Registration Rights Agreement - Satyam Infoway Ltd. and South Asia Regional Fund and Sterling Commerce Inc.
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT, dated as of September 14, 1999, by and
among Satyam Infoway Limited, a limited liability company under the laws of the
Republic of India (the "Company"), South Asia Regional Fund, a company
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incorporated in Mauritius ("SARF"), and Sterling Commerce, Inc., a Delaware
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corporation ("Sterling Commerce").
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W I T N E S S E T H
- - - - - - - - - -
WHEREAS, in connection with the issuance and sale by the Company, and
the purchase by Sterling Commerce, of 481,000 Equity Shares, the parties desire
to provide registration rights to Sterling Commerce;
WHEREAS, the Company has already provided certain registration rights
to SARF in a Share Subscription and Shareholders Agreement, dated February 5,
1999 (the "SARF Subscription Agreement"); and
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WHEREAS, the parties desire to enter into this Agreement to supercede
the SARF Subscription Agreement regarding the sale of Equity Shares by SARF in
the United States and to provide a single, coordinated agreement, regarding the
Company's obligation to register Equity Shares (or related American Depositary
Shares) owned by SARF or Sterling Commerce.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein and not
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otherwise defined herein have the meanings ascribed to them in the Stockholders
Agreement, dated as of the date hereof (the "Stockholders Agreement"), by and
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among the Company, Sterling Commerce and Satyam Computer Services Limited,
provided that the parties agree that any subsequent amendment to the
Stockholders Agreement will not alter the meaning of any defined terms in this
Agreement. In addition, the following terms shall have the meanings ascribed to
them below:
"Commission" means the United States Securities and Exchange
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Commission.
"Demand Registration" means a registration of Registrable Securities
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under the Securities Act pursuant to a request made under Section 2.1(a).
"Equity Shares" means the equity shares, par value Rs.10 per share, of
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the Company and any other equity securities representing, or received in
exchange for, such equity shares, including, without limitation, American
Depositary Receipts and American Depositary Shares.
"Holder" shall mean a holder of Registrable Securities entitled to
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rights and subject to obligations hereunder, with the Initial Holders being SARF
and Sterling Commerce.
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"Registrable Security" means each Equity Share until (i) it has been
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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 the Stockholders Agreement 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).
"Underwriter" means a securities dealer who purchases any Registrable
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Securities as principal in an underwritten offering or other transaction.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration. (a) Request for Registration by
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Sterling Commerce or SARF. At any time commencing 180 days after an Initial
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Public Offering, Sterling Commerce may make two written requests, and SARF may
make three written requests, for a Demand Registration, pursuant to a
registration statement on the appropriate form. Notwithstanding the foregoing,
in the event that Sterling Commerce (i) has made two written requests for a
Demand Registration under this Section 2.1 and (ii) continues to hold Equity
Shares, Sterling Commerce may make one additional written request for a Demand
Registration with respect to not less than all of the Registrable Securities
then held by Sterling Commerce pursuant to a registration statement on the
appropriate form.
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) Effective Registration. A registration will not be deemed to
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have been effected as a Demand Registration unless it has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement 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 Section 2.1 is deemed not to have
been effected or (ii) the registration requested pursuant to this Section 2.1
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 Section 2.1(a) and the Company shall
continue to be obligated to effect the registrations
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pursuant to this Section 2.1 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 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) Selection of Underwriter. If the Holder commencing the Demand
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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) Price Determination. In connection with a Demand Registration
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under this Section 2.1 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.
Section 2.2 Piggy-Back Registration. If at any time the Company
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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 Section 2.1 (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").
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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 Section
2.2 by giving written notice to the Company of its request to withdraw.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligations pursuant to Section 2.1, and no failure to effect a registration
under this Section 2.2 and to complete the sale of Equity Shares in connection
therewith shall relieve the Company of any other obligation under this Agreement
(including, without limitation, the Company's obligations under Sections 3.2 and
4.1).
