Articles of Association - Satyam Infoway Ltd.
UNDER THE COMPANIES ACT, 1956
[1 OF 1956]
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
SATYAM INFOWAY LIMITED
The following articles shall be the regulations of the management of the
Company.
PRELIMINARY
1. Subject to as provided here in after the regulations contained in Table `A'
of the Companies Act, 1956, herein after, referred to as Table `A' shall
apply to the Company except, those regulations as do not apply to private
Companies.
2. [/3/]
CAPITAL
3. The authorised share capital of the Company shall be as stated in clause V
of the Memorandum of Association.
(i) [Where at any time subsequent to the first allotment of shares, it is
proposed to increase the subscribed capital by the issue of new
shares, subject to any directions to the contrary which may be given
by the company in general meeting and subject only to these
directions, such new shares shall be issued in accordance with the
provisions of section 81 of the Act.]/4/
4. The Directors of the Company may from time to time determine the amount
payable on application and allotment at the time of issue of shares and may
also make calls upon the members in respect of any money unpaid on their
shares of such amount and payable at such time and place as they may from
time to time decide.
5. Every person whose name is entered as a member in the register of members
shall be entitled to receive within three months of the date of allotment
one certificate for all his shares under the seal of the Company and if,
any member so desires, he can have more than one certificate in respect of
each or more of his shares on payment of Rs.10/-as certificate. The
Company shall not be bound to issue more than one certificate in respect of
the same share to joint holders.
6. If a share certificate is defaced, lost or destroyed, it may be renewed on
payment of Rs.30/-and on executing an indemnity bond in respect of the
shares comprised in the certificate after the Directors are satisfied as to
the genuineness of the case.
______________________________
/3/ Provisions relating to Private Companies deleted by Special Resolution
passed in an Extra-ordinary General Meeting held on 30th November 1998.
/4/ Inserted vide Special resolution passed in Extra-ordinary General meeting
held on 30th June 1997
<PAGE>
SHARE WARRANTS
6A.
1) The company may issue share warrants subject to, and in accordance with
the provisions of Section 114 and 115; and accordingly the Board may in
its discretion with respect to any share which is fully paid-up, on
application in writing signed by the person registered as holder of the
share, and authenticated by such evidence (if any) as the Board may,
from time to time, require as to the identity of the person signing the
application, and on receiving the certificate (if any) of the share,
and the amount of the stamp duty on the warrant and such fee as the
Board may from time to time require, issue a share warrant.
2) The Board may, from time to time, make rules as to the terms of which
(if it shall think fit) a new share warrant or coupon may be issued by
way of renewal in case of defacement, loss or destruction.
3) The warrant issued shall entitle the registered holder thereof a right
to subscribe (the "Subscription Right(s)") for one fully paid share in
the capital of the company at any time during the warrant exercise
period for the warrant exercise price on the following conditions
4) The Warrant Exercise price per shall be calculated by applying, at the
"Warrant exercise date" a multiple of eight to the fully diluted
earnings per share calculated using the latest annual audited accounts
of the company. The term "fully diluted" shall for the purposes of this
clause mean that the number of shares used to calculated the earnings
per share will be the number of shares used to calculated the earnings
per share will the number of shares that would be in issue if all the
warrants and options in issue at the Warrant exercise date were
converted into shares, subject to a minimum price of the higher of (a)
66% of the fair market value of a share on the warrant exercise date,
fair market value being arrived at by taking the mean price per share
determined by three reputable merchant banks acceptable to the share
holders at the time and (b) the par value of shares subscribed. If the
share holders cannot agree on three reputable merchant banks, the
President for the time-being of the International Chambers of Commerce,
India will select and appoint such remaining reputable Merchant bankers
as may be required, at the request of any of the parties hereto.
5) The Warrants exercise period shall be any time between 30th June 2001
to 30 June 2003 during which warrants can be exercised failing which
the relevant warrants will lapse and cease to have any further effect.
Once a notice exercising the warrant has been given, such notice may
not be withdrawn except with written consent of the company. The
warrants shall have to be exercised in not more than 3 tranches by the
warrant holders.
6) Each warrant holder shall be entitled to warrant certificates in such
denominations as he may request. The warrant certificates shall be
issued under the seal of the company. The conditions of the warrants
and the warrants shall be binding upon the company and the warrant
holders and all persons claiming through or under them respectively.
7) As long as any of the subscription rights remain exercisable:
(a) all shares allotted and issued on exercise of the subscription
shall rant pari passu in all respects with the fully paid
shares in the company and shall accordingly entitle the
holders to participate in full in all dividends or other
distributions paid or made on in respect of the shares from
the relevant warrant exercise date; and
(b) the company shall send to each warrant holder, at the same
time as the same are sent to the holders of shares, its
audited accounts and all other notices,
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reports and communications despatched by it to the holders of
the shares generally.
(c) Warrants shall be transferable by instrument of transfer in
any usual or common form or such other form as may be approved
by the Directors. The provisions relating to the registration
transmission and transfer of shares and register of members
shall apply mutatis mutandis, to the registration,
transmission and transfer of the warrants and the register.
