Smaaash Entertainment Private
Limited (’Smaaash’ or the ‘Company’) was incorporated as a private limited company in India on November
30, 2009. The Company is engaged in the business of operating entertainment centers. Smaaash presents a various range of games
that offer a superlative virtual-reality experience and combines the best of sports, music and dining into a highly immersive,
interactive, innovative and involved entertainment experience. The Company also involved in the Product sales i.e. sale of in-house
developed games with the help of innovative ideas and cutting edge technology.
The address of its registered
office is 2nd Floor, Trade wing building, Oasis complex, P B Marg, Lower Parel, Mumbai 400 013 and principal place of business
is Mumbai, India.
The financial statements of
the Company, entities controlled by the Company and its subsidiaries (together ‘the Group’) have been prepared in accordance
with International Financial Reporting Standards (‘IFRS’).
These consolidated financial
statements were approved by the Board of Directors on
July 26, 2018.
The aforesaid consolidated financial
statement have been prepared in Indian Rupee (INR) and denominated in Thousands.
These consolidated financial
statements have been prepared and presented on the historical cost basis except for certain financial instruments that are measured
at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally
based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating
the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value
for measurement and/or disclosure purposes in these consolidated financial statement is determined on such a basis, except for
leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not
fair value, such as net realizable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting
purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described
as follows:
The consolidated balance sheet
presents current and non-current assets, and current and non-current liabilities, as separate classifications. For this purpose,
an asset is classified as current if:
The consolidated financial statements
incorporated the financial statement of the Company and entities (including structured entities) controlled by the Company and
its subsidiaries. Control is achieved when the Company:
The Company reassesses whether
or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements
of control listed above.
When the Company has less than
a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it
the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts
and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power,
including:
Consolidation of a subsidiary
begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically,
income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit
and loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component
of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive
income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
When necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies.
All intragroup assets and liabilities,
equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in the Group’s
ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests
are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners
of the Company.
When the Group loses control
of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of
the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount
of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously
recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed
of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category
of equity as specified/permitted by applicable IFRS). The fair value of any investment retained in the former subsidiary at the
date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, or, when
applicable, the cost on initial recognition of an investment in an associate or a joint venture.
Revenue from rendering of services
is measured at fair value of consideration received or receivable. Revenue is recognized over of the life of the contract using
percentage completion method and when the outcome of the transaction is estimated reliably.
The outcome of a transaction is estimated reliably
when all the following conditions are satisfied:
When the outcome of the transaction
involving the rendering of services cannot be estimated reliably, revenue shall be recognized only to the extent of the expenses
recognized that are recoverable.
Revenue from the sale of goods
is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
Revenue from sale of goods is
measured at fair value of the consideration received or receivable, net of returns and trade discounts and includes excise duty
but excludes sales tax, value added tax and Goods and Service Tax (GST).
The fair value of the consideration
on gaming services that result in bonus point credits for customers, under the Group’s bonus point schemes, is allocated
between the normal points supplied and the bonus point credit granted. The consideration allocated to the bonus point credits is
measured by reference to fair value from the standpoint of the holder and is recognized as revenue on redemption and / or expected
redemption after breakage.
Dividend income from investments
is recognized when the shareholder’s right to receive payment has been established (provided that it is probable that the
economic benefits will flow to the Group and the amount of income can be measured reliably).
Interest income from a financial
asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured
reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
Acquisitions of businesses are
accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred
by the Group to the former owners of the acquiree and the equity interests (if any) issued in exchange of control of the acquiree.
Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the
identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:
Goodwill is measured as the
excess of the sum of the consideration transferred, and the fair value of the acquirer’s previously held equity interest
in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Goodwill represents the cost
of acquired business as established at the date of acquisition of the business in excess of the acquirer’s interest in the
net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill
is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than
its carrying amount.
For the purposes of impairment
testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is
expected to benefit from the synergies of the combination.
A cash-generating unit to which
goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may
be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based
on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An
impairment loss recognized for goodwill is not reversed in subsequent periods.
On disposal of the relevant
cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Leases are classified as finance
leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases
are classified as operating leases.
Finance leases are capitalized
at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments.
The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The Group’s significant
operating leasing arrangements are in respect of office premises and warehouse at various locations. Rental expense from operating
leases is generally recognized on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely
to increase in line with expected general inflation to compensate for the Group’s expected inflationary cost increases, such
increases are recognized in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease
term.
Rental income from operating
leases is generally recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over
the lease term.