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Section 2.3 Reduction of Offering. (a) Demand Registration. As
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provided for in Section 2.2, 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 Holder commencing the Demand Registration; provided, however,
that (i) if the managing Underwriter or Underwriters of any underwritten
offering described in Section 2.1 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 Holders (including
the Holder commencing the Demand Registration) shall be reduced 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 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
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contrary contained herein, if the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.2 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.
Section 2.4 Registration Rights in India.
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(a) Sterling Commerce. In connection with any registered public
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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
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with registration rights applicable to an offering in India.
(b) SARF. The Company confirms the rights granted to SARF in Clause
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13 of the SARF Subscription Agreement.
ARTICLE III
REGISTRATION PROCEDURES
Section 3.1 Filings; Information. If the Company is required to
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effect or cause the registration of Registrable Securities pursuant to Section
2.1, the Company will use its reasonable best efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition thereof as quickly as practicable, and in connection with
any such request:
(a) The Company will as expeditiously as possible prepare and file with the
Commission a registration statement on an appropriate form for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its reasonable best efforts to
cause such filed registration statement to become and remain effective for a
period of not less than 90 days (or such shorter period as is required to
complete the distribution of the Equity Shares); provided that the Company may
postpone the filing of a registration statement for a period of not more than
120 days from the date of receipt of the request in accordance with Section 2.1
if the Company reasonably determines that such a filing would (i) require the
disclosure of material non-public information concerning the Company, which
disclosure would be reasonably expected to materially adversely affect the
Company or (ii) prevent, delay or otherwise adversely affect the Company from
making an offering of equity securities for its own account (which offering the
Company has a good faith intention to consummate) in which case the Holders
shall have the piggy-back registration rights set forth in Section 2.2, and in
the case of (i) or (ii) furnishes to the Holder requesting registration a
certificate signed by an executive officer of the Company to such effect;
provided that the Company shall only be entitled to postpone any such filing two
times in any twenty-four month period. If the Company postpones the filing of a
Registration Statement, it shall promptly notify the Holders in writing when the
events or circumstances permitting such postponement have ended.
(b) The Company will as expeditiously as possible prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement continuously effective for a period of not less
than 90 days or such shorter period which will terminate when all securities
covered by such registration statement have been sold and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Holders participating
therein as set forth in such registration statement.
(c) Upon request, the Company will, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Holder participating in such offering, counsel representing each Holder (if
requested), and each Underwriter, if any, of the Registrable Securities covered
by such registration statement copies of such registration statement as proposed
to be filed, together with exhibits thereto, which documents will be subject to
review and comment by the foregoing (and the Company and its Counsel shall give
due regard to such comments) promptly after delivery, and thereafter furnish to
such Holders, counsel and Underwriter, if any, for their review and
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comment such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents or
information as such Holder, counsel or Underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by the
participating Holders.
(d) After the filing of the registration statement, the Company will
promptly notify each Holder participating in such offering, and (if requested by
any Holder) confirm such notice in writing, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
registration statement or related prospectus or for additional information,
(iii) of the issuance by the Commission or any other Federal or state
governmental authority of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(iv) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Securities the
representations and warranties of the Company contained in any agreement
contemplated by Section 3.1(h) (including any underwriting agreement) cease to
be true and correct in all material respects, (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (vi) of the happening of any event which makes any statement made in
such registration statement or related prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in a registration statement,
prospectus or documents incorporated therein by reference so that, in the case
of the registration statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the prospectus, it will not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (vii)
of the Company's reasonable determination that a post-effective amendment to a
registration statement would be necessary.