REGISTRATION RIGHTS
6B [/5/]
(a) Notwithstanding anything to the contrary contained herein, at any
time commencing 180 days after an initial public offering outside India,
Sterling Commerce, Inc. ("Sterling Commerce"), may make one written request, and
South Asian Regional Fund ("SARF") may make three written requests ("Demand
Registration"), for a registration of Registrable Securities under the United
States Securities Act of 1933 ("Securities Act"), pursuant to a registration
statement on the appropriate form. "Registrable Security" means each equity
share of the Company until (i) it has been effectively registered under the
Securities Act and disposed of pursuant to an effective registration statement,
(ii) it is sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met, including a sale pursuant to the provisions of Rule 144(k), (iii) it has
been otherwise Transferred and the certificate or other evidence of ownership
for it is not required to bear the legend required pursuant to Article 11B and
it may be resold by the person receiving such certificate without registration
under the Securities Act or (iv) the Holder thereof ceases to hold at least one
percent (1.0%) of the outstanding Equity Shares and all of such Holder's Equity
Shares may be resold in one 90-day period without (x) a volume limitation or (y)
reliance on Rule 144(k).
The request for a Demand Registration shall specify the number of
Registrable Securities proposed to be sold (which shall be at least the lesser
of (i) U.S. $5.0 million in fair market value or (ii) all equity shares then
beneficially owned by Sterling Commerce or SARF, as the case may be) and will
also specify the intended method of disposition thereof. The Company shall not
be required to keep any shelf registration statement requested pursuant to a
Demand Registration continuously effective for more than 90 days.
(b) A registration will not be deemed to have been effected as a
Demand Registration unless it has been declared effective by the United States
Securities and Exchange Commission ("Commission") and the Company has complied
in all material respects with its obligations with respect thereto; provided
that if, after it has become effective, the offering of Registrable Securities
pursuant to such registration is or becomes the subject of any stop order,
injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of Registrable Securities pursuant to the registration (for any
reason other than the acts or omissions of the Holder who commenced the Demand
Registration), such registration will be deemed not to have been effected. If
(i) a registration requested pursuant to this Article 6B is deemed not to have
been effected or (ii) the registration requested pursuant to this Article 6B
does not remain effective for a period of at least 90 days beyond the effective
date thereof or until the earlier consummation of the distribution by the Holder
who commenced the Demand Registration of the Registrable Securities included in
such registration statement by it, then such registration statement shall not
count as a Demand Registration pursuant to Article 6B (a) and the Company shall
continue to be obligated to effect the registrations pursuant to this Article 6B
as though the request for such Demand Registration had never been made. At the
request of the Holder who commenced the Demand Registration, the Company shall
withdraw the Demand Registration at any time prior to the time it becomes
effective, provided that such Holder shall reimburse the
___________________________
/5/ Inserted vide Special resolution passed in Extra-ordinary General meeting
held on 8th September, 1999
3
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Company for all reasonable out-of-pocket expenses (including reasonable counsel
fees and expenses) incurred prior to such withdrawal and shall thereafter be
entitled to the Demand Registration rights that existed prior to such
withdrawal.
(c) If the Holder commencing the Demand Registration so elects, the
offering of Registrable Securities pursuant to a Demand Registration shall be in
the form of an underwritten offering. The Holder commencing the Demand
Registration shall select one or more nationally recognized firms of investment
bankers to act as the book-running managing Underwriter or Underwriters in
connection with such offering and shall select any additional investment bankers
and managers to be used in connection with the offering; provided that such
investment bankers and managers must be reasonably satisfactory to the Company.
(d) In connection with a Demand Registration under this Article 6B
only, the Holders participating in the Demand Registration shall have the sole
right to determine the offering price per share and underwriting discount, if
applicable, in connection with any resales of Registrable Securities by them,
after consultation with the Company and due regard for the Company's views
relating thereto.
6C [/5/]
Piggy-Back Registration: If at any time the Company proposes to file a
------------------------
registration statement under the Securities Act with respect to an offering by
the Company for its own account or for the account of any security holders of
any class of its equity securities for cash, including without limitation, a
registration statement filed in response to a request for Demand Registration
pursuant to Article 6B (other than a registration statement filed in connection
with an exchange offer or offering of securities solely to the Company's
existing security holders or for any compensatory benefit plan), then the
Company shall give written notice of such proposed filing to each Holder as soon
as practicable (but in no event less than 14 days before the anticipated filing
date), and such notice shall offer each other Holder the opportunity to register
such number of Registrable Securities as such Holder may request (which request
shall specify the Registrable Securities intended to be disposed of by such
Holder and the intended method of distribution thereof) (a "Piggy-Back
----------
Registration").
------------
The Company shall use its reasonable best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested by each other Holder to be included
in a Piggy-Back Registration to be included on the same terms and conditions as
any similar securities of the Company or any other security holder included
therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof. A
Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any registration statement pursuant to this Article 6C
by giving written notice to the Company of its request to withdraw.
No registration effected under this Article 6C, and no failure to
effect a registration under this Article 6C, shall relieve the Company of its
obligations pursuant to Article 6B, and no failure to effect a registration
under this Article 6C and to complete the sale of equity shares in connection
therewith shall relieve the Company of any other obligation.