In preparing the financial statements
of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies)
are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences on monetary
items are recognized in profit or loss in the period in which they arise.
For the purposes of presenting
these consolidated financial statements, the assets and liabilities of the Group’s foreign subsidiary are translated into
Indian Rupees (INR) using exchange rates prevailing at the end of each reporting period. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive
loss and accumulated in equity.
Borrowing costs directly attributable
to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period
of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are
recognized in profit or loss in the period in which they are incurred.
Government grants are not recognized
until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be
received.
Government grants are recognized
in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which
the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase,
construct or otherwise acquire non-current assets are recognized as deferred revenue in the consolidated statement of financial
position and transferred to profit or loss on a systematic and rational basis.
Government grants that are receivable
as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with
no future related costs are recognized in profit or loss in the period in which they become receivable.
Non-current assets and disposal
groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate
sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and
its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
Non-current assets (and disposal
groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Employee benefits include provident
fund, employee state insurance scheme, gratuity fund and compensated absences.
Payments to defined contribution
retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined retirement benefit
plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried
out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes
to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance
sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized
in other comprehensive income is reflected immediately in accumulated deficit and is not reclassified to profit or loss. Past service
cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate
at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
The Group presents the first two components of defined
benefit costs in profit or loss in the line item ‘Employee benefits expense’. Curtailment gains and losses are accounted
for as past service costs.
The present value of the defined benefit plan liability
is calculated using a discount rate, which is determined by reference to market yields at the end of the reporting period on government
bonds.
The retirement benefit obligation recognized in the
balance sheet represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this
calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions
in future contributions to the plans.
A liability for a termination benefit is recognized
at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any
related restructuring costs.
A liability is recognized for
benefits accruing to employees in respect of salaries, wages and other short term employee benefits in the period the related service
is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Provision for leave benefits
to employees is based on actuarial valuation done by projected accrued benefit method at the reporting date.
Income tax expense represents
the sum of the tax currently payable and deferred tax.
The tax currently payable is
based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the statement
of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never
taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted
by the end of the reporting period.
Deferred tax is recognized on
temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statement and the corresponding
tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary
differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax
assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition,
deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are
recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable
profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred
tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and
assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized,
based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end
of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Minimum alternate tax (MAT)
paid in a year is charged to Consolidated statement of profit and loss as current tax. The Group recognizes the MAT credit available
as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the specified
period i.e. the period for which the MAT credit is allowed to be carried forward. In the year in which the Group recognizes the
MAT credit as an asset in accordance with the Guidance note on Accounting for Credit available in respect of Minimum Alternate
Tax under the Income tax Act, 1961, the said asset is created by way of credit to the consolidated statement of profit and loss
and shown as MAT Credit Entitlement under the deferred tax assets. The Group reviews the MAT Credit Entitlement asset at each reporting
date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the
specified period.
Current and deferred tax are
recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in
the accounting for the business combination.
Property, plant and equipment
held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet
at their cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipments includes
freight, duties, taxes (to the extent not recoverable from tax authorities) and any directly attributable expenditure for making
the assets ready for its intended use. It also includes initial estimate of the costs of dismantling and removing the item and
restoring the site on which it is located. Replacement cost of an item of property, plant and equipment is capitalized if replacement
meets the recognition criteria.
Depreciation is recognized so
as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective basis.
Leasehold Improvements are amortized
over the unexpired period of lease on a straight-line basis.
Individual assets costing up
to Rs.5,000 are depreciated at the rate of 100% prorata over a period of one year from the date of purchase.
Estimates of residual value
of Property, plant and equipment is reviewed at least at each year-end.
An item of property, plant and
equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Projects under Property plant
and equipment are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
Intangible assets with finite
useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses.
Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization
method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective
basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment
losses.
An intangible asset is derecognized
on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses from derecognition of intangible
assets, measured at the difference between the net disposal proceeds and the carrying amount of the assets, and are recognized
in profit or loss when the asset is derecognized.
At the end of each reporting
period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Recoverable amount is the higher
of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of
an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently
reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately
in profit or loss.
Inventories are stated at the
lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale. Cost is determined on the basis of weighted average method.
Provisions are recognized when
the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision
is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated
to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value
of money is material).
A Contingent Liability is disclosed
where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.
Contingent Assets are not recognized. Information on contingent liabilities is disclosed in the notes to consolidated financial
statements unless the possibility of an outflow of resources embodying economic benefits is remote.
