|
**
|
Portions of
this exhibit have been omitted pursuant to Syntel’s request
to the Secretary of the Securities and Exchange Commission for
confidential treatment pursuant to Rule 24b-2 under the Securities
and Exchange Act of 1934, as amended.
|
EXHIBIT 10.1
E XECUTION V ERSION
STATE STREET INTERNATIONAL
HOLDINGS
and
SYNTEL DELAWARE,
LLC,
and
SYNTEL SOLUTIONS (MAURITIUS)
LIMITED
SHAREHOLDERS
AGREEMENT
relating to
SYNTEL SOLUTIONS (MAURITIUS)
LIMITED
1 February
2005
Page 1 of 28
E XECUTION V ERSION
SHAREHOLDERS
AGREEMENT
This Shareholders Agreement (this
“Agreement” ) is dated as of
February 1, 2005 and made by and among:
|
(1)
|
STATE STREET
INTERNATIONAL HOLDINGS ,
a company organized under the authority of Chapter 167F,
Section 2(6) of the Massachusetts General Laws and
Section 25A of the Federal Reserve Act, as amended with its
principal office at 225 Franklin Street, Boston, Massachusetts
02110, USA (“ State Street ”);
|
|
(2)
|
SYNTEL
DELAWARE, LLC , a company
incorporated under the laws of the State of Delaware, and having
its registered office at 1209 Orange Street, Wilmington, Delaware
19801, USA ( “Syntel” ); and
|
|
(3)
|
SYNTEL
SOLUTIONS (MAURITIUS) LIMITED , a company incorporated in Mauritius, and
having its registered office at 608 St. James Court, St. Denis
Street, Port Louis, Republic of Mauritius (the
“Company” ).
|
WHEREAS
|
A.
|
State Street
and Syntel together currently own 100% of the issued and
outstanding Shares (as defined herein below) of the
Company;
|
|
B.
|
The Company
owns 100% (except as set forth in the Subscription Agreement, as
defined below) of the issued and outstanding equity voting share
capital of Syntel Sourcing Private Limited, an Indian company
incorporated under the (Indian) Companies Act, 1956, as amended (
“Companies Act” ), with its registered
office at B/101-104, Delphi, “B” wing, Hiranandani
Business Park, Powai, Mumbai 400 076, India (
“SSI” ); and
|
|
C.
|
This is the
Shareholders Agreement contemplated in the Subscription
Agreement.
|
IT IS AGREED
as follows:
In this Agreement, unless the
context otherwise requires, the following words and expressions
shall have the following meanings:
“Affiliate”
means, in relation to a body
corporate, a company or entity that directly or indirectly holds
more than 25% of the voting rights of that body corporate and/or a
company or entity in which that body corporate holds directly or
indirectly more than 25% of the voting rights;
Page 2 of 28
E XECUTION V ERSION
“Agreement”
has the meaning given to such term
in the introduction to this Agreement;
“Auditors”
means Ernst and Young or such other
auditors as the Company may appoint from time to time;
“Board” means the Board of Directors of the Company from
time to time;
“Business”
has the meaning set out in
Section 2;
“Business
Day” means any
day on which the New York Stock Exchange is open for ordinary
business;
“Call
Notice” has the
meaning given to such term in Section 11.7;
“Call Offer
Period” has the
meaning given to such term in Section 11.7;
“Call Offer
Price” means
the price equivalent to **
“Call Offer to
Purchase” has
the meaning given to such term in Section 11.7;
“Chairman”
means the chairman from time to time
of the Board;
“Class A Common
Shares” shall
mean the shares of Class A Common Shares, without par value,
of the Company;
“Class B Common
Shares” shall
mean the shares of Class B Common Shares, without par value, of the
Company;
“Class A
Directors” shall mean the directors nominated by the holder
of shares of Class A Common Shares, as described in the
Constitution;
“Class B
Directors” shall mean the directors nominated by the holder
of shares of Class B Common Shares, as described in the
Constitution;
“Class A
Shareholder” shall mean the holder of shares of Class A
Common Shares;
“Class B
Shareholder” shall mean the holder of shares of Class B
Common Shares;
“Companies
Act” has the
meaning given to such term in the recitals to this
Agreement;
“Company”
has the meaning given to such term
in the introduction to this Agreement;
Page 3 of 28
E XECUTION V ERSION
“Control”
or
“control” , with respect to any person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management, business or
policies of such person, whether through the ownership of voting
securities, by contract or otherwise, or the power to elect or
appoint at least 50% of the directors, managers, partners or other
individuals exercising similar authority with respect to such
person;
“Constitution”
means the constitution of the
Company to be adopted by the Company in the form set out in
Exhibit A of the Subscription Agreement;
“Contractual
Documents” has
the meaning given to such term in Section 16.1;
“Damages”
means all or any damages, claims,
penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, Encumbrances, losses, reasonable expenses, fees and
any Taxes and/or interest, charges, penalties or other amounts
imposed with respect to any Tax by any Governmental Authority,
including, without limitation, court costs, reasonable
attorney’s fees, disbursements and expenses (to the extent
permitted by applicable law).