6D[/5/]
Reduction of Offering. (a) Demand Registration. As provided for in Article
--------------------- -------------------
6C, the Company may include in a Demand Registration Equity Shares for the
account of the Company, the other Holders or other holders thereof exercising
contractual piggy back or demand rights, on the same terms and conditions as the
Registrable Securities to be included therein for the account of the
______________________________
/5/
4
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Holder commencing the Demand Registration; provided, however, that (i) if the
managing Underwriter or Underwriters of any underwritten offering described in
Article 6B have informed the Company in writing that it is their opinion that
the total number of Equity Shares which the Company and the Holders and any
other holders participating therein intend to include in such offering is such
as to materially and adversely affect the success of such offering, then (x) the
number of Equity Shares to be offered for the account of such other holders (if
any) shall be reduced (to zero, if necessary), in the case of this clause (x)
pro rata in proportion to the respective number of Equity Shares requested to be
registered, (y) thereafter, if necessary, the number of Equity Shares to be
offered for the account of the Company (if any) shall be reduced (to zero, if
necessary) and (z) thereafter, if necessary, the number of Equity Shares to be
offered for the account of the Holder (other than the Holder commencing the
Demand Registration) (if any) shall be reduced (to zero, if necessary), to the
extent necessary to reduce the total number of Equity Shares requested to be
included in such offering to the number of Equity Shares, if any, recommended by
such managing Underwriters and (ii) if the offering is not underwritten, no
other party, including the Company, shall be permitted to offer securities under
any such Demand Registration unless the Holder commencing the Demand
Registration consents to the inclusion of such Equity Shares therein, such
consent not to be unreasonably withheld.
(b) Piggy-Back Registration. Notwithstanding anything to the contrary
-----------------------
contained herein, if the managing Underwriter or Underwriters of any
underwritten offering described in Article 6C have informed the Company in
writing that it is their opinion that the total number of Equity Shares that the
Company and the Holders and any other Persons desiring to participate in a
registration other than a Demand Registration intend to include in such offering
is such as to materially and adversely affect the success of such offering, then
the number of Equity Shares to be offered for the account of the Holders and all
such other Persons (other than the Company) participating in such registration
shall be reduced (to zero if necessary) or limited pro rata in proportion to the
respective number of Equity Shares requested to be registered to the extent
necessary to reduce the total number of Equity Shares requested to be included
in such offering to the number of Equity Shares, if any, recommended by such
managing Underwriters; provided, however, that if such offering is effected for
the account of any other security holder of the Company pursuant to the demand
registration rights of such security holder, then (x) the number of Equity
Shares to be offered for the account of the Company (if any) shall be reduced
(to zero, if necessary) and (y) thereafter, if necessary, the number of Equity
Shares to be offered for the account of the Holders and any other holders that
have requested to include Equity Shares in such registration (but not such
security holders who have exercised their demand registration rights) shall be
reduced (to zero, if necessary), in the case of this clause (y) pro rata in
proportion to the respective number of Equity Shares requested to be registered,
to the extent necessary to reduce the total number of Equity Shares requested to
be included in such offering to the number of Equity Shares, if any, recommended
by such managing Underwriters.
6E [/5/]
Registration Rights in India.
----------------------------
In connection with any registered public offering by the Company of equity
shares in India, the Company shall, subject to all necessary approvals of the
Government of India, use its reasonable best efforts to register the equity
shares held by Sterling Commerce under Indian law and, at the request of
Sterling Commerce, include the equity shares held by Sterling Commerce in such
offering on terms that treat it pro rata with the other holders of equity shares
with registration rights applicable to an offering in India.
TRANSFERS
____________________________
/5/
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7. The shareholder shall not except with the prior written consent of the
other shareholders:
(1) pledge, mortgage, charge or otherwise encumber any of its shares,
options or warrants or any interest in any such shares options or
warrants;
(2) transfer, dispose of or grant an option over any of its shares or
any interest (legal or beneficial) in any such shares, options or
warrants; or
(3) enter into any agreement in respect of the votes attached to any
of its shares, options or warrants.
8. Satyam Computer Services Limited shall not be entitled to transfer any
shares, warrants or options to a buyer unless it ensures that the buyer
makes a written offer (open for acceptance for a period of at least 28 days
and with adequate security as to the performance of its obligations) to
purchase all of the shares held by South Asia Regional Fund at the Tag
Along price per share. Any such offer shall be on the terms that the
consideration shall be payable in cash in full without any set off within
21 days of acceptance of the offer. Satyam Computer Services Limited shall
also ensure that the buyer completes the purchase from South Asia Regional
Fund all of its shares before or at the same time as the buyer completes
the purchase of shares from it. "Tag Along Price" shall mean the higher of
(a) the highest consideration offered for each share the proposed transfer
of which has led to the offer; and (b) the highest consideration paid by
the buyer for any share in the twelve months up to the relevant offer.
9. If any shareholder transfers any shares, warrants or options owned by it in
accordance with the provisions of any share subscription agreement other
than to the other shareholder(s) (transferee) of the company, such transfer
shall be made upon the condition that the transfer shall be made upon the
condition that the transferee(s) shall execute a Deed of Adherence, in form
agreed to by the parties by which, on and as of the date on which such
shares, warrants or options are transferred to it, the transferee(s) shall
become subject to the same obligations and shall be entitled to the same
rights as bound and accrued to the transferor pursuant to such share
subscription agreement.
10. The registration of transfer of shares, warrants or options shall be
carried out by the board of directors only if they are effected in
accordance with any Share Subscription Agreement entered into by the
company and the transferee has fulfilled the obligations pursuant to such
an agreement.
11. If South Asia Regional Fund becomes entitled to exercise the Exit Option in
accordance with Share Subscription Agreement may at its option:
(i) require Satyam Computer Services Limited makes available for sale the
requisite number of its shares along with South Asia Regional Fund's
shareholding, meeting the minimum listing requirements on the BSE or
the NSE or other recognised stock exchange in India or abroad,
through an offer for sale to public
(ii) sell its holding to a trade buyer or financial investor in which case
the sponsor will undertake all steps to facilitate such a sale,
including making available necessary number of its shares which when
combined with the shares owned by South Asia Regional Fund will give
the trade buyer or financial investor at least a 25.1% shareholding
in the company, and both Satyam Computer Services Limited and South
Asia Regional Fund sell their shares on the same terms and conditions
(iii) require the company to buy back all of its shares or such of South
Asia Regional Fund's shares as are permitted under Indian law, at a
price per share agreed between South Asia Regional Fund and the
company, or failing such agreement at Fair Market value.
