, the Vendor hereby agrees to sell
and the Purchaser agrees to purchase on the Completion Date, the Vendor's
AMC Shares, free from all Encumbrances and together with all rights and
advantages now and hereafter attaching thereto and relying on Warranties
contained in this Agreement.
2.2 Subject to the terms of this Agreement, in consideration for the sale of
the Vendor's AMC Shares, the Purchaser will pay the AMC Purchase Price to
the Vendor in the manner set out hereinafter.
2.3 The Claims shall be adjusted in accordance with the provisions of the SPA
Escrow Agreement. The Parties hereby agree that if any part of the SPA
Escrow Amount remains un-adjusted/un-utilised after the Retention Period
not earmarked for a specific claim under the SPA Escrow Agreement, it shall
paid to the Vendor as an additional purchase price at the end of the
Retention Period together with interest accrued thereon.
2.4 The AMC purchase price may stand increased by the balance of SPA Escrow
Amount, which shall not exceed an amount of Rs. 220,442,758 (Rupees Two
hundred twenty million four forty two thousand seven hundred fifty eight
only) (equivalent of USD 47.6% of 9.5 million), depending upon the
occurrence of the events laid down in the SPA Escrow Agreement, and shall
to that extent be contingent.
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2.5 Within seven (7) days of the satisfaction or waiver of the conditions set
out in Clause 3, the Vendor will cause the meeting of the Board to be
called and the Completion shall occur as indicated in Clause 4.
2.6 On the execution of this Agreement, the Vendor and the Purchaser shall
instruct the Escrow Agent to return the MOU Escrow Amount to the Purchaser
and retain the interest accrued thereon and pay the same to the Vendor in
accordance with clause 4.2.1(v).
3. CONDITIONS PRECEDENT TO COMPLETION
3.1 The obligation of the Purchaser to purchase the Vendor's AMC Shares is
subject to the fulfillment, by the Vendor prior to or simultaneously on the
Completion Date (or at the time specified below), of the following
conditions:
(a) the Vendor's AMC Shares are converted into electronic form and
dematerialized and sufficient evidence have been produced from the
depository in that regards;
(b) a letter from the Depository to the effect that the depository shall,
upon receiving irrevocable instructions from the vendor, transfer the
shares standing in the name of the Vendor to the name of the
Purchaser;
(c) Subject to the Disclosure Letter the Vendor's Warranties remaining
true and correct in all material respects on the Completion;
(d) confirmation from the Vendor that the Shareholders Agreement has been
duly terminated and that there are no surviving obligations or rights
there under;
(e) there having been, since the date of this Agreement:
(i) nomaterial adverse change in the operations, financial
position of the AMC and its Subsidiary or the Fund whether
arising out of additional disclosure notified to the
Purchaser or not; or
(ii) no receipt of any notice of any action or investigation by
any Governmental Authority or any Person which would
restrain, prohibit or otherwise challenge the Transaction;
(f) there being no order of any Governmental Authority, or Court since the
date of this Agreement that has, as against the AMC or the Trustee
Company as the case may be, been instituted or any action or
investigation to restrain, prohibit or otherwise challenge the
Transaction been taken;
g) the Vendor shall have caused the employees of the AMC who have availed
housing loans to execute housing loan agreements in the form agreed;
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(h) the Vendor shall have caused identification of the Assets in relation
to the Fixed Asset Register;
(i) the Vendor having obtained the consent of Unicredito for the sale of
the Vendor's AMC shares to the Purchaser;
(j) all consents and approvals required for the purpose of execution,
delivery or performance and the consummation in each case by the
Vendor, of the Transactions contemplated in this Agreement shall have
been duly obtained;
(k) the Vendor shall have ensured that the Trustee Company has written to
SEBI seeking its confirmation of the Transaction. The Parties hereby
acknowledge that the SEBI "no objection letter" has been procured by
the Purchaser vide letter dated May 7, 2002;
(l) the Vendor shall have caused the AMC to deliver to the Purchaser a
certificate duly certified by its company secretary, dated the
Completion Date, certifying that the conditions set forth in
paragraph(e) and (f) of this Clause 3 have been satisfied;
(m) the Vendor has delivered to the Purchaser a certificate dated the
Completion Date, certifying that the conditions set forth in
paragraphs (a) to (d), and (g) to (k) of this Clause 3.1 have been
satisfied;
(n) the Purchaser having been given a reasonable opportunity to conduct a
limited high level review, the agreed scope of which is set out in
Schedule 4 relating to the AMC prior to Completion, provided such
review shall have been completed at least 2 days prior to the
Completion Date; and
(o) the Vendors shall have caused the AMC to adopt the Accounts.
3.2 The Completion is subject to the fulfillment by the Purchaser, prior to or
on the Completion Date (or at the time specified below), of the following
conditions:
(a) all consents and approvals of, notices to and filings or registrations
with any Governmental Authority or any other Person required pursuant
to any applicable law or regulation of any Governmental Authority, in
connection with the Transaction;
(b) all corporate and other proceedings by the Purchaser in connection
with the Transaction contemplated at or prior to the Completion Date
pursuant to this Agreement shall have been procured, and the Vendors
having received all such counterpart originals and certified or other
copies of such documents as they may reasonably request, including
without limitation a copy of the resolutions of the board of directors
of the Purchaser, and evidencing the approval of the Transaction;
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(c) the Purchaser's Warranties as stated in Schedule 2 remaining true and
correct in all material respects on the Completion; and
(d) the Purchaser has delivered to the Vendor a certificate dated the
Completion Date certifying that the conditions set forth in paragraphs
(a), to (c) of this Clause 3.2 have been satisfied.
3.3 The Vendor hereby undertakes to use its best endeavors to ensure the
satisfaction of each of the conditions set out in Clause 3.1. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Vendor in consultation with the
Purchaser and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.4 The Purchaser hereby undertakes to use its best endeavors to ensure the
satisfaction of each of the conditions set out in Clause 3.2. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Purchaser in consultation with the
Vendor and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.5 The Party responsible for the satisfaction of each condition as specified
in Clauses 3.1 and 3.2 shall promptly give notice to the other Parties of
the satisfaction of the relevant conditions within (2) two Business Days of
becoming aware of the same. If the conditions of the Vendor in Clause 3.1
or those of the Purchaser in Clause 3.2 are not satisfied in full by them
are waived by the Purchaser (incase of Clause 3.1) or the Vendor (in case
of Clause 3.2), by 31st July 2002 or such other extended date as may be
mutually agreed, the Purchaser or the Vendor (as the case may be) may, in
its sole discretion, terminate this Agreement at any time thereafter in
accordance with Clause 10.
3.6 The Purchaser or the Vendor (as the case may be) shall have the sole right
to waive in whole or in part, conditionally or unconditionally, any of the
conditions in Clause 3.1 or Clause 3.2 by notice in writing to the Vendor
or the Purchaser (as the case may be), which shall be deemed notification
to the other parties hereto.
4. COMPLETION AND POST-COMPLETION ACTIONS
4.1 Subject to Clause 3, the Completion shall take place simultaneously with
the Completion of the SPA with ITI and the SPA with the Employee
Shareholders at the registered office of the AMC at Chennai or at Mumbai,
within seven (7) days after the conditions set out in Clause 3.1 and Clause
3.2 are satisfied or
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waived (the "Completion Date") or on such other date and place as the
Parties may agree.
4.2 OBLIGATIONS OF THE PARTIES
Simultaneously on, or before Completion all and not some only of the
following events shall take place:
4.2.1 the Vendor shall:
(i) procure that the written resignations of each of the
directors of the AMC nominated by the Vendor take effect on
the Completion Date, with acknowledgments signed by each of
them in a form satisfactory to the Purchaser to the effect
that he has no claim against the AMC for compensation, for
the loss of office (whether contractual, statutory or
otherwise), redundancy or otherwise except only for any
accrued remuneration and reimbursable business expenses
incurred down to the Completion Date;
(ii) procure that the appointment of the new directors of the AMC
nominated by the Purchaser occurs with effect from the
Completion Date;
(iii) procure that a list of statutory registers maintained by
the AMC, indicating therein the location where they have
been kept, is handed over;
(iv) execute the SPA Escrow Agreement and such other agreement as
may be mutually agreed to give effect to the Transaction;
(v) issue the instruction to the Escrow Agent to release to the
Vendor its proportionate share of interest accrued on the
MOU Escrow Amount till the date of payment;
(vi) deliver signed irrevocable instructions directing the
depository to transfer the Vendor's AMC Shares in to the
depository account of the Purchaser; and
(vii) procure the delivery by the Trustee Shareholder to the
nominee of the Purchaser, the Trustee Company Shares
together with the share transfer forms executed by the
Trustee Shareholders in favor of the Purchaser.
(viii) execute the Deed of Variation effective as of the
Completion Date and such other documents as may be necessary
to transfer the sponsorship and the trusteeship functions
related to the Fund in favor of the appropriate Purchaser
entities and take such actions as may be required for
completing all formalities
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including providing an exit option to the existing unit
holders of the Fund;
4.2.2 the Vendor shall cause the Trustee Shareholders to procure that
as of the Completion:
(i) a meeting of the board of the Trustee Company be held
transferring the Trustee Company Shares in favor of the
nominees of the Purchaser;
(ii) the written resignations of each of the directors of the
Trustee Company take effect on the Completion Date with
acknowledgments signed by each of them to the effect that
either of them has no claim against the Trustee Company for
compensation for the loss of office (whether contractual,
statutory or otherwise), redundancy or otherwise except only
for any accrued remuneration and reimbursable business
expenses incurred down to the Completion Date;
(iii) appointment of the new directors of the Trustee Company
nominated by the Purchaser take effect from the Completion
Date; and
(iv) a list of statutory registers maintained by the AMC,
indicating therein the location where they have been kept,
is handed over.
4.2.3 Simultaneously with the compliance to the satisfaction of the
Purchaser of the provisions in Clause 3.1, 4.2.1 and 4.2.2 on
Completion:
(i) the Purchaser will execute the SPA Escrow Agreement and
deposit the SPA Escrow Amount in the SPA Escrow Account;
(ii) the Purchaser will on the Completion Date pay to the Vendor
the AMC Purchase Price in the manner indicated by the
Vendor; and
(iii) the Purchaser shall offer/have taken irrevocable steps
jointly with the AMC or to offer an exit option to the
existing unit holders of the Fund to redeem their units
without imposition of any exit load in compliance with the
Regulations.
4.3 The Warranties and, subject to the Disclosure Letter, in case of Vendor's
Warranties, all other provisions of this Agreement insofar as the same
shall not have been performed at Completion shall not be extinguished or
affected by Completion, or by any other event or matter whatsoever
(including, without limitation, any satisfaction and/or waiver of any
condition contained in Clause 3.1 or Clause 3.2), except by a specific and
duly authorised written waiver or release by the Purchaser or the Vendor as
the case may be.
15
5. OBLIGATIONS OF THE VENDOR BETWEEN EXECUTION AND COMPLETION
5.1 From the date hereof through to the Completion Date, the Vendor shall cause
the AMC to conduct its business in the ordinary course, in a manner, and
use all reasonable efforts to shall otherwise use all reasonable efforts,
so as to ensure that the Vendor's Warranties shall continue to be true and
correct on and as of the Completion Date, as if made on such date. The
Vendor shall give the Purchaser prompt notice of any event, condition or
circumstance occurring from the date hereof until the Completion Date that
would constitute a violation or breach of any Vendor's Warranty if such
Vendor's Warranty were made as of any date from the date hereof until the
Completion Date, or that would constitute a violation or breach of any
terms and conditions contained in this Agreement.
5.2 The Vendor shall use its reasonable efforts to cause the AMC to preserve
the relationship and goodwill with their clients.
5.3 The Vendor shall cause the AMC to comply in all material respect with all
applicable laws, regulations, and decrees of any court or regulatory body.
5.4 Protective Covenants
5.4.1 The Vendor shall cause in relation to the AMC, the Fund and the
Trustee Company, and covenants with the Purchaser that, without
the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld from the date hereof until the
Completion:
(i) the AMC shall not incur any capital expenditure without the
prior approval from the Purchaser;
(ii) the AMC and Fund shall conduct business in the ordinary
course and shall not incur any revenue expenses other than
in the ordinary course of business;
(iii) the AMC shall not incur any expense or compensation, other
than in the ordinary course of business;
(iv) the AMC shall not release any new product launch or
corporate campaign;
(v) no dividends shall be declared by the AMC or the Trustee
Company;
(vi) no new employee shall be hired and no new position shall be
created in the AMC;
(vii) there shall be no creation of any charge or encumbrance on
the Assets of the AMC or the Fund;
16
(viii) there shall be no change in the composition of the Board
or Senior Executive of the AMC and the Fund, except arising
out of retirement or demise (as the case may be) of such
persons;
(ix) there shall be no borrowing or lending of any sum of money
by the AMC or the Fund;
(xi) the AMC or Trustee Company shall not induce or attempt to
induce the Senior Executives of the AMC to leave the
employment of the AMC (it being understood however that any
director, Senior Executive or personnel may resign of his or
her own volition) or appoint any additional directors,
Senior Executive or otherwise change the roles of the Senior
Executives; or
(xii) the AMC or Trustee Company shall not sell or otherwise
dispose of any material part of its Assets (or any interest
therein) or contract to do so;
(xiii) except for the sale and transfer of shares pursuant to
this Transaction, the AMC or Trustee Company shall not
issue, sell, repurchase, redeem or permit the transfer of or
mortgage, pledge or subject to any lien any shares,
partnership interests or equity interests in the AMC or
otherwise permit any change in its equity structure;
(xiv) the AMC or Trustee Company shall not amend the Basic
Documents or change its financial year;
(xv) the AMC or Trustee Company shall not acquire Assets or any
shares, partnership interests or other equity interests (or
any interest therein) or contract to do so, otherwise than
in the ordinary course of its business;
(xvi) the AMC or Trustee Company shall not enter, terminate,
extend or renew any arrangement, contract or agreement with
any Related Party except as expressly permitted under this
Agreement;
(xvii) the AMC or Trustee Company shall not give any guarantee or
indemnity in favour of any party or give any financial
assistance in any way to any Related Party;
(xviii) the AMC or Trustee Company shall not increase salary or
compensation of any of the employee of the AMC or create,
modify any benefits to the employees of the AMC;
17
(xix) the AMC or the Trustee Company shall not re-appoint their
respective present auditors at their respective annual
meetings for the financial year ending 31st March 2002.
All requests for approvals pursuant to this Clause shall be made to the CEO
of the Purchaser by the AMC, the Trustee Company or the Fund, as the case
may be, and such approval shall be given within a period of two (2) working
days from the date of such request.
5.5 The Vendor acknowledges that the above provisions of this Clause are no
more extensive than is reasonable to protect the Purchaser of the Vendor's
AMC Shares and the Trustee Company Shares.
5.6 Each of the restrictions in this Clause 5.4 shall be enforceable by the
Purchaser independently of each of the others and its validity shall not be
affected if any of the others is invalid; if any of those restrictions is
void but would be valid if some part of the restrictions were deleted the
restriction in question shall apply with such modification as may be
necessary to make it valid.
5.7 The Purchaser shall be entitled from the date hereof through to the
Completion Date to depute one or more of its officers to over see and
monitor the operations of the AMC and the Fund.
6. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Vendor hereby represents, warrants and undertakes to the Purchaser for
the period prior to this Agreement and until the expiry of the Warranty
Period, in relation to itself, the AMC, it's the Subsidiary and the Fund in
the terms set forth in Schedule 3, and acknowledges that the Purchaser in
entering into this Agreement relies on such Vendor's Warranties.
6.2 The Purchaser hereby represents, warrants and undertakes to the Vendor in
the terms set forth in Schedule 2 and acknowledges that the Vendor is
entering into this Agreement relying on such Purchaser's Warranties.
6.3 The Vendor's Warranties are subject to the matters disclosed in writing to
the Purchaser under letter dated July 23, 2002, addressed by Vendor, ITI
and the Employee Shareholders, and accepted and confirmed by the Purchaser.
The said letter alongwith its annexures is referred to as the "Disclosure
Letter". The matters disclosed in the Disclosure Letter shall be acceptable
to the Purchaser and shall be exceptions to the relevant Vendor's Warranty
and wherever the term `except as disclosed' is used in Schedule 3 it shall
mean as disclosed in the Disclosure Letter. The Purchaser shall not make
any Claims under the Vendor Warranties in relation to the items specified
in the SPA Escrow Agreement.
6.4. The Vendor shall be entitled to make further additions to the Disclosure
Letter for events arising after the date hereof, at any time upto the
Completion Date. Provided that any additions to the Disclosure Letter as
contemplated in this
18
Clause 6.4 shall not be effective until after the Vendor has notified such
addition in writing to the Purchaser.
6.5 For the avoidance of doubt, each Vendor's Warranty is qualified by the
expression "to the best of the Vendor's knowledge after the Vendor having
exercised due care and made reasonable enquiry" and does not relate to any
forecasts, budgets and estimates with respect to matters on which the
Vendor's Warranties are given.
6.6 The rights and remedies of the Purchaser in respect of any breach of the
warranties shall not be affected because of an investigation (which shall
include the preparation of legal, financial and technical due diligence as
commissioned by the Purchaser) made prior to the execution of this
agreement or at any time until Completion Date in to the affairs of the
AMC, the Subsidiary or the Fund.
6.7 The Purchaser's Warranties and the Vendor's Warranties set forth in each of
Schedule 2 and Schedule 3, respectively, shall be separate and independent.
6.8 The Vendor further warrants to the Purchaser and its successors in title
that:
6.8.1 subject to Clause 6.8.2, the Vendor's Warranties shall be deemed
to have been repeated as at the Completion and all references
therein to the date of this Agreement were references to such
dates at the Completion; and
6.8.2 if after the signing of this Agreement and before Completion any
event shall occur or any matter arise which results or may result
in any of the Vendor's Warranties being unfulfilled to the
satisfaction of the Purchaser or being untrue, misleading or
incorrect in any respect at Completion, then the Vendor (at their
own cost) shall make any investigation and take such steps
concerning the event or matter which the Purchaser may reasonably
require.
7. RESTRICTION ON ANNOUNCEMENTS; CONFIDENTIALITY
7.1 Each Party undertakes that, prior to the Completion and thereafter, it will
not make any announcement in connection with this Agreement unless all of
the other Parties shall have given their written consent to such
announcement, including both as to timing and substance, except for
announcements required by applicable law or regulations, in which case any
information provided by the disclosing Party about the other Parties shall
require the prior written approval of such other Parties.
7.2 No Party shall, without the consent of the other Parties, during the
continuance of this Agreement or after its termination, disclose to any
Person (save to the extent to which it is obliged to make disclosure as a
result of applicable law or regulations or for the purposes of procuring
any approvals) this Agreement or any of the arrangements contemplated by
this Agreement or any information
19
relating to the AMC, the Trustee Company, the Subsidiary, the Fund, the
Purchaser and/or the Vendor obtained in the course of preparing the
Agreement or otherwise pursuant to this Agreement or the performance of the
transactions contemplated by this Agreement, or use such information
otherwise than as strictly required for the purpose of performing this
Agreement or in the best interests of the AMC, the Trustee Company, the
Subsidiary, the Fund, the Purchaser or the Vendor, as the case may be;
provided that the foregoing shall not prohibit disclosure by any Party to
its employees and Affiliates or to its professional advisers to the extent
necessary for the purpose of this Agreement and subject to such employees,
or Affiliates or professional advisers being subject to confidentiality
obligations no less onerous than those imposed by this Clause. The
obligations set forth under this Clause 7.2 shall survive the consummation
and termination of this Agreement.
7.3 At the Completion parties, shall be entitled to make their own press
releases provided the contents of the same have been mutual agreed prior to
such release.
8. ACCESS AND FURTHER ASSURANCES
8.1 As from the date of this Agreement, the Vendor shall cause to give to the
Purchaser and its accountants, counsel and agents reasonable access, upon
reasonable prior notice and during normal business hours, to the premises
and all the books and records of the AMC and shall instruct the officers
and employees of the AMC to give promptly all information and explanations
to the Purchaser or any such persons as the Purchaser may reasonably
request, it being recognized that such access should not unduly hinder the
AMC's normal operations.
8.2 The Vendor agrees to, at any time and from time to time, upon the written
request of the Purchaser:
(a) promptly and duly execute and deliver all such further instruments and
documents, and do or procure to be done all such acts or things, as
such the Purchaser may reasonably deem necessary or desirable in
obtaining the full benefits of this Agreement and of the rights and
ownership herein granted; and
(b) do or procure to be done each and every act or thing which the
Purchaser may from time to time reasonably require to be done for the
purpose of enforcing the Purchaser's rights under this Agreement.
9. COSTS AND EXPENSES
9.1 Except as otherwise provided in Clause 9.2, each Party shall pay its own
costs and expenses (including the fees and costs of any financial or
technical advisors, lawyers or accountants engaged by it) in relation to
the negotiations leading up to the Transaction contemplated hereunder and
to the preparation,
20
execution and carrying into effect all documents referred to and or relate
to the Transaction here under including this Agreement.
9.2 Any stamp duty, fees or expenses payable in connection with the Transaction
including for the execution of this Agreement shall be borne by the
Purchaser.
10. TERMINATION
10.1 This Agreement may be terminated prior to the Completion:
(a) at the election of the Purchaser,
(i) under Clause 3.5;
(ii) for non fulfillment of the conditions in Clauses 4.2.1 and 4.2.2
due to the fault of the Vendor.
(b) at the election of the Vendor,
(i) under Clause 3.5;
(ii) for non fulfillment of the conditions in Clause 4.2.3 due to the
fault of the Purchaser.
(c) at any time on or prior to the Completion, by mutual written consent
of the Purchaser and the Vendors.
10.2 This Agreement shall stand fulfilled and terminated upon expiry of the
Warranty Period or payment of the Retention Amount under the SPA Escrow
Agreement to the Vendor or the Purchaser, as the case may be, in accordance
with the SPA Escrow Agreement whichever is later.
10.3 If this Agreement is terminated pursuant to Clause 10.1 then, except for
the provisions of Clauses 7, 11, and 14 (which shall survive the
termination), this Agreement shall have no further force and effect and
Parties shall have no further liability or claim against each other except
for those which have already been incurred prior to the termination or
except for those which relate to the provisions which survive the
termination.
10.4 In the event of the Completion of this Agreement or the ITI SPA or the
Employee SPA does not occur or this Agreement or the ITI SPA or the
Employee SPA is terminated before Completion, neither the Purchaser nor the
Vendor shall have any claim against each other and the interest on the MOU
Escrow Amount shall be paid by the Escrow Agent to the Purchaser by issuing
an instruction to the Escrow Agent under the prescribed form set out in the
Escrow Agreement.
21
11. NOTICES
11.1 Each notice, demand or other communication given or made under this
Agreement shall be in writing and may be given by facsimile, by personal
delivery or by sending the same by prepaid registered mail (or prepaid
registered airmail or a recognized international courier service where the
address of the Party to receive the notice is not in the same country as
that of the Party giving the notice) addressed to the Party concerned at
the address or fax number below (or such other address or fax number as the
addressee has by five (5) days' prior written notice specified to the other
Parties):
TO THE PURCHASER:
Address: Templeton Asset Management (India) Private Limited,
1st Floor, Sakhar Bhavan,
Nariman Point,
Mumbai 400 021,
Attention: Mr. Rajiv Vij
Phone: + 91 22 288 6129
Fax: + 91 22 288 6707
Email: rvij@templeton.com
TO PIONEER:
Address: Pioneer Investment Management, Inc.
60, State Street,
Boston, Massachusetts,
U.S.A 02109
Attention: Mr. Daniel Geraci
Phone: + 1 617 4224806
Fax: + 1 617 4224296
Email: dan.geraci@pioneerinvest.com
Any notice, demand or other communication so addressed to the relevant
Party shall be deemed to have been delivered (a) if given or made by
personal delivery, when actually delivered to the relevant address; and (b)
if given or made by prepaid registered post to an address within the same
country or by a recognized international courier service to an overseas
address, seven (7) days after the dispatch of the same; (c) if given or
made by prepaid registered airmail to an overseas address, ten (10) days
after the dispatch of the same; (d) if given or made by fax, upon dispatch
and the receipt of a transmission report confirming dispatch.
12. POST COMPLETION OBLIGATIONS
12.1 The post Completion obligations of the Vendor:
22
The Vendor covenants and agrees that, it by itself and or through its
Affiliate shall not without the consent of the Purchaser, from the
Completion until two (2) years after the Completion Date:
(a) in relation any mutual fund or AMC in India, undertake or act as
sponsor a trustee or asset management business, or carry on any
activity either as a shareholder (investor), advisor, manager,
consultant, technical know-how provider, under the mutual fund
industry in India;
(b) hire any the employees of the AMC and or induce them to leave the
employment of the AMC and join another asset management company under
different management or an organization carrying on activities of,
connected to or associated to a mutual fund.
12.2 The post Completion obligations of the Purchaser:
(a) obtain all the necessary approvals from SEBI and the Registrar of
Companies and such other authorities for change of name of the AMC and
the Trustee Company;
(b) shall take all steps as may be necessary for the purposes of changing
the corporate name (including obtaining approval from the Registrar of
Companies for the change of name and appropriate Board and shareholder
consents of the AMC, the Trustee Company) of the AMC, the Fund and the
Trustee Company by deleting the words "Pioneer" or "ITI" such that the
new name of the AMC, Fund or the Trustee Company will not contain the
words " Pioneer or ITI" or any other derivation thereof or any name,
brand or mark reasonably similar to any of them or reasonably capable
of confusion with any of them, and at the request of the Vendor
furnishing documentary evidence satisfactory in relation to the same.
The Purchaser will within one hundred and eighty (180) days of the
Completion, stop using the name "Pioneer" or ITI in relation to the
AMC, in its communication with third parties. Provided however that no
liability shall accrue to the Vendor on account of such usage. It is
clarified that the Purchaser shall have no right title or interest
into or over the name "Pioneer" or "ITI" at any time including during
the one hundred and eighty (180) days referred to above;
(c) shall not for a period of two (2) years from the Completion Date, hire
any the employees of the Vendor and or induce them to leave the
employment of the Vendor and join the Purchaser or its Affiliate in
India;
(d) provide an exit option to the unit holders as per the Regulations;
(e) subject to the receipt by the Vendor of the RBI approval, forthwith
repay the aggregate amount of Rs. 45 million lying to the credit of
the Vendor in the books of the AMC as advance against equity. Provided
23
however that if the RBI approval has been received before Completion,
the Vendor shall be at liberty to request the Purchaser to repay the
said amount upon production of a copy of the said approval.
13. MISCELLANEOUS
13.1 This Agreement may not be amended, modified or supplemented except by a
written instrument executed by each of the Parties.
13.2 No waiver of any provision of this Agreement shall be effective unless set
forth in a written instrument signed by the Party waiving such provision.
No failure or delay by a Party in exercising any right, power or remedy
under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of the same preclude any further exercise
thereof or the exercise of any other right, power or remedy. Without
limiting the foregoing, no waiver by a Party of any breach by another Party
of any provision hereof shall be deemed to be a waiver of any subsequent
breach of that or any other provision hereof.
13.3 This Agreement shall inure to the benefit of the Parties and is binding
upon the Parties hereto and their respective successors, legal
representatives and permitted assigns. This Agreement shall not be
assignable by any Party, except with the written consent of the other
Parties.
13.4 This Agreement constitutes the whole agreement between the Parties relating
to the subject matter hereof and supersedes any prior (not simultaneous)
agreements or understandings with effect from the execution hereof as
regards the Transaction and with effect from the Completion as regards the
MOU Escrow Agreement.
13.5 Any liability of the Vendor to the Purchaser under this Agreement may in
whole or in part be released, compounded or compromised or time or
indulgence given by the Purchaser in its absolute discretion as regards any
such liability without in any way prejudicing or affecting the Purchaser's
rights against any other or others or the Vendor under the same or a like
liability.
13.6 Each and every obligation under this Agreement shall be treated as a
separate obligation and shall be severally enforceable as such and in the
event of any obligation or obligations being or becoming unenforceable in
whole or in part. To the extent that any provision or provisions of this
Agreement are unenforceable they shall be deemed to be deleted from this
Agreement, and any such deletion shall not affect the enforceability of
this Agreement as remain not so deleted.
13.7 This Agreement may be executed in one or more counterparts which, each of
which when so signed and taken together, shall be deemed an original but
all the counterparts shall together constitute one and the same instrument.
24
13.8 Subject to contract to the contrary the parties may pursue remedies
available under this Agreement. The Parties shall ensure that no such
remedy results in more than one claim against the Party concerned for the
same cause of action. It is agreed that no Party would be penalised twice
for the same claim or cause of action under this Agreement.
13.9 Nothing in this Agreement shall be deemed to constitute a partnership
between the Parties hereto or constitute any party the agent of another
party for any purpose.
13.10 The illegality, invalidity or unenforceability of any provision of this
Agreement, whether in whole or in part, under the law of any jurisdiction
shall not affect its legality, validity or enforceability under the law of
any other jurisdiction nor the legality, validity or enforceability of any
other provision or part
14. GOVERNING LAW AND JURISDICTION
14.1 This Agreement shall be governed by and construed in accordance with the
laws of India.
14.2 Any dispute or claim arising out of or in connection with or relating to
this Agreement, or the breach, termination or invalidity hereof (the
"Dispute"), shall be referred to the CEO of the Vendor and the CEO of the
Purchaser for resolution. If the Dispute is not resolved within a period of
30 days from such referral then the Dispute shall be finally settled by an
arbitration which shall be governed by the Arbitration and Conciliation Act
1996 (the "Act ") as are in force at the time. For the purpose of such
arbitration, there shall subject Clause 14.3 below, be three arbitrators
appointed (each of them must be lawyers having significant expertise in the
commercial field), one nominated by Pioneer on hand and one nominated by
the Purchaser on the other hand and the third arbitrator appointed by such
appointed arbitrators (such board of arbitrators is referred to below as
the "Arbitration Board"). The place of arbitration shall be in Mumbai. All
arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any such dispute or claim strictly in accordance
with the governing law specified in Clause 14.1 of this Agreement. Judgment
upon any arbitral award rendered hereunder may be entered in any court
having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case
may be if required.
14.3 Notwithstanding Clause 14.1, in the event the Vendor raises any dispute in
relation to issues which are also raised by ITI under the its share
purchase agreement then the Vendor agrees that it shall together with ITI
jointly appoint only one arbitrator and the Purchaser shall appoint one
arbitrator.
14.4 Each Party shall co-operate in good faith to expedite (to the maximum
extent practicable) the conduct of any arbitral proceedings commenced under
this Agreement.
25
14.5 The costs and expenses of the arbitration, including, without limitation,
the fees of the arbitration and the Arbitration Board, shall be borne
equally by each Party to the dispute or claim, and each Party shall pay its
own fees, disbursements and other charges of its counsel.
14.6 Any award made by the Arbitration Board shall be final and binding on each
of the Parties as if it were parties to the dispute.
