International Media Acquisition Corp 8-K, filed Oct 24, 2022
International Media Acquisition Corp. (IMAQ)
About this 8-K
International Media Acquisition Corp filed this 8-K on October 24, 2022, reporting on events of October 22, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including
area code: (
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement
On October 22nd, 2022, International Media Acquisition Corp. (“IMAQ”) entered into a Stock Purchase Agreement (the “SPA”) with Risee Entertainment Holdings Private Limited, a company incorporated in India (“Seller”), and Reliance Entertainment Studios Private Limited, company incorporated in India (the “Target Company”). Pursuant to the terms of the SPA, a business combination between IMAQ and the Target Company will be effected by the acquisition of 100% of the issued and outstanding share capital of the Target Company from Seller in a series of transactions (collectively, the “Stock Acquisition”). The board of directors of IMAQ has (i) approved and declared advisable the SPA and the other transactions contemplated thereby, and (ii) resolved to recommend approval of the SPA and related transactions by the stockholders of IMAQ. All capitalized terms used herein, but not otherwise defined, shall have the respective meanings ascribed to such terms in the SPA.
Stock Acquisition Consideration
In accordance with the terms and subject to the conditions of the SPA, the Seller shall, in exchange for the consideration set forth below, sell, transfer, convey, assign and deliver to IMAQ, and IMAQ shall purchase, acquire and accept from the Seller all rights, title and interest in and to the shares of the Target Company (the “Company Shares”) in the manner described herein, free and clear of all liens, excepting only restrictions on the subsequent transfer of the Company Shares by IMAQ imposed under applicable laws, IMAQ’s organizational documents, and the Shareholders’ Agreement (as defined below). Such purchases shall be made as follows:
(a) Tranche 1: IMAQ shall purchase and Seller shall sell 3,920 Company Shares (the “Tranche 1 Company Shares”) at the initial closing of the Stock Acquisition which shall occur within four days of the satisfaction or waiver of the closing conditions set forth in the SPA (the “Initial Closing,” and any subsequent closing thereafter, an “Additional Closing”), which shares shall represent 39.20 % of the fully diluted equity ownership of the Target Company as of the date of the Initial Closing, for the higher of: (i) the fair market value of the Tranche 1 Company Shares determined in accordance with the requirements of the Foreign Exchange Management Act, 1999, of the Republic of India (the “FEMA”), or (ii) $40,000,000;
(b) Tranche 2: IMAQ shall purchase and Seller shall sell 1,570 Company Shares (“Tranche 2 Company Shares”) on or prior to the 90th day following the Initial Closing for the higher of: (i) the fair market value of the Tranche 2 Company Shares determined in accordance with the requirements of the FEMA, or (ii) $16,000,000 (and simultaneously, IMAQ shall also infuse $4,000,000 as primary equity capital into the Target Company and be issued common equity shares in the Target Company against such subscription amount, or, alternatively, IMAQ may also infuse this amount as a loan to the Target Company in accordance with applicable laws), which shares (i.e., the Tranche 2 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated under the SPA, if issued) shall (together with the shares purchased under paragraph (a) above) represent 54.90% of the fully diluted equity ownership of the Target Company as of such Additional Closing;
(c) Tranche 3: IMAQ shall purchase and Seller shall sell 1,960 Company Shares (“Tranche 3 Company Shares”) on or prior to 12 months from the Initial Closing for the higher of: (i) the fair market value of the Tranche 3 Company Shares determined in accordance with the requirements of the FEMA, or (ii) $20,000,000 (and simultaneously, IMAQ shall also infuse $20,000,000 as primary equity capital into the Target Company and be issued common equity shares in the Target Company against such subscription amount, or, alternatively, IMAQ may also infuse this amount as a loan to the Target Company in accordance with applicable laws), which shares (i.e., the Tranche 3 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated under the SPA, if issued) shall (together with the shares purchased and subscribed under paragraphs (a) and (b) above, as the case may be) represent 74.50% of the fully diluted equity ownership of the Target Company as of such Additional Closing;
(d) Tranche 4: IMAQ shall purchase and Seller shall sell 2,550 Company Shares (“Tranche 4 Company Shares”) on or prior to 18 months from the Initial Closing for the higher of: (i) the fair market value of the Tranche 4 Company Shares determined in accordance with the requirements of the FEMA, or (ii) $26,000,000 (and simultaneously, IMAQ shall also infuse $14,000,000 as primary equity capital into the Target Company and be issued common equity shares in the Target Company against such subscription amount, or, alternatively IMAQ may also infuse this amount as a loan to the Target Company in accordance with applicable Laws), which shares (i.e., the Tranche 4 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated under the SPA, if issued) shall (together with the shares purchased and subscribed under paragraphs (a), (b) and (c) above, as the case may be) represent 100% of the fully diluted equity ownership of the Target Company as of such Additional Closing.
(e) The Target Company shall, and IMAQ shall ensure that, all primary investments into the Target Company by IMAQ as contemplated under the SPA, aggregating to $38,000,000, shall be used solely for the purposes of repayment of the inter-company loans aggregating to $38,000,000 as existing on the books of the Target Company at the Initial Closing (the “Existing Inter-Company Loans”), as set forth in the SPA.
(f) Any loan extended by IMAQ to the Target Company pursuant to paragraphs (b) to (d) above shall be repaid (including any interest repayment or payment of charges) by the Target Company only after the Seller has been paid the entire consideration contemplated under the SPA.
At the Initial Closing and each Additional Closing, the applicable consideration will be paid by IMAQ to the Seller in Indian National Rupees, the currency of the Republic of India (“INR”), based upon the foreign exchange rates published by Bloomberg as set forth in the SPA.
Default of Additional Purchase and Subscription Obligations
In the event that IMAQ defaults/fails: (i) to consummate the Additional Closings as contemplated under the SPA, (ii) to make the infusion of primary investment or loan of $38,000,000 in the Target Company, (iii) to ensure that the Target Company repays the Existing Inter-Company Loans, in each case, in accordance with the time periods specified in the SPA, for any reason whatsoever (including on account of delay or failure in obtaining any approval from any Authority or non-fulfillment of any other condition mentioned in the SPA and the other agreements related thereto (the “Additional Agreements”)), the following consequences shall follow, without prejudice to the other rights and remedies of the Seller provided for under the SPA and the Additional Agreements:
(a) the Seller shall have the right to seek specific performance and in the event that such specific performance is not enforceable or available under any provision of applicable law, IMAQ shall be liable to pay damages to the Seller on account of the default/breach committed by IMAQ;
(b) the Seller shall have an unfettered right to transfer, sell, dispose, and/or create liens on all or any of the Company Shares held by it;
(c) the Seller shall have affirmative vote rights with respect to the matters specified in the Shareholders’ Agreement;
(d) if any default as stipulated under the SPA has not been cured by IMAQ within a period of 18 months of the Initial Closing, the Seller shall have the right to appoint majority of the directors on the board of directors of the Target Company (the “Board”) upon completion of such 18 month period, provided that IMAQ shall continue to have the right to nominate one director or observer on the Board, as long as IMAQ holds at least 10% of the total share capital of the Target Company as determined on a fully diluted basis, and further provided that if: (i) the Seller has transferred, sold, disposed of and/or created any liens on all (and not some) of the Company Shares held by it, and (ii) IMAQ has completed the purchase of more than 75% of the Company Shares, the Board shall be reconstituted in a manner which reflects the inter se shareholding percentages of the stockholders of the Target Company, however, the transferee of the Seller’s transferred Company Shares shall continue to have the right to nominate one director or observer on the Board, as long as such transferee holds at least 10% of the total share capital of the Target Company, and, further, IMAQ shall have certain affirmative vote rights with respect to the matters specified in the Shareholders’ Agreement; and
(e) if any default as stipulated under the SPA has not been cured by IMAQ within a period of 21 months of the Initial Closing and IMAQ has not completed the purchase of more than 75% of the Company Shares, at the option of the Seller: (i) all the rights of IMAQ under the SPA and the Additional Agreements shall fall away and cease to exist, and (ii) all the liabilities, obligations, and responsibilities of the Seller under the SPA and the Additional Agreements shall fall away and cease to exist other than the right of IMAQ to nominate one director on the Board of the Target Company, as long as IMAQ holds at least 10% of the total share capital of the Target Company as determined on a fully diluted basis; provided, however, that if the Seller has transferred, sold, or disposed of all (and not some) of the Company Shares, the transferee of the Seller’s transferred Company Shares and IMAQ shall mutually discuss and agree on the affirmative vote rights which may be available to IMAQ with respect to the matters specified in the Shareholders’ Agreement.
Representations and Warranties
The SPA contains customary representations and warranties of the parties thereto. The Target Company has made representations and warranties with respect to (a) corporate existence and power, (b) authorization to enter into the SPA and related transactions, (c) governmental authorization, (d) non-contravention, (e) capitalization, (f) corporate records, (g) subsidiaries, (h) consents, (i) financial statements, (j) books and records, (k) internal accounting controls, (l) absence of certain changes, (m) properties and title to assets, (n) litigation, (o) contracts, (p) licenses and permits, (q) compliance with Laws, (r) intellectual property, (s) accounts payable and affiliate loans, (t) employees and employee matters, (u) withholding, (v) employee benefits, (w) real property, (x) tax matters, (y) environmental laws, (z) finders’ fees, (aa) powers of attorney, suretyships and bank accounts, (bb) directors and officers, (cc) anti-money laundering laws, (dd) insurance, (ee) related party transactions, and (ff) investment company status.
The Seller has made representations and warranties with respect to (a) corporate existence, (b) corporate power and authority, (c) conflicts, (d) consents, (e) liens and encumbrances, (f) title, (g) taxes, (h) jurisdiction of formation, (i) pendency of proceedings, and (j) absence of voting agreements.
IMAQ has made representations and warranties with respect to, among other things, (a) corporate existence and power, (b) corporate authorization to enter into the SPA and related transactions, (c) governmental authorization, (d) non-contravention, (e) finders’ fees, (f) board approval, (g) litigation, (h) capitalization, (i) compliance, (j) SEC filings and financial statements, (k) IMAQ’s trust fund, (l) SEC registration, and (m) listing.
Covenants
The SPA includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Stock Acquisition, and efforts to satisfy conditions to the consummation of the Stock Acquisition.
The SPA also contains additional covenants of the parties, including, among others, access to information, tax matters, notices of certain events, cooperation in the preparation of the Proxy Statement and other filings required to be filed in connection with the Stock Acquisition, efforts to obtain Company Consents, satisfaction of indebtedness, the Target Company providing additional financial information, and non-competition and non-solicitation.
Exclusivity
Each of Seller and the Target Company has agreed that from the date of the SPA until the Initial Closing or, if earlier, the valid termination of the SPA in accordance with its terms, it will not initiate any negotiations with any party relating to an Alternative Transaction (as such term is defined in the SPA) or enter into any agreement relating to such a proposal. Each of Seller and the Target Company has also agreed to be responsible for any acts or omissions of any of its respective representatives that, if they were the acts or omissions of Seller or the Target Company, as applicable, would be deemed a breach of the party’s obligations with respect to these non-solicitation restrictions.
Conditions to Closing
The consummation of the Initial Closing and any Additional Closing is conditioned upon, among other things, (i) the absence of any applicable law or order restraining, prohibiting or imposing any condition on the consummation of the Stock Acquisition and related transactions, (ii) no action being brought by any Authority to enjoin or otherwise restrict the consummation of the Initial Closing and any Additional Closing, and (iii) with respect to the Initial Closing, approval by IMAQ stockholders of the Stock Acquisition and related transactions and each of the Purchaser Proposals (as defined in the SPA).
IMAQ’s obligation to close is subject to the satisfaction of the following conditions, which include, among other things, (a) the Target Company having duly performed or complied with all of its obligations under the SPA in all material respects, (b) the Target Company having obtained a valuation certificate to determine the fair market value of the Company Shares in accordance with the FEMA for transfer of the Company Shares to IMAQ as required under the applicable Indian laws, (c) the Target Company having obtained any Company Consents required under the SPA, (d) the Target Company having delivered to IMAQ the Required Financial Statements, and (e) all issues identified during the due diligence exercise carried out by IMAQ on the Target Company having been resolved and addressed by the Target Company to the satisfaction of IMAQ prior to the Initial Closing.
The Target Company’s conditions to closing include, among other things, (a) IMAQ having duly performed or complied with all of its obligations under the SPA in all material respects, (b) the representations and warranties of IMAQ contained in the SPA (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect), other than the Purchaser Fundamental Representations, being true and complete in all material respects as of the date of the SPA and as of the Initial Closing and any Additional Closing, as if made at and as of such date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty being true and complete in all material respects at and as of such earlier date), (c) the Purchaser Fundamental Representations (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect) being true and complete in all respects at and as of the date of the SPA and as of the Initial Closing and any Additional Closing, as if made as of such date (except to the extent that any such representation and warranty is expressly made as of a specific date, in which case such representation and warranty being true and complete in all respects at and as of such specific date), other than de minimis inaccuracies, (d) no event having occurred that would result in a Material Adverse Effect on IMAQ, and (e) IMAQ and certain stockholders of IMAQ shall have executed and delivered to the Target Company a copy of each Additional Agreement to which IMAQ and such stockholders are party.
Termination
(A) Either the Seller or IMAQ may terminate the SPA at any time prior to the Initial Closing as follows:
(a) In the event that the Initial Closing has not occurred by the six-month anniversary of the date of the SPA (the “Outside Closing Date”), either party shall have the right to terminate the SPA without liability to the other party. Such right may be exercised by either party by giving written notice to the other Parties at any time after the Outside Closing Date.
(b) In the event that an Authority shall have issued an order or enacted a law, having the effect of permanently restraining, enjoining or otherwise prohibiting the Stock Acquisition, which order or law is final and non-appealable, IMAQ or Seller shall have the right, at its sole option, to terminate the SPA without liability to the other party; provided, however, that the right to terminate the SPA shall not be available to Seller or IMAQ if the failure by such party or its affiliates to comply with any provision of the SPA has been a substantial cause of, or substantially resulted in, such action by such Authority.
(c) The SPA may be terminated at any time prior to the Initial Closing by mutual written consent of Seller and IMAQ duly authorized by each of their respective boards of directors.
(B) The SPA may also be terminated any time prior to the Initial Closing by:
(a) IMAQ, if (x) Seller or the Target Company shall be in breach of any of its material representations, warranties, agreements or covenants contained in the SPA to be performed on or prior to the Initial Closing, which has rendered or would reasonably be expected to render the satisfaction of any of the conditions set forth in the SPA impossible; and (y) such breach cannot be cured or is not cured within thirty (30) days following receipt by Seller of a written notice from IMAQ describing in reasonable detail the nature of such breach.
(b) Seller, without prejudice to any rights or obligations Seller may have, if: (i) IMAQ shall have breached any of its covenants, agreements, representations, and warranties contained in the SPA; and (ii) such breach cannot be cured or is not cured within thirty (30) days following receipt by IMAQ of a written notice from Seller describing in reasonable detail the nature of such breach.
(c) IMAQ, if there is a Material Adverse Effect with respect to the Target Company.
(d) Seller, if there is a Material Adverse Effect with respect to IMAQ.
(e) IMAQ or Seller, if any of the Purchaser Proposals fail to receive the requisite vote for approval at the Purchaser Stockholder Meeting.
(f) Seller, in accordance with conditions specified under the section entitled “Default of Additional Purchase and Subscription Obligations” above.
Survival of Representations and Warranties and Indemnification
The representations and warranties of IMAQ, Seller and the Target Company contained in the SPA will survive the Initial Closing for a period of 18 months. All Seller Fundamental Warranties shall survive for a period of 10 years after the Initial Closing and the Company Fundamental Representations and the Purchaser Fundamental Representations shall survive for a period of five years after the Initial Closing, and the representations and warranties set forth in Section 4.24 of the SPA shall survive for seven years. All covenants and agreements of the parties contained in the SPA shall survive for the period explicitly specified therein, if applicable, or until performed. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.
Subject to the limitations set forth in the SPA, from and after the Initial Closing, Reliance shall defend, indemnify and hold harmless each of IMAQ, its affiliates and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders and representatives, from and against, and pay or reimburse, such indemnitees for any and all incurred, actual and direct losses (including reasonable legal expenses and costs resulting from Third Party Claims), solely resulting from, arising out of or relating to (i) any inaccuracy in or breach of the representations or warranties of Seller or Reliance set forth in the SPA; or (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or Reliance pursuant to the SPA. Notwithstanding the foregoing, Reliance shall have no liability for any claims made by IMAQ prior to the purchase of 100% of the Company Shares by IMAQ as contemplated under the SPA. In addition, from and after the Initial Closing, Reliance shall defend, indemnify and hold harmless each Seller Indemnitee from and again, and pay or reimburse the Seller Indemnitee for any and all losses and damages actually suffered or incurred by Seller Indemnitee resulting from arising out of, or relating to any disclosures or submissions made by Reliance to any person including the SEC, public or investors.
Subject to the limitations set forth in the SPA, from and after the Initial Closing, Seller shall defend, indemnify and hold harmless each of IMAQ, its affiliates and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders and representatives, from and against, and pay or reimburse, such indemnitees for any and all incurred, actual and direct losses (including reasonable legal expenses and costs resulting from Third Party Claims), solely resulting from, arising out of or relating to (i) any inaccuracy in or breach of any of the Seller Fundamental Warranties set forth in the SPA; or (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to the SPA.
From and after the Initial Closing, IMAQ shall defend, indemnify and hold harmless each of Seller, its affiliates and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders and representatives (each a “Seller Indemnitee” and together the “Seller Indemnitees”), from and against, and pay or reimburse, the Seller Indemnitees for any and all losses and damages, resulting from, arising out of or relating to (i) any inaccuracy in or breach of any of the representations or warranties of IMAQ contained in the SPA, (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by IMAQ pursuant to the SPA, (iii) any disclosures or submissions made by IMAQ to any person, including the SEC, public, or investors, and (iv) the agreements entered into by IMAQ in connection with its initial public offering.
The foregoing description of the SPA is qualified in its entirety by reference to the full text of the SPA, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K, and is incorporated herein by reference.
The SPA and other agreements described below have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about IMAQ, the Target Company or the other parties thereto. In particular, the assertions embodied in the representations and warranties in the SPA were made as of a specified date, are modified or qualified by information in one or more disclosure letters prepared in connection with the execution and delivery of the SPA, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the SPA are not necessarily characterizations of the actual state of facts about IMAQ, the Target Company or the other parties thereto at the time they were made or otherwise and should only be read in conjunction with the other information that IMAQ makes publicly available in reports, statements and other documents filed with the SEC. IMAQ, Seller and the Target Company stockholders, members, managers and security holders are not third-party beneficiaries under the SPA.
Certain Related Agreements
Shareholders’ Agreement
On October 22, 2022, Seller, the Target Company and IMAQ entered into a Shareholders’ Agreement (the “Shareholders’ Agreement”), pursuant to which the parties agreed, among other things, that (i) Mr. Shibasish Sarkar shall serve as the Chief Executive Officer of the Target Company upon consummation of the Initial Closing, (ii) immediately at Initial Closing, the Board shall consist of five directors, three of whom shall be nominated by IMAQ and the other two shall be nominated by the Seller, each to serve for a term of two years; provided that the right to nominate a director shall be deemed to include the right to replace or remove such director, and (iii) neither the Seller nor IMAQ shall be entitled to transfer, sell or create any encumbrance on all or any of the Company Shares held by it, except with the prior written consent of the other party and/or other than as contemplated under the SPA; provided, however, that IMAQ shall be entitled to create any encumbrance on the Company Shares held by it for the purpose of availing financing to, or in the ordinary course of business of, IMAQ.
The parties agreed pursuant to the Shareholders’ Agreement that IMAQ shall at all times have the right to nominate the majority of the Board members from the Initial Closing onwards, and consequently exercise majority control over the Board. Notwithstanding anything to the contrary, neither the Target Company nor its subsidiaries nor the respective shareholders, directors, officers, committees, committee members, employees, agent nor any of their respective delegates (as the case may be) shall approve, authorize, or agree or commit to undertake any action with respect to any of Reserved Matters (as defined in the Shareholders’ Agreement) in any manner, whether directly or indirectly, unless approved in writing by: (i) the Seller, or the Seller director(s) if such Reserved Matter is taken up for discussion at a Board or committee meeting, from the Initial Closing until such time that IMAQ has the right to nominate the majority of the Board seats in accordance with the terms of the Shareholders’ Agreement; (ii) IMAQ, or IMAQ’s director(s) if such Reserved Matter is taken up for discussion at a Board or committee meeting, in the event that the Seller obtains the right to constitute the majority of the Board in accordance with the terms of the Shareholders’ Agreement; and (ii) the Minority Shareholder (as defined in the Shareholders’ Agreement) if such Reserved Matter is being considered at a meeting of shareholders.
The Shareholders’ Agreement shall become effective from the date of the Initial Closing and shall be terminated with respect to a party upon such party ceasing to hold any Company Shares. Any person acquiring securities issued by the Target Company or in a transfer of securities in accordance with the terms of the Shareholders’ Agreement shall be bound by the provisions of the Shareholders’ Agreement in accordance with the terms thereof.
In the event that either party defaults under the Shareholders’ Agreement, the non-defaulting party shall have certain rights and remedies under the Shareholders’ Agreement, including the right to seek specific performance. In addition, the defaulting party shall indemnify the non-defaulting party for any losses related to the defaulting parties’ breach of the Shareholders’ Agreement.
Earnout Agreement
On October 22, 2022, the Seller, IMAQ and the Target Company entered into an Earnout Agreement, pursuant to which, during the period from and after the first anniversary of the Initial Closing until the third anniversary of the Initial Closing (the “Earnout Period”), up to $17,500,000 of the consideration for the Stock Acquisition (the “Earnout”) will be paid to the Seller by the Target Company upon the achievement of certain trading prices of the common stock of IMAQ as follows:
(a) the Seller shall be entitled to receive, and the Target Company shall be obligated to pay, an INR amount equivalent to $7,500,000 at such time as the weighted average share price of the shares IMAQ on Nasdaq, for a period of ten (10) trading days over any twenty (20) consecutive trading days during the Earnout Period, is greater than or equal to $15.00 per share; and
(b) the Seller shall be entitled to receive, and the Target Company shall be obligated to pay, an INR amount equivalent to $10,000,000 at such time as the weighted average share price of the shares of IMAQ on Nasdaq, for a period of ten (10) trading days over any twenty (20) consecutive trading days during the Earnout Period, is greater than or equal to $20.00 per share Any Earnout that is not earned on or before the expiration of the Earnout Period shall be forfeited.
The foregoing description of the Earnout Agreement is qualified in its entirety by reference to the full text of the Form of Earnout Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K, and is incorporated herein by reference.
Important Information for Investors and Stockholders
This document does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom. IMAQ intends to file a proxy statement with the SEC. A proxy statement will be sent to all IMAQ stockholders. IMAQ also intends to file other documents regarding the proposed transactions with the SEC. Before making any voting decision, investors and security holders of IMAQ are urged to read the proxy statement and all other relevant documents that IMAQ files with the SEC in connection with the proposed transactions as they become available because they will contain important information about the proposed transactions.
Investors and security holders will be able to obtain free copies of the proxy statement and all other relevant documents filed with the SEC by IMAQ through the website maintained by the SEC at www.sec.gov.
Forward Looking Statements
Certain statements included in this Current Report on Form 8-K are not historical facts but are forward-looking statements. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Current Report on Form 8-K and on the current expectations of IMAQ’s and the Target Company’s respective management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of IMAQ and the Target Company. Some important factors that could cause actual results to differ materially from those in any forward-looking statements could include changes in domestic and foreign business, market, financial, political and legal conditions.
These forward-looking statements are subject to a number of risks and uncertainties, including, the inability of the parties to successfully or timely consummate the SPA, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect IMAQ or the expected benefits of the Stock Acquisition, if not obtained; the failure to realize the anticipated benefits of the Stock Acquisition; matters discovered by the parties as they complete their respective due diligence investigation of the other party; the ability of IMAQ to maintain the listing of IMAQ’s shares on Nasdaq; costs related to the Stock Acquisition; IMAQ’s failure to satisfy the conditions to the consummation of each tranche of the Stock Acquisition, including the initial approval of the SPA by the stockholders of IMAQ, the risk that the Stock Acquisition may not be completed by the stated deadlines and the potential failure to obtain an extension of the stated deadlines; the inability to complete the financing contemplated in connection with the Stock Acquisition and the purchase of 100% of the equity of the Target Company; the outcome of any legal proceedings that may be instituted against IMAQ or the Target Company related to the Stock Acquisition; the attraction and retention of qualified directors, officers, employees and key personnel following the Stock Acquisition, IMAQ’s ability following the Stock Acquisition to compete effectively in a highly competitive market; the ability to protect and enhance the Target Company’s corporate reputation and brand; the impact from future regulatory, judicial, and legislative changes in the Target Company’s industry; the uncertain effects of the COVID-19 pandemic and other pandemics on the production of movies and attendance at movie theaters; changes in the viewing patterns of customers and consumer behavior, as well as evolving technologies, distribution platforms and packaging; the substantial investment of capital required to produce and market films and other programming; the inability to compete for talent, content, audiences, subscribers, advertising and distribution in the Indian and global entertainment industry; future financial performance of IMAQ following the Stock Acquisition; the ability of IMAQ to forecast and maintain an adequate rate of revenue growth and appropriately plan its expenses; the risk that the Stock Acquisition disrupts current plans and operations of the Target Company as a result of the announcement and consummation of the Stock Acquisition; the possibility that the Target Company may be adversely affected by other economic, business, regulatory, and/or competitive factors; the evolution of the markets in which the Target Company competes, including technological changes and other trends affecting the entertainment industry and increases in the cost for content and other rights; risks related to streaming initiatives; the ability of the Target Company to implement its existing strategic initiatives and continue to innovate; risks related to acquisition and integration of acquired businesses; the ability of the Target Company to defend its intellectual property; the risk that the Target Company may not be able to execute its growth strategy and the timing of expected business milestones; and the risk of declines or disruptions in the Indian economy. The foregoing list of risks is not exhaustive.
If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that IMAQ and the Target Company do not presently know, or that IMAQ and the Target Company currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect IMAQ’s and the Target Company’s current expectations, plans and forecasts of future events and views as of the date hereof. Nothing in this Current Report on Form 8-K and the exhibits hereto should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this Current Report on Form 8-K and the exhibits hereto, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein and the risk factors of IMAQ and the Target Company described above. IMAQ and the Target Company anticipate that subsequent events and developments will cause their assessments to change. However, while IMAQ and the Target Company may elect to update these forward-looking statements at some point in the future, they each specifically disclaim any obligation to do so, except as required by law.
Participants in the Solicitation
IMAQ and the Target Company and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from IMAQ’s stockholders in connection with the proposed Stock Acquisition. A list of the names of the directors and executive officers of IMAQ and information regarding their interests in the Stock Acquisition will be contained in the proxy statement when available. You may obtain free copies of these documents as described in the second paragraph under the above section entitled “Important Information for Investors and Stockholders.”
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit | Description | |
| 2.1* | Stock Purchase Agreement, dated as of October 22, 2022, by and among International Media Acquisition Corp., Seller and the Target Company. | |
| 10.1 | Shareholders’ Agreement, dated October 22, 2022, by and among Seller, Target Company and International Media Acquisition Corp. | |
| 10.2 | Earnout Agreement, dated October 22, 2022, by and among Seller, the Target Company and International Media Acquisition Corp. | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
| * | Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). International Media Acquisition Corp. agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: October 23, 2022 | ||
| INTERNATIONAL MEDIA ACQUISITION CORP. | ||
| By: | /s/ Shibasish Sarkar | |
| Name: | Shibasish Sarkar | |
| Title: | Chief Executive Officer | |
Exhibit 2.1
STOCK PURCHASE AGREEMENT
dated
October 22, 2022
by and among
Risee Entertainment Holdings Private Ltd.,
Reliance Entertainment Studios Private Limited,
and
International Media Acquisition Corp.
Table of Contents
| Page | |
| ARTICLE I DEFINITIONS | 1 |
| 1.1 Definitions | 1 |
| 1.2 Construction | 14 |
| ARTICLE II PURCHASE AND SALE | 15 |
| 2.1 Purchase and Sale of the Company Shares | 15 |
| 2.2 Purchase Price | 17 |
| 2.3 Closing Deliveries | 17 |
| 2.4 Withholding Rights | 20 |
| 2.5 Additional Closing Dates | 20 |
| 2.6 Taking of Necessary Action; Further Action | 21 |
| 2.7 Change of Name | 21 |
| 2.8 Taxes | 22 |
| 2.9 Earnout | 22 |
| ARTICLE III CLOSING | 22 |
| 3.1 Closings | 22 |
| 3.2 Simultaneous Actions | 22 |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 23 |
| 4.1 Corporate Existence and Power | 23 |
| 4.2 Authorization | 24 |
| 4.3 Governmental Authorization | 24 |
| 4.4 Non-Contravention | 24 |
| 4.5 Capitalization | 25 |
| 4.6 Corporate Records | 26 |
| 4.7 Subsidiaries | 26 |
| 4.8 Consents | 27 |
| 4.9 Financial Statements | 27 |
| 4.10 Books and Records | 27 |
| 4.11 Internal Accounting Controls | 28 |
| 4.12 Absence of Certain Changes | 28 |
| 4.13 Properties; Title to the Company’s Assets | 28 |
| 4.14 Litigation | 28 |
| 4.15 Contracts | 29 |
| 4.16 Licenses and Permits | 30 |
| 4.17 Compliance with Laws | 31 |
| 4.18 Intellectual Property | 32 |
| 4.19 Accounts Payable; Affiliate Loans | 36 |
| 4.20 Employees; Employment Matters | 36 |
| 4.21 Withholding | 39 |
| 4.22 Employee Benefits | 39 |
| 4.23 Real Property | 41 |
i
| 4.24 Tax Matters | 42 |
| 4.25 Environmental Laws | 46 |
| 4.26 Finders’ Fees | 47 |
| 4.27 Powers of Attorney, Suretyships and Bank Accounts | 47 |
| 4.28 Directors and Officers | 47 |
| 4.29 Anti-Money Laundering Laws | 47 |
| 4.30 Insurance | 48 |
| 4.31 Related Party Transactions | 49 |
| 4.32 No Trading or Short Position | 49 |
| 4.33 Not an Investment Company | 49 |
| 4.34 Information Supplied | 49 |
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER | 49 |
| 5.1 Corporate Existence | 50 |
| 5.2 Corporate Power and Authority | 50 |
| 5.3 Conflicts | 50 |
| 5.4 Consents | 50 |
| 5.5 Liens and Encumbrances | 50 |
| 5.6 Title | 51 |
| 5.7 Taxes | 51 |
| 5.8 Indian Resident Company | 51 |
| 5.9 No Pending Proceedings | 51 |
| 5.10 Absence of Voting Agreements | 51 |
| ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER | 51 |
| 6.1 Corporate Existence and Power | 51 |
| 6.2 Corporate Authorization | 51 |
| 6.3 Governmental Authorization | 52 |
| 6.4 Non-Contravention | 52 |
| 6.5 Finders’ Fees | 52 |
| 6.6 Information Supplied | 52 |
| 6.7 Trust Fund | 52 |
| 6.8 Listing | 53 |
| 6.9 Board Approval | 53 |
| 6.10 Purchaser SEC Documents and Financial Statements | 53 |
| 6.11 Litigation | 54 |
| 6.12 Withholding Taxes | 54 |
| 6.13 Investigation and Enquiry | 54 |
| 6.14 Spot Delivery Contract | 55 |
| 6.15 Further Approvals | 55 |
| ARTICLE VII COVENANTS OF THE PARTIES PENDING the INITIAL CLOSING | 55 |
| 7.1 Conduct of the Business | 55 |
| 7.2 Exclusivity | 58 |
| 7.3 Access to Information | 58 |
| 7.4 Notices of Certain Events | 59 |
ii
| 7.5 Cooperation with Proxy Statement; Other Filings | 59 |
| 7.6 Trust Account | 62 |
| 7.7 Supplements to Disclosure Schedules | 62 |
| ARTICLE VIII COVENANTS OF THE COMPANY | 62 |
| 8.1 Reporting; Compliance with Laws; No Insider Trading | 62 |
| 8.2 Commercially Reasonable Efforts to Obtain Consents | 63 |
| 8.3 Additional Financial Information | 63 |
| 8.4 Company Amended Charter | 63 |
| 8.5 Satisfaction of Indebtedness | 64 |
| 8.6 Non-Competition; Non-Solicitation | 64 |
| 8.7 Sole Vehicle | 65 |
| ARTICLE IX COVENANTS OF ALL PARTIES HERETO | 65 |
| 9.1 Commercially Reasonable Efforts; Further Assurances; Governmental Consents | 65 |
| 9.2 Compliance with SPAC Agreements | 67 |
| 9.3 Confidentiality | 67 |
| 9.4 Directors’ and Officers’ Indemnification and Liability Insurance | 68 |
| 9.5 Purchaser Public Filings; Nasdaq | 68 |
| 9.6 Additional Financing | 69 |
| 9.7 Further Approvals | 69 |
| 9.8 Default of Additional Purchase and Subscription Obligations | 69 |
| ARTICLE X CONDITIONS TO CLOSING | 70 |
| 10.1 Condition to the Obligations of the Parties | 70 |
| 10.2 Conditions to Obligations of Purchaser | 70 |
| 10.3 Conditions to Obligations of Seller and the Company | 72 |
| ARTICLE XI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; SPECIFIC PERFORMANCE | 73 |
| 11.1 Survival of Representations and Warranties | 73 |
| 11.2 General Indemnification | 73 |
| 11.3 Claims for Indemnification | 74 |
| 11.4 Limitations on Indemnification Obligations | 76 |
| 11.5 De Minimis Provisions | 77 |
| 11.6 Specific Performance | 77 |
| 11.7 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law. | 77 |
| ARTICLE XII TERMINATION | 77 |
| 12.1 Termination Without Default | 77 |
| 12.2 Termination Upon Default | 78 |
| 12.3 Effect of Termination | 79 |
iii
| ARTICLE XIII MISCELLANEOUS | 79 |
| 13.1 Notices | 79 |
| 13.2 Amendments; No Waivers; Remedies | 80 |
| 13.3 Arm’s Length Bargaining; No Presumption Against Drafter | 80 |
| 13.4 Publicity | 81 |
| 13.5 Expenses | 81 |
| 13.6 No Assignment or Delegation | 81 |
| 13.7 Governing Law | 81 |
| 13.8 Counterparts; Facsimile Signatures | 82 |
| 13.9 Entire Agreement | 82 |
| 13.10 Severability | 82 |
| 13.11 Further Assurances | 82 |
| 13.12 Third Party Beneficiaries | 82 |
| 13.13 Waiver | 82 |
| 13.14 No Other Representations; No Reliance | 83 |
| 13.15 Waiver of Jury Trial | 85 |
| 13.16 Submission to Jurisdiction | 86 |
| 13.17 Arbitration | 86 |
| 13.18 Attorneys’ Fees | 87 |
| 13.19 Remedies | 87 |
| 13.20 Non-Recourse | 87 |
| 13.21 Post-Closing Confidentiality | 87 |
iv
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 22, 2022 (this “Agreement”), by and among Risee Entertainment Holdings Private Limited., a private limited company incorporated in India (“Seller”), Reliance Entertainment Studios Private Limited, a private limited company incorporated in India (the “Company”), and International Media Acquisition Corp., a Delaware corporation (“Purchaser”).
W I T N E S E T H:
A. The Company is a media, entertainment and film production company which is engaged in the business of creation, acquisition, marketing and distribution of content across film, television, web and digital platforms, animation, games and new media, and is also engaged in related, ancillary and derivative products and services to the above which without limitation includes artist management, film production (including pre & post), media planning and buying services, licensing, merchandising, training and education, music, public performances, OTT platforms, import, export, trading etc. in the media and entertainment sector (“Business”), and conducts this Business by itself and through its Subsidiaries and Joint Ventures (together, the “Company Group”);
B. Purchaser is a blank check company formed for the sole purpose of entering into a share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities;
C. Seller is the sole beneficial shareholder of the Company and owns beneficially and of record 100% of issued and outstanding share capital of the Company;
D. Purchaser intends to enter into subscription agreements (the “Subscription Agreements”) with certain investors, pursuant to which such investors, upon the terms and subject to the conditions set forth therein, shall purchase shares of Purchaser Common Stock at $10.00 per share in a private placement or placements, to be consummated prior to the Closing or shall otherwise obtain financing in connection with the transactions contemplated by this Agreement; and
E. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of the Company Shares, in a series of transactions, upon the terms and conditions hereinafter set forth. In consideration of the mutual covenants and promises set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
“Acquisition” means the purchase of the Company Shares by Purchaser in accordance with the terms of this Agreement.
1
“Action” means any legal action, litigation, suit, claim, hearing, proceeding or investigation, including any audit, claim or assessment for Taxes or otherwise, by or before any Authority.
“Additional Agreements” means the Shareholders Agreement attached as Exhibit A, Earnout Agreement attached as Exhibit B, and each other agreement, document, instrument and/or certificate contemplated by this Agreement to be executed in connection with the transactions contemplated hereby and have been specifically agreed to be ‘Additional Agreements’.
“Additional Closing” means each closing of the sale of Additional Company Shares to Purchaser.
“Additional Closing Date” has the meaning set forth in Section 3.1.
“Additional Company Shares” means the Tranche 2 Company Shares, the Tranche 3 Company Shares, and the Tranche 4 Company Shares, as the case may be.
“Additional Purchaser SEC Documents” means all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be filed or furnished by Purchaser with the SEC under the Exchange Act or the Securities Act, together with any amendments, restatements or supplements thereto, subsequent to the date of this Agreement.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person.
“Agreement” has the meaning set forth in the Preamble.
“Alternative Transaction” has the meaning set forth in Section 7.2.
“Applicable Taxes” mean such Taxes as applicable to the Company Group under the jurisdiction in which it operates.
“Applicable Wages” mean such wages payable to employees of the Company Group in the jurisdiction in which it operates.
“Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority exercising executive, legislative, judicial, regulatory or administrative functions (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Balance Sheet” means the audited consolidated balance sheet of the Company as of March 31, 2022.
“Balance Sheet Date” has the meaning set forth in Section 4.9(a).
2
“Books and Records” means all books and records, ledgers, employee records, customer lists, files, correspondence, and other records of every kind (whether written, electronic, or otherwise embodied) owned or controlled by a Person in which a Person’s assets, its business or its transactions are otherwise reflected, other than stock books and minute books.
“Business” has the meaning set forth in the recitals to this Agreement.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York or Mumbai, India are authorized to close for business, excluding as a result of “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in New York, New York are generally open for use by customers on such day.
“CARES Act” means Coronavirus Aid, Relief, and Economic Security Act.
“Closing” means the Initial Closing and each Additional Closing, as the case may be.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the Preamble.
“Company Consent” has the meaning set forth in Section 4.8.
“Company Corporate Documents” means the memorandum of association and articles of association of the Company, as the case may be.
“Company Exclusively Licensed IP” means all Company Licensed IP that is exclusively licensed to or purported to be exclusively licensed to any member of the Company Group.
“Company Financial Statements” has the meaning set forth in Section 4.9(a).
“Company Fundamental Representations” means the representations and warranties of Seller set forth in Section 4.1 (Corporate Existence and Power), Section 4.2 (Authorization), Section 4.5 (Capitalization), Section 4.7 (Subsidiaries), and Section 4.26 (Finders’ Fees).