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11A [/5/]
(a) Notwithstanding any other provisions of these Articles of
Association, except for as provided in Article 11C, Sterling Commerce shall not
transfer its pecuniary interest in any equity shares of the Company for a period
of 180 days from the date of the allotment of shares to it for the first time in
the Company, except transfers to a wholly-owned subsidiary or parent
corporation.
(b) In the event of an initial public offering in which (i) the gross
proceeds from the shares of Equity Shares sold are at least $20 million, and
(ii) immediately after such offering the Equity Shares, or American Depositary
Shares representing the Equity Shares, are listed for trading on either the New
York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market
National Market System ("Qualified IPO"), neither Sterling Commerce, Inc. nor
Satyam Computer Systems Limited ("SCSL") shall transfer any equity shares for a
period (the "Lockup Period") commencing on the date on which such Qualified IPO
is consummated, provided that all (i) members of the Board of Directors, (ii)
Affiliates of members of the Board of Directors, which Affiliates own Equity
Shares and (iii) Similarly Situated Investors agree to a substantially identical
lockup. The length of the Lockup Period shall be determined by the Company,
after consultation with the underwriters in connection with the Qualified IPO,
but in no event shall be longer than 180 days.
(c) Neither Sterling Commerce nor SCSL shall transfer any Equity
Shares (other than transfers (1) to the Company, (2) to any Affiliate, (3)
pursuant to a merger or consolidation involving the Company or the sale of all
or substantially all of the outstanding equity shares or (4) Transfers
constituting a bona fide public distribution pursuant to (x) any registration
statement filed under the Securities Act (the U.S. Securities Act of 1933) or
any Public Offering ("Public Offering" shall mean any underwritten public
distribution of equity securities of the Company in the United States pursuant
to an effective registration statement under the Securities Act) or (y) Rule 144
Open Market Transactions) unless (i) the certificates representing such Equity
Shares issued to the Transferee bear the legend provided in Article 11B, if
required by such Article, and (ii) the Transferee (if not already a party
hereto) has executed and delivered to each other party hereto, as a condition
precedent to such Transfer, an instrument or instruments, reasonably
satisfactory to such parties, confirming that the Transferee agrees to be bound
by the terms of this Agreement in the same manner as such Transferee's
transferor, except as otherwise specifically provided in this Agreement.
11B [/5/] In the cases of Sterling Commerce and SCSL, each outstanding
certificate representing equity shares issued to them, or any certificate issued
in exchange for any similarly legended certificate (including any related
depositary receipt), shall, unless sold in a transaction pursuant to Article 11A
(c)(1), (2), (3) or (4), bear a legend reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS OF ANY STATE WITHIN THE UNITED STATES, AND MAY BE
OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THE HOLDER OF THESE SECURITIES MAY BE REQUIRED TO DELIVER TO THE
COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL (REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE EFFECT THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR QUALIFICATION UNDER
STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY TRANSFER OF THESE
SECURITIES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY
________________________
/5/
/5/
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TRANSFEREE AGREES BY HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE STOCKHOLDERS
AGREEMENT, DATED AS OF SEPTEMBER 13, 1999. NO TRANSFER OF SUCH SECURITIES WILL
BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE
WITH THE TERMS OF SUCH AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE
BOUND BY THE RESTRICTIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT. THE COMPANY
WILL MAIL A COPY OF SUCH STOCKHOLDERS AGREEMENT TO THE HOLDER HEREOF WITHOUT
CHARGE WITHIN FIVE (5) DAYS AFTER THE COMPANY'S RECEIPT OF A WRITTEN REQUEST
THEREFOR.
11C [/5/]
(a) Notwithstanding any other provisions of these Articles of
Association, (a) In the event that SCSL proposes to effect a Tag-Along Sale,
SCSL shall afford Sterling Commerce the opportunity to participate therein in
accordance with this Article 11C.
(b) With respect to each Tag-Along Sale, Sterling Commerce shall have
the right to Transfer, at the same price and upon identical terms and conditions
as such proposed Transfer (except as set forth below), the number of Equity
Shares owned by Sterling Commerce equal to the Transfer Allotment; provided,
however, that in the event of a Tag-Along Sale pursuant to a Transfer by SCSL of
an interest in a Person that directly or indirectly owns Equity Shares, the
price and other terms and conditions of such Tag-Along Sale applicable to
Sterling Commerce shall as closely approximate those of the proposed Transfer as
is reasonably practicable.
At the time any Tag-Along Sale is proposed, SCSL shall give written
notice to Sterling Commerce of its right to sell Equity Shares hereunder (the
"Transfer Notice"), which notice shall identify the Proposed Purchaser and state
the number of Equity Shares proposed to be Transferred, the proposed offering
price (including the form and terms of any non-cash consideration to be received
in connection therewith), the proposed date of any such Transfer (the "Transfer
Date") and any other material terms and conditions of the proposed Transfer. The
Transfer Notice shall also contain a complete and correct copy of any offer to,
or agreement with, SCSL by the Proposed Purchaser to purchase such Equity
Shares. SCSL shall use its reasonable best efforts to deliver the Transfer
Notice at least 30 days prior to the Transfer Date and in no event shall SCSL
provide such Transfer Notice later than 21 days prior to the Transfer Date.