26
Schedule 1
LIST OF EMPLOYEE SHAREHOLDERS
LIST OF SHAREHOLDERS
NO OF AMT PER
NAME OF THE SHARE HOLDER FATHER'S NAME TYPE OF SHARES SHARES SHARE ADDRESS
1. Vivek Reddy D G K Reddy Equity 216600 10 12, Subba Rao Avenue
3 rd Street
Madras
Tamilnadu
2. Ravi Mehrotra Umesh Mehrotra Equity 100000 10 23 Cenotaph Road
Rahul Apts
Ground Floor
Flat B
Teynampet
Madras
3. R.Narayanan N Ramachandran Equity 5000 10 55 C MIG FLAT
A L MUDALIAR
ROAD
Madras
Tamil Nadu
4. Anoop Bhasker Amrit Rai Bhasker Equity 4000 10 44/5 3 rd street
East Abhirampuram
Madras
27
Tamilnadu
5. Anil Prabhudas JeevanPrabhudas Equity 4000 10 B 34 PA Towers
869PHRoad
Kilpauk
Madras
Tamilnadu
6. K N Sivasubramaniam Narayanan Equity 4000 10 No 2 22nd cross Street
Indira Nagar
Madras
Tamilnadu
7. R Sukumar A M Rajah Equity 4000 10 8, Sadulla Street
Madras
Tamilnadu
8. V Rajagopal Veeraraghavachari N K Equity 3000 10 No43 Kalaignar Street
Anna Nagar
Pammal
Madras
Tamilnadu
9. Lalitha Swamy K Ramaswamy Equity 2000 10 E 2 Sriji Apts
25 Rajasekharan Road
Mylapore
Madras
Tamilnadu
10. Prem Khatri J P Khatri Equity 2000 10 6 D Cambrae East
28
Victoria Cresent Road
Egmore
Madras
Tamilnadu
11. Tamil Selvi M Balasubramanian Equity 2000 10 61, Vasudevan Nagar
Jafferkhanpet
Ashok Nagar
Madras
Tamilnadu
12. P L Ambal Saravanan Equity 1500 10 C/O Kumarappa
Chethyar
162A Kamar Salai
Ramakrishna Nagar
Aiwarthirunagar
Madras
Tamilnadu
5 A Muthu Lakshmi
13. D Vijayraghavan K V Desikachari Equity 1500 10 Street
Muthu Lakshmi Nagar
Extn
Chitlapakkam
Madras
Tamilnadu
14. S Chellappa N Sivaguru Equity 1500 10 C 2, Paras Apts
Jeevarathnam Nagar
Adyar
29
Madras
Tamilnadu
15. S R Ramesh S K Ramamurthi Equity 1400 10 Vigneswar house (upstairs)
No 1 New Thillai Nagar
Plot 25, Part 6
P N Pudur
Coimbatore
Tamilnadu
16. Indira Menon P R Menon Equity 1200 10 No 9, M Block
Anna Nagar East
Madras
Tamil Nadu
17. Rajendra Mukadam Upendra Dhondo Mukadam Equity 1200 10 23/C Zaoba Wadi
Thakurdwar, JSS Road
Bombay
Maharashtra
18. Aseem Malhotra R I Malhotra Equity 1200 10 B 302 Rosewood Apts
Mayur Vi bar Phase I (Extn)
New Delhi
19. Samvita Reddy A Koti Reddy Equity 1000 10 73, E V K Sampath Road
Vepery
Madras
Tamilnadu
30
20. Sanjeev Patnaik K C Patnaik Equity 1000 10 No 67
kamaraja nagar
Ernavur
Ennore
Madras
Tamilnadu
21. G Srinivas G V Sastry Equity 1000 10 3, Ill Main Road
Kasturiba Nagar
Adyar
Madras
Tamilnadu
22. K Thirugnanam C Karuppiah Equity 1000 10 13, Park Street
108, Pandian Nagar
Thiru Nagar
Madurai
Tamilnadu
23. V N Srikanth V N Subba Rao Equity 1000 10 22 Umayal Road
Kilpauk
Madras
Tamilnadu
24. P K Saravanan P Kannabiran Equity 600 10 No 5,Ratnam Nagar
Thruvanmiyur
31
Madras
Tamilnadu
25. S Balasubramaniam TV Sivararnakrishnan Equity 600 10 No 4 Arul Jyothi
Rossary Church Road Lane
Santhome
Madras
Tamilnadu
26. Senthi Kumar M A Mariappan Equity 600 10 No 3, V Cross
Ammayappa Nagar
Trichy
Tamilnadu
27. R Anantharaman A Ramaswamy Equity 600 10 No 26,
Nore Veeraswamy Street
Nungambakkam
Madras
Tamil Nadu
28. K Bharati Raj M S Krishnamurthy Equity 500 10 No 102, Bazaar Road
Mylapore
Madras
Tamilnadu
29. R Sekhar S Ramamoorthy Equity 500 10 5 Raman Street
Madras
Tamilnadu
32
30. P S Balasubramaniam P Sitaraman Equity 500 10 A1 Damayanthi Apts
South Mada Street
Nungambakkam
Madras
Tamilnadu
31. J VS Ravi Kumar J Kameswara Sastry Equity 400 10 60-3-19, Ashok Nagar
SBI Colony Road
Near ITI
Vijaywada
Andhra Pradesh
32. A V Ravi Kumar A V N Murthy Equity 400 10 Lakshmi Sudha Nivas
54-1-30, Plot No 26
L.I.C Colony
Vijaywada
Andhra Pradesh
33. Vinay Kumar B Devadattam Equity 400 10 2/3 R T
Prakasam Nagar
Begumpet
Hyderabad
Andhra Pradesh
34. S Vidyasagar R S Mani Equity 400 10 K -7 Turn Bulls Road
Nandanam
Madras
Tamilnadu
33
35. B Parthiban N Balasubramaniam Equity 400 10 No 11 Jacob Street
Madipakkam
Madras
Tamilnadu
36. R Ramesh S Raju Equity 400 10 3/0, Supdt Qtrs
The Sea Farer's Club
Rajaji Salai
Opp- Reserve Bank Of India
Madras
Tamilnadu
37. Simon Solomon MT Solomon Raj Equity 400 10 1219, 17th Street
Anna Nagar West Extn
Madras
Tamilnadu
38. R S Gopalan S Rajan Equity 400 10 86,A V Krishnaswamy Street
Janaki Nagar
Valsarvakkam
Madras
Tamilnadu
39. K Balaji E Krishnan Equity 300 10 No 28-C Third Agraharam
Salem
Tamilnadu
40. P Jayaraman K Pitchai Raman Equity 300 10 No 3, 3 rd Cross
Ammoiyappa Nagar
34
Puthur
Trichy
Tamilnadu
41. T Srikumar M P Thiruvengadam Equity 200 10 No 28, III Street
Jayalakshmi Puram
N ungambakkam
Madras
Tamilnadu
42. B Srinivas Rao B Seetharamaraju Equity 200 10 No 20 Ambika Nagar Main Road
Madhavaram Milk Colony
Madras
Tamilnadu
43. MKannan Muruganandan Equity 200 10 270 G, GST Road
Thirunagar
Madurai
Tamilnadu
44. D Venkatesh B Deivasigamani Equity 200 10 10 Kandappa Gramani Street
Pu rasawalkam
Madras
Tamilnadu
369600
35
SCHEDULE 2
PURCHASERS WARRNTIES
1 ORGANISATION, GOOD STANDING AND QUALIFICATION: The Purchaser has been
duly incorporated and organised, and is validly existing in good
standing, under the laws of India. The Purchaser has the corporate
power and authority to carry on its business as currently conducted
and proposed to be conducted.
2 the Purchaser has the legal right and full power and authority to
enter into, deliver and perform this Agreement and any other documents
to be executed by the Purchaser pursuant to or in connection with the
Transaction which when executed will constitute valid and binding
obligation of the Purchaser, and enforceable against them in
accordance with their terms.
3 The execution, delivery and the performance by the Purchaser of this
Agreement and the respective obligations in relation to the
Transaction contemplated herein, do not and will not:
(i) breach or constitute a default under the Charter Document of the
Purchaser;
(ii) result in a violation or breach of or default under any
applicable law or regulation or of any order, judgment or decree
of any Court, Governmental Authority, regulatory body to which
each of the Purchaser is a party or by which the Purchaser or any
of its assets are bound.
(iii)Result in a breach of, or constitute a default under any
contract to which the Purchaser is a party
4 Except for the approvals of the FIPB, Reserve Bank of India and the
corporate approvals, no consent, approval, order or authorisation of,
or registration, qualification, designation, declaration or filing
with, any Governmental Authority or any other Person is required in
connection with the execution, delivery and performance by the
Purchaser, of this Agreement and or the Transaction and
5 All corporate action on the part of the Board, the board of directors
of the Purchaser, necessary for the authorisation, execution, delivery
of and the performance of all obligations of the Purchaser under this
Agreement have been taken as of the date of this Agreement;
SCHEDULE 3
VENDOR WARRANTIES
INTERPRETATION
In this Schedule, unless the context clearly indicates a contrary intention, -
(a) The provisions of the agreement ("Agreement") to which these
warranties relate to its interpretation shall apply, mutatis mutandis,
and the words and expressions defined in the Agreement shall bear the
same meanings in this Schedule;
(b) The warranties, representations and undertakings herein shall apply in
respect of each of the AMC and its Subsidiary (together "the AMC" for
the purpose of this Schedule), and references in these warranties to
AMC shall also be deemed where the context so admits, unless specified
otherwise, to apply to the Trustee Company;
(c) Where ever the warranty refers to accounts of the AMC it shall relate
to a period on or after April 1, 2001 unless specified otherwise.
1. AUTHORITY AND CAPACITY OF THE VENDOR
1.1 The Vendor is a company duly incorporated and validly existing under
the law of its incorporation.
1.2.1 The Vendor has the legal right and full power and authority to enter
into, deliver and perform this Agreement and any other documents to be
executed by the Vendor pursuant to or in connection with the
Transaction which when executed will constitute valid and binding
obligation of the Vendor, and enforceable against them in accordance
with their terms.
1.2.2 Subject to applicable laws, regulations and rules, the execution,
delivery and performance by the Vendor and the AMC, of this Agreement
and the respective obligations in relation to the Transaction
contemplated herein, do not and will not:
(i) breach or constitute a default under the respective Charter
Document of Vendor and AMC;
(ii) result in a breach of, or constitute a default under, any
Contract to which the AMC, or the Vendor is a party or by which
they are bound or give any third party a right to terminate or
modify, or result in the creation of any Encumbrance under any
agreement, licence or other instrument; or
(iii) result in a violation or breach of or default under any
applicable law or regulation or of any order, judgement or decree
of any Court,
37
Governmental Authority, regulatory body to which each of the
Vendor or the AMC is a party or by which each of the Vendor or
the AMC or any of their respective assets are bound.
1.2.3 Except for the approvals of the SEBI, FIPB, Reserve Bank of India, the
Trustees, the unit holders and the corporate approvals, no consent,
approval, order or authorisation of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority or
any other Person is required in connection with the execution,
delivery and performance by the Vendor or the AMC, of this Agreement
and or the Transaction and
1.3 VENDOR'S AMC SHARES:
(i) the Vendor's AMC Shares were validly issued and are fully
paid-up;
(ii) the Vendor is the sole beneficial owner of the its shares and is
registered as the sole owner of such shares;
(iii) the Vendor has clear and marketable title to its shares and that
the shares are free from any Encumbrance or claim, demand or
doubts, and the Vendor is not aware of any claims against their
shares or any circumstances which might reasonably believed to
lead to a claim or demand against the Vendor's AMC Shares;
(iv) the Vendor has good right, full power and absolute authority to
sell and transfer the Vendor's AMC Shares free from any third
party claim or demand of any nature and that they have not nor
anyone on their behalf have done, committed or omitted any act,
deed, matter or thing whereby the Vendor's AMC Shares is or can
be forfeited extinguished or rendered void or voidable; and
(v) that the Vendor has not entered into or arrived at any agreement
and/or arrangement, written or oral, with any person or party in
respect of the Vendor's AMC Shares, or their membership of the
AMC which, will render the sale of the sale and transfer of AMC
Shares violative of such agreements.
2. CORPORATE MATTERS
2.1 CHARTER DOCUMENT: The copies of the Charter Documents of the AMC
(having attached thereto all amendments made to date) delivered to the
Purchaser and filed with the Registrar of Companies are true and
complete copies, and the AMC has complied with all the provisions of
its Charter Documents and, in particular, has not entered into any
ultra vires transaction. All legal and procedural requirements and
other formalities concerning such Charter Documents have been duly and
properly complied with in all material respects.
38
2.2 ORGANISATION, GOOD STANDING AND QUALIFICATION: The AMC has been duly
incorporated and organised, and is validly existing in good standing,
under the laws of India. The AMC has the corporate power and authority
to own and operate its Assets and properties and to carry on its
business as currently conducted and proposed to be conducted.
2.3 CAPITALISATION AND OTHER PARTICULARS OF THE AMC: The particulars of
the AMC as disclosed in the Accounts are true, complete and correct as
of the date.
2.4 ISSUED SHARES: The 7,893,965 million shares now outstanding comprise
the entire issued share capital of the AMC. No modification or
variation of the terms of issue or the rights attaching to such Shares
has been made since the dates of issue.
2.5 PAID UP: All the issued shares of the AMC are fully paid up and the
AMC has not exercised nor purported to exercise or claimed any lien
over any of them.
2.6 CONDUCT IN RELATION TO CAPITAL: The AMC has not at any time repaid or
redeemed or agreed to repay or redeem any of its share capital or
otherwise reduced or agreed to reduce its issued share capital or
purchased any of its own shares or carried out any transaction having
the effect of a reduction of capital.
2.7 CONVERSION RIGHTS: No person has the right to call for the issue of
any share or loan capital of the AMC by reason of any conversion
rights or under any option or other agreement and there are no claims,
charges, liens, equities or encumbrances on the Vendor's AMC Shares.
2.8 OPTIONS, WARRANTS AND RESERVED SHARES: Except as disclosed in Clause
12.2(e) of the SPA, there are no outstanding options, warrants, rights
(including conversion or pre-emption rights) or agreements for the
subscription or purchase from the AMC of any shares in the capital
stock of the AMC or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the AMC, and no shares
of the AMC when issued, are subject to any pre-emptive rights, rights
of first refusal or other rights pursuant to any agreement or
commitment of the AMC as the case may be.
2.9 OTHER RIGHTS WITH RESPECT TO SHARES: Except as contemplated in this
Agreement, no voting or similar agreements exist relating to the AMC
Shares or any other securities issued by the AMC or the shares of the
Subsidiary which are presently outstanding or that may hereafter be
issued.
2.10 EXISTENCE OF SUBSIDIARIES: The AMC has a subsidiary called ITI Capital
Markets Limited , a company incorporated under the Companies Act 1956
and having its registered office at No.39, TTK Road, Alwarpet, Chennai
600 018 . The particulars of the subsidiary as the its capital and
other statutory details such as capital, director are disclosed in the
Disclosure Letter. Except for the Subsidiary the AMC does not own any
direct or indirect equity or voting interest in any other AMC,
partnership or any other legal entity.
39
2.11 CORPORATE RECORDS: Except as disclosed the statutory books, minute
books and register of members of the AMC have been properly and
accurately maintained and written up to date in all material respects
and contain full and accurate records of all resolutions passed by the
directors and the shareholders of the AMC and all issuances and
transfers of shares or other securities of the AMC. All such documents
are in its possession or under the control of the AMC.
2.12 REGISTER OF MEMBERS: Except as disclosed the register of members of
the AMC contains a complete and accurate record of the members of the
AMC and the AMC has not received any notice of any application for
rectification and so far as the Vendor is aware such members are the
beneficial owners of the shares listed against their names.
2.13 DIVIDENDS: Except as disclosed and except for the dividends declared
under an investment scheme operated by the AMC, the AMC has not
declared any dividend or made any distribution to its shareholders
since their incorporation.
2.14 POWERS OF ATTORNEY: Except for the powers of attorney disclosed in the
Disclosure Letter there are no outstanding powers of attorney given by
the AMC or the Fund.
2.15 WINDING-UP ORDERS: No order has been made, no resolution has been
passed, no petition has been presented by the AMC and no petition has
been presented by any other person for the Winding-up of the AMC; no
receiver or manager has been appointed by any person of the business
or assets of the AMC or any part thereof and there is no unfulfilled
or unsatisfied judgement or decree or court order outstanding against
the AMC.
2.16 The Vendor does not hold any equity or voting interest in any entity
that carries on any business that competes with the business of the
AMC or Fund in India.
3. ACCOUNTS AND RECORDS
3.1 Except as disclosed therein and except as disclosed, the Accounts and
the accounts for the period ending March 31, 2001 ("2001 Accounts") of
the AMC have been prepared in accordance with applicable law and in
accordance with accounting principles, standards and practices
generally accepted at the date of this Agreement in India and give a
true and fair view of the assets, liabilities and state of affairs of
the AMC at the Account Date.
3.2 MANAGEMENT ACCOUNTS: Except as disclosed, the Management Accounts have
been prepared in accordance with applicable law and in accordance with
accounting principles, standards and practices generally accepted at
the date of this Agreement in India and, subject thereto, on a basis
consistent with that adopted in preparing the audited accounts for the
previous two financial periods so as to give a true and fair view of
the assets, liabilities and state of affairs of the AMC at the
Management Account Date and of the profits or losses for the period
concerned and as at that date make:
40
3.2.1 full provision for all actual liabilities,
3.2.2 proper provision for all contingent liabilities, and
3.2.3 provision reasonably regarded as adequate for all bad and
doubtful debts.
3.3 ACCOUNTING AND OTHER RECORDS:
Except as disclosed, the AMC's books and records are in its possession or
under its control and have been properly maintained in accordance with all
applicable laws. As at the Completion Date, the AMC's books and records
will accurately record all transactions of the AMC up to and including [the
Management Accounts Date] and will be capable of being written up within a
reasonable time so as to record all subsequent transactions of the AMC.
3.4 CHANGES SINCE APRIL 1ST 2001 AS REGARDS THE AMC AND THE FUND: Except as
disclosed:
3.4.1 there has been no material adverse change in its financial
position or turnover and no event, fact or matter has
occurred that will give rise to any such change;
3.4.2 its business has been carried on in the ordinary course,
without any interruption or alteration in its nature, scope
or manner, and so as to maintain the same as a going
concern;
3.4.3 it has not entered into any transaction or assumed or
incurred any liabilities (including contingent liabilities)
or made any payment not provided for in the Accounts or the
Management Accounts otherwise than in the ordinary course of
carrying on its business;
3.4.4 its profits have not been affected by changes or
inconsistencies in account treatment, by any non-recurring
items of income or expenditure, by transactions of an
abnormal or unusual nature or entered into otherwise that on
normal commercial terms or by any other factors rendering
such profits exceptionally high or low;
3.4.5 no dividend or other distribution has been declared, made
or paid to its shareholders;
3.4.6 no share or loan capital or any other security giving rise
to a right over the capital has been allotted or issued or
agreed to be allotted or issued;
3.4.7 it has not redeemed or purchased or agreed to redeem or
purchase any of its share capital; and
41
3.4.8 except in the ordinary course of business, no debt or
liability has been incurred, assumed or guaranteed by the
AMC except, advance share application monies of Rs 450
lakhs, which will be returned to Pioneer.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES: Except as disclosed, there are no
liabilities of the AMC other than (I) liabilities disclosed or provided for
in the Accounts and the Management Accounts; (ii) liabilities incurred in
the ordinary course of business since the Management Accounts Date, none of
which results in a material adverse change in the financial position or
turnover of the AMC; or (iii) liabilities disclosed elsewhere in this
Agreement.
4. FINANCE
4.1 Except for the funds of the investors in the Blue Chip Fund, open end
Scheme aggregating to Rs 1.5 crores, which are lying with the Fund for want
of instruction from the investors, and except as disclosed, neither the AMC
nor the Fund has outstanding any obligation for the payment or repayment of
money, whether present or future, actual or contingent.
4.2 The AMC and the Fund have no encumbrance, mortgage, charge, pledge, lien
(save by operation of law in the ordinary course of business) or other
security interest or any other agreement or arrangement having a similar
effect subsisting over the whole or any part of its present or future
revenues.
4.3 Except for the payments under the Blue Chip Scheme and except as disclosed,
no borrowing of the Fund or AMC has become or is now due and payable or
capable of being declared due and payable, before its normal or originally
stated maturity and no demand or other notice requiring the payment or
repayment of money before its normal or originally stated maturity has been
received by the AMC.
4.4 No event or circumstance has occurred of which the Vendor is aware which is
or, with the giving of notice or lapse of time or both, shall be such as to
terminate, cancel or render incapable of exercise any entitlement to draw
money or otherwise exercise the rights of the AMC or Fund under an
agreement relating to borrowing.
5. TAXATION MATTERS
5.1 RETURNS, INFORMATION AND CLEARANCES, EXCEPT AS DISCLOSED AND TO THE BEST OF
THE VENDOR'S KNOWLEDGE AND UNDERSTANDINGS:
i) All returns, computations, notices and information which are or have
been required to be made or given by the AMC for a Taxation purpose
(i) have been made on a proper basis and are correct and (ii) none of
them is subject of any dispute with the Indian Taxation authorities.
42
ii) The AMC is in possession of sufficient information or has reasonable
access to such information to enable it to compute its liability to
Taxation.
5.2 TAXATION CLAIMS, LIABILITIES AND RELIEFS:
Except as disclosed, there is no liability of Taxation in respect of which
a claim has been made to the knowledge of the Vendor.
5.3 AMC RESIDENCE: The AMC has been resident for tax purposes in India
5.4 DEDUCTION OF TAX AT SOURCE: Except as disclosed, the liability on account
of late filing/remittance of returns for tax to be deducted at source does
not exceed an amount of Rs 25,000/- on account of interest and such returns
are true and correct in all material respects. To the best of our knowledge
and understanding the deductions have been made in accordance with law.
6. LEGAL MATTERS
6.1 Except as disclosed, the Vendor hereby represents and warrants in respect
of the AMC Trustee and the Fund that:
(i) NO VIOLATION OF LAW: There has not been any investigation or enquiry
by nor any notice or communication, or order, decree, decision or
judgment of, any court, tribunal, arbitrator, governmental agency or
regulatory body received by and against the AMC, with respect to any
material violation and/or there has been no subsisting violation to
comply with any such applicable law, regulation, byelaw or Charter
Documents, which has resulted in any liability or criminal or
administrative sanction;
(ii) PERMITS: Consistent with industry practice, the AMC has all permits,
approvals, authorisations, licenses, registrations, and consents
(including, without limitation, the registrations of the AMC with
SEBI), necessary for the conduct of its business as currently
conducted have been obtained and are in full force and effect. The AMC
is not in material breach of or in material default under any such
permit, approval, authorisation, franchise or license and the Vendor
are not aware of any event or circumstance under which any of those
licences, registrations, permissions or consents is likely to be
revoked terminated and/or cancelled, except for those which are
consequential arising out of this Agreement or the Transaction;
(iii) ETHICAL CODE OF CONDUCT: The AMC has not and has not authorised or
permitted any of its employees, agents or representatives to make or
promise any payment of anything of value to any Governmental Authority
or any employee, agent or representative of any
43
Governmental Authority for the purpose of obtaining or retaining
business; and
(iv) UNLAWFUL ACTS: The AMC has not, so far as the Vendor is aware, nor
have any of its Senior Executives in the course of theiremployment by
any act or default committed:
a. any criminal or unlawful act involving dishonesty;
b. any breach of trust; or
c. any breach of contract or statutory duty or any tortuous act
which could entitle any third party to terminate any contract to
which the AMC is a party;
which could have a material adverse effect on the AMC.
6.2 COMPLIANCE WITH AGREEMENTS: Except as disclosed, all the contracts and all
leases, tenancies, licences and agreements of whatsoever nature to which
the AMC is a party are, except as disclosed, valid, binding enforceable
obligations of the parties thereto and the terms thereof have been complied
with by the AMC and there have occurred no grounds for rescission,
avoidance or repudiation of any of the contracts or such leases, tenancies,
licences or agreements and no notice of termination or of intention to
terminate has been received in respect of any thereof.
6.3 LITIGATION:
6.3.1 Except as disclosed, and except as in the ordinary course of
business, since the Account Date no claim for damages or
otherwise has been made against the AMC.
6.3.2 The AMC, except as disclosed, is not involved whether as
plaintiff or defendant or other party in any claim, legal action,
proceeding, suit, litigation, prosecution, investigation, enquiry
or arbitration and no such claim, legal action, proceeding, suit,
litigation, prosecution, investigation, enquiry or arbitration is
pending against the AMC.
6.4 INSOLVENCY:
6.4.1 No order has been made, petition, presented, resolution passed or
meeting convened for the winding up (or other process whereby the
business is terminated and the assets of the AMC concerned are
distributed amongst the creditors and/or shareholders or other
contributories) of the AMC and there are no cases or proceedings
under any applicable insolvency, reorganisation, or similar laws
in any jurisdiction concerning the AMC and no events have
occurred which, under applicable laws, would justify any such
cases or proceedings.
6.4.2 No petition has been presented or other proceedings have been
commenced for an administration order to be made (or any other
order
44
to be made by which during the period it is in force, the
affairs, business and assets of the AMC concerned are managed by
a person appointed for the purpose by a Court, governmental
agency or similar body) in relation to the AMC, nor has any such
order been made.
6.4.3 No receiver (including an administrative receiver), liquidator,
trustee, administrator, custodian or similar official has been
appointed in any jurisdiction in respect of the whole or any part
of the business or assets of the AMC and no step has been taken
for or with a view to the appointment of such a person.
6.4.4 The AMC is not insolvent as on date.
7. TRADING AND CONTRACTUAL ARRANGEMENTS
7.1 CAPITAL COMMITMENTS: Since March 17, 2002 (the "MOU Date"), except under
various investment schemes operated by the AMC for its clients, the AMC:
7.1.1 has not entered into any capital commitments;
7.1.2 is not, nor has been, party to any unusual, long-term or onerous
commitments, contracts or arrangements otherwise at an arm's
length basis in the ordinary course of business;
7.1.3 except as disclosed, is not party to any agency,
distributorship, marketing, purchasing, agreement or arrangement
that restricts its freedom to carry on its business in such
manner as it thinks fit; and
7.1.4 is not, nor has agreed to become, a member of any joint venture,
consortium, partnership or other unincorporated association
(other than a recognised trade association).
7.2 CONTRACTS: The AMC is not a party to or bound, except as disclosed, by any
Contract (collectively, "Material Contracts") that:
7.2.1 grants management, operational or voting rights in the AMC to any
Person;
7.2.2 is a consulting Contract that involves payments of an amount
equal to or in excess of Rs. 1 million for any 12-month period;
7.2.3 is a non-competition Contract restricting in any way the
business activities of the AMC;
7.2.4 was entered into outside of the ordinary course of business of
the AMC;
7.2.5 is a Contract with any Person relating to the use of the Assets
of the AMC, including without limitation use of the Assets for
Internet services, telephone services or the provision of data or
other value-added services, excluding Contracts with its
customers or clients;
45
7.2.6 is a Contract involving subscriber management or systems, call
centres or other customer service systems;
7.2.7 The AMC is not in default in the performance, observance or
fulfilment of any of the material obligations, covenants or
conditions contained in any Contract to which it is a party. Each
Material Contract has been duly authorised, executed and
delivered by the AMC, and constitutes a valid and binding
obligation of each party thereto, enforceable against each party
thereto in accordance with its terms. To the best of the Vendor
knowledge, no party (other than the AMC) is in material breach of
any Material Contract or has indicated any intention to terminate
any such Contract prior to the expiration of its term.
7.3 ARRANGEMENTS WITH ASSOCIATES ETC:
Except as disclosed:
7.3.1 There is no indebtedness (actual or contingent) nor any
indemnity, guarantee or security arrangement, except as
disclosed, between the AMC and any current or former employee,
current or former director or any current or former consultant of
the AMC.
7.3.2 The AMC is not a party to any contract, arrangement or
understanding, except as disclosed, with any current or former
employee, current or former director of the AMC other than the
employment contracts.
7.3.3 Other than employment contracts with the Employee Shareholders,
there are no existing contracts or arrangements, except as
disclosed, between or involving the AMC and any of the Vendor
and/or any of the directors.
7.4 TRANSACTIONS WITH DIRECTORS:
There is no outstanding:
7.4.1 loan, except as disclosed, made by the AMC to, or to the AMC, by
the Vendor, or any director or officer of the AMC;
7.4.2 agreement or arrangement, except as disclosed, to which the AMC
is a party and in which the Vendor or any director of the AMC;
7.4.3 Related Party Transaction: Except as disclosed, there are no
Contracts, understandings, transactions or proposed transactions
between the AMC and any Related Party on the other hand. Except
for loans/advances aggregating to not more than Rs. 65 lacs made
to any single employee, pursuant to staff Housing/Vehicle
Assistance Scheme existing as of the date of this Agreement, no
Related Party or employee of the AMC is indebted to the AMC, nor
is the AMC indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Vendors'
knowledge, no such Person is, directly or
46
indirectly, interested in any Contract with the AMC, excluding
employment contracts.
7.5 Investment Management Agreement: The Investment Management Agreement
executed between the Trustee Company and the AMC is the only investment
management agreement for the family of funds operated and managed by the
AMC on behalf of the Trustee Company.
7.6 Guarantee: Except as disclosed in the Accounts, there is not outstanding
guarantee, indemnity, surety or comfort (whether or not legally binding)
given by or for the benefit of the AMC.
8. EMPLOYEES
8.1 DISCLOSURE OF MATERIAL FACTS:
8.1.1 Except as disclosed, all material facts and matters relating to
the employment of all employees of the AMC have been disclosed to
the Purchaser.
8.1.2 The AMC has no collective agreements, arrangements and other
understandings with any recognised trade union, staff association
or other body representing the employees of the AMC and, to the
best of the Vendor's knowledge, no labour union has requested,
sought or attempted to represent any employees, representatives
or agents of the AMC. There is no strike or other labour dispute
involving the AMC.
8.1.3 STATUS OF EMPLOYEES: Except as disclosed to the best of the
Vendor's knowledge, no Senior Executive has terminated their
employment with the AMC since the MOU Date.
8.1.4 EMPLOYMENT AGREEMENTS AND COMPENSATION ARRANGEMENTS: Except as
disclosed, other than standard employment contracts of the AMC in
the form as disclosed, and the employment contract of the current
CEO of the AMC as disclosed, the AMC is not a party to nor bound
by any currently effective employment contract (other than
contracts that can be terminated on an at-will basis), deferred
compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation
agreement. To the best of the Vendor knowledge, none of these
employees or the CEO is in breach of their respective employment
contracts or any terms by which any such person may have been
seconded to the AMC.
8.2 COMPLIANCE WITH REQUIREMENTS: Except as disclosed, the AMC has in relation
to each of its employees and (so far as relevant) to each of its former
employees:
47
8.2.1 complied in all material respects with its obligations (as
appropriate) under relevant laws and all other statutes and
regulations relevant to its relations with each employee or the
conditions of service of the employee and has maintained adequate
and suitable records regarding the service of the employee;
8.2.2 discharged or adequately provided for in all material respects
its obligations to pay all salaries, wages, commissions, bonuses,
overtime pay, holiday pay, sick pay and other benefits of or
connected with employment upto the date of this Agreement; and
8.2.3 complied in all material respects with all its obligations under
the master mediclaim policy.
8.3 AGREEMENTS: Except as disclosed, the AMC has not since the MOU Date entered
into:
8.3.1 any agreement or arrangement to make any payments (other than
emoluments) to or on behalf of any of its directors or employees;
8.3.2 any contract of service with any employee, which is not
terminable by the AMC by three months' notice or less without
payment of compensation (except as provided by statute);
8.3.3 any agreement imposing a legal obligation on the AMC to increase
the rates of remuneration of, or to make any bonus or incentive
payments or any benefits in kind or any payments under a
profit-sharing scheme to or on behalf of, any of its employees at
any future date which would result in an increase in the AMC's
employment costs;
8.3.4 any negotiation for a change in the emoluments or other terms of
engagement of any grade of the AMC's employees resulting in an
increase in the AMC's employment costs;
8.3.5 any agreement or arrangement for the provision of compensation
on the termination of employment of any employee of the AMC,
beyond the minimum required by law and by the employment
contracts.
8.4 DISPUTES:
8.4.1 Except as disclosed, no subsisting material dispute has arisen
since incorporation between the AMC and any member or category of
its employees or former employees.
8.4.2 Except as disclosed, there are no significant complaints pending
against the AMC of whatsoever nature in relation to any of its
employees or former employees and there is no industrial action
or dispute or of such nature existing in respect of or concerning
any employees or former employees of the AMC.