(e) The Company will use its reasonable best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States as the Holders participating in
the offering reasonably (in light of the intended plan of distribution) requests
and (ii) cause such Registrable Securities to be registered with or approved by
such other governmental agencies or authorities in the United States as may be
necessary by virtue of the business and operations of the Company and do any and
all other acts and things that may be reasonably necessary or advisable to
enable the participating Holders to consummate the disposition of the
Registrable Securities owned by them; provided that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (e), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(f) The Company will take all reasonable actions required to prevent
the entry, or obtain the withdrawal, of any order suspending the effectiveness
of a registration statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any Registrable Securities
for sale in any jurisdiction, at the earliest moment.
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(g) Upon the occurrence of any event contemplated by paragraph
3.1(d)(iv), (vi) or (vii) above, the Company will (i) prepare a supplement or
post-effective amendment to such registration statement or a supplement to the
related prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (ii)
promptly make available to the Holders any such supplement or amendment.
(h) The Company will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form and which is reasonably
satisfactory to the Company) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities.
(i) The Company will furnish to each Holder participating in the
offering and to each Underwriter, if any, a signed counterpart, addressed to
such Holder or Underwriter, of (i) an opinion or opinions of counsel to the
Company, and (ii) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letter, as the case may
be, as such Holder(s) or the managing Underwriter therefor reasonably requests
so long as consistent with the professional standards then applicable to such
letters.
(j) The Company will use its reasonable best efforts (a) to cause any
class of Registrable Securities (including, as appropriate, related American
Depositary Shares) to be listed on a national securities exchange (if such
Equity Shares are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company are then
listed (if any), if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (b) to secure designation of all such
Registrable Securities covered by such registration statement as a Nasdaq
"national market system security" within the meaning of Rule 11Aa2-1 of the
Commission or, failing that, to secure Nasdaq authorization for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
reasonable best efforts to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the National Association
of Securities Dealers, Inc. (the "NASD").
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The Company may require each Holder participating in an offering
covered by this Agreement to furnish promptly in writing to the Company such
information regarding the distribution of the Registrable Securities by such
Holder as the Company may from time to time reasonably request and such other
information as may be legally required in connection with such registration
including, without limitation, all such information as may be requested by the
Commission or the NASD. The Company may delay or withdraw such registration, or
exclude a Holder from participating, if a Holder fails to provide such
information.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Sections 3.1(d)(iii),
(iv), (v), (vi) and (vii) hereof, the Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3.1(g) hereof,
and, if so directed by the Company, each Holder will deliver to the Company all
copies, other than permanent file copies, then in such Holder's possession of
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the most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event the Company shall give such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in Section 3.1(a)
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to Section 3.1(d)(iii), (iv), (v), (vi) or (vii)
hereof to the date when the Company shall make available to the Holder(s) a
prospectus supplemented or amended to conform with the requirements of Section
3.1(g) hereof.
In connection with any registration of Registrable Securities pursuant
to Section 2.2, the Company will take the actions contemplated by paragraphs
(c), (d), (e), (i) and (j) above.
(k) In connection with any underwritten Demand Registration pursuant
to Section 2.1, the Company will participate in a reasonable manner in any
marketing efforts reasonably requested by the underwriters.