“Deed of
Adherence” means a deed of adherence in the form set out in
Schedule 1 ;
“Director”
means any Class A Director or
Class B Director appointed to the Board from time to
time;
“Effective
Date” means the
Closing Date under the Subscription Agreement;
“ Employees
” means all persons employed or retained by the Company
and/or SSI, including, without limitation, those employees on long
term disability leave or other absence;
“Encumbrance”
means any interest or equity of any
person (including, without limitation, any right to acquire, option
or right of pre-emption) and any charge, mortgage, security
interest, pledge, lien (including retention of title claims),
assignment, power of sale or hypothecation and any rental, hire
purchase, creditor, conditional sale or other agreement for payment
on deferred terms or any other third party right, restriction or
encumbrance of any nature whatsoever (whether or not perfected) and
the term Encumber shall be construed accordingly;
“FTE” means full-time equivalent Employee;
“ Governmental
Authority ” means any government, any state or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, or any other government authority,
agency, department, board, commission or instrumentality of United
States of America or any political subdivision thereof, and any
court, tribunal or arbitrator(s) of competent jurisdiction, and,
any governmental or non-governmental self-regulatory organization,
agency or authority;
“Group
Company” means
the Company and its Subsidiaries from time to time;
Page 4 of 28
E XECUTION V ERSION
“Material
Event” means
that State Street has received an opinion of counsel to the effect
that pursuant to legal or regulatory requirements, State Street is
prohibited from continuing in a joint venture relationship with the
Class B Shareholder;
“MSA” means that certain Master Services Agreement
between SSI and State Street Bank and Trust Company;
“Notice” has the meaning given to such term in
Section 23.1;
“Permitted
Transferee” has
the meaning given to such term in Section 11.2;
“ Preferred
Shares ” means the Preferred Shares, without par
value, of the Company, the holders of which shall have no rights
other than the right to receive dividends in accordance with the
terms set forth in the Company’s Constitution;
“ Put Notice
” has the meaning given to such term in
Section 11.6;
“ Put Offer to
Sell ” has the meaning given to such term in
Section 11.6;
“ Put Offer
Period ” has the meaning given to such term in
Section 11.6;
“Share” means shares of Class A Common Shares,
Class B Common Shares and the Preferred Shares;
“Shareholder”
means a holder of Shares;
“Shareholder
Support” means
any undertaking, covenant, guarantee of, performance bond from,
pledge of Shares held by, or any other recourse to, the
Shareholders, and provided by the Shareholders to, or in favour of,
any third person pursuant to any financing arrangement of the
Company or any other Group Company from time to time;
“SSI” has the meaning given to such term in the
recitals to this Agreement;
“SSI
Board” means
the board of directors of SSI from time to time;
“SSI
Chairman” means
the chairman from time to time of the SSI Board;
“Standard of
Conduct” has
the meaning given to such term in Section 5;
“State
Street” has the
meaning given to such term in the introduction to this
Agreement;
“Subscription
Agreement” means the agreement dated as of February 1,
2005 among State Street, Syntel and the Company for the
subscription of 51 shares of Class A Common Shares of the
Company;
“Syntel” has the meaning given to such term in the
introduction to this Agreement;
Page 5 of 28
E XECUTION V ERSION
“ Tax ”
means all taxes imposed by any Governmental Authority, including,
(i) any tax based upon or measured by income, gross receipts,
sales use or value added; (ii) any taxes denominated as ad
valorem, transfer, franchise, capital shares, payroll, employment
excise, occupation, property, windfall profits, environmental,
customers, or withholding taxes; and (iii) any interest,
penalties, or other amounts imposed with respect to any
tax;
“Transfer
Value” means
the price per Share calculated in accordance with the provisions of
Schedule 2 ;
“United States
Dollars” ,
“ USD ” and
“US$” means the lawful currency of the
United States of America.