48
8.4.3 Except as disclosed, no employee has given notice of termination
of his contract of employment or is under notice of dismissal.
8.4.4 Except as disclosed, the AMC has not offered any contract of
employment to any person for a salary of more than [Rs.1 million]
per annum, which offer remains outstanding.
8.5 PENSIONS: Except as disclosed, the AMC does not make, and is not party to
any arrangement under which it could be liable to make payments (except for
statutory payment) for providing retirement, death, disability, life
assurance or medical benefits to any person.
9. OPERATIONS AND COMPLIANCE OF THE FUND AND ITS SCHEMES:
9.1 ACCOUNTS: Except as disclosed, the 2001 Accounts and the Accounts of the
Fund and its Schemes have been prepared in accordance with the Regulations
and the Schedule Nine of the Regulations;
9.2 LIABILITIES AND NPAS: Except as disclosed and except as disclosed in the
portfolio statement the Fund and the Schemes do not have any non-performing
other than those reflected in the 2001 Accounts, the Accounts and
Management Accounts incurred in the ordinary course of business.
9.3 ACTIVITIES SINCE ACCOUNTS DATE: Except as disclosed and otherwise than in
the ordinary course of business, since the Accounts Date, there has not
been:
9.3.1 any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets used by
the AMC or the Fund or the operating results or the business of
the Fund as currently conducted;
9.3.2 any waiver by the AMC or the Fund of a valuable right or of a
debt owed to the Fund or any of its Schemes with a value of over
Rs. 500,000 owed to it;
9.3.3 any material change or amendment to a contract by which the Fund
is bound, except for changes or amendments which are expressly
provided for or disclosed in this Agreement;
9.3.4 any declaration or payment of any dividend or other distribution
by any Scheme of the Fund otherwise than in ordinary course of
business;
9.3.5 any debt or liability incurred, assumed or guaranteed by the
Fund or any of its Schemes otherwise than in ordinary course of
business.
49
9.4 CURRENT OPERATIONS: Except as disclosed, to the best knowledge of the
Vendor, there is no existing fact or circumstance as on date that has a
material adverse effect on the ability of the Fund or Schemes to conduct
its business as currently conducted.
9.5 TAXES: The liability/ penalties on account of late filing/remittance of
returns for tax to be deducted at source does not exceed an amount of
Rs.2,35,000/- on account of interest and such returns are true and correct
in all material respects. To the best of our knowledge and understanding
the deductions have been made in accordance with law.
COMPLIANCE
9.5 A list of the all the Schemes operated by the Vendor is attached in
Annexure 4.3 of the Disclosure Letter. There has been no material adverse
change that is inconsistent with normal industry conditions in any of the
information contained in the offer documents of the Schemes since the [MOU]
Date;
9.6 AUM: (i) The Vendor represents that the Mutual Fund, as on February 20 2002
had assets under management of Rs. 3833.79 crores in the equity schemes and
Rs. 1476.68 crores and under fixed-income schemes aggregating to assets
under management at Rs.2357.10 crores as certified by the auditors.
(ii) the Vendor represents that the Mutual Fund, as on July 19, 2002 had
assets under management of Rs.1405.80 crores in the equity schemes and Rs.
2688.85 crores and under fixed-income schemes aggregating to assets under
management at Rs. 4094.64 crores as certified by the auditors.
9.7 COMPLIANCE WITH REGULATIONS: Except as disclosed, the Vendor represents and
warrants that:
9.7.1 The affairs of the Fund have been conducted materially in
accordance with the Regulations and the related circulars of the
Regulations.
9.7.2 The accounting operations of the Fund and the Schemes have
materially been carried out in accordance with Schedule Nine of
the Regulations and with the guidance note of Institute of
Chartered Accountants of India.
9.8 The Code of Ethics relating to conduct of the directors of the Trustee and
the employees of the AMC and Code for Personal Trading and Insider Trading
guidelines have been complied with and the AMC is not aware of any
violations thereof;
9.9 The business of the Schemes has been conducted generally in a bonafide
manner with the interests of the unit holders paramount;
50
9.10 The AMC fees and the other expenses charged to the Fund and the Schemes are
within the limits provided in the Regulations and the offer documents of
the respective schemes;
9.11 That the entry and exit loads collected from the investors has been
utilised in accordance with the Regulations;
9.12 The investor services have been rendered fully in accordance with the
Regulations;
9.13 The offer documents (including abridged offer documents)/sales
literature/annual reports /all sales material have been fully prepared and
updated in accordance with the Regulations;
10. ASSETS
10.1 THE PROPERTIES: Except as disclosed, the Properties shown in Schedule_
comprise all of the premises and land owned, leased, occupied or licensed
used in connection with the businesses of the AMC and the Fund. The AMC has
provided to the Purchaser, except as disclosed, true and complete copies of
documents for all immoveable property owned, leased and or occupied by the
AMC. The AMC is in compliance in all material respects with all such
leases.
10.2 TITLE: Except as disclosed, the AMC has full and clear title to the
immoveable properties owned by the AMC which free and clear of all
Encumbrances and there is no dispute pending or of which the Vendor is
reasonably aware with regard to the title or rights to any such owned
property.
10.3 STATUTORY OBLIGATIONS, NOTICES AND ORDERS: Except as disclosed, in relation
to each of the owned properties, no notices, orders, proposals,
applications, requests or schedule of dilapidation, demands for duty or
taxes affecting or relating to any of such Properties have been served or
made by any authority on the AMC or the Fund.
10.4 NOTICES OF BREACH: Except as disclosed, in relation to the leased or
licensed immovable property occupied by the AMC or the Fund neither the AMC
nor the Fund has not received any notice or complaint from the landlord of
any breach of the terms of the leases or tenancy agreements which would
entitle the landlord to terminate the leases or agreements or claim damages
for breach of terms or covenant; under which such properties are held.
10.5 DISPOSAL OF ASSETS: Except for the sale of securities owned by the AMC and
except as disclosed, no Assets of the AMC above the value of Rs.
25,000/-have been disposed of since July 1, 2001 to June 30, 2002 except as
disclosed and in the ordinary course of business.
51
10.6 STAMP DUTY: All documents, except as disclosed, to which the AMC or Fund is
a party, or which form part of the title to any asset owned or possessed by
the AMC, or which the AMC or the Vendor may need to enforce or produce in
evidence in any court of law have been duly stamped and registered.
10.7 TRANSACTIONS NOT AT ARM'S LENGTH:
10.7.1 Since the MOU Date, the AMC does not own, nor has agreed to
acquire, any asset, nor, has received or agreed to receive any
services or facilities (including, without limitation, the
benefit of any licensee or agreements), the consideration for the
acquisition or provision of which was otherwise than on an arm's
length basis.
10.7.2 Except as disclosed, since the MOU Date, the AMC has not
disposed, nor has agreed to dispose, of any asset, nor has
provided or agreed to provide any services or facilities
(including, without limitation, the benefit of any licences or
agreements), the consideration for the disposal or provision of
which was or will be less than its market value, or otherwise
than on an arm's length basis.
10.8 CONTROL OF RECORDS AND INFORMATION: Except as stated in Annexure 3.3 of the
Disclosure Letter and subject to the Custodian Agreement, all records and
information belonging to the AMC or the Fund or relating to their affairs
(whether or not held in written form) are in the exclusive possession and
under the direct control of the AMC and or the Fund and subject to
unrestricted access by them.
10.9 INTELLECTUAL PROPERTY
10.9.1 The AMC has such interest in any intellectual property rights
and has, as disclosed, entered into any agreement for:
(i) the licensing or use of intellectual property rights; or
(ii) the provision or acquisition of know-how or technical
information or assistance; or
(iii) the prohibition or restriction of the disclosure of any
know-how or technical information.
10.9.2 INTELLECTUAL PROPERTY RIGHTS.
(i) True and complete copies of all licenses granted to or by
the AMC in respect of any Intellectual Property
(collectively, the "IP Licenses"), have been made available
to the Purchaser. Except as provided in the IP Licenses, the
AMC is not obligated to pay any royalties or other payments
to any Person in respect of Intellectual Property used by
the AMC. The AMC
52
is not in breach of any IP License or of any agreement under
which any confidential business information was or is to be
made available to it;
(ii) Except as otherwise set out in the respective IP Licenses,
(1) all rights in all Intellectual Property and confidential
business information owned or otherwise required for the
business of the AMC as currently conducted are vested in or
validly granted to the AMC and, (2) except as disclosed in
relation to paragraph (i) above, all renewal fees and steps
required for their maintenance or protection have been paid
and taken as on date;
(iii) To the best of the Vendor knowledge, the processes and
methods employed, the services provided, the businesses
conducted and the products, used or dealt with by the AMC,
do not, or at the time of being employed, provided,
conducted used or dealt in did not, infringe the rights of
any other Person in any Intellectual Property or business
information;
(iv) To the best of the Vendor knowledge, there is not, nor has
there been at any time, any unauthorised use or infringement
by the AMC of any of the Intellectual Property or
confidential business information owned or otherwise
required for the business of the AMC.
11. INSURANCE
Assets of the AMC and the Fund as stated in Annexure 11 of the Disclosure
Letter are at the date of this Agreement adequately insured according to
prudent business practices thereof against fire and other risks normally
insured against by companies carrying on the same classes of business or
owing assets of a similar nature and all such insurances are in full force
and effect and the premiums have been paid.
12. CONFIDENTIALITY
So far as the Vendor are aware neither the AMC nor the Fund have disclosed
or permitted to be disclosed or undertaken or arranged to disclose to any
person any of its know-how, secrets or confidential information other than
under an obligation of confidentiality.
13. GENERAL
13.1 NO MISREPRESENTATION: No representation, warranty or statement by the AMC,
the Vendor in this Agreement, or in the Disclosure Letter, or Exhibit,
Schedule of this Agreement, statement or certificate furnished to the
Purchaser
53
pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
made herein, in light of the circumstances under which they were made, and
are not misleading;
13.2 FULL DISCLOSURE: To the best of knowledge of the AMC and the Vendor, there
are no fact or circumstance relating to the affairs of the AMC which has
not been disclosed to the Purchaser and which if not disclosed might
reasonably have been expected to influence the decision of the Purchaser to
enter into this Agreement; and
13.3 ACCURACY AND ADEQUACY OF INFORMATION DISCLOSED TO THE PURCHASER: All
information contained in this Agreement, Disclosure Letter and all other
information which has been given in writing or made available by or on
behalf of the Vendor to the Purchaser or its agents, employees or
professional advisers in the course of the negotiations leading to this
Agreement or in the course of any due diligence or other investigation
carried out by or on behalf of the Purchaser prior to entering into this
Agreement was when given and remains true, complete and accurate in all
respects and to the best knowledge of the Vendor, the Vendor is not aware
of any fact or matter or circumstances which have not disclosed in writing
to the Purchaser or which renders any such information untrue, inaccurate
or misleading or the disclosure of which might reasonably affect the
willingness of the Purchaser to purchase the AMC Shares or the price at or
terms upon which the Purchaser would be willing to purchase them.
54
Schedule 4
List of Senior Executives
1. Mr. Vivek Reddy
2. Mr. Ravi Mehrotra
3. Mr. R. Narayanan
4. Mr. Anoop Bhaskar
5. Mr. Anil Prabhudas
6. Mr. K N Sivasubramaniam
7. Mr. R Sukumar
8. Mrs. Lalitha Swamy
9. Mr. S Chellappa
55
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED,
By its duly authorised signatory
Name: Mr Rajiv Vij /s/ Rajiv Vij
PIONEER INVESTMENT MANAGEMENT, INC
By its duly authorised signatory
Name: Mr. Fabio Tombesi /s/ Fabio Tombesi
56
EXHIBIT 10.67
-------------
(continued)
THIS AGREEMENT is made at Mumbai as of the 23rd day of July 2002 AMONG:
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED, a company incorporated under
the laws of India and having its registered office at 1st Floor, Sakhar Bhavan,
Nariman Point, Mumbai 400 021, ("Purchaser" which expression shall unless
repugnant to the context thereof include its successors and permitted assigns);
and
INVESTMENT TRUST OF INDIA LIMITED, a company incorporated under the provisions
of the Indian Companies Act, 1913 and having its registered office at "Mashkur,"
1, Krishnama Road, Nungambakkam Chennai - 600 034, India (hereinafter referred
to as "Vendor" or "ITI" which expression shall unless repugnant to the context
thereof include its successors)
1
WHEREAS:
A. The Pioneer ITI AMC Limited a company incorporated under the Company Act
1956 having its registered office at Century Centre, 75 T.T.K. Road,
Alwarpet, Chennai - 600018 India (the AMC), is the asset management company
to the Pioneer ITI Mutual Fund, a mutual fund set up and registered with
the Securities and Exchange Board of India ("SEBI") under the SEBI (Mutual
Funds) Regulations, 1996.
B. Pioneer Investment Management, Inc. a company incorporated under the laws
of Delaware and having its principle office at 60, State Street, Boston,
Massachusetts, U.S.A ("Pioneer") and ITI, collectively as on the date
hereof hold 95.3 % of the shares of AMC and the Employee Shareholders hold
4.7 % of the shares of AMC.
C. Pursuant to a Memorandum of Understanding dated 17th March 2002 entered
into amongst the Purchaser, ITI and Pioneer (the "MOU"), ITI and Pioneer
agreed to sell and the Purchaser agreed to purchase the AMC Shares held by
ITI and Pioneer on certain terms and conditions and the manner set out
herein. It was also agreed that the Trustee Shareholders would be procured
to sell to the Purchaser, or its nominee, the Trustee Company Shares at the
same time or immediately after the Completion.
2
D. Simultaneously the Purchaser had also entered into a memorandum of
understanding dated 17th March 2002 with the Employee Shareholders (defined
herein below) of the AMC (the "Employees MOU") for the purchase of their
shares in the AMC.
E. Subsequently the Purchaser also entered into an escrow agreement dated 20th
March 2002 with ITI, Pioneer and the Escrow Agent (the "MOU Escrow
Agreement") and pursuant thereto deposited the MOU Escrow Amount by way of
earnest money with the Escrow Agent on the terms and conditions set out
therein.
F. The Purchaser has conducted a due diligence of the affairs of the AMC and
the Trustee Company pursuant to and in accordance with the terms of the MOU
and is desirous of acquiring the Vendor's AMC Shares held by the Vendor in
the AMC on the terms and conditions set out herein.
G. Simultaneously the Purchaser has also entered into separate Share Purchase
Agreements each dated 23rd July 2002 with Pioneer and the Employee
Shareholders for the purchase of their respective shares held by them in
the AMC.
3
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following meaning:
"ACCOUNTS" means the unaudited balance sheet of the AMC and its Subsidiary,
for the period ending the Accounts Date which shall be audited prior to
Completion, and the audited statements of profit and loss and cash flows of
the AMC and its Subsidiary, ended on such date and as disclosed;
"ACCOUNTS DATE" means March 31, 2002;
"AFFILIATE" of a Person (the "Subject Person") means (i) in the case of a
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 a Subject Person that is a natural Person, any other
Person that, either directly or indirectly through one or more intermediate
Persons, is controlled by the Subject Person. For purposes of this
definition, "control" means the power to direct the management or policies
of a Person, whether through the ownership of over 50% of the voting power
of such Person, through the power to appoint over half of the members of
the board of directors or similar governing body of such Person, through
contractual arrangements or otherwise;
"AMC Shares" means collectively the:
(i) Vendor's AMC Shares; and
(ii) Pioneer's AMC Shares; and
(iii) Employee Shares;
"AMC PURCHASE PRICE" means Rs.1,040,705,229.00 (Rupees One thousand forty
million seven hundred and five thousand two hundred twenty nine only)
payable to the Vendor;
"ARBITRATION BOARD" shall have the meaning set forth in Clause 14.2;
"ASSETS" means all assets, rights and privileges of any nature and all
goodwill associated therewith of the AMC, all Intellectual Property,
Equipment and Software, and rights in respect of the Immovable property;
"BASIC DOCUMENTS" means, collectively, the Charter Documents, the
Memorandum of Association and Articles of Association of the Trustee
Company, the Investment Management Agreement dated 23rd July 1993 executed
amongst the AMC and the Trustee Company, the Trust Deed dated
4
29th July 1993 amongst ITI and the Trustees including the variations
thereto, and the Custodian Agreement dated 19th April 2001 amongst the AMC
and the Trustee Company and Deutsche Bank AG;
"BOARD" means the board of directors of the AMC;
"CLAIMS" means the reimbursement and or payment of claims that have arisen
or may arise to the AMC, and which have been agreed to be set off against
the Retention Amount in accordance with the SPA Escrow Agreement;
"CHARTER DOCUMENTS" means the Articles of Association and the Memorandum of
Association of the AMC;
"COMPLETION" means the completion of the sale and purchase of the Vendor's
AMC Shares pursuant to Clause 4.1, which completion shall occur
simultaneous with the completion of sale and purchase of the Pioneer's AMC
Shares, the Employee Shares and the Trustee Company Shares;
"COMPLETION DATE" shall have the same meaning as set out in Clause 4;
"CONTRACTS" means all contracts, agreements, licenses, engagements, leases,
financial instruments, purchase orders, commitments and other contractual
arrangements entered into by the AMC;
"DISCLOSURE LETTER" shall have the same meaning as ascribed to in Clause
6.3;
"EMPLOYEE SHAREHOLDERS" means the other shareholders of the AMC who hold
shares of the AMC and whose names have been listed in Schedule 1 hereto;
"EMPLOYEE SHARES" means 3,69,600 fully paid equity shares of Rs 10/- each,
representing 4.7% of the issued capital of the AMC, held by the Employee
Shareholders;
"ENCUMBRANCE" means (i) any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, deed of trust, title retention,
security interest or other encumbrance of any kind securing, or conferring
any priority of payment in respect of, any obligation of any Person,
including without limitation any right granted by a transaction which, in
legal terms, is not the granting of security but which has an economic or
financial effect similar to the granting of security under applicable law,
(ii) any proxy, power of attorney, voting trust agreement, interest,
option, right of first offer, or refusal or transfer restriction in favour
of any Person, and (iii) any adverse claim as to title, possession or use;
"EQUIPMENT" means all the plant and machinery, tools and equipment,
vehicles and office furniture, computer equipment (including without
limitation servers, personal computers, mainframes, modems, screens,
terminals, keyboards, disks, printers, cabling and associated and
peripheral electronic equipment) and other tangible assets, but excluding
Software;
5
"ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior Partners,
Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia building, 123
M. G. Road, Mumbai 400 023 (which expression shall mean to include their
respective successors);
"FIPB" means the Foreign Investment Promotion Board of the Ministry of
Industry of India;
"FUND" means the Pioneer ITI Mutual Fund, a mutual fund set up and
registered with the Securities and Exchange Board of India, and includes
all the mutual fund schemes floated there under;
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof; any supranational or trade agency, department, agency or
instrumentality of any government or political subdivision thereof;
departments, bodies, regulatory authorities, government authorities, any
court or arbitral tribunal; and the governing body of any -securities
exchange or other securities self-regulatory body;
"IMMOVABLE PROPERTY" means the immovable properties owned, leased, licensed
and or occupied by the AMC;
"INTELLECTUAL PROPERTY" means all letters patent, trademarks, service
marks, registered designs, domain names and utility models, copyrights,
inventions, confidential information, brand names, database rights,
know-how and business names and any similar rights situated in any country
and the benefit (subject to the burden) of any of the foregoing (in each
case whether registered or unregistered and including applications for the
grant of any of the foregoing and the right to apply for any of the
foregoing in any part of the world) owned by the AMC, Trustee or the Fund;
"IP LICENSES" shall have the meaning set forth in Clause 10.9 of Schedule
3;
"VENDOR'S AMC SHARES" means, 37,65,762 fully paid equity shares of Rs 10/-
each, representing 47.7 % of the issued capital of the AMC;
"LIABILITIES" means all indebtedness and other liabilities of any nature
whatsoever, actual or contingent, and whether or not of a nature required
to be disclosed in the accounts of the AMC and its Subsidiary;
"LITIGATION" shall have the meaning set forth in Clause 6.3 of Schedule 3;
"MANAGEMENT ACCOUNTS" means the un-audited balance sheet of the AMC and its
Subsidiary and the un-audited statements of income and cash flows for
period ending June 30, 2002;
"MATERIAL CONTRACTS" shall have the meaning set forth in Clause 7.2 of
Schedule 3;
6
"MOU ESCROW AGREEMENT" means the escrow agreement dated 20 th March 2002
between the Vendor, ITI, the Purchaser and the Escrow Agent;
"MOU ESCROW AMOUNT" means the rupee equivalent of Rs. 28,27,50,000/-
(Rupees Twenty eight crores twenty seven lakhs and fifty thousand only)
deposited with the Escrow Agent under the MOU Escrow Agreement;
"OWNERSHIP" means, at any time ownership of the Shares on a fully diluted
basis, assuming the exercise, conversion or exchange of all options,
warrants and other securities exercisable for or convertible or
exchangeable into Shares regardless of whether such options, warrants or
other securities are currently exercisable, convertible or exchangeable at
such time;
"PARTIES" means the Vendor and the Purchaser and "PARTY" means any of them;
"PERSON" means any individual, firm, company, Governmental Authority, joint
venture, association, partnership or other entity (whether or not having
separate legal personality);
"PURCHASER'S WARRANTIES" means the representations, warranties and
undertakings of the Purchaser set forth in Schedule 2;
"REGULATIONS" means the SEBI (Mutual Fund) Regulations 1996 and as amended
from time to time;
"RELATED PARTY" means with respect to the AMC or a Subsidiary, as the case
may be, (i) any shareholder of the AMC or such Subsidiary, (ii) any
director of the AMC or such Subsidiary, (iii) any Senior Executive of the
AMC or such Subsidiary, 1(iv) any Person in which any shareholder, director
or Senior Executive of the AMC or such Subsidiary has any shareholding
interest, other than a passive shareholding of less than 10% in a publicly
listed company, and (vi) any other Affiliate of the AMC or such Subsidiary
or of a shareholder or director of the AMC or such Subsidiary;
"RETENTION AMOUNT" means an amount of Rs. 462,982,500.00 (Rupees Four sixty
two million nine eighty two thousand five hundred only) to be used for
setting off and or reimbursing the AMC against the Claims in accordance
with the SPA Escrow Agreement;
"RETENTION PERIOD" means the period commencing from the Completion and
ending at the later of 30 days after (i) the completion and communication
to the Purchaser of the findings of the SEBI appointed external audit for
the period ending 31st March 2003 or (ii) the statutory annual financial
audit for the financial period ending 31st March 2003, which shall be
completed no later than September 30 2003;
7
"Rs." means Indian Rupees, the lawful currency of India;
"SEBI" means Securities Exchange Board of India;
"SENIOR EXECUTIVE" means the employees of the AMC whose names have been set
out in Schedule 4;
"SHAREHOLDERS' Agreement" means the shareholders' agreement, entered into
by the AMC, Pioneering Management Corporation and ITI dated 8th October
1993;
"SHARES" means the equity shares of the par value Rs. 10/- per share in the
issued and paid up capital of the AMC;
"SOFTWARE" means any set of instructions for execution by microprocessor,
irrespective of application, language or medium;
"SPA ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior
Partners, Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia
building, 123 M. G. Road, Mumbai 400 023 (which expression shall mean to
include their respective successors);
"SPA ESCROW ACCOUNT" means the fixed deposit account opened by the SPA
Escrow Agent with the SPA Escrow Bank designated as "Anand S Bhatt a/c
Templeton- Pioneer" in accordance with the terms of the SPA Escrow
Agreement;
"SPA ESCROW AMOUNT" means a sum of Rs. 220,862,634 (Rupees Two hundred
twenty million eight hundred sixty two thousand six hundred thirty four
only) deposited by the Purchaser with the SPA Escrow Agent that shall be an
amount equal to 47.6% of the Retention Amount;
"SPA ESCROW AGREEMENT" means the agreement in an agreed form to be entered
into, on the Completion, by the Purchaser with Pioneer, the Vendor,
Employee Shaeholders and the SPA Escrow Agent;
"SPA ESCROW BANK" means Citibank NA, D.N. Road, Mumbai 400 001;
"SUBSIDIARY" means any company, partnership or other legal entity in which
the AMC owns, directly or indirectly, greater than 50% of the equity
interest or voting power;
"TAXATION" means all forms of taxation and statutory, governmental, state,
provincial, local governmental or municipal impositions, duties,
contributions and levies of India whenever imposed and whether chargeable
directly or primarily against or attributable directly or primarily to the
AMC or its subsidiary and all penalties, charges, costs and interest
relating thereto;
8
"TRANSACTION" means the acquisition of the AMC Shares by the Purchaser and
the Trustee Company Shares by the nominee of the Purchaser;
"TRUSTEE OR TRUSTEE COMPANY" means the Pioneer ITI Mutual Fund Private
Limited a private company incorporated under the Companies Act 1956 and
having its registered address at 117, Nungambakkam High Road, Chennai -600
034 and which is the trustee of the Mutual Fund;
"TRUSTEE COMPANY SHARES" means the shares of the Trustee Company held by
the Trustee Shareholders;
"TRUSTEE SHAREHOLDERS" means the shareholders of the Trustee Company;
"PIONEER'S AMC SHARES": means 37,58,603 fully paid equity shares of Rs 10/-
each, representing 47.6% of the issued capital of the AMC held by Pioneer;
"VENDOR'S WARRANTIES" means the representations, warranties and
undertakings of the Vendor as set forth in Schedule 3;
"WARRANTIES" means collectively the Vendor Warranties set out in the
Schedule 3 and the Purchaser's Warranties set out in Schedule 2 and
"Warranty" means any of them;
"WARRANTY PERIOD" means a period of 2 years from the Completion Date.
1.2 INTERPRETATION
In this Agreement
(a) Any reference herein to any Clause, Schedule, Exhibit or Annex is to
such Clause, Schedule, Exhibit or Annex to this Agreement unless the
context otherwise requires. The Schedules, Exhibits and Annexes to
this Agreement including this interpretation Clause shall be deemed to
form part of this Agreement;
(b) References to a Party shall, where the context permits, include such
Party's respective successors, legal representatives and permitted
assigns;
(c) The headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(d) Unless the context requires otherwise, words importing the singular
include the plural and vice versa, and pronouns importing a gender
include each of the masculine, feminine and neuter genders;
(e) References to the knowledge, information, belief or awareness of any
Person shall be deemed to include the knowledge, information, belief
or
9
awareness such Person would have if such Person had made reasonable
inquiries;
(f) Any reference to a statutory provision shall include any subordinate
legislation and such provision as from time to time modified or
re-enacted or consolidated whether before or after the date of this
Agreement so far as such modification, re-enactment or consolidation
applies or is capable of applying to any transactions entered into
under this Agreement prior to Completion and (as from time to time
modified, re-enacted or consolidated) which such provision has
directly or indirectly replaced;
(g) Any reference to "accounts" shall include the directors' and auditors'
reports, relevant balance sheets and profit and loss accounts and
related notes together with all documents which are or would be
required by law to be annexed to such accounts before such accounts
are laid before the company in general meeting in respect of the
accounting reference period in question; and
(h) References to this Agreement shall include the Recitals and Schedules
to it and references to Clauses and Schedules are to Clauses of and
schedules to this Agreement.
2. SALE AND PURCHASE OF SHARES
2.1 Subject to the terms of this Agreement, the Vendor hereby agrees to sell
and the Purchaser agrees to purchase on the Completion Date, the Vendor's
AMC Shares, free from all Encumbrances and together with all rights and
advantages now and hereafter attaching thereto and relying on Warranties
contained in this Agreement.
2.2 Subject to the terms of this Agreement, in consideration for the sale of
the Vendor's AMC Shares, the Purchaser will pay the AMC Purchase Price to
the Vendor in the manner set out hereinafter.
2.3 The Claims shall be adjusted in accordance with the provisions of the SPA
Escrow Agreement. The Parties hereby agree that if any part of the SPA
Escrow Amount remains un-adjusted/un-utilised after the Retention Period
not earmarked for a specific claim under the SPA Escrow Agreement, it shall
paid to the Vendor as an additional purchase price at the end of the
Retention Period together with interest accrued thereon.
2.4 The AMC purchase price may stand increased by the balance of SPA Escrow
Amount, which shall not exceed an amount of Rs. 220,862,634 (Rupees Two
hundred twenty million eight hundred sixty two thousand six hundred thirty
four only) , depending upon the occurrence of the events laid down in the
SPA Escrow Agreement, and shall to that extent be contingent.
10
2.5 Within seven (7) days of the satisfaction or waiver of the conditions set
out in Clause 3, the Vendor will cause the meeting of the Board to be
called and the Completion shall occur as indicated in Clause 4.
2.6 On the execution of this Agreement, the Vendor and the Purchaser shall
instruct the Escrow Agent to return the MOU Escrow Amount to the Purchaser
and retain the interest accrued thereon and pay the same to the Vendor in
accordance with clause 4.2.1(v).
3. CONDITIONS PRECEDENT TO COMPLETION
3.1 The obligation of the Purchaser to purchase the Vendor's AMC Shares is
subject to the fulfillment, by the Vendor prior to or simultaneously on the
Completion Date (or at the time specified below), of the following
conditions:
(a) the Vendor's AMC Shares are converted into electronic form and
dematerialized and sufficient evidence have been produced from the
depository in that regards;
(b) a letter from the Depository to the effect that the depository shall,
upon receiving irrevocable instructions from the vendor, transfer the
shares standing in the name of the Vendor to the name of the
Purchaser;
(c) Subject to the Disclosure Letter the Vendor's Warranties remaining
true and correct in all material respects on the Completion;
(d) confirmation from the Vendor that the Shareholders Agreement has been
duly terminated and that there are no surviving obligations or rights
there under;
(e) there having been, since the date of this Agreement:
(i) no material adverse change in the operations, financial
position of the AMC and its Subsidiary or the Fund whether
arising out of additional disclosure notified to the
Purchaser or not; or
(ii) no receipt of any notice of any action or investigation by
any Governmental Authority or any Person which would
restrain, prohibit or otherwise challenge the Transaction;
(f) there being no order of any Governmental Authority, or Court since the
date of this Agreement that has, as against the AMC or the Trustee
Company as the case may be, been instituted or any action or
investigation to restrain, prohibit or otherwise challenge the
Transaction been taken;
g) the Vendor shall have caused the employees of the AMC who have availed
housing loans to execute housing loan agreements in the form agreed;
11
(h) the Vendor shall have caused identification of the Assets in relation
to the Fixed Asset Register;
(i) all consents and approvals required for the purpose of execution,
delivery or performance and the consummation in each case by the
Vendor, of the Transactions contemplated in this Agreement shall have
been duly obtained;
(k) the Vendor shall have ensured that the Trustee Company has written to
SEBI seeking its confirmation of the Transaction. The Parties hereby
acknowledge that the SEBI "no objection letter" has been procured by
the Purchaser vide letter dated May 7, 2002;
(l) the Vendor shall have caused the AMC to deliver to the Purchaser a
certificate duly certified by its company secretary, dated the
Completion Date, certifying that the conditions set forth in
paragraph(e) and (f) of this Clause 3 have been satisfied;
(m) the Vendor has delivered to the Purchaser a certificate dated the
Completion Date, certifying that the conditions set forth in
paragraphs (a) to (d), and (g) to (k) of this Clause 3.1 have been
satisfied;
(n) the Purchaser having been given a reasonable opportunity to conduct a
limited high level review, the agreed scope of which is set out in
Schedule 4 relating to the AMC prior to Completion, provided such
review shall have been completed at least 2 days prior to the
Completion Date; and
(o) the Vendors shall have caused the AMC to adopt the Accounts.