“Company Group” has the meaning set forth in the recitals to this Agreement.
“Company Information Systems” has the meaning set forth in Section 4.18(n).
“Company IP” means, collectively, all Company Owned IP and Company Licensed IP.
3
“Company Licensed IP” means all Intellectual Property owned by a third Person and licensed to or purported to be licensed to any member of the Company Group or that any member of the Company Group otherwise has a right to use or purports to have a right to use.
“Company Owned IP” means all Intellectual Property owned or purported to be owned by any member of the Company Group, in each case, whether exclusively, jointly with another Person or otherwise.
“Company Shares” means 10,000 shares of the Company, which shall comprise all of the issued and outstanding share capital of the Company.
“Confidential Information” means any information, knowledge or data concerning the businesses and affairs of the Company Group, or any suppliers, customers or agents of the Company Group that is not already generally available to the public, including any Intellectual Property.
“Contracts” means the Lease and all other contracts, agreements, leases (including equipment leases, car leases and capital leases), licenses, Permits, commitments, customer contracts, statements of work (SOWs), sales and purchase orders and similar instruments, oral or written, to which any member of the Company Group is a party or by which any of its respective properties or assets is bound.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings.
“Copyrights” has the meaning set forth in the definition of “Intellectual Property”.
“Damages” means: (i) amounts paid in settlement, interest, court costs, costs of investigation, fees and expenses of attorneys, accountants, actuaries, and other experts, and other expenses of litigation or of any claim, default, or assessment; (ii) any and all monetary (or where the context so requires, monetary equivalent of) damages, fines, fees, penalties as applicable under Applicable Laws, losses, and out-of-pocket expenses (including without limitation any liability imposed under any award, writ, order, judgment, decree or direction passed or made by any Person); and (iii) any punitive, or other exemplary or extra contractual damages payable or paid in respect of any contract.
“Data Protection Laws” means all applicable Laws in any applicable jurisdiction relating to the Processing, privacy, security, or protection of Personal Information, and all regulations or guidance issued thereunder.
“DGCL” means the Delaware General Corporation Law.
“Dispute” has the meaning set forth in Section 13.17.
“Domain Names” has the meaning set forth in the definition of “Intellectual Property.”
4
“Enforceability Exceptions” has the meaning set forth in Section 4.2(a).
“Environmental Laws” shall mean all applicable Laws that prohibit, regulate or control any Hazardous Material or any Hazardous Material Activity.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Excluded Matter” means any one or more of the following: (a) general economic or political conditions; (b) conditions generally affecting the industries in which the Company or its Subsidiaries operates; (c) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (d) any changes in applicable Laws (including in connection with the COVID-19 pandemic) or accounting rules (including U.S. GAAP) or the enforcement, implementation or interpretation thereof; (e) the announcement, pendency or completion of the transactions contemplated by this Agreement; (f) any natural or man-made disaster, acts of God or pandemics, including the COVID-19 pandemic, or the worsening thereof; or (g) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions (it being understood that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from the definition of a “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect); provided, however, that the exclusions provided in the foregoing clauses (a) through (d), and clause (f) shall not apply to the extent that the Company Group, taken as a whole is disproportionately affected by any such exclusions or any change, event or development to the extent resulting from any such exclusions relative to all other similarly situated companies that participate in the industry in which they operate.
“Foreign Corrupt Practices Act” has the meaning set forth in Section 4.17(a).
“Hazardous Material” shall mean any material, emission, chemical, substance or waste that has been designated by any Authority to be radioactive, toxic, hazardous, a pollutant or a contaminant.
“Hazardous Material Activity” shall mean the transportation, transfer, recycling, storage, use, treatment, manufacture, removal, remediation, release, exposure of others to, sale, labeling, or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, or product manufactured with ozone depleting substances, including any required labeling, payment of waste fees or charges (including so-called e-waste fees) and compliance with any recycling, product take-back or product content requirements.
“IND AS” means the accounting standards applicable in the Republic of India.
5
“Indebtedness” means with respect to any Person, (a) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind (except for amounts received (i) as an advance for supply of goods or services, (ii) advance for consideration of an immoveable property, (iii) as security deposit for performance of any contract, (iv) as an advance, for subscription of any securities of the Company), (including amounts by reason of overdrafts and amounts owed by reason of letter of credit reimbursement agreements), including with respect thereto, all interests, fees and costs, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all payment obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than accounts payable to creditors for goods and services incurred in the ordinary course of business consistent with past practices), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien or security interest on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (f) all obligations of such Person under leases required to be accounted for as capital leases under U.S. GAAP, (g) all guarantees by such Person, (h) all liability of such Person with respect to any hedging obligations, including interest rate or currency exchange swaps, collars, caps or similar hedging obligations, (i) any unfunded or underfunded liabilities pursuant to any retirement or nonqualified deferred compensation plan or arrangement, and any earned and payable but unpaid compensation (including salary, bonuses and paid time off), (j) any payment obligations that the Company has elected to defer pursuant to the CARES Act or as a result of COVID-19, including any deferred rent or deferred Taxes, and any liabilities associated with any loans or other stimulus packages received by the Company under the CARES Act and applicable rules and regulations thereunder, and (l) any agreement to incur any of the same. For informational purposes, Indebtedness shall include any grants or loans that are not carried as tangible liabilities on the financial statements on a stand-alone basis (whether or not such liabilities are included in the footnotes to the financial statements), including arising out of the Company’s obligations under Contracts.
“Indian Companies Act” means the Companies Act, 1956 or the Companies Act, 2013, each to the extent in force as on the date of this Agreement (as amended from time to time) and shall include statutory replacements or re-enactments thereof.
“INR” means Indian National Rupees, the currency of the Republic of India.
“Initial Acquisition” means the acquisition of the Initial Company Shares, in accordance with the terms of this Agreement.
“Initial Closing” has the meaning set forth in Section 3.1.
“Initial Closing Date” has the meaning set forth in Section 3.1.
“Initial Company Shares” or “Tranche 1 Company Shares” means 3,920 (three thousand nine hundred and twenty) shares of the Company, which shall comprise 39.20 % of the issued and outstanding share capital of the Company, on a fully diluted basis.
“Intellectual Property” means, save and except for all Reliance Intellectual Property, all of the worldwide intellectual property rights and proprietary rights associated with any of the following, whether registered, unregistered or registrable, to the extent recognized in a particular jurisdiction: discoveries, inventions, ideas, technology, know-how, trade secrets, and Software, in each case whether or not patentable or copyrightable (including proprietary or confidential information, systems, methods, processes, procedures, practices, algorithms, formulae, techniques, knowledge, results, protocols, models, designs, drawings, specifications, materials, technical data or information, and other information related to the development, marketing, pricing, distribution, cost, sales and manufacturing) (collectively, “Trade Secrets”); trade names, trademarks, service marks, trade dress, product configurations, other indications of origin, registrations thereof or applications for registration therefor, together with the goodwill associated with the foregoing (collectively, “Trademarks”); patents, patent applications, utility models, industrial designs, supplementary protection certificates, and certificates of inventions, including all re-issues, continuations, divisionals, continuations-in-part, re-examinations, renewals, counterparts, extensions, and validations thereof (collectively, “Patents”); works of authorship, copyrights, copyrightable materials, copyright registrations and applications for copyright registration (collectively, “Copyrights”); domain names and URLs (collectively, “Domain Names”), social media accounts, and other intellectual property, and all embodiments and fixations thereof and related documentation and registrations and all additions, improvements and accessions thereto.
6
“Interim Period” has the meaning set forth in Section 7.1(a).
“IP Contracts” means, collectively, any and all Contracts to which any member of the Company Group is a party or by which any of its respective properties or assets is bound, in any case under which the Company Group (i) is granted a right (including option rights, rights of first offer, first refusal, first negotiation, etc.) in or to any Intellectual Property of a third Person, (ii) grants a right (including option rights, rights of first offer, first refusal, first negotiation, etc.) to a third Person in or to any Intellectual Property owned or purported to be owned by the Company Group or (iii) has entered into an agreement not to assert or sue with respect to any Intellectual Property (including settlement agreements and co-existence arrangements), in each case other than (A) “shrink wrap” or other licenses for generally commercially available software (including Publicly Available Software) or hosted services, (B) customer, distributor or channel partner Contracts on Company’s standard forms, (C) Contracts with the Company Group’s employees or contractors on Company’s standard forms, and (D) customary non-disclosure agreements entered into in the ordinary course of business consistent with past practices (subparts (A)-(D) collectively, the “Standard Contracts”).
“IPO” means the initial public offering of Purchaser pursuant to a prospectus dated July 28, 2021.
“Joint Ventures” means the following entities: (a) Rohit Shetty Picturez LLP; (b) Select Flix LLP; (c) Window Seat Films LLP; (d) Y-Not Films LLP; (e) Film Hangar LLP; (f) Global Cinemas LLP; and (g) Plan C Studios LLP;
“Knowledge of the Company” or “to the Company’s Knowledge” means the actual or constructive knowledge after reasonable inquiry of the officers and directors of each Company Group, but only with respect to the entity in which they each may serve.
“Latest Balance Sheet” means the Balance Sheet of the Company recasted for the purpose of bringing it in accordance with U.S. GAAP.
“Law” means any domestic or foreign, federal, state, municipality or local law, statute, ordinance, code, rule, or regulation.
“Leases” means, collectively, the leases executed by the Company, together with all fixtures and improvements erected on the premises leased thereby.
7
“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, claim, security interest or encumbrance of any kind in respect of such property or asset, and any conditional sale or voting agreement or proxy, including any agreement to give any of the foregoing.
“Material Adverse Effect” means any fact, effect, event, development, change, state of facts, condition, circumstance, violation or occurrence (an “Effect”) that, individually or together with one or more other contemporaneous Effect, (i) has or would reasonably be expected to have a materially adverse effect on the financial condition, assets, liabilities, business, prospects or results of operations of the Company Group; or (ii) prevents or materially impairs or would reasonably be expected to prevent or materially impair the ability of the Company Group to consummate the Acquisition and the other transactions contemplated by this Agreement in accordance with the terms and conditions of this Agreement; provided, however, that a Material Adverse Effect shall not be deemed to include Effects (and solely to the extent of such Effects) resulting from an Excluded Matter. It being clarified that when “Material Adverse Effect” and “Effect” are used in this Agreement with respect to the Purchaser, all references in this definition to “Company Group” shall deemed to be construed as references to “Purchaser”.
“Material Contracts” has the meaning set forth in Section 4.15(a). “Material Contracts” shall not include any Contracts that are also Plans.
“Nasdaq” means The Nasdaq Stock Market LLC.
“Permit” means each license, franchise, permit, order, approval, consent or other similar authorization required to be obtained and maintained by the Company Group under applicable Laws to carry out or otherwise affecting, or relating in any way to, the Business.
“Permitted Liens” means (a) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance which have been made available to Purchaser; (b) mechanics’, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business consistent with past practices for amounts (i) that are not delinquent, (ii) that are not material to the business, operations and financial condition of the Company so encumbered, either individually or in the aggregate, and (iii) not resulting from a breach, default or violation by the Company Group of any Contract or Law; (c) liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings (and for which adequate accruals or reserves have been established on the Financial Statements in accordance with U.S. GAAP).
8
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Information” means (i) any data or information that, alone or in combination with other data or information identifies an individual natural Person (including any part of such Person’s name, physical address, telephone number, email address, financial account number or credit card number, government issued identifier (including social security number and driver’s license number), user identification number and password, billing and transactional information, medical, health or insurance information, date of birth, educational or employment information, vehicle identification number, IP address, cookie identifier, or any other number or identifier that identifies or relates to an individual natural Person, or such Person’s vehicle, browser or device); (ii) or any other data or information that constitutes personal data, personal health information, protected health information, personally identifiable information, personal information or similar defined term under any Data Protection Law.
“Plan” means each “employee benefit plan” and all other compensation and benefits plans, policies, programs, arrangements or payroll practices, including multiemployer plans within the meaning of Section 3(37) of ERISA (if applicable), and each other stock purchase, stock option, restricted stock, severance, retention, employment (other than any employment offer letter in such form as previously provided to Purchaser that is terminable “at will” without any contractual obligation on the part of the Company Group to make any severance, termination, change of control, or similar payment), consulting, change-of-control, collective bargaining, bonus, incentive, deferred compensation, employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, whether or not subject to ERISA (including any related funding mechanism now in effect or required in the future), whether formal or informal, oral or written, in each case, that is sponsored, maintained, contributed or required to be contributed to by the Company Group, or under which the Company Group has any current or potential liability.
“Process,” “Processed” or “Processing” means any operation or set of operations performed upon Personal Information or sets of Personal Information, whether or not by automated means, such as collection, recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination, or otherwise making available, alignment or combination, restriction, erasure, or destruction.
“Prospectus” has the meaning set forth in Section 13.13.
“Proxy Statement” has the meaning set forth in Section 7.5(a).
“Publicly Available Software” means each of any Software that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed as free software, “copyleft,” open source software (e.g. Linux), or under similar licensing and distribution models, including but not limited to any of the following: (A) the GNU General Public License (GPL) or Lesser/Library GPL (LGPL), (B) the Artistic License (e.g., PERL), (C) the Mozilla Public License, (D) the Netscape Public License, (E) the Sun Community Source License (SCSL), (F) the Sun Industry Source License (SISL) and (G) the Apache Server License, including for the avoidance of doubt all Software licensed under a Copyleft License.
9
“Purchase Period” means the time commencing on the Initial Closing and continuing until the earlier of (a) Purchaser having purchased all of the Company Shares from the Seller in accordance with the terms of this Agreement, (b) the date on which the Purchaser fails to purchase the Company Shares (or any part thereof) in accordance with the terms of this Agreement, and (c) the date of termination of this Agreement.
“Purchase Price” means, in aggregate:
(A) for the purchase of the Tranche 1 Company Shares, the higher of: (i) the fair market value of the Tranche 1 Company Shares determined in accordance with the requirements of the Foreign Exchange Management Act, 1999 or (ii) $40,000,000 (such amount, the “Tranche 1 Purchase Price”),
(B) for the purchase of the Tranche 2 Company Shares, the higher of: (i) the fair market value of the Tranche 2 Company Shares determined in accordance with the requirements of the Foreign Exchange Management Act, 1999 or (ii) $16,000,000 (such amount, the “Tranche 2 Purchase Price”),
(C) for the purchase of the Tranche 3 Company Shares, the higher of: (i) the fair market value of the Tranche 3 Company Shares determined in accordance with the requirements of the Foreign Exchange Management Act, 1999 or (ii) $20,000,000 (such amount, the “Tranche 3 Purchase Price”), and
(D) for the purchase of the Tranche 4 Company Shares, the higher of: (i) the fair market value of the Tranche 4 Company Shares determined in accordance with the requirements of the Foreign Exchange Management Act, 1999 or (ii) $26,000,000 (such amount, the “Tranche 4 Purchase Price”).
“Purchaser” has the meaning set forth in the Preamble.
“Purchaser Compliance Documents” means such documents that the Purchaser is required to furnish under applicable Law in relation to the filing of e-Form FC-TRS.
“Purchaser Fundamental Representations” means the representations and warranties of Purchaser set forth in Section 6.1 (Corporate Existence and Power), Section 6.2 (Corporate Authorization), Section 6.4 (Non-Contravention), Section 6.5 (Finders’ Fees), Section 6.6 (Information Supplied), Section 6.13 (Investigation and Enquiry), Section 6.14 (Spot Delivery Contract), Section 6.15 (Further Approvals).
“Purchaser Proposals” has the meaning set forth in Section 7.5(e).
10
“Purchaser SEC Documents” means (i) Purchaser’s Annual Reports on Form 10-K for each fiscal year of Purchaser beginning with the first year that Purchaser was required to file such a form, (ii) all proxy statements relating to Purchaser’s meetings of stockholders (whether annual or special) held, and all information statements relating to stockholder consents, since the beginning of the first fiscal year referred to in clause (i) above, (iii) its Form 8-Ks filed since the beginning of the first fiscal year referred to in clause (i) above, and (iv) all other forms, reports, registration statements and other documents (other than preliminary materials) filed by Purchaser with the SEC since Purchaser’s incorporation.
“Purchaser Stockholder Approval” has the meaning set forth in Section 6.2.
“Purchaser Stockholder Meeting” has the meaning set forth in Section 7.5(a).
“Purchaser Unit” means each unit of Purchaser issued in connection with the IPO (inclusive of units issued in a private placement simultaneously with the IPO) comprised of (a) one share of Purchaser Common Stock and (b) one-half of one warrant (a “Purchaser Warrant”), each whole Purchaser Warrant entitling the holder thereof to purchase one share of Purchaser Common Stock at a price of $11.50 per share.
“Purchaser Warrant” has the meaning set forth in the definition of “Purchaser Unit.”
“Real Property” means, collectively, all real properties and interests therein (including the right to use), together with all buildings, fixtures, trade fixtures, plant and other improvements located thereon or attached thereto; all rights arising out of use thereof (including air, water, oil and mineral rights); and all subleases, franchises, licenses, permits, easements and rights-of-way which are appurtenant thereto.
“Registered Exclusively Licensed IP” means all Company Exclusively Licensed IP that is the subject of a registration or an application for registration, including issued patents and patent applications.
“Registered IP” means collectively, all Registered Owned IP and Registered Exclusively Licensed IP.
“Registered Owned IP” means all Intellectual Property constituting Company Owned IP or filed in the name of any member of the Company Group, and in each instance is the subject of a registration or an application for registration, including issued patents and patent applications.
“Reliance Intellectual Property” means and includes all of the worldwide intellectual property rights and proprietary rights associated with any of the following, whether registered, unregistered or registrable, trade names, trademarks, service marks, trade dress, mark, other indications of origin, registrations thereof or applications for registration therefor, together with the goodwill associated with the foregoing; domain names and URLs, social media accounts, and other intellectual property, and all embodiments and fixations thereof and related documentation and registrations and all additions, improvements and accessions thereto intellectual property right (including trademark, tradename, logo, design, copyright), works of authorship, copyrights, copyrightable materials, copyright registrations and applications for copyright registration; with or using the word “Reliance”, “ADAG”, “Anil Dhirubhai Ambani Group” and the Reliance Logos (as the case may be).
11
“Reliance Intellectual Property Material” means and includes all documents, hoardings, licenses, marketing / advertising material, letterhead, electronic media, stamps, stencils, and any other material using any of the Reliance Intellectual Property.
“Reliance Logos” means and includes any and all logos, designs, or graphical representations with or using the marks “Reliance”, “ADAG”, “Anil Dhirubhai Ambani Group”.
“Representatives” means a party’s officers, directors, Affiliates, managers, consultant, employees, representatives and agents.
“Required Financial Statements” has the meaning set forth in Section 8.3.
“Resolution Period” has the meaning set forth in Section 13.17.
“Restricted Business” means the Business save and except any business or activity pertaining to (i) radio or satellite broadcasting in all languages, (ii) post-production services for audio and video media, and (iii) activities and services for Hollywood and other non-Indian films, movies, media, or entertainment (as the case may be).
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the Securities and Exchange Commission.
“SEC Statement” means the Proxy Statement, whether in preliminary or definitive form, and any amendments or supplements thereto.
“Securities Act” means the Securities Act of 1933, as amended.
“Software” means computer software, programs, and databases (including development tools, library functions, and compilers) in any form, including in or as Internet websites, web content, links, source code, object code, operating systems, database management code, utilities, graphical user interfaces, menus, images, icons, forms, methods of processing, software engines, platforms, and data formats, together with all versions, updates, corrections, enhancements and modifications thereof, and all related specifications, documentation, developer notes, comments, and annotations.
“Standard Contracts” has the meaning set forth in the definition of IP Contracts.
“Shareholders Agreement” means the agreement entered into on the date of this Agreement between the shareholders of the Company setting forth certain agreements, rights and obligations of the stockholders after the Initial Closing.
“Subscription Agreements” has the meaning set forth in the recitals to this Agreement.
12
“Subsidiary” means, with respect to any Person, each entity of which at least fifty percent (50%) of the capital stock or other equity or voting securities are Controlled or owned, directly or indirectly, by such Person.
“Subsidiary Corporate Documents” in relation to a Subsidiary, means the memorandum of association and the articles of association, or such other equivalent incorporation / constitution documents in the relevant jurisdiction, of such Subsidiary.
“Tangible Personal Property” means all tangible personal property and interests therein, including machinery, computers and accessories, furniture, office equipment, communications equipment, automobiles, laboratory equipment and other equipment owned or leased by the Company Group and other tangible property, in each case having a value of above INR $ 125,000.
“Tax Return” means any return, information return, declaration, claim for refund or credit, report or any similar statement, and any amendment thereto, including any attached schedule and supporting information, whether on a separate, consolidated, combined, unitary or other basis, that is filed or required to be filed with any Taxing Authority in connection with the determination, assessment, collection or payment of a Tax or the administration of any Law relating to any Tax.
“Tax(es)” means any U.S. federal, state or local or non-U.S. tax, charge, fee, levy, custom, duty, deficiency, or other assessment of any kind or nature imposed by any Taxing Authority (including any income (net or gross), gross receipts, profits, windfall profit, sales, use, value added, goods and services, ad valorem, franchise, license, withholding, employment, social security, workers compensation, unemployment compensation, employment, payroll, transfer, excise, import, real property, personal property, intangible property, occupancy, recording, minimum, alternative minimum), together with any interest, penalty, additions to tax or additional amount imposed with respect thereto.
“Taxing Authority” means the Internal Revenue Service and any other Authority responsible for the collection, assessment or imposition of any Tax or the administration of any Law relating to any Tax.
“Territory” means India.
“Trade Secrets” has the meaning set forth in the definition of “Intellectual Property.”
“Trademarks” has the meaning set forth in the definition of “Intellectual Property.”
“Trust Account” has the meaning set forth in Section 6.7.
“Trust Agreement” has the meaning set forth in Section 6.7.
“Trust Fund” has the meaning set forth in Section 6.7.
13
“Trustee” has the meaning set forth in Section 6.7.
“U.S. GAAP” means U.S. generally accepted accounting principles, consistently applied.
1.2 Construction.
(a) References to particular sections and subsections, schedules, and exhibits not otherwise specified are cross-references to sections and subsections, schedules, and exhibits of this Agreement. Captions are not a part of this Agreement, but are included for convenience, only.
(b) The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; and, unless the context requires otherwise, “party” means a party signatory hereto.
(c) Any use of the singular or plural, or the masculine, feminine or neuter gender, includes the others, unless the context otherwise requires; the word “including” means “including without limitation”; the word “or” means “and/or”; the word “any” means “any one, more than one, or all”; and, unless otherwise specified, any financial or accounting term has the meaning of the term under United States generally accepted accounting principles as consistently applied heretofore by the Company. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Additional Agreement to a Person’s shareholders or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form.
(d) Unless otherwise specified, any reference to any agreement (including this Agreement), instrument, or other document includes all schedules, exhibits, or other attachments referred to therein, and any reference to a statute or other law means such law as amended, restated, supplemented or otherwise modified from time to time and includes any rule, regulation, ordinance or the like promulgated thereunder, in each case, as amended, restated, supplemented or otherwise modified from time to time.
(e) Any reference to a numbered schedule means the same-numbered section of the disclosure schedule. Any reference in a schedule contained in the disclosure schedules delivered by a party hereunder shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) the applicable representations and warranties (or applicable covenants) that are contained in the section or subsection of this Agreement that corresponds to such schedule and any other representations and warranties of such party that are contained in this Agreement to which the relevance of such item thereto is reasonably apparent on its face. The mere inclusion of an item in a schedule as an exception to (or, as applicable, a disclosure for purposes of) a representation or warranty shall not be deemed an admission that such item represents a material fact, event or circumstance or that such item would have a Material Adverse Effect or establish any standard of materiality to define further the meaning of such terms for purposes of this Agreement. Nothing in the disclosure schedules constitutes an admission of any liability or obligation of the disclosing party to any third party or an admission to any third party, including any Authority, against the interest of the disclosing party, including any possible breach of violation of any Contract or Law. Summaries of any written document in the disclosure schedules do not purport to be complete and are qualified in their entirety by the written document itself. The disclosure schedules and the information and disclosures contained therein are intended only to qualify and limit the representations and warranties of the parties contained in this Agreement, and shall not be deemed to expand in any way the scope or effect of any of such representations and warranties.
14
(f) If any action is required to be taken or notice is required to be given within a specified number of days following a specific date or event, the day of such date or event is not counted in determining the last day for such action or notice. If any action is required to be taken or notice is required to be given on or before a particular day which is not a Business Day, such action or notice shall be considered timely if it is taken or given on or before the next Business Day.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of the Company Shares. Upon the terms and subject to the conditions of this Agreement, at the Initial Closing and each Additional Closing, Seller shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from the Seller by paying the Purchase Price, all rights, title and interest in and to the portion of the Company Shares set forth below, free and clear of all Liens, excepting only restrictions on the subsequent transfer of the Company Shares by Purchaser imposed under applicable Laws, Company Corporate Documents, and the Shareholders Agreement (as the case may be). Such purchases shall be made as follows:
(a) Tranche 1: Purchaser shall purchase and Seller shall sell the Initial Company Shares at the Initial Closing for the Tranche 1 Purchase Price, which shares shall represent 39.20 % of the fully diluted equity ownership of the Company as of the date of the Initial Closing;
(b) Tranche 2: Purchaser shall purchase and Seller shall sell 1,570 (one thousand five hundred and seventy) Company Shares (“Tranche 2 Company Shares”) on or prior to the 90th day following the Initial Closing for the Tranche 2 Purchase Price (and simultaneously, the Purchaser shall also infuse $4,000,000 as primary equity capital into the Company and be issued common equity shares in the Company against such subscription amount, or the Purchaser may also infuse this amount as a loan to the Company in accordance with applicable Laws), which shares (i.e., the Tranche 2 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated hereunder) shall (together with the shares purchased under Section 2.1(a) above) represent 54.90% of the fully diluted equity ownership of the Company as of such Additional Closing;
(c) Tranche 3: Purchaser shall purchase and Seller shall sell 1,960 (one thousand nine hundred and sixty) Company Shares (“Tranche 3 Company Shares”) on or prior to 12 months of the Initial Closing for the Tranche 3 Purchase Price (and simultaneously, the Purchaser shall also infuse $20,000,000 as primary equity capital into the Company and be issued common equity shares in the Company against such subscription amount, or the Purchaser may also infuse this amount as a loan to the Company in accordance with applicable Laws), which shares (i.e., the Tranche 3 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated hereunder) shall (together with the shares purchased and subscribed under Sections 2.1(a) and (b) above, as the case may be) represent 74.50% of the fully diluted equity ownership of the Company as of such Additional Closing;
15
(d) Tranche 4: Purchaser shall purchase and Seller shall sell 2,550 (two thousand five hundred and fifty) Company Shares (“Tranche 4 Company Shares”) on or prior to 18 months of the Initial Closing for the Tranche 4 Purchase Price (and simultaneously, the Purchaser shall also infuse $14,000,000 as primary equity capital into the Company and be issued common equity shares in the Company against such subscription amount, or the Purchaser may also infuse this amount as a loan to the Company in accordance with applicable Laws), which shares (i.e., the Tranche 4 Company Shares and the shares allotted pursuant to the primary equity infusion contemplated hereunder) shall (together with the shares purchased and subscribed under Sections 2.1(a), (b) and (c) above, as the case may be) represent 100 % of the fully diluted equity ownership of the Company as of such Additional Closing.
(e) The Company shall and the Purchaser shall ensure that all primary investments into the Company by the Purchaser as envisaged under this Section 2.1, aggregating to $38,000,000, shall be used solely for the purposes of repayment of the inter-company loans aggregating to $38,000,000 as existing on the books of the Company at Initial Closing (“Existing Inter-Company Loans”), as set forth in more detail on Schedule 2.1 and within the time periods mentioned thereunder.
(f) Any loan extended by the Purchaser to the Company pursuant to Sections 2.1(b) to 2.1(d) above shall be repaid (including any interest repayment or payment of charges) by the Company only after the Seller has been paid the entire Purchase Price.
(g) The time periods mentioned in Sections 2.1(b), (c), and (d) above may be extended by a maximum period of 90 (ninety) days, only on account of any change in Law that directly restricts or prohibits the completion of the actions contemplated in Sections 2.1(b), (c), and (d) above on a spot delivery basis, from being completed within the time periods mentioned thereunder, provided that an advance written notice of at least 15 (fifteen) days along with a detailed explanation of such change in Law and restriction is provided by the Purchaser to the Seller. It is clarified that if there is any change in Law which prohibits the completion of the actions contemplated in Sections 2.1(b), (c), and (d) within the time periods mentioned thereunder, other than a change of Law pertaining to purchase of Company Shares by the Purchaser on a spot delivery basis, the Purchaser and the Seller may mutually explore and agree on alternative structures / options to achieve the same commercial effect as pursuant to completion of the actions contemplated in Sections 2.1(b), (c), and (d), such that in no event shall the Seller’s economic interest as contemplated under this Agreement be prejudiced or affected.
2.2 Purchase Price. At the Initial Closing and each Additional Closing, the Purchase Price will be paid by the Purchaser to the Seller, in accordance with the terms of Section 2.1, without any deduction or withholding, via wire transfer and shall be paid in Indian Rupees based upon the foreign exchange rates published by Bloomberg as the Composite 5:00 p.m. New York closing rates (CMPN) on the fifth (5th) Business Day prior to the Closing Date (or, if such rate is not published on such date, the first date prior thereto on which Bloomberg published the CMPN rate), except as otherwise required by Law (in which case, the exchange rate shall be determined in accordance with such Law).
16
2.3 Closing Deliveries.
(a) Company Closing Deliveries. At the Initial Closing and subject thereto, the Company and Seller (as applicable) shall deliver (or cause to be delivered) to Purchaser the following:
(i) Seller shall deliver (or cause to be delivered), simultaneously with receipt of the Tranche 1 Purchase Price, all duly stamped share certificates evidencing the Initial Company Shares, endorsed in the name of the Purchaser;
(ii) Seller shall deliver (or cause to be delivered) a copy of each of the Additional Agreement to which it is a party, duly executed by Seller;
(iii) Company shall deliver (or cause to be delivered) a copy of each of the Additional Agreements to which it is a party, duly executed by the Company;
(iv) Seller shall deliver (or cause to be delivered) duly executed and stamped share transfer forms in Form SH-4 for transfer of the Initial Company Shares from the Seller to the Purchaser;
(v) Company shall deliver (or cause to be delivered), a copy of the written consent of/resolutions passed by the stockholders and directors of the Company and Seller shall deliver (or cause to be delivered), the written consent of/resolutions passed by the stockholders and directors of the Seller (in each case, to the extent required under applicable Law), adopting, authorizing and approving this Agreement, the Additional Agreements, and the transactions contemplated hereby and the amendment and restatement of the Company Corporate Documents and the Subsidiary Corporate Documents in substantially the form and substance mutually agreed between the Parties and passing the Change of Name Resolution;
(vi) Company shall deliver (or cause to be delivered), a copy of the Board resolution passed by the Company for (i) taking on record the transfer of the Initial Company Shares from the Seller to the Purchaser, (ii) making necessary amendment to the Register of Members of the Company to record the change in ownership of the Initial Company Shares (iii) taking on record the resignations of certain existing directors of the Company as on the Initial Closing Date, (iv) taking on record the appointment of the new directors nominated by the Purchaser on to the Board of the Company (“Purchaser Nominee Directors”), and making necessary changes in the Register of Directors to reflect the change in the Board composition (v) taking on record the change in bank account signatories from the existing signatories to the signatories designate by the Purchaser, (vi) taking on record the change in name of the Company which shall occur within a period of 14 (fourteen) days from the Initial Closing Date, (vii) taking on record the cessation of the Company’s use of the Reliance Intellectual Property which shall occur within a period of 14 (fourteen) days from the Initial Closing Date, and (viii) the amendment and restatement of the Company Corporate Documents and the Subsidiary Corporate Documents in substantially the form and substance mutually agreed between the Parties;
17
(vii) Company shall deliver (or cause to be delivered), a certificate, dated as of the Initial Closing Date, signed by an officer of the Company, enclosing (i) a true, complete and correct copy of the Company Corporate Documents and the Capitalization Table of the Company and each Subsidiary, as in effect on the Initial Closing Date, and (ii) a copy of resolutions duly adopted by the Board of Directors of the Company authorizing this Agreement, the Additional Agreements to which the Company is a party and the transactions contemplated hereby;
(viii) Company shall deliver (or cause to be delivered), a certificate, dated as of the Initial Closing Date, signed by an officer of the Company certifying that (a) the Company has duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with by the Company at or prior to the Initial Closing Date, (b) the representations and warranties of the Company Group contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Initial Closing Date, (c) since the date of this Agreement, there shall not have occurred any Effect in respect of the Company Group, that individually, or together with any other Effect since the date of this Agreement, has had or would reasonably be expected to have a Material Adverse Effect in respect of the Company Group as a whole which is continuing and uncured;
(ix) Seller shall deliver (or cause to be delivered), a certificate, dated as of the Initial Closing Date, signed by an officer / authorized representative of the Seller certifying that (a) the Seller has duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with by the Seller at or prior to the Initial Closing Date, and (b) the representations and warranties of the Seller contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Initial Closing Date;
(x) Company shall deliver (or cause to be delivered) the Change of Name Certificate, duly executed by the Company; and
(xi) Company shall deliver (or cause to be delivered) a certificate, dated as of the Initial Closing Date, signed by an officer of the Company enclosing a copy of the (a) forms filed by each entity forming part of the Company Group with the jurisdictional Registrar of Companies for effecting the Change of Name Resolution.
(b) Purchaser Closing Deliveries. At the Initial Closing and subject thereto, Purchaser shall deliver (or cause to be delivered) the following to the Seller:
18
(i) the Purchase Price payable for the Initial Company Shares (i.e., the Tranche 1 Purchase Price) via wire transfer of immediately available funds to the account(s) of Seller designated by Seller;
(ii) documentary evidence showing that the Tranche 1 Purchase Price has been duly transmitted in the account(s) designated by the Seller;
(iii) copies of resolutions duly adopted by the Board of Directors of Purchaser adopting, authorizing, and approving this Agreement, the Additional Agreements to which Purchaser is a party and the transactions contemplated hereby and thereby and the Purchaser Proposals;
(iv) a certificate, dated as of the Initial Closing Date, signed by the Secretary of Purchaser, enclosing true, correct and complete copies of (i) the Purchaser’s certificate of incorporation, certified as of a recent date by the Secretary of State of the State of Delaware; (ii) the Purchaser’s bylaws; copies of resolutions duly adopted by the Board of Directors of Purchaser authorizing this Agreement, the Additional Agreements to which the Purchaser is a party and the transactions contemplated hereby; (iv) a certificate of good standing of the Purchaser, certified as of a recent date by the Secretary of State of the State of Delaware;
(v) a certificate, dated as of the Initial Closing Date, signed by an officer of the Purchaser certifying that (a) the Purchaser has duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with by the Purchaser prior to the Initial Closing Date, (b) the representations and warranties of the Purchaser contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Initial Closing Date, (c) since the date of this Agreement, there shall not have occurred any Effect in respect of the Purchaser, that individually, or together with any other Effect since the date of this Agreement, has had or would reasonably be expected to have a Material Adverse Effect in respect of the Purchaser which is continuing and uncured;
(vi) copies of the Additional Agreements duly executed by Purchaser;
(vii) the Change of Name Certificate, duly executed by the Purchaser;
(viii) a certificate, dated as of the Initial Closing Date, signed by an officer of the Company enclosing a copy of the (a) forms filed by each entity forming part of the Company Group with the jurisdictional Registrar of Companies for effecting the Change of Name Resolution.
2.4 Withholding Rights. In the event the Purchaser is required under applicable Law to deduct and withhold from the Purchase Price payable under this Agreement, the Purchaser shall pay such additional amounts as may be necessary to ensure that the Seller receives and retains (after any deduction or withholding in respect of the Purchase Price), a net amount equal to the full amount which it would have received if no withholding or deduction from the Purchaser Price was necessary. Provided however that the Purchaser will have the right to explore and determine the feasibility of purchasing the Company Shares through an entity established in an alternative jurisdiction where the aforesaid requirement of withholding from the Purchase Price is not applicable (provided such jurisdiction does not appear in the grey list notified by the Financial Action Task Force). In the event that the Purchaser is able to implement an alternative structure, such structure shall be established within the applicable timelines as stipulated under clause 2.1 above and the Purchaser shall not be required to undertake the payment of the aforementioned additional amount to the Seller. In the event the Seller is eligible for and receives a refund of the whole or part of the withholding amount paid by the Purchaser, the Seller shall, within 15 (fifteen) days from receipt of such refund, transfer the refund amount back to the Purchaser, provided there are no restrictions or prohibitions under applicable Law to make such refund. In the event that there are any such restrictions or prohibitions under applicable Laws, the Seller shall, in consultation with the Purchaser, determine an alternative legally valid mechanism to effect such refund.
19
2.5 Additional Closing Dates. On each Additional Closing Date:
(i) Seller and the Company (as applicable) shall make the deliveries set forth in Sections 2.3(a)(i), (iv), (vi) (only to the limited extent of taking on record transfer of shares and amendment to the register of members), (vii), (viii), and (ix) with respect to any Additional Company Shares being sold, and in such provisions references to ‘Initial Company Shares’ shall be construed as ‘Additional Company Shares’ and references to ‘Tranche 1 Purchase Price’ shall be construed as ‘Tranche 2 Purchase Price’, ‘Tranche 3 Purchase Price’, and ‘Tranche 4 Purchase Price’, as the case may be;
(ii) Purchaser shall make the deliveries set forth in Sections 2.3(b)(i), (ii), (iv), and (v) with respect to any Additional Company Shares being purchased, and in such provisions references to ‘Initial Company Shares’ shall be construed as ‘Additional Company Shares’ and references to ‘Tranche 1 Purchase Price’ shall be construed as ‘Tranche 2 Purchase Price’, ‘Tranche 3 Purchase Price’, and ‘Tranche 4 Purchase Price’, as the case may be.
2.6 Taking of Necessary Action; Further Action. If, at any time after the Initial Closing or any Additional Closing, any further action is necessary to carry out the purposes of this Agreement and to vest Purchaser with full right, title and interest in, to and under the Company Shares purchased on or prior to such date, the officers and directors of the Company are fully authorized in the name and on behalf of the Company, and the Company shall take all lawful action necessary to accomplish such purpose or acts, so long as such action is not inconsistent with this Agreement. Notwithstanding the generality of the above, the Company, Seller and Purchaser (as indicated below) shall also ensure that the following actions are taken within the timelines prescribed under applicable Indian regulations:
(a) Company shall file relevant Forms including Form DIR-12 pertaining to resignation of all the directors of the Company at Closing and appointment of the Purchaser Nominee Directors are filed with the jurisdictional Registrar of Companies;
(b) Seller shall file e-Form FC-TRS with the Reserve Bank of India to report the purchase by the Purchaser of the applicable Company Shares from the Seller; and
20
(c) Purchaser shall provide those documents (and information) which are required under applicable Indian regulations to be provided by the Purchaser to Seller to enable the Seller to duly file the completed e-Form FC-TRS with the Reserve Bank of India.