Section 3.2 Registration Expenses. In connection with the Demand
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Registration pursuant to Section 2.1 hereof, and any registration statement
filed pursuant to Section 2.2 hereof, the Company shall pay the following
registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees, (ii) fees
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and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties)
and all fees and expenses incident to the performance of or compliance with this
Agreement by the Company, (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities, (vi) reasonable fees and
disbursements of counsel for the Company, (vii) in connection with a Demand
Registration pursuant to Section 2.1 only, reasonable fees and disbursements of
counsel for the Holder commencing the demand registration (not to exceed $25,000
in the aggregate), (viii) customary fees and expenses for independent certified
public accountants retained by the Company (including the expenses of any
comfort letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters in customary form if
such letter may be rendered under then-applicable standards of professional
conduct), and (ix) the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration. The Company shall
have no obligation to pay (A) any fees and expenses of counsel for the Holders
(except as specified in clause (vii) above), or (B) any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.1 Indemnification by the Company. The Company agrees to
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indemnify and hold harmless each Holder, its officers, directors, employees and
agents, and each Person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, together
with the partners, officers, directors, employees and agents of such controlling
Person (collectively, the "Controlling Persons"), from and against any loss,
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claim, damage, liability, reasonable attorneys' fees, cost or expense and costs
and expenses of investigating and defending any such claim (collectively, the
"Damages"), joint or several, and any action in respect thereof to which any
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such
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Holder, its officers, directors, employees and agents, and each such Controlling
Person for any legal and other expenses reasonably incurred by such Holder, its
officers, directors, employees and agents, or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable to a Holder
to the extent that (a) any such Damages arise out of or are based upon an untrue
statement or omission made in any preliminary prospectus if (i) the Holder
failed to send or deliver a copy of the final prospectus with or prior to the
delivery of written confirmation of the sale by or on behalf of the Holder to
the Person asserting the claim from which such Damages arise, and (ii) the final
prospectus would have corrected such untrue statement or such omission; or (b)
any such Damages arise out of or are based upon an untrue statement or omission
in any prospectus if (x) such untrue statement or omission is corrected in an
amendment or supplement to such prospectus, and (y) having previously been
furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, the Holder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of a
Registrable Security to the Person asserting the claim from which such Damages
arise. The Company also agrees to indemnify any Underwriter, selling brokers or
other person participating in the distribution of the Registrable Securities,
their officers and directors and each Person who controls such Underwriter or
other person on substantially the same basis as that of the indemnification of
the Holders provided in this Section 4.1 and to acknowledge such indemnification
in writing if reasonably requested to do so.
Section 4.2 Indemnification by Holders. Each Holder agrees to
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indemnify and hold harmless the Company, along with its officers, directors,
employees and agents and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, together with the partners, officers, directors, employees and agents of
such controlling Person, to the same extent as the foregoing indemnity from the
Company to the Holders, but only with reference to information related to such
Holder, or its plan of distribution, either (a) furnished in writing by the
Holder or on its behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus, or (b) omitted by the Holder
from any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus, and necessary to make the statements contained therein with respect
to the Holder or its plan of distribution not misleading. In case any action or
proceeding shall be brought against the Company or its officers, directors,
employees or agents or any such controlling Person or its partners, officers,
directors, employees or agents, in respect of which indemnity may be sought
against a Holder, such indemnifying Holder shall have the rights and duties
given to the Company, and the Company or its officers, directors, employees or
agents, controlling Person, or its partners, officers, directors, employees or
agents, shall have the rights and duties given to such Holder, under Section
4.1. Each Holder also agrees to indemnify and hold harmless any other Person
selling Registrable Securities and the Underwriters of the Registrable
Securities, and their respective officers and directors and each Person who
controls each other such other Person or Underwriter on substantially the same
basis as that of the indemnification of the Company provided in this Section
4.2. The Company shall be entitled to receive indemnities from Underwriters,
selling brokers,
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dealer managers and similar securities industry professionals participating in
the distribution, to the same extent as provided above, with respect to
information either (a) furnished in writing by such Persons specifically for
inclusion in any prospectus or registration statement or (b) omitted by such
Persons from any registration statement or prospectus and necessary to make the
statements contained therein about such Person and, if applicable, its plan of
distribution not misleading. In no event shall the liability of any Holder be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
Section 4.3 Conduct of Indemnification Proceedings. Promptly after
--------------------------------------
receipt by any Person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
-----------------
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party") notify the Indemnifying Party in writing of the
------------------
claim or the commencement of such action, provided that the failure to notify
the Indemnifying Party shall not relieve it from any liability except to the
extent of any material prejudice resulting therefrom. If any such claim or
action shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Parry thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party; provided, that the
Indemnifying Party acknowledges, in a writing in form and substance reasonably
satisfactory to such Indemnified Party, such Indemnifying Party's liability for
all Damages of such Indemnified Party to the extent specified in, and in
accordance with this Article IV. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its controlling
Persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
Section 4.4 Contribution. If the indemnification provided for in
------------
this Article IV is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
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payable by such Indemnified Party as a result of such Damages (i) as between the
Company and the Holders on the one hand and the Underwriters on the other, in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Holders on the one hand and the Underwriters on the other
from the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Company and the
Holders on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such Damages, as well as any other
relevant equitable considerations, and (ii) as between the Company on the one
hand and the Holders on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each Holder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Holders
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and each Holder bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and each Holder
on the one hand and of the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and each Holder or by the
Underwriters. The relative fault of the Company on the one hand and of each
Holders on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of the Holder were offered to the public (less underwriting discounts
and commissions) exceeds the amount of any damages which the Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation
The indemnity, contribution and expense reimbursement obligations
contained in this Article IV are in addition to any liability any Indemnifying
Party may otherwise have to an Indemnified Party or otherwise. The provisions
of this Article IV shall survive for a period equal to the statute of
limitations of the underlying claim under applicable law, notwithstanding any
transfer of the Registrable Securities by a Holder or any termination of this
Agreement.