3.2 The Completion is subject to the fulfillment by the Purchaser, prior to or
on the Completion Date (or at the time specified below), of the following
conditions:
(a) all consents and approvals of, notices to and filings or registrations
with any Governmental Authority or any other Person required pursuant
to any applicable law or regulation of any Governmental Authority, in
connection with the Transaction;
(b) all corporate and other proceedings by the Purchaser in connection
with the Transaction contemplated at or prior to the Completion Date
pursuant to this Agreement shall have been procured, and the Vendors
having received all such counterpart originals and certified or other
copies of such documents as they may reasonably request, including
without limitation a copy of the resolutions of the board of directors
of the Purchaser, and evidencing the approval of the Transaction;
(c) the Purchaser's Warranties as stated in Schedule 2 remaining true and
correct in all material respects on the Completion; and
12
(d) the Purchaser has delivered to the Vendor a certificate dated the
Completion Date certifying that the conditions set forth in paragraphs
(a), to (c) of this Clause 3.2 have been satisfied.
3.3 The Vendor hereby undertakes to use its best endeavors to ensure the
satisfaction of each of the conditions set out in Clause 3.1. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Vendor in consultation with the
Purchaser and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.4 The Purchaser hereby undertakes to use its best endeavors to ensure the
satisfaction of each of the conditions set out in Clause 3.2. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Purchaser in consultation with the
Vendor and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.5 The Party responsible for the satisfaction of each condition as specified
in Clauses 3.1 and 3.2 shall promptly give notice to the other Parties of
the satisfaction of the relevant conditions within (2) two Business Days of
becoming aware of the same. If the conditions of the Vendor in Clause 3.1
or those of the Purchaser in Clause 3.2 are not satisfied in full by them
are waived by the Purchaser (incase of Clause 3.1) or the Vendor (in case
of Clause 3.2), by 31st July 2002 or such other extended date as may be
mutually agreed, the Purchaser or the Vendor (as the case may be) may, in
its sole discretion, terminate this Agreement at any time thereafter in
accordance with Clause 10.
3.6 The Purchaser or the Vendor (as the case may be) shall have the sole right
to waive in whole or in part, conditionally or unconditionally, any of the
conditions in Clause 3.1 or Clause 3.2 by notice in writing to the Vendor
or the Purchaser (as the case may be), which shall be deemed notification
to the other parties hereto.
4. COMPLETION AND POST-COMPLETION ACTIONS
4.1 Subject to Clause 3, the Completion shall take place simultaneously with
the Completion of the SPA with Pioneer and the SPA with the Employee
Shareholders at the registered office of the AMC at Chennai or at Mumbai,
within seven (7) days after the conditions set out in Clause 3.1 and Clause
3.2 are satisfied or waived (the "Completion Date") or on such other date
and place as the Parties may agree.
13
4.2 OBLIGATIONS OF THE PARTIES
Simultaneously on, or before Completion all and not some only of the
following events shall take place:
4.2.1 the Vendor shall:
(i) procure that the written resignations of each of the
directors of the AMC nominated by the Vendor take effect on
the Completion Date, with acknowledgments signed by each of
them in a form satisfactory to the Purchaser to the effect
that he has no claim against the AMC for compensation, for
the loss of office (whether contractual, statutory or
otherwise), redundancy or otherwise except only for any
accrued remuneration and reimbursable business expenses
incurred down to the Completion Date;
(ii) procure that the appointment of the new directors of the AMC
nominated by the Purchaser occurs with effect from the
Completion Date;
(iii) procure that a list of statutory registers maintained by
the AMC, indicating therein the location where they have
been kept, is handed over;
(iv) execute the SPA Escrow Agreement and such other agreement as
may be mutually agreed to give effect to the Transaction;
(v) issue the instruction to the Escrow Agent to release to the
Vendor its proportionate share of interest accrued on the
MOU Escrow Amount till the date of payment;
(vi) deliver signed irrevocable instructions directing the
depository to transfer the Vendor's AMC Shares in to the
depository account of the Purchaser; and
(vii) procure the delivery by the Trustee Shareholder to the
nominee of the Purchaser, the Trustee Company Shares
together with the share transfer forms executed by the
Trustee Shareholders in favor of the Purchaser.
(viii) execute the Deed of Variation effective as of the
Completion Date and such other documents as may be necessary
to transfer the sponsorship and the trusteeship functions
related to the Fund in favor of the appropriate Purchaser
entities and take such actions as may be required for
completing all formalities including providing an exit
option to the existing unit holders of the Fund;
14
4.2.2 the Vendor shall cause the Trustee Shareholders to procure that
as of the Completion:
(i) a meeting of the board of the Trustee Company be held
transferring the Trustee Company Shares in favor of the
nominees of the Purchaser;
(ii) the written resignations of each of the directors of the
Trustee Company take effect on the Completion Date with
acknowledgments signed by each of them to the effect that
either of them has no claim against the Trustee Company for
compensation for the loss of office (whether contractual,
statutory or otherwise), redundancy or otherwise except only
for any accrued remuneration and reimbursable business
expenses incurred down to the Completion Date;
(iii)appointment of the new directors of the Trustee Company
nominated by the Purchaser take effect from the Completion
Date; and
(iv) a list of statutory registers maintained by the AMC,
indicating therein the location where they have been kept,
is handed over.
4.2.3 Simultaneously with the compliance to the satisfaction of the
Purchaser of the provisions in Clause 3.1, 4.2.1 and 4.2.2 on
Completion:
(i) the Purchaser will execute the SPA Escrow Agreement and
deposit the SPA Escrow Amount in the SPA Escrow Account;
(ii) the Purchaser will on the Completion Date pay to the Vendor
the AMC Purchase Price in the manner indicated by the
Vendor; and
(iii) the Purchaser shall offer/have taken irrevocable steps
jointly with the AMC or to offer an exit option to the
existing unit holders of the Fund to redeem their units
without imposition of any exit load in compliance with the
Regulations.
4.3 The Warranties and, subject to the Disclosure Letter, in case of Vendor's
Warranties, all other provisions of this Agreement insofar as the same
shall not have been performed at Completion shall not be extinguished or
affected by Completion, or by any other event or matter whatsoever
(including, without limitation, any satisfaction and/or waiver of any
condition contained in Clause 3.1 or Clause 3.2), except by a specific and
duly authorised written waiver or release by the Purchaser or the Vendor as
the case may be.
15
5. OBLIGATIONS OF THE VENDOR BETWEEN EXECUTION AND COMPLETION
5.1 From the date hereof through to the Completion Date, the Vendor shall cause
the AMC to conduct its business in the ordinary course, in a manner, and
use all reasonable efforts to shall otherwise use all reasonable efforts,
so as to ensure that the Vendor's Warranties shall continue to be true and
correct on and as of the Completion Date, as if made on such date. The
Vendor shall give the Purchaser prompt notice of any event, condition or
circumstance occurring from the date hereof until the Completion Date that
would constitute a violation or breach of any Vendor's Warranty if such
Vendor's Warranty were made as of any date from the date hereof until the
Completion Date, or that would constitute a violation or breach of any
terms and conditions contained in this Agreement.
5.2 The Vendor shall use its reasonable efforts to cause the AMC to preserve
the relationship and goodwill with their clients.
5.3 The Vendor shall cause the AMC to comply in all material respect with all
applicable laws, regulations, decrees of any court or regulatory body.
5.4 PROTECTIVE COVENANTS
5.4.1 The Vendor shall cause in relation to the AMC, the Fund and the
Trustee Company, and covenants with the Purchaser that, without
the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld from the date hereof until the
Completion:
(i) the AMC shall not incur any capital expenditure without the
prior approval from the Purchaser;
(ii) the AMC and Fund shall conduct business in the ordinary
course and shall not incur any revenue expenses other than
in the ordinary course of business;
(iii) the AMC shall not incur any expense or compensation, other
than in the ordinary course of business;
(iv) the AMC shall not release any new product launch or
corporate campaign;
(v) no dividends shall be declared by the AMC or the Trustee
Company;
(vi) no new employee shall be hired and no new position shall be
created in the AMC;
(vii) there shall be no creation of any charge or encumbrance on
the Assets of the AMC or the Fund;
16
(viii) there shall be no change in the composition of the Board
or Senior Executive of the AMC and the Fund, except arising
out of retirement or demise (as the case may be) of such
persons;
(ix) there shall be no borrowing or lending of any sum of money
by the AMC or the Fund;
(xi) the AMC or Trustee Company shall not induce or attempt to
induce the Senior Executives of the AMC to leave the
employment of the AMC (it being understood however that any
director, Senior Executive or personnel may resign of his or
her own volition) or appoint any additional directors,
Senior Executive or otherwise change the roles of the Senior
Executives; or
(xii) the AMC or Trustee Company shall not sell or otherwise
dispose of any material part of its Assets (or any interest
therein) or contract to do so;
(xiii) except for the sale and transfer of shares pursuant to
this Transaction, the AMC or Trustee Company shall not
issue, sell, repurchase, redeem or permit the transfer of or
mortgage, pledge or subject to any lien any shares,
partnership interests or equity interests in the AMC or
otherwise permit any change in its equity structure;
(xiv) the AMC or Trustee Company shall not amend the Basic
Documents or change its financial year;
(xv) the AMC or Trustee Company shall not acquire Assets or any
shares, partnership interests or other equity interests (or
any interest therein) or contract to do so, otherwise than
in the ordinary course of its business;
(xvi) the AMC or Trustee Company shall not enter, terminate,
extend or renew any arrangement, contract or agreement with
any Related Party except as expressly permitted under this
Agreement;
(xvii) the AMC or Trustee Company shall not give any guarantee or
indemnity in favour of any party or give any financial
assistance in any way to any Related Party;
(xviii) the AMC or Trustee Company shall not increase salary or
compensation of any of the employee of the AMC or create,
modify any benefits to the employees of the AMC;
17
(xix) the AMC or the Trustee Company shall not re-appoint their
respective present auditors at their respective annual
meetings for the financial year ending 31st March 2002.
All requests for approvals pursuant to this Clause shall be made to the CEO
of the Purchaser by the AMC, the Trustee Company or the Fund, as the case
may be, and such approval shall be given within a period of two (2) working
days from the date of such request.
5.5 The Vendor acknowledges that the above provisions of this Clause are no
more extensive than is reasonable to protect the Purchaser of the Vendor's
AMC Shares and the Trustee Company Shares.
5.6 Each of the restrictions in this Clause 5.4 shall be enforceable by the
Purchaser independently of each of the others and its validity shall not be
affected if any of the others is invalid, if any of those restrictions is
void but would be valid if some part of the restrictions were deleted the
restriction in question shall apply with such modification as may be
necessary to make it valid.
5.7 The Purchaser shall be entitled from the date hereof through to the
Completion Date to depute one or more of its officers to over see and
monitor the operations of the AMC and the Fund.
6. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Vendor hereby represents, warrants and undertakes to the Purchaser for
the period prior to this Agreement and until the expiry of the Warranty
Period, in relation to itself, the AMC, it's the Subsidiary and the Fund in
the terms set forth in Schedule 3, and acknowledges that the Purchaser in
entering into this Agreement relies on such Vendor's Warranties.
6.2 The Purchaser hereby represents, warrants and undertakes to the Vendor in
the terms set forth in Schedule 2 and acknowledges that the Vendor is
entering into this Agreement relying on such Purchaser's Warranties.
6.3 The Vendor's Warranties are subject to the matters disclosed in writing to
the Purchaser under letter-dated July 23, 2002 addressed by Vendor, Pioneer
and the Employee Shareholders, and accepted and confirmed by the Purchaser.
The said letter alongwith its annexures is referred to as the "Disclosure
Letter". The matters disclosed in the Disclosure Letter shall be acceptable
to the Purchaser and shall be exceptions to the relevant Vendor's Warranty
and wherever the term `except as disclosed' is used in Schedule 3 it shall
mean as disclosed in the Disclosure Letter. The Purchaser shall not make
any Claims under the Vendor Warranties in relation to the items specified
in the SPA Escrow Agreement.
6.4. The Vendor shall be entitled to make further additions to the Disclosure
Letter for events arising after the date hereof, at any time upto the
Completion Date. Provided that any additions to the Disclosure Letter as
contemplated in this
18
Clause 6.4 shall not be effective until after the Vendor has notified such
addition in writing to the Purchaser.
6.5 For the avoidance of doubt, each Vendor's Warranty is qualified by the
expression "to the best of the Vendor's knowledge after the Vendor having
exercised due care and made reasonable enquiry" and does not relate to any
forecasts, budgets and estimates with respect to matters on which the
Vendor's Warranties are given.
6.6 The rights and remedies of the Purchaser in respect of any breach of the
warranties shall not be affected because of an investigation (which shall
include the preparation of legal, financial and technical due diligence as
commissioned by the Purchaser) made prior to the execution of this
agreement or at any time until Completion Date in to the affairs of the
AMC, the Subsidiary or the Fund.
6.7 The Purchaser's Warranties and the Vendor's Warranties set forth in each of
Schedule 2 and Schedule 3, respectively, shall be separate and independent.
6.8 The Vendor further warrants to the Purchaser and its successors in title
that:
6.8.1 subject to Clause 6.8.2, the Vendor's Warranties shall be deemed
to have been repeated as at the Completion and all references
therein to the date of this Agreement were references to such
dates at the Completion; and
6.8.2 if after the signing of this Agreement and before Completion any
event shall occur or any matter arise which results or may result
in any of the Vendor's Warranties being unfulfilled to the
satisfaction of the Purchaser or being untrue, misleading or
incorrect in any respect at Completion, then the Vendor (at their
own cost) shall make any investigation and take such steps
concerning the event or matter which the Purchaser may reasonably
require.
7. RESTRICTION ON ANNOUNCEMENTS; CONFIDENTIALITY
7.1 Each Party undertakes that, prior to the Completion and thereafter, it will
not make any announcement in connection with this Agreement unless all of
the other Parties shall have given their written consent to such
announcement, including both as to timing and substance, except for
announcements required by applicable law or regulations, in which case any
information provided by the disclosing Party about the other Parties shall
require the prior written approval of such other Parties.
7.2 No Party shall, without the consent of the other Parties, during the
continuance of this Agreement or after its termination, disclose to any
Person (save to the extent to which it is obliged to make disclosure as a
result of applicable law or regulations or for the purposes of procuring
any approvals) this Agreement or any of the arrangements contemplated by
this Agreement or any information
19
relating to the AMC, the Trustee Company, the Subsidiary, the Fund, the
Purchaser and/or the Vendor obtained in the course of preparing the
Agreement or otherwise pursuant to this Agreement or the performance of the
transactions contemplated by this Agreement, or use such information
otherwise than as strictly required for the purpose of performing this
Agreement or in the best interests of the AMC, the Trustee Company, the
Subsidiary, the Fund, the Purchaser or the Vendor, as the case may be;
provided that the foregoing shall not prohibit disclosure by any Party to
its employees and Affiliates or to its professional advisers to the extent
necessary for the purpose of this Agreement and subject to such employees,
or Affiliates or professional advisers being subject to confidentiality
obligations no less onerous than those imposed by this Clause. The
obligations set forth under this Clause 7.2 shall survive the consummation
and termination of this Agreement.
7.3 At the Completion parties, shall be entitled to make their own press
releases provided the contents of the same have been mutual agreed prior to
such release.
8. ACCESS AND FURTHER ASSURANCEs
8.1 As from the date of this Agreement, the Vendor shall cause to give to the
Purchaser and its accountants, counsel and agents reasonable access, upon
reasonable prior notice and during normal business hours, to the premises
and all the books and records of the AMC and shall instruct the officers
and employees of the AMC to give promptly all information and explanations
to the Purchaser or any such persons as the Purchaser may reasonably
request, it being recognized that such access should not unduly hinder the
AMC's normal operations.
8.2 The Vendor agrees to, at any time and from time to time, upon the written
request of the Purchaser:
(a) promptly and duly execute and deliver all such further instruments and
documents, and do or procure to be done all such acts or things, as
such the Purchaser may reasonably deem necessary or desirable in
obtaining the full benefits of this Agreement and of the rights and
ownership herein granted; and
(b) do or procure to be done each and every act or thing which the
Purchaser may from time to time reasonably require to be done for the
purpose of enforcing the Purchaser's rights under this Agreement.
9. COSTS AND EXPENSES
9.1 Except as otherwise provided in Clause 9.2, each Party shall pay its own
costs and expenses (including the fees and costs of any financial or
technical advisors, lawyers or accountants engaged by it) in relation to
the negotiations leading up to the Transaction contemplated hereunder and
to the preparation,
20
execution and carrying into effect all documents referred to and or relate
to the Transaction here under including this Agreement.
9.2 Any stamp duty, fees or expenses payable in connection with the Transaction
including for the execution of this Agreement shall be borne by the
Purchaser.
10. TERMINATION
10.1 This Agreement may be terminated prior to the Completion:
(a) at the election of the Purchaser,
(i) under Clause 3.5;
(ii) for non fulfillment of the conditions in Clauses 4.2.1 and 4.2.2
due to the fault of the Vendor.
(b) at the election of the Vendor,
(i) under Clause 3.5;
(ii) for non fulfillment of the conditions in Clause 4.2.3 due to the
fault of the Purchaser.
(c) at any time on or prior to the Completion, by mutual written consent
of the Purchaser and the Vendors.
10.2 This Agreement shall stand fulfilled and terminated upon expiry of the
Warranty Period or payment of the Retention Amount under the SPA Escrow
Agreement to the Vendor or the Purchaser, as the case may be, in accordance
with the SPA Escrow Agreement which ever is later.
10.3 If this Agreement is terminated pursuant to Clause 10.1 then, except for
the provisions of Clauses 7, 11, and 14 (which shall survive the
termination), this Agreement shall have no further force and effect and
Parties shall have no further liability or claim against each other except
for those which have already been incurred prior to the termination or
except for those which relate to the provisions which survive the
termination.
10.4 In the event of the Completion of this Agreement or the ITI SPA or the
Employee SPA does not occur or this Agreement or the Pioneer SPA or the
Employee SPA is terminated before Completion, neither the Purchaser nor the
Vendor shall have any claim against each other and the interest on the MOU
Escrow Amount shall be paid by the Escrow Agent to the Purchaser by issuing
an instruction to the Escrow Agent under the prescribed form set out in the
Escrow Agreement.
21
11. NOTICES
11.1 Each notice, demand or other communication given or made under this
Agreement shall be in writing and may be given by facsimile, by personal
delivery or by sending the same by prepaid registered mail (or prepaid
registered airmail or a recognized international courier service where the
address of the Party to receive the notice is not in the same country as
that of the Party giving the notice) addressed to the Party concerned at
the address or fax number below (or such other address or fax number as the
addressee has by five (5) days' prior written notice specified to the other
Parties):
TO THE PURCHASER:
Address: Templeton Asset Management (India) Private Limited,
1st Floor, Sakhar Bhavan,
Nariman Point,
Mumbai 400 021,
Attention: Mr. Rajiv Vij
Phone: + 91 22 288 6129
Fax: + 91 22 288 6707
Email: rvij@templeton.com
IF TO ITI: The Investment Trust of India Limited
Address: 16, Neetaji Subhas Road, 4th Floor, Calcutta - 700 001
Attention: Mr. Sanjay Maloo
Phone: +91 33 220 7016
Fax: +91 33 248 7702
Email: smaloo1@hotmail.com
Any notice, demand or other communication so addressed to the relevant
Party shall be deemed to have been delivered (a) if given or made by
personal delivery, when actually delivered to the relevant address; and (b)
if given or made by prepaid registered post to an address within the same
country or by a recognized international courier service to an overseas
address, seven (7) days after the dispatch of the same; (c) if given or
made by prepaid registered airmail to an overseas address, ten (10) days
after the dispatch of the same; (d) if given or made by fax, upon dispatch
and the receipt of a transmission report confirming dispatch.
12. POST COMPLETION OBLIGATIONS
12.1 The post Completion obligations of the Vendor:
The Vendor covenants and agrees that, it by itself and or through its
Affiliate shall not without the consent of the Purchaser, from the
Completion until two (2) years after the Completion Date:
(a) in relation any mutual fund or AMC in India, undertake or act as
sponsor a trustee or asset management business, or carry on any
22
activity either as a shareholder (investor), advisor, manager,
consultant, technical know-how provider, under the mutual fund
industry in India;
(b) hire any the employees of the AMC and or induce them to leave the
employment of the AMC and join another asset management company under
different management or an organization carrying on activities of,
connected to or associated to a mutual fund.
12.2 The post Completion obligations of the Purchaser:
(a) obtain all the necessary approvals from SEBI and the Registrar of
Companies and such other authorities for change of name of the AMC and
the Trustee Company;
(b) shall take all steps as may be necessary for the purposes of changing
the corporate name (including obtaining approval from the Registrar of
Companies for the change of name and appropriate Board and shareholder
consents of the AMC, the Trustee Company) of the AMC, the Fund and the
Trustee Company by deleting the words "Pioneer" or "ITI" such that the
new name of the AMC, Fund or the Trustee Company will not contain the
words " Pioneer or ITI" or any other derivation thereof or any name,
brand or mark reasonably similar to any of them or reasonably capable
of confusion with any of them, and at the request of the Vendor
furnishing documentary evidence satisfactory in relation to the same.
The Purchaser will within one hundred and eighty (180) days of the
Completion, stop using the name "Pioneer" or ITI in relation to the
AMC, in its communication with third parties. Provided however that no
liability shall accrue to the Vendor on account of such usage. It is
clarified that the Purchaser shall have no right title or interest
into or over the name "Pioneer" or "ITI" at any time including during
the one hundred and eighty (180) days referred to above;
(c) shall not for a period of two (2) years from the Completion Date, hire
any the employees of the Vendor and or induce them to leave the
employment of the Vendor and join the Purchaser or its Affiliate in
India;
(d) provide an exit option to the unit holders as per the Regulations;
13. MISCELLANEOUS
13.1 This Agreement may not be amended, modified or supplemented except by a
written instrument executed by each of the Parties.
13.2 No waiver of any provision of this Agreement shall be effective unless set
forth in a written instrument signed by the Party waiving such provision.
No failure or delay by a Party in exercising any right, power or remedy
under this
23
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of the same preclude any further exercise thereof or the
exercise of any other right, power or remedy. Without limiting the
foregoing, no waiver by a Party of any breach by another Party of any
provision hereof shall be deemed to be a waiver of any subsequent breach of
that or any other provision hereof.
13.3 This Agreement shall inure to the benefit of the Parties and is binding
upon the Parties hereto and their respective successors, legal
representatives and permitted assigns. This Agreement shall not be
assignable by any Party, except with the written consent of the other
Parties.
13.4 This Agreement constitutes the whole agreement between the Parties relating
to the subject matter hereof and supersedes any prior (not simultaneous)
agreements or understandings with effect from the execution hereof as
regards the Transaction and with effect from the Completion as regards the
MOU Escrow Agreement.
13.5 Any liability of the Vendor to the Purchaser under this Agreement may in
whole or in part be released, compounded or compromised or time or
indulgence given by the Purchaser in its absolute discretion as regards any
such liability without in any way prejudicing or affecting the Purchaser's
rights against any other or others or the Vendor under the same or a like
liability.
13.6 Each and every obligation under this Agreement shall be treated as a
separate obligation and shall be severally enforceable as such and in the
event of any obligation or obligations being or becoming unenforceable in
whole or in part. To the extent that any provision or provisions of this
Agreement are unenforceable they shall be deemed to be deleted from this
Agreement, and any such deletion shall not affect the enforceability of
this Agreement as remain not so deleted.
13.7 This Agreement may be executed in one or more counterparts which, each of
which when so signed and taken together, shall be deemed an original but
all the counterparts shall together constitute one and the same instrument.
13.8 Subject to contract to the contrary the parties may pursue remedies
available under this Agreement. The Parties shall ensure that no such
remedy results in more than one claim against the Party concerned for the
same cause of action. It is agreed that no Party would be penalised twice
for the same claim or cause of action under this Agreement.
13.9 Nothing in this Agreement shall be deemed to constitute a partnership
between the Parties hereto or constitute any party the agent of another
party for any purpose.
13.10 The illegality, invalidity or unenforceability of any provision of this
Agreement, whether in whole or in part, under the law of any jurisdiction
shall not affect its legality, validity or enforceability under the law of
any other
24
jurisdiction nor the legality, validity or enforceability of any other
provision or part
14. GOVERNING LAW AND JURISDICTION
14.1 This Agreement shall be governed by and construed in accordance with the
laws of India.
14.2 Any dispute or claim arising out of or in connection with or relating to
this Agreement, or the breach, termination or invalidity hereof (the
"Dispute"), shall be referred to the CEO of the Vendor and the CEO of the
Purchaser for resolution. If the Dispute is not resolved within a period of
30 days from such referral then the Dispute shall be finally settled by an
arbitration which shall be governed by the Arbitration and Conciliation Act
1996 (the "Act ") as are in force at the time. For the purpose of such
arbitration, there shall subject to clause 14.3, be three arbitrators
appointed (each of them must be lawyers having significant expertise in the
commercial field), one nominated by Pioneer on hand and one nominated by
the Purchaser on the other hand and the third arbitrator appointed by such
appointed arbitrators (such board of arbitrators is referred to below as
the "Arbitration Board"). The place of arbitration shall be in Mumbai. All
arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any such dispute or claim strictly in accordance
with the governing law specified in Clause 14.1 of this Agreement. Judgment
upon any arbitral award rendered hereunder may be entered in any court
having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case
may be if required.
14.3 Notwithstanding Clause 14.1, in the event the Vendor raises any dispute in
relation to issues which are also raised by Pioneer under the its share
purchase agreement then the Vendor agrees that it shall together with
Pioneer jointly appoint only one arbitrator and the Purchaser shall appoint
one arbitrator.
14.4 Each Party shall co-operate in good faith to expedite (to the maximum
extent practicable) the conduct of any arbitral proceedings commenced under
this Agreement.
14.5 The costs and expenses of the arbitration, including, without limitation,
the fees of the arbitration and the Arbitration Board, shall be borne
equally by each Party to the dispute or claim, and each Party shall pay its
own fees, disbursements and other charges of its counsel.
14.6 Any award made by the Arbitration Board shall be final and binding on each
of the Parties as if it were parties to the dispute.
25
Schedule 1
LIST OF EMPLOYEE SHAREHOLDERS
LIST OF SHAREHOLDERS
NO OF AMT PER
NAME OF THE SHARE HOLDER FATHER'S NAME TYPE OF SHARES SHARES SHARE ADDRESS
1. Vivek Reddy D G K Reddy Equity 216600 10 12, Subba Rao Avenue
3 rd Street
Madras
Tamilnadu
2. Ravi Mehrotra Umesh Mehrotra Equity 100000 10 23 Cenotaph Road
Rahul Apts
Ground Floor
Flat B
Teynampet
Madras
3. R.Narayanan N Ramachandran Equity 5000 10 55 C MIG FLAT
A L MUDALIAR
ROAD
Madras
Tamil Nadu
4. Anoop Bhasker Amrit Rai Bhasker Equity 4000 10 44/5 3 rd street
East Abhirampuram
Madras
26
Tamilnadu
5. Anil Prabhudas JeevanPrabhudas Equity 4000 10 B 34 PA Towers
869PHRoad
Kilpauk
Madras
Tamilnadu
6. K N Sivasubramaniam Narayanan Equity 4000 10 No 2 22nd cross Street
Indira Nagar
Madras
Tamilnadu
7. R Sukumar A M Rajah Equity 4000 10 8, Sadulla Street
Madras
Tamilnadu
8. V Rajagopal Veeraraghavachari N K Equity 3000 10 No43 Kalaignar Street
Anna Nagar
Pammal
Madras
Tamilnadu
9. Lalitha Swamy K Ramaswamy Equity 2000 10 E 2 Sriji Apts
25 Rajasekharan Road
Mylapore
Madras
Tamilnadu
10. Prem Khatri J P Khatri Equity 2000 10 6 D Cambrae East
27
Victoria Cresent Road
Egmore
Madras
Tamilnadu
11. Tamil Selvi M Balasubramanian Equity 2000 10 61, Vasudevan Nagar
Jafferkhanpet
Ashok Nagar
Madras
Tamilnadu
12. P L Ambal Saravanan Equity 1500 10 C/O Kumarappa
Chethyar
162A Kamar Salai
Ramakrishna Nagar
Aiwarthirunagar
Madras
Tamilnadu
5 A Muthu Lakshmi
13. D Vijayraghavan K V Desikachari Equity 1500 10 Street
Muthu Lakshmi Nagar
Extn
Chitlapakkam
Madras
Tamilnadu
14. S Chellappa N Sivaguru Equity 1500 10 C 2, Paras Apts
Jeevarathnam Nagar
Adyar
28
Madras
Tamilnadu
15. S R Ramesh S K Ramamurthi Equity 1400 10 Vigneswar house (upstairs)
No 1 New Thillai Nagar
Plot 25, Part 6
P N Pudur
Coimbatore
Tamilnadu
16. Indira Menon P R Menon Equity 1200 10 No 9, M Block
Anna Nagar East
Madras
Tamil Nadu
17. Rajendra Mukadam Upendra Dhondo Mukadam Equity 1200 10 23/C Zaoba Wadi
Thakurdwar, JSS Road
Bombay
Maharashtra
18. Aseem Malhotra R I Malhotra Equity 1200 10 B 302 Rosewood Apts
Mayur Vi bar Phase I (Extn)
New Delhi
19. Samvita Reddy A Koti Reddy Equity 1000 10 73, E V K Sampath Road
Vepery
Madras
Tamilnadu
29
20. Sanjeev Patnaik K C Patnaik Equity 1000 10 No 67
kamaraja nagar
Ernavur
Ennore
Madras
Tamilnadu
21. G Srinivas G V Sastry Equity 1000 10 3, Ill Main Road
Kasturiba Nagar
Adyar
Madras
Tamilnadu
22. K Thirugnanam C Karuppiah Equity 1000 10 13, Park Street
108, Pandian Nagar
Thiru Nagar
Madurai
Tamilnadu
23. V N Srikanth V N Subba Rao Equity 1000 10 22 Umayal Road
Kilpauk
Madras
Tamilnadu
24. P K Saravanan P Kannabiran Equity 600 10 No 5,Ratnam Nagar
Thruvanmiyur
30
Madras
Tamilnadu
25. S Balasubramaniam TV Sivararnakrishnan Equity 600 10 No 4 Arul Jyothi
Rossary Church Road Lane
Santhome
Madras
Tamilnadu
26. Senthi Kumar M A Mariappan Equity 600 10 No 3, V Cross
Ammayappa Nagar
Trichy
Tamilnadu
27. R Anantharaman A Ramaswamy Equity 600 10 No 26,
Nore Veeraswamy Street
Nungambakkam
Madras
Tamil Nadu
28. K Bharati Raj M S Krishnamurthy Equity 500 10 No 102, Bazaar Road
Mylapore
Madras
Tamilnadu
29. R Sekhar S Ramamoorthy Equity 500 10 5 Raman Street
Madras
Tamilnadu
31
30. P S Balasubramaniam P Sitaraman Equity 500 10 A1 Damayanthi Apts
South Mada Street
Nungambakkam
Madras
Tamilnadu
31. J VS Ravi Kumar J Kameswara Sastry Equity 400 10 60-3-19, Ashok Nagar
SBI Colony Road
Near ITI
Vijaywada
Andhra Pradesh
32. A V Ravi Kumar A V N Murthy Equity 400 10 Lakshmi Sudha Nivas
54-1-30, Plot No 26
L.I.C Colony
Vijaywada
Andhra Pradesh
33. Vinay Kumar B Devadattam Equity 400 10 2/3 R T
Prakasam Nagar
Begumpet
Hyderabad
Andhra Pradesh
34. S Vidyasagar R S Mani Equity 400 10 K -7 Turn Bulls Road
Nandanam
Madras
Tamilnadu
32
35. B Parthiban N Balasubramaniam Equity 400 10 No 11 Jacob Street
Madipakkam
Madras
Tamilnadu
36. R Ramesh S Raju Equity 400 10 3/0, Supdt Qtrs
The Sea Farer's Club
Rajaji Salai
Opp- Reserve Bank Of India
Madras
Tamilnadu
37. Simon Solomon MT Solomon Raj Equity 400 10 1219, 17th Street
Anna Nagar West Extn
Madras
Tamilnadu
38. R S Gopalan S Rajan Equity 400 10 86,A V Krishnaswamy Street
Janaki Nagar
Valsarvakkam
Madras
Tamilnadu
39. K Balaji E Krishnan Equity 300 10 No 28-C Third Agraharam
Salem
Tamilnadu
40. P Jayaraman K Pitchai Raman Equity 300 10 No 3, 3 rd Cross
Ammoiyappa Nagar
35
Puthur
Trichy
Tamilnadu
41. T Srikumar M P Thiruvengadam Equity 200 10 No 28, III Street
Jayalakshmi Puram
N ungambakkam
Madras
Tamilnadu
42. B Srinivas Rao B Seetharamaraju Equity 200 10 No 20 Ambika Nagar Main Road
Madhavaram Milk Colony
Madras
Tamilnadu
43. MKannan Muruganandan Equity 200 10 270 G, GST Road
Thirunagar
Madurai
Tamilnadu
44. D Venkatesh B Deivasigamani Equity 200 10 10 Kandappa Gramani Street
Pu rasawalkam
Madras
Tamilnadu
369600
34
SCHEDULE 2
PURCHASERS WARRNTIES
1 ORGANISATION, GOOD STANDING AND QUALIFICATION: The Purchaser has been
duly incorporated and organised, and is validly existing in good
standing, under the laws of India. The Purchaser has the corporate
power and authority to carry on its business as currently conducted
and proposed to be conducted.