(c) If Sterling Commerce wishes to participate in the Tag-Along Sale,
it shall provide written notice (the "Tag-Along Notice") to SCSL no less than
seven days prior to the Transfer Date. The Tag-Along Notice shall set forth the
number of Equity Shares that Sterling Commerce elects to include in the
Transfer, which shall not exceed the Transfer Allotment; provided that the
failure of Sterling Commerce to correctly specify a number of Equity Shares not
exceeding the Transfer Allotment shall not affect the rights Sterling Commerce
may otherwise have under this Article 11C. Any Tag-Along Notice given by
Sterling Commerce shall constitute its binding agreement to sell such Equity
Shares on the terms and conditions applicable to the Transfer.
If a Tag-Along Notice is not received by SCSL from Sterling Commerce
prior to the seven-day period specified above, SCSL shall have the right to sell
or otherwise Transfer the number of Equity Shares specified in the Transfer
Notice to the Proposed Purchaser specified in the Transfer Notice without any
participation by Sterling Commerce, but only on terms and conditions with
respect to the consideration paid by the Proposed Purchaser no more favorable
(and other material terms and conditions which a reasonable investor would
consider significant to the decision to include Equity Shares in the Transfer no
more favorable in any material respect) to the Proposed Purchaser than as stated
in the Transfer Notice to Sterling Commerce, and only if such Transfer occurs on
a date within 60 Business Days of the Transfer Date.
(d) The provisions of this Article 11C shall not apply to any
Transfers (i) by SCSL to
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/5/
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a permitted transferee of SCSL (provided that such permitted transferee has
agreed to be bound by this Agreement as contemplated by Article 11A hereof),
(ii) pursuant to a Public Offering, or (iii) pursuant to a Rule 144 Open Market
Transaction of which Sterling Commerce has been provided at least two Business
Days prior written notice.
12. The Board of Directors can in the best interest of the company, if they
thought fit, refuse registration of any company application for transfer
without assigning any reason for so doing and they shall give notice of
refusal in all such cases within one month.
13. BSE means "Bombay Stock Exchange" of India and NSE means "National Stock
Exchange" of India. South Asia Regional Fund includes its subsidiaries for
the time being.
14. [/6/]
15. [/7/]
MEETINGS
16. All General Meetings including Annual General Meetings may be called by
giving not less than [twenty one clear days]/8/ notice in writing.
17. The provisions of Sec.173 of the Companies Act, 1956 shall not apply to the
Company. The provisions of Section 176(2) shall not apply the Company.
MANAGEMENT
18. The quorum of meeting of Directors shall be three or one third of the
strength of the Board whichever is higher.
18A
1) As long as South Asia Regional Fund own at least 7.5% of the issued
ordinary share capital of the company, be entitled by notice in writing to
the company, to nominate one Director to the Board of the company and to
require the removal or substitution of any such director appointed by it.
Such a Director appointed need not retire by rotation notwithstanding
anything contrary contained in any other clause in the Articles of
Association.
2) The Board shall comprise of a majority of independent non-executive
directors. At the time of completion of any sale, assignment, transfer or
other disposition of all the shares held by a shareholder, the shareholder
shall procure the resignation of each director nominated by it. Where a
shareholder sells, assigns transfers or otherwise disposes, part of its
shares, such transferee shall not be entitled to appoint any director
unless and until all of the transferring shareholder's original holding is
transferred to it, unless the shareholders agree to the contrary.
3) The company shall provide at least 15 business days notice of meetings of
the Board to those entitled to attend Board meetings unless a shorter
duration is agreed to by all the
____________________
/6/ Deleted vide Special Resolution passed in Extra-ordinary General Meeting
held on 30/th/ November 1998
/7/ Deleted vide Special Resolution passed in Extra-ordinary General Meeting
held on 30/th/ November 1998
/8/ Replaced in lieu of the words "seven days" vide Special Resolution passed
in Extra-ordinary General Meeting held on 30/th/ November 1998
9
<PAGE>
directors entitled to attend board meetings. The company shall prepare an
agenda for each meeting, providing the full details of matters to be
considered, and details of all resolutions proposed to be passed at the
meeting of the Board. Business Day means a day on which banks are open for
business (including dealings in foreign currency deposits and exchange) in
India.
4) South Asia Regional Fund shall have the right through its nominated
Director to participate on all Board committees, including executive
committee, the audit and finance committee and the remuneration committee.
18B [/5/]
(a) For so long as Sterling Commerce owns at least 2.0% of the issued and
outstanding equity shares, Sterling Commerce shall be entitled to designate one
non-voting observer to the Board of Directors (the "Board Observer"), provided
that the Board Observer shall at all times be a senior officer of Sterling
Commerce reasonably acceptable to the Chief Executive Officer of the Company.
The Board Observer shall be entitled to all of the rights and privileges of
members of the Board of Directors, including without limitation, access to all
information to which members of the Board of Directors have access, except that
(i) the Board Observer shall not be entitled to vote on any matter brought
before the Board of Directors, (ii) the Board Observer shall be excluded from
any portion of any meeting, at the good faith discretion of the Chief Executive
Officer of the Company or the Chairman of the Board of Directors, to protect the
competitive interests of the Company or where a conflict of interest exists,
including, without limitation, matters relating to the relationship between the
Company and Sterling Commerce, (iii) if the Company has been advised by outside
counsel that providing certain information to Board Observers would be
reasonably likely to cause such information to be not subject to an applicable
attorney-client or similar privilege, the Company shall be entitled to withhold
such information from the Board Observer, and (iv) upon request, the Board
Observer shall execute a confidentiality agreement in customary form with
respect to information obtained in his or her capacity as a Board Observer.