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ARTICLE V
MISCELLANEOUS
Section 5.1 Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and these registration rights;
provided that (i) a Holder shall not be required to make any representations or
warranties except those which relate solely to such Holder and its intended
method of distribution, and (ii) the liability of a Holder to any Underwriter
under such underwriting agreement will be limited to liability arising from
misstatements or omissions regarding such Holder and its intended method of
distribution and any such liability shall not exceed an amount equal to the
amount of net proceeds the Holder derives from such registration; provided,
however, that in an offering by the Company in which a Holder requests to be
included in a Piggy-Back Registration, the Company shall use its reasonable best
efforts to arrange the terms of the offering such that the provisions set forth
in clauses (i) and (ii) of this Section 5.1 are true; provided further, that if
the Company fails in its reasonable best efforts to so arrange the terms, the
Holder may withdraw all or any part of its Registrable Securities from the
Piggy-Back Registration and the Company shall reimburse the withdrawing Holder
for all reasonable out-of-pocket expenses (including reasonable out-of-pocket
counsel fees and expenses) incurred prior to such withdrawal.
Section 5.2 Holdback Agreements. Sterling Commerce shall comply with
-------------------
all of its obligations set forth in Section 2.2(b) of the Stockholders
Agreement.
Section 5.3 Amendment and Modification. Any provision of this
--------------------------
Agreement may be waived, provided that such waiver is set forth in a writing
executed by the party against whom the enforcement of such waiver is sought.
Except for a waiver applicable to a single party and consented to by that party,
this Agreement may not be amended, modified or supplemented other than by a
written instrument signed by the Company, Sterling Commerce and SARF. No course
of dealing between or among any Persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any Person under or by reason of this
Agreement.
Section 5.4 Successors and Assigns; Entire Agreement. (a) This
----------------------------------------
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and executors, administrators and heirs; provided, however, that except as
otherwise specifically permitted pursuant to this Agreement, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by the Company without the prior written consent of Sterling Commerce
and SARF. If a Holder shall acquire additional Equity Shares, such Equity Shares
shall, except as otherwise expressly provided herein, be held subject to (and
entitled to all the benefits of) all of the terms of this Agreement.
(b) This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and
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understandings of any and every nature among them.
Section 5.5 Separability. In the event that any provision of this
------------
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 5.6 Notices.