2 the Purchaser has the legal right and full power and authority to
enter into, deliver and perform this Agreement and any other documents
to be executed by the Purchaser pursuant to or in connection with the
Transaction which when executed will constitute valid and binding
obligation of the Purchaser, and enforceable against them in
accordance with their terms.
3 The execution, delivery and the performance by the Purchaser of this
Agreement and the respective obligations in relation to the
Transaction contemplated herein, do not and will not:
(i) breach or constitute a default under the Charter Document of the
Purchaser;
(ii) result in a violation or breach of or default under any
applicable law or regulation or of any order, judgment or decree
of any Court, Governmental Authority, regulatory body to which
each of the Purchaser is a party or by which the Purchaser or any
of its assets are bound.
(iii) Result in a breach of, or constitute a default under any
contract to which the Purchaser is a party
4 Except for the approvals of the FIPB, Reserve Bank of India and the
corporate approvals, no consent, approval, order or authorisation of,
or registration, qualification, designation, declaration or filing
with, any Governmental Authority or any other Person is required in
connection with the execution, delivery and performance by the
Purchaser, of this Agreement and or the Transaction and
5 All corporate action on the part of the Board, the board of directors
of the Purchaser, necessary for the authorisation, execution, delivery
of and the performance of all obligations of the Purchaser under this
Agreement have been taken as of the date of this Agreement;
35
SCHEDULE 3
VENDOR WARRANTIES
INTERPRETATION
In this Schedule, unless the context clearly indicates a contrary intention, -
(a) The provisions of the agreement ("Agreement") to which these
warranties relate to its interpretation shall apply, mutatis mutandis,
and the words and expressions defined in the Agreement shall bear the
same meanings in this Schedule;
(b) The warranties, representations and undertakings herein shall apply in
respect of each of the AMC and its Subsidiary (together "the AMC" for
the purpose of this Schedule), and references in these warranties to
AMC shall also be deemed where the context so admits, unless specified
otherwise, to apply to the Trustee Company;
(c) Where ever the warranty refers to accounts of the AMC it shall relate
to a period on or after April 1, 2001 unless specified otherwise.
1. AUTHORITY AND CAPACITY OF THE VENDOR
1.1 The Vendor is a company duly incorporated and validly existing under
the law of its incorporation.
1.2.1 The Vendor has the legal right and full power and authority to enter
into, deliver and perform this Agreement and any other documents to be
executed by the Vendor pursuant to or in connection with the
Transaction which when executed will constitute valid and binding
obligation of the Vendor, and enforceable against them in accordance
with their terms.
1.2.2 Subject to applicable laws, regulations and rules, the execution,
delivery and performance by the Vendor and the AMC, of this Agreement
and the respective obligations in relation to the Transaction
contemplated herein, do not and will not:
(i) breach or constitute a default under the respective Charter
Document of Vendor and AMC;
(ii) result in a breach of, or constitute a default under, any
Contract to which the AMC, or the Vendor is a party or by which
they are bound or give any third party a right to terminate or
modify, or result in the creation of any Encumbrance under any
agreement, licence or other instrument; or
(iii) result in a violation or breach of or default under any
applicable law or regulation or of any order, judgement or decree
of any Court,
36
Governmental Authority, regulatory body to which each of the
Vendor or the AMC is a party or by which each of the Vendor or
the AMC or any of their respective assets are bound.
1.2.3 Except for the approvals of the SEBI, FIPB, Reserve Bank of India, the
Trustees, the unit holders and the corporate approvals, no consent,
approval, order or authorisation of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority or
any other Person is required in connection with the execution,
delivery and performance by the Vendor or the AMC, of this Agreement
and or the Transaction and
1.3 VENDOR'S AMC SHARES:
(i) the Vendor's AMC Shares were validly issued and are fully
paid-up;
(ii) the Vendor is the sole beneficial owner of the its shares and is
registered as the sole owner of such shares;
(iii) the Vendor has clear and marketable title to its shares and that
the shares are free from any Encumbrance or claim, demand or
doubts, and the Vendor is not aware of any claims against their
shares or any circumstances which might reasonably believed to
lead to a claim or demand against the Vendor's AMC Shares;
(iv) the Vendor has good right, full power and absolute authority to
sell and transfer the Vendor's AMC Shares free from any third
party claim or demand of any nature and that they have not nor
anyone on their behalf have done, committed or omitted any act,
deed, matter or thing whereby the Vendor's AMC Shares is or can
be forfeited extinguished or rendered void or voidable; and
(v) that the Vendor has not entered into or arrived at any agreement
and/or arrangement, written or oral, with any person or party in
respect of the Vendor's AMC Shares, or their membership of the
AMC which, will render the sale of the sale and transfer of AMC
Shares violative of such agreements.
2. CORPORATE MATTERS
2.1 CHARTER DOCUMENT: The copies of the Charter Documents of the AMC
(having attached thereto all amendments made to date) delivered to the
Purchaser and filed with the Registrar of Companies are true and
complete copies, and the AMC has complied with all the provisions of
its Charter Documents and, in particular, has not entered into any
ultra vires transaction. All legal and procedural requirements and
other formalities concerning such Charter Documents have been duly and
properly complied with in all material respects.
37
2.2 ORGANISATION, GOOD STANDING AND QUALIFICATION: The AMC has been duly
incorporated and organised, and is validly existing in good standing,
under the laws of India. The AMC has the corporate power and authority
to own and operate its Assets and properties and to carry on its
business as currently conducted and proposed to be conducted.
2.3 CAPITALISATION AND OTHER PARTICULARS OF THE AMC: The particulars of
the AMC as disclosed in the Accounts are true, complete and correct as
of the date.
2.4 ISSUED SHARES: The 7,893,965 million shares now outstanding comprise
the entire issued share capital of the AMC. No modification or
variation of the terms of issue or the rights attaching to such Shares
has been made since the dates of issue.
2.5 PAID UP: All the issued shares of the AMC are fully paid up and the
AMC has not exercised nor purported to exercise or claimed any lien
over any of them.
2.6 CONDUCT IN RELATION TO CAPITAL: The AMC has not at any time repaid or
redeemed or agreed to repay or redeem any of its share capital or
otherwise reduced or agreed to reduce its issued share capital or
purchased any of its own shares or carried out any transaction having
the effect of a reduction of capital.
2.7 CONVERSION RIGHTS: No person has the right to call for the issue of
any share or loan capital of the AMC by reason of any conversion
rights or under any option or other agreement and there are no claims,
charges, liens, equities or encumbrances on the Vendor's AMC Shares.
2.8 OPTIONS, WARRANTS AND RESERVED SHARES: Except as disclosed in Clause
12.2(e) of the SPA, there are no outstanding options, warrants, rights
(including conversion or pre-emption rights) or agreements for the
subscription or purchase from the AMC of any shares in the capital
stock of the AMC or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the AMC, and no shares
of the AMC when issued, are subject to any pre-emptive rights, rights
of first refusal or other rights pursuant to any agreement or
commitment of the AMC as the case may be.
2.9 OTHER RIGHTS WITH RESPECT TO SHARES: Except as contemplated in this
Agreement, no voting or similar agreements exist relating to the AMC
Shares or any other securities issued by the AMC or the shares of the
Subsidiary which are presently outstanding or that may hereafter be
issued.
2.10 EXISTENCE OF SUBSIDIARIES: The AMC has a subsidiary called ITI Capital
Markets Limited , a company incorporated under the Companies Act 1956
and having its registered office at No.39, TTK Road, Alwarpet, Chennai
600 018 . The particulars of the subsidiary as the its capital and
other statutory details such as capital, director are disclosed in the
Disclosure Letter. Except for the Subsidiary the AMC does not own any
direct or indirect equity or voting interest in any other AMC,
partnership or any other legal entity.
38
2.11 CORPORATE RECORDS: Except as disclosed the statutory books, minute
books and register of members of the AMC have been properly and
accurately maintained and written up to date in all material respects
and contain full and accurate records of all resolutions passed by the
directors and the shareholders of the AMC and all issuances and
transfers of shares or other securities of the AMC. All such documents
are in its possession or under the control of the AMC.
2.12 REGISTER OF MEMBERS: Except as disclosed the register of members of
the AMC contains a complete and accurate record of the members of the
AMC and the AMC has not received any notice of any application for
rectification and so far as the Vendor is aware such members are the
beneficial owners of the shares listed against their names.
2.13 DIVIDENDS: Except as disclosed and except for the dividends declared
under an investment scheme operated by the AMC, the AMC has not
declared any dividend or made any distribution to its shareholders
since their incorporation.
2.14 POWERS OF ATTORNEY: Except for the powers of attorney disclosed in the
Disclosure Letter there are no outstanding powers of attorney given by
the AMC or the Fund.
2.15 WINDING-UP ORDERS: No order has been made, no resolution has been
passed, no petition has been presented by the AMC and no petition has
been presented by any other person for the Winding-up of the AMC; no
receiver or manager has been appointed by any person of the business
or assets of the AMC or any part thereof and there is no unfulfilled
or unsatisfied judgement or decree or court order outstanding against
the AMC.
2.16 The Vendor does not hold any equity or voting interest in any entity
that carries on any business that competes with the business of the
AMC or Fund in India.
3. ACCOUNTS AND RECORDS
3.1 Except as disclosed therein and except as disclosed, the Accounts and
the accounts for the period ending March 31, 2001 ("2001 Accounts") of
the AMC have been prepared in accordance with applicable law and in
accordance with accounting principles, standards and practices
generally accepted at the date of this Agreement in India and give a
true and fair view of the assets, liabilities and state of affairs of
the AMC at the Account Date.
3.2 MANAGEMENT ACCOUNTS: Except as disclosed, the Management Accounts have
been prepared in accordance with applicable law and in accordance with
accounting principles, standards and practices generally accepted at
the date of this Agreement in India and, subject thereto, on a basis
consistent with that adopted in preparing the audited accounts for the
previous two financial periods so as to give a true and fair view of
the assets, liabilities and state of affairs of the AMC at the
Management Account Date and of the profits or losses for the period
concerned and as at that date make:
39
3.2.1 full provision for all actual liabilities,
3.2.2 proper provision for all contingent liabilities, and
3.2.3 provision reasonably regarded as adequate for all bad and
doubtful debts.
3.3 ACCOUNTING AND OTHER RECORDS:
Except as disclosed, the AMC's books and records are in its possession or
under its control and have been properly maintained in accordance with all
applicable laws. As at the Completion Date, the AMC's books and records
will accurately record all transactions of the AMC up to and including [the
Management Accounts Date] and will be capable of being written up within a
reasonable time so as to record all subsequent transactions of the AMC.
3.4 CHANGES SINCE APRIL 1ST 2001 AS REGARDS THE AMC AND THE FUND: Except as
disclosed:
3.4.1 there has been no material adverse change in its financial
position or turnover and no event, fact or matter has
occurred that will give rise to any such change;
3.4.2 its business has been carried on in the ordinary course,
without any interruption or alteration in its nature, scope
or manner, and so as to maintain the same as a going
concern;
3.4.3 it has not entered into any transaction or assumed or
incurred any liabilities (including contingent liabilities)
or made any payment not provided for in the Accounts or the
Management Accounts otherwise than in the ordinary course of
carrying on its business;
3.4.4 its profits have not been affected by changes or
inconsistencies in account treatment, by any non-recurring
items of income or expenditure, by transactions of an
abnormal or unusual nature or entered into otherwise that on
normal commercial terms or by any other factors rendering
such profits exceptionally high or low;
3.4.5 no dividend or other distribution has been declared, made
or paid to its shareholders;
3.4.6 no share or loan capital or any other security giving rise
to a right over the capital has been allotted or issued or
agreed to be allotted or issued;
3.4.7 it has not redeemed or purchased or agreed to redeem or
purchase any of its share capital; and
40
3.4.8 except in the ordinary course of business, no debt or
liability has been incurred, assumed or guaranteed by the
AMC except, advance share application monies of Rs 450
lakhs, which will be returned to Pioneer.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES: Except as disclosed, there are no
liabilities of the AMC other than (I) liabilities disclosed or provided for
in the Accounts and the Management Accounts; (ii) liabilities incurred in
the ordinary course of business since the Management Accounts Date, none of
which results in a material adverse change in the financial position or
turnover of the AMC; or (iii) liabilities disclosed elsewhere in this
Agreement.
4. FINANCE
4.1 Except for the funds of the investors in the Blue Chip Fund, open end
Scheme aggregating to Rs 1.5 crores, which are lying with the Fund for want
of instruction from the investors, and except as disclosed, neither the AMC
nor the Fund has outstanding any obligation for the payment or repayment of
money, whether present or future, actual or contingent.
4.2 The AMC and the Fund have no encumbrance, mortgage, charge, pledge, lien
(save by operation of law in the ordinary course of business) or other
security interest or any other agreement or arrangement having a similar
effect subsisting over the whole or any part of its present or future
revenues.
4.3 Except for the payments under the Blue Chip Scheme and except as disclosed,
no borrowing of the Fund or AMC has become or is now due and payable or
capable of being declared due and payable, before its normal or originally
stated maturity and no demand or other notice requiring the payment or
repayment of money before its normal or originally stated maturity has been
received by the AMC.
4.4 No event or circumstance has occurred of which the Vendor is aware which is
or, with the giving of notice or lapse of time or both, shall be such as to
terminate, cancel or render incapable of exercise any entitlement to draw
money or otherwise exercise the rights of the AMC or Fund under an
agreement relating to borrowing.
5. TAXATION MATTERS
5.1 RETURNS, INFORMATION AND CLEARANCES, EXCEPT AS DISCLOSED AND TO THE BEST OF
THE VENDOR'S KNOWLEDGE AND UNDERSTANDINGS:
i) All returns, computations, notices and information which are or have
been required to be made or given by the AMC for a Taxation purpose
(i) have been made on a proper basis and are correct and (ii) none of
them is subject of any dispute with the Indian Taxation authorities.
41
ii) The AMC is in possession of sufficient information or has reasonable
access to such information to enable it to compute its liability to
Taxation.
5.2 TAXATION CLAIMS, LIABILITIES AND RELIEFS:
Except as disclosed, there is no liability of Taxation in respect of which
a claim has been made to the knowledge of the Vendor.
5.3 AMC RESIDENCE: The AMC has been resident for tax purposes in India
5.4 DEDUCTION OF TAX AT SOURCE: Except as disclosed, the liability on account
of late filing/remittance of returns for tax to be deducted at source does
not exceed an amount of Rs 25,000/- on account of interest and such returns
are true and correct in all material respects. To the best of our knowledge
and understanding the deductions have been made in accordance with law.
6. LEGAL MATTERS
6.1 Except as disclosed, the Vendor hereby represents and warrants in respect
of the AMC Trustee and the Fund that:
(i) NO VIOLATION OF LAW: There has not been any investigation or enquiry
by nor any notice or communication, or order, decree, decision or
judgment of, any court, tribunal, arbitrator, governmental agency or
regulatory body received by and against the AMC, with respect to any
material violation and/or there has been no subsisting violation to
comply with any such applicable law, regulation, byelaw or Charter
Documents, which has resulted in any liability or criminal or
administrative sanction;
(ii) PERMITS: Consistent with industry practice, the AMC has all permits,
approvals, authorisations, licenses, registrations, and consents
(including, without limitation, the registrations of the AMC with
SEBI), necessary for the conduct of its business as currently
conducted have been obtained and are in full force and effect. The AMC
is not in material breach of or in material default under any such
permit, approval, authorisation, franchise or license and the Vendor
are not aware of any event or circumstance under which any of those
licences, registrations, permissions or consents is likely to be
revoked terminated and/or cancelled, except for those which are
consequential arising out of this Agreement or the Transaction;
(iii) ETHICAL CODE OF CONDUCT: The AMC has not and has not authorised or
permitted any of its employees, agents or representatives to make or
promise any payment of anything of value to any Governmental Authority
or any employee, agent or representative of any
42
Governmental Authority for the purpose of obtaining or retaining
business; and
(iv) UNLAWFUL ACTS: The AMC has not, so far as the Vendor is aware, nor
have any of its Senior Executives in the course of theiremployment by
any act or default committed:
a. any criminal or unlawful act involving dishonesty;
b. any breach of trust; or
c. any breach of contract or statutory duty or any tortuous act
which could entitle any third party to terminate any contract to
which the AMC is a party;
which could have a material adverse effect on the AMC.
6.2 COMPLIANCE WITH AGREEMENTS: Except as disclosed, all the contracts and all
leases, tenancies, licences and agreements of whatsoever nature to which
the AMC is a party are, except as disclosed, valid, binding enforceable
obligations of the parties thereto and the terms thereof have been complied
with by the AMC and there have occurred no grounds for rescission,
avoidance or repudiation of any of the contracts or such leases, tenancies,
licences or agreements and no notice of termination or of intention to
terminate has been received in respect of any thereof.
6.3 LITIGATION:
6.3.1 Except as disclosed, and except as in the ordinary course of
business, since the Account Date no claim for damages or
otherwise has been made against the AMC.
6.3.2 The AMC, except as disclosed, is not involved whether as
plaintiff or defendant or other party in any claim, legal action,
proceeding, suit, litigation, prosecution, investigation, enquiry
or arbitration and no such claim, legal action, proceeding, suit,
litigation, prosecution, investigation, enquiry or arbitration is
pending against the AMC.
6.4 INSOLVENCY:
6.4.1 No order has been made, petition, presented, resolution passed or
meeting convened for the winding up (or other process whereby the
business is terminated and the assets of the AMC concerned are
distributed amongst the creditors and/or shareholders or other
contributories) of the AMC and there are no cases or proceedings
under any applicable insolvency, reorganisation, or similar laws
in any jurisdiction concerning the AMC and no events have
occurred which, under applicable laws, would justify any such
cases or proceedings.
6.4.2 No petition has been presented or other proceedings have been
commenced for an administration order to be made (or any other
order
43
to be made by which during the period it is in force, the
affairs, business and assets of the AMC concerned are managed by
a person appointed for the purpose by a Court, governmental
agency or similar body) in relation to the AMC, nor has any such
order been made.
6.4.3 No receiver (including an administrative receiver), liquidator,
trustee, administrator, custodian or similar official has been
appointed in any jurisdiction in respect of the whole or any part
of the business or assets of the AMC and no step has been taken
for or with a view to the appointment of such a person.
6.4.4 The AMC is not insolvent as on date.
7. TRADING AND CONTRACTUAL ARRANGEMENTS
7.1 CAPITAL COMMITMENTS: Since March 17, 2002 (the "MOU Date"), except under
various investment schemes operated by the AMC for its clients, the AMC:
7.1.1 has not entered into any capital commitments;
7.1.2 is not, nor has been, party to any unusual, long-term or onerous
commitments, contracts or arrangements otherwise at an arm's
length basis in the ordinary course of business;
7.1.3 except as disclosed, is not party to any agency,
distributorship, marketing, purchasing, agreement or arrangement
that restricts its freedom to carry on its business in such
manner as it thinks fit; and
7.1.4 is not, nor has agreed to become, a member of any joint venture,
consortium, partnership or other unincorporated association
(other than a recognised trade association).
7.2 CONTRACTS: The AMC is not a party to or bound, except as disclosed, by any
Contract (collectively, "Material Contracts") that:
7.2.1 grants management, operational or voting rights in the AMC to any
Person;
7.2.2 is a consulting Contract that involves payments of an amount
equal to or in excess of Rs. 1 million for any 12-month period;
7.2.3 is a non-competition Contract restricting in any way the
business activities of the AMC;
7.2.4 was entered into outside of the ordinary course of business of
the AMC;
7.2.5 is a Contract with any Person relating to the use of the Assets
of the AMC, including without limitation use of the Assets for
Internet services, telephone services or the provision of data or
other value-added services, excluding Contracts with its
customers or clients;
44
7.2.6 is a Contract involving subscriber management or systems, call
centres or other customer service systems;
7.2.7 The AMC is not in default in the performance, observance or
fulfilment of any of the material obligations, covenants or
conditions contained in any Contract to which it is a party. Each
Material Contract has been duly authorised, executed and
delivered by the AMC, and constitutes a valid and binding
obligation of each party thereto, enforceable against each party
thereto in accordance with its terms. To the best of the Vendor
knowledge, no party (other than the AMC) is in material breach of
any Material Contract or has indicated any intention to terminate
any such Contract prior to the expiration of its term.
7.3 ARRANGEMENTS WITH ASSOCIATES ETC:
Except as disclosed:
7.3.1 There is no indebtedness (actual or contingent) nor any
indemnity, guarantee or security arrangement, except as
disclosed, between the AMC and any current or former employee,
current or former director or any current or former consultant of
the AMC.
7.3.2 The AMC is not a party to any contract, arrangement or
understanding, except as disclosed, with any current or former
employee, current or former director of the AMC other than the
employment contracts.
7.3.3 Other than employment contracts with the Employee Shareholders,
there are no existing contracts or arrangements, except as
disclosed, between or involving the AMC and any of the Vendor
and/or any of the directors.
7.4 TRANSACTIONS WITH DIRECTORS:
There is no outstanding:
7.4.1 loan, except as disclosed, made by the AMC to, or to the AMC, by
the Vendor, or any director or officer of the AMC;
7.4.2 agreement or arrangement, except as disclosed, to which the AMC
is a party and in which the Vendor or any director of the AMC;
7.4.3 Related Party Transaction: Except as disclosed, there are no
Contracts, understandings, transactions or proposed transactions
between the AMC and any Related Party on the other hand. Except
for loans/advances aggregating to not more than Rs. 65 lacs made
to any single employee, pursuant to staff Housing/Vehicle
Assistance Scheme existing as of the date of this Agreement, no
Related Party or employee of the AMC is indebted to the AMC, nor
is the AMC indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Vendors'
knowledge, no such Person is, directly or
45
indirectly, interested in any Contract with the AMC, excluding
employment contracts.
7.5 Investment Management Agreement: The Investment Management Agreement
executed between the Trustee Company and the AMC is the only investment
management agreement for the family of funds operated and managed by the
AMC on behalf of the Trustee Company.
7.6 Guarantee: Except as disclosed in the Accounts, there is not outstanding
guarantee, indemnity, surety or comfort (whether or not legally binding)
given by or for the benefit of the AMC.
8. EMPLOYEES
8.1 DISCLOSURE OF MATERIAL FACTS:
8.1.1 Except as disclosed, all material facts and matters relating to
the employment of all employees of the AMC have been disclosed to
the Purchaser.
8.1.2 The AMC has no collective agreements, arrangements and other
understandings with any recognised trade union, staff association
or other body representing the employees of the AMC and, to the
best of the Vendor's knowledge, no labour union has requested,
sought or attempted to represent any employees, representatives
or agents of the AMC. There is no strike or other labour dispute
involving the AMC.
8.1.3 STATUS OF EMPLOYEES: Except as disclosed to the best of the
Vendor's knowledge, no Senior Executive has terminated their
employment with the AMC since the MOU Date.
8.1.4 EMPLOYMENT AGREEMENTS AND COMPENSATION ARRANGEMENTS: Except as
disclosed, other than standard employment contracts of the AMC in
the form as disclosed, and the employment contract of the current
CEO of the AMC as disclosed, the AMC is not a party to nor bound
by any currently effective employment contract (other than
contracts that can be terminated on an at-will basis), deferred
compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation
agreement. To the best of the Vendor knowledge, none of these
employees or the CEO is in breach of their respective employment
contracts or any terms by which any such person may have been
seconded to the AMC.
8.2 COMPLIANCE WITH REQUIREMENTS: Except as disclosed, the AMC has in relation
to each of its employees and (so far as relevant) to each of its former
employees:
46
8.2.1 complied in all material respects with its obligations (as
appropriate) under relevant laws and all other statutes and
regulations relevant to its relations with each employee or the
conditions of service of the employee and has maintained adequate
and suitable records regarding the service of the employee;
8.2.2 discharged or adequately provided for in all material respects
its obligations to pay all salaries, wages, commissions, bonuses,
overtime pay, holiday pay, sick pay and other benefits of or
connected with employment upto the date of this Agreement; and
8.2.3 complied in all material respects with all its obligations under
the master mediclaim policy.
8.3 AGREEMENTS: Except as disclosed, the AMC has not since the MOU Date entered
into:
8.3.1 any agreement or arrangement to make any payments (other than
emoluments) to or on behalf of any of its directors or employees;
8.3.2 any contract of service with any employee, which is not
terminable by the AMC by three months' notice or less without
payment of compensation (except as provided by statute);
8.3.3 any agreement imposing a legal obligation on the AMC to increase
the rates of remuneration of, or to make any bonus or incentive
payments or any benefits in kind or any payments under a
profit-sharing scheme to or on behalf of, any of its employees at
any future date which would result in an increase in the AMC's
employment costs;
8.3.4 any negotiation for a change in the emoluments or other terms of
engagement of any grade of the AMC's employees resulting in an
increase in the AMC's employment costs;
8.3.5 any agreement or arrangement for the provision of compensation
on the termination of employment of any employee of the AMC,
beyond the minimum required by law and by the employment
contracts.
8.4 DISPUTES:
8.4.1 Except as disclosed, no subsisting material dispute has arisen
since incorporation between the AMC and any member or category of
its employees or former employees.
8.4.2 Except as disclosed, there are no significant complaints pending
against the AMC of whatsoever nature in relation to any of its
employees or former employees and there is no industrial action
or dispute or of such nature existing in respect of or concerning
any employees or former employees of the AMC.
47
8.4.3 Except as disclosed, no employee has given notice of termination
of his contract of employment or is under notice of dismissal.
8.4.4 Except as disclosed, the AMC has not offered any contract of
employment to any person for a salary of more than [Rs.1 million]
per annum, which offer remains outstanding.
8.5 PENSIONS: Except as disclosed, the AMC does not make, and is not party to
any arrangement under which it could be liable to make payments (except for
statutory payment) for providing retirement, death, disability, life
assurance or medical benefits to any person.
9. OPERATIONS AND COMPLIANCE OF THE FUND AND ITS SCHEMES:
9.1 ACCOUNTS: Except as disclosed, the 2001 Accounts and the Accounts of the
Fund and its Schemes have been prepared in accordance with the Regulations
and the Schedule Nine of the Regulations;
9.2 LIABILITIES AND NPAS: Except as disclosed and except as disclosed in the
portfolio statement the Fund and the Schemes do not have any non-performing
other than those reflected in the 2001 Accounts, the Accounts and
Management Accounts incurred in the ordinary course of business.
9.3 ACTIVITIES SINCE ACCOUNTS DATE: Except as disclosed and otherwise than in
the ordinary course of business, since the Accounts Date, there has not
been:
9.3.1 any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets used by
the AMC or the Fund or the operating results or the business of
the Fund as currently conducted;
9.3.2 any waiver by the AMC or the Fund of a valuable right or of a
debt owed to the Fund or any of its Schemes with a value of over
Rs. 500,000 owed to it;
9.3.3 any material change or amendment to a contract by which the Fund
is bound, except for changes or amendments which are expressly
provided for or disclosed in this Agreement;
9.3.4 any declaration or payment of any dividend or other distribution
by any Scheme of the Fund otherwise than in ordinary course of
business;
9.3.5 any debt or liability incurred, assumed or guaranteed by the
Fund or any of its Schemes otherwise than in ordinary course of
business.
48
9.4 CURRENT OPERATIONS: Except as disclosed, to the best knowledge of the
Vendor, there is no existing fact or circumstance as on date that has a
material adverse effect on the ability of the Fund or Schemes to conduct
its business as currently conducted.
9.5 TAXES: The liability/ penalties on account of late filing/remittance of
returns for tax to be deducted at source does not exceed an amount of
Rs.2,35,000/- on account of interest and such returns are true and correct
in all material respects. To the best of our knowledge and understanding
the deductions have been made in accordance with law.
COMPLIANCE
9.5 A list of the all the Schemes operated by the Vendor is attached in
Annexure 4.3 of the Disclosure Letter. There has been no material adverse
change that is inconsistent with normal industry conditions in any of the
information contained in the offer documents of the Schemes since the [MOU]
Date;
9.6 AUM: (i) The Vendor represents that the Mutual Fund, as on February 20 2002
had assets under management of Rs. 3833.79 crores in the equity schemes and
Rs. 1476.68 crores and under fixed-income schemes aggregating to assets
under management at Rs.2357.10 crores as certified by the auditors.
(ii) the Vendor represents that the Mutual Fund, as on July 19, 2002 had
assets under management of Rs.1405.80 crores in the equity schemes and Rs.
2688.85 crores and under fixed-income schemes aggregating to assets under
management at Rs. 4094.64 crores as certified by the auditors.
9.7 COMPLIANCE WITH REGULATIONS: Except as disclosed, the Vendor represents and
warrants that:
9.7.1 The affairs of the Fund have been conducted materially in
accordance with the Regulations and the related circulars of the
Regulations.
9.7.2 The accounting operations of the Fund and the Schemes have
materially been carried out in accordance with Schedule Nine of
the Regulations and with the guidance note of Institute of
Chartered Accountants of India.
9.8 The Code of Ethics relating to conduct of the directors of the Trustee and
the employees of the AMC and Code for Personal Trading and Insider Trading
guidelines have been complied with and the AMC is not aware of any
violations thereof;
9.9 The business of the Schemes has been conducted generally in a bonafide
manner with the interests of the unit holders paramount;
49
9.10 The AMC fees and the other expenses charged to the Fund and the Schemes are
within the limits provided in the Regulations and the offer documents of
the respective schemes;
9.11 That the entry and exit loads collected from the investors has been
utilised in accordance with the Regulations;
9.12 The investor services have been rendered fully in accordance with the
Regulations;
9.13 The offer documents (including abridged offer documents)/sales
literature/annual reports /all sales material have been fully prepared and
updated in accordance with the Regulations;
10. ASSETS
10.1 THE PROPERTIES: Except as disclosed, the Properties shown in Schedule_
comprise all of the premises and land owned, leased, occupied or licensed
used in connection with the businesses of the AMC and the Fund. The AMC has
provided to the Purchaser, except as disclosed, true and complete copies of
documents for all immoveable property owned, leased and or occupied by the
AMC. The AMC is in compliance in all material respects with all such
leases.
10.2 TITLE: Except as disclosed, the AMC has full and clear title to the
immoveable properties owned by the AMC which free and clear of all
Encumbrances and there is no dispute pending or of which the Vendor is
reasonably aware with regard to the title or rights to any such owned
property.