2.7 Change of Name.
(a) Purchaser hereby unconditionally and absolutely undertakes that within 14 (fourteen) days from the Initial Closing, the name of each entity of the Company Group that uses any Reliance Intellectual Property in its corporate name shall be amended by removing the wordmarks and trademarks “Reliance”, “Reliance Entertainment” and any and all other Reliance Intellectual Property. Purchaser undertakes within 14 (fourteen) days from the Initial Closing Date, such wordmarks and trademarks (including the Reliance Intellectual Property) shall no longer be used in any communication, document, agreement, hoarding, bank account names, advertisement, license, approval, consent, filing, registration, marketing material, letterhead, electronic media, website, movies, etc. Purchaser shall, within 14 (fourteen) days from the Initial Closing Date, destroy or return to Seller all the existing marketing materials, hoarding, etc. in the possession of Purchaser or the Company on which any Reliance Intellectual Property appears or has been used.
(b) Within 14 (fourteen) days from the Initial Closing Date, all agreements and arrangements entered into between the Company and the Seller for usage of any Reliance Intellectual Property shall automatically terminate, cease to exist and stand rescinded, without any further action required from the parties.
(c) Company shall and the Purchaser shall ensure that, on the Initial Closing Date, an extra ordinary general meeting of each entity forming part of the Company Group shall be held and a special resolution is passed for change in the corporate name of each entity forming part of the Company Group (“Change of Name Resolution”).
(d) Company and the Purchaser shall ensure, on the Initial Closing Date, each entity of the Company Group that uses any Reliance Intellectual Property in its corporate name files the necessary forms with the jurisdictional Registrar of Companies for effecting the Change of Name Resolution;
(e) Company and the Purchaser shall, on the Initial Closing Date, submit a certificate in the form and substance appearing in Schedule 2.6(5) confirming that they shall, within 14 (fourteen) days of the Initial Closing Date, stop all use of the Reliance Intellectual Property and shall return all Reliance Intellectual Property Material to the Purchaser within 14 (fourteen) days from the Initial Closing Date. (“Change of Name Certificate”).
2.8 Taxes. Each of the parties acknowledge and agree that each such party (a) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement, and (b) is responsible for paying its own Taxes, including but not limited to any capital gains taxes required to be paid by the Seller relating to and upon receipt of the Purchase Price.
2.9 Earnout. Prior to the Initial Closing, the Seller and the Purchaser will enter into the Earnout Agreement with the Company in the form attached as Exhibit B to this Agreement.
21
ARTICLE III
CLOSING
3.1 Closings. Unless this Agreement is earlier terminated in accordance with ARTICLE XII, the initial closing of the transactions contemplated hereby shall take place electronically or at the offices of the Company in Mumbai, at 10:00 a.m. NY local time but shall be deemed to have occurred for all purposes as of 12:01 a.m. local time, no later than four (4) Business Days after the last of the conditions to Closing set forth in ARTICLE X have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date and location as Purchaser, Seller, and the Company agree to in writing (the “Initial Closing”). The parties may participate in the Initial Closing via electronic means. The date on which the Initial Closing actually occurs is referred to as the “Initial Closing Date.” Further, Purchaser, Seller, and the Company shall agree upon, in writing, to the dates on which each of the Additional Closings shall take place (each such date is referred to as an “Additional Closing Date”) for undertaking the purchase and sale of the Additional Company Shares in accordance with Section 2.1 of this Agreement. If the parties are unable to agree on the date on which an Additional Closing is to take place, such Additional Closing shall take place on the last date of the time period mentioned in Sections 2.1(b), (c) and (d) above, and such date shall be referred to as the Additional Closing Date.
3.2 Simultaneous Actions. All proceedings to be taken and all documents to be executed and delivered by all parties at the Initial Closing and each Additional Closing shall be deemed to have been taken and executed and delivered simultaneously, and no proceedings shall be deemed taken nor any actions executed or delivered until all have been taken, executed, and delivered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to Purchaser prior to the execution of this Agreement and the Updated Disclosure Schedules (with specific reference to the particular section or subsection of this Agreement to which the information set forth in such disclosure schedules) (which qualify (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced), the Company (and not the Seller) hereby represents and warrants to Purchaser that each of the following representations and warranties are true correct and complete as of the date of this Agreement and as of the Initial Closing and as of each Additional Closing Date (except for representations and warranties that are made as of a specific date, which are made only as of such date) as follows:
4.1 Corporate Existence and Power.
(a) Seller is a company duly organized, validly existing and in good standing under the laws and regulations of India. Seller has the company power and authority to own, lease or otherwise hold and operate its properties and other assets and to carry on its business as presently conducted. Seller has made available to Purchaser, prior to the date of this Agreement, correct and complete copies of its organizational or constitutive documents, in each case as amended to the date hereof. The organizational or constitutive documents of Seller so delivered are in full force and effect. Seller is not in violation of its organizational or constitutive documents.
22
(b) The Company and each other member of the Company Group is a corporation or legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize that concept) under the laws of its jurisdiction of its incorporation or formation, as the case may be. The Company and each other member of the Company Group has all requisite power and authority, corporate and otherwise, to own, lease or otherwise hold and operate its properties and other assets and to carry on the Business as presently conducted and as proposed to be conducted. The Company and each other member of the Company Group is duly licensed or qualified to do business and is in good standing (with respect to jurisdictions that recognize that concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or other assets makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect in respect of the Company Group and except as set forth under Schedule 4.1 (b) (a). The Company and each other member of the Company Group has offices located only at the addresses set forth in Schedule 4.1 (b) (b). The Company has made available to Purchaser, prior to the date of this Agreement, complete and accurate copies of the Company Corporate Documents, and the comparable organizational or constitutive documents of each of its Subsidiaries, in each case as amended to the date hereof. The Company Corporate Documents and the comparable organizational or constitutive documents of the Company’s Subsidiaries so delivered are in full force and effect. The Company is not in violation of the Company Corporate Documents and each of its Subsidiaries is not in violation of its respective comparable organizational or constitutive documents.
4.2 Authorization.
(a) Seller has all requisite company power and authority to execute and deliver this Agreement and the Additional Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the Additional Agreements to which it is a party and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary company action on the part of Seller. No other proceedings on the part of Seller are necessary to authorize this Agreement or the Additional Agreements to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and the Additional Agreements to which Seller is a party have been duly executed and delivered by Seller and, assuming the due authorization, execution and delivery by Purchaser and the other parties hereto and thereto, this Agreement and the Additional Agreements to which Seller is a party constitute a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies (the “Enforceability Exceptions”).
23
(b) The Company has all requisite company power and authority to execute and deliver this Agreement and the Additional Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of this Agreement and the Additional Agreements to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary company action on the part of the Company. No other proceedings on the part of the Company are necessary to authorize this Agreement or the Additional Agreements to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and the Additional Agreements to which the Company is a party have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Purchaser and the other parties hereto and thereto, this Agreement and the Additional Agreements to which the Company is a party constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, subject to the Enforceability Exceptions.
4.3 Governmental Authorization. None of the execution, delivery or performance by Seller or the Company of this Agreement or any Additional Agreement to which Seller or the Company, as applicable, is or will be a party, or the consummation by Seller or the Company of the transactions contemplated hereby or thereby, requires any consent, approval, license, Order or other action by or in respect of, or registration, declaration or filing with, any Authority except as set forth on Schedule 4.3.
4.4 Non-Contravention. None of the execution, delivery or performance by Seller or the Company of this Agreement or any Additional Agreement to which Seller or the Company, as applicable, is or will be a party or the consummation by Seller or the Company of the transactions contemplated hereby and thereby does or will (a) contravene or conflict with any provision of the organizational or constitutive documents of Seller or the Company Group, (b) contravene or conflict with or constitute a violation of any provision of any Law or Order binding upon or applicable to Seller or the Company Group or to any of its respective properties, rights or assets, (c) except for the Contracts listed in Schedule 4.8 requiring Company Consents (but only as to the need to obtain such Company Consents), (i) require consent, approval or waiver under, (ii) constitute a default under or breach of (with or without the giving of notice or the passage of time or both), (iii) violate, (iv) give rise to any right of termination, cancellation, amendment or acceleration of any right or obligation of Seller or any member of the Company Group or to a loss of any material benefit to which Seller or any member of the Company Group is entitled, in the case of each of clauses (i) – (iv), under any provision of any Permit, Contract or other instrument or obligations binding upon Seller or any member of the Company Group or any of its respective properties, rights or assets, (d) result in the creation or imposition of any Lien (except for Permitted Liens) on any of Seller’s or the Company Group’s properties, rights or assets, (e) require any consent, approval or waiver from any Person pursuant to any provision of the organizational or constitutive documents of Seller or any member of the Company Group, or (f) result in the imposition of any Lien upon the Company Shares (other than restrictions on the subsequent transfer of the Company Shares by Purchaser imposed under applicable securities laws).
24
4.5 Capitalization.
(a) The capitalization of each entity forming part of the Company Group is set forth on Schedule 4.5. The Company Shares represent all of the issued and outstanding share capital of the Company. There are no other share capital or other voting securities of the Company are authorized, issued, reserved for issuance or outstanding. All issued and outstanding shares of capital of the Company are duly authorized, validly issued, fully paid and non-assessable and are owned of record and beneficially by Seller, free and clear of all Liens, preemptive right, subscription right or any similar right (including under any provision of any Contract to which the Company is a party or by which the Company or any of its properties, rights or assets are bound), excepting only restrictions on the subsequent transfer of the Company Shares by Purchaser and preemption right (as the case may be) imposed under applicable Laws, Company Corporate Documents and the restrictions set forth in the Additional Agreements (as the case may be). All of the issued and outstanding shares of capital of the Company were issued in compliance with the Indian Companies Act and all applicable Laws (including any applicable securities laws) and in compliance with the Company Corporate Documents.
(b) Except as set forth on Schedule 4.5, there are no (i) outstanding warrants, options, agreements, convertible securities, performance units or other commitments or instruments pursuant to which the Company is or may become obligated to issue or sell any of its share capital or other securities, (ii) outstanding obligations of the Company to repurchase, redeem or otherwise acquire outstanding share capital of the Company or any securities convertible into or exchangeable for any share capital of the Company, (iii) treasury share capital of the Company, (iv) bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote, (v) preemptive or similar rights to purchase or otherwise acquire share capital or other securities of the Company to any person other than an existing member of the Company (including pursuant to any Contract to which the Company is a party), or (vi) Liens (including any right of first refusal, right of first offer, proxy, voting trust, voting agreement or similar arrangement) with respect to the sale or voting of shares or securities of the Company (whether outstanding or issuable). Except as set forth on Schedule 4.5, there are no issued, outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company.
(c) All of the issued and outstanding Company Shares are owned of record and beneficially by Seller and Seller has good and valid title to the Company Shares, free and clear of any Liens except for the restrictions on the subsequent transfer of such Company Shares by Purchaser imposed under applicable Laws and the Company Corporate Documents. At the Closing, Seller will have transferred to Purchaser, and Purchaser will have acquired from Seller, good and valid title to the Company Shares free and clear of any Liens excepting only restrictions on the subsequent transfer of the Company Shares by Purchaser imposed under applicable securities Laws and the Company Corporate Documents.
4.6 Corporate Records. All material proceedings of the boards of directors of the Company Group since incorporation, including all committees thereof, and of the Company Group’s shareholders, and all consents to actions taken thereby, are accurately reflected in the minutes and records contained in the corporate minute books of the Company Group and made available to Purchaser. The stockholder ledgers of the Company Group are correct and complete.
25
4.7 Subsidiaries.
(a) Schedule 4.7 lists each Subsidiary of the Company (including its jurisdiction of incorporation or formation and its outstanding share capital or other ownership interests). Except as set forth on Schedule 4.5, all of the outstanding capital stock of, or other ownership interests in, each Subsidiary is owned beneficially and of record by the Company, directly or indirectly, is validly issued, fully paid and nonassessable and free and clear of any Liens (excepting only restrictions on the subsequent transfer of such capital stock by the Company or another Subsidiary imposed under applicable Law, the Company Corporate Documents, and the Subsidiary Corporate Documents for each of the Company’s Subsidiaries). There are no (i) authorized or outstanding securities of any Subsidiary convertible into or exchangeable for, no options or warrants or rights to subscribe for, or providing for the issuance or sale of, any capital stock or other ownership interest in, or any other securities of, any of the Subsidiaries, or (ii) voting trusts, proxies or other agreements among a Subsidiary’s stockholders with respect to the voting or transfer of such Subsidiary’s capital stock.
(b) Except for the Subsidiaries of the Company, the Company does not own, directly or indirectly, as of the date hereof, (i) any capital stock of, or other voting securities or other equity or voting interests in, any Person or (ii) any other interest or participation that confers on the Company or any Subsidiary of the Company the right to receive (A) a share of the profits and losses of, or distributions of assets of, any other Person or (B) any economic benefit or right similar to, or derived from, the economic benefits and rights occurring to holders of capital stock of any other Person.
4.8 Consents. The Contracts listed on Schedule 4.8 are the only Material Contracts requiring a consent, approval, authorization, order or other action of or filing with any Person as a result of the execution, delivery and performance by the Company of this Agreement, any agreement in connection with the purchase of the Additional Company Shares, or any Additional Agreement to which the Company, as applicable, is or will be a party or the consummation by the Company of the transactions contemplated hereby or thereby (each of the foregoing, a “Company Consent”).
4.9 Financial Statements.
(a) The Company Group has delivered to Purchaser the Company’s audited financial statements for the twelve month periods ended March 31, 2022 and 2021 consisting of the audited consolidated balance sheets as of such dates, the audited consolidated income statements for the twelve month period ended on such date, and the audited consolidated cash flow statements for the twelve month period ended on such date and the related statements of operations and changes in stockholders’ equity, including the notes thereto (collectively, the “Company Financial Statements”). The Company Financial Statements have been prepared in conformity with U.S. GAAP /IND AS. The Company Financial Statements fairly present, in all material respects, the financial position of the Company Group as of the dates thereof and the results of operations of the Company Group for the periods reflected therein. The Company Financial Statements were prepared from the Books and Records of the Company Group in all material respects. Since March 31, 2022 (the “Balance Sheet Date”), except as required by applicable Laws or U.S. GAAP/IND AS, there has been no change in any accounting principle, procedure or practice followed by the Company Group or in the method of applying any such principle, procedure or practice.
26
(b) Except as: (i) specifically disclosed, reflected or fully reserved against on the Balance Sheet; (ii) liabilities and obligations incurred in the ordinary course of business consistent with past practices since the Balance Sheet Date that are not material; (iii) liabilities that are executory obligations arising under Contracts to which a member of the Company Group is a party (none of which, with respect to the liabilities described in clause (ii) and this clause (iii) results from, arises out of, or relates to any breach or violation of, or default under, a Contract or applicable Law); (iv) expenses incurred in connection with the negotiation, execution and performance of this Agreement, any Additional Agreement or any of the transactions contemplated hereby or thereby; and (v) liabilities set forth on Schedule 4.9(b), the Company Group does not have any material liabilities, debts or obligations of any nature (whether accrued, fixed or contingent, liquidated or unliquidated, asserted or unasserted or otherwise).
(c) Except as set forth on Schedule 4.9(c), the Company Group does not have any Indebtedness.
4.10 Books and Records. Except as set forth under Schedule 4.10, the Books and Records of the Company and the other members of the Company Group accurately and fairly, in reasonable detail, reflect the transactions and dispositions of assets of and the providing of services by the Company Group, to the extent required under applicable Law. The Books and Records of the Company and the other members of the Company Group have been maintained, in all material respects in accordance with the requirement of applicable Law.
4.11 Internal Accounting Controls. Except as set forth under Schedule 4.11, the Company Group has established a system of internal accounting controls designed to provide reasonable assurance that: (a) that transactions are executed in accordance with management’s general or specific instructions and recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP/IND AS, and the Company Group’s historical practices to maintain asset accountability; (b) access to assets is permitted only in accordance with management’s general or specific authorization or as permitted under applicable Law; and (c) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, to the extent required under applicable Law.
4.12 Absence of Certain Changes. From the Balance Sheet Date until the date of this Agreement, (a) the Company and each other member of the Company Group have materially conducted their respective businesses in the ordinary course and in a manner consistent with past practice; (b) there has not been any Material Adverse Effect in respect of the Company Group; and (c) neither the Company nor any other member of the Company Group has taken any action that, if taken after the date of this Agreement and prior to the Closing, would require the consent of Purchaser pursuant to Section 7.1.
27
4.13 Properties; Title to the Company’s Assets.
(a) Except as set forth on Schedule 4.13, all items of Tangible Personal Property have no defects and are in good operating condition and repair and function in accordance with their intended uses (ordinary wear and tear excepted), have been maintained and are suitable for their present uses and meet all specification and warranty requirements with respect thereto. All of the Tangible Personal Property is located at the offices of the Company or any other member of the Company Group.
(b) The Company or a Subsidiary has good, valid and marketable title in and to, or in the case of the Lease and the assets which are leased or licensed pursuant to Contracts, a valid leasehold interest or license in or a right to use all of the tangible assets reflected on the Balance Sheet. No such tangible asset is subject to any Lien other than Permitted Liens. The Company Group’s assets constitute all of the material rights, properties, and assets of any kind or description whatsoever, including goodwill, necessary for the Company Group to operate the Business immediately after the Closing in substantially the same manner as the Business is currently being conducted.
4.14 Litigation. Except as set forth under Schedule 4.14, there is no Action pending or, to the Knowledge of the Company, threatened against Seller or any member of the Company Group, any of the officers or directors of Seller or any member of the Company Group, the Business or Seller’s or any member of the Company Group’s rights, properties or assets before any Authority or which in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement or any Additional Agreement. There are no outstanding judgments against Seller or any member of the Company Group, or any of their respective rights, properties or assets. Neither Seller nor any member of the Company Group nor any of their respective rights, properties or assets have been, since April 1, 2016, subject to any Action by any Authority.
4.15 Contracts.
(a) Schedule 4.15(a) sets forth a correct and complete list, as of the date of this Agreement, of all of the following Contracts as amended to date which are currently in effect shall be collectively referred to as “Material Contracts”:
(i) all Contracts that require annual payments or expenses incurred by, or annual payments or income to, the Company Group of $500,000 or more (other than standard purchase and sale orders entered into in the ordinary course of business consistent with past practices);
(ii) all sales, advertising, agency, lobbying, broker, sales promotion, market research, marketing or similar Contracts;
(iii) each Contract with any current officer, director, employee or consultant of any member of the Company Group, under which the Company Group (A) has continuing obligations for payment of an annual compensation of at least $500,000, and which is not terminable for any reason or no reason upon reasonable notice without payment of any penalty, severance or other material obligation; (B) has severance or post-termination obligations to such Person; or (C) has an obligation to make a payment upon consummation of the transactions contemplated by this Agreement or any Additional Agreement or as a result of a change of control of the Company;
28
(iv) all Contracts creating a joint venture, strategic alliance, limited liability company or partnership arrangement to which the Company Group is a party;
(v) all Contracts relating to any acquisitions or dispositions of material assets by the Company Group (other than acquisitions or dispositions of inventory in the ordinary course of business consistent with past practices);
(vi) all IP Contracts, separately identifying all such IP Contracts under which any member of the Company Group is obligated to pay royalties of at least $ 1,25,000 thereunder and all such IP Contracts under which any member of the Company Group is entitled to receive royalties thereunder;
(vii) all Contracts limiting the freedom of any member of the Company Group to compete in any line of business or industry, with any Person or in any geographic area;
(viii) all Contracts providing for guarantees, indemnification arrangements and other hold harmless arrangements made or provided by any member of the Company Group, including all ongoing agreements for repair, warranty, maintenance, service, or similar obligations, other than Standard Contracts;
(ix) all Contracts with or pertaining to the Company Group to which any Affiliate of the Company Group is a party, other than Contracts relating to such Affiliate’s status as a Company shareholder;
(x) all Contracts relating to property or assets (whether real or personal, tangible or intangible) in which the Company Group holds a leasehold interest (including the Lease) and which involve payments to the lessor thereunder in excess of $500,000 per year;
(xi) all Contracts creating or otherwise relating to outstanding Indebtedness (other than intercompany Indebtedness);
(xii) all Contracts relating to the voting or control of the equity interests of any member of the Company Group or the election of directors of any member of the Company Group (other than the organizational documents of any member of the Company Group);
(xiii) all Contracts not cancellable by the Company Group with no more than sixty (60) days’ notice if the effect of such cancellation would result in monetary penalty to the Company Group in excess of $100,000 per the terms of such contract;
29
(xiv) all Contracts that may be terminated, or the provisions of which may be altered, as a result of the consummation of the transactions contemplated by this Agreement or any Additional Agreement;
(xv) all Contracts under which any of the benefits, compensation or payments (or the vesting thereof) will be increased or accelerated by the consummation of the transactions contemplated by this Agreement or any Additional Agreement, or the amount or value thereof will be calculated on the basis of, the transactions contemplated by this Agreement or any Additional Agreement; and
(xvi) all collective bargaining agreements or other agreement with a labor union or labor organization.
(b) Each Material Contract is (i) a valid and binding agreement, (ii) in full force and effect, and enforceable by the Company. To the Knowledge of the Company, the Company Group is not in material breach or default (whether with or without the passage of time or the giving of notice or both) under the terms of any such Material Contract. The Company Group has not assigned, delegated or otherwise transferred any of its rights or obligations under any Material Contract or granted any power of attorney with respect thereto.
(c) The Company Group is in compliance in all material respects with all covenants, including all financial covenants, in all notes, indentures, bonds and other instruments or Contracts establishing or evidencing any Indebtedness. The consummation and closing of the transactions contemplated by this Agreement shall not cause or result in an event of default under any instruments or Contracts establishing or evidencing any Indebtedness.
4.16 Licenses and Permits. Except as set forth under Schedule 4.16, each license, franchise, permit, order or approval or other similar authorization required under applicable Laws to carry out or otherwise affecting, or relating in any way to, the Business (the “Permits”), are valid and in full force and effect, and none of the Permits will be terminated or impaired or become terminable as a result of the transactions contemplated by this Agreement or any Additional Agreement. The Company Group has all material Permits necessary to operate the Business, and each of the Permits is in full force and effect. The Company is not in material breach or violation of, or material default under, any such Permit, and, to the Company’s Knowledge, no basis (including the execution of this Agreement and the other Additional Agreements to which the Company is a party and the consummation of the transactions contemplated by this Agreement or any Additional Agreement) exists which, with notice or lapse of time or both, would reasonably be expected to constitute any such breach, violation or default or give any Authority grounds to suspend, revoke or terminate any such Permit, where such suspension, revocation or termination would result in cessation of the Business or cause a Material Adverse Effect. The Company has not received any written (or, to the Company’s Knowledge, oral) notice from any Authority regarding any material violation of any Permit. There has not been and there is not any pending or, to the Company’s Knowledge, threatened Action, investigation or disciplinary proceeding by or from any Authority against the Company involving any material Permit.
30
4.17 Compliance with Laws.
Except as set forth under Schedule 4.17, the Company represents and warrants as follows:
(a) Neither the Company Group nor, to the Knowledge of the Company, any Representative or other authorized Person, in each cast acting on behalf of the Company Group, is in violation in any material respect of, and since April 1, 2018 no such Person has failed to be in compliance in all material respects with, all applicable Laws and Orders. Since April 1, 2018, (i) no event has occurred or circumstance exists that (with or without notice or due to lapse of time) would reasonably be expected to constitute or result in a violation by any member of the Company Group of, or failure on the part of any member of the Company Group to comply with, or any liability suffered or incurred by any member of the Company Group in respect of any violation of or material noncompliance with, any Laws, Orders or policies by Authority that are or were applicable to it or the conduct or operation of its business or the ownership or use of any of its assets and (ii) no Action is pending, or to the Knowledge of the Company, threatened, alleging any such violation or noncompliance by a member of the Company Group. Since April 1, 2018, the Company Group has not been threatened in writing or given written notice of any violation of any Law or any judgment, order or decree entered by any Authority, which pertains to the Company. Without limiting the generality of the foregoing, the Company Group is, and since April 1, 2018 has been, in compliance in all material respects with: (i) every Law applicable to the Company Group due to the specific nature of the Business, including Data Protection Laws (to the extent applicable); (ii) the Foreign Corrupt Practices Act of 1977 (the “Foreign Corrupt Practices Act”) (to the extent applicable) and any comparable or similar Law of any jurisdiction applicable to any member of the Company Group; and (iii) every Law regulating or covering conduct in the workplace, including regarding sexual harassment or, on any legally impermissible basis, a hostile work environment. Since April 1, 2018, the Company Group has not been threatened or charged in writing with or given written notice of any violation of any Data Protection Law, the Foreign Corrupt Practices Act or any other Law referred to in or generally described in foregoing sentence and, to the Company’s Knowledge, the Company Group is not under any investigations with respect to any such Law.
(b) Neither the Company Group nor, to the Knowledge of the Company, any Representative or other Person acting on behalf of the Company Group is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. The Company is an organization which has been professionally managed and operated by a designated management team. The Seller (and its officers, directors, shareholders, employees, agents, trustees, advisers, lenders, and representatives) have not and are not involved or have any role whatsoever in the day to day management, operations, or policy decisions of the Company, have not been and are not key managerial persons of the Company, and have not and shall not be so identified in any filings or disclosures.
4.18 Intellectual Property.
(a) Except as set forth on Schedule 4.18, the Company Group is the sole and exclusive owner of each item of Company Owned IP, free and clear of any Liens. Except as set forth on Schedule 4.18, the Company Group is the sole and exclusive licensee of each item of Company Exclusively Licensed IP, free and clear of any Liens. Except as set forth on Schedule 4.18, the Company Group have a valid right to use the Company Licensed IP.
31
(b) Schedule 4.18 sets forth a correct and complete list of all (i) Registered IP; (ii) unregistered material Trademarks constituting Company Owned IP; (iii) Domain Names constituting Company Owned IP; (iv) all social media handles constituting Company Owned IP; and (v) a general description of all material technical Trade Secrets constituting Company Owned IP; accurately specifying as to each of the foregoing, as applicable: (A) the filing number, issuance or registration number, or other identify details; (B) the owner and nature of the ownership; and (C) the jurisdictions by or in which such Registered Owned IP has been issued, registered, or in which an application for such issuance or registration has been filed or for unregistered material Trademarks, used by the Company Group.
(c) All Registered Owned IP is subsisting and valid and enforceable. All Registered Exclusively Licensed IP is subsisting and valid and enforceable. All Persons (including members of the Company Group) have, in connection with the prosecution of all Patents before the United States Patent and Trademark Office, Indian Trade Marks Registry and Indian Patent Office, and other similar offices in other jurisdictions complied with the applicable obligations of candor owed to the United States Patent and Trademark Office and such other offices. No Registered Owned IP, and no Registered Exclusively Licensed IP, is or has been involved in any interference, opposition, reissue, reexamination, revocation or equivalent proceeding, and no such proceeding has been threatened in writing with respect thereto. In the past six (6) years, there have been no claims filed, served or threatened in writing, or orally threatened, against the Company contesting the validity, use, ownership, enforceability, patentability, registrability, or scope of any Registered IP. All registration, maintenance and renewal fees currently due in connection with any Registered Owned IP, and all Registered Exclusively Licensed IP, have been paid and all documents, recordations and certificates in connection therewith have been filed with the relevant authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, maintaining and perfecting such rights and recording the Company Group’s ownership or interests therein.
(d) The operation of the Business as currently conducted and as conducted in the past six (6) years do not conflict with, infringe, misappropriate or otherwise violate any Intellectual Property Right of any third Person. In the past six (6) years, there have been no claims filed, served or threatened in writing or orally against the Company alleging any conflict with, infringement, misappropriation, or other violation of any Intellectual Property of a third Person (including any unsolicited written offers to license any such Intellectual Property). There are no Actions pending that involve a claim against a member of the Company Group by a third Person alleging infringement or misappropriation of such third Person’s Intellectual Property. To the Knowledge of the Company, in the past six(6) years no third Person has conflicted with, infringed, misappropriated, or otherwise violated any Company IP.
(e) In the past six (6) years no member of the Company Group has filed, served, or threatened a third Person with any material claims alleging any conflict with, infringement, misappropriation, or other violation of any Company IP. There are no Actions pending that involve a claim against a third Person by a member of the Company Group alleging infringement or misappropriation of Company IP. The Company Group is not subject to any Order that adversely restricts the use, transfer, registration or licensing of any such Intellectual Property by the Company Group.
32
(f) Each employee, agent, consultant, and contractor who has contributed to or participated in the creation or development of any Intellectual Property on behalf of the Company Group or any predecessor in interest thereto has executed a form of proprietary information and/or inventions agreement or similar written Contract with a member of the Company Group under which such Person: (i) has assigned all right, title and interest in and to such Intellectual Property to a member of the Company Group (or such predecessor in interest, as applicable); and (ii) is obligated to maintain the confidentiality of the Company Group’s confidential information in accordance with the term of such Person’s employment or engagement both during and after the term of such Person’s employment or engagement.
(g) No government funding or facility of a university, college, other educational institution or research center was used in the development of any item of Company Owned IP.
(h) None of the execution, delivery or performance by the Company of this Agreement or any of the Additional Agreements to which the Company is or will be a party or the consummation by the Company of the transactions contemplated hereby or thereby will (i) cause any item of Company Owned IP, or any material item of Company Licensed IP immediately prior to the Closing, to not be owned, licensed or available for use by the Company Group on substantially the same terms and conditions immediately following the Closing or (ii) require any additional payment obligations by the Company Group in order to use or exploit any other such Intellectual Property to the same extent as the Company Group was permitted immediately before the Closing.
(i) The Company Group is not obligated under any Contract to make any payments by way of royalties, fees, or otherwise to any owner or licensor of, or other claimant to, any Intellectual Property.
(j) The Company Group has exercised commercially reasonable efforts necessary to maintain, protect and enforce the secrecy, confidentiality and value of all Trade Secrets constituting Company Owned IP and all other material Confidential Information, in each instance that are at least consistent with efforts undertaken by third Persons in the industry within which the Business is a part. No Company IP is subject to any technology or source code escrow arrangement or obligation. No Person other than the Company Group and their employees and contractors (i) has a right to access or possess any source code of the Software constituting the Company Owned IP, or (ii) will be entitled to obtain access to or possession of such source code as a result of the execution, delivery and performance of by the Company of this Agreement. The Company Group is in actual possession and control of the source code of any Software constituting Company Owned IP and all related documentation and materials.
(k) The Company Group has a privacy policy regarding the collection, use or disclosure of data in connection with the operation of the business as currently conducted (the “Privacy Policy”) that is made available to all visitors to the Sites prior to the collection of any data in the possession, custody, or control, or otherwise held or processed by, or on behalf of the Company Group. For purposes of this Section 4.18(k), “Sites” shall mean, any websites or applications made available to the general public provided by or on behalf of the Company Group. The Privacy Policy accurately describes the Company Group’s data collection, disclosure and use practices, complies with all Laws, and is consistent with good industry practice. None of the marketing materials and/or advertisements made, or provided by, or on behalf of the Company Group have been inaccurate in a material way, misleading in a material way, unfair or deceptive in violation of applicable Laws.
33
(l) In connection with its Processing of any Personal Information, the Company is and has been in compliance with all applicable Laws, including without limitation all Data Protection Laws, the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 and Laws related to data loss, theft, and security breach notification obligations, and there has been no unauthorized disclosure of any Personal Information for which the Company would be required to make a report to an Authority, a data subject, or any other Person. In addition, the Company Group has in place and, since April 1, 2018, has had in place commercially reasonable policies (including the Privacy Policy and any other internal and external privacy policies), rules, and procedures regarding the Company’s collection, use, disclosure, disposal, dissemination, storage, protection and other Processing of Personal Information. The Company Group has complied in all respects with such privacy policies, rules, and procedures in connection with any collection, use, or disclosure by the Company Group of any Personal Information of any Person. The Company Group has not been subject to, and to the Company’s Knowledge, there are no, complaints to or audits, proceedings, investigations or claims pending against the Company Group by any Authority, or by any Person, in respect of the collection, use, storage disclosure or other Processing of Personal Information. The Company (i) has implemented commercially reasonable physical, technical, organization and administrative security measures and policies designed to protect all Personal Information of any Person accessed, Processed or maintained by the Company from unauthorized physical or virtual access, use, modification, acquisition, disclosure or other misuse, and (ii) requires by written contract all material third party providers and other persons who have or have had access to Personal Information, or who Process Personal Information on Company’s behalf, to implement, appropriate security programs and policies consistent with the Data Protection Laws. Without limiting the generality of the foregoing, since April 1, 2018, the Company Group has not experienced any material loss, damage or unauthorized access, use, disclosure or modification, or breach of security of Personal Information maintained by or on behalf of the Company Group (including by any agent, subcontractor or vendor of the Company Group).
(m) The Software that constitutes Company Owned IP and all Software that is used by the Company Group is free of all viruses, worms, Trojan horses and other material known contaminants and does not contain any bugs, errors, or problems of a material nature that would disrupt its operation or have an adverse impact on the operation of other Software. The Company Group has not incorporated Publicly Available Software into the Company Group’s products and services, and the Company Group has not distributed Publicly Available Software as part of the Company Group’s products and services. The Company Group has not used Publicly Available Software in a manner that subjects, in whole or in part, any Software constituting Company Owned IP to any Copyleft License obligations. The Company Group is in material compliance with all Publicly Available Software license terms applicable to any Publicly Available Software licensed to or used by the Company Group. The Company Group has not received any written notice from any Person that it is in breach of any license with respect to Publicly Available Software.
34
(n) The Company Group has implemented and maintained (or, where applicable, has required its vendors to maintain), consistent with commercially reasonable and industry practices and in compliance with its contractual obligations to other Persons, reasonable security measures designed to protect, preserve and maintain the performance, security and integrity of all computers, servers, equipment, hardware, networks, Software and systems used, owned, leased or licensed by the Company Group in connection with the operation of the Business (the “Company Information Systems”). There has been no unauthorized access to or use of the Company Information Systems, nor has there been any downtime or unavailability of the Company Information Systems that resulted in a material disruption of the Business. The Company Information Systems are adequate and sufficient (including with respect to working condition and capacity) for the operations of the Business. There has been no failure with respect to any Company Information System that has had a material effect on the operations of the Company Group.
(o) There is no standards-setting organization (including ETSI, 3GPP, 3GPP2, TIA, IEEE, IETF, and ITU-R), university or industry body, consortium, other multi-party special interest group and any other collaborative or other group in which the Company Group is currently participating, or has participated in the past or applied for future participation in, including any of the foregoing that may be organized, funded, sponsored, formed or operated, in whole or in part, by any Authority, in all cases, to the extent related to any Intellectual Property (each a “Standards Setting Body”). The Company is not party to any membership agreements and other Contracts relating to such Standards Bodies, to which Company Group is bound (collectively, “Standards Setting Agreements”). The Company Group is not bound by, and has not agreed in writing to be bound by, any Contract (including any written licensing commitment), bylaw, policy, or rule of any Standards Setting Body that requires or purports to require Company to contribute, disclose or license any Intellectual Property to such Standards Setting Body or its other members, other than the Standards Setting Agreements. The Company Group has not made any written Patent disclosures to any Standards Setting Body. The Company is not engaged in any material dispute with any Standards Setting Body with respect to any Intellectual Property or with any third Persons with respect to Company Group’s conduct with respect to any Standards Setting Body.
4.19 Accounts Payable; Affiliate Loans.
(a) The accounts payable of the Company Group reflected on the Company Financial Statements, and all accounts payable arising subsequent to the date thereof, arose from bona fide transactions in the ordinary course consistent with past practice.
(b) There are no accounts, receivables or notes of the Company Group which are owed by any Affiliate of the Company Group. The Company Group is not indebted to any of its Affiliates and no Affiliates are indebted to the Company Group.
4.20 Employees; Employment Matters.
(a) The aggregate compensation of the five highest compensated officers or employees of the Company Group as of the date hereof, setting forth the name, title and total compensation (including bonuses and commissions) paid to each such person for the fiscal years ended March 31, 2022 and 2021 are listed on Schedule 4.20(a).
35
(b) The Company Group is not a party to any collective bargaining agreement, and, since April 1, 2018, there has been no activity or proceeding by a labor union or representative thereof to organize any employees of the Company Group. There is no labor strike, material slowdown or material work stoppage or lockout pending or, to the Knowledge of the Company, threatened against the Company Group, and, since April 1, 2018, the Company Group has not experienced any strike, material slowdown, material work stoppage or lockout by or with respect to its employees. To the Knowledge of the Company, the Company Group is not subject to any attempt by any union to represent Company Group employees as a collective bargaining agent.
(c) There are no pending, or to the Knowledge of the Company, threatened Actions against the Company Group under any worker’s compensation policy or long-term disability policy. There is no unfair labor practice charge or complaint pending or, to the Knowledge of the Company, threatened before any applicable Authority relating to employees of the Company Group. Since April 1, 2018, the Company Group has not engaged in, and is not currently contemplating, any location closing, employee layoff, or relocation activities that would trigger the Worker Adjustment Retraining and Notification Act of 1988 (if applicable), as amended, or any similar state or local statute, rule or regulation.
(d) Except as set forth under Schedule 4.20 (d), the Company Group is, and since April 1, 2018 has been, in material compliance in all material respects with all applicable Laws relating to employment of labor, including all applicable Laws relating to wages, hours, overtime, collective bargaining, equal employment opportunity, anti-discrimination, anti-harassment (including, but not limited to sexual harassment), anti-retaliation, immigration, leaves, disability rights or benefits, employment and reemployment rights of members and veterans of the uniformed services, paid time off/vacation, unemployment insurance, safety and health, workers’ compensation, pay equity, restrictive covenants, child labor, whistleblower rights, classification of employees and independent contractors, meal and rest breaks, business expenses, and the collection and payment of withholding or social security Taxes. Since April 1, 2018, no audits have been conducted, or are currently being conducted, or, to the Knowledge of the Company, are threatened to be conducted by any Authority with respect to applicable Laws regarding employment or labor Laws. The Company Group has complied, in all material respects, with all Laws relating to the verification of identity and employment authorization of individuals employed in the United States, and none of the Company Group currently employs, or since April 1, 2018 has employed, any Person who was not permitted to work in the jurisdiction in which such Person was employed. No audit by any Authority is currently being conducted, pending or, to the Knowledge of the Company, threatened to be conducted in respect to any foreign workers employed by the Company Group. There is individual who is employed by the Company Group pursuant to a visa. No employee of the Company Group has, since April 1, 2018, brought or, to the Knowledge of the Company, threatened to bring a claim for unpaid compensation, including overtime amounts.
(e) To the Knowledge of the Company, no key employee or officer of the Company Group is a party to or is bound by any confidentiality agreement, non-competition agreement or other contract (with any Person) that would materially interfere with: (A) the performance by such officer or key employee of any of his or her duties or responsibilities as an officer or employee of the Company Group or (B) the Company’s business or operations. No key employee or officer of the Company Group has given written notice of their definite intent to terminate their employment with the Company, nor does the Company have any present intention to terminate the employment of any of the foregoing.
36
(f) The employment of each of the key employees is terminable at will without any penalty or severance obligation on the part of the Company Group. All material sums due for employee compensation and all vacation time owing to any employees of the Company Group, and all fees owing to any independent contractors and consultants, have been duly accrued on the accounting records of the Company Group.
(g) Each current and former employee and officer of the Company Group, and each independent contractor and consultant who has had been involved in the creation of Company Owned IP has executed a form of proprietary information and/or inventions agreement or similar agreement. To the Knowledge of the Company, no current or former employees, officers or consultants are or were, as the case may be, in violation thereof. Other than with respect to exclusions previously accepted by the Company involving works or inventions unrelated to the business of the Company Group, no current or former employee, officer or consultant of the Company Group has disclosed excluded works or inventions made prior to his or her employment or consulting relationship with the Company Group from his, her or its assignment of inventions pursuant to such employee, officer or consultant’s proprietary information and inventions agreement.