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All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to Sterling Commerce, at 4600 Lakehurst Court, Dublin, Ohio
43103, Attention: Al Hoover, with a copy (which shall not
constitute notice) to Skadden, Arps, Slate Meagher & Flom, LLP,
919 Third Avenue, New York, New York 10022, Attention: Eric J.
Friedman, Esq.;
(b) if to SARF, at Les Cascades Building, Edith Cavell Street, Port
Louis, Mauritius, with a copy to Commonwealth Development Corporation, One
Bessborough Gardens, London SW1V 2JQ, England, with a copy to CDC Advisors PVT
Ltd., Thapar Niketan, 7/4 Brunton Road, Bangalore - 560 025, India; and
(c) if to the Company, at Maansarovar Towers, 271-A, Anna Salai,
Teynampet, Chennai - 600 018, India, with a copy to IInd Floor, Mayfair Centre,
1-8-303/36, S.P. Road, Secunderabad - 500 003, India, with a copy to M.G.
Ramachandran, B 12 Kalindi Colony, New Delhi - 110 065, India, and to Latham &
Watkins, 135 Commonwealth Drive, Menlo Park, California 94025, Attention:
Anthony J. Richmond, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
The parties may change the addresses to which notices are to be given by giving
five days' prior notice of such change in accordance herewith.
Section 5.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal law of the State of New York, without
giving effect to principles of conflicts of law.
Section 5.8 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 5.9 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
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Section 5.10 Further Assurances. Each party shall cooperate and take
------------------
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 5.11 Termination. Unless sooner terminated in accordance
-----------
with its terms or as otherwise herein provided, this Agreement shall terminate
upon the earlier to occur of (i) the mutual agreement by the parties hereto,
(ii) such time as no Holder holds at least one percent (1.0%) of the outstanding
Equity Shares and all of each 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) or
(iii) the three-year anniversary of an Initial Public Offering.
Section 5.12 Remedies. In the event of a breach or a threatened
--------
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall
be specifically enforceable, it being agreed by the parties that the remedy at
law, including monetary damages, for breach of any such provision will be
inadequate compensation for any loss and that any defense or objection in any
action for specific performance or injunctive relief that a remedy at law would
be adequate is waived.
Section 5.13 Pronouns. Whenever the context may require, any
--------
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
Section 5.14 Recapitalization, Exchanges, etc. If any capital stock
--------------------------------
or other securities are issued in respect of, in exchange for, or in
substitution of, any Equity Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Equity Shares or any other change in capital
structure of the Company, then appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement and the term "Equity Shares" as used
herein, shall be deemed to include shares of such capital stock or other
securities, as appropriate. Without limiting the foregoing, whenever a
particular number of Equity Shares is specified herein, such number shall be
adjusted to reflect stock dividends, stock-splits, combinations or other
reclassifications of stock or any similar transactions.
Section 5.15 Arbitration.
-----------
(a) Any and all claims, disputes, questions or controversies
involving the parties hereto and arising out of or in connection with this
Agreement, or the execution, interpretation, validity, performance, breach or
termination hereof (collectively, "Disputes") shall, upon the written request of
--------
any party to this Agreement, be first referred to senior officers of each party
for resolution. The senior officers shall meet immediately and attempt to
negotiate a resolution of the Dispute. If such officers, negotiating in good
faith, are unable to resolve and settle the dispute within fifteen (15) calendar
days after the Dispute is first submitted to them, then any such officer shall
be entitled to cause the Dispute to be submitted for settlement pursuant to the
terms of Section 5.15(b).
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(b) Any Dispute which is not settled after an attempt by the parties
hereto by amicable negotiation under Section 5.15(a) shall be resolved by final
and binding arbitration. The arbitration shall be held in London in accordance
with the Rules of the International Chamber of Commerce as then existing and
shall be heard and determined by an arbitral tribunal composed of three (3)
arbitrators. Each party shall nominate one arbitrator within thirty (30) days
after the date on which the Dispute is submitted for settlement pursuant to this
5.15(b), and both of such arbitrators shall nominate a third arbitrator, who
shall serve as the Chairman of such arbitral tribunal, within sixty (60) days
after the date on which the Dispute is submitted to arbitration pursuant to this
5.15(b). If any arbitrator has not been named within the time limits specified
herein, such appointment shall be made by the International Court of Arbitration
of the International Chamber of Commerce, upon the written request of any party,
if possible within thirty (30) days of such request. In the event there are
more than two parties to a Dispute, whether as claimants or respondents, the
procedure for selection of arbitrators remains the same as above, except that
each of the multiple claimants and/or respondents shall jointly appoint an
arbitrator.