10.3 STATUTORY OBLIGATIONS, NOTICES AND ORDERS: Except as disclosed, in relation
to each of the owned properties, no notices, orders, proposals,
applications, requests or schedule of dilapidation, demands for duty or
taxes affecting or relating to any of such Properties have been served or
made by any authority on the AMC or the Fund.
10.4 NOTICES OF BREACH: Except as disclosed, in relation to the leased or
licensed immovable property occupied by the AMC or the Fund neither the AMC
nor the Fund has not received any notice or complaint from the landlord of
any breach of the terms of the leases or tenancy agreements which would
entitle the landlord to terminate the leases or agreements or claim damages
for breach of terms or covenant; under which such properties are held.
10.5 DISPOSAL OF ASSETS: Except for the sale of securities owned by the AMC and
except as disclosed, no Assets of the AMC above the value of Rs.
25,000/-have been disposed of since July 1, 2001 to June 30, 2002 except as
disclosed and in the ordinary course of business.
50
10.6 STAMP DUTY: All documents, except as disclosed, to which the AMC or Fund is
a party, or which form part of the title to any asset owned or possessed by
the AMC, or which the AMC or the Vendor may need to enforce or produce in
evidence in any court of law have been duly stamped and registered.
10.7 TRANSACTIONS NOT AT ARM'S LENGTH:
10.7.1 Since the MOU Date, the AMC does not own, nor has agreed to
acquire, any asset, nor, has received or agreed to receive any
services or facilities (including, without limitation, the
benefit of any licensee or agreements), the consideration for the
acquisition or provision of which was otherwise than on an arm's
length basis.
10.7.2 Except as disclosed, since the MOU Date, the AMC has not
disposed, nor has agreed to dispose, of any asset, nor has
provided or agreed to provide any services or facilities
(including, without limitation, the benefit of any licences or
agreements), the consideration for the disposal or provision of
which was or will be less than its market value, or otherwise
than on an arm's length basis.
10.8 CONTROL OF RECORDS AND INFORMATION: Except as stated in Annexure 3.3 of the
Disclosure Letter and subject to the Custodian Agreement, all records and
information belonging to the AMC or the Fund or relating to their affairs
(whether or not held in written form) are in the exclusive possession and
under the direct control of the AMC and or the Fund and subject to
unrestricted access by them.
10.9 INTELLECTUAL PROPERTY
10.9.1 The AMC has such interest in any intellectual property rights
and has, as disclosed, entered into any agreement for:
(i) the licensing or use of intellectual property rights; or
(ii) the provision or acquisition of know-how or technical
information or assistance; or
(iii) the prohibition or restriction of the disclosure of any
know-how or technical information.
10.9.2 INTELLECTUAL PROPERTY RIGHTS.
(i) True and complete copies of all licenses granted to or by
the AMC in respect of any Intellectual Property
(collectively, the "IP Licenses"), have been made available
to the Purchaser. Except as provided in the IP Licenses, the
AMC is not obligated to pay any royalties or other payments
to any Person in respect of Intellectual Property used by
the AMC. The AMC
51
is not in breach of any IP License or of any agreement under
which any confidential business information was or is to be
made available to it;
(ii) Except as otherwise set out in the respective IP Licenses,
(1) all rights in all Intellectual Property and confidential
business information owned or otherwise required for the
business of the AMC as currently conducted are vested in or
validly granted to the AMC and, (2) except as disclosed in
relation to paragraph (i) above, all renewal fees and steps
required for their maintenance or protection have been paid
and taken as on date;
(iii) To the best of the Vendor knowledge, the processes and
methods employed, the services provided, the businesses
conducted and the products, used or dealt with by the AMC,
do not, or at the time of being employed, provided,
conducted used or dealt in did not, infringe the rights of
any other Person in any Intellectual Property or business
information;
(iv) To the best of the Vendor knowledge, there is not, nor has
there been at any time, any unauthorised use or infringement
by the AMC of any of the Intellectual Property or
confidential business information owned or otherwise
required for the business of the AMC.
11. INSURANCE
Assets of the AMC and the Fund as stated in Annexure 11 of the Disclosure
Letter are at the date of this Agreement adequately insured according to
prudent business practices thereof against fire and other risks normally
insured against by companies carrying on the same classes of business or
owing assets of a similar nature and all such insurances are in full force
and effect and the premiums have been paid.
12. CONFIDENTIALITY
So far as the Vendor are aware neither the AMC nor the Fund have disclosed
or permitted to be disclosed or undertaken or arranged to disclose to any
person any of its know-how, secrets or confidential information other than
under an obligation of confidentiality.
13. GENERAL
13.1 NO MISREPRESENTATION: No representation, warranty or statement by the AMC,
the Vendor in this Agreement, or in the Disclosure Letter, or Exhibit,
Schedule of this Agreement, statement or certificate furnished to the
Purchaser
52
pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
made herein, in light of the circumstances under which they were made, and
are not misleading;
13.2 FULL DISCLOSURE: To the best of knowledge of the AMC and the Vendor, there
are no fact or circumstance relating to the affairs of the AMC which has
not been disclosed to the Purchaser and which if not disclosed might
reasonably have been expected to influence the decision of the Purchaser to
enter into this Agreement; and
13.3 ACCURACY AND ADEQUACY OF INFORMATION DISCLOSED TO THE PURCHASER: All
information contained in this Agreement, Disclosure Letter and all other
information which has been given in writing or made available by or on
behalf of the Vendor to the Purchaser or its agents, employees or
professional advisers in the course of the negotiations leading to this
Agreement or in the course of any due diligence or other investigation
carried out by or on behalf of the Purchaser prior to entering into this
Agreement was when given and remains true, complete and accurate in all
respects and to the best knowledge of the Vendor, the Vendor is not aware
of any fact or matter or circumstances which have not disclosed in writing
to the Purchaser or which renders any such information untrue, inaccurate
or misleading or the disclosure of which might reasonably affect the
willingness of the Purchaser to purchase the AMC Shares or the price at or
terms upon which the Purchaser would be willing to purchase them.
53
Schedule 4
List of Senior Executives
1. Mr. Vivek Reddy
2. Mr. Ravi Mehrotra
3. Mr. R. Narayanan
4. Mr. Anoop Bhaskar
5. Mr. Anil Prabhudas
6. Mr. K N Sivasubramaniam
7. Mr. R Sukumar
8. Mrs. Lalitha Swamy
9. Mr. S Chellappa
54
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED,
By its duly authorised signatory
Name: Mr Rajiv Vij /s/ Rajiv Vij
INVESTMENT TRUST OF INDIA LIMITED
By its duly authorised signatory
Name: Mr Sanjay Maloo /s/ Sanjay Maloo
55
EXHIBIT 10.67
-------------
(Continued)
THIS AGREEMENT is made at Mumbai as of the 23rd day of July, 2002 AMONG:
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED, a company incorporated under
the laws of India and having its registered office at 1st Floor, Sakhar Bhavan,
Nariman Point, Mumbai 400 021, ("Purchaser" which expression shall unless
repugnant to the context thereof include its successors and permitted assigns);
and
MR. VIVEK REDDY, an Indian Inhabitant, son of Mr. D.G.K. Reddy, having his
address at Pioneer ITI AMC Limited, Century Centre 75 TTK Road, Chennai -
600018, a shareholder and Chief Executive Officer of Pioneer ITI AMC Limited
acting for himself and such other employee and non-employee shareholders of the
AMC, as listed in Schedule 1 to the Employee MOU as defined herein below (the
Vendors).
1
WHEREAS:
A. The Pioneer ITI AMC Limited a company incorporated under the provisions of
the Companies Act, 1956 and having its registered office at Century Centre,
75 T.T.K. Road, Alwarpet, Chennai - 600018 India (hereinafter referred to
as "the AMC"), is the asset management company to the Pioneer ITI Mutual
Fund, a mutual fund set up and registered with the Securities and Exchange
Board of India ("SEBI") under the SEBI (Mutual Funds) Regulations, 1996.
B. The Investment Trust of India Limited, a company incorporated under the
provisions of the Indian Companies Act, 1913 and having its registered
office at "Mashkur", 1, Krishnama Road, Nungambakkam Chennai - 600 034,
India ("ITI") and Pioneer, collectively as on the date hereof hold 95.3 %
of the shares of AMC and the Employees Shareholders hold 4.7 % of the
shares of AMC.
C. Pursuant to a Memorandum of Understanding dated 17th March 2002 entered
into amongst the Purchaser, ITI and Pioneer, (the "MOU"), ITI and Pioneer
agreed to sell and the Purchaser agreed to purchase the AMC Shares held by
ITI and Pioneer on certain terms and conditions and the manner set out
therein. It was also agreed that the Trustee Shareholders would be procured
to sell to the Purchaser or its nominee, the Trustee Company Shares at the
same time or immediately after the Completion.
2
D. The Purchaser had also entered into a memorandum of understanding dated
17th March 2002 with the Employee Shareholders (defined herein below) of
the AMC (the "Employees MOU") for the purchase of their shares in the AMC.
E. The Purchaser has conducted a due diligence of the affairs of the AMC and
the Trustee Company pursuant to and in accordance with the terms of the MOU
and is desirous of acquiring the Vendors's AMC Shares held by the Vendors
in the AMC on the terms and conditions set out herein.
F. Simultaneously the Purchaser has also entered into separate Share Purchase
Agreements each dated 23rd July 2002 with ITI and Pioneer for the purchase
of the respective shares held by them in the AMC.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following meaning:
3
"ACCOUNTS" means the unaudited balance sheet of the AMC and its Subsidiary,
for the period ending the Accounts Date which shall be audited prior to
Completion, and the audited statements of profit and loss and cash flows of
the AMC and its Subsidiary, ended on such date and as disclosed;
"ACCOUNTS DATE" means March 31, 2002;
"AFFILIATE" of a Person (the "Subject Person") means (i) in the case of a
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 a Subject Person that is a natural Person, any other
Person that, either directly or indirectly through one or more intermediate
Persons, is controlled by the Subject Person. For purposes of this
definition, "control" means the power to direct the management or policies
of a Person, whether through the ownership of over 50% of the voting power
of such Person, through the power to appoint over half of the members of
the board of directors or similar governing body of such Person, through
contractual arrangements or otherwise;
"AMC SHARES" means collectively the:
(i) Vendors's AMC Shares; and
(ii) ITI's AMC Shares; and
(iii) Pioneer's AMC Shares;
-
"AMC PURCHASE PRICE" means Rs. 133,971,013.00 (Rupees One Hundred Thirty
Three Million, Nine Hundred Seventy One Thousand And Thirteen Only) payable
to the Vendors;
"ASSETS" means all assets, rights and privileges of any nature and all
goodwill associated therewith of the AMC, all Intellectual Property,
Equipment and Software, and rights in respect of the Immovable property;
"BASIC DOCUMENTS" means, collectively, the Charter Documents, the
Memorandum of Association and Articles of Association of the Trustee
Company, the Investment Management Agreement dated 23rd July 1993 executed
amongst the AMC and the Trustee Company, the Trust Deed dated 29th July
1993 amongst ITI and the Trustees including the variations thereto, and the
Custodian Agreement dated 19th April 2001 amongst the AMC and the Trustee
Company and Deutsche Bank AG;
"BOARD" means the board of directors of the AMC;
"CLAIMS" means the reimbursement and or payment of claims which have arisen
or may arise to the AMC, and which have been agreed to be set off against
the Retention Amount in accordance with the SPA Escrow Agreement;
4
"CHARTER DOCUMENTS" means the Articles of Association and the Memorandum of
Association of the AMC;
"COMPLETION" means the completion of the sale and purchase of the Vendor's
AMC Shares pursuant to Clause 4.1, which completion shall occur
simultaneous with the completion of sale and purchase of the ITI's AMC
Shares, the Pioneer's AMC Shares and the Trustee Company Shares;
"COMPLETION DATE" shall have the same meaning as set out in Clause 4;
"CONTRACTS" means all contracts, agreements, licenses, engagements, leases,
financial instruments, purchase orders, commitments and other contractual
arrangements entered into by the AMC;
"DISCLOSURE LETTER" shall have the same meaning ascribed in Clause 6.3.
"EMPLOYEE SHARES" means 3,69,600 fully paid equity shares of Rs 10/- each,
representing 4.7% of the issued capital of the AMC, held by the Employee
Shareholders;
"ENCUMBRANCE" means (i) any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, deed of trust, title retention,
security interest or other encumbrance of any kind securing, or conferring
any priority of payment in respect of, any obligation of any Person,
including without limitation any right granted by a transaction which, in
legal terms, is not the granting of security but which has an economic or
financial effect similar to the granting of security under applicable law,
(ii) any proxy, power of attorney, voting trust agreement, interest,
option, right of first offer, or refusal or transfer restriction in favour
of any Person and (iii) any adverse claim as to title, possession or use;
"EQUIPMENT" means all the plant and machinery, tools and equipment,
vehicles and office furniture, computer equipment (including without
limitation servers, personal computers, mainframes, modems, screens,
terminals, keyboards, disks, printers, cabling and associated and
peripheral electronic equipment) and other tangible assets, but excluding
Software;
"ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior Partners,
Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia building, 123
M. G. Road, Mumbai 400 023 (which expression shall mean to include their
respective successors);
"FIPB" means the Foreign Investment Promotion Board of the Ministry of
Industry of India;
"FUND" means the Pioneer ITI Mutual Fund, a mutual fund set up and
registered with the Securities and Exchange Board of India, and includes
all the mutual fund schemes floated there under;
5
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof; any supranational or trade agency, department, agency or
instrumentality of any government or political subdivision thereof;
departments, bodies, regulatory authorities, government authorities, any
court or arbitral tribunal; and the governing body of any -securities
exchange or other securities self-regulatory body;
"IMMOVABLE PROPERTY" means the immovable properties owned, leased, licensed
and or occupied by the AMC;
"INTELLECTUAL PROPERTY" means all letters patent, trademarks, service
marks, registered designs, domain names and utility models, copyrights,
inventions, confidential information, brand names, database rights,
know-how and business names and any similar rights situated in any country
and the benefit (subject to the burden) of any of the foregoing (in each
case whether registered or unregistered and including applications for the
grant of any of the foregoing and the right to apply for any of the
foregoing in any part of the world) owned by the AMC, Trustee or the Fund ;
"IP LICENSES" shall have the meaning set forth in Clause 10.9 of Schedule
3;
"ITI'S AMC SHARES" means, 37,65,762 fully paid equity shares of Rs 10/-
each, representing 47.7 % of the issued capital of the AMC;
"LIABILITIES" means all indebtedness and other liabilities of any nature
whatsoever, actual or contingent, and whether or not of a nature required
to be disclosed in the accounts of the AMC and its Subsidiary;
"LITIGATION" shall have the meaning set forth in Clause 9(a)(i) of Schedule
3;
"MANAGEMENT ACCOUNTS" means the un-audited balance sheet of the AMC and its
Subsidiary and the un-audited statements of income and cash flows for
period ending June 30, 2002;
"OWNERSHIP" means, at any time ownership of the Shares on a fully diluted
basis, assuming the exercise, conversion or exchange of all options,
warrants and other securities exercisable for or convertible or
exchangeable into Shares regardless of whether such options, warrants or
other securities are currently exercisable, convertible or exchangeable at
such time;
"PARTIES" means the Vendors and the Purchaser and "PARTY" means any of
them;
"PERSON" means any individual, firm, company, Governmental Authority, joint
venture, association, partnership or other entity (whether or not having
separate legal personality);
6
"PIONEER" shall mean Pioneer Investment Management, Inc. a company
incorporated under the laws of Delaware and having its principle office at
60, State Street, Boston, Massachusetts, U.S.A;
"PIONEER'S AMC SHARES": means 37,58,603 fully paid equity shares of Rs 10/-
each, representing 47.6% of the issued capital of the AMC held by Pioneer;
"PURCHASER'S WARRANTIES" means the representations, warranties and
undertakings of the Purchaser set forth in Schedule 2;
"REGULATIONS" means the SEBI (Mutual Fund) Regulations 1996 and as amended
from time to time;
"RELATED PARTY" means with respect to the AMC or a Subsidiary, as the case
may be, (i) any shareholder of the AMC or such Subsidiary, (ii) any
director of the AMC or such Subsidiary, (iii) any Senior Executive of the
AMC or such Subsidiary, (iv) any relative of any individual shareholder,
director or Senior Executive of the AMC or such Subsidiary (v) any Person
in which any shareholder, director or Senior Executive of the AMC or such
Subsidiary has any shareholding interest, other than a passive shareholding
of less than 10% in a publicly listed company, and (vi) any other Affiliate
of the AMC or such Subsidiary or of a shareholder or director of the AMC or
such Subsidiary;
"RETENTION AMOUNT" means an amount of Rs. 462,982,500 (Rupees Four Hundred
and Sixty Two Million Nine Hundred And Eighty Two Thousand Five Hundred
only) to be used for setting off and or reimbursing the AMC against the
Claims in accordance with the SPA Escrow Agreement;
"RETENTION PERIOD" means the period commencing from the Completion and
ending at the later of 30 days after (i) the completion and communication
to the Purchaser of the findings of the SEBI appointed external audit for
the period ending 31st March 2003 or (ii) the statutory annual financial
audit for the financial period ending 31st March 2003 which shall be
completed no later than 30th September 2003;
"Rs." means Indian Rupees, the lawful currency of India;
"SEBI" means Securities Exchange Board of India;
"SENIOR EXECUTIVE" means the employees of the AMC whose names have been set
out in Schedule 4;
"SHARES" means the equity shares of the par value Rs. 10/- per share in the
issued and paid up capital of the AMC;
"SOFTWARE" means any set of instructions for execution by microprocessor,
irrespective of application, language or medium;
"SPA ESCROW AGENT" means Mr Anand Bhatt/ Hamid A Moochhala, Senior
Partners, Wadia Ghandy & Co., having offices at 2nd floor, N.M. Wadia
7
building, 123 M. G. Road, Mumbai 400 023 (which expression shall mean to
include their respective successors);
"SPA ESCROW ACCOUNT" means the fixed deposit account opened by the SPA
Escrow Agent with the SPA Escrow Bank designated as "Anand S Bhatt a/c
Templeton- Pioneer" in accordance with the terms of the SPA Escrow
Agreement;
"SPA ESCROW AMOUNT" means a sum of Rs 21,677,108 (Rupees Twenty One Million
Six Hundred Seventy Seven Thousand One Hundred And Eight only) deposited by
the Purchaser with the SPA Escrow Agent which shall be an amount equal to
4.7 % of the Retention Amount;
"SPA ESCROW AGREEMENT" means the agreement in an agreed form to be entered
into, on the Completion, by the Purchaser with ITI, Pioneer, the Vendors
and the SPA Escrow Agent;
"SPA ESCROW BANK" means Citibank NA, D.N. Road, Mumbai 400 001;
"SUBSIDIARY" means any company, partnership or other legal entity in which
the AMC owns, directly or indirectly, greater than 50% of the equity
interest or voting power;
"TAXATION" means all forms of taxation and statutory, governmental, state,
provincial, local governmental or municipal impositions, duties,
contributions and levies of India whenever imposed and whether chargeable
directly or primarily against or attributable directly or primarily to the
AMC or its subsidiary and all penalties, charges, costs and interest
relating thereto;
"TRANSACTION" means the acquisition of the AMC Shares by the Purchaser and
the Trustee Company Shares by the nominee of the Purchaser;
"TRUSTEE OR TRUSTEE COMPANY" means the Pioneer ITI Mutual Fund Private
Limited a private company incorporated under the Companies Act 1956 and
having its registered address at 117, Nungambakkam High Road, Chennai -600
034 and which is the trustee of the Mutual Fund;
"TRUSTEE COMPANY SHARES" means the shares of the Trustee Company held by
the Trustee Shareholders;
"TRUSTEE SHAREHOLDERS" mean the shareholders of the Trustee Company;
"VENDORS' AMC SHARES": 3,69,600 fully paid equity shares of Rs 10/- each,
representing 4.7.6% of the issued capital of the AMC held by the Employee
Shareholders;
"VENDORS' WARRANTIES" means the representations, warranties and
undertakings of the Vendors as set forth in Schedule 3;
8
"WARRANTIES" means collectively the Vendors Warranties set out in the
Schedule 3 and the Purchaser's Warranties set out in Schedule 2 and
"Warranty" means any of them;
"WARRANTY PERIOD" means a period of 2 years from the Completion Date;
1.2 INTERPRETATION
In this Agreement
(a) Any reference herein to any Clause, Schedule, Exhibit or Annex is to
such Clause, Schedule, Exhibit or Annex to this Agreement unless the
context otherwise requires. The Schedules, Exhibits and Annexes to
this Agreement including this interpretation Clause shall be deemed to
form part of this Agreement;
(b) References to a Party shall, where the context permits, include such
Party's respective successors, legal representatives and permitted
assigns;
(c) The headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(d) Unless the context requires otherwise, words importing the singular
include the plural and vice versa, and pronouns importing a gender
include each of the masculine, feminine and neuter genders;
(e) References to the knowledge, information, belief or awareness of any
Person shall be deemed to include the knowledge, information, belief
or awareness such Person would have if such Person had made reasonable
inquiries;
(f) Any reference to a statutory provision shall include any subordinate
legislation and such provision as from time to time modified or
re-enacted or consolidated whether before or after the date of this
Agreement so far as such modification, re-enactment or consolidation
applies or is capable of applying to any transactions entered into
under this Agreement prior to Completion and (as from time to time
modified, re-enacted or consolidated) which such provision has
directly or indirectly replaced;
(g) Any reference to "accounts" shall include the directors' and auditors'
reports, relevant balance sheets and profit and loss accounts and
related notes together with all documents which are or would be
required by law to be annexed to such accounts before such accounts
are laid before the company in general meeting in respect of the
accounting reference period in question; and
9
(h) References to this Agreement shall include the Recitals and Schedules
to it and references to Clauses and Schedules are to Clauses of and
schedules to this Agreement.
2. SALE AND PURCHASE OF SHARES
2.1 Subject to the terms of this Agreement, the Vendors hereby agrees to sell
and the Purchaser agrees to purchase on the Completion Date, the Vendors'
AMC Shares, free from all Encumbrances and together with all rights and
advantages now and hereafter attaching thereto and relying on Warranties
contained in this Agreement.
2.2 Subject to the terms of this Agreement, in consideration for the sale of
the Vendors' AMC Shares, the Purchaser will pay the AMC Purchase Price to
the Vendors in the manner set out hereinafter.
2.3 The AMC Purchase Price to be paid to the Vendors will be allocated amongst
the Vendors in proportion to the number of shares held by them as set out
in Schedule 1, and paid to them in the following manner: -
(i) 44.26% of the AMC Purchase Price will be paid at the AMC Completion
("First Installment").
(ii) 27.87% of the AMC Purchase Price will accrue and be payable six (6)
months from the AMC Completion contingent on occurrence of certain
conditions described herein below ("Second Installment").
(iii) 27.87% of the AMC Purchase Price will accrue and be payable one (1)
year from the AMC Completion contingent on occurrence of certain
conditions described herein below ("Third Installment").
The Vendors agree and accept that the Purchaser shall not be liable to make
any payments to any of the Employee Shareholders under this Agreement and
in relation to this Transaction in excess of the AMC Purchase Price and any
addition to the AMC Purchase Price as stated in 2.6 and 2.7. The Vendors
further agree and accept that the Purchaser shall not be liable to make any
payments to any of the Employee Shareholders in relation to their
employment with the AMC save for what is stated in their employment
contract.
2.3 In the case of those of the Vendors who are employees of the Company on the
date hereof and who leave the services of the AMC of their own volition
(the "Exit Date") at any time after the payment of the First Installment in
accordance with clause 2.3(i) above then, such Employee Shareholder shall
not be entitled to any further amount in the event the amounts so far paid
to such Employee Shareholder equals or exceeds the total par value of the
Employee's shares sold by such Employee Shareholder. However, this
prohibition will not apply if the service of such Employee Shareholder is
terminated or in the event the Employee Shareholder leaves the services of
the AMC on account of
10
permanent disability or death or if the annual compensation payable to an
Employee Shareholder is reduced from the amount paid for financial year
ending March 2002 as provided in Schedule 2 hereto. If the services of the
Employee Shareholder are terminated, or in the event the Employee
Shareholder leaves the services of the AMC on account of permanent
disability or death or if the annual compensation payable to a Employee
Shareholder is reduced from the amount paid for the financial year, ending
March 2002, then in such an event all amounts due to such Employee
Shareholder pursuant to the terms of this Agreement shall be accelerated
and become immediately payable. Provided that, in the event any Employee
Shareholder is no longer in the service of the AMC at anytime after the
execution of this Agreement till the AMC Completion, then the total amount
payable to such Employee Shareholder shall not exceed the total par value
of the Employee Shares sold by such Employee Shareholder.
2.4 In the event an Employee Shareholder leaves the employment of the AMC
(whether of his own volition or by termination of service), the Purchasers
shall be at liberty to adjust all amounts owing by such Employee
Shareholder to the AMC against any amounts payable under this Agreement.
2.5 The Claims shall be adjusted in accordance with the provisions of the SPA
Escrow Agreement. The Parties hereby agree that if any part of the SPA
Escrow Amount remains un-adjusted/un-utilised after the Retention Period
not earmarked for a specific claim under the SPA Escrow Agreement, it shall
paid to the Vendors as an additional purchase price at the end of the
Retention Period together with interest accrued thereon.
2.6 The AMC purchase price may stand increased by the balance of the Vendor's
share of the SPA Escrow Amount, which shall not exceed an amount of Rs.
21,677,108 (Rupees Twenty One Million Six Hundred Seventy Seven Thousand
One Hundred And Eight Only) depending upon the occurrence of the events
laid down in the SPA Escrow Agreement and shall to that extent be
contingent.
3. CONDITIONS PRECEDENT TO COMPLETION
3.1 The obligation of the Purchaser to purchase the Vendors' AMC Shares is
subject to the fulfilment, by the Employee Shareholders Vendors prior to or
simultaneously on the Completion Date (or at the time specified below), of
the following conditions:
(a) the Vendors' AMC Shares are converted into electronic form and
dematerialized and sufficient evidence have been produced from the
depository in that regards;
(b) delivery by the Employee Shareholders to the Purchasers, signed
irrevocable instructions directing the depository to transfer the
Vendors AMC Shares in to the depository account of the Purchaser
Vendors;
(c) delivery by the Trustee Shareholder to the nominee of the Purchaser,
the Trustee Company Shares together with the share transfer forms
executed by the Trustee Shareholders in favour of the Purchaser
together with the requisite corporate approvals and other proceedings
11
(d) subject to the Disclosure Letter the Vendors' Warranties remaining
true and correct in all material respects on the Completion;
(e) there having been, since the date of this Agreement:
(i) nomaterial adverse change in the operations, financial position
of the AMC and its Subsidiary or the Fund whether arising out of
additional disclosure notified to the Purchaser or not; or
(ii) no receipt of any notice of any action or investigation by any
Governmental Authority or any Person which would restrain,
prohibit or otherwise challenge the Transaction;
(f) there being no order of any Governmental Authority, or Court since the
date of this Agreement that has, as against the AMC or the Trustee
Company as the case may be, which has been instituted or any action or
investigation to restrain, prohibit or otherwise challenge the
Transaction been taken;
g) the Vendors shall have caused the employees of the AMC who have
availed housing loans to execute housing loan agreements in the form
agreed;
(h) the Vendors shall have caused identification of the Assets in relation
to the Fixed Asset Register;
(j) all consents and approvals required for the purpose of execution,
delivery or performance and the consummation of the Transactions
contemplated in this Agreement shall have been duly obtained;
(k) the Vendors shall have caused the Trustee Company having written to
SEBI seeking its confirmation of the Transaction. The Parties hereby
acknowledge that the SEBI "no objection letter" has been procured by
the Purchaser vide letter dated May 7, 2002;
(l) the Vendors shall have caused the AMC having delivered to the
Purchaser a certificate duly certified by its company secretary, dated
the Completion Date, certifying that the conditions set forth in
paragraph (e)and (f) of this Clause 3 have been satisfied;
(m) the Vendors have delivered to the Purchaser a certificate dated the
Completion Date certifying that the conditions set forth in paragraphs
(a) to (d), and (g) to (k) of this Clause 3.1 have been satisfied;
(n) the Purchaser having been given a reasonable opportunity to conduct a
limited high level review, the agreed scope of which set out in
Schedule 4 relating to the AMC prior to Completion, provided such
review shall have been completed at least 2 days prior to the
Completion Date; and
(o) the Vendors shall have caused the AMC to adopt the Accounts.
12
3.2 The Completion is subject to the fulfilment by the Purchaser, prior to or
on the Completion Date (or at the time specified below), of the following
conditions:
(a) all consents and approvals of, notices to and filings or registrations
with any Governmental Authority or any other Person required pursuant
to any applicable law or regulation of any Governmental Authority, in
connection with the Transaction and the sale and purchase of the
Trustee Company Shares ;
(b) all corporate and other proceedings by the Purchaser in connection
with the Transactions contemplated at or prior to the Completion Date
pursuant to this Agreement shall have been procured and the Vendors
having received all such counterpart originals and certified or other
copies of such documents as they may reasonably request, including
without limitation a copy of the resolutions of the board of directors
of the Purchaser, and evidencing the approval of the Transaction;
(c) the Purchaser's Warranties as stated in Schedule 2 remaining true and
correct in all material respects on the Completion; and
(d) the Purchaser has delivered to the Vendors a certificate dated the
Completion Date certifying that the conditions set forth in paragraphs
(a) to (c) of this Clause 3.2 have been satisfied.
3.3 The Vendors hereby undertakes to use its best endeavours to ensure the
satisfaction of each of the conditions set out in Clause 3.1. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Vendors in consultation with the
Purchaser and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.4 The Purchaser hereby undertakes to use its best endeavours to ensure the
satisfaction of each of the conditions set out in Clause 3.2. Without
prejudice to the foregoing, it is agreed that all requests and enquiries
from any government, governmental, supranational or trade agency, court or
regulatory body shall be dealt with the Purchaser in consultation with the
Vendors and each of them shall promptly co-operate with and provide all
necessary information and assistance reasonably required by such
government, agency, court or body upon being requested to do so by the
other.
3.5 The Party responsible for the satisfaction of each condition as specified
in Clause 3.1 and 3.2 shall promptly give notice to the other Parties of
the satisfaction of the relevant conditions within (2) two Business Days of
becoming aware of the same. If the conditions of the Vendors in Clause 3.1
or that of the Purchaser in Clause 3.2 are not satisfied in full by them or
waived by the Purchaser (in case of Clause 3.1) or the Vendors (in case of
Clause 3.2), by 31st July 2002 or such other extended date as may be
mutually agreed, the Purchaser or the Vendors (as the case may be) may, in
its sole discretion, terminate this Agreement at any time thereafter in
accordance with Clause 10.
13
3.6 The Purchaser or the Vendors (as the case may be) shall have the sole right
to waive in whole or in part, conditionally or unconditionally, any of the
conditions in Clause 3.1 or Clause 3.2 by notice in writing to the Vendors
or the Purchaser (as the case may be), which shall be deemed notification
to the other parties hereto.
4. COMPLETION AND POST-COMPLETION ACTIONS
4.1 Subject to Clause 3 the Completion shall take place simultaneously with the
Completion of the SPA with ITI and the SPA with the Pioneer at the
registered office of the AMC at Chennai or at Mumbai, within seven (7) days
after the conditions set out in Clause 3.1 and Clause 3.2 are satisfied or
waived (the "Completion Date") or on such other date and place as the
Parties may agree.