(b) The Board Observer shall be entitled to observe meetings of Committees
of the Board of Directors, which committees (the "General Committees") have been
have been delegated general authority by the Board of Directors, including,
without limitation, any Executive Committee. The Company agrees to inform
promptly Sterling Commerce of business conducted by committees of the Board of
Directors other than General Committees.
(c) The Board Observer shall be provided advance notice of all meetings of
the Board of Directors and General Committees, such notice to be given in the
same manner as the notice given to the members of the Board of Directors or
General Committees, as applicable.
19. Subject to any rights or restrictions for the time being attached to equity
shares, on poll, every member holding the share in the equity capital of
the company, shall have voting right in proportion to the share of the paid
up equity capital of the Company.
20. If two or more members are jointly registered as holders of any one share,
any of such persons may at any Meeting either personally or by proxy or
attorney as if he were solely entitled thereto and if more than one of such
joint holders be present at meeting personally or by proxy or attorney one
of such persons so present whose name stands first in register in respect
of such share shall alone be entitled to vote, in respect of several
executors or administrators of a deceased member in whose name any share
stands, shall for the purpose of this clause, be deemed to be joint
holders.
21. Unless otherwise determined by the Company in a General Meeting, the number
of directors of the Company shall not be less than two or more than twelve
including nominated, technical or special directors, if any and inclusive
of any other type of directors of the Board.
_______________________________
/5/
10
<PAGE>
22. "The Company shall be managed by its Board of Directors. The following
persons will constituted the First Directors and they shall be permanent
directors not liable to retire by rotation.
First Directors
1. B. Ramalinga Raju
2. B. Rama Raju
Two thirds of the members of the Board other than the Permanent Directors
shall retire by rotation".
23. The Company shall subject to the provisions of the Act, be entitled to
agree with any person firm corporation or other body that he or it shall
have the right to appoint his or its nominee or nominees on the Board of
Directors of the company upon such terms and conditions as the company may
deem fit. Such nominees and their successors in office appointed under this
article shall be called Special Directors. The special directors appointed
under this clause shall be entitled to hold office until requested to
retire by the persons, firm corporation or the body who may have appointed
them and will not be bound to be retired by rotation. A special director
shall not be required to hold any qualification share. As and whenever, a
special director shall not be required to vacate office, whether upon
requests as aforesaid or by death resignation or otherwise, the person,
firm, corporation or body who appointed such special director may appoint
any other director in his place. The special director may at any time by
notice in writing to Company resign his office. Subject to aforesaid, a
special director shall be entitled to the same rights and privileges and be
subject to the same obligations as other directors of the company.
24. Unless otherwise determined by the company in general meeting a director
shall not be required to hold any shares in the company as qualification.
25. The Board shall have power to co-opt one or more persons to be directors,
subject to Article 24, supra.
26. Every Director of the company shall be entitled to receive from the Company
a sitting fee not exceeding Rs.2000/- for every meeting of the Board of
Directors or of a committee of Directors attended by him in addition to all
traveling and out of pocket expenses incurred by him in attending and
returning from such meetings.
27. The Directors are liable to retire by rotation except the first directors
appointed under article 25 supra.
28. The Managing Director or the chairman of the Board shall have the power to
convene the meeting of the Board of Directors or of the shareholders of the
company and to fix the date, time, place and agenda for such meetings.
29. Subject to the provision of Section 219 of the Companies Act 1956, a
resolution in writing appointed approved and signed by majority of
Directors of the Company shall be as valid and effectual as if passed at a
meeting of Directors of the company duly called and convened.
POWERS OF BOARD OF DIRECTORS
30. The business of the company shall be managed by the Board of Directors with
the assistance of the managing director of the Company. The Board shall
have all the powers to execute and carry out the various objects of the
Company enumerated in the Memorandum of Association of the Company and
particularly all powers conferred on the Board by the
11
<PAGE>
provisions of the Act as far as they are applicable to a private company
and by the clauses and provisions of their Memorandum and Articles of
Association.
31. In addition to the expressed powers in the presents and in the Act, the
Board shall have such powers as may be directed by the Company in General
Meeting subject however to the Companies Act, 1956 and the Memorandum of
Association of the Company.
32. The Board of Directors of the Company may from time to time and at any time
at its discretion raise or borrow any sum of money for the purpose of the
Company. The Board of Directors may secure the repayment of such money's on
such terms and conditions in all respects as it thinks fit and in
particular by the issue of debenture stocks charged upon all or any part of
the properties of the Company (both present and future) including its
uncalled capital for the time being.
33. Subject to the provisions of Section 297, 299 and 314 of the Companies Act,
1956 a Director of the Company, his relative, a firm of which such a
director or relative is partner, any other partner in such a firm and a
private Company may enter into any contact with company,
a) To rendering of services to the Company
b) For supplying materials to the Company.
c) For rendering all or any of the above services.
34. The directors shall have power to remunerate any person who renders
services to the Company or supplies materials or enters into any contracts
for any kind of services to the Company. They can also appoint a body
corporate to any office of profit and the company excepting that of the
Manager or Secretary; such remuneration may be monthly payment or a
remuneration based on profits of the company as the Board think fit and
desirable.