(h) With regard to any individual who performs or performed services for the Company and who is not treated as an employee for Tax purposes by the Company Group, the Company Group has complied in all material respects with applicable Laws concerning independent contractors, including for Tax withholding purposes or Plan purposes, and the Company Group does not have any Liability by reason of any individual who performs or performed services for the Company Group, in any capacity, being improperly excluded from participating in any Plan. Each individual engaged by the Company Group as an independent contractor or consultant is, and since April 1, 2018 has been, properly classified by the Company Group as an independent contractor, and the Company Group has not received any notice from any Authority or Person disputing such classification. Each of the employees of the Company Group is, and since April 1, 2018 has been, properly classified by the Company Group as “exempt” or “non-exempt” under applicable Laws.
(i) There is no, and since April 1, 2018 there has been no, written notice provided to the Company Group of any claim or litigation relating to, or any complaint or allegation of, discrimination, retaliation, wrongful termination, constructive termination, harassment (including sexual harassment), sexual misconduct, or wage and hour violation against the Company Group; nor there is any pending obligation for the Company Group under any settlement or out-of-court or pre-litigation arrangement relating to such matters nor to the Knowledge of the Company, has any such litigation, settlement or other arrangement been threatened.
37
(j) Since April 1, 2018, the Company Group has investigated all workplace harassment (including sexual harassment), discrimination, retaliation, and workplace violence written claims relating to current and/or former employees of the Company Group or third-parties who interacted with current and/or former employees of the Company Group. With respect to each such written claim with potential merit, the Company Group has taken corrective action. Further, to the knowledge of the Company, no allegations of sexual harassment have been made to the Company Group against any individual in his or her capacity as director or an employee of the Company Group at a level of vice president or above.
(k) As of the date hereof and since April 1, 2018, there have been no audits by any Authority, nor have there been any charges, fines, or penalties, including those pending or threatened, under any applicable federal, state or local occupational safety and health Law and Orders (collectively, “OSHA”) against the Company Group. The Company Group is in compliance in all material respects with OSHA and there are no pending appeals of any Authority’s decision or fines issued in relation to OSHA.
(l) The Company Group has complied with all applicable Laws (in all material respects) regarding the COVID-19 pandemic, including all applicable federal, state and local Orders issued by any Authority (whether in the United States or any other jurisdiction) regarding shelters-in-place, or similar Orders in effect as of the date hereof and have taken appropriate precautions regarding its employees, to the extent applicable and mandatory in nature. As of the date hereof, all employees of the Company Group who are reasonably able to conduct their duties remotely are working remotely. There have been no, and there are no pending or anticipated layoffs, leaves of absence or terminations of employment in respect to the employees of the Company as a result of the COVID-19 pandemic. The Company Group has promptly and thoroughly investigated all occupational safety and health complaints, issues, or inquiries related to the COVID-19 pandemic. With respect to each occupational safety and health complaint, issue, or inquiry related to the COVID-19 pandemic, the Company Group has taken prompt corrective action that is reasonably calculated to prevent further spread of COVID-19 within the Company Group’s workplace.
(m) The Company Group has not paid or promised to pay any bonus to any employee in connection with the consummation of the transactions contemplated hereby.
4.21 Withholding. All obligations of the Company Group applicable to its employees, whether arising by operation of Law, by Contract, or attributable to payments by the Company Group to trusts or other funds or to any Authority, with respect to unemployment compensation benefits or social security benefits for its employees through the date hereof, have been paid or adequate accruals therefor have been made on the Company Financial Statements. All reasonably anticipated obligations of the Company Group with respect to such employees (except for those related to wages during the pay period immediately prior to the Closing Date and arising in the ordinary course of business consistent with past practices), whether arising by operation of Law, by contract, by past custom, or otherwise, for salaries and holiday pay, bonuses and other forms of compensation payable to such employees in respect of the services rendered by any of them prior to the date hereof have been or will be paid by the Company Group prior to the Closing Date.
38
4.22 Employee Benefits.
Except as set forth under Schedule 4.22, the Company represents and warrants as follows:
(a) With respect to each Plan, the Company has made available to Purchaser or its counsel a correct and complete copy, to the extent applicable, of: (i) each writing constituting a part of such Plan and all amendments thereto, including all plan documents, material employee communications, benefit schedules, trust agreements, and insurance contracts and other funding vehicles; and (ii) the current summary plan description and any material modifications thereto.
(b) There are no pending or, to the Knowledge of the Company, threatened Actions against or relating to the Plans, the assets of any of the trusts under such Plans or the Plan sponsor or the Plan administrator, or against any fiduciary of any Plan with respect to the operation of such Plan (other than routine benefits claims). No Plan is presently under audit or examination (nor has written notice been received of a potential audit or examination) by any Authority.
(c) Each Plan has been established, administered and funded in accordance with its terms and in compliance in all material respects with the applicable provisions of applicable Laws. All premiums due or payable with respect to insurance policies funding any Plan have been made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the Company Financial Statements.
(d) None of the Plans provide retiree health or life insurance benefits, except as may be required by applicable Law.
(e) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) (i) result in any payment becoming due, or increase the amount of any compensation or benefits due, to any current or former employee of the Company Group with respect to any Plan; (ii) increase any benefits otherwise payable under any Plan; or (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits.
(f) All Plans subject to the laws of any jurisdiction outside of the United States (i) if they are intended to qualify for special tax treatment, meet all requirements for such treatment, and (ii) if they are intended to be funded and/or book-reserved, are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions.
(g) The Company represents and warrants that:
(i) The Company has obtained registration under all applicable labour legislations, rules and regulations and any other applicable Laws in connection with its employees and has made timely and complete filings as required under relevant labour legislations, rules and regulations with the relevant labour authorities.
39
(ii) No Key Managerial Personnel has given, or has been given, notice of termination of his employment in the last six months. No offer of employment to any person at the grade/level of any Key Managerial Personnel has been made in the last six months. For this purpose, Key Managerial Personnel shall mean any employee having a cost to company (CTC) of INR 25,00,000 per annum or above. Since March 31, 2022, no change has been made in the rate of the emoluments of any Key Managerial Personnel.
(iii) All subsisting contracts of employment to which the Company is a party, and all subsisting contracts for the provision of any personnel or consultancy services by any independent contractors to the Company, are terminable by the Company, in case of employees on probation or independent contractors with 30 days’ notice or less without compensation and, in case of permanent employees with 60 days’ notice or less without compensation.
(iv) The Company is and has been in compliance with all applicable Laws relating to employment and employment practices, including relating to, work conditions, hours of work, weekly holidays, payment of wages or other dues, provident fund, gratuity, bonus, employees state insurance, minimum wage, overtime payments, employment discrimination, workers’ compensation, employee social security contributions, employee income tax withholding and family and medical leave, and have not engaged in any unfair labour practice.
(v) The Company has not employed any contract labour.
(vi) The Company have paid or provided for all Taxes, insurance, statutory contributions and other levies due in respect of their employees, including under the Payment of Gratuity Act, 1972, the Employees’ State Insurance Act, 1948 and the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
(vii) No employee of the Company is entitled to a commission or remuneration of any sort calculated by reference to the whole or part of the turnover or profits of the Company.
(viii) There are no bonus, retirement, death, disability, profit sharing, option plans, incentive compensation, pension, gratuity, superannuation, employees provident fund, employees deposit linked insurance, or other employee benefit plans or arrangements (the “Benefit Plans”) of any nature whatsoever offered or given by the Company to any of its present or past employees or Directors, other than gratuity, contribution to provident fund or contribution under the applicable Laws including Employees’ State Insurance Act, 1948. The Company and each entity forming part of the Company Group have maintained and currently maintain adequate funds and reserves for paying/contributing to the Benefit Plans (if any are applicable to the Company), and the Company has properly provided for and contributed to all Benefit Plans, including gratuity, provident fund and contribution under Employees’ State Insurance Act, 1948, by making, in a timely manner, all such contributions as are required by applicable Law and making such deductions from all payments made or deemed to be or treated as made by it or on its behalf, as are required under applicable Law, and by duly accounting to the governmental authorities for all sums so deducted and contributed for all other amounts for which it is required to account under the relevant Benefit Plans.
40
(ix) The Company has in all respects complied with its obligations (including under applicable Law and any applicable Benefit Plans) to their employees and former employees and no claim in relation to employees or former employees of the Company has been made against the Company, or against any Person whom the Company are liable to indemnify.
(x) There are no sexual harassment complaints filed with regards to the Company or any of its officers or employees. There are no unfair labour practice claims against the Company.
(xi) Other than advance against salary, the Company has not granted any loan and/or advance, or provided any guarantee or financial assistance to any of its employees (past or present).
(xii) Neither the Company nor any member of the Company Group has or recognize any trade union or other body representing any of its employees and nor is it a party to any collective bargaining agreement or union contract.
4.23 Real Property.
(a) The Company Group does not own, or otherwise have an interest in, any Real Property, including under any Real Property lease, sublease, space sharing, license or other occupancy agreement. The Company Group has good, and marketable fee simple title to the owned Real Property, free and clear of all Liens (except for Permitted Liens). The Leases are the only Contracts pursuant to which the Company Group leases any Real Property or right in any Real Property. The Company Group has provided to Purchaser correct and complete copies of all Leases. The Company Group has good, valid and subsisting title to its respective leasehold estates in the leased Real Property, free and clear of all Liens. The Company Group has not breached or violated any local zoning ordinance, and no notice from any Person has been received by the Company Group or served upon the Company Group claiming any violation of any local zoning ordinance.
(b) Except as set forth under Schedule 4.23 (b), with respect to each Lease: (i) it is valid, binding, and enforceable in accordance with its terms and in full force and effect; (ii) all rents and additional rents and other sums, expenses and charges due thereunder have been paid; (iii) the Company Group has been in peaceable possession of the premises leased thereunder since the commencement of the original term thereof; (iv) no waiver, indulgence or postponement of the Company Group’s obligations thereunder has been granted by the lessor; (v) the Company Group has performed all material obligations imposed on it under such Lease and there exist no default or event of default thereunder by the Company Group; (vi) there exists, to the Company’s Knowledge, no occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any further event or condition, would reasonably be expected to become a default or event of default by the Company Group thereunder; and (vii) there are no outstanding claims of breach or indemnification or notice of default or termination thereunder. The Company Group holds the leasehold estate established under the Leases free and clear of all Liens, except for Liens of mortgagees of the Real Property on which such leasehold estate is located. The Real Property leased by the Company Group is in a state of maintenance and repair in all material respects adequate and suitable for the purposes for which it is presently being used, and there are no material repair or restoration works likely to be required in connection with such leased Real Property. The Company Group is in physical possession and actual and exclusive occupation of the whole of the leased premises, none of which is subleased or assigned to another Person. The Company Group does not owe any brokerage commission with respect to any Real Property.
41
4.24 Tax Matters. Except as set forth under Schedule 4.24, the Company represents the following:
(a) (i) The Company Group has duly and timely filed all Tax Returns which are required to be filed by or with respect to it, and has paid all Taxes (whether or not shown on such Tax Returns) which have become due; (ii) all such Tax Returns are true, correct and complete and accurate in all material respects; (iii) there is no Action, pending or proposed in writing, with respect to Taxes of the Company Group; (iv) no statute of limitations in respect of the assessment or collection of any Taxes of the Company Group for which a Lien may be imposed on any of the Company Group’s assets has been waived or extended, which waiver or extension is in effect; (v) the Company Group has complied in all material respects with all applicable Laws relating to the reporting, payment, collection and withholding of Taxes and has duly and timely withheld or collected, paid over to the applicable Taxing Authority and reported all Taxes (including income, social, security and other payroll Taxes) required to be withheld or collected by the Company Group; (vi) the Company has (A) properly collected all sales Taxes required to be collected in the time and manner required by applicable Laws and remitted all such sales Taxes to the applicable Taxing Authority in the time and in the manner required by applicable Laws and (B) properly requested, received and retained all necessary exemption certificates and other documentation supporting any claimed exemption or waiver of Taxes on sales or similar transactions as to which it would otherwise have been obligated to collect or withhold Taxes; (vii) there is no outstanding request for a ruling from any Taxing Authority, request for consent by a Taxing Authority for a change in a method of accounting, subpoena or request for information by any Taxing Authority or agreement with any Taxing Authority with respect to the Company Group; (viii) there is no Lien (other than Permitted Liens) for Taxes upon any of the assets of the Company Group; (ix) no claim has ever been made by a Taxing Authority in a jurisdiction where the Company Group has not paid any Tax or filed Tax Returns, asserting that the Company Group is or may be subject to Tax in such jurisdiction, the Company Group is not nor has it ever been subject to Tax in any country other than the respective countries of incorporation or formation of the Company Group members by virtue of having a permanent establishment or other place of business in that country, and the members of the Company Group are and have always been tax residents solely in their respective countries of incorporation or formation; (x) the Company Group has provided to Purchaser true, complete and correct copies of all Tax Returns relating to, and all audit reports and correspondence relating to each proposed adjustment, if any, made by any Taxing Authority with respect to, any taxable period ending after March 31, 2015; (xi) is not, and has ever been, a party to any Tax sharing, Tax indemnity or Tax allocation Contract; (xii) the Company has no liability for the Taxes of any other Person (1) as a transferee or successor or by contract or (2) otherwise by operation of applicable Law; (xiii) to the Knowledge of the Company, no issue has been raised by a Taxing Authority in any prior Action relating to the Company Group with respect to any Tax for any period which, by application of the same or similar principles, could reasonably be expected to result in a proposed Tax deficiency of the Company Group for any other period; (xiv) the Company Group has not requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed; (xv) the Company is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
42
(b) The unpaid Taxes of the Company Group (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Group’s interim financial statements for the most recently completed quarterly period and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Return.
(c) The Company Group has been in compliance in all respects with all applicable transfer pricing laws and legal requirements.
(d) The Company Group has not deferred the withholding or remittance of any Applicable Taxes related or attributable to any Applicable Wages for any employees of the Company and shall not defer the withholding or remittance any Applicable Taxes related or attributable to Applicable Wages for any employees of the Company up to and through and including the Closing Date, notwithstanding IRS Notice 2020-65 (or any comparable regime for state or local Tax purposes).
(e) All Taxes due and payable by the Company as on date have been duly paid within the respective time periods for their payment, and where required, provisions or reserves have been made in the Company Financial Statements and the Company does not have any liabilities for unpaid Taxes for all periods up to date.
(f) The Company is not treated for any taxation purpose as resident in a country other than the country of its incorporation and the Company does not have, or has had, a branch, agency or permanent establishment in a country other than the country of its incorporation for any Taxation purpose (including any double taxation agreement) and no Taxation Authority has ever sought to assert the same.
(g) All returns, computations, reports, certificates and information which are, or have been, required to be prepared and / or filed by the Company for any Taxation purposes for the period up to date have been made in accordance with applicable Laws on a proper and timely basis, and are not the subject of any Action or dispute involving the Tax Authorities. All Tax returns submitted by the Company are true and correct, and were prepared in compliance with all applicable Laws.
(h) The Company has, as required under applicable Laws in relation to Taxation, maintained appropriate books and records and has maintained adequate documentation of the relevant Tax records to substantiate any Action against the Company in writing by the Tax Authorities.
43
(i) The Company is in compliance with all transfer pricing requirements (including maintenance of records and documentation) under applicable Law. Further, all transactions between the related parties and associated enterprises have been carried out on an arm’s length basis, as required under applicable Law.
(j) The Company is entitled to all carry forward Losses and unabsorbed depreciation as claimed by it in its Tax return(s) and no such Losses and / or unabsorbed depreciation have been or are required to be disallowed.
(k) There are no Actions, audits, or dispute, which is pending or threatened in writing, against the Company in each case that involves any Tax or Tax return of the Company, and there are no outstanding charges or attachment orders or show cause notices issued to the Company in writing by any Tax Authority that involve an attachment of assets of the Company, and all previous Tax claims which have become due and payable under the Tax Laws have been duly discharged and paid in full.
(l) The Company is not responsible (under applicable Law or any Material Contracts to which the Company is a party) for the payment of Taxes of any Person other than itself, except for deduction and remittance of Tax deductible at source / collectible at source as required under the applicable Laws.
(m) The Company has obtained all Permits in relation to Tax, including in relation to its Business, and is and has been in material compliance with all the terms and conditions under such Permits.
(n) The Company has made all withholdings (including payroll withholding relating to income tax or social security contributions) and deductions in respect, or on account, of any Taxation from any payments made by it which it is obliged or otherwise required by law to make and has accounted in full and within the requisite period to the appropriate authority for all amounts so deducted.
(o) The Company has maintained all records required to be maintained by them under applicable Laws in relation to Taxes. Also, all the records which it is required to keep for taxation purposes or which would be needed to substantiate any claim made or position adopted in relation to Tax by them (as the case may be), have been duly kept and maintained.
(p) The Company has paid all Taxes which have become due and payable under Tax Laws on all historical restructuring activities.
(q) The Company has not entered into, and is not, nor has it been a party to or involved in any transaction, scheme or arrangement:
(i) with a view or for the main purpose of avoiding or evasion of any actual or potential liability to Tax;
44
(ii) which could be reclassified for the purposes of Tax under any legislation, enactment or other law or otherwise by any Government Authority; or
(iii) which, to the knowledge of the Company, could result in any Tax claim or Action against the Company or which could be used as evidence against the Company in any Action pertaining to Tax avoidance.
(r) All tax liabilities for the period prior to the Initial Closing Date has been discharged by the Company. Further, the Company has carried out its Business and operations in a manner entitling it to claim deduction for Tax purposes in respect of all revenue expenses (including depreciation and amortization) incurred by it during the course of its Business and all expenses incurred and claimed as deduction by the Company are eligible expense incurred wholly for its own business purpose.
(s) All income, whether accrued or not, prior to the Initial Closing Date has been accounted for and appropriate taxes on the same has been discharged by the Company.
(t) There are no Liens or encumbrances with respect to the Company that have arisen in connection with any failure (or alleged failure) to pay any Tax, which is presently due or was due in the past.
(u) The Company has timely filed all returns, estimates, information statements, reports and any other filings required under applicable tax laws (including but not limited to Central Goods and Service Tax Act, 2017, Integrated Goods and Service Tax Act, 2017, Union Territory Goods and Service Tax Act, 2017, Goods and Services Tax (Compensation to States) Act, 2017, respective State Goods and Service Tax Act, 2017, Central Excise Act, 1944, Customs Act, 1962, Finance Tax Act, 1994, respective State VAT and Entry Tax legislations, The Central Sales Tax Act, 1956, Foreign Trade Policy (as amended from time to time)) (“Tax Returns”) relating to taxes, required to be filed by the Company with any tax authority. Such Tax Returns are true and correct in all respects, discloses all income of the Company from all sources and have been completed in accordance with applicable Law in all material respects. The Company has maintained adequate documentation with respect to the expenditure incurred and being claimed.
(v) The Company has not paid or become liable to pay, and there are no circumstances by reason of which the Company is likely to become liable to pay, any penalty, fine, surcharge or interest relating to Taxation under applicable Law. There are no Tax litigations pending against the Company.
(w) The Company has maintained all records required to be maintained by it under applicable Tax Laws. All the records which the Company is required to keep for taxation purposes or which would be needed to substantiate any claim made or position taken in tax returns in relation to tax by the Company, has been duly kept and maintained.
(x) There are no instances of Tax not paid or short paid or erroneously refunded or input Tax credit wrongly availed or utilized, any contravention of any provisions of any applicable Tax laws, by the Company, or any member of the Company Group.
45
(y) No audit, investigation or other Action by a governmental authority is pending or being conducted with respect to (i) any Taxes due from or with respect to the Company or in relation to the filing of any Tax Returns or failure to do so or (ii) the Company in respect of any pending Action under any Tax laws that have any adverse impact on the Company’s ability to consummate the transactions contemplated herein or that has the effect of creating any charge or lien on any Shares or any Assets of the Company in favour of a governmental authority.
(z) The entities which have claimed deduction under Rule 9A of Income-tax Rules, 1962 (“ITR”) have satisfied mandatory conditions mentioned in the said rule to claim such deduction.
(aa) The Company has discharged the interest dues as and when investigation / audit para raised by the GST authorities.
(bb) The Company has paid pending dues of reverse charge liability.
(cc) The Company has undertaken reconciliation of payment made to vendor within 180 days and duly account for the same in GST returns.
(dd) The Company has undertaken reversal of ineligible input tax credit as and when identified.
(ee) The Company has reconciled the differences in input tax credit availed in GST return vis-a-vis appearing in GSTR-2A
4.25 Environmental Laws. Since April 1, 2018, the Company Group has complied and is in compliance with all Environmental Laws, and there are no Actions pending or, the Knowledge of the Company, threatened against the Company Group alleging any failure to so comply. The Company Group has not (i) received any written notice of any alleged claim, violation of or liability under any Environmental Law which has not heretofore been cured or for which there is any remaining liability; (ii) disposed of, emitted, discharged, handled, stored, transported, used or released any Hazardous Material; arranged for the disposal, discharge, storage or release of any Hazardous Material; or exposed any employee or other individual to any Hazardous Material so as to give rise to any liability or corrective or remedial obligation under any Environmental Laws; or (iii) entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other Person with respect to liabilities arising out of Environmental Laws or the Hazardous Material Activity of the Company Group. There are no Hazardous Material in, on or under any properties owned, leased or used at any time by the Company Group that could give rise to any material liability or corrective or remedial obligation of the Company Group under any Environmental Laws.
4.26 Finders’ Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller, the Company or any other member of the Company Group or any of their respective Affiliates who might be entitled to any fee or commission from Seller, the Company, any other member of the Company Group, Purchaser or any of their respective Affiliates upon consummation of the transactions contemplated by this Agreement or any of the Additional Agreements.
46
4.27 Powers of Attorney, Suretyships and Bank Accounts. The Company Group does not have any general or special powers of attorney outstanding (whether as grantor or grantee thereof) or any obligation or liability (whether actual, accrued, accruing, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of the obligation of any Person. There is no bank, trust company, savings institution, brokerage firm, mutual fund or other financial institution with which the Company Group has an account or safe deposit box, including the names and identification of all Persons authorized to draw thereon or have access thereto.
4.28 Directors and Officers. Schedule 4.28 sets forth a true, correct and complete list of all directors and officers of each entity forming part of the Company Group.
4.29 Anti-Money Laundering Laws.
(a) The Company Group (to the extent applicable to it) currently is and, since April 1, 2018, has been, in compliance with applicable Laws related to (i) anti-corruption or anti-bribery, including, if applicable, the U.S. Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., and any other equivalent or comparable Laws of other countries (collectively, “Anti-Corruption Laws”), (ii) economic sanctions administered, enacted or enforced by any Authority (collectively, “Sanctions Laws”), (iii) export controls, including, if applicable, the U.S. Export Administration Regulations, 15 C.F.R. §§ 730, et seq., and any other equivalent or comparable Laws of other countries (collectively, “Export Control Laws”), (iv) anti-money laundering, including, if applicable, the Money Laundering Control Act of 1986, 18 U.S.C. §§ 1956, 1957, and any other equivalent or comparable Laws of other countries; (v) anti-boycott regulations, as administered by the U.S. Department of Commerce, if applicable; and (vi) importation of goods, including Laws administered by the U.S. Customs and Border Protection, Title 19 of the U.S.C. and C.F.R., if applicable, and any other equivalent or comparable Laws of other countries (collectively, “International Trade Control Laws”).
(b) Neither the Company Group nor, to the Knowledge of the Company, any Representative of the Company Group (acting on behalf of the Company Group), is or is acting under the direction of, on behalf of or for the benefit of a Person that is, (i) the subject of Sanctions Laws or identified on any sanctions or similar lists administered by an Authority, including the U.S. Department of the Treasury’s Specially Designated Nationals List, the U.S. Department of Commerce’s Denied Persons List and Entity List, the U.S. Department of State’s Debarred List, HM Treasury’s Consolidated List of Financial Sanctions Targets and the Investment Bank List, or any similar list enforced by any other relevant Authority, as amended from time to time, or any Person owned or controlled by any of the foregoing (collectively, “Prohibited Party”); (ii) the target of any Sanctions Laws; (iii) located, organized or resident in a country or territory that is, or whose government is, the target of comprehensive trade sanctions under Sanctions Laws, including, as of the date of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria; or (iv) an officer or employee of any Authority or public international organization, or officer of a political party or candidate for political office. Neither the Company Group nor, to the Knowledge of the Company, any Representative of the Company Group (acting on behalf of the Company Group), (A) has participated in any transaction involving a Prohibited Party, or a Person who is the target of any Sanctions Laws, or any country or territory that was during such period or is, or whose government was during such period or is, the target of comprehensive trade sanctions under Sanctions Laws, (B) to the Knowledge of the Company, has exported (including deemed exportation) or re-exported, directly or indirectly, any commodity, software, technology, or services in violation of any applicable Export Control Laws or (C) has participated in any transaction in violation of or connected with any purpose prohibited by Anti-Corruption Laws or any applicable International Trade Control Laws, including support for international terrorism and nuclear, chemical, or biological weapons proliferation.
47
(c) The Company, has not received written notice of, nor, to the Knowledge of the Company, any of its Representatives is or has been the subject of, any investigation, inquiry or enforcement proceedings by any Authority regarding any offense or alleged offense under Anti-Corruption Laws, Sanctions Laws, Export Control Laws or International Trade Control Laws (including by virtue of having made any disclosure relating to any offense or alleged offense) and, to the Knowledge of the Company, there are no circumstances likely to give rise to any such investigation, inquiry or proceeding.
4.30 Insurance. Except as set forth under Schedule 4.30, all forms of insurance owned or held by and insuring any member of the Company Group are in full force and effect. All premiums with respect to such policies covering all periods up to and including the Closing Date have been or will be paid when due, no notice of cancellation or termination has been received with respect to any such policy which was not replaced on substantially similar terms prior to the date of such cancellation or termination and there is no claim by the Company Group or, to the Company’s Knowledge, any other Person pending under any of such insurance policies as to which coverage has been questioned, denied or disputed by the underwriters or issuers of such policies. There is no existing default or event which, with or without the passage of time or the giving of notice or both, would constitute noncompliance with, or a default under, any such policy or entitle any insurer to terminate or cancel any such policy. Such policies will not in any way be affected by or terminate or lapse by reason of the transactions contemplated by this Agreement or the Additional Agreements. The insurance policies to which the Company Group is a party are sufficient for the operation of the Business and compliance with all requirements of all Material Contracts to which the Company Group is a party or by which the Company Group is bound. Since April 1, 2018, the Company Group has not been refused any insurance with respect to its assets or operations or had its coverage limited by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance. The Company Group does not have any self-insurance arrangements. No fidelity bonds, letters of credit, performance bonds or bid bonds have been issued to or in respect of the Company Group.
4.31 Related Party Transactions. As contemplated by this Agreement or as provided in the Company Financial Statements, no Affiliate of the Company Group, current or former director, manager, officer or employee of any Person in the Company Group or any immediate family member or Affiliate of any of the foregoing (a) is a party to any Contract, or has otherwise entered into any transaction, understanding or arrangement, with any member of the Company Group, (b) owns any asset, property or right, tangible or intangible, which is used by any member of the Company Group, or (c) is a borrower or lender, as applicable, under any Indebtedness owed by or to any member of the Company Group since April 1, 2018.
48
4.32 No Trading or Short Position. No member of the Company Group, or any of their respective managers and officers, members and employees has engaged in any short sale of Purchaser’s voting stock or any other type of hedging transaction involving Purchaser’s securities (including, without limitation, depositing shares of Purchaser’s securities with a brokerage firm where such securities are made available by the broker to other customers of the firm for purposes of hedging or short selling Purchaser’s securities).
4.33 Not an Investment Company. Neither Seller nor the Company is an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
4.34 Information Supplied. None of the information supplied or to be supplied by the Company Group expressly for inclusion or incorporation by reference in the filings with the SEC and mailings to Purchaser’s stockholders with respect to the solicitation of proxies to approve the transactions contemplated by this Agreement and the Additional Agreements, if applicable, will, at the time of the Purchaser Stockholder Meeting or at the Closing Date, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by the Company Group or included in the Purchaser SEC Documents, the Additional Purchaser SEC Documents, the SEC Statement or any Other Filing).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to Purchaser that each of the following representations and warranties are true, correct and complete as of the date of this Agreement, as of the Initial Closing and as of each Additional Closing (except for representations and warranties that are made as of a specific date, which are made only as of such date) as follows (“Seller Fundamental Warranties”):
5.1 Corporate Existence. Seller is a corporation duly incorporated and validly existing under the laws of India.
5.2 Corporate Power and Authority. Seller has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Seller. No other corporate proceedings on the part of Seller are necessary to authorize this Agreement party or to consummate the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Seller and assuming the due authorization, execution and delivery by each of the other parties hereto and thereto (other than Seller), and placing reliance on the representations and warranties made by the Purchaser in Section 6.14, this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms, subject to Enforceability Exceptions. If any vote of the holders of any of Seller’s share capital is necessary to adopt this Agreement and approve the Acquisition and the consummation of the other transactions contemplated hereby, it shall be obtained prior to the Initial Closing Date.
49
5.3 Conflicts. Placing reliance on the representations and warranties made by the Purchaser in Section 6.14, the execution, delivery and performance by Seller of this Agreement or the consummation by Seller of the transactions contemplated hereby do not and will not (a) contravene or conflict with the organizational or constitutive documents of Seller, or (b) contravene or conflict with or constitute a violation of any provision of any Law or any Order binding upon the Seller.
5.4 Consents. None of the execution, or delivery by Seller of this Agreement, or the consummation by Seller of the transactions contemplated hereby, requires the Seller to obtain any consent, approval, license, Order or other action by or in respect of, or registration, declaration or filing with, any Authority, save and except as contemplated in this Agreement.
5.5 Liens and Encumbrances. The Seller is the absolute legal owner, free of all Encumbrances, of the Company Shares, has validly acquired such Company Shares and authorized to validly hold such Company Shares in the Company and all relevant/applicable consents with respect to such shareholding as required by the Seller have been obtained and are currently in force and effect. For the purpose of this Agreement, “Encumbrance” shall mean (i) any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, deed of trust, 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 voting agreement, option, pre-emptive rights, right of first offer, refusal or transfer restriction in favour of any person, save and except only restrictions on the subsequent transfer of the Company Shares by Purchaser and pre-emption rights (as the case may be) imposed under applicable Law, the Company Corporate Documents, and the Shareholders Agreement (as the case may be) and (iii) any adverse claim as to title, possession or use.
5.6 Title. Other than in relation to the one (1) share jointly held by Mr. Pravina Sharad Awate and the Seller, the Seller currently owns all legal and beneficial title to such Company Shares and the Seller is presently recorded as a member of the Company in its register of members in respect of such number of the Company Shares. Further, the Seller has not received any notice of any tax claims, tax demands or proceedings that are pending, or any notice of any taxes or other sums payable under the Income Tax Act, 1961.
5.7 Taxes. There are no orders passed in any claims, tax claims, tax demands, investigation or proceedings pending before any court/governmental authority pending against the Seller prohibiting the sale of the Company Shares owned by the Seller, as contemplated by the Agreement or prevent the Seller from fulfilling its obligations set out in this Agreement.
5.8 Indian Resident Company. The Seller is an Indian resident company.
5.9 No Pending Proceedings. There are no pending proceedings or threatened proceedings for which the Seller has received a written notification in which any person including governmental Authority has specifically exercised or specifically claimed to have any rights to any of the Company Shares.
50
5.10 Absence of Voting Agreements. There are no agreements, arrangements or understandings (whether oral or written) between the Seller and any other person with respect to the holding, voting or transfer of the Company Shares, save and except restrictions on subsequent transfer of the Company Shares imposed under applicable Law, Company Corporate Documents and the Shareholders Agreement (as the case may be).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and the Company as of the date hereof and as of the Initial Closing Date and each Additional Closing Date, as follows:
6.1 Corporate Existence and Power. Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.
6.2 Corporate Authorization. Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and the Additional Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby, subject to the receipt of Purchaser Stockholder Approval which shall be duly obtained for all tranches prior to the Initial Closing Date. The execution and delivery by Purchaser of this Agreement and the Additional Agreements to which it is a party and the consummation by Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Purchaser. No other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement or the Additional Agreements to which it is a party or to consummate the transactions contemplated by this Agreement (other than the receipt of the Purchaser Stockholder Approval) or the Additional Agreements. This Agreement and the Additional Agreements to which Purchaser is a party have been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery by each of the other parties hereto and thereto (other than Purchaser), this Agreement and the Additional Agreements to which Purchaser is a party constitute a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject to the Enforceability Exceptions. The affirmative vote of holders of a majority of the then outstanding shares of Purchaser Common Stock present in person or by proxy and entitled to vote at the Purchaser Stockholder Meeting, assuming a quorum is present (the “Purchaser Stockholder Approval”), is the only vote of the holders of any of Purchaser’s capital stock necessary to adopt this Agreement and approve the Acquisition and the consummation of the other transactions contemplated hereby.
51
6.3 Governmental Authorization. None of the execution, delivery or performance of this Agreement or any Additional Agreement by Purchaser or the consummation by Purchaser of the transactions contemplated hereby and thereby requires any consent, approval, license, Order, or other action by or in respect of, or registration, declaration or filing with any Authority.\
6.4 Non-Contravention. The execution, delivery and performance by Purchaser of this Agreement or the consummation by Purchaser of the transactions contemplated hereby and thereby do not and will not (a) contravene or conflict with the organizational or constitutive documents of Purchaser, or (b) contravene or conflict with or constitute a violation of any provision of any Law or any Order binding upon Purchaser.
6.5 Finders’ Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser or its Affiliates who might be entitled to any fee or commission from the Company, the Seller or any of their respective Affiliates upon consummation of the transactions contemplated by this Agreement or any of the Additional Agreements.
6.6 Information Supplied. None of the information supplied or to be supplied by Purchaser expressly for inclusion or incorporation by reference in the filings with the SEC and mailings to Purchaser’s stockholders with respect to the solicitation of proxies to approve the transactions contemplated by this Agreement and the Additional Agreements, if applicable, will, at the date of filing or mailing, at the time of the Purchaser Stockholder Meeting or at the Closing Date, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Purchaser or included in the Purchaser SEC Documents, the Additional Purchaser SEC Documents, the SEC Statement or any Other Filing). In any and all filings and disclosures made by the Purchaser, the Purchaser shall not identify the Seller (and its officers, directors, shareholders, employees, agents, trustees, advisers, lenders, and representatives) as (a) being involved or having any role whatsoever in the day to day management, operations, or policy decisions of the Company, or (b) as a key managerial person of the Company.
6.7 Trust Fund. As of the date of this Agreement, Purchaser has, at least $21,468,570 in the trust fund established by Purchaser for the benefit of its public stockholders (the “Trust Fund”) in a trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company (the “Trustee”) at J.P. Morgan Chase Bank, N.A., and such monies are invested in “government securities” (as such term is defined in the Investment Company Act of 1940) and held in trust by the Trustee pursuant to the Investment Management Trust Agreement dated as of July 28, 2021, between Purchaser and the Trustee (the “Trust Agreement”). The Trust Agreement is valid and in full force and effect and enforceable in accordance with its terms, except as may be limited by the Enforceability Exceptions, and has not been amended or modified. There are no separate agreements, side letters or other agreements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Purchaser SEC Documents to be inaccurate in any material respect or that would entitle any Person (other than stockholders of Purchaser holding shares of Purchaser Common Stock sold in Purchaser’s IPO who shall have elected to redeem their shares of Purchaser Common Stock pursuant to Purchaser’s amended and restated certificate of incorporation) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except in accordance with the Trust Agreement and Purchaser’s amended and restated certificate of incorporation. Purchaser has performed all material obligations required to be performed by it to date under, and is not in material default or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and, to the knowledge of Purchaser, no event has occurred which, with due notice or lapse of time or both, would reasonably be expected to constitute such a material default thereunder. There are no claims or proceedings pending with respect to the Trust Account.
52
6.8 Listing. The Purchaser’s Common Stock, Units, Rights, and Warrants are listed on Nasdaq, with trading tickers “IMAQ,” “IMAQU” “IMAQR” and “IMAQW.”
6.9 Board Approval. Purchaser’s Board of Directors (including any required committee or subgroup of such board) has unanimously (i) declared the advisability of the transactions contemplated by this Agreement, (ii) determined that the transactions contemplated hereby are in the best interests of the stockholders of Purchaser and (iii) determined that the transactions contemplated hereby constitutes a “Business Combination” as such term is defined in Purchaser’s amended and restated certificate of incorporation and (iv) recommended to Purchaser’s stockholders to adopt and approve each of the Purchaser Proposals.
6.10 Purchaser SEC Documents and Financial Statements.
(a) Purchaser has filed all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be filed or furnished by Purchaser with the SEC since Purchaser’s formation under the Exchange Act or the Securities Act, together with any amendments, restatements or supplements thereto, and will use commercially reasonable efforts to file all Additional Purchaser SEC Documents. Purchaser has made available to the Company copies in the form filed with the SEC of all of the following, except to the extent available in full without redaction on the SEC’s website through EDGAR for at least two (2) Business Days prior to the date of this Agreement: (i) Purchaser’s Annual Reports on Form 10-K for each fiscal year of Purchaser beginning with the first year that Purchaser was required to file such a form, (ii) all proxy statements relating to Purchaser’s meetings of stockholders (whether annual or special) held, and all information statements relating to stockholder consents, since the beginning of the first fiscal year referred to in clause (i) above, (iii) its Form 8-Ks filed since the beginning of the first fiscal year referred to in clause (i) above, and (iv) all other forms, reports, registration statements and other documents (other than preliminary materials if the corresponding definitive materials have been provided to the Company pursuant to this Section 6.10) filed by Purchaser with the SEC since Purchaser’s formation (the forms, reports, registration statements and other documents referred to in clauses (i) through (iv) above, whether or not available through EDGAR, collectively, the “Purchaser SEC Documents”).
(b) Purchaser SEC Documents were, and the Additional Purchaser SEC Documents will be, prepared in all material respects in accordance with the requirements of the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations thereunder. Purchaser SEC Documents did not, and the Additional Purchaser SEC Documents will not, at the time they were or are filed, as the case may be, with the SEC (except to the extent that information contained in any Purchaser SEC Document or Additional Purchaser SEC Document has been or is revised or superseded by a later filed Purchaser SEC Document or Additional Purchaser SEC Document, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing does not apply to statements in or omissions in any information supplied or to be supplied by the Company Group expressly for inclusion or incorporation by reference in the SEC Statement or Other Filing.
53
(c) As used in this Section 6.10, the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC.
6.11 Litigation. There is no (a) Action pending or, to the Knowledge of Purchaser, threatened against Purchaser or any of its Subsidiaries, or any of their respective officers, or directors or that affects its or their assets or properties, or which in any manner challenges or seeks to prevent, enjoin, alter, or delay the transactions contemplated by this Agreement or the Additional Agreements, (b) Order outstanding against Purchaser or any of its subsidiaries or that affects its or their assets or properties. Neither Purchaser nor any of its subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the preceding sentence that contains any ongoing obligations, restrictions or liabilities (of any nature) that are material to Purchaser and its subsidiaries.