(c) Neither the existence of any Dispute nor the fact that any
arbitration is pending hereunder shall relieve either party hereto of its
respective obligations under this Agreement.
(d) Each party agrees that all of the transactions contemplated by
this Agreement shall constitute and shall be deemed to constitute commercial
activities. To the extent that any party may be entitled in any jurisdiction
whatsoever to claim immunity, whether characterized as sovereign or otherwise,
from litigation, execution, set-off, attachment or other legal process of any
nature whatsoever, it hereby expressly and irrevocable waives such immunity.
(e) Any arbitration proceedings, decision or award rendered hereunder
and the validity, effect and interpretation of this arbitration agreement shall
be governed by the laws of the place of arbitration and by the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June
10, 1958. The award shall be final and binding on the parties and judgment upon
any award may be entered in any court of competent jurisdiction.
(f) To the fullest extent permitted by law, the parties hereby waive
any rights of appeal to any court of competent jurisdiction with respect to any
question of law arising in the course of the arbitration or with respect to any
award, whether interlocutory or final. The parties expressly agree that leave to
appeal or state a special case under Section 45 or Section 69 of the English
Arbitration Act of 1996 shall not be sought with respect to any question of law
arising during the course of the arbitration or with respect to any award made.
However, the parties do not intent to deprive any court of its jurisdiction to
issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid
of the arbitration proceedings or in connection with the enforcement of any
award. Without prejudice to the availability of provisional remedies under the
jurisdiction of a competent court, the arbitral tribunal shall have fully
authority to grant provisional remedies.
(g) The arbitral tribunal may consolidate an arbitration arising
under or relating to this Agreement, the Stock Purchase Agreement, dated as of
even date herewith, by and between the Company and Sterling Commerce, and the
Registration Rights Agreement, dated as of even date herewith, by and among the
Company, Satyam Computer Services Limited and Sterling Commerce with
15
<PAGE>
any other arbitration arising under or relating to any of these agreements, if
the subject of the disputes in the arbitrations arises out of or relates
essentially to the same set of facts or transactions, and no party would be
prejudiced thereby. Such consolidated arbitration(s) shall be determined by the
arbitral tribunal appointed for the arbitration proceeding that was commenced
first in time.
(h) The arbitration proceedings conducted pursuant to this Agreement
shall be confidential. Neither party shall disclose or permit the disclosure of
any information about the evidence adduced or the documents produced by the
other party in the arbitration proceedings or about the existence, contents or
results of the arbitration without the prior written consent of the other party
except as required by law or in the course of a judicial, regulatory or
arbitration proceeding, as may be requested or required by a governmental
authority or as required for the enforcement of an arbitral award. Before
making any disclosure permitted by the preceding sentence, the party intending
to make such disclosure shall give the other party reasonable written notice of
the intended disclosure and afford the other party a reasonable opportunity to
protect its interests.
(Signature pages follow)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SATYAM INFOWAY LIMITED
By: /s/ R. Ramaraj
_______________________
Name: R. Ramaraj
Title: Managing Director
Witnessed by:
/s/ K. Thiagarajan
___________________________
Name: K. Thiagarajan
Title: General Manager - Finance
STERLING COMMERCE, INC.
By: /s/ Albert K. Hoover
------------------------
Name: Albert K. Hoover
Title: Senior Vice President and General Counsel
Witnessed by:
/s/ Shelly R. Boggs
---------------------------
Name: Shelly R. Boggs
Title: Legal Administrative Assistant
SOUTH ASIA REGIONAL FUND
By: /s/ [Illegible]
------------------------
Name:
Title:
Witnessed by:
/s/ [Illegible]
---------------------------
Name:
Title:
S-1