35. The Board shall have the powers, subject to Sec. 292 of the Companies Act.
a) to sell, lease or otherwise dispose of the whole or substantial the
whole of the undertaking of the Company as and when they deem fit, but
such power shall be exercised by means of a resolution passed at a
Board Meeting.
b) To remit or give time for repayment of any debt due by a Director.
c) To borrow money for the purpose of the business of the Company even
though the limits exceed the paid-up capital and reserves of the
Company as the Board of Directors deem it necessary for the purpose or
the business of the Company.
d) To contribute to any charitable or benevolent purpose or to public
utilities such amount as the Directors think fit but not in any case
exceeding 5% of the average net profits of the company or Rs.50000/- in
each financial year, whichever is greater.
35A
1) Decisions relating to any of the following matters require
approval of Satyam Computer Services Limited and South Asia
Regional Fund at the Shareholders' meeting or as the case may be
the approval of the Board of Directors including the vote in
favour of or consent in writing to the relevant matter by South
Asia Regional Fund's nominated Director;
(a) any change in the Memorandum and Articles of Association of
the Company;
(b) any change in the capital structure of the company or issue
of further shares or equity interest or creation of any
options, warrants or other rights to subscribed for, acquire
or call for shares or redemption or purchase by the company
of shares or a reduction in the share capital of the company
or in any way alteration of the rights attaching to the share
capital of the company;
(c) issue of any debenture or loan stock (secured or unsecured)
or creation of any mortgage, charge, lien, encumbrance or
other third party right over any of the
12
<PAGE>
company's assets or by giving by the company of any guarantee
or indemnity or becoming a surety for any third party;
(d) any arrangement for any joint venture or partnership or for
the acquisition of the whole or substantially the whole of
the assets and undertaking of the company or an acquisition
by the company of any part of (or the whole of) the issued
share capital, stock, or interest or of the assets and
undertakings (or any rights over the same) of another
company;
(e) declaration of any dividend, distribution of company's share
capital or purchase, redemption or any kind of acquisition of
any of the company's shares or capital stock or any warrant
or option over the same;
(f) approval or amendment of annual operating plans or budgets or
any activity outside the scope of the annual budget of the
company;
(g) any change in the nature or material modification of the
project or change in the business undertaken by the company;
(h) the merger, acquisition or winding up of the company or
participation in any scheme of reconstruction or any
settlement whatsoever involving the company, or liquidation
or dissolution of the company;
(i) making of any loan, creation, renewal or extension of any
borrowings or indebtedness by the company or granting of any
credit (other than credit given in the normal course of the
company's business) in excess of equivalent rupee value of
US$50,000 by the company;
(j) the appointment, remuneration, compensation, transfer and
discharge of any director, or employee earning in excess of
the equivalent rupee value of US$50000 per annum;
(k) the acquisition or construction or lease of items of tangible
or intangible property involving an estimated expenditure of
the equivalent rupee value of US$100,000 or more in each
individual case, which is not previously expressly authorised
in the budget;
(l) any transaction by the company with any shareholder or any
associated company of any shareholder or any directors of the
company and/or the sponsor and/or members of their respective
families and/or associated companies of such Directors;
(m) any obligation of the company outside the normal course of
trading which would involve the payment by it, in cash or
otherwise, of amounts in excess of the equivalent rupee value
of US$100,000 in the aggregate in any 12 month period;
(n) the assignment, sale or other disposal, lease or lending in
any 12 month period of any asset or related group of assets
of the company having a net book value in aggregate of the
equivalent rupee value of US$100,000 or more;
(o) any change in the company's accounting policies or the
company's auditors, bankers, financial year or bank mandates;
(p) the establishment of any retirement benefit scheme in
relation to the company's employees, or the making of any
contribution to any third party scheme for the provision of
retirement benefits;
(q) any expenditure or commitments for expenditure in any
financial year exceeding in aggregate the equivalent rupee
value of US$150,000 which is not expressly authorised in the
approved budget;
(r) granting or entering into of any license, sub-license,
agreement or similar arrangement concerning any part of the
name of the company or any of the company's intellectual
property rights;
(s) the making, granting or allowing of any claim, disclaimer,
surrender, election or consent for taxation purposes in
excess of the equivalent rupee value of US$25,000;
(t) the company entering into the occupation, purchase, sale,
transfer, lease or licence of any freehold or leasehold
property with an individual aggregate annual cost to the
company of more than the equivalent rupee value of US$50,000;
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<PAGE>
(u) the company forming or having any subsidiary or holding or
acquiring any shares, stock or interest in any company
(wherever incorporated) or any rights over the same;
(v) early repayment of any moneys advanced to the company
pursuant to any term loan agreement;
(w) appointing any Director (executive or non executive) or any
shadow director of the company or appointing any committee of
the board or delegating any of the powers of the board to any
committee;
(x) the company establishing any bonus, profit sharing, share
option or other incentive scheme for any director or employee
of the company;
(y) write off of any amounts of money or otherwise due and owing
to the company;
(z) the pricing, quantum, timing of an initial public offering
(IPO) and identity of the lead managers, at the time of the
IPO.
(aa) The giving by the company of any power of attorney not in the
ordinary course of business; and
(ab) Any modification of any significant commercial contracts or
business agreements.
35B[/5/] No consent or approval of Sterling Commerce shall be required in
connection with the making of any decision, or the taking of any action, by the
Board of Directors, including, without limitation, any future equity financing
at a price per equity share equal to or greater than the purchase price paid by
Sterling Commerce provided that the rights to transfer or otherwise dispose of,
and registration rights and other liquidity rights with respect to, equity
shares of the then existing stockholders of the Company are diluted on a pro
rata basis.