6.12 Withholding Taxes. To the Knowledge of the Purchaser and in reliance upon the advice provided by its accountants, no Taxes are required to be deduced at source or withheld by Purchaser under Law from payments to be made to the Seller under this Agreement, including from the Purchase Price.
6.13 Investigation and Enquiry. The Purchaser has to its satisfaction (i) made its own enquiry and investigation, conducted its own diligence, and formed an independent judgement concerning the Company (including the Company’s assets, liabilities, obligations, material contracts) and the Company Shares, (ii) received independent legal, financial, and technical advice relating to the Company and the Company Shares, (iii) received from the Company, satisfactory responses to all questions and requisitions raised by Purchaser, and based on such investigation and diligence formed an independent judgement concerning the Company and the transactions contemplated under this Agreement and the Additional Agreements. Based on the investigation, enquiry, and due diligence conducted by Purchaser, there is nothing that Purchaser has found which would otherwise be considered as Seller being in breach of any Seller Fundamental Warranties.
6.14 Spot Delivery Contract. Each Additional Closing (and the transfer of Company Shares at such Additional Closing), as contemplated under this Agreement, is a “spot delivery contract” (as such term is defined under the Securities Contract (Regulation) Act, 1956) and is permitted to be undertaken (without the requirement of obtaining any approval or consent from any governmental authority, including the Securities and Exchange Board of India) in accordance with the Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 3, 2013 issued by the Securities and Exchange Board of India.
6.15 Further Approvals. In the event the transfer of any Additional Shares at any Additional Closing (as contemplated under this Agreement) requires any approval/s from any governmental authority, the Purchaser hereby confirms and agrees that obtaining such approval/s shall be the sole responsibility and liability of the Purchaser. Seller shall provide reasonable co-operation in this regard to the extent of providing any information / document that is required from the Seller by such governmental authority.
54
ARTICLE VII
COVENANTS OF THE PARTIES PENDING the INITIAL CLOSING
7.1 Conduct of the Business. The Company covenants and agrees that prior to the Initial Closing:
(a) Except as expressly contemplated by this Agreement or the Additional Agreements, from the date hereof until the earlier of the Initial Closing and the termination of this Agreement in accordance with its terms (the “Interim Period”), it shall (I) conduct its business only in the ordinary course (including the payment of accounts payable and the collection of accounts receivable), consistent with past practices, (II) duly and timely file all material Tax Returns required to be filed (or obtain a permitted extension with respect thereto) with the applicable Taxing Authorities and pay any and all Taxes due and payable during such time period, (III) duly observe and comply with all applicable Laws and Orders in all material respects, and (IV) use its commercially reasonable efforts to preserve intact its business relationships with employees, clients, suppliers, contract manufacturing organizations, contract research organizations and other third parties. Without limiting the generality of the foregoing, and except as expressly contemplated by this Agreement or the Additional Agreements, or as required by applicable Law, from the date hereof until the earlier of the Initial Closing and the termination of this Agreement in accordance with its terms, without Purchaser’s prior written consent (which shall not be unreasonably conditioned, withheld or delayed), the Company shall not, or shall not permit its Subsidiaries to:
(i) amend, modify or supplement its certificate of incorporation or bylaws or other organizational or governing documents except as contemplated hereby, or engage in any reorganization, reclassification, liquidation, dissolution or similar transaction;
(ii) amend, waive any provision of, terminate prior to its scheduled expiration date, or otherwise compromise in any way or relinquish any material right under any Material Contract, except in the ordinary course of business;
(iii) other than in the ordinary course of business consistent with past practice, modify, amend or enter into any contract, agreement, lease, license or commitment, including for capital expenditures, that extends for a term of one year or more and obligates the payment by the Company of more than $500,000 (individually);
(iv) sell, lease, license or otherwise dispose of any of the Company Group’s material assets, except pursuant to existing contracts or commitments disclosed herein or in the ordinary course of business consistent with past practices;
(v) sell, lease, license or otherwise dispose of any material Company Owned IP, except pursuant to existing contracts or commitments disclosed to the Purchaser or in the ordinary course of business consistent with past practices;
55
(vi) permit any material Registered Owned IP to go abandoned or expire for failure to make an annuity or maintenance fee payment, or file any necessary paperwork or action to maintain such rights;
(vii) (A) pay, declare or promise to pay any dividends, distributions or other amounts with respect to its capital stock or other equity securities; (B) pay, declare or promise to pay any other amount to any stockholder or other equity holder in its capacity as such; and (C) except as contemplated hereby or by any Additional Agreement, amend any term, right or obligation with respect to any outstanding shares of its capital stock or other equity securities;
(viii) (A) Make any loan, advance or capital contribution to any Person; (B) incur any Indebtedness including drawings under the lines of credit, if any, other than intercompany Indebtedness; or (C) except as set forth herein, repay or satisfy any Indebtedness, other than repayment of Indebtedness in accordance with the terms thereof;
(ix) suffer or incur any Lien, except for Permitted Liens on the Company Group’s assets, except in the ordinary course of business consistent with past practices;
(x) delay, accelerate or cancel, or waive any material right with respect to, any receivables or Indebtedness owed to the Company Group or write off or make reserves against the same (other than, in the case of the Company, in the ordinary course of business consistent with past practices);
(xi) merge or consolidate or enter a similar transaction with, or acquire all or substantially all of the assets or business of, any other Person; make any material investment in any Person or be acquired by any Person;
(xii) terminate or allow to lapse any insurance policy protecting any of the Company Group’s as applicable, assets, unless simultaneously with such termination or lapse or as soon as practicable, a replacement policy having comparable deductions and providing coverage equal or greater than the coverage under the terminated or lapsed policy for substantially similar premiums or less is in full force and effect;
(xiii) adopt any severance, retention or other employee plan or fail to continue to make timely contributions to each Plan in accordance with the terms thereof;
(xiv) institute, settle or agree to settle any Action before any Authority, in each case in excess of $250,000 (exclusive of any amounts covered by insurance) or that imposes injunctive or other non-monetary relief on such party;
(xv) except as required by IND AS, U.S. GAAP, or Applicable Law, make any material change in its accounting principles, methods or practices or write down the value of its assets;
(xvi) change its principal place of business or jurisdiction of organization;
56
(xvii) issue, redeem or repurchase any capital stock, membership interests or other securities, or issue any securities exchangeable for or convertible into any shares of its capital stock or other securities, other than as otherwise contemplated herein or in any Additional Agreement;
(xviii) (A) make, change or revoke any Tax election; (B) change any method of accounting; (C) settle or compromise any material claim, notice, audit report or assessment in respect of Taxes of the Company Group; (D) enter into any Tax allocation, Tax sharing, Tax indemnity or other closing agreement relating to any Taxes of the Company Group; or (E) surrender or forfeit any right to claim a Tax refund;
(xix) enter into any transaction with or distribute or advance any material assets or property to any of its Affiliates, other than the payment of salary and benefits in the ordinary course;
(xx) other than as required by a Plan or in the ordinary course of business consistent with past practices, (A) increase or change the compensation or benefits of any employee or service provider of the Company Group, (B) accelerate the vesting or payment of any compensation or benefits of any employee or service provider of the Company Group, (C) enter into, amend or terminate any Plan (or any plan, program, agreement or arrangement that would be a Plan if in effect on the date hereof) or grant, amend or terminate any awards thereunder, (D) fund any payments or benefits that are payable or to be provided under any Plan, (E) make any loan to any present or former employee or other individual service provider of the Company Group, other than advancement of expenses in the ordinary course of business consistent with past practices, or (F) enter into, amend or terminate any collective bargaining agreement or other agreement with a labor union or labor organization;
(xxi) fail to duly observe and conform to any applicable Laws and Orders in material respects; or
(xxii) agree or commit to do any of the foregoing.
(b) Neither party shall (i) take or agree to take any action that would be reasonably likely to cause any representation or warranty of such party to be inaccurate or misleading in any respect at, or as of any time prior to, the Closing Date or (ii) omit to take, or agree to omit to take, any action necessary to prevent any such representation or warranty from being inaccurate or misleading in any respect at any such time.
(c) Notwithstanding the foregoing, the Company and Purchaser and their respective Subsidiaries shall be permitted to take any and all actions required to comply in all material respects with the quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law, directive, guidelines or recommendations by any Authority (including the Centers for Disease Control and Prevention and the World Health Organization) in each case in connection with, related to or in response to COVID-19, including the CARES Act (to the extent applicable to such party) or any changes thereto.
57
7.2 Exclusivity.
During the Interim Period or the Purchase Period, neither the Company nor Seller shall, and such Persons shall cause each of their respective Representatives not to, without the prior written consent of Purchaser (which consent may be withheld in the sole and absolute discretion of Purchaser), directly or indirectly, (i) encourage, solicit, initiate, engage or participate in negotiations with any Person concerning any Alternative Transaction, (ii) take any other action intended or designed to facilitate the efforts of any Person relating to a possible Alternative Transaction or (iii) approve, recommend or enter into any Alternative Transaction or any contract or agreement related to any Alternative Transaction. Immediately following the execution of this Agreement, the Company and Seller shall, and shall cause each of their Representatives, to terminate any existing discussion or negotiations with any Persons other than Purchaser concerning any Alternative Transaction. Each of the Company and Seller shall be responsible for any acts or omissions of any of its respective Representatives that, if they were the acts or omissions of the Company or Seller, as applicable, would be deemed a breach of such party’s obligations hereunder (it being understood that such responsibility shall be in addition to and not by way of limitation of any right or remedy Purchaser, as applicable, may have against such Representatives with respect to any such acts or omissions). For purposes of this Agreement, the term “Alternative Transaction” means any of the following transactions involving the Company or its Subsidiaries (other than the transactions contemplated by this Agreement or the Additional Agreements); (A) any merger, consolidation, share exchange, business combination or other similar transaction, or (B) any sale, lease, exchange, transfer or other disposition of all or a material portion of the assets of any Person, the Company or its Subsidiaries or any capital stock or other equity interests of any Person, the Company or its Subsidiaries in a single transaction or series of transactions.
7.3 Access to Information. During the Interim Period, the Company shall use its commercially reasonable efforts to, (a) continue to give Purchaser, its legal counsel and its other Representatives ̄reasonable access to the offices, properties and Books and Records of the Company, (b) furnish to Purchaser, its legal counsel and its other Representatives such information relating to the business of the Company Group as Purchaser may request (acting reasonably) and (c) cause its employees, legal counsel, accountants and other Representatives to cooperate with Purchaser in its due diligence of the Business; provided, that no investigation pursuant to this Section 7.3 (or any investigation made prior to the date hereof) shall affect any representation or warranty given by the Company; and provided, further, that any investigation pursuant to this Section 7.3 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business of the Company Group. Any access to information under this Section shall at all times be subject to: (a) Purchaser, its legal counsel, and other Representatives entering into confidentiality undertakings in the form required by Seller and the Company, (b) Purchaser being fully responsible and liable for all acts of its legal counsel and other Representatives, and (c) reasonable restrictions as may be imposed by the Company and Seller in order to protect confidential information.
7.4 Notices of Certain Events. During the Interim Period, each of Purchaser, Seller and the Company (as the case may be) with respect to itself, shall promptly notify the other parties of:
58
(a) any notice from any Person alleging or raising the possibility that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or that the transactions contemplated by this Agreement might give rise to any Action or other rights by or on behalf of such Person or result in the loss of any rights or privileges of the Company or Seller to any such Person or create any Lien on any of the Company Group’s assets;
(b) any notice or other communication from any Authority in connection with the transactions contemplated by this Agreement or the Additional Agreements;
(c) any Actions commenced or threatened against, relating to or involving or otherwise affecting Purchaser, Seller, the Company or any of their stockholders or their equity, assets or business or that relate to the consummation of the transactions contemplated by this Agreement or the Additional Agreements;
(d) the occurrence of any fact or circumstance which constitutes or results, or would reasonably be expected to constitute or result in a Material Adverse Effect, and
(e) any inaccuracy of any representation or warranty of such party contained in this Agreement at any time during the term hereof, or any failure of such party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, that would reasonably be expected to cause any of the conditions set forth in ARTICLE X not to be satisfied.
7.5 Cooperation with Proxy Statement; Other Filings.
(a) The Company shall promptly provide to Purchaser such information concerning the Company as is either required by the federal securities Laws or reasonably requested by Purchaser for inclusion in the Offer Documents. Promptly after the receipt by Purchaser from the Company of all such information, Purchaser shall prepare and file with the SEC, and with all other applicable regulatory bodies, proxy materials (the “Proxy Statement”) for the purpose of soliciting proxies from holders of Purchaser Common Stock sufficient to obtain Purchaser Stockholder Approval at a meeting of holders of Purchaser Common Stock to be called and held for such purpose (the “Purchaser Stockholder Meeting”). Purchaser shall promptly respond to any SEC comments on the Proxy Statement. The Proxy Statement and the documents included or referred to therein, together with any supplements, amendments or exhibits thereto, are referred to herein as the “Offer Documents”.
(b) Purchaser (i) shall permit the Company and its counsel to review and comment on the Proxy Statement and any exhibits, amendments or supplements thereto (or other related documents); (ii) shall consider any such comments reasonably and in good faith; and (iii) shall not file the Proxy Statement or any exhibit, amendment or supplement thereto without giving reasonable and good faith consideration to the comments of the Company. As promptly as practicable after receipt thereof, Purchaser shall provide to the Company and its counsel notice and a copy of all correspondence (or, to the extent such correspondence is oral, a summary thereof), including any comments from the SEC or its staff, between Purchaser or any of its Representatives, on the one hand, and the SEC or its staff or other government officials, on the other hand, with respect to the Offer Documents, and, in each case, shall consult with the Company and its counsel concerning any such correspondence. Purchaser shall not file any response letters to any comments from the SEC without consulting reasonably and in good faith with the Company. Purchaser will use its reasonable efforts to permit the Company’s counsel to participate in any material calls, meetings or other material communications with the SEC or its staff. Purchaser will advise the Company, promptly after it receives notice thereof, of the time when the Proxy Statement or any amendment or supplement thereto has been filed with the SEC and the time when all SEC comments to the Proxy Statement have been cleared.
59
(c) As soon as practicable after the Proxy Statement is “cleared” by the SEC, Purchaser shall distribute the Proxy Statement to the holders of Purchaser Common Stock and, pursuant thereto, shall call the Purchaser Stockholder Meeting in accordance with its organizational documents and the laws of the State of Delaware and, subject to the other provisions of this Agreement, solicit proxies from such holders to vote in favor of the adoption of this Agreement and the approval of the transactions contemplated hereby and the other matters presented to Purchaser’s stockholders for approval or adoption at the Purchaser Stockholder Meeting.
(d) Purchaser and the Company shall comply with all applicable provisions of and rules under the Securities Act and Exchange Act and all applicable Laws of the State of Delaware and Nasdaq, in the preparation, filing and distribution of the Proxy Statement (or any amendment or supplement thereto), as applicable, the solicitation of proxies under the Proxy Statement and the calling and holding of the Purchaser Stockholder Meeting. Without limiting the foregoing, Purchaser shall ensure that the Proxy Statement, as of the date on which it is first distributed to holders of Purchaser Common Stock, and as of the date of the Purchaser Stockholder Meeting, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (provided, that Purchaser shall not be responsible for the accuracy or completeness of any information relating to the Company (or any other information) that is furnished by the Company expressly for inclusion in the Proxy Statement). The Company (and not the Seller) represents and warrants that the information relating to the Company supplied by the Company for inclusion in the Proxy Statement will not as of the date on which the Proxy Statement (or any amendment or supplement thereto) is first distributed to holders of Purchaser Common Stock or at the time of the Purchaser Stockholder Meeting does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading. If at any time prior to the Closing Date, a change in the information relating to Purchaser, Seller, or the Company or any other information furnished by Purchaser or the Company for inclusion in the Proxy Statement, which would make the preceding sentence incorrect, should be discovered by Purchaser or the Company, as applicable, such party shall promptly notify the other parties of such change or discovery and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Laws, disseminated to Purchaser’s stockholders. In connection therewith, Purchaser and the Company shall instruct their respective employees, counsel, financial advisors, auditors and other authorized representatives to reasonably cooperate with Purchaser as relevant if required to achieve the foregoing.
60
(e) In accordance with Purchaser’s amended and restated certificate of incorporation and applicable securities laws, rules and regulations, including the DGCL and rules and regulations of Nasdaq, in the Proxy Statement, Purchaser may seek from the holders of Purchaser Common Stock the approval the following proposals: (i) the Purchaser Stockholder Approval; (ii) adoption and approval of the amended and restated certificate of incorporation of Purchaser, in form and substance reasonably acceptable to Purchaser; (iii) approval of the members of the Board of Directors of Purchaser immediately after the Closing; (iv) approval to adjourn the Purchaser Stockholder Meeting, if necessary; (v) all required approvals under Nasdaq rules of the issuance of the shares of Purchaser Common Stock in connection with the Subscription Agreements; and (vi) approval to obtain any and all other approvals necessary or advisable to effect the consummation of the Acquisition as reasonably determined by the Company and Purchaser (the proposals set forth in the forgoing clauses (i) through (vi) collectively, the “Purchaser Proposals”).
(f) Purchaser, with the assistance of the Company, shall use its reasonable best efforts to cause the Proxy Statement to “clear” comments from the SEC. As soon as practicable after the Proxy Statement is “cleared” by the SEC, Purchaser shall cause the Proxy Statement, together will all other Offer Documents, to be disseminated to holders of Purchaser Common Stock. The Offer Documents shall provide the public stockholders of Purchaser with the opportunity to redeem all or a portion of their public shares of Purchaser Common Stock, at a price per share equal to the pro rata share of the funds in the Trust Account, all in accordance with and as required by Purchaser’s amended and restated certificate of incorporation, the Trust Agreement, applicable Laws and any applicable rules and regulations of the SEC. In accordance with Purchaser’s amended and restated certificate of incorporation, the proceeds held in the Trust Account will first be used for the redemption of the shares of Purchaser Common Stock held by Purchaser’s public stockholders who have elected to redeem such shares.
(g) The Company acknowledges that a substantial portion of the Proxy Statement shall include disclosure regarding the Company and its management, operations and financial condition. Accordingly, the Company agrees to as promptly as reasonably practical provide Purchaser with such information as shall be requested by Purchaser (acting reasonably) for inclusion in or attachment to the Proxy Statement, and that such information is accurate in all material respects and complies as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. The Company understands that such information shall be included in the Proxy Statement or responses to comments from the SEC or its staff in connection therewith. In connection with the preparation and filing of the Proxy Statement and any amendments thereto, the Company Group shall reasonably cooperate with the Purchaser and shall make their directors, officers and appropriate senior employees reasonably available to Purchaser and its counsel in connection with the drafting of such filings and mailings and responding in a timely manner to comments from the SEC.
(h) Notwithstanding anything else to the contrary in this Agreement or any Additional Agreements, Purchaser may make any public filing with respect to the Acquisition to the extent required by applicable Laws, provided that prior to making any filing that includes information regarding the Company Group, Purchaser shall provide a copy of the filing to the Company and permit the Company to make revisions to protect confidential or proprietary information of the Company Group.
61
7.6 Trust Account. Purchaser covenants that it shall cause the funds in the Trust Account to be disbursed in accordance with the Trust Agreement, including for the payment of (a) all amounts payable to public holders of shares of Purchaser Common Stock, (b) deferred underwriting commissions and the expenses of Purchaser and the Company Group to the third parties to which they are owed, and (c) the remaining monies in the Trust Account to Purchaser or the Company after the Closing.
7.7 Supplements to Disclosure Schedules. The Company may, at least ten (10) Business Day prior to the Initial Closing, by written notice to Purchaser, deliver a supplement to the disclosure schedules delivered by the Company to Purchaser prior to the execution of this Agreement (“Updated Disclosure Schedules”) in order to disclose any matter occurring or notified after the date of this Agreement, which, if had occurred prior to the date of this Agreement, would have been required to be set forth or described in the disclosure schedules delivered by the Company to Purchaser prior to the execution of this Agreement or to correct any inaccuracy or breach in the representations and warranties made by the Company, which inaccuracy or breach has occurred in relation to such matters occurring or notified after the date of this Agreement; provided, however, that any material change to the Disclosure Schedules shall require the consent of the Purchaser.
ARTICLE VIII
COVENANTS OF THE COMPANY
8.1 Reporting; Compliance with Laws; No Insider Trading. During the Interim Period and the Purchase Period:
(a) The Company shall, on behalf of the Company Group, duly and timely file all Tax Returns required to be filed with the applicable Taxing Authorities and pay any and all Taxes due and payable during such time period.
(b) The Company shall duly observe and conform in all material respects to all applicable Laws, including the Exchange Act, and Orders.
(c) The Company shall not, and it shall direct its respective Representatives to not, directly or indirectly, (i) purchase or sell (including entering into any hedge transaction with respect to) any Purchaser Common Stock, Purchaser Unit, Purchaser Right, or Purchaser Warrant, except in compliance with all applicable securities Laws, including Regulation M under the Exchange Act; (ii) use or disclose or permit any other Person to use or disclose any information that Purchaser or its Affiliates has made or makes available to the Company and its Representatives in violation of the Exchange Act, the Securities Act or any other applicable securities Law; or (iii) save and except as required under applicable Law, disclose to any third party any non-public information about the Company, Purchaser, the Acquisition or the other transactions contemplated hereby.
The Seller shall not, and it shall direct its Representatives to not, directly or indirectly, (i) purchase or sell (including entering into any hedge transaction with respect to) any Purchaser Common Stock, Purchaser Unit, Purchaser Right, or Purchaser Warrant, except in compliance with all applicable securities Laws, including Regulation M under the Exchange Act; (ii) use or disclose or permit any other Person to use or disclose any information that Purchaser or its Affiliates has made or makes available to the Seller in violation of the Exchange Act, the Securities Act or any other applicable securities Law; or (iii) save and except as required under applicable Law, disclose to any third party any non-public information about the Company, Purchaser, the Acquisition or the other transactions contemplated hereby.
62
8.2 Commercially Reasonable Efforts to Obtain Consents. The Company shall use its commercially reasonable efforts to obtain each Company Consent.
8.3 Additional Financial Information. As soon as practicable after the date of this Agreement, but no later than thirty (30) days following the date of this Agreement, the Company shall provide Purchaser with the Company’s audited financial statements for the twelve month periods ended March 31, 2022 and 2021 consisting of the audited consolidated balance sheets as of such dates, the audited consolidated income statements for the twelve month period ended on such date, and the audited consolidated cash flow statements for the twelve month period ended on such date (the “PCAOB Audits”). Subsequent to the delivery of the PCAOB Audits, the Company’s consolidated interim financial information for each quarterly period thereafter shall be delivered to Purchaser no later than forty (40) days following the end of each quarterly period (the “Required Financial Statements”). All of the financial statements to be delivered pursuant to this Section 8.3, shall be prepared under U.S. GAAP in accordance with requirements of the PCAOB for public companies. The Company will promptly provide with additional Company financial information (including information required to prepare a Management Discussion and Analysis) reasonably requested by Purchaser for inclusion in the Proxy Statement and any other filings to be made by Purchaser with the SEC.
8.4 Company Amended Charter. On or immediately prior to the Initial Closing Date, subject to the approval of its shareholders, the Company shall amend and restate the Company Corporate Documents and the Subsidiary Corporate Documents so that the Company Corporate Documents and the Subsidiary Corporate Documents will be in substantially the form and substance, mutually agreed between the Parties.
8.5 Satisfaction of Indebtedness. The Company agrees and acknowledges that as on the date of execution of this Agreement, there is an existing inter-company Loan amounting to $38,000,000 that the Company owes to certain group companies of the Company, as detailed in Section 2.1 read with Schedule 2.1. The Purchaser agrees and confirms that such loan will be repaid by the Company in the manner (and within the timelines) envisaged under Section 2.1 read with Schedule 2.1.
8.6 Non-Competition; Non-Solicitation.
(a) For a period of three (3) years commencing on the Initial Closing Date (the “Restricted Period”) Seller shall not, and shall not permit any of its Affiliates to (i) engage in or assist others in engaging in the Restricted Business in the Territory; or (ii) have an interest in any Person that engages, directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant. Notwithstanding the foregoing, save and except for the Company Shares held by Seller, Seller or its Affiliates may own, directly or indirectly, solely as an investment, securities of (i) any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 2% or more of any class of securities of such Person, (ii) any Person that is not traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 10% or more of any class of securities of such Person, and (iii) Seller, its promoters and other entities controlled by Seller and any of its promoters may continue to engage, assist, have interest in, and operate existing businesses engaged in the Restricted Business provided such businesses were and the business relationship was in existence prior to the Closing Date. Further, for the avoidance of doubt, radio, satellite broadcasting in any language, post production services for audio and video, and Hollywood and any other non-Indian films, movies, media and entertainment are specifically outside the scope of the non-compete obligations provided under this Section and the Seller and its Restricted Affiliates are entitled to undertake such activities without any restrictions.
63
(b) During the Restricted Period, Seller shall not, and shall not permit any of its Restricted Affiliates to directly or indirectly, hire or solicit any employee of the Company Group (the “Restricted Employees”) or encourage any such Restricted Employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such Restricted Employees; provided, that nothing in this Section 8.6(b) shall prevent Seller or any of its Affiliates from hiring, (i) at any time from the date of termination of employment by the Company Group, any Restricted Employee whose employment has been terminated by the Company Group, or (ii) after 180 days from the date of termination of employment by the Restricted Employee, any Restricted Employee whose employment has been terminated by the Restricted Employee.
(c) During the Restricted Period, Seller shall not, and shall not permit any of its Restricted Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of the Company or potential clients or customers of the Company for purposes of diverting their business or services from the Company.
(d) Seller acknowledges that a breach of this Section 8.6 would give rise to irreparable harm to the Company and Purchaser for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller of any such obligations, the Company and Purchaser shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).
(e) Seller acknowledges that the restrictions contained in this Section 8.6 are reasonable and necessary to protect the legitimate interests of the Company and Purchaser and constitute a material inducement to Purchaser to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 8.6 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 8.6 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
8.7 Sole Vehicle. The Purchaser confirms and undertakes that on and from the Initial Closing, the Company Group shall be the sole and exclusive vehicle for the purpose of the Purchaser and/or any of its Affiliates undertaking the Business.
64
ARTICLE IX
COVENANTS OF ALL PARTIES HERETO
9.1 Commercially Reasonable Efforts; Further Assurances; Governmental Consents.
(a) Subject to the terms and conditions of this Agreement, each party shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable Laws, or as reasonably requested by the other parties, to consummate and implement expeditiously each of the transactions contemplated by this Agreement, including using its reasonable best efforts to (i) obtain all necessary actions, non-actions, waivers, consents, approvals and other authorizations from all applicable Authorities prior to the Initial Closing Date; (ii) avoid an Action by any Authority; and (iii) execute and deliver any additional instruments necessary to consummate the transactions contemplated by this Agreement. The parties shall execute and deliver such other documents, certificates, agreements and other writings and take such other actions as may be necessary or desirable in order to consummate or implement expeditiously each of the transactions contemplated by this Agreement.
(b) Subject to applicable Laws, in connection with execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement, each of the Company, Seller and Purchaser agrees to (i) reasonably cooperate and consult with the other regarding obtaining and making all notifications and filings with Authorities, (ii) furnish to the other such information and assistance as the other may reasonably request in connection with its preparation of any notifications or filings, (iii) keep the other reasonably apprised of the status of matters relating to the completion of the transactions contemplated by this Agreement, including promptly furnishing the other with copies of notices and other communications received by such party from, or given by such party to, any third party or any Authority with respect to such transactions, (iv) permit the other party to review and incorporate the other party’s reasonable comments in any communication to be given by it to any Authority with respect to any filings required to be made with, or action or nonactions, waivers, expirations or terminations of waiting periods, clearances, consents or orders required to be obtained from, such Authority in connection with execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement and (v) to the extent reasonably practicable, consult with the other in advance of and not participate in any meeting or discussion relating to the transactions contemplated by this Agreement, either in person or by telephone, with any Authority in connection with the proposed transactions unless it gives the other party the opportunity to attend and observe; provided, however, that, in each of clauses (iii) and (iv) above, that materials may be redacted (A) to remove references concerning the valuation of such party and its Affiliates, (B) as necessary to comply with contractual arrangements or applicable Laws, and (C) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.
65
(c) During the Interim Period, Purchaser, on the one hand, and the Company and Seller, on the other hand, shall each notify the other in writing promptly after learning of any stockholder demands or other stockholder Action (including derivative claims) relating to this Agreement, any of the Additional Agreements or any matters relating thereto commenced against Purchaser or any of its Representatives in their capacity as a representative of Purchaser or against any member of the Company Group (collectively, the “Transaction Litigation”). Purchaser shall control the negotiation, defense and settlement of any such Transaction Litigation brought against Purchaser or members of the board of directors of the Purchaser, and Seller shall control the negotiation, defense and settlement of any such Transaction Litigation brought against any member of the Company Group or the members of their boards of directors; provided, however, that in no event shall Seller or the Purchaser settle, compromise or come to any arrangement with respect to any Transaction Litigation, or agree to do the same, without the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed); provided, that it shall be deemed to be reasonable for Purchaser (if Seller is controlling the Transaction Litigation) or Seller (if the Purchaser is controlling the Transaction Litigation) to withhold, condition or delay its consent if any such settlement or compromise (A) does not provide for a legally binding, full, unconditional and irrevocable release of Purchaser (if Seller is controlling the Transaction Litigation) or Seller, the Company and its Subsidiaries and related parties (if the Purchaser is controlling the Transaction Litigation) and its respective Representative that is the subject of such Transaction Litigation, (B) provides for any non-monetary, injunctive, equitable or similar relief against Purchaser (if Seller is controlling the Transaction Litigation) or Seller, the Company and its Subsidiaries and related parties (if the Purchaser is controlling the Transaction Litigation) or (C) contains an admission of wrongdoing or Liability by Purchaser (if Seller is controlling the Transaction Litigation) or Seller, the Company and its Subsidiaries and related parties (if the Purchaser is controlling the Transaction Litigation) and its respective Representative that is the subject of such Transaction Litigation. Purchaser and Seller shall each (i) keep the other reasonably informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation and (iv) reasonably cooperate with each other.
9.2 Compliance with SPAC Agreements. Without the prior written consent of the Company, during the Interim Period, Purchaser shall (a) comply with the Trust Agreement, the Underwriting Agreement, dated as of June 28, 2021, by and between Purchaser and Chardan Capital Markets, LLC, LLC, and (b) enforce the terms of the letter agreement, dated as of June 28, 2021, by and among Purchaser, Content Creation Media LLC and each of the officers and directors of Purchaser named therein. The Purchaser hereby confirms that neither the aforementioned documents, nor their contents, shall impose or result in any liability on the Seller. The Trust Agreement, the Underwriting Agreement, and the letter agreement, each dated as of June 28, 2021 are collectively referred to as the “SPAC Agreements”.
66
9.3 Confidentiality. Except as necessary to complete the SEC Statement, the other Offer Documents or any Other Filings, from and after the date hereof until the Closing Date, each party hereto agrees to, and will cause its respective Affiliates to, hold in strict confidence, and will not use to the detriment of any other party or any of its Affiliates, all confidential and proprietary information with respect to Seller, the Company Group or Purchaser, as applicable. Without limiting the generality of the foregoing, each party hereto agrees, covenants and acknowledges that, from and after the date hereof until the Closing Date, it will not, and will cause its Affiliates not to, disclose, give, sell, use, or otherwise divulge any confidential or proprietary information (including but not limited to any technology, process, trade secrets, know-how, other intellectual property rights, strategies, financial statements or other financial information not otherwise publicly available, forecasts, operations, business plans, prices, discounts, products, product specifications, designs, plans, data or ideas). Each party hereto will not distribute any information with respect to Seller, the Company Group or Purchaser, as applicable (including any confidential or secret information referred to in the next preceding sentence) to any of its Affiliates unless such Affiliate agrees in writing to be bound by the provisions of this Section 9.3. Notwithstanding the foregoing, each party hereto may disclose and use such information (i) if compelled to disclose the same by judicial or administrative process or by other requirements of applicable Law (but subject to the following provisions of this Section 9.3) or such disclosure is necessary so that such party does not commit a violation of the rules of any securities exchange or applicable Law or is necessary or appropriate in connection with any Order or legal proceeding, (ii) if the same currently is, or hereafter is, in the public domain through no fault of such party or any of its Affiliates, (iii) if the same is later acquired by such party from another source and such party is not aware that such source is under an obligation to another Person to keep such information confidential, or (iv) if the same is independently developed by such party without reference thereto or reliance thereon. If any party hereto or any of its Affiliates is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such information, such party shall (unless expressly prohibited by applicable Law) provide the other parties with prompt written notice of any such request or requirement so that any such other party may seek, at its expense, a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 9.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the other parties, the disclosing party nonetheless is required to disclose such information to any tribunal, the disclosing party, without liability hereunder, may disclose that portion of such information that it is legally required to disclose.
9.4 Directors’ and Officers’ Indemnification and Liability Insurance.
(a) All rights to indemnification for acts or omissions occurring through the Initial Closing now existing in favor of the current directors and officers of the Company or its Subsidiaries and Persons who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the Company or its Subsidiaries, as provided in their respective organizational documents or in any indemnification agreements shall survive the Initial Closing and shall continue in full force and effect in accordance with their terms. For a period of six (6) years after the Initial Closing, the Company shall cause the organizational documents of the Company and its Subsidiaries to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses than are set forth as of the date of this Agreement in the organizational documents of, the Company and its Subsidiaries, as applicable, to the extent permitted by applicable Laws.
67
(b) Prior to the Initial Closing, the Company shall reasonably cooperate with the Purchaser in order to obtain directors’ and officers’ liability insurance for the Company that shall be effective as of Initial Closing and will cover (i) those Persons who were directors and officers of the Company prior to the Initial Closing and (ii) those Persons who will be the directors and officers of the Company after the Initial Closing on terms not less favorable than the terms of a typical directors’ and officers’ liability insurance policy for a company whose equity is listed on Nasdaq which policy has a scope and amount of coverage that is reasonably appropriate for a company of similar characteristics (including the line of business and revenues) as the Company.
(c) The provisions of this Section 9.4 are intended to be for the benefit of, and shall be enforceable by, each Person who will have been a director or officer of the Company for all periods ending on or before the Initial Closing and may not be changed with respect to any officer or director without his or her written consent.
9.5 Purchaser Public Filings; Nasdaq. During the Interim Period, Purchaser will keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws, and shall use its reasonable best efforts prior to the Initial Closing to maintain the listing of the Purchaser Units, Purchaser Rights and the Purchaser Warrants on Nasdaq. During the Interim Period, Purchaser shall use its reasonable best efforts to cause (a) Purchaser’s initial listing application with Nasdaq in connection with the transactions contemplated by this Agreement to have been approved; (b) all applicable initial and continuing listing requirements of Nasdaq to be satisfied; and (c) the Purchaser Common Stock, Purchaser Rights, and the Purchaser Warrants to be approved for listing on Nasdaq, subject to official notice of issuance, in each case, as promptly as reasonably practicable after the date of this Agreement and in any event prior to the Closing Date.
9.6 Additional Financing. Subsequent to the Initial Closing, in the event that Purchaser raises additional capital in either a debt or equity financing, after reserving certain amounts to fund the operating expenses of the Company as set forth in its operating budget, Purchaser shall utilize remaining funds to purchase the Additional Company Shares as set forth in Section 2.1. However, the failure of the Purchaser to raise any such additional capital shall not dilute or otherwise affect its obligation to purchase the Company Shares from the Seller in accordance with the terms of this Agreement, including Section 2.1.
9.7 Further Approvals. In the event the transfer of any Additional Shares at any Additional Closing (as contemplated under this Agreement) requires any approval/s from any governmental authority, the Purchaser hereby confirms and agrees that obtaining such approval/s shall be the sole responsibility and liability of the Purchaser. Seller shall provide reasonable co-operation in this regard to the extent of providing any information / document required from the Seller by such governmental authority.
68
9.8 Default of Additional Purchase and Subscription Obligations. Notwithstanding anything contained in this Agreement and the other Additional Agreements, in the event that Purchaser defaults / fails: (i) to purchase the Additional Company Shares (or any part thereof), (ii) to make the infusion of primary investment or loan of $38,000,000 in the Company, (iii) to ensure that the Company repays the Existing Inter-Company Loans, in each case, in accordance with the time periods mentioned in this Agreement (including Section 2.1), for any reason whatsoever (including on account of delay or failure in obtaining any approval from any Authority or non-fulfillment of any other condition mentioned in this Agreement and the other Additional Agreements), the following consequences shall follow, without prejudice to the other rights and remedies of the Seller provided for under this Agreement and the Additional Agreements:
(a) the Seller shall have the right to seek specific performance and in the event that such specific performance is not enforceable or available under any provision of applicable Law, the Purchaser shall be liable to pay Damages to the Seller on account of the default / breach committed by the Purchaser;
(b) the Seller shall have an unfettered right to transfer, sell, dispose, and / or create Liens on all or any of the Company Shares held by it;
(c) the Seller shall have affirmative vote rights with respect to the matters under Part C of Clause 2.17 of the SHA;
(d) if any default as stipulated under this Section 9.8 has not been cured by the Purchaser within a period of 18 (eighteen) months of the Initial Closing Date, the Seller shall have the right to appoint majority of the directors on the Board of the Company upon completion of such 18 (eighteen) month period, provided that the Purchaser shall continue to have the right to nominate 1 (one) director on the Board of the Company, as long as the Purchaser holds at least 10% of the total share capital of the Company as determined on a fully diluted basis, and further provided that if: (i) the Seller has transferred, sold, disposed of and/or created any liens on all (and not some) of the Company Shares held by it, and (ii) the Purchaser has completed the purchase of at least 75% of the Company Shares, the Board of the Company shall be reconstituted in a manner which reflects the inter se shareholding percentages of the stockholders of the Company, however, the transferee of the Seller’s transferred Company Shares shall continue to have the right to nominate 1 (one) director or observer on the Board of the Company, as long as such transferee holds at least 10% of the total share capital of the Company and the Purchaser shall have affirmative vote rights with respect to all items listed under Part A of Clause 2.17 of the SHA; and
(e) if any default as stipulated under this Section 9.8 has not been cured by the Purchaser within a period of 21 (twenty one) months of the Initial Closing Date and the Purchaser has not completed the purchase of at least 75% of the Company Shares, at the option of the Seller: (i) all the rights of the Purchaser under this Agreement and the Additional Agreements shall fall away and cease to exist, and (ii) all the liabilities, obligations, and responsibilities of the Seller under this Agreement and the Additional Agreements shall fall away and cease to exist, other than the right of the Purchaser to nominate 1 (one) director on the Board of the Company, as long as the Purchaser holds at least 10% of the total share capital of the Company as determined on a fully diluted basis. It being clarified that, in such cases, if the Seller has transferred, sold, or disposed of all (and not some) of the Company Shares, the transferee of the Seller’s transferred Company Shares and the Purchaser shall mutually discuss and agree on the affirmative vote rights which may be available to the Purchaser with respect to the items listed under Part A of Clause 2.17 of the SHA.
69
ARTICLE X
CONDITIONS TO CLOSING
10.1 Condition to the Obligations of the Parties. The obligations of all of the parties to consummate the Initial Closing and any Additional Closing are subject to the satisfaction at or prior to the Initial Closing of all the following conditions:
(a) No provisions of any applicable Law and no Order shall restrain or prohibit or impose any condition (which condition is legally incapable of being fulfilled or satisfied) on the consummation of the transactions contemplated hereby, including the Acquisition.