4.2 OBLIGATIONS OF THE PARTIES
Simultaneously on, or before Completion all and not some only of the
following events shall take place:
4.2.1 the Vendors shall:
(i) procure that the appointment of the new directors of the AMC
nominated by the Purchaser occurs with effect from the
Completion Date;
(ii) procure that a list of statutory registers maintained by the
AMC, indicating therein the location where they have been
kept, is handed over to the Purchaser;
(iii) execute the SPA Escrow Agreement and such other agreement as
may be mutually agreed to give effect to the Transaction;
(iv) deliver a signed irrevocable instructions directing the
depository to transfer the Vendors' AMC Shares in to the
depository account of the Purchaser; and
(v) procure the delivery by the Trustee Shareholder to the
nominee of the Purchaser, the Trustee Company Shares
together with the share transfer forms executed by the
Trustee Shareholders in favor of the Purchaser.
4.2.2 the Vendors shall cause the Trustee Shareholders to procure
that as of the Completion:
(i) a meeting of the board of the Trustee Company be held
transferring the Trustee Company Shares in favor of the
nominees of the Purchaser;
(ii) the written resignations of each of the directors of the
Trustee Company take effect on the Completion Date with
acknowledgments signed by each of them to the effect that
14
either of them has no claim against the Trustee Company for
compensation for the loss of office (whether contractual,
statutory or otherwise), redundancy or otherwise except only
for any accrued remuneration and reimbursable business
expenses incurred down to the Completion Date;
(iii) execution of Deed of Variation effective as of the
Completion Date and such other documents as may be necessary
to transfer the sponsorship and the trusteeship functions
related to the Fund in favour of the appropriate Purchaser
entities.
(iv) appointment of the new directors of the Trustee Company
nominated by the Purchaser take effect from the Completion
Date; and
(v) a list of statutory registers maintained by the AMC,
indicating therein the location where they have been kept,
is handed over.
4.2.3 Simultaneously with the compliance to the satisfaction of the
Purchaser of the provisions in Clause 3.1, 4.2.1 and 4.2.2 on
Completion:
(i) the Purchaser will execute the SPA Escrow Agreement and
deposit the SPA Escrow Amount in the SPA Escrow Account;
(ii) the Purchaser will on the Completion Date pay to each
Employee Shareholder 50% of the AMC Purchase Price in
proportion to his shareholding; and
(iii) the Purchaser shall offer/have taken irrevocable steps
jointly with the AMC or to offer an exit option to the
existing unit holders of the Fund to redeem their units
without imposition of any exit load in compliance with the
Regulations.
4.3 The Warranties and all other provisions of this Agreement insofar as the
same shall not have been performed at Completion shall not be extinguished
or affected by Completion, or by any other event or matter whatsoever
(including, without limitation, any satisfaction and/or waiver of any
condition contained in Clause 3.1 or Clause 3.2), except by a specific and
duly authorised written waiver or release by the Purchaser or the Vendors
as the case may be.
5. OBLIGATIONS OF THE VENDORS BETWEEN EXECUTION AND COMPLETION
5.1 From the date hereof through to the Completion Date, the Vendors shall
cause the AMC to, conduct its business in the ordinary course, in a manner,
and use all reasonable efforts to shall otherwise use all reasonable
efforts, so as to ensure that the Vendors' Warranties shall continue to be
true and correct on and as of the Completion Date, as if made on such date.
The Vendors shall give the Purchaser prompt notice of any event, condition
or circumstance
15
occurring from the date hereof until the Completion Date that would
constitute a violation or breach of any Vendors' Warranty if such Vendors
Warranty were made as of any date from the date hereof until the Completion
Date, or that would constitute a violation or breach of any terms and
conditions contained in this Agreement.
5.2 The Vendors shall use its reasonable efforts to cause the AMC to preserve
the relationship and goodwill with their clients;
5.3 The Vendors shall cause the AMC to comply in all material respect with all
applicable laws, regulations, decrees of any court or regulatory body;
5.4 Protective Covenants
5.4.1 The Vendors shall cause in relation to the AMC, the Fund and the
Trustee Company, and covenants with the Purchaser that, without
the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld from the date hereof until the
Completion:
(i) the AMC shall not incur any capital expenditure without the
prior approval from the Purchaser;
(ii) the AMC and Fund shall conduct business in the ordinary
course and shall not incur any revenue expenses other than
in the ordinary course of business;
(iii) the AMC shall not incur any expense or compensation, other
than in the ordinary course of business;
(iv) the AMC shall not release any new product launch or
corporate campaign;
(v) no dividends shall be declared by the AMC or the Trustee
Company;
(vi) no new employee shall be hired and no new position shall be
created in the AMC;
(vii) there shall be no creation of any charge or encumbrance on
the Assets of the AMC or the Fund;
(viii) there shall be no change in the composition of the Board
or Senior Executive of the AMC and the Fund, except arising
out of retirement or demise (as the case may be) of such
persons;
(ix) there shall be no borrowing or lending of any sum of money
by the AMC or the Fund;
(xi) the AMC shall not induce or attempt to induce the Senior
Executives of the AMC to leave the employment of the AMC,
16
(it being understood however that any director, Senior
Executive or personnel may resign of his or her own
volition) or appoint any additional directors, Senior
Executive or otherwise change the roles of the Senior
Executives; or
(xii) the AMC shall not sell or otherwise dispose of any material
part of its Assets (or any interest therein) or contract to
do so;
(xiii) except for the sale and transfer of shares pursuant to
this Transaction, the AMC shall not issue, sell, repurchase,
redeem or permit the transfer of or mortgage, pledge or
subject to any lien any shares, partnership interests or
equity interests in the AMC or otherwise permit any change
in its equity structure;
(xiv) the AMC shall not amend the Basic Documents or change its
financial year;
(xv) the AMC shall not acquire Assets or any shares, partnership
interests or other equity interests (or any interest
therein) or contract to do so, otherwise than in the
ordinary course of its business;
(xvi) the AMC shall not enter, terminate, extend or renew any
arrangement, contract or agreement with any Related Party
except as expressly permitted under this Agreement;
(xvii) the AMC shall not give any guarantee or indemnity in
favour of any party or give any financial assistance in any
way to any Related Party;
(xviii) the AMC shall not increase salary or compensation of any
of the employee of the AMC or create, modify any benefits to
the employees of the AMC;
(xix) shall not, in case of the AMC or cause not to, in case of
the Trustee Company re-appoint their respective present
auditors at their respective annual meetings for the
financial year ending 31st March 2002.
All requests for approvals pursuant to this Clause shall be made to the CEO
of the Purchaser by the AMC, the Trustee Company or the Fund, as the case
may be and such approval shall be given within a period of two (2) working
days from the date of such request..
5.5 The Vendors acknowledge that the above provisions of this Clause are no
more extensive than is reasonable to protect the Purchaser of the Vendors'
AMC Shares and the Trustee Company Shares.
17
5.6 Each of the restrictions in this Clause 5.2 shall be enforceable by the
Purchaser independently of each of the others and its validity shall not be
affected if any of the others is invalid; if any of those restrictions is
void but would be valid if some part of the restrictions were deleted the
restriction in question shall apply with such modification as may be
necessary to make it valid.
5.7 The Purchaser shall be entitled from the date hereof through to the
Completion Date to depute one or more of its officers to over see and
monitor the operations of the AMC and the Fund.
6. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Vendors hereby represents, warrants and undertakes to the Purchaser for
the period prior to this Agreement and until the expiry of the Warranty
Period, in relation to itself, the AMC, its Subsidiary and the Fund in the
terms set forth in Schedule 4, and acknowledges that the Purchaser in
entering into this Agreement relying on such Vendors' Warranties.
6.2 The Purchaser hereby represents warrants and undertakes to the Vendors in
the terms set forth in Schedule3 and acknowledges that the Vendors is
entering into this Agreement relying on such Purchaser's Warranties.
6.3 The Vendors' Warranties are subject to the matters disclosed in writing to
the Purchaser under letter dated July 23, 2002 addressed by ITI and Pioneer
and accepted and confirmed by the Purchaser. The said letter along with its
annexures is referred to as the "Disclosure Letter". The matters disclosed
in the Disclosure Letter shall be acceptable to the Purchaser and shall be
exceptions to the relevant Vendors' Warranty and wherever the term `except
as disclosed is used in Schedule 3 it shall mean as disclosed in the
Disclosure Letter. The Purchaser shall not make any Claims under the
Vendors Warranties in relation to the items specified in the SPA Escrow
Agreement.
6.4. The Vendors shall be entitled to make further additions to the Disclosure
Letter for events arising after the date hereof, at any time upto the
Completion Date. Provided that any additions to the Disclosure Letter as
contemplated in this Clause 6.4 shall not be effective until after the
Vendors has notified such addition in writing to the Purchaser.
6.5 For the avoidance of doubt, each Vendors' Warranty is qualified by the
expression "to the best of the Vendors' knowledge after the Vendors having
exercised due care and made reasonable enquiry" and does not relate to any
forecasts, budgets and estimates with respect to matters on which the
Vendors' Warranties are given.
6.6 The rights and remedies of the Purchaser in respect of any breach of the
warranties shall not be affected because of an investigation (which shall
include the preparation of legal, financial and technical due diligence as
commissioned by the Purchaser), made prior to the execution of this
agreement or at any time until Completion Date, in to the affairs of the
AMC, the Subsidiary or the Fund.
18
6.7 The Purchaser's Warranties and the Vendors' Warranties set forth in each of
Schedule 2 and Schedule 3, respectively, shall be separate and independent.
6.8 The Vendors further warrants to the Purchaser and its successors in title
that:
6.8.1 subject to Clause 6.8.2, the Vendors' Warranties shall be deemed
to have been repeated as at the Completion and all references
therein to the date of this Agreement were references to such
dates at the Completion; and
6.8.2 if after the signing of this Agreement and before Completion any
event shall occur or any matter arise which results or may result
in any of the Vendors' Warranties being unfulfilled to the
satisfaction of the Purchaser or being untrue, misleading or
incorrect in any respect at Completion then the Vendors (at their
own cost) shall make any investigation and take such steps
concerning the event or matter which the Purchaser may reasonably
require.
6.9 Subject to contract to the contrary the parties may pursue remedies
available under this Agreement. The parties shall ensure that no such
remedy results in more than one claim against the party concerned for the
same cause of action. It is agreed that no party would be penalized twice
for the same claim or cause of action under this Agreement.
7. RESTRICTION ON ANNOUNCEMENTS; CONFIDENTIALITY
7.1 Each Party undertakes that prior to the Completion and thereafter it will
not make any announcement in connection with this Agreement unless all of
the other Parties shall have given their written consent to such
announcement, including both as to timing and substance, except for
announcements required by applicable law or regulations, in which case any
information provided by the disclosing Party about the other Parties shall
require the prior written approval of such other Parties.
7.2 No Party shall, without the consent of the other Parties, during the
continuance of this Agreement or after its termination disclose to any
Person (save to the extent to which it is obliged to make disclosure as a
result of applicable law or regulations or for the purposes of procuring
any approvals) this Agreement or any of the arrangements contemplated by
this Agreement or any information relating to the AMC, the Trustee Company,
the Subsidiary, the Fund, the Purchaser and/or the Vendors obtained in the
course of preparing the Agreement or otherwise pursuant to this Agreement
or the performance of the transactions contemplated by this Agreement, or
use such information otherwise than as strictly required for the purpose of
performing this Agreement or in the best interests of the AMC, the Trustee
Company, the Subsidiary, the Fund, the Purchaser or the Vendors, as the
case may be; provided that the foregoing shall not prohibit disclosure by
any Party to its employees and Affiliates or to its professional advisers
to the extent necessary for the purpose of this Agreement and subject to
such employees, or Affiliates
19
or professional advisers being subject to confidentiality obligations no
less onerous than those imposed by this Clause. The obligations set forth
under this Clause 7.2 shall survive the consummation and termination of
this Agreement.
7.3 At the Completion parties shall be entitled to make their own press
releases provided the contents of the same have been mutual agreed prior to
such release.
8. ACCESS AND FURTHER ASSURANCES
8.1 As from the date of this Agreement, the Vendors shall cause to give to the
Purchaser and its accountants, counsel and agents reasonable access, upon
reasonable prior notice and during normal business hours, to the premises
and all the books and records of the AMC and shall instruct the officers
and employees of the AMC to give promptly all information and explanations
to the Purchaser or any such persons as the Purchaser may reasonably
request, it being recognized that such access should not unduly hinder the
AMC's normal operations.
8.2 The Vendors agree to, at any time and from time to time, upon the written
request of the Purchaser:
(a) promptly and duly execute and deliver all such further instruments and
documents, and do or procure to be done all such acts or things, as
such the Purchaser may reasonably deem necessary or desirable in
obtaining the full benefits of this Agreement and of the rights and
ownership herein granted; and
(b) do or procure to be done each and every act or thing which the
Purchaser may from time to time reasonably require to be done for the
purpose of enforcing the Purchaser's rights under this Agreement;
9. COSTS AND EXPENSES
9.1 Except as otherwise provided in Clause 9.2, each Party shall pay its own
costs and expenses (including the fees and costs of any financial or
technical advisors, lawyers or accountants engaged by it) in relation to
the negotiations leading up to the Transaction contemplated hereunder and
to the preparation, execution and carrying into effect all documents
referred to and or relate to the Transaction here under including this
Agreement.
9.2 Any stamp duty, fees or expenses payable in connection with the Transaction
including for the execution of this Agreement shall be borne by the
Purchaser.
10. TERMINATION
10.1 This Agreement may be terminated prior to the Completion:
(a) upon the termination of the Pioneer's and ITI's share purchase
agreements
20
(b) at the election of the Purchaser,
(i) under Clause 3.5;
(ii) for non fulfilment of the conditions in Clause 4.2.1 and 4.2.2
due to the fault of the Vendors;
(c) at the election of the Vendors,
(i) under Clause 3.5;
(ii) for non fulfilment of the conditions in Clause 4.2.3 due to the
fault of the Purchaser.
(c) at any time on or prior to the Completion, by mutual written consent
of the Purchaser and the Vendors.
10.2 This Agreement shall stand fulfilled and terminated upon expiry of the
Warranty Period or payment of the Retention Amount under the SPA Escrow
Agreement to the Vendors or the Purchaser, as the case may be, in
accordance with the SPA Escrow Agreement which ever is later.
10.3 If this Agreement is terminated pursuant to Clause 10.1 then, except for
the provisions of Clauses 7, 11, and 14. (which shall survive the
termination), this Agreement shall have no further force and effect and
Parties shall have no further liability or claim against each other except
for those which have already been incurred prior to the termination or
except for those which relate to the provisions which survive the
termination.
11. NOTICES
11.1 Each notice, demand or other communication given or made under this
Agreement shall be in writing and may be given by facsimile, by personal
delivery or by sending the same by prepaid registered mail (or prepaid
registered airmail or a recognized international courier service where the
address of the Party to receive the notice is not in the same country as
that of the Party giving the notice) addressed to the Party concerned at
the address or fax number below (or such other address or fax number as the
addressee has by five (5) days' prior written notice specified to the other
Parties):
TO THE PURCHASER:
Address: Templeton Asset Management (India) Private Limited,
1st Floor, Sakhar Bhavan,
Nariman Point,
Mumbai 400 021,
Attention: Mr. Rajiv Vij
Phone: + 91 22 288 6129
Fax: + 91 22 288 6707
Email: rvij@templeton.com
21
TO VENDORS:
Address: Mr. Vivek Reddy, c/o Pioneer ITI AMC Limited, Century Centre
75 TTK Road, Chennai - 600018
Attention: Vivek Reddy
Phone: + 91 44 4679222, 91 44 8274169
Fax: + 91 44 4986707
Email: vivek.reddy@pioneeriti.com
Any notice, demand or other communication so addressed to the relevant
Party shall be deemed to have been delivered (a) if given or made by
personal delivery, when actually delivered to the relevant address; and (b)
if given or made by prepaid registered post to an address within the same
country or by a recognized international courier service to an overseas
address, seven (7) days after the dispatch of the same; (c) if given or
made by prepaid registered airmail to an overseas address, ten (10) days
after the dispatch of the same; (d) if given or made by fax, upon dispatch
and the receipt of a transmission report confirming dispatch.
12. POST COMPLETION OBLIGATIONS
12.1 The Vendors covenant and agree that, it by itself and or through its
Related party shall not without the consent of the Purchaser, from the
Completion until two (2) years after the Completion Date hire any the
employees of the AMC and or induce them to leave the employment of the AMC
and join another asset management company under different management or an
organization carrying on activities of, connected to or associated to a
mutual fund.
12.2 The Vendors covenant and agree that, it by itself and or through its
Related party shall not without the consent of the Purchaser, divulge any
information, whether confidential or not, in relation to the business or
operations of the AMC or the Fund.
13. MISCELLANEOUS
13.1 This Agreement may not be amended, modified or supplemented except by a
written instrument executed by each of the Parties.
13.2 No waiver of any provision of this Agreement shall be effective unless set
forth in a written instrument signed by the Party waiving such provision.
No failure or delay by a Party in exercising any right, power or remedy
under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of the same preclude any further exercise
thereof or the exercise of any other right, power or remedy. Without
limiting the foregoing, no waiver by a Party of any breach by another Party
of any provision hereof shall be deemed to be a waiver of any subsequent
breach of that or any other provision hereof.
22
13.3 This Agreement shall inure to the benefit of the Parties and is binding
upon the Parties hereto and their respective successors, legal
representatives and permitted assigns. This Agreement shall not be
assignable by any Party, except with the written consent of the other
Parties.
13.4 This Agreement constitutes the whole agreement between the Parties relating
to the subject matter hereof and supersedes any prior (not simultaneous)
agreements or understandings with effect from the execution hereof as
regards the MOU.
13.5 Any liability of the Vendors to the Purchaser under this Agreement may in
whole or in part be released, compounded or compromised or time or
indulgence given by the Purchaser in its absolute discretion as regards any
such liability without in any way prejudicing or affecting the Purchaser's
rights against any other or others or the Vendors under the same or a like
liability.
13.6 Each and every obligation under this Agreement shall be treated as a
separate obligation and shall be severally enforceable as such and in the
event of any obligation or obligations being or becoming unenforceable in
whole or in part. To the extent that any provision or provisions of this
Agreement are unenforceable they shall be deemed to be deleted from this
Agreement, and any such deletion shall not affect the enforceability of
this Agreement as remain not so deleted.
13.7 This Agreement may be executed in one or more counterparts which, each of
which when so signed and taken together, shall be deemed an original but
all the counterparts shall together constitute one and the same instrument.
13.8 Subject to contract to the contrary the parties may pursue remedies
available under this Agreement. The Parties shall ensure that no such
remedy results in more than one claim against the Party concerned for the
same cause of action. It is agreed that no Party would be penalised twice
for the same claim or cause of action under this Agreement.
13.9 Nothing in this Agreement shall be deemed to constitute a partnership
between the Parties hereto or constitute any party the agent of another
party for any purpose.
13.10The illegality, invalidity or unenforceability of any provision of this
Agreement, whether in whole or in part, under the law of any jurisdiction
shall not affect its legality, validity or enforceability under the law of
any other jurisdiction nor the legality, validity or enforceability of any
other provision or part
14. GOVERNING LAW AND JURISDICTION
14.1 This Agreement shall be governed by and construed in accordance with the
laws of India.
23
14.2 Any dispute or claim arising out of or in connection with or relating to
this Agreement, or the breach, termination or invalidity hereof (the
"Dispute"), shall be referred to the CEO of the Purchaser for resolution.
24
Schedule 1
LIST OF EMPLOYEE SHAREHOLDERS
LIST OF SHAREHOLDERS
NO OF AMT PER
NAME OF THE SHARE HOLDER FATHER'S NAME TYPE OF SHARES SHARES SHARE ADDRESS
1. Vivek Reddy D G K Reddy Equity 216600 10 12, Subba Rao Avenue
3 rd Street
Madras
Tamilnadu
2. Ravi Mehrotra Umesh Mehrotra Equity 100000 10 23 Cenotaph Road
Rahul Apts
Ground Floor
Flat B
Teynampet
Madras
3. R.Narayanan N Ramachandran Equity 5000 10 55 C MIG FLAT
A L MUDALIAR
ROAD
Madras
Tamil Nadu
4. Anoop Bhasker Amrit Rai Bhasker Equity 4000 10 44/5 3 rd street
East Abhirampuram
Madras
25
Tamilnadu
5. Anil Prabhudas JeevanPrabhudas Equity 4000 10 B 34 PA Towers
869PHRoad
Kilpauk
Madras
Tamilnadu
6. K N Sivasubramaniam Narayanan Equity 4000 10 No 2 22nd cross Street
Indira Nagar
Madras
Tamilnadu
7. R Sukumar A M Rajah Equity 4000 10 8, Sadulla Street
Madras
Tamilnadu
8. V Rajagopal Veeraraghavachari N K Equity 3000 10 No43 Kalaignar Street
Anna Nagar
Pammal
Madras
Tamilnadu
9. Lalitha Swamy K Ramaswamy Equity 2000 10 E 2 Sriji Apts
25 Rajasekharan Road
Mylapore
Madras
Tamilnadu
10. Prem Khatri J P Khatri Equity 2000 10 6 D Cambrae East
26
Victoria Cresent Road
Egmore
Madras
Tamilnadu
11. Tamil Selvi M Balasubramanian Equity 2000 10 61, Vasudevan Nagar
Jafferkhanpet
Ashok Nagar
Madras
Tamilnadu
12. P L Ambal Saravanan Equity 1500 10 C/O Kumarappa
Chethyar
162A Kamar Salai
Ramakrishna Nagar
Aiwarthirunagar
Madras
Tamilnadu
5 A Muthu Lakshmi
13. D Vijayraghavan K V Desikachari Equity 1500 10 Street
Muthu Lakshmi Nagar
Extn
Chitlapakkam
Madras
Tamilnadu
14. S Chellappa N Sivaguru Equity 1500 10 C 2, Paras Apts
Jeevarathnam Nagar
Adyar
27
Madras
Tamilnadu
15. S R Ramesh S K Ramamurthi Equity 1400 10 Vigneswar house (upstairs)
No 1 New Thillai Nagar
Plot 25, Part 6
P N Pudur
Coimbatore
Tamilnadu
16. Indira Menon P R Menon Equity 1200 10 No 9, M Block
Anna Nagar East
Madras
Tamil Nadu
17. Rajendra Mukadam Upendra Dhondo Mukadam Equity 1200 10 23/C Zaoba Wadi
Thakurdwar, JSS Road
Bombay
Maharashtra
18. Aseem Malhotra R I Malhotra Equity 1200 10 B 302 Rosewood Apts
Mayur Vi bar Phase I (Extn)
New Delhi
19. Samvita Reddy A Koti Reddy Equity 1000 10 73, E V K Sampath Road
Vepery
Madras
Tamilnadu
28
20. Sanjeev Patnaik K C Patnaik Equity 1000 10 No 67
kamaraja nagar
Ernavur
Ennore
Madras
Tamilnadu
21. G Srinivas G V Sastry Equity 1000 10 3, Ill Main Road
Kasturiba Nagar
Adyar
Madras
Tamilnadu
22. K Thirugnanam C Karuppiah Equity 1000 10 13, Park Street
108, Pandian Nagar
Thiru Nagar
Madurai
Tamilnadu
23. V N Srikanth V N Subba Rao Equity 1000 10 22 Umayal Road
Kilpauk
Madras
Tamilnadu
24. P K Saravanan P Kannabiran Equity 600 10 No 5,Ratnam Nagar
Thruvanmiyur
29
Madras
Tamilnadu
25. S Balasubramaniam TV Sivararnakrishnan Equity 600 10 No 4 Arul Jyothi
Rossary Church Road Lane
Santhome
Madras
Tamilnadu
26. Senthi Kumar M A Mariappan Equity 600 10 No 3, V Cross
Ammayappa Nagar
Trichy
Tamilnadu
27. R Anantharaman A Ramaswamy Equity 600 10 No 26,
Nore Veeraswamy Street
Nungambakkam
Madras
Tamil Nadu
28. K Bharati Raj M S Krishnamurthy Equity 500 10 No 102, Bazaar Road
Mylapore
Madras
Tamilnadu
29. R Sekhar S Ramamoorthy Equity 500 10 5 Raman Street
Madras
Tamilnadu
30
30. P S Balasubramaniam P Sitaraman Equity 500 10 A1 Damayanthi Apts
South Mada Street
Nungambakkam
Madras
Tamilnadu
31. J VS Ravi Kumar J Kameswara Sastry Equity 400 10 60-3-19, Ashok Nagar
SBI Colony Road
Near ITI
Vijaywada
Andhra Pradesh
32. A V Ravi Kumar A V N Murthy Equity 400 10 Lakshmi Sudha Nivas
54-1-30, Plot No 26
L.I.C Colony
Vijaywada
Andhra Pradesh
33. Vinay Kumar B Devadattam Equity 400 10 2/3 R T
Prakasam Nagar
Begumpet
Hyderabad
Andhra Pradesh
34. S Vidyasagar R S Mani Equity 400 10 K -7 Turn Bulls Road
Nandanam
Madras
Tamilnadu
31
35. B Parthiban N Balasubramaniam Equity 400 10 No 11 Jacob Street
Madipakkam
Madras
Tamilnadu
36. R Ramesh S Raju Equity 400 10 3/0, Supdt Qtrs
The Sea Farer's Club
Rajaji Salai
Opp- Reserve Bank Of India
Madras
Tamilnadu
37. Simon Solomon MT Solomon Raj Equity 400 10 1219, 17th Street
Anna Nagar West Extn
Madras
Tamilnadu
38. R S Gopalan S Rajan Equity 400 10 86,A V Krishnaswamy Street
Janaki Nagar
Valsarvakkam
Madras
Tamilnadu
39. K Balaji E Krishnan Equity 300 10 No 28-C Third Agraharam
Salem
Tamilnadu
40. P Jayaraman K Pitchai Raman Equity 300 10 No 3, 3 rd Cross
Ammoiyappa Nagar
32
Puthur
Trichy
Tamilnadu
41. T Srikumar M P Thiruvengadam Equity 200 10 No 28, III Street
Jayalakshmi Puram
N ungambakkam
Madras
Tamilnadu
42. B Srinivas Rao B Seetharamaraju Equity 200 10 No 20 Ambika Nagar Main Road
Madhavaram Milk Colony
Madras
Tamilnadu
43. MKannan Muruganandan Equity 200 10 270 G, GST Road
Thirunagar
Madurai
Tamilnadu
44. D Venkatesh B Deivasigamani Equity 200 10 10 Kandappa Gramani Street
Pu rasawalkam
Madras
Tamilnadu
369600
33
SCHEDULE 2
PURCHASER'S WARRANTIES
1 ORGANISATION, GOOD STANDING AND QUALIFICATION: The Purchaser has been duly
incorporated and organised, and is validly existing in good standing, under
the laws of India. The Purchaser has the corporate power and authority to
carry on its business as currently conducted and proposed to be conducted.
2 the Purchaser has the legal right and full power and authority to enter
into, deliver and perform this Agreement and any other documents to be
executed by the Purchaser pursuant to or in connection with the Transaction
which when executed will constitute valid and binding obligation of the
Purchaser, and enforceable against them in accordance with their terms.
3 The execution, delivery and the performance by the Purchaser of this
Agreement and the respective obligations in relation to the Transaction
contemplated herein, do not and will not:
(i) breach or constitute a default under the Charter Document of the
Purchaser;
(ii) result in a violation or breach of or default under any applicable law
or regulation or of any order, judgement or decree of any Court,
Governmental Authority, regulatory body to which each of the Purchaser
is a party or by which the Purchaser or any of its assets are bound.
(iii) Result in a breach of, or constitute a default under any contract to
which the Purchaser is a party
4 Except for the approvals of the FIPB, Reserve Bank of India and the
corporate approvals, no consent, approval, order or authorisation of, or
registration, qualification, designation, declaration or filing with, any
Governmental Authority or any other Person is required in connection with
the execution, delivery and performance by the Purchaser, of this Agreement
and or the Transaction and
5 All corporate action on the part of the Board, the board of directors of
the Purchaser, necessary for the authorisation, execution, delivery of and
the performance of all obligations of the Purchaser under this Agreement
have been taken as of the date of this Agreement;
34
SCHEDULE 3
VENDOR WARRANTIES
INTERPRETATION
In this Schedule, unless the context clearly indicates a contrary intention, -
(a) The provisions of the agreement ("Agreement") to which these
warranties relate to its interpretation shall apply, mutatis mutandis,
and the words and expressions defined in the Agreement shall bear the
same meanings in this Schedule;
(b) The warranties, representations and undertakings herein shall apply in
respect of each of the AMC and its Subsidiary (together "the AMC" for
the purpose of this Schedule), and references in these warranties to
AMC shall also be deemed where the context so admits, unless specified
otherwise, to apply to the Trustee Company;
(c) Where ever the warranty refers to accounts of the AMC it shall relate
to a period on or after April 1, 2001 unless specified otherwise.
1. AUTHORITY AND CAPACITY OF THE VENDOR
1.1 The Vendor is a company duly incorporated and validly existing under
the law of its incorporation.
1.2.1 The Vendor has the legal right and full power and authority to enter
into, deliver and perform this Agreement and any other documents to be
executed by the Vendor pursuant to or in connection with the
Transaction which when executed will constitute valid and binding
obligation of the Vendor, and enforceable against them in accordance
with their terms.
1.2.2 Subject to applicable laws, regulations and rules, the execution,
delivery and performance by the Vendor and the AMC, of this Agreement
and the respective obligations in relation to the Transaction
contemplated herein, do not and will not:
(i) breach or constitute a default under the respective Charter
Document of Vendor and AMC;
(ii) result in a breach of, or constitute a default under, any
Contract to which the AMC, or the Vendor is a party or by which
they are bound or give any third party a right to terminate or
modify, or result in the creation of any Encumbrance under any
agreement, licence or other instrument; or
(iii) result in a violation or breach of or default under any
applicable law or regulation or of any order, judgement or decree
of any Court, Governmental Authority, regulatory body to which
each of the Vendor
35
or the AMC is a party or by which each of the Vendor or the AMC
or any of their respective assets are bound.
1.2.3 Except for the approvals of the SEBI, FIPB, Reserve Bank of India, the
Trustees, the unit holders and the corporate approvals, no consent,
approval, order or authorisation of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority or
any other Person is required in connection with the execution,
delivery and performance by the Vendor or the AMC, of this Agreement
and or the Transaction and
1.3 VENDOR'S AMC SHARES:
(i) the Vendor's AMC Shares were validly issued and are fully
paid-up;
(ii) the Vendor is the sole beneficial owner of the its shares and is
registered as the sole owner of such shares;
(iii) the Vendor has clear and marketable title to its shares and that
the shares are free from any Encumbrance or claim, demand or
doubts, and the Vendor is not aware of any claims against their
shares or any circumstances which might reasonably believed to
lead to a claim or demand against the Vendor's AMC Shares;
(iv) the Vendor has good right, full power and absolute authority to
sell and transfer the Vendor's AMC Shares free from any third
party claim or demand of any nature and that they have not nor
anyone on their behalf have done, committed or omitted any act,
deed, matter or thing whereby the Vendor's AMC Shares is or can
be forfeited extinguished or rendered void or voidable; and
(v) that the Vendor has not entered into or arrived at any agreement
and/or arrangement, written or oral, with any person or party in
respect of the Vendor's AMC Shares, or their membership of the
AMC which, will render the sale of the sale and transfer of AMC
Shares violative of such agreements.
2. CORPORATE MATTERS
2.1 CHARTER DOCUMENT: The copies of the Charter Documents of the AMC
(having attached thereto all amendments made to date) delivered to the
Purchaser and filed with the Registrar of Companies are true and
complete copies, and the AMC has complied with all the provisions of
its Charter Documents and, in particular, has not entered into any
ultra vires transaction. All legal and procedural requirements and
other formalities concerning such Charter Documents have been duly and
properly complied with in all material respects.
