SHAREHOLDERS AGREEMENT
by and among
SPE MAURITIUS HOLDINGS LIMITED
SPE MAURITIUS INVESTMENTS LIMITED
the Persons listed on Annexure 1
and
MAA TELEVISION NETWORK LIMITED
dated
______, 2012
(ii)
TABLE OF CONTENTS
Page No.
1. Definitions 1
1.1 Definitions 1
1.2 Usage 11
2. Transfers 12
2.1 Restrictions on Transfer 12
2.2 Permitted Transfers 13
2.3 Legending of Shares 13
2.4 Extension of time for Obtaining Consent 14
2.5 Agreement to be Bound Upon Transfer; Transfers in Compliance with Laws 14
3. Right of First Negotiation; Right of Last Refusal 14
3.1 Right of First Negotiation 14
3.2 Right of Last Refusal 15
3.3 Tag Along Rights. 17
3.4 Drag-Along Rights. 18
3.5 Filings, Approvals and Closing 19
4. Corporate Governance 20
4.1 General 20
4.2 Shareholder Actions 20
4.3 Certain Corporate Matters 21
4.4 Election of Directors; Number and Composition; Etc 22
4.5 Board of Directors Committees 23
4.6 Removal and Replacement of Directors 23
4.7 Officers 24
4.8 Appointment of External Auditors 24
4.9 Books and Records 25
4.10 Compliance with Anti-Bribery Laws 25
4.11 Compliance with Laws and Sony Policies 26
4.12 Conflict with Organizational Documents 27
4.13 Related Party Transactions 27
4.14 No Limitations on Affiliates or Directors; Programming Right of First Refusal and Last Negotiation 27
4.15 Agreement to be Bound 28
4.16 Shareholders Not to Bind Company 28
4.17 Director Indemnification 28
4.18 Government Officials 28
4.19 Written Consent 28
5. Purchase of Underlying Shares, Call Option; Sale of the Company 29
5.1 Purchase of Underlying Shares 29
5.2 Call Option 31
5.3 Determination of Fair Market Value 32
5.4 Transfer to Third Parties; Company Sale 33
5.5 Withholding. 34
6. Representations and Warranties 35
6.1 Of the SPE Shareholders 35
6.2 Of the Non-SPE Shareholders 35
6.3 Of the Company 36
7. Indemnification 36
7.1 Indemnification by the SPE Shareholders 36
7.2 Indemnification by the Non-SPE Shareholders 36
7.3 Notice and Defense of Claims 37
8. Additional Capital Contributions/Preemptive Rights 38
8.1 Additional Capital Contributions. 38
8.2 Preemptive Rights 43
8.3 Issuance of New Securities 44
9. Restrictive Covenants 40
9.1 Non-Competition; Non-Solicitation 40
9.2 No Use of Names and Marks 40
9.3 Treatment of Restrictive Covenants 41
10. Miscellaneous 41
10.1 Governing Law 41
10.2 Resolution of Disputes 41
10.3 Notices 42
10.4 Non-SPE Shareholders’ Representative 43
10.5 Publicity 43
10.6 Confidentiality 44
10.7 Successors and Assigns 45
10.8 Amendment and Waiver 45
10.9 Counterparts 45
10.10 Specific Performance 46
10.11 Headings 46
10.12 Severability 46
10.13 Expenses 46
10.14 Entire Agreement 46
10.15 Effectiveness; Termination 46
10.16 No Partnership or Agency 47
10.17 Further Assurances 47
ii
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this “Agreement”) dated l 2012, among SPE Mauritius Holdings Limited, a Mauritius company with its principal address at 6th Floor, Tower A, 1 CyberCity, Ebène, Mauritius (“SPEMH”), SPE Mauritius Investments Limited, a Mauritius company with its principal address at 6th Floor, Tower A, 1 CyberCity, Ebène, Mauritius (collectively with SPEMH, the “SPE Shareholders”), the Non-SPE Shareholders listed on Annexure 1, and MAA Television Network Limited, a company incorporated and existing in accordance with the Laws of India bearing registration number U64204AP2001PLC036950, with its registered office at Aishwarya House, Plot # 770/C, Road # 44, Jubilee Hills, Hyderabad- 500 033, India (the “Company”).
Pursuant to a Share Purchase Agreement dated concurrently herewith (the “Share Purchase Agreement”) by and among the SPE Shareholders, as purchasers, the Non-SPE Shareholders and other Persons, as sellers, the SPE Shareholders have agreed to purchase from the Non-SPE Shareholders and other Persons for such aggregate number of Shares, comprising 51 per cent of the total issued and paid-up Shares on a Fully Diluted Basis, subject to the terms and conditions set forth in the Share Purchase Agreement. It is intended by the Parties that this Agreement shall become effective on the Closing Date.