(b) There shall not be any Action or Order by any Authority prohibiting or restricting the consummation of any Closing.
(c) With respect to the Initial Closing, each of the Purchaser Proposals shall have been approved at the Purchaser Stockholder Meeting.
10.2 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate the Initial Closing an any Additional Closing is subject to the satisfaction, or the waiver in Purchaser’s sole and absolute discretion, at or prior to the Initial Closing of all the following further conditions:
(a) The Company shall have duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with (without giving effect to any materiality or similar qualifiers contained therein) by the Company at or prior to the Initial Closing or Additional Closing, as the case may be.
(b) Company shall have obtained a valuation certificate to determine the fair market value of the Company Shares in accordance with the Foreign Exchange Management Act, 1999 for transfer of the Company Shares to the Purchaser as required under the applicable Indian laws.
(c) The Company shall have provided certified true copies of the valuation certificate, and Board resolutions referenced in (a) above.
(d) Purchaser shall have received a certificate, dated as of each Closing Date, signed by the Secretary of the Company attaching correct and complete copies of (i) the Company Corporate Documents, certified as of a recent date; (ii) copies of resolutions duly adopted by the board of directors of the Company authorizing this Agreement, the Additional Agreements to which the Company is a party and the transactions contemplated hereby and thereby.
70
(e) The Seller shall have prepared the draft of e-Form FC-TRS, complete to the extent practicable, on the online portal of the Reserve Bank of India, as required to be filed with the Reserve Bank of India with respect to the purchase by the Purchaser of the Company Shares and shall provide snapshots of such reasonable completed e-Form FC-TRS to the Purchaser.
(f) Immediately prior to each Closing, the Seller shall have provided to the Purchaser, a copy of a valid no objection certificate under Section 281 of the Income Tax Act, 1961, from the Income Tax Department with respect to sale of the Company Shares by Seller to Purchaser.
(g) The Company shall have delivered to Purchaser a duly executed certificate conforming to the requirements of Sections 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i) of the United States Treasury regulations, and a notice to be delivered to the United States Internal Revenue Service as required under Section 1.897-2(h)(2) of the United States Treasury regulations, each dated no more than thirty (30) days prior to such Closing Date and in form and substance reasonably acceptable to Purchaser.
(h) The Company shall have obtained each Company Consent, if any, which consents shall be in form and substance reasonably acceptable to Purchaser.
(i) The Company shall have delivered to Purchaser the Required Financial Statements.
(j) All issues identified during the due diligence exercise carried out by the Purchaser on the Company Group and listed out under Schedule 10.2(j) (Conditions Precedent to Initial Closing) shall have been resolved and addressed by the Company, to the satisfaction of the Purchaser prior to the Initial Closing.
(k) Purchaser shall have received each of the closing deliverables set forth in Section 2.3(a).
10.3 Conditions to Obligations of Seller and the Company. The obligations of Seller and the Company to consummate each Closing is subject to the satisfaction, or the waiver in Seller’s and the Company’s sole and absolute discretion, at or prior to each Closing, of all of the following further conditions:
(a) Purchaser shall have duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with (without giving effect to any materiality or similar qualifiers contained therein) by Purchaser at or prior to the Initial Closing Date.
(b) The representations and warranties of Purchaser contained in this Agreement (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect), other than the Purchaser Fundamental Representations, shall be true and correct in all material respects as of the date of this Agreement, as of the Initial Closing and any Additional Closing, as if made at and as of such date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects at and as of such earlier date).
71
(c) The Purchaser Fundamental Representations (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect) shall be true and correct in all respects at and as of the date of this Agreement, as of the Initial Closing and any Additional Closing, as if made as of such date (except to the extent that any such representation and warranty is expressly made as of a specific date, in which case such representation and warranty shall be true and correct at and as of such specific date), other than de minimis inaccuracies.
(d) Since the date of this Agreement, there shall not have occurred any Effect in respect of Purchaser that individually, or together with any other Effect, has had or would reasonably be expected to have a Material Adverse Effect in respect of Purchaser.
(e) The Company and Seller shall have received a certificate, dated as of the Initial Closing Date and each Additional Closing, signed by the Chief Executive Officer of Purchaser certifying accuracy of the provisions of the foregoing clauses (a), (b), (c) and (d) of this Section 10.3.
(f) The Company and Seller shall have received a certificate, dated as of the Initial Closing Date and the Additional Closing Dates, signed by the Secretary of Purchaser attaching true, correct and complete copies of resolutions duly adopted by the Board of Directors of Purchaser authorizing this Agreement, the Additional Agreements to which Purchaser is a party and the transactions contemplated hereby and thereby, and the Purchaser Proposals; and a certificate of good standing of Purchaser, certified as of a recent date by the Secretary of State of the State of Delaware.
(g) Purchaser or stockholder of Purchaser shall have executed and delivered to the Company a copy of each Additional Agreement, to which Purchaser or such other stockholder of Purchaser, as applicable, is a party.
(h) Purchaser shall have delivered to Seller and the Company, the Purchaser Compliance Documents.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; SPECIFIC PERFORMANCE
11.1 Survival of Representations and Warranties. The representations and warranties of Purchaser, Seller and the Company contained in this Agreement will survive the Initial Closing for a period of eighteen (18) months. All Seller Fundamental Warranties shall survive for a period of 10 (ten) years after the Initial Closing Date and the Company Fundamental Representations and the Purchaser Fundamental Representations shall survive for a period of five (5) years after the Initial Closing Date, and the representations and warranties in Section 4.24 shall survive for seven (7) years. All covenants and agreements of the parties contained herein shall survive for the period explicitly specified therein, if applicable, or until performed. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.
72
11.2 General Indemnification.
(a) Subject to the limitations that are set forth in this ARTICLE XI, from and after the Initial Closing, Seller shall defend, indemnify and hold harmless each of Purchaser, its Affiliates and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders and representatives (each a “Purchaser Indemnitee” and together the “Purchaser Indemnitees”), from and against, and pay or reimburse, the Purchaser Indemnitees for any and all incurred, actual and direct losses (including reasonable legal expenses and costs resulting from Third Party Claims) (collectively, “Losses”), solely resulting from, arising out of or relating to (i) any inaccuracy in or breach of any of the Seller Fundamental Warranties set out under ARTICLE V of this Agreement; or (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement.
(b) Subject to the limitations that are set forth in this ARTICLE XI, and following the purchase of 100% of the Company Shares by the Purchaser as contemplated under this Agreement, the Company shall defend, indemnify and hold harmless the Purchaser Indemnitees, from and against, and pay or reimburse, the Purchaser Indemnitees for any and all Losses, resulting from, arising out of or relating to (i) any inaccuracy in or breach of any of the representations or warranties of Seller or the Company contained in this Agreement or in any certificate or instrument delivered by or on behalf of Seller or the Company pursuant to this Agreement or (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or the Company pursuant to this Agreement. For abundant caution, it being clarified that, the Company shall have no liability for any claims made by the Purchaser prior to the purchase of 100% of the Company Shares by the Purchaser as contemplated under this Agreement.
(c) From and after the Initial Closing, Purchaser shall defend, indemnify and hold harmless each of Seller, its Affiliates and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders and representatives (each a “Seller Indemnitee” and together the “Seller Indemnitees”), from and against, and pay or reimburse, the Seller Indemnitees for any and all Losses and Damages actually suffered or incurred by such Seller Indemnitee, resulting from, arising out of or relating to (i) any inaccuracy in or breach of any of the representations or warranties of the Purchaser contained in this Agreement, (ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Purchaser pursuant to this Agreement, (iii) any disclosures or submissions made by the Purchaser to any person, including the SEC, public, or investors, and (iv) the SPAC Agreements.
(d) From and after the Initial Closing, the Company shall defend, indemnify and hold harmless each of the Seller Indemnitees, from and against, and pay or reimburse, the Seller Indemnitees for any and all Losses and Damages actually suffered or incurred by such Seller Indemnitee, resulting from, arising out of or relating to any disclosures or submissions made by the Company to any person, including the SEC, public, or investors.
73
(e) The obligations to indemnify and hold harmless pursuant to Section 11.2(a), and Section 11.2(b) and Section 11.2(c) shall survive the consummation of the transactions contemplated hereby for the periods set forth in Section 11.1, except for claims for indemnification pursuant to such clauses asserted prior to the end of such period which claims shall survive until final resolution and satisfaction thereof.
11.3 Claims for Indemnification.
(a) Third-Party Claims.
(i) If a claim, action, suit or proceeding by a third party (a “Third Party Claim”) is made against any person or entity entitled to indemnification pursuant to Section 11.2 (an “Indemnified Party”), and if such Indemnified Party intends to seek indemnity with respect thereto under this ARTICLE XI, such Indemnified Party shall promptly provide written notice to the party obligated to indemnify such Indemnified Party (such notified party, the “Responsible Party”) of such claims and in any event such notice of claim should be delivered to the Responsible Party before the expiry of one half of the period of time to respond to the relevant Third Party Claim; provided that the failure to so notify shall not relieve the Responsible Party of its obligations hereunder, except to the extent that the Responsible Party is prejudiced as an outcome of such failure to so notify. Such notice shall identify specifically the basis under which indemnification is sought pursuant to Section 11.2 and enclose true and correct copies of any written document furnished to the Indemnified Party by the Person that instituted the Third Party Claim (including details of the legal and factual basis of the claim and the evidence on which the third party relies), and setting out the amount of Losses which are the subject of the Third Party Claim (to the extent such amount is determinable at the time of sending the notice of claim), in order to enable the Responsible Party to assess the merits of the claim and to make appropriate provision as it may consider necessary. The Responsible Party shall have thirty (30) Business Days after receipt of such notice to assume the conduct and control, at the expense of the Responsible Party, of the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith; provided that the Responsible Party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by such Indemnified Party and reasonably acceptable to the Responsible Party, provided that, the fees and expenses of such counsel shall be borne by such Indemnified Party. So long as the Responsible Party is contesting any such claim, the Indemnified Party shall not pay or settle any such claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the Responsible Party for such claim and the terms of settlement shall not include acceptance of any liability or wrong doing or allegations of the person or persons asserting such claim and it shall not make the Responsible Party liable or subject it to any obligations or payments. If the Responsible Party does not notify the Indemnified Party within thirty (30) Business Days after the receipt of the Indemnified Party’s notice of a claim of indemnity hereunder that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest the claim, however, the Indemnified Party shall not have the right to settle or compromise the claim without the prior written consent of the Responsible Party, unless such settlement or compromise involves the Indemnified Party waiving any right to indemnity therefor pursuant to this Agreement. The Responsible Party shall not, except with the consent of the Indemnified Party, enter into any settlement that does not include as an unconditional term thereof the giving by the person or persons asserting such claim to all Indemnified Parties of an unconditional release from all liability with respect to such claim or consent to entry of any judgment. The Indemnified Party shall not, except with the consent of the Responsible Party, enter into any settlement that does not include as an unconditional term thereof the giving by the person or persons asserting such claim to all Responsible Parties of an unconditional release from all liability with respect to such claim or consent to entry of any judgment.
74
(ii) The Responsible Party and the Indemnified Party shall cooperate in the defense or prosecution of any Third Party Claim in respect of which indemnity may be sought hereunder and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith.
(b) Procedure for Other Claims. An Indemnified Party wishing to assert a claim for indemnification under this ARTICLE XI which is not subject to Section 11.3(a)(each, a “Direct Claim”) shall promptly, but in any event not later than thirty (30) Business Days from the date of such Indemnified Party becoming aware of such Direct Claim, deliver to the Responsible Party a written notice (a “Claim Notice”) which contains (i) a description and the amount of any Losses incurred by the Indemnified Party (the “Claimed Amount”), (ii) a statement that the Indemnified Party is entitled to indemnification under this ARTICLE XI and a reasonable explanation of the legal and factual basis therefor (along with evidence relied upon by the Indemnified Parties), and (iii) a demand for payment in the amount of such Losses; provided, however, that the failure by any Indemnified Party to give notice as provided herein shall not relieve the Responsible Party of its indemnification obligation under this Agreement except and only to the extent that such Responsible Party is prejudiced as a result of such failure to give notice. The Indemnified Party shall allow the Responsible Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim. Within thirty (30) Business Days after delivery of a Claim Notice, the Responsible Party shall deliver to the Indemnified Party a written response in which the Responsible Party shall either: (A) agree that the Indemnified Party is entitled to receive all of the Claimed Amount (in which case such response shall be accompanied by a payment by the Responsible Party to the Indemnified Party of the Claimed Amount, by check or by wire transfer of the Claimed Amount to the Indemnified Party), (B) agree that the Indemnified Party is entitled to receive part, but not all, of the Claimed Amount (the “Agreed Amount”) (in which case such response shall be accompanied by check, or by wire transfer of the Agreed Amount to the Indemnified Party), or (C) contest that the Indemnified Party is entitled to receive any of the Claimed Amount (in which case such response shall be accompanied by a reasonably detailed description of the reason for such contest). If the Responsible Party does not respond to a Claim Notice within the aforesaid period of thirty (30) Business Days, the Responsible Party shall be deemed to have contested the entire Claimed Amount. If the Responsible Party in such response contests the payment of all or part of the Claimed Amount, the Responsible Party and the Indemnified Party shall use good faith efforts to resolve such dispute. If such dispute is not resolved within thirty (30) days following the delivery by the Responsible Party of such response, the Responsible Party and the Indemnified Party shall each have the right to submit such dispute to arbitration in accordance with the provisions of Section 13.17.
75
11.4 Limitations on Indemnification Obligations. Notwithstanding anything contained in this Agreement or the Additional Agreements:
(a) Subject to Section 11.4(f), in no event shall the cumulative liability of the Seller for any and all claims arising under, out of, or related to this Agreement, or the sale and purchase of the Company Shares exceed the Purchase Price actually received by the Seller.
(b) No Purchaser Indemnitee or Seller Indemnitee shall be entitled to be compensated more than once for the same Loss.
(c) In no event shall Seller or any of its Affiliates, or their successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders or representatives be liable or responsible in any manner whatsoever for any inaccuracy or breach of the representations and warranties, covenants, and obligations of the Company.
(d) In no event shall Seller or any of its Affiliates, or their successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders or representatives be liable or responsible in any manner whatsoever except in case of any inaccuracy or breach of the Seller Fundamental Warranties as set forth in ARTICLE V.
(e) In no event shall the Seller or any of its Affiliates, or their successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders or representatives have any liability to a Purchaser Indemnitee for:
(i) any Losses, to the extent incurred or arising as a result of any adoption, implementation, or change in any Law or permit (or any interpretation or application thereof by any Authority) that occurs after the date hereof, and
(ii) any Losses, which are contingent, punitive, exemplary, or indirect, and in case of contingent Losses, unless and until such contingent Losses have been finally determined and become an actual liability and are due and payable.
(f) Limitations not to apply for Fraud. In the event that any Loss for which Purchaser Indemnitees or Seller Indemnitees shall be entitled to indemnification pursuant to Section 11.2 arises as a result of fraud of the Company, Purchaser, and/or Seller, as finally determined by a court exercising competent jurisdiction, none of the limits on indemnification stipulated under this Agreement shall be applicable. It being clarified that the Seller shall not in any event be liable for any fraud in, of, or by the Company or otherwise pertaining to the operations, business, or affairs of the Company in any manner whatsoever.
11.5 De Minimis Provisions. The Company shall not be liable for any claim for indemnification pursuant to Section 11.2(b) unless, the amount of Loss resulting:
(a) from such claim exceeds $ 5,000, and
76
(b) from such claim, either individually or when aggregated with their liability for all other claims for indemnification pursuant to Section 11.2 exceeds $25,000, in which case, such person(s) shall be liable for the whole amount of the claim(s) and not just the amount above the threshold specified in this clause (b).
11.6 Specific Performance. Each party’s obligations under this Agreement are unique. If any party hereto should breach its covenants or agreements under this Agreement, the parties hereto each acknowledge that it would be extremely impracticable to measure the resulting damages; accordingly, the non-breaching party or parties, in addition to any other available rights or remedies they may have under the terms of this Agreement, may sue in equity for specific performance or to obtain an injunction or injunctions to prevent breaches of this Agreement, and each party hereto expressly waives the defense that a remedy in damages will be adequate.
11.7 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
ARTICLE XII
TERMINATION
12.1 Termination Without Default.
(a) In the event that the Initial Closing of the transactions contemplated hereunder has not occurred by the six (6)-month anniversary of the date of this Agreement (the “Outside Closing Date”), either Party shall have the right to terminate this Agreement without liability to the other party. Such right may be exercised by either Party by giving written notice to the other Parties at any time after the Outside Closing Date.
(b) In the event an Authority shall have issued an Order or enacted a Law, having the effect of permanently restraining, enjoining or otherwise prohibiting the Acquisition, which Order or Law is final and non-appealable, Purchaser or Seller shall have the right, at its sole option, to terminate this Agreement without liability to the other party; provided, however, that the right to terminate this Agreement pursuant to this Section shall not be available to Seller or Purchaser if the failure by such party or its Affiliates to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Authority.
(c) This Agreement may be terminated at any time prior to the Initial Closing Date by mutual written consent of Seller and Purchaser duly authorized by each of their respective boards of directors.
12.2 Termination Upon Default.
(a) Purchaser may terminate this Agreement at any time prior to the Initial Closing Date by giving notice to Seller: if (x) Seller or the Company shall be in breach of any of its material representation, warranty, agreement or covenant contained herein to be performed on or prior to the Initial Closing Date, which has rendered or would reasonably be expected to render the satisfaction of any of the conditions set forth in Section 10.2(a) impossible; (y) such breach cannot be cured or is not cured within thirty (30) days following receipt by Seller of a written notice from Purchaser describing in reasonable detail the nature of such breach.
77
(b) Seller may terminate this Agreement by giving notice to Purchaser, without prejudice to any rights or obligations Seller may have, if: (i) Purchaser shall have breached any of its covenants, agreements, representations, and warranties contained herein; and (ii) such breach cannot be cured or is not cured within thirty (30) days following receipt by Purchaser of a written notice from Seller describing in reasonable detail the nature of such breach.
(c) By Purchaser, prior to the Initial Closing Date, if there is a Material Adverse Effect with respect to the Company.
(d) By Seller, prior to the Initial Closing Date, if there is a Material Adverse Effect with respect to the Purchaser.
(e) By Purchaser or Seller, prior to the Initial Closing Date, if any of the Purchaser Proposals fails to receive the requisite vote for approval at the Purchaser Stockholder Meeting.
(f) Seller may terminate this Agreement in accordance with Section 9.8.
12.3 Effect of Termination.
(a) If this Agreement is terminated pursuant to this ARTICLE XII (other than termination pursuant to Sections 12.1(c) and 12.2(f)), this Agreement shall become void and of no further force or effect without liability of any party (or any shareholder, director, officer, employee, Affiliate, agent, consultant or representative of such party) to the other parties hereto; provided that, if such termination shall result as a direct result of the willful breach by a party of its covenants and agreements fraud by a party in connection with the transactions contemplated by this Agreement, as finally determined by a court exercising competent jurisdiction, such party shall not be relieved of liability to the other parties for any such willful breach or fraud. The provisions of Section 9.3, Section 9.8, this Section 12.3 and ARTICLE XIII shall survive any termination hereof pursuant to this ARTICLE XII.
(b) If this Agreement is terminated pursuant to Section 12.2(f), without prejudice to its other rights and remedies of the Seller provided for under this Agreement and the Additional Agreements, the consequences as per Section 9.8 shall follow.
78
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if by hand, electronic mail or nationally recognized overnight courier service, by 5:00 PM Eastern Time on a Business Day, addressee’s day and time, on the date of delivery, and if delivered after 5:00 PM Eastern Time, on the first Business Day after such delivery; (b) if by email, on the date of transmission with affirmative confirmation of receipt; or (c) three (3) Business Days after mailing by prepaid certified or registered mail, return receipt requested. Notices shall be addressed to the respective parties as follows (excluding telephone numbers, which are for convenience only), or to such other address as a party shall specify to the others in accordance with these notice provisions:
if to Seller, to:
Risee Entertainment Holdings Private Limited
502, Plot No. 91/94, Prabhat Colony
Santacruz (East), Mumbai 400 055
Attention: Gautam Jain
Email: gautam.jain@unlimit.co.in
if to the Company, to:
Reliance Entertainment Studios Private Limited
8th Floor, 801/802, Lotus Grandeur, Veera Desai Road
Ext Oshiwara, Andheri West Mumbai, MH- 400053
if to Purchaser:
International Media Acquisition Corp.
1604 US Highway 130
North Brunswick, NJ 08902
Attn: Shibasish Sarkar, Chief Executive Officer
E-mail: shibasish@imac.org.in
with a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
13.2 Amendments; No Waivers; Remedies.
(a) This Agreement cannot be amended, except by a writing signed by each party, and cannot be terminated orally or by course of conduct. No provision hereof can be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given.
(b) Neither any failure or delay in exercising any right or remedy hereunder or in requiring satisfaction of any condition herein nor any course of dealing shall constitute a waiver of or prevent any party from enforcing any right or remedy or from requiring satisfaction of any condition. No notice to or demand on a party waives or otherwise affects any obligation of that party or impairs any right of the party giving such notice or making such demand, including any right to take any action without notice or demand not otherwise required by this Agreement. No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise of any other right or remedy, as appropriate to make the aggrieved party whole with respect to such breach, or subsequent exercise of any right or remedy with respect to any other breach.
79
(c) Except as otherwise expressly provided herein, no statement herein of any right or remedy shall impair any other right or remedy stated herein or that otherwise may be available.
(d) Notwithstanding anything to the contrary contained herein, no party shall seek, nor shall any party be liable for, punitive or exemplary damages under any tort, contract, equity or other legal theory with respect to any breach (or alleged breach) of this Agreement or any provision hereof or any matter otherwise relating hereto or arising in connection herewith.
13.3 Arm’s Length Bargaining; No Presumption Against Drafter. This Agreement has been negotiated at arm’s-length by parties of equal bargaining strength, each represented by counsel or having had but declined the opportunity to be represented by counsel and having participated in the drafting of this Agreement. This Agreement creates no fiduciary or other special relationship between the parties, and no such relationship otherwise exists. No presumption in favor of or against any party in the construction or interpretation of this Agreement or any provision hereof shall be made based upon which Person might have drafted this Agreement or such provision.
13.4 Publicity. Except as required by Law or applicable stock exchange rules and except with respect to the Additional Purchaser SEC Documents, the parties agree that neither they nor their Representatives shall issue any press release or make any other public disclosure concerning the transactions contemplated hereunder without the prior approval of the other party hereto. If a party is required to make such a disclosure as required by Law or applicable stock exchange rules, the party making such determination will, if practicable in the circumstances, use reasonable commercial efforts to allow the other party reasonable time to comment on such disclosure in advance of its issuance.
13.5 Expenses. The costs and expenses in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred. Provided that the applicable stamp duty on this Agreement and the transfer of the Company Shares shall be borne by the Purchaser.
13.6 No Assignment or Delegation. No party may assign any right or delegate any obligation hereunder, including by merger, consolidation, operation of law or otherwise, without the written consent of the other parties; provided, however, that Purchaser shall have the right without the consent of the other party to cause a wholly-owned Subsidiary to effect the Acquisition at the Initial Closing or the Additional Closings, but no such assignment shall relieve Purchaser from its obligations hereunder and further provided that the Purchaser shall procure that such wholly-owned Subsidiary shall assign any rights assigned to it and obligations delegated to it in accordance with this Section back to the Purchaser immediately prior to the wholly-owned Subsidiary ceasing to be a wholly-owned Subsidiary of the Purchaser. Any purported assignment or delegation without such consent shall be void, in addition to constituting a material breach of this Agreement. Notwithstanding the foregoing, in the event the Purchaser defaults / fails in its obligation to: (i) make payment of the Purchase Price (or any part thereof) for purchase of any portion of the Additional Company Shares, (ii) make the infusion of primary investment of $38,000,000 in the Company, or (iii) ensure that the Company repays the Existing Inter-Company Loans, each, in accordance with the terms of this Agreement, for any reason whatsoever (including on account of delay or failure in obtaining any approval from any Authority), the Seller shall have the right to assign its rights and delegate its obligations under this Agreement.
80
13.7 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including the applicable statute of limitations, shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of New York. Notwithstanding the foregoing, the provisions set forth in Section 5.5 regarding the capitalization of the Company, (ii) the representations or warranties of Seller specifically set out under ARTICLE V, (iii) the non-compete and non-solicitation covenants specifically set out in Section 8.6, and (iv) any indemnification related thereto, in all respects, shall be solely governed by and construed in accordance with Indian Law.
13.8 Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Agreement shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.
13.9 Entire Agreement. This Agreement, together with the Additional Agreements, sets forth the entire agreement of the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements related thereto (whether written or oral), all of which are merged herein. No provision of this Agreement or any Additional Agreement may be explained or qualified by any agreement, negotiations, understanding, discussion, conduct or course of conduct or by any trade usage. Except as otherwise expressly stated herein or in any Additional Agreement, there is no condition precedent to the effectiveness of any provision hereof or thereof.
13.10 Severability. A determination by a court or other legal authority that any provision that is not of the essence of this Agreement is legally invalid shall not affect the validity or enforceability of any other provision hereof. The parties shall cooperate in good faith to substitute (or cause such court or other legal authority to substitute) for any provision so held to be invalid a valid provision, as alike in substance to such invalid provision as is lawful.
81
13.11 Further Assurances. Each party shall execute and deliver such documents and take such action, as may reasonably be considered within the scope of such party’s obligations hereunder, necessary to effectuate the transactions contemplated by this Agreement.
13.12 Third Party Beneficiaries. Except with respect to Section 9.4 with respect to Directors and Officers Insurance, neither this Agreement nor any provision hereof confers any benefit or right upon or may be enforced by any Person not a signatory hereto.
13.13 Waiver. Reference is made to the final prospectus of Purchaser, dated July 28, 2021 (the “Prospectus”). Each of Seller and the Company has read the Prospectus and understands that Purchaser has established the Trust Account for the benefit of the public shareholders of Purchaser and the underwriters of the IPO pursuant to the Trust Agreement and that, except for a portion of the interest earned on the amounts held in the Trust Account, Purchaser may disburse monies from the Trust Account only for the purposes set forth in the Trust Agreement. For and in consideration of Purchaser agreeing to enter into this Agreement, each of Seller and the Company hereby agrees that it does not now and shall not at any time hereafter prior to the Closing have any right, title, interest or claim of any kind in or to any monies in the Trust Account as a result of, or arising out of, any negotiations, contracts or agreements with Purchaser and hereby agrees that it will not seek recourse against the Trust Account for any reason.
13.14 No Other Representations; No Reliance.
(a) NONE OF SELLER, THE COMPANY NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE COMPANY OR THE BUSINESS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE IV (IN CASE OF THE COMPANY) AND ARTICLE V (IN CASE OF SELLER), IN EACH CASE, AS MODIFIED BY THE DISCLOSURE SCHEDULES AND UPDATED DISCLOSURE SCHEDULES. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, THE PURCHASER ACKNOWLEDGES THAT THE WARRANTIES SET FORTH IN ARTICLE IV ARE ONLY PROVIDED BY THE COMPANY AND NEITHER SELLER, NOR ITS AFFILIATES, NOR THEIR SUCCESSORS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, TRUSTEES, ADVISERS, LENDERS OR REPRESENTATIVES SHALL BE LIABLE OR RESPONSIBLE IN ANY MANNER WHATSOEVER FOR ANY INACCURACY OR BREACH OF THE REPRESENTATIONS AND WARRANTIES OR OBLIGATIONS OF THE COMPANY. Without limiting the generality of the foregoing, neither Seller, the Company nor any of their respective Representatives has made, and shall not be deemed to have made, any representations or warranties in the materials relating to the Company made available to Purchaser and its Representatives, including due diligence materials, or in any presentation of the business of the Company by management of the Company or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by Purchaser in executing, delivering and performing this Agreement, the Additional Agreements or the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE IV (in case of the Company) and ARTICLE V (in case of Seller) as modified by the disclosure schedules. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including any offering memorandum or similar materials made available by any Seller, the Company or their respective Representatives are not and shall not be deemed to be or to include representations or warranties of Seller or the Company, and are not and shall not be deemed to be relied upon by Purchaser in executing, delivering and performing this Agreement, the Additional Agreement and the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE IV (in case of the Company) and ARTICLE V (in case of Seller), in each case, as modified by the disclosure schedules. Except for the specific representations and warranties expressly made by the Company in ARTICLE IV (in case of the Company) and ARTICLE V (in case of Seller), in each case as modified by the disclosure schedules: (a) Purchaser acknowledges and agrees that: (i) neither Seller, the Company nor any of their respective Representatives is making or has made any representation or warranty, express or implied, at law or in equity, in respect of the Company, the business, assets, liabilities, operations, prospects or condition (financial or otherwise) of the Company, the nature or extent of any liabilities of the Company, the effectiveness or the success of any operations of the Company or the accuracy or completeness of any confidential information memoranda, projections, forecasts or estimates of earnings, or other information (financial or otherwise) regarding the Company or otherwise furnished to Purchaser or its respective Representatives or made available to Purchaser and its Representatives in any “data rooms,” “virtual data rooms,” management presentations or any other form in expectation of, or in connection with, the transactions contemplated hereby, or in respect of any other matter or thing whatsoever; and (ii) no Representative of Seller or the Company has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in ARTICLE IV (in case of the Company) and ARTICLE V (in case of Seller) and subject to the limited remedies herein provided; (b) Purchaser specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that Seller and the Company have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by any Person; and (c) none of Seller, the Company nor any other Person shall have any liability to Purchaser or any other Person with respect to any such other representations or warranties, including projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations, future cash flows or the future financial condition of the Company or the future business, operations or affairs of the Company. Seller was not and is not required to provide to the Purchaser any information, documents, or data in relation to the Company or the Company Group or the transactions contemplated hereunder (save and except for the representations or warranties of the Seller specifically set out under ARTICLE V of this Agreement), and Seller is not and shall not be liable for any suppression, concealment or misrepresentation of information, documents, or data supplied to the Purchaser by the Company or the Company Group in relation to the business or affairs of the Company or the Company Group or the transactions contemplated hereunder.
82
(b) NONE OF PURCHASER NOR ANY OF ITS REPRESENTATIVES HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO PURCHASER OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE VI. Without limiting the generality of the foregoing, neither Purchaser nor any of its Representatives has made, and shall not be deemed to have made, any representations or warranties in the materials relating to Purchaser made available to the Seller, Company and their Representatives, including due diligence materials, or in any presentation of the business of Purchaser by management of Purchaser or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by Seller and the Company in executing, delivering and performing this Agreement, the Additional Agreements or the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE VI. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including any offering memorandum or similar materials made available by Purchaser or its Representatives are not and shall not be deemed to be or to include representations or warranties of Purchaser, and are not and shall not be deemed to be relied upon by Seller or the Company in executing, delivering and performing this Agreement, the Additional Agreement and the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE VI. Except for the specific representations and warranties expressly made by Purchaser in ARTICLE VI (a) the Company acknowledges and agrees that: (i) neither Purchaser or any of its Representatives is making or has made any representation or warranty, express or implied, at law or in equity, in respect of Purchaser, the business, assets, liabilities, operations, prospects or condition (financial or otherwise) of Purchaser, the nature or extent of any liabilities of Purchaser, the effectiveness or the success of any operations of Purchaser or the accuracy or completeness of any confidential information memoranda, projections, forecasts or estimates of earnings, or other information (financial or otherwise) regarding Purchaser furnished to Seller, the Company or their respective Representatives or made available to Seller, the Company and their Representatives in any “data rooms,” “virtual data rooms,” management presentations or any other form in expectation of, or in connection with, the transactions contemplated hereby, or in respect of any other matter or thing whatsoever; and (ii) no Representative of Purchaser has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in ARTICLE VI and subject to the limited remedies herein provided; (b) each of the Company and Seller specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that Purchaser has specifically disclaimed and does hereby specifically disclaim any such other representation or warranty made by any Person; and (c) none of the Purchaser nor any other Person shall have any liability to the Company, Seller or any other Person with respect to any such other representations or warranties, including projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations, future cash flows or the future financial condition of Purchaser or the future business, operations or affairs of Purchaser.
13.15 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (I) ARISING UNDER THIS AGREEMENT OR UNDER ANY ADDITIONAL AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO OR ANY FINANCING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.5.
83
13.16 Submission to Jurisdiction. Subject to the provisions of Section 13.17, each of the parties irrevocably and unconditionally submits to the exclusive jurisdiction of the state and federal courts located in the City of New York (or any appellate courts thereof), for the purposes of any Action (a) arising under this Agreement or under any Additional Agreement or (b) in any way connected with or related or incidental to the dealings of the parties in respect of this Agreement or any Additional Agreement or any of the transactions contemplated hereby or thereby, and irrevocably and unconditionally waives any objection to the laying of venue of any such Action in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action has been brought in an inconvenient forum. Each party hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action (i) arising under this Agreement or under any Additional Agreement or (ii) in any way connected with or related or incidental to the dealings of the parties in respect of this Agreement or any Additional Agreement or any of the transactions contemplated hereby or thereby, (A) any claim that it is not personally subject to the jurisdiction of the courts as described in this Section 13.16 for any reason, (B) that it or its property is exempt or immune from the jurisdiction of any such court or from any Action commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) that (x) the Action in any such court is brought in an inconvenient forum, (y) the venue of such Action is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address set forth in Section 13.1 shall be effective service of process for any such Action.
13.17 Arbitration. Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Section 13.17), arising out of, related to, or in connection with this Agreement, any Additional Agreement or the transactions contemplated hereby or thereby (a “Dispute”) shall be governed by this Section 13.17. A party must, in the first instance, provide written notice of any Disputes to the other parties subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The parties involved in such Dispute shall seek to resolve the Dispute on an amicable basis within ten (10) Business Days of the notice of such Dispute being received by such other parties subject to such Dispute (the “Resolution Period”); provided, that if any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during the Resolution Period may immediately be referred the International Chamber of Commerce and finally settled under the Rules of Arbitration of the International Chamber of Commerce (the “Rules”) by a panel of three arbitrators appointed in accordance with the said Rules, with the Seller on the one hand nominating one arbitrator and the Purchaser on the other hand nominating the second arbitrator, and both such arbitrators shall appoint the third arbitrator. If any such dispute is submitted to arbitration: (i) the Emergency Arbitrator Provisions (as such term is defined in the Rules) shall not apply, (ii) the seat of arbitration shall be London, England and the language of the arbitration shall be English, and (iii) the award issued by the arbitration tribunal shall be final and binding upon the parties. All proceedings of such arbitration including arguments, applicable documents on record, pleadings shall be confidential.
13.18 Attorneys’ Fees. In the event of any legal action initiated by any party arising under or out of, in connection with or in respect of, this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses incurred in such action, as determined and fixed by the court or tribunal.
13.19 Remedies. Each party’s obligations under this Agreement are unique. If any party hereto should breach its covenants or agreements under this Agreement, the parties hereto each acknowledge that it would be extremely impracticable to measure the resulting damages; accordingly, the non-breaching party or parties, in addition to any other available rights or remedies they may have under the terms of this Agreement, may sue in equity for specific performance or to obtain an injunction or injunctions to prevent breaches of this Agreement, and each party hereto expressly waives the defense that a remedy in damages will be adequate.
13.20 Non-Recourse. This Agreement may be enforced only against, and any dispute, claim or controversy based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought only against, the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth in this Agreement with respect to such party. No past, present or future director, officer, employee, incorporator, member, partner, shareholder, agent, attorney, advisor, lender or representative or Affiliate of any named party to this Agreement (which Persons are intended third party beneficiaries of this Section 13.20) shall have any liability (whether in contract or tort, at law or in equity or otherwise, or based upon any theory that seeks to impose liability of an entity party against its owners or Affiliates) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of such named party or for any dispute, claim or controversy based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
84
13.21 Post-Closing Confidentiality. From and after the Initial Closing, Seller shall, and shall cause its Affiliates (other than Purchaser and the Company Group) to, hold in strict confidence, and will not use to the detriment of Purchaser or any of its Affiliates, all confidential and proprietary information with respect to the Company Group. Without limiting the generality of the foregoing, Seller agrees, covenants and acknowledges that, from and after the Initial Closing Date, Seller shall not, and shall cause its Affiliates not to, disclose, give, sell, use, or otherwise divulge any confidential or proprietary information with respect to the Company Group (including any technology, process, trade secrets, know-how, other intellectual property rights, strategies, financial statements or other financial information not otherwise publicly available, forecasts, operations, business plans, prices, discounts, products, product specifications, designs, plans, data or ideas). Seller shall not distribute any information with respect to the Company Group (including any confidential or secret information referred to in the next preceding sentence) to any of its Affiliates unless such Affiliate agrees in writing to be bound by the provisions of this Section 13.21. Notwithstanding the foregoing, Seller may disclose and use such information (i) if compelled to disclose the same by judicial or administrative process or by other requirements of applicable Law (but subject to the following provisions of this Section 13.21) or such disclosure is necessary so that Seller not commit a violation of the rules of any securities exchange or is necessary or appropriate in connection with any legal proceeding, (ii) if the same currently is, or hereafter is, in the public domain through no fault of Seller or any of its Affiliates, (iii) if the same is later acquired by Seller from another source and Seller is not aware that such source is under an obligation to another Person to keep such information confidential, or (iv) if the same is independently developed by Seller without reference thereto or reliance thereon. If Seller or any of its Affiliates is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such information, the applicable Person shall (unless expressly prohibited by applicable Law) provide Purchaser with prompt written notice of any such request or requirement so that Purchaser may seek, at its expense, a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 13.21. If, in the absence of a protective order or other remedy or the receipt of a waiver by Purchaser, the disclosing Person nonetheless is required to disclose such information to any tribunal, the disclosing Person, without liability hereunder, may disclose that portion of such information that it is legally required to disclose.
[The remainder of this page intentionally left blank; signature pages to follow]
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| PURCHASER: | ||
| INTERNATIONAL MEDIA ACQUISITION CORP. | ||
| By: | /s/ Shibasish Sarkar | |
| Name: Shibasish Sarkar | ||
| Title: Chief Executive Officer | ||
| SELLER: | ||
| RISEE ENTERTAINMENT HOLDINGS PRIVATE LIMITED | ||
| By: | /s/ Ajay Mittal | |
| Name: A.N. Sethuraman / Ajay Mittal | ||
| Title:Authorized Signatory | ||
| COMPANY: | ||
| RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED | ||
| By: | /s/ Paras Jani | |
| Name: Paras Jani | ||
| Title: Authorised Signatory | ||
86
Exhibit 10.1
Dated: October 22, 2022
SHAREHOLDERS’ AGREEMENT
AMONGST
RISEE ENTERTAINMENT HOLDINGS PRIVATE LTD.
AND
RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED
AND
INTERNATIONAL MEDIA ACQUISITION CORP.