36
2.2 ORGANISATION, GOOD STANDING AND QUALIFICATION: The AMC has been duly
incorporated and organised, and is validly existing in good standing,
under the laws of India. The AMC has the corporate power and authority
to own and operate its Assets and properties and to carry on its
business as currently conducted and proposed to be conducted.
2.3 CAPITALISATION AND OTHER PARTICULARS OF THE AMC: The particulars of
the AMC as disclosed in the Accounts are true, complete and correct as
of the date.
2.4 ISSUED SHARES: The 7,893,965 million shares now outstanding comprise
the entire issued share capital of the AMC. No modification or
variation of the terms of issue or the rights attaching to such Shares
has been made since the dates of issue.
2.5 PAID UP: All the issued shares of the AMC are fully paid up and the
AMC has not exercised nor purported to exercise or claimed any lien
over any of them.
2.6 CONDUCT IN RELATION TO CAPITAL: The AMC has not at any time repaid or
redeemed or agreed to repay or redeem any of its share capital or
otherwise reduced or agreed to reduce its issued share capital or
purchased any of its own shares or carried out any transaction having
the effect of a reduction of capital.
2.7 CONVERSION RIGHTS: No person has the right to call for the issue of
any share or loan capital of the AMC by reason of any conversion
rights or under any option or other agreement and there are no claims,
charges, liens, equities or encumbrances on the Vendor's AMC Shares.
2.8 OPTIONS, WARRANTS AND RESERVED SHARES: Except as disclosed in Clause
12.2(e) of the SPA, there are no outstanding options, warrants, rights
(including conversion or pre-emption rights) or agreements for the
subscription or purchase from the AMC of any shares in the capital
stock of the AMC or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the AMC, and no shares
of the AMC when issued, are subject to any pre-emptive rights, rights
of first refusal or other rights pursuant to any agreement or
commitment of the AMC as the case may be.
2.9 OTHER RIGHTS WITH RESPECT TO SHARES: Except as contemplated in this
Agreement, no voting or similar agreements exist relating to the AMC
Shares or any other securities issued by the AMC or the shares of the
Subsidiary which are presently outstanding or that may hereafter be
issued.
2.10 EXISTENCE OF SUBSIDIARIES: The AMC has a subsidiary called ITI Capital
Markets Limited , a company incorporated under the Companies Act 1956
and having its registered office at No.39, TTK Road, Alwarpet, Chennai
600 018 . The particulars of the subsidiary as the its capital and
other statutory details such as capital, director are disclosed in the
Disclosure Letter. Except for the Subsidiary the AMC does not own any
direct or indirect equity or voting interest in any other AMC,
partnership or any other legal entity.
2.11 CORPORATE RECORDS: Except as disclosed the statutory books, minute
books and register of members of the AMC have been properly and
accurately
37
maintained and written up to date in all material respects and contain
full and accurate records of all resolutions passed by the directors
and the shareholders of the AMC and all issuances and transfers of
shares or other securities of the AMC. All such documents are in its
possession or under the control of the AMC.
2.12 REGISTER OF MEMBERS: Except as disclosed the register of members of
the AMC contains a complete and accurate record of the members of the
AMC and the AMC has not received any notice of any application for
rectification and so far as the Vendor is aware such members are the
beneficial owners of the shares listed against their names.
2.13 DIVIDENDS: Except as disclosed and except for the dividends declared
under an investment scheme operated by the AMC, the AMC has not
declared any dividend or made any distribution to its shareholders
since their incorporation.
2.14 POWERS OF ATTORNEY: Except for the powers of attorney disclosed in the
Disclosure Letter there are no outstanding powers of attorney given by
the AMC or the Fund.
2.15 WINDING-UP ORDERS: No order has been made, no resolution has been
passed, no petition has been presented by the AMC and no petition has
been presented by any other person for the Winding-up of the AMC; no
receiver or manager has been appointed by any person of the business
or assets of the AMC or any part thereof and there is no unfulfilled
or unsatisfied judgement or decree or court order outstanding against
the AMC.
2.16 The Vendor does not hold any equity or voting interest in any entity
that carries on any business that competes with the business of the
AMC or Fund in India.
3. ACCOUNTS AND RECORDS
3.1 Except as disclosed therein and except as disclosed, the Accounts and
the accounts for the period ending March 31, 2001 ("2001 Accounts") of
the AMC have been prepared in accordance with applicable law and in
accordance with accounting principles, standards and practices
generally accepted at the date of this Agreement in India and give a
true and fair view of the assets, liabilities and state of affairs of
the AMC at the Account Date.
3.2 MANAGEMENT ACCOUNTS: Except as disclosed, the Management Accounts have
been prepared in accordance with applicable law and in accordance with
accounting principles, standards and practices generally accepted at
the date of this Agreement in India and, subject thereto, on a basis
consistent with that adopted in preparing the audited accounts for the
previous two financial periods so as to give a true and fair view of
the assets, liabilities and state of affairs of the AMC at the
Management Account Date and of the profits or losses for the period
concerned and as at that date make:
3.2.1 full provision for all actual liabilities,
38
3.2.2 proper provision for all contingent liabilities, and
3.2.3 provision reasonably regarded as adequate for all bad and
doubtful debts.
3.3 ACCOUNTING AND OTHER RECORDS:
Except as disclosed, the AMC's books and records are in its possession or
under its control and have been properly maintained in accordance with all
applicable laws. As at the Completion Date, the AMC's books and records
will accurately record all transactions of the AMC up to and including [the
Management Accounts Date] and will be capable of being written up within a
reasonable time so as to record all subsequent transactions of the AMC.
3.4 CHANGES SINCE APRIL 1ST 2001 AS REGARDS THE AMC AND THE FUND: Except as
disclosed:
3.4.1 there has been no material adverse change in its financial
position or turnover and no event, fact or matter has
occurred that will give rise to any such change;
3.4.2 its business has been carried on in the ordinary course,
without any interruption or alteration in its nature, scope
or manner, and so as to maintain the same as a going
concern;
3.4.3 it has not entered into any transaction or assumed or
incurred any liabilities (including contingent liabilities)
or made any payment not provided for in the Accounts or the
Management Accounts otherwise than in the ordinary course of
carrying on its business;
3.4.4 its profits have not been affected by changes or
inconsistencies in account treatment, by any non-recurring
items of income or expenditure, by transactions of an
abnormal or unusual nature or entered into otherwise that on
normal commercial terms or by any other factors rendering
such profits exceptionally high or low;
3.4.5 no dividend or other distribution has been declared, made
or paid to its shareholders;
3.4.6 no share or loan capital or any other security giving rise
to a right over the capital has been allotted or issued or
agreed to be allotted or issued;
3.4.7 it has not redeemed or purchased or agreed to redeem or
purchase any of its share capital; and
3.4.8 except in the ordinary course of business, no debt or
liability has been incurred, assumed or guaranteed by the
AMC except, advance share application monies of Rs 450
lakhs, which will be returned to Pioneer.
39
3.5 ABSENCE OF UNDISCLOSED LIABILITIES: Except as disclosed, there are no
liabilities of the AMC other than (I) liabilities disclosed or provided for
in the Accounts and the Management Accounts; (ii) liabilities incurred in
the ordinary course of business since the Management Accounts Date, none of
which results in a material adverse change in the financial position or
turnover of the AMC; or (iii) liabilities disclosed elsewhere in this
Agreement.
4. FINANCE
4.1 Except for the funds of the investors in the Blue Chip Fund, open end
Scheme aggregating to Rs 1.5 crores, which are lying with the Fund for want
of instruction from the investors, and except as disclosed, neither the AMC
nor the Fund has outstanding any obligation for the payment or repayment of
money, whether present or future, actual or contingent.
4.2 The AMC and the Fund have no encumbrance, mortgage, charge, pledge, lien
(save by operation of law in the ordinary course of business) or other
security interest or any other agreement or arrangement having a similar
effect subsisting over the whole or any part of its present or future
revenues.
4.3 Except for the payments under the Blue Chip Scheme and except as disclosed,
no borrowing of the Fund or AMC has become or is now due and payable or
capable of being declared due and payable, before its normal or originally
stated maturity and no demand or other notice requiring the payment or
repayment of money before its normal or originally stated maturity has been
received by the AMC.
4.4 No event or circumstance has occurred of which the Vendor is aware which is
or, with the giving of notice or lapse of time or both, shall be such as to
terminate, cancel or render incapable of exercise any entitlement to draw
money or otherwise exercise the rights of the AMC or Fund under an
agreement relating to borrowing.
5. TAXATION MATTERS
5.1 RETURNS, INFORMATION AND CLEARANCES, EXCEPT AS DISCLOSED AND TO THE BEST OF
THE VENDOR'S KNOWLEDGE AND UNDERSTANDINGS:
i) All returns, computations, notices and information which are or have
been required to be made or given by the AMC for a Taxation purpose
(i) have been made on a proper basis and are correct and (ii) none of
them is subject of any dispute with the Indian Taxation authorities.
ii) The AMC is in possession of sufficient information or has reasonable
access to such information to enable it to compute its liability to
Taxation.
5.2 TAXATION CLAIMS, LIABILITIES AND RELIEFS:
Except as disclosed, there is no liability of Taxation in respect of which
a claim has been made to the knowledge of the Vendor.
40
5.3 AMC RESIDENCE: The AMC has been resident for tax purposes in India
5.4 DEDUCTION OF TAX AT SOURCE: Except as disclosed, the liability on account
of late filing/remittance of returns for tax to be deducted at source does
not exceed an amount of Rs 25,000/- on account of interest and such returns
are true and correct in all material respects. To the best of our knowledge
and understanding the deductions have been made in accordance with law.
6. LEGAL MATTERS
6.1 Except as disclosed, the Vendor hereby represents and warrants in respect
of the AMC Trustee and the Fund that:
(i) NO VIOLATION OF LAW: There has not been any investigation or enquiry
by nor any notice or communication, or order, decree, decision or
judgment of, any court, tribunal, arbitrator, governmental agency or
regulatory body received by and against the AMC, with respect to any
material violation and/or there has been no subsisting violation to
comply with any such applicable law, regulation, byelaw or Charter
Documents, which has resulted in any liability or criminal or
administrative sanction;
(ii) PERMITS: Consistent with industry practice, the AMC has all permits,
approvals, authorisations, licenses, registrations, and consents
(including, without limitation, the registrations of the AMC with
SEBI), necessary for the conduct of its business as currently
conducted have been obtained and are in full force and effect. The AMC
is not in material breach of or in material default under any such
permit, approval, authorisation, franchise or license and the Vendor
are not aware of any event or circumstance under which any of those
licences, registrations, permissions or consents is likely to be
revoked terminated and/or cancelled, except for those which are
consequential arising out of this Agreement or the Transaction;
(iii) ETHICAL CODE OF CONDUCT: The AMC has not and has not authorised or
permitted any of its employees, agents or representatives to make or
promise any payment of anything of value to any Governmental Authority
or any employee, agent or representative of any Governmental Authority
for the purpose of obtaining or retaining business; and
(iv) UNLAWFUL ACTS: The AMC has not, so far as the Vendor is aware, nor
have any of its Senior Executives in the course of theiremployment by
any act or default committed:
a. any criminal or unlawful act involving dishonesty;
b. any breach of trust; or
41
c. any breach of contract or statutory duty or any tortuous act
which could entitle any third party to terminate any contract to
which the AMC is a party;
which could have a material adverse effect on the AMC.
6.2 COMPLIANCE WITH AGREEMENTS: Except as disclosed, all the contracts and all
leases, tenancies, licences and agreements of whatsoever nature to which
the AMC is a party are, except as disclosed, valid, binding enforceable
obligations of the parties thereto and the terms thereof have been complied
with by the AMC and there have occurred no grounds for rescission,
avoidance or repudiation of any of the contracts or such leases, tenancies,
licences or agreements and no notice of termination or of intention to
terminate has been received in respect of any thereof.
6.3 LITIGATION:
6.3.1 Except as disclosed, and except as in the ordinary course of
business, since the Account Date no claim for damages or
otherwise has been made against the AMC.
6.3.2 The AMC, except as disclosed, is not involved whether as
plaintiff or defendant or other party in any claim, legal action,
proceeding, suit, litigation, prosecution, investigation, enquiry
or arbitration and no such claim, legal action, proceeding, suit,
litigation, prosecution, investigation, enquiry or arbitration is
pending against the AMC.
6.4 INSOLVENCY:
6.4.1 No order has been made, petition, presented, resolution passed or
meeting convened for the winding up (or other process whereby the
business is terminated and the assets of the AMC concerned are
distributed amongst the creditors and/or shareholders or other
contributories) of the AMC and there are no cases or proceedings
under any applicable insolvency, reorganisation, or similar laws
in any jurisdiction concerning the AMC and no events have
occurred which, under applicable laws, would justify any such
cases or proceedings.
6.4.2 No petition has been presented or other proceedings have been
commenced for an administration order to be made (or any other
order to be made by which during the period it is in force, the
affairs, business and assets of the AMC concerned are managed by
a person appointed for the purpose by a Court, governmental
agency or similar body) in relation to the AMC, nor has any such
order been made.
6.4.3 No receiver (including an administrative receiver), liquidator,
trustee, administrator, custodian or similar official has been
appointed in any jurisdiction in respect of the whole or any part
of the business or assets of the AMC and no step has been taken
for or with a view to the appointment of such a person.
6.4.4 The AMC is not insolvent as on date.
42
7. TRADING AND CONTRACTUAL ARRANGEMENTS
7.1 CAPITAL COMMITMENTS: Since March 17, 2002 (the "MOU Date"), except under
various investment schemes operated by the AMC for its clients, the AMC:
7.1.1 has not entered into any capital commitments;
7.1.2 is not, nor has been, party to any unusual, long-term or onerous
commitments, contracts or arrangements otherwise at an arm's
length basis in the ordinary course of business;
7.1.3 except as disclosed, is not party to any agency,
distributorship, marketing, purchasing, agreement or arrangement
that restricts its freedom to carry on its business in such
manner as it thinks fit; and
7.1.4 is not, nor has agreed to become, a member of any joint venture,
consortium, partnership or other unincorporated association
(other than a recognised trade association).
7.2 CONTRACTS: The AMC is not a party to or bound, except as disclosed, by any
Contract (collectively, "Material Contracts") that:
7.2.1 grants management, operational or voting rights in the AMC to any
Person;
7.2.2 is a consulting Contract that involves payments of an amount
equal to or in excess of Rs. 1 million for any 12-month period;
7.2.3 is a non-competition Contract restricting in any way the
business activities of the AMC;
7.2.4 was entered into outside of the ordinary course of business of
the AMC;
7.2.5 is a Contract with any Person relating to the use of the Assets
of the AMC, including without limitation use of the Assets for
Internet services, telephone services or the provision of data or
other value-added services, excluding Contracts with its
customers or clients;
7.2.6 is a Contract involving subscriber management or systems, call
centres or other customer service systems;
7.2.7 The AMC is not in default in the performance, observance or
fulfilment of any of the material obligations, covenants or
conditions contained in any Contract to which it is a party. Each
Material Contract has been duly authorised, executed and
delivered by the AMC, and constitutes a valid and binding
obligation of each party thereto, enforceable against each party
thereto in accordance with its terms. To the best of the Vendor
knowledge, no party (other than the AMC) is in material breach of
any Material Contract or has indicated any intention to terminate
any such Contract prior to the expiration of its term.
43
7.3 ARRANGEMENTS WITH ASSOCIATES ETC:
Except as disclosed:
7.3.1 There is no indebtedness (actual or contingent) nor any
indemnity, guarantee or security arrangement, except as
disclosed, between the AMC and any current or former employee,
current or former director or any current or former consultant of
the AMC.
7.3.2 The AMC is not a party to any contract, arrangement or
understanding, except as disclosed, with any current or former
employee, current or former director of the AMC other than the
employment contracts.
7.3.3 Other than employment contracts with the Employee Shareholders,
there are no existing contracts or arrangements, except as
disclosed, between or involving the AMC and any of the Vendor
and/or any of the directors.
7.4 TRANSACTIONS WITH DIRECTORS:
There is no outstanding:
7.4.1 loan, except as disclosed, made by the AMC to, or to the AMC, by
the Vendor, or any director or officer of the AMC;
7.4.2 agreement or arrangement, except as disclosed, to which the AMC
is a party and in which the Vendor or any director of the AMC;
7.4.3 Related Party Transaction: Except as disclosed, there are no
Contracts, understandings, transactions or proposed transactions
between the AMC and any Related Party on the other hand. Except
for loans/advances aggregating to not more than Rs. 65 lacs made
to any single employee, pursuant to staff Housing/Vehicle
Assistance Scheme existing as of the date of this Agreement, no
Related Party or employee of the AMC is indebted to the AMC, nor
is the AMC indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Vendors'
knowledge, no such Person is, directly or indirectly, interested
in any Contract with the AMC, excluding employment contracts.
7.5 Investment Management Agreement: The Investment Management Agreement
executed between the Trustee Company and the AMC is the only investment
management agreement for the family of funds operated and managed by the
AMC on behalf of the Trustee Company.
7.6 Guarantee: Except as disclosed in the Accounts, there is not outstanding
guarantee, indemnity, surety or comfort (whether or not legally binding)
given by or for the benefit of the AMC.
44
8. EMPLOYEES
8.1 DISCLOSURE OF MATERIAL FACTS:
8.1.1 Except as disclosed, all material facts and matters relating to
the employment of all employees of the AMC have been disclosed to
the Purchaser.
8.1.2 The AMC has no collective agreements, arrangements and other
understandings with any recognised trade union, staff association
or other body representing the employees of the AMC and, to the
best of the Vendor's knowledge, no labour union has requested,
sought or attempted to represent any employees, representatives
or agents of the AMC. There is no strike or other labour dispute
involving the AMC.
8.1.3 STATUS OF EMPLOYEES: Except as disclosed to the best of the
Vendor's knowledge, no Senior Executive has terminated their
employment with the AMC since the MOU Date.
8.1.4 EMPLOYMENT AGREEMENTS AND COMPENSATION ARRANGEMENTS: Except as
disclosed, other than standard employment contracts of the AMC in
the form as disclosed, and the employment contract of the current
CEO of the AMC as disclosed, the AMC is not a party to nor bound
by any currently effective employment contract (other than
contracts that can be terminated on an at-will basis), deferred
compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation
agreement. To the best of the Vendor knowledge, none of these
employees or the CEO is in breach of their respective employment
contracts or any terms by which any such person may have been
seconded to the AMC.
8.2 COMPLIANCE WITH REQUIREMENTS: Except as disclosed, the AMC has in relation
to each of its employees and (so far as relevant) to each of its former
employees:
8.2.1 complied in all material respects with its obligations (as
appropriate) under relevant laws and all other statutes and
regulations relevant to its relations with each employee or the
conditions of service of the employee and has maintained adequate
and suitable records regarding the service of the employee;
8.2.2 discharged or adequately provided for in all material respects
its obligations to pay all salaries, wages, commissions, bonuses,
overtime pay, holiday pay, sick pay and other benefits of or
connected with employment upto the date of this Agreement; and
8.2.3 complied in all material respects with all its obligations under
the master mediclaim policy.
45
8.3 AGREEMENTS: Except as disclosed, the AMC has not since the MOU Date entered
into:
8.3.1 any agreement or arrangement to make any payments (other than
emoluments) to or on behalf of any of its directors or employees;
8.3.2 any contract of service with any employee, which is not
terminable by the AMC by three months' notice or less without
payment of compensation (except as provided by statute);
8.3.3 any agreement imposing a legal obligation on the AMC to increase
the rates of remuneration of, or to make any bonus or incentive
payments or any benefits in kind or any payments under a
profit-sharing scheme to or on behalf of, any of its employees at
any future date which would result in an increase in the AMC's
employment costs;
8.3.4 any negotiation for a change in the emoluments or other terms of
engagement of any grade of the AMC's employees resulting in an
increase in the AMC's employment costs;
8.3.5 any agreement or arrangement for the provision of compensation
on the termination of employment of any employee of the AMC,
beyond the minimum required by law and by the employment
contracts.
8.4 DISPUTES:
8.4.1 Except as disclosed, no subsisting material dispute has arisen
since incorporation between the AMC and any member or category of
its employees or former employees.
8.4.2 Except as disclosed, there are no significant complaints pending
against the AMC of whatsoever nature in relation to any of its
employees or former employees and there is no industrial action
or dispute or of such nature existing in respect of or concerning
any employees or former employees of the AMC.
8.4.3 Except as disclosed, no employee has given notice of termination
of his contract of employment or is under notice of dismissal.
8.4.4 Except as disclosed, the AMC has not offered any contract of
employment to any person for a salary of more than [Rs.1 million]
per annum, which offer remains outstanding.
8.5 PENSIONS: Except as disclosed, the AMC does not make, and is not party to
any arrangement under which it could be liable to make payments (except for
statutory payment) for providing retirement, death, disability, life
assurance or medical benefits to any person.
46
9. OPERATIONS AND COMPLIANCE OF THE FUND AND ITS SCHEMES:
9.1 ACCOUNTS: Except as disclosed, the 2001 Accounts and the Accounts of the
Fund and its Schemes have been prepared in accordance with the Regulations
and the Schedule Nine of the Regulations;
9.2 LIABILITIES AND NPAS: Except as disclosed and except as disclosed in the
portfolio statement the Fund and the Schemes do not have any non-performing
other than those reflected in the 2001 Accounts, the Accounts and
Management Accounts incurred in the ordinary course of business.
9.3 ACTIVITIES SINCE ACCOUNTS DATE: Except as disclosed and otherwise than in
the ordinary course of business, since the Accounts Date, there has not
been:
9.3.1 any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets used by
the AMC or the Fund or the operating results or the business of
the Fund as currently conducted;
9.3.2 any waiver by the AMC or the Fund of a valuable right or of a
debt owed to the Fund or any of its Schemes with a value of over
Rs. 500,000 owed to it;
9.3.3 any material change or amendment to a contract by which the Fund
is bound, except for changes or amendments which are expressly
provided for or disclosed in this Agreement;
9.3.4 any declaration or payment of any dividend or other distribution
by any Scheme of the Fund otherwise than in ordinary course of
business;
9.3.5 any debt or liability incurred, assumed or guaranteed by the
Fund or any of its Schemes otherwise than in ordinary course of
business.
9.4 CURRENT OPERATIONS: Except as disclosed, to the best knowledge of the
Vendor, there is no existing fact or circumstance as on date that has a
material adverse effect on the ability of the Fund or Schemes to conduct
its business as currently conducted.
9.5 TAXES: The liability/ penalties on account of late filing/remittance of
returns for tax to be deducted at source does not exceed an amount of
Rs.2,35,000/- on account of interest and such returns are true and correct
in all material respects. To the best of our knowledge and understanding
the deductions have been made in accordance with law.
COMPLIANCE
47
9.5 A list of the all the Schemes operated by the Vendor is attached in
Annexure 4.3 of the Disclosure Letter. There has been no material adverse
change that is inconsistent with normal industry conditions in any of the
information contained in the offer documents of the Schemes since the [MOU]
Date;
9.6 AUM: (i) The Vendor represents that the Mutual Fund, as on February 20 2002
had assets under management of Rs. 3833.79 crores in the equity schemes and
Rs. 1476.68 crores and under fixed-income schemes aggregating to assets
under management at Rs.2357.10 crores as certified by the auditors.
(ii) the Vendor represents that the Mutual Fund, as on July 19, 2002 had
assets under management of Rs.1405.80 crores in the equity schemes and Rs.
2688.85 crores and under fixed-income schemes aggregating to assets under
management at Rs. 4094.64 crores as certified by the auditors.
9.7 COMPLIANCE WITH REGULATIONS: Except as disclosed, the Vendor represents and
warrants that:
9.7.1 The affairs of the Fund have been conducted materially in
accordance with the Regulations and the related circulars of the
Regulations.
9.7.2 The accounting operations of the Fund and the Schemes have
materially been carried out in accordance with Schedule Nine of
the Regulations and with the guidance note of Institute of
Chartered Accountants of India.
9.8 The Code of Ethics relating to conduct of the directors of the Trustee and
the employees of the AMC and Code for Personal Trading and Insider Trading
guidelines have been complied with and the AMC is not aware of any
violations thereof;
9.9 The business of the Schemes has been conducted generally in a bonafide
manner with the interests of the unit holders paramount;
9.10 The AMC fees and the other expenses charged to the Fund and the Schemes are
within the limits provided in the Regulations and the offer documents of
the respective schemes;
9.11 That the entry and exit loads collected from the investors has been
utilised in accordance with the Regulations;
9.12 The investor services have been rendered fully in accordance with the
Regulations;
9.13 The offer documents (including abridged offer documents)/sales
literature/annual reports /all sales material have been fully prepared and
updated in accordance with the Regulations;
48
10. ASSETS
10.1 THE PROPERTIES: Except as disclosed, the Properties shown in Schedule_
comprise all of the premises and land owned, leased, occupied or licensed
used in connection with the businesses of the AMC and the Fund. The AMC has
provided to the Purchaser, except as disclosed, true and complete copies of
documents for all immoveable property owned, leased and or occupied by the
AMC. The AMC is in compliance in all material respects with all such
leases.
10.2 TITLE: Except as disclosed, the AMC has full and clear title to the
immoveable properties owned by the AMC which free and clear of all
Encumbrances and there is no dispute pending or of which the Vendor is
reasonably aware with regard to the title or rights to any such owned
property.
10.3 STATUTORY OBLIGATIONS, NOTICES AND ORDERS: Except as disclosed, in relation
to each of the owned properties, no notices, orders, proposals,
applications, requests or schedule of dilapidation, demands for duty or
taxes affecting or relating to any of such Properties have been served or
made by any authority on the AMC or the Fund.
10.4 NOTICES OF BREACH: Except as disclosed, in relation to the leased or
licensed immovable property occupied by the AMC or the Fund neither the AMC
nor the Fund has not received any notice or complaint from the landlord of
any breach of the terms of the leases or tenancy agreements which would
entitle the landlord to terminate the leases or agreements or claim damages
for breach of terms or covenant; under which such properties are held.
10.5 DISPOSAL OF ASSETS: Except for the sale of securities owned by the AMC and
except as disclosed, no Assets of the AMC above the value of Rs.
25,000/-have been disposed of since July 1, 2001 to June 30, 2002 except as
disclosed and in the ordinary course of business.
10.6 STAMP DUTY: All documents, except as disclosed, to which the AMC or Fund is
a party, or which form part of the title to any asset owned or possessed by
the AMC, or which the AMC or the Vendor may need to enforce or produce in
evidence in any court of law have been duly stamped and registered.
10.7 TRANSACTIONS NOT AT ARM'S LENGTH:
10.7.1 Since the MOU Date, the AMC does not own, nor has agreed to
acquire, any asset, nor, has received or agreed to receive any
services or facilities (including, without limitation, the
benefit of any licensee or agreements), the consideration for the
acquisition or provision of which was otherwise than on an arm's
length basis.
10.7.2 Except as disclosed, since the MOU Date, the AMC has not
disposed, nor has agreed to dispose, of any asset, nor has
provided or agreed to provide any services or facilities
(including, without
49
limitation, the benefit of any licences or agreements), the
consideration for the disposal or provision of which was or will
be less than its market value, or otherwise than on an arm's
length basis.
10.8 CONTROL OF RECORDS AND INFORMATION: Except as stated in Annexure 3.3 of the
Disclosure Letter and subject to the Custodian Agreement, all records and
information belonging to the AMC or the Fund or relating to their affairs
(whether or not held in written form) are in the exclusive possession and
under the direct control of the AMC and or the Fund and subject to
unrestricted access by them.
10.9 INTELLECTUAL PROPERTY
10.9.1 The AMC has such interest in any intellectual property rights
and has, as disclosed, entered into any agreement for:
(i) the licensing or use of intellectual property rights; or
(ii) the provision or acquisition of know-how or technical
information or assistance; or
(iii) the prohibition or restriction of the disclosure of any
know-how or technical information.
10.9.2 INTELLECTUAL PROPERTY RIGHTS.
(i) True and complete copies of all licenses granted to or by
the AMC in respect of any Intellectual Property
(collectively, the "IP Licenses"), have been made available
to the Purchaser. Except as provided in the IP Licenses, the
AMC is not obligated to pay any royalties or other payments
to any Person in respect of Intellectual Property used by
the AMC. The AMC is not in breach of any IP License or of
any agreement under which any confidential business
information was or is to be made available to it;
(ii) Except as otherwise set out in the respective IP Licenses,
(1) all rights in all Intellectual Property and confidential
business information owned or otherwise required for the
business of the AMC as currently conducted are vested in or
validly granted to the AMC and, (2) except as disclosed in
relation to paragraph (i) above, all renewal fees and steps
required for their maintenance or protection have been paid
and taken as on date;
(iii) To the best of the Vendor knowledge, the processes and
methods employed, the services provided, the businesses
conducted and the products, used or dealt with by the AMC,
do not, or at the time of being employed, provided,
conducted used
50
or dealt in did not, infringe the rights of any other Person
in any Intellectual Property or business information;
(iv) To the best of the Vendor knowledge, there is not, nor has
there been at any time, any unauthorised use or infringement
by the AMC of any of the Intellectual Property or
confidential business information owned or otherwise
required for the business of the AMC.
11. INSURANCE
Assets of the AMC and the Fund as stated in Annexure 11 of the Disclosure
Letter are at the date of this Agreement adequately insured according to
prudent business practices thereof against fire and other risks normally
insured against by companies carrying on the same classes of business or
owing assets of a similar nature and all such insurances are in full force
and effect and the premiums have been paid.
12. CONFIDENTIALITY
So far as the Vendor are aware neither the AMC nor the Fund have disclosed
or permitted to be disclosed or undertaken or arranged to disclose to any
person any of its know-how, secrets or confidential information other than
under an obligation of confidentiality.
13. GENERAL
13.1 NO MISREPRESENTATION: No representation, warranty or statement by the AMC,
the Vendor in this Agreement, or in the Disclosure Letter, or Exhibit,
Schedule of this Agreement, statement or certificate furnished to the
Purchaser pursuant to this Agreement, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements made herein, in light of the circumstances under which they were
made, and are not misleading;
13.2 FULL DISCLOSURE: To the best of knowledge of the AMC and the Vendor, there
are no fact or circumstance relating to the affairs of the AMC which has
not been disclosed to the Purchaser and which if not disclosed might
reasonably have been expected to influence the decision of the Purchaser to
enter into this Agreement; and
13.3 ACCURACY AND ADEQUACY OF INFORMATION DISCLOSED TO THE PURCHASER: All
information contained in this Agreement, Disclosure Letter and all other
information which has been given in writing or made available by or on
behalf of the Vendor to the Purchaser or its agents, employees or
professional advisers in the course of the negotiations leading to this
Agreement or in the course of any due diligence or other investigation
carried out by or on behalf of the Purchaser prior to entering into this
Agreement was when given and remains true, complete and accurate in all
respects and to the best knowledge
51
of the Vendor, the Vendor is not aware of any fact or matter or
circumstances which have not disclosed in writing to the Purchaser or which
renders any such information untrue, inaccurate or misleading or the
disclosure of which might reasonably affect the willingness of the
Purchaser to purchase the AMC Shares or the price at or terms upon which
the Purchaser would be willing to purchase them.
52
Schedule 4
List of Senior Executives
1. Mr. Vivek Reddy
2. Mr. Ravi Mehrotra
3. Mr. R. Narayanan
4. Mr. Anoop Bhaskar
5. Mr. Anil Prabhudas
6. Mr. K N Sivasubramaniam
7. Mr. R Sukumar
8. Mrs. Lalitha Swamy
9. Mr. S Chellappa
53
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED,
By its duly authorised signatory
Name: Mr Rajiv Vij /s/ Rajiv Vij
FOR SELF AND ON BEHALF OF THE EMPLOYEE SHAREHOLDERS
Name: VIVEK REDDY /s/ Vivek Reddy
Title: Constituted Attorney of the Employee Shareholders
54