|
|
1.2
|
Construction
of certain references
|
In this Agreement unless otherwise
specified:
|
|
1.2.1
|
the index and
headings are for ease of reference only and shall not be taken into
account in construing this Agreement;
|
|
|
1.2.2
|
references to
this Agreement or any other document shall be construed as
references to this Agreement or that other document as amended,
varied, novated, supplemented or replaced from time to
time;
|
|
|
1.2.3
|
references to
any recital, Section, clause, paragraph, Schedule or Appendix are
to those contained in this Agreement, and references to a part of a
Schedule are to the part of the Schedule in which the reference
appears and all Schedules and Appendices to this Agreement are an
integral part of this Agreement;
|
|
|
1.2.4
|
the expression
“ this Section ” shall, unless followed
by reference to a specific provision, be deemed to refer to the
whole Section (not merely the clause, sub-clause, paragraph or
other provision of such Section) in which the expression
occurs;
|
|
|
1.2.5
|
references to a
party mean a party to this Agreement including that party’s
successors in title and assigns or transferees permitted in
accordance with the terms of this Agreement provided that the
relevant property, right or liability has been properly assigned or
transferred to such person;
|
|
|
1.2.6
|
references to a
Director shall, where the context allows, include reference to the
alternate of such Director;
|
|
|
1.2.7
|
references to
any gender shall include the other gender; and words in the
singular include the plural and vice versa;
|
|
|
1.2.8
|
law includes any legislation, any
common or customary law, constitution, decree, judgment, order,
ordinance, treaty or other legislative measure in
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Page 6 of 28
E XECUTION V ERSION
|
|
any jurisdiction and any present
or future directive, notification, circular, request, requirement
or guideline (in each case, whether or not having the force of law
but, if not having the force of law, compliance with which is in
accordance with the general practice of persons to whom the
directive, notification, circular, request, requirement or
guideline is addressed);
|
|
|
1.2.9
|
references to
legislation include any statute, by-law, regulation, rule,
notification, circular, subordinate or delegated legislation or
order; and reference to any legislation is to such legislation or
order as amended, modified or consolidated from time to time and to
any legislation replacing it or made under it;
|
|
|
1.2.10
|
reference to a
person (or to a word importing a person) shall be construed so as
to include:
|
|
|
(a)
|
individual,
firm, partnership, trust, joint venture, company, corporation, body
corporate, unincorporated body, association, organization, any
government, or state or any agency of a government or state, or any
local or municipal authority or other governmental body (whether or
not in each case having separate legal personality);
|
|
|
(b)
|
that
person’s successors in title and assigns or transferees
permitted in accordance with the terms of this Agreement;
and
|
|
|
(c)
|
references to a
person’s representatives shall be to its officers, employees,
legal or other professional advisers, sub-contractors, agents,
attorneys and other duly authorized representatives;
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|
|
1.2.11
|
in writing
includes any communication made by letter or fax but does not
include e-mail or other forms of electronic
communication.
|
|
2.
|
BUSINESS AND
NAME OF COMPANY
|
The business of the Company (the
“Business” ) shall be to act as an
investment holding company and acquire and manage directly or
indirectly equity controlling interests in SSI, an Indian
incorporated limited company offering back- and middle-office
services for institutional investors.
Both parties acknowledge and agree
that the relationship between State Street and Syntel is not
exclusive, and each party may enter into joint ventures with other
third parties for similar services anywhere in the world, subject
to any restrictions set forth in this Agreement and the MSA. Both
parties agree to provide reasonable cooperation, at the requesting
party’s expense, in furtherance of the foregoing sentence and
in response to requests or requirements by Governmental
Authorities.
If, at any time, State Street ceases
to own the Class A Common Shares of the Company, the
Shareholders and the Company agree to take all such steps as are
necessary to change
Page 7 of 28
E XECUTION V ERSION
the name of the Company and SSI to a
name that does not in any manner whatsoever include any tradename
or trademark of State Street, or any words similar thereto in any
language. Any such name change shall also be made on all
letterhead, signs, logos, literature and any other items of the
Company and SSI that identify the Company or the Business or SSI or
the business of SSI.
This Agreement shall come into force
and effect from the Effective Date.
|
|
4.1
|
Financing
the Company
|
As soon as practicable and in any
event within thirty (30) days following the earlier of
(i) the Effective Date or (ii) the hiring of an Employee
of the respective company, the Shareholders shall cause their
respective Directors to cause each of the Company and SSI to take
all steps as are necessary to have in place a set of rules
(collectively, the “ Standard of Conduct
”) in the form set out in Schedule 3 which will be
required to be complied by any and all Employees. Each Employee
shall provide an undertaking to the Company pursuant to which the
Employee undertakes (i) to perform his duties,
responsibilities and functions to the Company to the best of his
abilities in a diligent, trustworthy, professional and efficient
manner, and (ii) to comply with the Company’s policies
and procedures, including, without limitation, the Standard of
Conduct.