The SPE Shareholders and Non-SPE Shareholders wish to agree upon the manner in which the Company will be governed, to restrict and regulate the transfer of Shares so as to provide continuity of ownership, and to provide reciprocal rights of first negotiation, last refusal and other rights.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:
1. Definitions
.
1.1 Definitions
. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:
“Act” means the Indian Companies Act, 1956 as in effect on the relevant date and any statutory modification, amendment or re-enactment thereof for the time being in force or any and every other statute for the time being in force concerning companies in India and affecting the Company and any reference to any provision of the “Act” is to that provision as so modified, amended or re-enacted or contained in any such subsequent statute.
“Accountant” means the statutory auditor of the Company.
“Adjudicated Decision” means an adjudicated arbitral award pursuant to Section10.2 or an adjudicated decision of a court of competent jurisdiction.
“Affiliate” means any Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Person specified. For purposes of this definition of Affiliate (and for purposes of the definition of “Change in Control” and for purposes of Section4.14(d)), (i)the terms “control”, “controlling” or “controlled” as to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, the right to appoint directors, by contract or otherwise; and (ii)the ownership of a majority of the voting securities of a Person or the ability to elect a majority of its board of directors (or equivalent governing body) shall be deemed to confer control.
“Agreement” means this Agreement, as it may be amended, supplemented or modified from time to time in accordance with the terms hereof.
“Anti-Bribery Laws” means the Indian Prevention of Corruption Act, 1988, the Indian Prevention of Money Laundering Act, 2002, the U.S. Foreign Corrupt Practices Act of 1977, the Japanese Unfair Competition Prevention Law of 1998, the United Kingdom Bribery Act 2010 and all other Laws relating to bribery and/or corruption that are applicable to the Company or the Shareholders or their Affiliates.
“Approvals” has the meaning set forth in Section3.5.
“Arms-Length Terms” has the meaning set forth in Section4.13.
“Articles” means the articles of association of the Company, as in effect on the date of this Agreement (attached as Annexure 2) and amended from time to time in accordance with such articles and this Agreement.
“Assets” means any assets or properties of every kind, nature, character and description (whether immovable, movable, tangible, intangible, absolute, accrued, fixed or otherwise) as now operated, hired, rented, owned or leased by a Person, including securities, accounts and notes receivable, real estate, plant and machinery, equipment, raw materials, inventory, furniture, fixtures, Contract rights and rights under insurance policies.
“Audited Financial Statements” means in respect of the Financial Year ending on March 31, 2014, the audited balance sheet, and the related statements of income and cash flow for such Financial Year, prepared in accordance with GAAP and audited by the Accountant.
“Bankruptcy Event” with respect to a Person shall mean any of the following events: (i)such Person goes into receivership or liquidation other than for purposes of amalgamation or reconstruction, becomes insolvent, or appoints a receiver; (ii)a petition under any bankruptcy statute shall be filed by or against such Person (which petition, if filed against such Person, shall not have been dismissed within 45 days thereafter); (iii)such Person executes a general assignment for the benefit of creditors or make any composition or arrangement with its creditors; (iv)such Person takes advantage of any applicable insolvency, bankruptcy or reorganization or any other like or analogous statute; or (v)such Person experiences the occurrence of any event analogous to the foregoing.
“Board Drag-Along Fair Market Value Determination” has the meaning set forth in Section3.4(f).
“Board Offer Fair Market Value Determination” has the meaning set forth in Section8.2(a).
“Board of Directors” means the board of directors of the Company.
“Bona Fide Offer” has the meaning set forth in Section3.2(a).
“Business Day” means any day other than a Saturday, Sunday or any other day on which commercial banks in Los Angeles, California, USA, Ebène, Mauritius or Mumbai, India are authorized or required by Law, or necessitated by any Force Majeure Event, to close.
“Call Option” has the meaning set forth in Section5.2.
“Call Option Period” has the meaning set forth in Section5.2.
“Call Price” has the meaning set forth in Section5.2.
“CCI” means the Competition Commission of India.
“CEO” has the meaning set forth in Section4.7(a).
“CFO” has the meaning set forth in Section4.7(a).
“Challenging Drag-Along Shareholder” has the meaning set forth in Section3.4(f).
“Challenging Offer Shareholder” has the meaning set forth in Section8.2(d).