Page 1 of 37
SHAREHOLDERS’ AGREEMENT
This Shareholders’ Agreement (the “Agreement”) is executed at Delhi on October 22, 2022 (“Execution Date”),
BY AND AMONGST:
RISEE ENTERTAINMENT HOLDINGS PRIVATE LTD., a private limited company incorporated under the laws of India, bearing corporate identity number U74999MH2018PTC309252 and having its registered office at 502, Plot No. 91/94, Prabhat Colony, Santa Cruz (East) Mumbai, Mumbai City, Maharashtra - 400055, India (hereinafter referred to as the “Seller”, which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns) of the FIRST PART;
AND
RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED, a private limited company incorporated under the laws of India, bearing corporate identity number U22300MH2019PTC321407 and having its registered office at 8th Floor , 801/802 Lotus Grandeur, Veera Desai Road Extension, Oshiwara, Andheri West Mumbai, Mumbai City, Maharashtra - 400053, India (hereinafter referred to as the “Company”, which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns) of the SECOND PART;
AND
INTERNATIONAL MEDIA ACQUISITION CORP., a Delaware corporation bearing state file number 4749847 having its registered office at 1604 US Highway 130 North Brunswick, NJ 08902 (hereinafter referred to as the “Purchaser”, which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns) of the THIRD PART.
The Seller, the Company and the Purchaser are hereinafter collectively referred to as the “Parties”, and individually as “Party”.
| WHEREAS: |
| A. | The Company, its Subsidiaries and/or Joint Ventures (the “Company Group”) are media and entertainment companies and the Company Group is engaged in the creation, acquisition, marketing and distribution of content across film, television, web and digital platforms, animation, games and new media, as also in related, ancillary and derivative products and services to the above which, without limitation, includes artist management, film production (including pre and post), media planning and buying services, licensing, merchandising, training and education, music, public performances, OTT platforms, import, export, trading in the media and entertainment sector (as conducted by the Company Group, the “Business”); |
Page 2 of 37
| B. | Purchaser is a blank check company formed for the sole purpose of entering into a share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities; |
| C. | Seller is the sole beneficial shareholder of the Company and owns beneficially and of record 100% of the Fully Diluted Share Capital of the Company; |
| D. | The Parties have executed a stock purchase agreement of even date (hereinafter referred to as the “SPA”) in accordance with which the Purchaser proposes to purchase the Company Shares (as defined hereunder) at the Purchase Price (as defined hereunder) and the Seller proposes to sell, transfer, convey, assign and deliver to the Purchaser, all rights, title and interest in and to the Company Shares, in a series of transactions, in the manner and method as stipulated under the SPA; |
| E. | The Purchaser and Seller are now desirous of recording their rights and obligations as Shareholders of the Company and are therefore executing this Agreement along with the Company to record their mutual understanding with respect to their inter se rights and obligations in the Company, the management of the Company and certain other matters pertaining to the operations of the Company. |
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL PROMISES AND COVENANTS AS SET FORTH HEREUNDER AND OTHER GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH HAS BEEN AGREED TO AND ACKNOWLEDGED, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
| 1. | DEFINITIONS AND INTERPRETATION |
| 1.1 | Definitions |
In this Agreement, unless the context otherwise requires, the terms and expressions when used with the first letter capitalized shall bear the meanings ascribed to them below.
| (a) | “Act” shall mean the Companies Act, 2013, as amended from time to time; |
| (b) | “Acquisition” shall mean the purchase of the Company Shares by Purchaser in accordance with the terms of the SPA; |
Page 3 of 37
| (c) | “Additional Agreements” shall mean the SPA, and any other documents, instruments and/or certificates which pertain to the Acquisition and have been specifically agreed by the Purchaser and Seller to be ‘Additional Agreements’; |
| (d) | “Additional Closing” shall have the meaning as ascribed to it under the SPA; |
| (e) | “Additional Closing Date(s)” shall mean the date(s) on which each Additional Closing occurs, in accordance with the terms of the SPA; |
| (f) | “Additional Company Shares” shall mean the Company Shares which shall be purchased by the Purchaser from the Seller on each Additional Closing Date as set forth under the SPA; |
| (g) | “Additional Purchase Price” shall mean the purchase price paid by the Purchaser for each purchase of Additional Company Shares as determined in accordance with the SPA; |
| (h) | “Affiliate” shall mean any Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with a Party and shall include a Subsidiary, Joint Venture or a holding company of such Person; |
| (i) | “Agreement” shall mean this shareholders’ agreement entered into by the Parties, as may be amended from time to time, and shall include all the recitals, appendices and schedules to this shareholders’ agreement; |
| (j) | “Applicable Law” shall mean any applicable domestic or foreign, federal, state, provincial, municipal, local or other law, regulations, administrative orders, ordinance, constitution, decree, principles of common law, binding governmental policies, statute or treaty, and shall include notifications, guidelines, policies, directions, directive and orders of any statutory authority, board, tribunal or recognised Stock Exchange; |
| (k) | “Articles” shall mean the Articles of Association of the Company as on the Execution Date, as may be amended from time to time; |
| (l) | “Board” shall mean the board of Directors of the Company; |
| (m) | “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York or Mumbai, India are authorized to close for business, excluding as a result of “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Government Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in New York, New York are generally open for use by customers on such day; |
Page 4 of 37
| (n) | “Company Group” shall mean the Company, its Subsidiaries and its Joint Ventures; |
| (o) | “Company Shares” shall mean 10,000 (ten thousand) Shares of the Company, which shall comprise 100% of the Fully Diluted Share Capital of the Company, all of which are beneficially held by the Seller as on the Execution Date (and shall include any other Shares held by the Seller till such time that the Purchase Period is completed); |
| (p) | “Competitor” shall mean any Person who is engaged in a business activity which is identical or similar to the Business of the Company or the Company Group; |
| (q) | “Confidential Information” shall mean (i) all of the Company’s business plans, mechanisms, business related functions, activities and services, customer lists, knowledge of customer needs and preferences, trade secrets, details of any Intellectual Property Rights/proprietary information, business strategies, marketing strategies, methods of operation, tax records, markets, other valuable information and trade related information relating to the business and activities of the Company and information which are useful or necessary for the success of the Company’s business and activities, financial information, such as Company’s earnings, assets, debts, prices, pricing structure, estimates, volumes of customers, transaction details such as names or address, terms of services, contracts of particular transactions, or related information about Company employees, customers, potential customers; marketing information, such as details about ongoing or proposed marketing programs or agreements by or on behalf of the Company, projections, sales forecasts or results of marketing efforts or information about impending transactions; personnel information; and customer information, such as any compilation of past, existing or prospective customers, customers’ proposals or agreements between customers and status of customers’ accounts or credit, or related information about actual or prospective customers and (ii) similar information as stated above, pertaining to either of the Seller, Purchaser or the Company Group and (iii) any information pertaining to the Acquisition including the terms of this Agreement and the Additional Agreements; |
| (r) | “Control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings; |
Page 5 of 37
| (s) | “Damages” shall mean: |
| (i) | amounts paid in settlement, interest, court costs, costs of investigation, fees and expenses of attorneys, accountants, actuaries, and other experts, and other expenses of litigation or of any claim, default, or assessment; |
| (ii) | any and all monetary (or where the context so requires, monetary equivalent of) damages, fines, fees, penalties as applicable under Applicable Laws, losses, and out-of-pocket expenses (including without limitation any liability imposed under any award, writ, order, judgment, decree or direction passed or made by any Person); and |
| (iii) | any punitive, or other exemplary or extra contractual damages payable or paid in respect of any contract; |
| (t) | "Deadlock” shall have the meaning attributed to it under Clause 15.1 of this Agreement; |
| (u) | “Director(s)” shall mean the director(s) of the Company; |
| (v) | “Dispute” shall have the meaning attributed to it under Clause 14.1; |
| (w) | “Employees” shall mean individuals who are the confirmed/permanent employees of the Company; |
| (x) | “Encumbrance” shall mean (i) any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, deed of trust, 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 voting agreement, interest, option, pre-emptive rights, right of first offer, refusal or Transfer restriction in favour of any Person, except as already provided in the Articles and (iii) any adverse claim as to title, possession or use and “Encumber” shall be construed accordingly; |
| (y) | “Equity Share/s” shall mean any equity share that forms part of the Fully Diluted Share Capital of the Company; |
| (z) | “Existing Inter-Company Loans” shall have the meaning as ascribed to it under the SPA; |
| (aa) | “Fully Diluted Share Capital” shall mean the aggregate of the existing paid-up equity share capital of the Company and shall assume for such computation that all outstanding convertible securities (whether or not by their terms then currently convertible, exercisable or exchangeable), share options, warrants, including but not limited to any outstanding commitments to issue Shares at a future date, have been so converted, exercised or exchanged; |
Page 6 of 37
| (bb) | “Government Authority(ies)” shall mean: |
| (a) | A government, whether foreign, federal, state, territorial or local which has or claims jurisdiction over either of the Parties or a department, office or ministry of such government acting in that capacity; |
| (b) | Any commission, agency, board or other governmental, semi-governmental, judicial, quasi-judicial administrative, monetary or fiscal authority, tribunal; |
| (cc) | “Initial Acquisition” shall mean the acquisition of the Initial Company Shares; |
| (dd) | “Initial Closing” shall have the meaning as ascribed to it under Clause 3.1 of the SPA; |
| (ee) | “Initial Company Shares” shall mean 3,920 (three thousand nine hundred and twenty) of the Company Shares, which shall comprise of 39.20% of the issued and outstanding Fully Diluted Share Capital of the Company, agreed to be acquired by the Purchaser at Initial Closing; |
| (ff) | “Intellectual Property” and “Intellectual Property Rights” and “IPR” shall mean all of the worldwide intellectual property rights and proprietary rights associated with any of the following, whether registered, unregistered or registrable, to the extent recognized in a particular jurisdiction: discoveries, inventions, ideas, technology, know-how, trade secrets, and Software, in each case whether or not patentable or copyrightable (including proprietary or confidential information, systems, methods, processes, procedures, practices, algorithms, formulae, techniques, knowledge, results, protocols, models, designs, drawings, specifications, materials, technical data or information, and other information related to the development, marketing, pricing, distribution, cost, sales and manufacturing) (collectively, “Trade Secrets”); trade names, trademarks, service marks, trade dress, product configurations, other indications of origin, registrations thereof or applications for registration therefor, together with the goodwill associated with the foregoing (collectively, “Trademarks”); patents, patent applications, utility models, industrial designs, supplementary protection certificates, and certificates of inventions, including all re-issues, continuations, divisionals, continuations-in-part, re-examinations, renewals, counterparts, extensions, and validations thereof (collectively, “Patents”); works of authorship, copyrights, copyrightable materials, copyright registrations and applications for copyright registration (collectively, “Copyrights”); domain names and URLs (collectively, “Domain Names”), social media accounts, and other intellectual property, and all embodiments and fixations thereof and related documentation and registrations and all additions, improvements and accessions thereto; |
Page 7 of 37
| (gg) | “Joint Ventures” means the following entities: (a) Rohit Shetty Picturez LLP; (b) Select Flix LLP; (c) Window Seat Films LLP; (d) Y-Not Films LLP; (e) Film Hangar LLP; (f) Global Cinemas LLP; and (g) Plan C Studios LLP; |
| (hh) | “Key Employees” shall mean (a) any employee of the Company having an annual remuneration of at least INR 2,00,00,000 (Rupees two crores) per annum, (b) chief executive officer, chief operating officer, head of sales or business development, head of finance (or chief financial officer), head of technology, head of operations, head of (respective) products; and (c) any other employee as may be determined mutually by the Purchaser and the Seller; |
| (ii) | “Majority Shareholder” shall mean such Shareholder (i.e. either the Seller or Purchaser) holding more than 50% of the Fully Diluted Share Capital of the Company at the relevant point in time; |
| (jj) | “Material Provisions” means any provisions of Clause 2 (Management of the Company), Clause 3 (Shareholders Meetings) and Clause 6 (Lock in and Non Disposal Undertaking); |
| (kk) | “Memorandum” shall mean the Memorandum of Association of the Company, as on the Execution Date hereof; |
| (ll) | “Minority Shareholder” shall mean such Shareholder (i.e. either the Seller or Purchaser) who is not the Majority Shareholder at the relevant point in time; |
| (mm) | “Person” shall mean any natural person, limited or unlimited liability company, corporation, general partnership, limited partnership, proprietorship, trust, union, association, court, tribunal, agency, government, ministry, department, commission, self-regulatory organisation, arbitrator, board, or other entity, enterprise, authority, or business organisation; |
| (nn) | “Purchase Period” shall mean the period commencing on the Initial Closing and continuing until the earlier of: (a) Purchaser having purchased all of the Company Shares from the Seller in accordance with the SPA, or (b) the date on which the Purchaser fails to acquire the Company Shares (or any part thereof) in accordance with the terms (including timelines) mentioned in the SPA; |
| (oo) | “Purchase Price” shall have the meaning as ascribed to it under the SPA; |
| (pp) | “Representations and Warranties” shall mean the representations and warranties made and/or provided by the Parties to each other under the SPA and this Agreement, as the case may be; |
Page 8 of 37
| (qq) | “Reserved Matters” shall mean the matters listed in Clause 2.17, for which any decision with respect to such matters would require prior written consent and which shall be subject to further conditions as stipulated under this Agreement; |
| (rr) | “Resolution Period” shall have the meaning attributed to it under Clause 14.1; |
| (ss) | “Rules” shall have the meaning attributed to it under Clause 14.1; |
| (tt) | “Rupees” or “INR” shall mean the lawful currency of the Republic of India; |
| (uu) | “Securities” means and includes any shares, scrips, bonds, derivates, options, warrants, debentures (convertible and non-convertibles), preference shares (convertible and non-convertible), bonds, units, rights, or any other securities, including securities which are directly or indirectly convertible into, or exercisable or exchangeable for shares of a company, whether or not then currently convertible, exercisable or exchangeable; |
| (vv) | “Share/s” shall mean any shares that forms part of the Fully Diluted Share Capital of the Company; |
| (ww) | “Shareholders” shall mean the existing shareholders of the Company at any time; |
| (xx) | “SPA” shall mean the stock purchase agreement of even date executed between the Seller, the Company and the Purchaser; |
| (yy) | “Subsidiary” shall mean, with respect to any Person, each entity of which more than 50% of the Shares or other equity or voting securities are owned directly or indirectly by such Person or such entity is otherwise Controlled by such Person owned, directly or indirectly, by such Person; and |
| (zz) | “USD” or “Dollar” shall mean the lawful currency of the United States of America. |
| 1.2 | Interpretation |
Unless the context otherwise requires in this Agreement:
| (a) | words importing persons or parties shall include firms and corporations and any organisations having legal capacity; |
| (b) | words importing the singular include the plural and vice versa where the context so requires; |
| (c) | all references to a number of Shares of a series or class of Shares shall be automatically adjusted to reflect any share splits, share combinations, share dividends, recapitalizations, reorganizations or the like occurring after the date hereof with respect to such series or class, as applicable; |
Page 9 of 37
| (d) | reference to any law shall include such law as from time to time enacted amended, supplemented or re-enacted; |
| (e) | reference to any gender includes a reference to all other genders; |
| (f) | reference to the words “include” or “including” shall be construed without limitation; |
| (g) | reference to this Agreement or any other agreement, deed or other instrument or document shall be construed as a reference to such agreement, deed or other instrument or document as the same may from time to time be amended, varied supplemented or novated; and |
| (h) | the headings and titles in this Agreement are indicative only and shall not be deemed part thereof or be taken into consideration in the interpretation or construction hereof. |
| 1.3 | Other Definitions |
All capitalized terms not defined in Clause 1.1 shall have the meanings assigned to them either in the other parts of the Agreement including in the introduction to, recitals of and body of this Agreement when defined by use in bold letters enclosed within quotes (“ ”);. Provided that in the absence of a definition being provided for a term, word or phrase used in this Agreement, no meaning shall be assigned to such term, word, phrase which derogates or detracts from, in any way, the intent of this Agreement.
| 2. | MANAGEMENT OF THE COMPANY |
| 2.1 | Directors: |
The Company shall be managed by the Board of Directors.
| 2.2 | Board Composition: |
Immediately at Initial Closing, the Seller and the Company shall take all necessary actions to ensure that the Board shall be reconstituted to comprise of 5 (five) Directors, of which, subject to Section 2.17 of this Agreement, 3 (three) Directors shall be nominated by the Purchaser and 2 (two) Directors shall be nominated by the Seller.
The Purchaser hereby nominates and appoints Mr. Shibasish Sarkar, and any two other nominees of the Purchaser as decided by the Purchaser, as the initial nominee Director(s) of the Company who shall each serve for a term of 2 (two) years and may continue to serve as Directors subject to the approval, which shall not be withheld without a valid reason, and the requisite resolutions passed by the Board. The Director(s) nominated and appointed by the Purchaser shall hereinafter be referred to as the “Purchaser Director(s)”.
Page 10 of 37
The Seller will have the right to nominate 2 (two) Directors onto the Board, who shall serve for a term of 2 (two) years and may continue to serve as Directors subject to the approval, which shall not be withheld without a valid reason, and the requisite resolutions passed by the Board (each hereinafter referred to as the “Seller Director”).
The right to nominate a Director (including an Additional Director) shall be deemed to include the right to nominate, replace or remove such Director. Any such representative appointed in place of the outgoing Director shall have the same status, and same rights as those enjoyed by the outgoing Director. In such an event, the Seller and the Purchaser (as the case may be) shall exercise their rights (including voting rights) in such manner so as to cause the appointment of such representative as a Director.
The Parties agree to vote in favour of the appointment of any Directors nominated pursuant to the terms of this Agreement.
So long as the Seller and/or Purchaser holds any Shares, the Seller and the Purchaser shall each be entitled to appoint 1 (one) observer to the Board (“Observer”), in addition to the Director(s) nominated by either Party. The Observer shall have the right to receive all notices relating to Board meetings. The Observer shall not be (i) considered for the constitution of a valid quorum for the meetings of the Board, and (ii) entitled to vote with respect to any resolution proposed to be passed at a meeting of the Board or by circulation.
| 2.3 | Additional Directors |
Additional Directors may be appointed to the Board subsequently from time to time but only with the prior written consent of the Seller and the Purchaser.
| 2.4 | No Qualification Shares |
A Director need not hold any qualification Shares in order to be on the Board.
| 2.5 | Casual Vacancies |
If any Director dies, resigns, vacates or is removed from office before his/her term expires, the resulting casual vacancy may be filled only by a nominee of the Shareholder who had originally appointed the Director vacating office, but any person so nominated, shall retain his/her office only so long as the vacating Director would have retained the same, if no vacancy had occurred.
| 2.6 | Proceedings of Board |
Subject to Clause 2.17 relating to the approval of certain Reserved Matters, the Board shall approve decisions or pass resolutions and grant consents only at meetings held in accordance with the procedures set out in this Clause 2.
Page 11 of 37
| 2.7 | Number of Board Meetings and Venue |
The Board shall meet at least 4 (four) times in every calendar year and at least once in every calendar quarter. Meetings of the Board shall be held at such place, as the Directors may agree, from time to time. Subject to Applicable Laws, all reasonable expenses and costs incurred by the Directors to attend such meetings shall be borne by the Company. At each Board meeting, the Directors will mutually appoint one of them as the Chairman to preside over that meeting. The Chairman will have no casting or second vote. The Directors shall not receive a sitting fee for attending Board meetings. Each board meeting shall necessarily have a video conferencing facility in accordance with Applicable Law by which each director can attend, participate and vote in the Board meeting.
| 2.8 | Convening Meetings of the Board |
Any Director may, and the secretary of the Company, if so appointed, shall on the requisition of a Director, summon a meeting of the Board, in accordance with the notice and other requirements set out below.
| 2.9 | Notice for Board Meetings |
At least 7 (seven) calendar days prior written notice shall be given to each of the Directors of any meeting of the Board. Notice of Board Meetings shall be sent by email as well as in hard copy by over night courier and in such other manner as may be required by Applicable Law. A meeting of the Board may be held at shorter notice with prior written intimation to all Directors and the prior written consent of the both the Seller and Purchaser Director(s) (which may be signified by letter, facsimile or e-mail with receipt acknowledged).
| 2.10 | Contents of Notice |
Every notice convening a meeting of the Board shall set forth in full and sufficient detail each item of the business to be transacted thereat along with all supporting documents, and no item or business shall be transacted at such meeting, unless the same has been stated in full and in sufficient detail in the notice convening the meeting supported with all documents, except as otherwise consented to by all the Directors, or their respective alternate Directors. The draft resolutions and other documents for all matters to be considered at the Board meeting must be furnished to all the Directors at least 7 (seven) calendar days prior to the date of the proposed Board meeting, except where such meeting is called on shorter notice, in which case they must be furnished to all Directors as much in advance of the meeting as reasonably practical. The secretary of the Company shall prepare the notice for the meetings. If the secretary is unavailable, unwilling or unable to do so, the Director that summoned the meeting shall be responsible and liable to prepare and dispatch the notice.
Page 12 of 37
| 2.11 | Quorum for Board Meetings |
The quorum for a Board meeting (including any adjourned Board meeting) shall be at least 3 (three) Directors which shall necessarily include one Seller Director. A meeting of the Board shall not be held or continued without the presence, at all times, of the quorum, unless (a) in case of Purchaser either of Purchaser Director(s) and (b) in case of the Seller Director, the Seller has expressly waived the requirement for his/her presence either in writing or by facsimile transmission.
If a quorum is not present within 30 (thirty) minutes of the scheduled time for any meeting of the Board or ceases to exist at any time during the meeting, then the meeting shall be adjourned, for a period determined by the Chairman, which period shall not be less than 7 (seven) calendar days (it being understood that the agenda for such adjourned meeting shall be the same as the agenda for the original meeting however, a fresh notice of at least 7 (seven) calendar days shall be sent informing the Directors of the next date of such adjourned meeting) (“First Adjourned Meeting”). If there is absence of quorum at the First Adjourned Meeting, then the Directors present at such First Adjourned Meeting (being at least 2 Directors) shall form the quorum provided that no agenda containing any Reserved Matter shall be discussed or voted upon at such First Adjourned Meeting.
Notice of each adjourned meeting shall be given to all Directors by facsimile transmission or e-mail with receipt acknowledged.
| 2.12 | Committees of the Board |
Subject to Clause 2.17, a committee of Directors (“Committee”), to whom any powers of the Board are delegated, can be appointed only by the Board. All Committees shall at all times have at least one (1) Seller Director as a member.
| 2.13 | Circular Resolutions |
The Board may act by written resolution, or in any other legally permissible manner, on any matter, except for matters, which by Applicable Law may only be acted upon at a meeting. Subject to any restrictions imposed by Applicable Law, no written resolution shall be deemed to have been duly adopted by the Board, unless such written resolution shall have been approved by the requisite majority of Directors, as provided in various sections in this Agreement, including where applicable Clause 2.17. If a Director does not convey his/her acceptance or rejection of the proposed resolution within 15 (fifteen) days from the date of receipt of the requisite documentation (including explanatory statements and supporting documents), he/she shall be deemed to have rejected the proposed resolution.
| 2.14 | Alternate Directors |
The Company, Purchaser and the Seller shall take all necessary steps to cause the Board to accept the appointment of an alternate Director of each of the Seller Director and the Purchaser Directors to act in such Director’s absence, subject to compliance with Applicable Law.
Page 13 of 37
| 2.15 | Decisions of the Board |
Except in respect of matters referred to under Clause 2.17 of this Agreement, the questions arising at any meeting of the Board or decision by circular resolution shall be decided by a simple majority of votes.
| 2.16 | Board Majority |
The Parties acknowledge and agree that the Purchaser shall at all times, and subject to the terms of this Agreement, have the right to nominate the majority of the Board members from the Initial Closing onwards, and consequently exercise majority control over the Board of Directors.
| 2.17 | Reserved Matters |
Notwithstanding anything to the contrary contained in any other provision of this Agreement or any power conferred upon the Board by this Agreement, the Act or the Articles, but subject to Clause 11, neither the Company nor its Subsidiaries nor the respective Shareholders, Directors, officers, Committees, committee members, employees, agent nor any of their respective delegates (as the case may be) shall approve, authorize, or agree or commit to undertake any action with respect to any of the Reserved Matters in any manner, whether directly or indirectly, unless approved in writing by: (i) the Seller, or Seller Director(s) if such Reserved Matter is taken up for discussion at a Board or Committee meeting, from the Initial Closing till such time that the Purchaser has the right to nominate the majority of the Board seats in accordance with this Agreement; (ii) the Purchaser, or Purchaser Director(s) if such Reserved Matter is taken up for discussion at a Board or Committee meeting, in the event that the Seller obtains the right to constitute the majority of the Board in accordance with Clause 11; and (ii) the Minority Shareholder if such Reserved Matter is being considered at a Shareholders meeting. The list of Reserved Matters is as follows:
Part A:
| (i) | (a) any modifications to the capital structure which includes permitting any transfer of shares, buy back of securities, any reduction of capital, issuance of bonus shares, rights issue, increase in paid up or authorised share capital; (b) any issue of any new Securities; (c) creation of options or warrants or other rights to subscribe to any Securities; (d) any reclassification of any existing Securities, splits, issuance of convertible debt; (e) any debt restructuring involving conversion into Equity Shares and redemption or repurchase of any Securities, in each case of the Company or any Subsidiaries of the Company; |
Page 14 of 37
| (ii) | any change in the Memorandum and Articles of the Company or any of its Subsidiaries; | |
| (iii) | any (a) restructuring, (b) acquisition, (c) demerger, and (d) merger or entering into any scheme of arrangement, in each case of the Company or any of its Subsidiaries; | |
| (iv) | any reconstitution (such as conversion of the Company or any of its Subsidiaries into a public limited company, partnership or limited liability partnership etc.) or consolidation involving the Company and/or its Subsidiaries with any other entity; | |
| (v) | voluntary liquidation or dissolution of the Company or any of its Subsidiaries; | |
| (vi) | variation of any rights attaching to any Securities in the Company or any of its Subsidiaries; | |
| (vii) | commencement of any new line of business, which is unrelated to the Business of the Company or any change in the Business of the Company or any of its Subsidiaries; | |
| (viii) | availing of any debt by the Company above an amount of INR 500,00,00,000 (Rupees five hundred crores only) (which excludes any existing loans of up to INR 180 crores (Rupees one hundred and eighty crores only) availed by the Company from third party lenders); | |
| (ix) | any (a) creation of Subsidiaries; or (b) entering into strategic partnerships/alliances/joint ventures that involve issue of Shares of the Company or outflow of capital or place limitations on the operations of the Company; | |
| (x) | entering into any compromise with any of the creditors or any class of them by the Company with regard to any material debts; | |
| (xi) | creation of any Encumbrance on any Securities, assets and investments (as the case may be) of the Company and/or the Subsidiaries, but excluding (a) any Encumbrance created with respect to availing debt of up to INR 500,00,00,000 (Rupees five hundred crores only) as referred to in item (viii) above, and (b) also excluding any Encumbrance created by the Purchaser on its shareholding in the Company and (c) creation of Encumbrance on any assets of the Company for the Purchaser to avail financing of up to USD 100,000,000 (one hundred million Dollars only), which amount shall be used solely for purchase of the Additional Shares or for repayment of the existing debt of the Company as on the date of execution of this Agreement; | |
| (xii) | providing any guarantee, surety or indemnity by the Company and any of its Subsidiaries (as the case may be), other than those provided in the ordinary course of business of the Company; | |
| (xiii) | acquiring or leasing or licensing any immoveable property for the Company and its Subsidiaries (as the case may be) except for in the ordinary course of business, in cases where the annual rental is more than INR 20,00,00,000 (Rupees twenty crores only) or the value of immovable property proposed to be acquired is more than INR 50,00,00,000 (Rupees fifty crores only); |
Page 15 of 37
| (xiv) | sale, transfer or disposal, in any manner whatsoever, of any of the Securities, assets or investments of the Company and/or the Subsidiaries, above an amount of INR 200,00,00,000 (Rupees two hundred crores only); | |
| (xv) | any change in registered office of the Company and any of its Subsidiaries; | |
| (xvi) | granting any waivers, releases, entering into any settlement, accepting any claims or liabilities, pertaining to the Company or its Subsidiaries, other than settlement of existing claims against the Company as referred to in the Schedule of Liabilities i.e. Schedule 4.9(b) of the SPA; | |
| (xvii) | undertaking any related party transaction with the Purchaser; and | |
| (xviii) | any agreement to do any of the above. |
Part B: Expanded List of Reserved Matters (in case of breach of the Material Provisions by Purchaser):
The following expanded list of Reserved Matters shall substitute the list stated under Part A in accordance with Clause 11.2, in the event that there is a default of the Material Provisions by the Purchaser:
| (i) | (a) any modifications to the capital structure which includes permitting any transfer of shares, buy back of securities, any reduction of capital, issuance of bonus shares, rights issue, increase in paid up or authorised share capital; (b) any issue of any new Securities; (c) creation of options or warrants or other rights to subscribe to any Securities; (d) any reclassification of any existing Securities, splits, issuance of convertible debt; (e) any debt restructuring involving conversion into Equity Shares and redemption or repurchase of any Securities, in each case of the Company or any Subsidiaries of the Company; | |
| (ii) | any change in the Memorandum and Articles of the Company or any of its Subsidiaries; | |
| (iii) | any (a) restructuring, (b) acquisition, (c) demerger, and (d) merger or entering into any scheme of arrangement, in each case of the Company or any of its Subsidiaries; | |
| (iv) | any reconstitution (such as conversion of the Company or any of its Subsidiaries into a public limited company, partnership or limited liability partnership etc.) or consolidation involving the Company and/or its Subsidiaries with any other entity; |
Page 16 of 37
| (v) | voluntary liquidation or dissolution of the Company or any of its Subsidiaries; | |
| (vi) | variation of any rights attaching to any Securities in the Company or any of its Subsidiaries; | |
| (vii) | commencement of any new line of business, which is unrelated to the Business of the Company or any change in the Business of the Company or any of its Subsidiaries; | |
| (viii) | availing of any debt by the Company above an amount of INR 50,00,00,000 (Rupees fifty crores only) (which shall exclude any loans and third party debt existing as on the date of occurrence of default of the Material Provisions as contemplated under Clause 11 of this Agreement); | |
| (ix) | any (a) creation of Subsidiaries; or (b) entering into strategic partnerships/alliances/joint ventures that involve issue of Shares of the Company or outflow of capital or place limitations on the operations of the Company; | |
| (x) | entering into any compromise with any of the creditors or any class of them by the Company with regard to any material debts; | |
| (xi) | creation of any Encumbrance on any Securities, assets and investments (as the case may be) of the Company and/or the Subsidiaries except for the purposes of availing debt up to INR 50,00,00,000 (Rupees fifty crores only) as contemplated under sub-clause (viii) above; | |
| (xii) | providing any guarantee, surety or indemnity by the Company and any of its Subsidiaries (as the case may be), other than those provided in the ordinary course of business of the Company; | |
| (xiii) | issuing post-dated cheques, by the Company and any of its Subsidiaries (as the case may be); | |
| (xiv) | appointment of any employee with a compensation of more than INR 2,00,00,000 (Rupees two crores only) per annum; | |
| (xv) | change in the board of directors of the Company and its Subsidiaries (as the case may be); | |
| (xvi) | acquiring or leasing or licensing any immoveable property for the Company and its Subsidiaries (as the case may be) except in the ordinary course of business, in cases where the annual rental is more than INR 10,00,00,000 (Rupees ten crores only) or the value of immovable property proposed to be acquired is more than INR 20,00,00,000 (Rupees twenty crores only); |
Page 17 of 37
| (xvii) | change in any accounting policies of the Company and any of its Subsidiaries, unless otherwise required by Applicable Law; | |
| (xviii) | undertaking any related party transaction; | |
| (xix) | cessation or stoppage of Business (including temporary) or any part thereof; | |
| (xx) | sale, transfer or disposal, in any manner whatsoever, of any of the Securities, assets or investments of the Company and/or the Subsidiaries, except in the ordinary course of business; | |
| (xxi) | assignment of any contracts or agreements or right or benefit of the Company and/or its Subsidiaries including but not limited to IPR, except in the ordinary course of business; | |
| (xxii) | constitution or delegation of powers to or terms of reference of any Committee of the Board including any amendment or change therein; | |
| (xxiii) | any change in registered office of the Company and any of its Subsidiaries; | |
| (xxiv) | entering into any transaction whereby the liabilities or obligations of the Company and its Subsidiaries (as the case may be) increase, except in the ordinary course of business; | |
| (xxv) | granting any waivers, releases, entering into any settlement, accepting any claims or liabilities, pertaining to the Company or its Subsidiaries; and | |
| (xxvi) | any agreement to do any of the above. |
Part C: Expanded List of Reserved Matters (in case of default in payment of any Additional Purchase Price by the Purchaser):
The following expanded list of Reserved Matters shall substitute the list stated under Part A and/or Part B in accordance with Clause 11.2, in case of default in payment of any Additional Purchase Price by the Purchaser:
| (i) | (a) any modifications to the capital structure which includes permitting any transfer of shares, buy back of securities, any reduction of capital, issuance of bonus shares, rights issue, increase in paid up or authorised share capital; (b) any issue of any new Securities; (c) creation of options or warrants or other rights to subscribe to any Securities; (d) any reclassification of any existing Securities, splits, issuance of convertible debt; (e) any debt restructuring involving conversion into Equity Shares and redemption or repurchase of any Securities, in each case of the Company or any Subsidiaries of the Company; | |
| (ii) | any change in the Memorandum and Articles of the Company or any of its Subsidiaries; |
Page 18 of 37
| (iii) | any (a) restructuring, (b) acquisition, (c) demerger, and (d) merger or entering into any scheme of arrangement, in each case of the Company or any of its Subsidiaries; | |
| (iv) | any reconstitution (such as conversion of the Company or any of its Subsidiaries into a public limited company, partnership or limited liability partnership etc.) or consolidation involving the Company and/or its Subsidiaries with any other entity; | |
| (v) | voluntary liquidation or dissolution of the Company or any of its Subsidiaries; | |
| (vi) | variation of any rights attaching to any Securities in the Company or any of its Subsidiaries; | |
| (vii) | commencement of any new line of business, which is unrelated to the Business of the Company or any change in the Business of the Company or any of its Subsidiaries; | |
| (viii) | availing of any debt by the Company above an amount of INR 100,00,00,000 (Rupees one hundred crores only) (which shall exclude any loans and third-party debt, existing as on the date of occurrence of default in payment of any Additional Purchase Price, as contemplated under Clause 11 of this Agreement); | |
| (ix) | any (a) creation of Subsidiaries; or (b) entering into strategic partnerships/alliances/joint ventures that involve issue of Shares of the Company or outflow of capital or place limitations on the operations of the Company; | |
| (x) | entering into any compromise with any of the creditors or any class of them by the Company with regard to any material debts; | |
| (xi) | creation of any Encumbrance on any Securities, assets and investments (as the case may be) of the Company and/or the Subsidiaries except for the purposes of availing debt up to INR 100,00,00,000 (Rupees one hundred crores only) as contemplated under sub-clause (viii) above; | |
| (xii) | providing any guarantee, surety or indemnity by the Company and any of its Subsidiaries (as the case may be), except as may be provided in the ordinary course of business; | |
| (xiii) | acquiring or leasing or licensing any immoveable property for the Company and its Subsidiaries (as the case may be) except for in the ordinary course of business, in cases where the annual rental is more than INR 10,00,00,000 (Rupees ten crores only) or the value of immovable property proposed to be acquired is more than INR 20,00,00,000 (Rupees twenty crores only); | |
| (xiv) | cessation or stoppage of Business (including temporary) or any part thereof; | |
| (xv) | sale, transfer or disposal, in any manner whatsoever, of any of the Securities, assets or investments of the Company and/or the Subsidiaries, except in the ordinary course of business; |
Page 19 of 37
| (xvi) | assignment of any contracts or agreements or right or benefit of the Company and/or its Subsidiaries including but not limited to IPR, except for in the ordinary course of business; | |
| (xvii) | constitution or delegation of powers to or terms of reference of any Committee of the Board including any amendment or change therein; | |
| (xviii) | any change in registered office of the Company and any of its Subsidiaries; | |
| (xix) | entering into any transaction whereby the liabilities or obligations of the Company and its Subsidiaries (as the case may be) increase, except in the ordinary course of business; | |
| (xx) | granting any waivers, releases, entering into any settlement, accepting any claims or liabilities, pertaining to the Company or its Subsidiaries; | |
| (xxi) | undertaking any related party transaction with the Purchaser (provided that in the event the default in payment of any Additional Purchase Price by the Purchaser continues for a period beyond 18 (eighteen) months from the Initial Closing Date, then all related party transactions shall fall under the ambit of reserved matters under this Part C ; and | |
| (xxii) | any agreement to do any of the above. |
| 2.18 | Manner of Giving Consents |
Any consent required including under Clause 2.17 shall be deemed to have been given only when the Seller and the Seller Directors or the Purchaser and Purchaser Directors, as the case may be, have specifically in writing granted such consent notwithstanding the results of voting at any meeting.
| 2.19 | Chief Executive Officer |
Chief Executive Officer: In addition to holding a Board seat, Mr. Shibasish Sarkar shall also be the Chief Executive Officer (“CEO”) of the Company and he shall be responsible and liable for managing the day-to-day management and affairs of the Company. For taking any decisions pertaining to Reserved Matters listed under Clause 2.17, the CEO shall be required to obtain the written consent of the Seller and the Purchaser.
| 3. | SHAREHOLDERS MEETINGS |
| 3.1 | General Meetings |
An annual general meeting of the Shareholders of the Company shall be held within 6 (six) months of the end of the financial year as provided under the Act. Subject to the foregoing, the Board, on its own, may convene an extraordinary general meeting of the Shareholders, whenever they deem appropriate.
Page 20 of 37
| 3.2 | Notices for General Meetings |
At least 21 (twenty one) calendar days prior written notice of every annual general meeting of Shareholders shall be given to all Shareholders whose names appear on the register of members of the Company. A meeting of the Shareholders may be called by giving shorter notice with the written consent of such number of Shareholders as provided by the Act, and which shall include the consent of the Purchaser Director and the Seller.
| 3.3 | Contents of Notice |
The notice to Shareholders shall specify the place, date and time of the meeting. Every notice convening a meeting of the Shareholders shall set forth in full and sufficient detail the business to be transacted thereat, and no business shall be transacted at such meeting unless the same has been stated in the notice convening the meeting. All general meetings of the Company and its Subsidiaries shall be held at the registered office of the Company in India.
| 3.4 | Quorum for General Meetings |
The presence of an authorized representative of both the Seller and Purchaser, shall be necessary to form a quorum for a valid general meeting (including any adjourned meeting) unless such Shareholder provides written notice prior to commencement of any general meeting or adjourned meeting waiving the requirement of the presence of such authorized representative to constitute a valid quorum for a particular general meeting or adjourned meeting, as the case may be.
If a quorum is not present within 30 (thirty) minutes of the scheduled time for any Shareholders meeting or ceases to exist at any time during the meeting, then the meeting shall be adjourned, to the same day, place and time in the next succeeding week (it being understood that the agenda for such adjourned meeting shall remain unchanged) ("First Adjourned General Meeting”). If there is absence of quorum at the First Adjourned General Meeting, then the Shareholders present at such meeting (being at least 2 (two) in number) shall form the quorum provided that no agenda containing any Reserved Matter shall be discussed or voted upon at such First Adjourned Meeting.
| 3.5 | Decision Making |
For the purpose of clarity, all decisions pertaining to the operations and management of the Company shall be made at all times by the Board, save and except for only those specific matters where decisions of Shareholders are mandatorily required to be made under Applicable Laws.