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6
|
THE BOARD
AND MANAGEMENT **
|
Page 8 of 28
E XECUTION V ERSION
The Board shall consist of **
Directors, ** of whom (including one Mauritian resident Director)
shall be nominated and elected by the Class A Shareholder and
considered Class A Directors and ** of whom (including one
Mauritian resident Director) shall be nominated and elected by the
Class B Shareholder and considered Class B Directors. Once
nominated, the Shareholders agree to take all action necessary or
desirable so as to cause the number of directors and the members of
the Board to be as set forth herein and in the constituent
documents of the Company. Any person nominated as a Director by a
Shareholder shall be appointed and may be removed from such office
only by the relevant nominating Shareholder, by a memorandum signed
in writing by such Shareholder, which shall take effect from the
date stated in such memorandum or, if no such date shall be stated,
from the date when such memorandum is lodged at the registered
office of the Company. For the avoidance of doubt, a Director shall
be removed from office without notice if he is guilty of any gross
default or misconduct in connection with or affecting the Business,
or is guilty of fraud, dishonesty or any criminal offence (save for
minor road traffic offences).
Subject to Section 6.2, any
Director appointed to the Board shall be entitled to nominate an
alternate to attend and vote at Board meetings in his absence. Such
alternate shall be approved in writing by the Shareholder who
appointed such nominating Director.
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|
6.4
|
Chairman and
Officers
|
**
Board meetings shall be held at the
registered office of the Company at intervals of not more than
three months. Except as otherwise agreed by all the
Directors:
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|
6.5.1
|
Board meetings
shall be convened by any Director or the company secretary by not
less than 5 Business Days’ notice, or where the particular
circumstances require a shorter period, such shorter period as the
circumstances reasonably require, sent to each Director;
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Page 9 of 28
E XECUTION V ERSION
|
|
6.5.2
|
notice shall be
sent to each Director to the address, fax number and/or e-mail
address notified to the Company for these purposes, provided if
notice is sent by fax or e-mail a copy of such notice shall also be
sent by post;
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|
|
6.5.3
|
each notice of
a Board meeting shall be accompanied by a full agenda and all
supporting papers;
|
|
|
6.5.4
|
each Board
meeting shall deal with the business set out in the agenda which
accompanied the notice convening that Board meeting and, in the
event any other business is raised at such meeting, it shall only
be considered to the extent it is so approved by at least one
Class A Director and one Class B Director (who are not also
Mauritian resident Directors);
|
|
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6.5.5
|
minutes of each
meeting of the Board shall be taken and kept by the company
secretary in the books of the Company. Copies of the minutes of
each such meeting shall be delivered to each member of the Board as
soon as practicable. If a member has not been present at the
meeting, copies of all papers considered by the Board at the
meeting shall be sent to him with the minutes;
|
|
|
6.5.6
|
any Director
may participate in a Board meeting by means of a telephone or video
conference, and the Chairman may appoint a Mauritian Director to
chair any such meeting; and
|
|
|
6.5.7
|
notwithstanding
any other provisions of this Section 6, a resolution in
writing signed by all Directors (which resolution may consist of
several counterparts) shall be as valid and effective as if it had
been adopted by a duly convened meeting of the Board.
|
The quorum for a
Board meeting shall be one Class A Director and one Class B
Director (who are not also Mauritian resident Directors) present in
person or by their alternates and one Mauritian resident Director.
If within 30 minutes . of the time appointed for a
Board meeting there is no quorum, the Director(s) present shall
adjourn the meeting to the same place and time on the third
Business Day following the adjourned meeting provided that at such
adjourned meeting the requirement that such Directors shall be
present shall not apply and any two Directors (including at least
one Mauritian resident Director) present may conduct the business
of the meeting.
Subject to the Constitution and
Schedule 4 , the Board may function through one or more
committees.
Page 10 of 28
E XECUTION V ERSION
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|
6.8
|
Shareholders
to Procure Director’s Resignation
|
Unless agreed to otherwise, if there
is a reduction in the percentage of Shares held by a Shareholder at
any time which affects a Shareholder’s right to appoint a
Director pursuant to Section 6.2 the relevant Shareholder
shall procure the resignation of the relevant number of Directors
(which shall not include a Mauritian resident Director) appointed
by it and shall procure that such directors resign without cost to
the Company and such Shareholder shall indemnify the Company and
the other Shareholder(s) from and against all claims, demands and
rights which any such director may have against the Company in
respect of dismissal, redundancy or otherwise.
|
|
6.9
|
Directors
may pass information to their Appointer
|
A Director may from time to time
disclose to the Shareholder who appointed him and its
representatives such information as he has regarding the Business
as shall reasonably be requested by