“Change in Control” of a Shareholder shall occur if as a result of any event (including but not limited to any stock acquisition, merger, consolidation or reorganization) any one or more Persons who together control such Shareholder (which shall be presumed if such Persons together beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding securities of such Shareholder immediately prior to such event) together fail to control such Shareholder after such event (which shall be presumed if such Persons fail to own, after such event, more than 50% of the combined voting power of the then-outstanding securities of such Shareholder (or any successor, resulting or ultimate parent company or entity of such Party, as the case may be, as a result of such event)).
“Closing Date” means the closing date of the purchase of [30,878,200] Shares by the SPE Shareholders pursuant to the Share Purchase Agreement.
“Company’s EBITDA” means an amount in Rs. equal to net income of the Company (as determined under GAAP) for the Financial Year ending on March 31, 2014, plus (i)without duplication and to the extent deducted in determining net income for such period, the sum of (A)Interest Expense for such period net of interest income, (B)income Tax expense for such period net of Tax refunds, (C)all amounts attributable to depreciation and amortization expense for such period, other than any amounts attributable to amortization in respect of programming and/or content used in the MAA Business, and (D) all amounts attributable to the impairment of fixed assets, minus (ii)amounts attributable to “Other Income” all as derived from the statement of income for such Financial Year, included in the Audited Financial Statements.
"Confidential Information" means (i)in relation to the SPE Shareholders, all confidential operating, business, commercial, technical, scientific or engineering information or data, which is proprietary or related to the Company, the SPE Shareholders or their Affiliates, or this Agreement, and (ii)in relation to any Non-SPE Shareholder, all confidential operating, business, commercial, technical, scientific or engineering information or data, which is proprietary or related to such Non-SPE Shareholder or its Affiliates, the Company or this Agreement.
“Contract” means any contract, agreement, lease, license, instrument, note, debenture or other evidence of indebtedness, or other legally binding commitment or undertaking.
“CPO” has the meaning set forth in Section4.7(a).
“CRO” has the meaning set forth in Section4.7(a).
“Director” means a member of the Board of Directors.
“Drag-Along Notice” has the meaning set forth in Section3.4(a).
“Drag-Along Percentage” has the meaning set forth in Section3.4(g).
“Drag-Along Purchaser” has the meaning set forth in Section3.4(a).
“Drag-Along Sellers” has the meaning set forth in Section3.4(a).
“Drag-Along Shares” has the meaning set forth in Section3.4(a).
“EBITDA Determination” has the meaning set forth in Section5.1(c).
“Encumbrance/s” means any mortgage, pledge, equitable interest, assignment by way of security, conditional sales contract, hypothecation, right of other Persons, claim, security interest, collateral assignment, encumbrance, defect in title, title retention agreement, voting trust agreement, interest, option, lien, charge, commitment, restriction or limitation of any nature whatsoever, including restriction on use, voting rights, transfer, receipt of income or exercise of any other attribute of ownership, right of set-off, any arrangement (for the purpose of, or which has the effect of, granting security), or any other security interest of any kind whatsoever, or any agreement, whether conditional or otherwise, to create any of the same.
“Excess New Securities” has the meaning given in Section8.2(b).
“Exercise Notice” has the meaning given in Section5.1.
“Exercise Period” has the meaning given in Section5.1.
“Exercise Price” means, with respect to any Outstanding Option, the applicable exercise price payable to the Company by the holder of such Outstanding Option upon the exercise of such Outstanding Option in respect of each Underlying Share.
“Fair Market Value” means with respect to Shares or any other asset, the amount to be received from the sale of such Shares or asset if a willing seller would sell and a willing buyer would buy all of such Shares or asset, each having full knowledge of the facts, in an arms’ length transaction without time constraints or any compulsion to sell and subject to applicable Law.
“Financial Year” means the financial year of the Company, which at present commences on April1 and ends on March31.
“Final Drag-Along Fair Market Value Determination” has the meaning set forth in Section3.4(f).
“Final Offer Fair Market Value Determination” has the meaning set forth in Section8.2(d).
“FIPB” means the Foreign Investment Promotion Board, Department of Economic Affairs, Ministry of Finance of the Government of India.
“Force Majeure Event” means an event beyond the reasonable control of the applicable Party, including but not limited to an act of god, war, epidemic, extremely adverse weather conditions, flood, cyclone, earthquake, tornado, volcanic eruption, fire or explosion, chemical, biological or radioactive, contamination, continuous power or computer systems failure, strikes, boycotts or lock-outs, civil disturbances, robbery, or the occurrence of any event analogous to the foregoing, in each case if beyond the reasonable control of such Party.