Page 21 of 37
Except as otherwise required by the relevant Applicable Laws, all decisions of the Shareholders of the Company shall be made by a simple majority of votes by poll wherein the voting rights of a Shareholder shall be proportionate to the relative percentage of the Fully Diluted Share Capital held by such Shareholder. Provided however, no decision shall be taken by the Shareholders of the Company at a general meeting of the Shareholders (including any adjourned general meeting), in respect of any of the matters mentioned in Clause 2.17 above, unless an affirmative vote of the Minority Shareholder has been taken in the manner as provided under this Agreement.
| 3.6 | Minutes of Meetings |
The chairman of the general meeting, the Board meeting and Committee meeting (as the case may be) (“Meeting Chairman”) shall circulate the draft minutes of general meeting, Board meetings to the Directors and minutes of the Committee meetings (as the case may be) to all the Shareholders, Board Members and the member of such Committees (as the case may be) within 15 (fifteen) days of the end of each relevant meeting for comments. The Meeting Chairman shall ensure that the comments received from all Shareholders, the Directors and Committee members (as the case may be) on the draft minutes are incorporated into the minutes (“Finalized Minutes”) and such Finalized Minutes shall be signed and recorded in the ‘minutes books’ of the Company.
| 3.7 | Provisions to apply mutatis mutandis |
Provisions relating to constitution, meetings and decisions of the Board and meetings and decisions of Shareholders as set out in Clauses 2 and 3 (including those pertaining to the constitution, notice, agenda, quorum, reserved matters, voting, and circular resolutions) shall apply mutatis mutandis to the board and general meetings of each of the Subsidiaries of the Company.
| 4. | STATUTORY AUDITOR |
The Company shall appoint a reputed accounting firm, as the statutory auditor of the Company, which shall be mutually agreed upon by the Seller and Purchaser. Such statutory auditor shall not be removed without the prior written consent of the Purchaser and the Seller.
| 5. | INFORMATION RIGHTS AND INSPECTION RIGHTS |
| 5.1 | Information Rights: The Company and the Purchaser shall furnish to the Seller, the following information: |
| (a) | Quarterly performance reports and quarterly financial statements, 45 calendar days from the end of every quarter and audited annual consolidated financial statements of the Company within 90 (ninety) calendar days from the end of every financial year; |
Page 22 of 37
| (b) | Annual budgets 30 (thirty) calendar days prior to start of each financial year and performance to budget reports of the Company along with the audited annual finance statements; |
| (c) | Financial statements and a report of key issues and variances to the budget and to the previous period; |
| (d) | Monthly income and expenditure statement within 15 (fifteen) calendar days from the end of each month; |
| (e) | Information along with copies of all legal proceedings or notices or claims (“Legal Proceedings”) received by or against the Company or any of its subsidiaries in respect of an amount exceeding INR 20,00,00,000 (Rupees twenty crores only) and in the event an amount is not quantifiable or available, all Legal Proceedings, within a period of 15 calendar days of receipt of such information by the Company; |
| (f) | All the minutes of the meetings of the Board, Shareholders and Committees of the Board and the information and documents tabled at such meetings, within 15 (fifteen) calendar days from the date of the minutes of such meeting being finalized; and |
| (g) | Any other information as may be reasonably required in writing by the Purchaser or the Seller. |
| 5.2 | Inspection Rights: For as long as the Purchaser or Seller owns any of the Company Shares, the Company shall allow such Party and its counsel, accountants and other consultants and representatives, upon providing prior written notice of at least 1 (one) Business Day (the “Requesting Party”), full access during normal business hours to all of its properties, books, contracts, commitments and records pertaining to the Company and will furnish to the Requesting Party such information concerning the affairs of the Company as such persons may reasonably request and will make available to the Requesting Party, any of the officers, directors, employees, counsel, accountants, or other consultants of the Company as the Requesting Party may reasonably request. The Requesting Party shall, on intimation to the Company during such time of inspection, have the right to interact directly with the Company’s auditors to discuss matters related to the Company, without the prior approval of the Company and the said auditors shall be free to share information and other inputs with the Requesting Party directly without the prior approval of the Company. The Requesting Party shall be responsible for handling all costs and expenses associated with these inspection rights. |
Page 23 of 37
| 6. | LOCK IN AND NON-DISPOSAL UNDERTAKING |
| 6.1 | Neither Party shall be entitled to transfer, sell or create any Encumbrance on all or any of the Company Shares held by it (“Sale of Shares”), except with the prior written consent of the other Party and/or other than as contemplated under the SPA. Provided however that the Purchaser shall be entitled to create any Encumbrance on the Company Shares held by it for availing financing or in the ordinary course of business of the Purchaser, to the extent permitted in accordance with Clause 2.17 – Part A (xi), Part B (xi) and Part C (xi). |
| 6.2 | Notwithstanding the provisions of Clause 6.1 above, the Seller shall be entitled to undertake the Sale of Shares in the event the Purchaser: (i) fails to purchase the Additional Company Shares (or any part thereof) for any reason whatsoever within the timelines stipulated in the SPA (including on account of delay or failure in obtaining any approval from any Authority), or (ii) breaches any of the Material Provisions. |
| 6.3 | Any Person acquiring Securities issued by the Company or in a transfer of Securities in accordance with the terms of this Agreement shall, be bound by the provisions of this Agreement and prior to such acquisition (unless already bound hereby), execute and deliver to the Company, a deed of adherence in the form laid down in Schedule 1. |
| 7. | FURTHER ISSUE |
| 7.1 | Subject to Clause 2.17, any decision pertaining to the availing of further financing for the Company whether through increase in the share capital of the Company or through debt financing shall not be undertaken without the prior approval of the Board and in the manner as decided by the Board. |
| 8. | ANTI-DILUTION RIGHTS |
| 8.1 | Subject to Clause 2.17, in the event the Company desires to issue any Shares (other than issuance of shares pursuant to an initial public offering of the shares of the Company, or pursuant to the implementation of any employee stock option plan of the Company) at a price lower than the Purchase Price paid by the Purchaser for Company Shares, then the Minority Shareholder at such time shall be issued such proportionate number of Shares of the Company to maintain its shareholding percentage in the Company immediately prior to such issuance of Shares, either free of cost or at the lowest price permitted under Applicable Law. |
| 9. | CONFIDENTIAL INFORMATION |
| 9.1 | The Parties recognize that each of them may be given and has access to Confidential Information of the other Parties. The Parties undertake not to use any such Confidential Information, other than for purposes related to this Agreement and/or protecting their respective interests under this Agreement and/or in the Company without the prior written consent of the other Parties and shall use their best efforts to keep confidential and not disclose to any third party save and except on a ‘need-to-know’ basis any Confidential Information of the other Parties. The provisions of this Clause shall not apply to Confidential Information which; |
| a) | is or becomes part of the public domain without breach of this Agreement by a Party; |
Page 24 of 37
| b) | is lawfully in the possession of a Party and subject to an existing agreement between the Parties (if any); |
| c) | is received from a third party who lawfully acquired such information without restriction, and without breach of this Agreement by a Party; |
| d) | is released pursuant to a binding court order or governmental regulation, provided that the Party delivers a copy of such order or action to the Company and co-operates with the Company if it elects to contest such disclosure; |
| e) | is required to be released or disclosed under Applicable Law, and/or |
| f) | is required to be disclosed by the Party to its Affiliates, Shareholders and investors, lenders, or utilization of information by the Party, for its own business purposes. |
| 9.2 | The provisions of this Clause shall survive the termination of this Agreement for a period of 3 (three) years. |
| 10. | SOLE VEHICLE FOR BUSINESS |
| 10.1 | The Purchaser confirms and undertakes that for the duration of this Agreement, the Company Group shall be sole and exclusive vehicle for the purpose of the Purchaser and/or any of its Affiliates undertaking the Business. |
| 11. | TERMINATION AND BREACH OF CONTRACT |
| 11.1 | Unless otherwise provided in this Agreement, this Agreement shall become effective from the Initial Closing and shall be terminated with respect to a Party upon such Party ceasing to hold any Shares in the Company. |
| 11.2 | Notwithstanding anything contained in this Agreement or the Additional Agreements: |
| 11.2.1 | In the event there is a breach by the Purchaser of any of the Material Provisions, then (a) the Seller shall have affirmative vote rights with respect to the matters under Part B of Clause 2.17 and (b) the Seller shall have an unfettered right to transfer, sell, dispose, and/or create Encumbrances on all or any of the Company Shares held by it; |
Page 25 of 37
| 11.2.2 | In the event that the Purchaser defaults / fails: (i) to purchase the Additional Company Shares (or any part thereof), (ii) to make the infusion of primary investment or loan of USD 38,000,000 (thirty eight million Dollars) in the Company, (iii) to ensure that the Company repays the Existing Inter-Company Loans, in each case, in accordance with the time periods mentioned in the SPA (including Section 2.1), for any reason whatsoever (including on account of delay or failure in obtaining any approval from any Authority or non-fulfilment of any other condition mentioned in this Agreement and the Additional Agreements), the following consequences shall follow, without prejudice to the other rights and remedies of the Seller provided for under this Agreement and the Additional Agreements: |
| (a) | the Seller shall have the right to seek specific performance and in the event that such specific performance is not enforceable or available under any provision of the Applicable Law, the Purchaser shall be liable to pay Damages to the Seller on account of the default / breach committed by the Purchaser; |
| (b) | the Seller shall have an unfettered right to transfer, sell, dispose, and / or create Encumbrances on all or any of the Company Shares held by it; |
| (c) | the Seller shall have affirmative vote rights with respect to the matters under Part C of Clause 2.17; |
| (d) | if any default as stipulated under this Clause 11.2.2 has not been cured by the Purchaser within a period of 18 (eighteen) months of the Initial Closing Date, the Seller shall have the right to appoint majority of the directors on the Board of the Company upon completion of such 18 (eighteen) month period, provided that the Purchaser shall continue to have the right to nominate 1 (one) director or observer on the Board of the Company, as long as the Purchaser holds at least 10% of the total share capital of the Company as determined on a fully diluted basis, and further provided that if: (i) the Seller has transferred, sold, disposed of and/or created any liens on all (and not some) of the Company Shares held by it, and (ii) the Purchaser has completed the purchase of at least 75% of the Company Shares, the Board of the Company shall be reconstituted in a manner which reflects the inter se shareholding percentages of the stockholders of the Company, however, the transferee of the Seller’s transferred Company Shares shall continue to have the right to nominate 1 (one) director or observer on the Board of the Company, as long as such transferee holds at least 10% of the total share capital of the Company, and the Purchaser shall have affirmative vote rights with respect to all items listed under Part A of Clause 2.17 of this Agreement; and |
Page 26 of 37
| (e) | if any default as stipulated under this Clause 11.2.2 has not been cured by the Purchaser within a period of 21 (twenty one) months of the Initial Closing Date and the Purchaser has not completed the purchase of at least 75% of the Company Shares, at the option of the Seller: (i) all the rights of the Purchaser under this Agreement and the Additional Agreements shall fall away and cease to exist, and (ii) all the liabilities, obligations, and responsibilities of the Seller under this Agreement and the Additional Agreements shall fall away and cease to exist, other than the right of the Purchaser to nominate 1 (one) director on the Board of the Company, as long as the Purchaser holds at least 10% of the total share capital of the Company as determined on a fully diluted basis. It being clarified that, in such cases, if the Seller has transferred, sold, or disposed of all (and not some) of the Company Shares, the transferee of the Seller’s transferred Company Shares and the Purchaser shall mutually discuss and agree on the affirmative vote rights which may be available to the Purchaser with respect to the items listed under Part A of Clause 2.17 of this Agreement. |
| 11.3 | In the event that either Party is in breach of this Agreement or commits any fraud, misconduct, misappropriation, mismanagement of funds or finances or assets of the Company through any action, inaction or negligence then the Party committing such default shall be perceived as the “Defaulting Party(ies)” and each of the above defaults shall be treated as an “Event of Default”, and the non-defaulting Party, without prejudice to its other rights and remedies provided for specifically under this Agreement, shall have the right to seek specific performance and in the event that such specific performance is not enforceable or available under any provision of law, shall seek Damages on account of the breach committed by the Defaulting Party. |
| 11.4 | The exercise of the remedies under this Clause is in addition to and shall not, in any way, affect or prejudice any other right or remedy accrued to the Purchaser or the Seller under the other provisions of this Agreement or under Applicable Law. |
| 12. | INDEMNIFICATION |
| 12.1 | In the event the Seller or the Purchaser commits any breach of the terms and conditions of this Agreement, then the Party in breach agrees to pay Damages to and shall indemnify and hold harmless, the non-breaching Party, its nominees on the Board, Alternate Directors or observers and their respective successors, officers, directors, shareholders, employees, agents, trustees, advisors, lenders and representatives (jointly, the “Indemnified Party”) against and in respect of any direct Damages, losses, liabilities, obligations, costs and expenses (including attorneys’ fees) that the Indemnified Party may suffer or incur arising out of or in connection with such breach and any connected actions, suits, proceedings, claims, demands, assessments, judgements, costs and expenses (including, legal fees and expenses, incidental to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing any such indemnity). |
Page 27 of 37
| 12.2 | The Indemnified Party shall be entitled, in their absolute discretion, to take such action as they may deem necessary to avoid, dispute, deny, resist, appeal, compromise or contest or settle any claim (including without limitation, making claims or counterclaims against third parties) made against the Indemnified Party pursuant to terms of this Agreement. |
| 12.3 | The right to indemnity as stipulated under Clause 12.1 above shall not prejudice any other provisions of this Agreement and/or any other right or remedy available to the Indemnified Party under this Agreement or under Applicable Law. |
| 12.4 | Notwithstanding anything contained in this Agreement or the Additional Agreements, in no event shall Seller or any of its Affiliates, or their successors, officers, directors, shareholders, employees, agents, trustees, advisers, lenders or representatives be liable or responsible in any manner whatsoever for any inaccuracy or breach of the representations and warranties, covenants, and obligations of the Company. |
| 13. | NOTICES |
| 13.1 | Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if by hand, electronic mail or nationally recognized overnight courier service, by 5:00 PM Indian Time on a Business Day, addressee’s day and time, on the date of delivery, and if delivered after 5:00 PM Indian Time, on the first Business Day after such delivery; (b) if by email, on the date of transmission with affirmative confirmation of receipt; or (c) three (3) Business Days after mailing by prepaid certified or registered mail, return receipt requested. Notices shall be addressed to the respective parties as follows (excluding telephone numbers, which are for convenience only), or to such other address as a party shall specify to the others in accordance with these notice provisions: |
if to Seller, to:
Risee Entertainment Holdings Private Limited
502, Plot No. 91/94, Prabhat Colony,
Santacruz (East), Mumbai MH 400 055
India
Attn: Mr. Gautam Jain
E-mail: gautam.jain@unlimit.co.in
Page 28 of 37
if to the Company, to:
Reliance Entertainment Studios Private Limited
8th Floor, 801/802, Lotus Grandeur, Veera Desai Road
Ext Oshiwara, Andheri West Mumbai, MH- 400053
if to Purchaser:
International Media Acquisition Corp.
1604 US Highway 130
North Brunswick, NJ 08902
Attn: Mr. Shibasish Sarkar, Chief Executive Officer
E-mail: shibasish@imac.org.in
with a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attn: Mr. Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
| 14. | DISPUTE RESOLUTION AND GOVERNING LAW |
| 14.1 | Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Clause 14.1), arising out of, related to, or in connection with this Agreement or the transactions contemplated hereby or thereby (a “Dispute”) shall be governed by this Clause 14.1. A party must, in the first instance, provide written notice of any Disputes to the other parties subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The parties involved in such Dispute shall seek to resolve the Dispute on an amicable basis within ten (10) Business Days of the notice of such Dispute being received by such other parties subject to such Dispute (the “Resolution Period”); provided, that if any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during the Resolution Period may immediately be referred the International Chamber of Commerce and finally settled under the Rules of Arbitration of the International Chamber of Commerce (the “Rules”) by a panel of three arbitrators appointed in accordance with the said Rules, with the Seller on the one hand nominating one arbitrator and the Purchaser on the other hand nominating the second arbitrator, and both such arbitrators shall appoint the third arbitrator. If any such dispute is submitted to arbitration: (i) the Emergency Arbitrator Provisions (as such term is defined in the Rules) shall not apply, (ii) the seat and venue of arbitration shall be London, England and the language of the arbitration shall be English, and (iii) the award issued by the arbitration tribunal shall be final and binding upon the parties. All proceedings of such arbitration including arguments, applicable documents on record, pleadings shall be confidential. |
Page 29 of 37
| 14.2 | This Agreement shall be governed under the laws of India. |
| 15. | DEADLOCK RESOLUTION |
| 15.1 | A deadlock ("Deadlock”) shall be considered to have occurred in the event that there is a disagreement between the Purchaser and the Seller solely on any one or more of the matters listed under Clause 2.17, and such matters have been considered in at least three Board and/or Shareholders’ general meetings and still remains unresolved (including the inability to reach such consensus between the Purchaser and Seller due to lack of quorum at any such Board or Shareholder meetings). |
| 15.2 | Upon the occurrence of a Deadlock, the matter shall be referred to the chief executive officers of both the Purchaser and the Seller ("Shareholder CEOs”). The Shareholder CEOs shall seek to resolve the dispute through mutual discussion over a period of 60 (sixty) days, through one or more meetings and may also enlist the assistance and advisory services of external advisors to the extent deemed appropriate by the Shareholder CEOs. Any decision reached by the Shareholder CEOs in this process shall be final and binding between the Parties and shall be implemented by the Parties. |
| 15.3 | In the event that the Deadlock remains unresolved between the Shareholder CEOs even after such 60 (sixty) day period, the matter shall be referred to the dispute resolution process envisaged under Clause 14 for resolution thereunder. |
| 16. | GENERAL PROVISIONS |
| 16.1 | Entire Agreement: This Agreement (together with any annexures, appendices or schedules that may be attached hereto and forming an integral part hereof), along with the Additional Agreements, constitute the full and entire understanding and agreement among the Parties with regard to the subject matters hereof and thereof which, for the avoidance of doubt, supersedes and replaces any pre-existing investment or shareholder agreements relating to the Company or its share capital among or between the Parties, Company and the Seller (as the case may be). |
| 16.2 | Waiver: If at any time any Party shall waive its rights accruing to it, due to breach of any of the provisions of this Agreement, such waiver shall not be construed as constituting waiver of other breaches of the same kind or other provisions of this Agreement. None of the terms of this Agreement shall be deemed to have been waived or altered, unless such waiver or alteration is in writing and is signed by all the Parties. |
Page 30 of 37
| 16.3 | Severability: In the event that any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect under any Applicable Law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby and the Parties agree to renegotiate such provisions in good faith. In the event the Parties cannot renegotiate such provisions, then: |
| (a) | such provisions shall be excluded from the Agreement; |
| (b) | the remainder of the Agreement shall be interpreted as if the provisions were so excluded; and |
| (c) | the remainder of the Agreement shall be enforced in accordance with its terms. |
| 16.4 | Binding Effect: All covenants, agreements, representations, warranties and undertakings contained in this Agreement by and on behalf of any of the Parties hereto shall bind and inure to the benefit of the respective successors and assigns of the Parties hereto, whether so expressed or not. This Agreement shall inure to the benefit of and be binding upon the Parties, their successors and permitted assigns, but shall not be assigned by any Party without the prior written consent of the other Parties. |
| 16.5 | Further Assurance: At any time and from time to time after the date hereof, each Party will execute and deliver such other documents and instruments as may be reasonably deemed necessary in order to more effectively perform and complete the transactions and undertakings contemplated hereunder. |
| 16.6 | Amendments: No amendment, modification or restatement of this Agreement and/or any of its Schedules shall be effective unless such amendment, modification or restatement is made in writing and signed by each of the Parties. |
| 16.7 | Sections: If any provisions of the Memorandum or the Articles (as amended from time to time) conflict with any of the provisions of this Agreement, the provisions of this Agreement shall prevail and the Parties shall, whenever necessary, exercise all voting and other rights and powers available to them to procure the amendment of the Articles of Association to the extent necessary to permit the Company and its affairs to be carried out as provided in this Agreement. |
| 16.8 | Survival after Termination: The termination of this Agreement shall be without prejudice to any claim or rights of action previously accrued to any Party hereto against the other Party. The provisions of this Agreement which are meant to survive the termination hereof, including but not limited to the obligations under clauses relating to Confidential Information, dispute resolution and governing law shall survive the termination of this Agreement or any part thereof. |
Page 31 of 37
| 16.9 | Relationship between the Parties: Nothing in this Agreement (or any of the arrangements contemplated by it) shall be deemed to constitute a partnership between the Parties, nor, except as may be expressly set out in it, constitute any Party as the agent of another Party for any purpose, or entitle any party to commit or bind another Party in any manner. The Parties have executed this Agreement on the basis of an independent contractor relationship. |
| 16.10 | Publicity: Neither Party shall disclose details of the Acquisition under this Agreement or any of the Additional Agreements in any advertisement, press release, professional or trade publication or in any other manner without the prior written consent of the other Party, other than any disclosures required to be made by the Purchaser in its capacity as a company listed on the NASDAQ or as otherwise required by either Party to be made under Applicable Law, including, but not limited to, those promulgated by the Securities and Exchange Commission. |
| 16.11 | Expenses: The expenses incurred by each Party in relation to the negotiation and execution of this Agreement and the transactions hereunder shall be borne by the respective Party. |
Page 32 of 37
SCHEDULE 1
DEED OF ADHERENCE
THIS DEED OF ADHERENCE (this “Deed”) is made on [●]:
BY:
[Name of New Shareholder], a [description of New Shareholder] and having its [registered office/permanent address] at [registered office/permanent address of New Shareholder] (hereinafter referred to as the “New Shareholder”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns);
IN FAVOUR OF:
[Name of Continuing Shareholder], a [description of Continuing Shareholder] and having its [registered office/permanent address] at [registered office/permanent address of Continuing Shareholder] (hereinafter referred to as the “Continuing Shareholder”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns);1
CONFIRMED BY:
[Name of Original Shareholder], a [description of Original Shareholder] and having its [registered office/permanent address] at [registered office/permanent address of Original Shareholder] (hereinafter referred to as the “Original Shareholder”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns);
AND
RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED a private limited company incorporated under the laws of India, bearing corporate identity number U22300MH2019PTC321407 and having its registered office at 8th Floor , 801/802 Lotus Grandeur, Veera Desai Road Extension, Oshiwara, Andheri West Mumbai, Mumbai City, Maharashtra - 400053, India (hereinafter referred to as “Company”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns).
1 To be repeated if there is more than one Continuing Shareholder.
Page 33 of 37
WHEREAS:
| (A) | The Original Shareholder, the Continuing Shareholder and the Company are parties to a Shareholders’ Agreement dated [●] (“SHA”) and the Stock Purchase Agreement dated [·] (“SPA”). The SHA and the SPA are collectively referred to as the “Agreements”. |
| (B) | The New Shareholder proposes to purchase [●] Shares of the Company, constituting [●]% of the Fully Diluted Share Capital, from the Original Shareholder (the “Sale Shares”). |
| (C) | This Deed is made by the New Shareholder in compliance with the Agreements. |
NOW THIS DEED WITNESSES as follows:
| 1. | In this Deed, capitalized terms used herein but not defined, shall have the same meaning ascribed to them under the Agreements. |
| 2. | The New Shareholder hereby confirms that it has been supplied with a copy of the Agreements. |
| 3. | The New Shareholder shall purchase from the Original Shareholder the Sale Shares for an aggregate purchase consideration of [Insert the Purchase Consideration] and agrees to hold the Sale Shares subject to the terms of the Agreements and the Articles of the Company. |
| 4. | The New Shareholder undertakes to the Continuing Shareholder to be bound by the Agreements in all respects as if the New Shareholder was a party to the Agreements and named in it as a Shareholder and to observe and perform all the provisions and obligations of the Agreements applicable to or binding on a Shareholder under the Agreements insofar as they fall to be observed or performed on or after the date of executing this Deed. |
| 5. | The Continuing Shareholder undertakes to the New Shareholder to observe and perform all the provisions and obligations of the Agreements applicable to or binding on a Shareholder under the Agreements and further the Continuing Shareholder and the Company acknowledge and confirm that the New Shareholder shall be entitled to the rights and benefits of the Agreements as if the New Shareholder were named in the Agreements in place of the Original Shareholder with effect from the date of executing this Deed. |
Page 34 of 37
| 6. | This Deed is entered into for the benefit of: (a) the parties to the Agreements; and (b) every other Person who after the Execution Date (and whether before or after the execution of this Deed) assumes any rights or obligations under the Agreements. |
| 7. | The address of the New Shareholder for the purposes of Clause 13 (Notices) of the SHA is as follows: |
| Name | : | [●] | |
| Address | : | [●] | |
| : | [●] | ||
| Attention | : | [●] |
| 8. | This Deed may be executed in any number of counterparts, all of which taken together shall constitute one and the same deed and any party may enter into this Deed by executing a counterpart. |
| 9. | Governing Law and Dispute Resolution: This Deed shall be governed by and construed in accordance with the laws of India. The provisions of Clause 14 (Dispute Resolution and Governing Law) of the SHA shall be deemed to stand incorporated in this Deed. |
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed on the date mentioned hereinabove:
For [Name of New Shareholder]
Name of the Authorized Representative: [●]
Designation: [●]
Place: [●]
For [Name of Continuing Shareholder]
Name of the Authorized Representative: [●]
Designation: [●]
Place: [●]
Page 35 of 37
For [Name of Original Shareholder]
Name of the Authorized Representative: [●]
Designation: [●]
Place: [●]
For RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED
Name of the Authorized Representative: [●]
Designation: [●]
Place: [●]
[Signature Page to follow]
Page 36 of 37
IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the date and the year first hereinabove written.
FOR THE PURCHASER:
INTERNATIONAL MEDIA ACQUISITION CORP.
| By: | /s/ Shibasish Sarkar | |
| Name: Shibasish Sarkar | ||
| Title: Chief Executive Officer |
FOR THE SELLER:
RISEE ENTERTAINMENT HOLDINGS PRIVATE LIMITED
| By: | /s/ Ajay Mittal | |
| Name: A.N. Sethuraman / Ajay Mittal | ||
| Title: Authorised Signatory |
FOR THE COMPANY:
RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED
| By: | /s/ Paras Jani | |
| Name: Paras Jani | ||
| Title: Authorised Signatory |
Page 37 of 37
Exhibit 10.2
FORM OF
EARNOUT AGREEMENT
This Earnout Agreement (this “Agreement”), dated as of October 22, 2022, is entered into by and between Risee Entertainment Holdings Private Limited, a private company incorporated in India, having its registered office at 502, Plot No. 91/94, Prabhat Colony, Santa Cruz (East) Mumbai 400 055 (the “Seller”), Reliance Entertainment Studios Private Limited, a private company incorporated in India, having its registered office at 8th Floor , 801/802 Lotus Grandeur, Veera Desai Road Ext, Oshiwara, Andheri West, Mumbai 400 053 (“Company”), and International Media Acquisition Corp., a Delaware corporation (“Parent”). The Seller, the Company, and the Parent are referred to herein each as a “Party” and together the “Parties”.
Recitals
WHEREAS, the Seller, the Company, and the Parent entered into a Stock Purchase Agreement, dated as of October 22, 2022, pursuant to which the Parent shall purchase all of the equity of the Company from the Seller in a series of transactions (the “Stock Purchase Agreement”) in accordance with the terms and subject to the conditions recorded thereunder; capitalized terms used but not defined herein shall have their respective meanings assigned to them in the Stock Purchase Agreement; and
WHEREAS, as a condition and an inducement to the Seller entering into the Stock Purchase Agreement, the Parties have agreed that up to $17,500,000 (the “Earnout”) will be paid to the Seller by the Company upon the achievement of certain trading prices of the common stock of the Parent as set forth herein.
NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Parties agree as follows:
Agreement
1. Definitions. For purposes hereof, the following terms when used in this Agreement shall have the respective meanings set forth below:
“Change in Control” means a change in Control of a Person.
“Earnout Period” means the period from and after the first anniversary of the Initial Closing Date until the third anniversary of the Initial Closing Date.
“First Milestone Event” means the occurrence of the following event: the weighted average share price of the shares of Parent Common Stock on Nasdaq, for a period of ten (10) trading days over any twenty (20) consecutive trading days during the Earnout Period, is greater than or equal to $15.00 per share / stock).
“INR” means Indian National Rupees, the currency of the Republic of India.
“Milestone Event” means any of the First Milestone Event and Second Milestone Event.
“Parent Common Stock” means the Parent’s common stock listed on Nasdaq with trading ticker “IMAQ”.
“Second Milestone Event” means the occurrence of the following event: the weighted average share price of the shares of Parent Common Stock on Nasdaq, for a period of ten (10) trading days over any twenty (20) consecutive trading days during the Earnout Period, is greater than or equal to $20.00 per share / stock.
2. Payment of Earnout.
(a) The Parties acknowledge, confirm, and agree that the Earnout shall be calculated as follows:
(i) the Seller shall be entitled to receive, and the Company shall be obligated to pay, an INR amount equivalent to $7,500,000 upon satisfaction / occurrence of the First Milestone Event;
(ii) the Seller shall be entitled to receive, and the Company shall be obligated to pay, an INR amount equivalent to $10,000,000 upon satisfaction / occurrence of the Second Milestone Event; and
Any Earnout that are not earned on or before the expiration of the Earnout Period shall be forfeited.
(b) The Company shall and the Parent shall ensure that the Company shall pay the Earnout to Seller immediately upon satisfaction / occurrence of a Milestone Event (but in any event within thirty (30) days of the achievement of a Milestone Event). Notwithstanding the foregoing, in the event that either of the Earnout payments become due for payment within the period of 18 months from Initial Closing, it will be paid within thirty (30) days after the expiration of 18 months from Initial Closing.
(c) The Parent hereby guarantees the payments to be made by the Company under this Agreement and shall immediately be liable to pay all such amounts in the event of any failure or delay by the Company to do so for any reason whatsoever.
3. Covenants.
In the event Parent shall at any time during the Earnout Period pay any dividend on Parent Common Stock by the issuance of additional shares of Parent Common Stock, or otherwise effect a subdivision or combination or consolidation or amalgamation of the outstanding Parent Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Parent Common Stock, then in each such case, the dollar values set forth in Sections 2(a) and Sections 4 shall be appropriately adjusted to provide to the Seller the same economic effect as contemplated by this Agreement prior to such event.
2
4. Change in Control. If, at any time after the Initial Closing and prior to or on the third (3rd) anniversary of the Initial Closing Date, any transaction resulting in a Change in Control, and the per share valuation of Parent Common Stock in such Change in Control transaction prior to giving effect to the provisions of this Section 4 is: (i) greater than or equal to $15.00, then, immediately prior to the consummation of such Change in Control transaction, the Milestone Event set forth in Section 2(a)(i) shall be deemed to have occurred whether or not such Milestone Event shall have previously occurred; (ii) greater than or equal to $20.00, then, immediately prior to the consummation of such Change in Control transaction, the Milestone Event set forth in Section 2(a)(ii) shall be deemed to have occurred whether or not such Milestone Event shall have previously occurred; (it being understood that such Change in Control may result in the occurrence of more than one of the events as provided in clauses (i) and (ii)).
5. Taking of Necessary Action. If, at any time, any further action is necessary or desirable to ensure that the Seller receives the Earnout and to carry out the purposes of this Agreement, the Company and Parent shall ensure that all lawful actions necessary or desirable to accomplish such purpose or acts shall be undertaken. Notwithstanding the generality of the foregoing, in the event any consent, approval, order, authorization, registration, qualification, designation, declaration or filing (“Authorization”) is required to be obtained from or filed to any Authority or Person in connection with the consummation of the transactions contemplated by this Agreement, the Company and Parent shall ensure that such Authorization is duly obtained or filed.
6. Representations and Warranties of the Seller. Seller represents and warrants to the Company as follows:
(a) Authorization. This Agreement, when executed and delivered by the Seller, shall constitute the valid and legally binding obligation of the Seller, enforceable in accordance with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application relating to or affecting enforcement of creditors’ rights generally; or (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
(b) Compliance with Other Instruments. The execution, delivery and performance by the Seller of this Agreement and the consummation by the Seller of the transactions contemplated by this Agreement will not result in any violation or default: (i) of any instrument, judgment, order, writ or decree to which it is a party or by which it is bound; (ii) under any note, indenture or mortgage to which it is a party or by which it is bound; (iii) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound; or (iv) of any provision of any federal or state statute, rule or regulation applicable to the Seller, in each case, which would have a material adverse effect on the Seller or its ability to consummate the transactions contemplated by this Agreement.
7. Representations and Warranties of the Company. The Company represents and warrants to the Seller as follows:
(a) Organization and Corporate Power. The Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to carry on its business as presently conducted and as proposed to be conducted.
3
(b) Authorization. The Company has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by the Company, shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally; or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(c) Governmental Consents and Filings. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of any Party in connection with the consummation of the transactions contemplated by this Agreement.
(d) Compliance with Other Instruments. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any violation or default: (i) of any provisions of its certificate of incorporation or other governing documents; (ii) of any instrument, judgment, order, writ or decree to which it is a party or by which it is bound; (iii) under any note, indenture or mortgage to which it is a party or by which it is bound; (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound; or (v) of any provision of any federal or state statute, rule or regulation applicable to the Company, in each case (other than clause (i)) which would have a material adverse effect on the Company, the Parent or the ability to consummate the transactions contemplated by this Agreement.
8. Representations and Warranties of the Parent. The Parent represents and warrants to the Seller as follows:
(a) Organization and Corporate Power. The Parent is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to carry on its business as presently conducted and as proposed to be conducted.
(b) Authorization. The Parent has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by the Parent, shall constitute the valid and legally binding obligation of the Parent, enforceable against the Parent in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally; or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(c) Governmental Consents and Filings. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of any Party in connection with the consummation of the transactions contemplated by this Agreement.
4
(d) Compliance with Other Instruments. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any violation or default: (i) of any provisions of its certificate of incorporation or other governing documents; (ii) of any instrument, judgment, order, writ or decree to which it is a party or by which it is bound; (iii) under any note, indenture or mortgage to which it is a party or by which it is bound; (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound; or (v) of any provision of any federal or state statute, rule or regulation applicable to the Parent, in each case (other than clause (i)) which would have a material adverse effect on the Company, the Parent or the ability to consummate the transactions contemplated by this Agreement.
9. General Provisions.
(a) Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (i) if by hand or nationally recognized overnight courier service, by 5:00 PM Eastern Time on a Business Day, addressee’s day and time, on the date of delivery, and if delivered after 5:00 PM Eastern Time, on the first Business Day after such delivery; (ii) if by electronic mail or facsimile, on the date of transmission with affirmative confirmation of receipt; or (iii) three (3) Business Days after mailing by prepaid certified or registered mail, return receipt requested. Notices shall be addressed to the respective Parties as follows, or to such other address as a Party shall specify to the others in accordance with these notice provisions:
if to the Company, to:
Reliance Entertainment Studios Private Limited
8th Floor, 801/802, Lotus Grandeur, Veera Desai Road
Ext Oshiwara, Andheri West Mumbai, MH- 400053
with a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attn: Mitchell S. Nussbaum
Fax: 212.504.3013
E-mail: mnussbaum@loeb.com
if to Seller, to:
Risee Entertainment Holdings Private Limited
502, Plot No. 91/94, Prabhat Colony,
Santa Cruz (East), Mumbai MH 400055
India
Attn: Gautam Jain
E-mail: gautam.jain@unlimit.co.in
5
if to Parent:
International Media Acquisition Corp.
1604 US Highway 130
North Brunswick, NJ 08902
Attn: Shibasish Sarkar, Chief Executive Officer
E-mail: shibasish@imac.org.in
with a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attn: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
(b) Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive the Closing.
(c) Entire Agreement. This Agreement, together with any documents, instruments and writings that are delivered pursuant hereto or referenced herein, constitutes the entire agreement and understanding of the Parties in respect of its subject matter and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.
(d) Successors. All of the terms, agreements, covenants, representations, warranties, and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the Parties and their respective successors. Nothing in this Agreement, express or implied, is intended to confer upon any Party other than the Parties or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(e) Assignments. Except as otherwise specifically provided herein, no Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party. Provided that the Seller shall have the unfettered right to transfer, assign, and convey its rights and interests under this Agreement.
(f) Counterparts. This Agreement may be executed, by manual or electronic signature, in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
6
(h) Governing Law. This Agreement, the entire relationship of the Parties, and any litigation between the Parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the laws of the State of Delaware, without giving effect to its choice of laws principles.
(i) Arbitration. Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Section 9 (i), arising out of, related to, or in connection with this Agreement or the transactions contemplated hereby (a “Dispute”) shall be governed by this Section 9 (i). A party must, in the first instance, provide written notice of any Disputes to the other parties subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The parties involved in such Dispute shall seek to resolve the Dispute on an amicable basis within ten (10) Business Days of the notice of such Dispute being received by such other parties subject to such Dispute (the “Resolution Period”); provided, that if any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during the Resolution Period may immediately be referred the International Chamber of Commerce and finally settled under the Rules of Arbitration of the International Chamber of Commerce (the “Rules”) by a panel of three arbitrators appointed in accordance with the said Rules, with the Seller on the one hand nominating one arbitrator and the Purchaser on the other hand nominating the second arbitrator, and both such arbitrators shall appoint the third arbitrator. If any such dispute is submitted to arbitration: (i) the Emergency Arbitrator Provisions (as such term is defined in the Rules) shall not apply, (ii) the seat of arbitration shall be London, England and the language of the arbitration shall be English, and (iii) the award issued by the arbitration tribunal shall be final and binding upon the parties. All proceedings of such arbitration including arguments, applicable documents on record, pleadings shall be confidential.
(j) Amendments. This Agreement may not be amended, modified or waived as to any particular provision, except with the written consent of the Parties.
(k) Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to any Party or to any circumstance, is adjudged by a governmental authority, arbitrator, or mediator not to be enforceable in accordance with its terms, the Parties agree that the governmental authority, arbitrator, or mediator making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.
7
(l) Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local, or foreign law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The Parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such Party has not breached will not detract from or mitigate the fact that such Party is in breach of the first representation, warranty, or covenant.
(m) Waiver. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent occurrence.
(n) Confidentiality. Except as may be required by law, regulation or applicable stock exchange listing requirements, unless and until the transactions contemplated hereby and the terms hereof are publicly announced or otherwise publicly disclosed by Parent, the Parties shall keep confidential and shall not publicly disclose the existence or terms of this Agreement.
(o) Specific Performance. Each party’s obligations under this Agreement are unique. If any party hereto should breach its covenants or agreements under this Agreement, the parties hereto each acknowledge that it would be extremely impracticable to measure the resulting damages; accordingly, the non-breaching party or parties, in addition to any other available rights or remedies they may have under the terms of this Agreement, may sue in equity for specific performance or to obtain an injunction or injunctions to prevent breaches of this Agreement, and each party hereto expressly waives the defense that a remedy in damages will be adequate.
[Signature page follows]
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the date first set forth above.
| RELIANCE ENTERTAINMENT STUDIOS PRIVATE LIMITED | ||
| By: | /s/ Paras Jani | |
| Name: | Paras Jani | |
| Title: | Authorised Signatory | |
| RISEE ENTERTAINMENT HOLDINGS PRIVATE LIMITED | ||
| By: | /s/ Ajay Mittal | |
| Name: | A.N. Sethuraman / Ajay Mittal | |
| Title: | Authorised Signatory | |
| INTERNATIONAL MEDIA ACQUISITION CORP. | ||
| By: | /s/ Shibasish Sarkar | |
| Name: | Shibasish Sarkar | |
| Title: | Chief Executive Officer | |
[Signature Page to Earnout Agreement]