36. Subject to section 314 of the Act, any one or more of the Directors or
their successors, legal heir or legal representatives or partners, or the
Company in which such directors or such person or directors or members can
be remunerated for any special service rendered to the Company other than
that of the service of director or Managing Director and the Board shall
from time to time fix the remuneration payable to such persons, firms or
companies as it deem fit.
MANAGING DIRECTOR
37. The Board may employ one of the Directors as Managing Director of the
Company. The Managing Director so appointed shall subject to provision of
Section 292 and subject to superintendence and control of Board of
Directors, have power to manage whole of the affairs of the Company. Such
appointment of the Managing Director may be made on such remuneration, and
such period and upon such terms and conditions as the Board of Directors
may deem fit.
Approval of the Board of Directors shall be obtained in respect of the
following matters:
Borrowings, guarantees and other indebtedness and liabilities incurred by
the Company in excess of Rs.10,00,000/- in the aggregate;
Extension of loans and other credit by the Company not in the ordinary
course of business;
Encumberation of the Company's assets;
Declaration and distribution of dividends;
Capital expenditure or other investments by the Company in excess of
Rs.2,00,000/-
Change in the nature of the Company's business by expansion or otherwise;
Sale or other disposal of any assets of the Company other than in the
ordinary course of business;
A merger or consolidation of the Company with, or into any other Company,
or extension of the objects of the Company;
Commencement of any litigation by the Company as plaintiff or the
settlement by the Company of any claim or litigation by or against it
having, in either case, a value in excess of Rs.50,000/-
_________________________
/5/
14
<PAGE>
Appointment of auditors or any Directors or any Director of the Company in
order to fill a vacancy;
Winding up or liquidation of the Company;
Issuance of share capital of the Company.
CHAIRMAN
38. The Board shall have the right to appoint one of the Directors of the
Company as the Chairman of the Board of Directors of the Company. The said
Chairman shall have a casting vote in addition to his own vote. [/9/]. In
any meeting of the Board, if the Chairman is not present within fifteen
minutes after the time appointed for holding the same, the directors
present may choose one of their members to be chairman of the Meeting.
COMMON SEAL
39. The Board shall provide a common seal for the Company and they shall have
power from time to time to destroy the same substitute a new seal in lieu
thereof, and the common seal shall be kept at the Registered office of the
Company and Committee to the custody of the Managing Director or the
Secretary if there is one. [The seal of the Company shall not be affixed to
any instrument except by the authority of a resolution of the Board or of a
committee of the Board authorised by it in that behalf, and except in the
presence of one director and of the secretary or such other person as the
Board may appoint for the purpose; and that director and the secretary or
other person as aforesaid shall sign every instrument to which the seal of
the company is so affixed in their presence]/10/.
ACCOUNTS
40. The Managing Director under the supervision of the Directors shall cause
true accounts to be kept of the paid up capital for the time being of the
Company, and of all sums of money received and expended by the Company and
the matter in respect of which receipt and expenditure have taken place and
of the assets and liabilities of the Company and generally of all
commercial financial and other affairs transactions and engagements and of
all other matters necessary for showing true financial state or condition
of the Company and the Accounts shall be kept either in English or in the
Regional language or in both languages and such books shall be kept in such
place in India as the Directors think fit.
41. The Directors shall from time to time determine in accordance with the
provisions of Companies Act, 1956 whether and to what extent and place and
under what conditions or regulations the accounts and books, register,
agreements and minutes of the General Body or any of them shall be open to
the inspection of member who shall have any right of inspecting any
accounts or books or documents or registers of the Company as conferred by
the Act.
DIVIDENDS AND RESERVES
41A
1) The company in general meeting may declare dividends, but no
dividend shall exceed the amount recommended by the board
_______________________
/9/ The following text "The Chairman shall also have power to defer or reserve
the decision of the Board on any matter" deleted vide Special Resolution passed
in an Extraordinary General Meeting held on /30th/ November 1998.
/10/ Inserted with effect from /3rd/ July 1998.
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<PAGE>
2) The board before recommending dividend, make proper prudent reserves
and provisions to meeting any planned capital expenditure and
increase in the requirements of working capital as in the opinion of
the Board ought reasonably to be made.
SECRECY
42. No member shall be entitled to visit or inspect the Company's work place
without the permission of the Managing Director or to require discovery of
or information respecting any details of the Company's trading or any
matter which is or may be in the nature of a trade secret, mystery of
trade, secret process or any other matter which, may relate to the conduct
of the business of the Company and which, in the opinion of the Director,
it would be inexpedient in the matter of the members of the Company's to
communicate to the public.
16
<PAGE>
<TABLE>
<CAPTION>
Sl.No Name, address, description and occupation Name, address, description,
of subscribers and signatures occupation and signature of
witness
-----------------------------------------------------------------------------------------------
<C> <S> <C>
1. B. Ramalinga Raju,
Plot No.1242,
Road No.62,
Jubilee Hills,
Hyderabad 500 033.
OCCUPATION: BUSINESS
Sd/- A. VENKATARAMAPPA, B.Com, CA Final
------------------------------------------------- 109 Venkata Ramana Towers,
2. B. Rama Raju Opp. Skyline Theatre,
H.NO.:1-10-72/A Baheerbagh,
Chikoti Gardens, Hyderabad 500 029.
Begumpet,
Hyderabad 500 016. Sd/-
OCCUPATION: BUSINESS
Sd/-
-------------------------------------------------
3. Satyam Computer Services Ltd.
I Floor May Fair Buildings,
S.P. Road, Secunderabad.
-------------------------------------------------
</TABLE>
Date : 4-11-95
Place: Hyderabad
17