Financial assets and financial
liabilities are recognized when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial
liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit
or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognized immediately in profit or loss.
All regular way purchases or
sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or
sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the
marketplace.
All recognized financial assets
are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial
assets.
Debt instruments that meet the
following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value
through profit or loss on initial recognition):
Dividend on financial assets
at FVTPL is recognized when the Group’s right to receive the dividends is established, it is probable that the economic benefits
associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment
and the amount of dividend can be measured reliably.
Debt instruments that meet the
following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that
are designated as at fair value through profit or loss on initial recognition):
Interest income is recognized
in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments
are treated as financial assets measured at amortized cost. Thus, the exchange differences on the amortized cost are recognized
in profit or loss and other changes in the fair value of FVTOCI financial assets are recognized in other comprehensive income and
accumulated under the heading of ‘Reserve for debt instruments through other comprehensive income’. When the investment
is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
For the impairment policy on
financial assets measured at amortized cost, refer note 3.18.5.
The effective interest method
is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective
interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in
profit or loss and is included in the Other income line item.
On initial recognition, the
Group can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in
other comprehensive income. This election is not permitted if the equity investment is held for trading. These elected investments
are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses
arising from changes in fair value recognized in other comprehensive income and accumulated in the reserve for ‘equity instruments
through other comprehensive income’. The cumulative gain or loss is not reclassified to profit or loss on disposal of the
investments.
Dividends on these investments
in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, it
is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a
recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognized in profit
or loss are included in the ‘Other income’ line item.
Investments in equity instruments
are classified as at FVTPL, unless the Group irrevocably elects on initial recognition to present subsequent changes in fair value
in other comprehensive income for equity instruments which are not held for trading.
A financial asset that meets
the amortized cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition
if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instrument
as at FVTPL.
Financial assets at FVTPL are
measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit
or loss. The net gain or loss recognized in profit or loss is included in the ‘Other gains and losses’ line item.
The Group applies the expected
credit loss model for recognising impairment loss on financial assets measured at amortized cost, lease receivables, trade receivables,
other contractual rights to receive cash or other financial asset.
Expected credit losses are the
weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group
expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective
interest rate for purchased or originated credit-impaired financial assets). The Group estimates cash flows by considering all
contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected
life of that financial instrument.
The Group measures the loss
allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial
instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal
to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent
the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not
cash shortfalls that are predicted over the next 12 months.
The Group measures the loss
allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial
instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal
to 12-month expected credit losses.
However, for trade receivables,
the Group measures the loss allowance at an amount equal to lifetime expected credit losses.
When making the assessment of
whether there has been a significant increase in credit risk since initial recognition, the Group uses the change in the risk of
a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses.
To make that assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date
with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable
and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit
risk since initial recognition.
Further, for the purpose of
measuring lifetime expected credit loss allowance for trade receivables, the Group has used a practical expedient as permitted
under IFRS 9. This expected credit loss allowance is computed based on a provision matrix, which takes into account historical
credit loss experience and adjusted for forward-looking information.
The Group derecognizes a financial
asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest
in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralised
borrowing for the proceeds received.
On derecognition of a financial
asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable
and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized
in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
The fair value of financial
assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each
reporting period.
For foreign currency denominated
financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those,
which are designated as hedging instruments in a hedging relationship.
Cash and cash equivalents comprise
cash at bank and on hand, call deposits, and other short-term highly liquid investments with an original maturity of three months
or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Debt and equity instruments
issued by the entity are classified either as financial liabilities or as equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any
contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments
issued by the entity are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Group’s
own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase,
sale, issue or cancellation of the Group’s own equity instruments.
The component parts of compound
instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange
of a fixed amount of cash or another financial asset for a fixed number of the Group’s own equity instruments is an equity
instrument.
At the date of issue, the fair
value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments.
This amount is recognized as a liability on an amortized cost basis using the effective interest method until extinguished upon
conversion or at the instrument’s maturity date.
All financial liabilities are
subsequently measured at amortized cost using the effective interest method or at FVTPL.
Financial liabilities that are
not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting period.
The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective
interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ‘Finance costs’
line item.
The effective interest method
is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
For financial liabilities that
are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange
gains and losses are determined based on the amortized cost of the instruments and are recognized in ‘Other income’
as ‘Net foreign exchange gains/(losses)’.
The fair value of financial
liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end
of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of
the fair value gains or losses and is recognized in profit or loss.
The Group derecognizes financial
liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. An exchange with a lender
of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability
and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability
derecognized and the consideration paid and payable is recognized in profit or loss.
Financial assets and liabilities
are offset and the net amount is reported in the consolidated financial statement where there is a legally enforceable right to
offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course
of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.
Operating segments are reported
in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Board of directors of the Group
has been identified as being the chief operating decision maker. Refer to note 40 for segment information presented.
The preparation of consolidated
financial statement requires the use of accounting estimates, which, by definition, will seldom equal the actual results. This
note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items, which are more likely
to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed
information about each of these estimates and judgements is included in relevant notes together with information about the basis
of calculation for each affected line item in the consolidated financial statement.
Some of the Group’s assets
and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability,
the Group uses market-observable data to the extent it is available.
Bonus point credits having a
predetermined life are granted to customers when they make payments for card balances. The fair value of the consideration on gaming
services resulting in such bonus point credits is allocated between the normal points and the bonus point credits granted. The
consideration allocated to the bonus point credits is measured by reference to fair value from the standpoint of the holder and
revenue is deferred. The Group at the end of each reporting period estimates the number of points redeemed and that it expects
will be further redeemed, based on empirical data of redemption/ lapses, and revenue is accordingly recognized.
In the normal course of business,
contingent liabilities may arise from litigation and other claims against the Group. There are certain obligations which managements
have concluded based on all available facts and circumstances are not probable of payment or difficult to quantify reliably and
such obligations are treated as contingent liabilities and disclosed in the notes but are not provided for in the consolidated
financial statement. Although there can be no assurance of the final outcome of the legal proceedings in which the Group is involved
it is not expected that such contingencies will have material effect on its financial position or profitability.
As described at note 3.11 above,
the Group reviews the estimated useful lives of property, plant and equipment and residual values at the end of each reporting
period. There was no change in the useful life and residual values of property, plant and equipment as compared to previous year.
In the current year, the Group
has applied a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily
effective for an accounting period that begins on or after January 1, 2017.
The Group has applied these
amendments for the first time in the current year. The amendments require an entity to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities, including both cash and non-cash changes.
The Group’s liabilities
arising from financing activities consist of borrowings and certain other financial liabilities. A reconciliation between the opening
and closing balances of these items is provided in note 21. Apart from the additional disclosure in note 21, the application of
these amendments has had no impact on the Group’s consolidated financial statements.
The Group has applied these
amendments for the first time in the current year. The amendments clarify how an entity should evaluate whether there will be sufficient
future taxable profits against which it can utilize a deductible temporary difference.
The application of these amendments
has had no impact on the Group’s consolidated financial statements as the Group already assesses the sufficiency of future
taxable profits in a way that is consistent with these amendments.
The Group has applied the amendments
to IFRS 12 included in the Annual Improvements to IFRSs 2014-2016 Cycle for the first time in the current year.
IFRS 12 states that an entity
need not provide summarized financial information for interests in subsidiaries that are classified (or included in a disposal
group that is classified) as held for sale.
The amendments clarify that
this is the only concession from the disclosure requirements of IFRS 12 for such interests.
The application of these amendments
has had no effect on the Group’s consolidated financial statements as none of the Group’s interests in these entities
are classified, or included in a disposal group that is classified, as held for sale.
In July 2014, the IASB finalized
the reform of financial instruments accounting and issued IFRS 9 (as revised in 2014), which contains the requirements for:
IFRS 9 (as revised in 2014)
is effective for annual periods beginning on or after January 1, 2018 with earlier application permitted. IFRS 9 requires retrospective
application (subject to some transitional provisions).
The entity elects to early adopt
IFRS 9 from the annual period beginning from April 1, 2015 and it has applied all of the requirements in IFRS 9 at the same time.
IFRS 15 establishes a single
comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede
the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations
when it becomes effective.
The core principle of IFRS 15
is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the
Standard introduces a 5-step approach to revenue recognition:
● Step 4: Allocate the
transaction price to the performance obligations in the contract
● Step 5: Recognize revenue
when (or as) the entity satisfies a performance obligation
Under IFRS 15, an entity recognizes
revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying
the particular performance obligation is transferred to the customer.
Far more prescriptive guidance
has been added in IFRS 15 to deal with specific scenarios. Furthermore, IFRS 15 requires extensive disclosures.
In April 2016, the IASB issued
Clarifications to IFRS 15 in relation to the identification of performance obligations, principal versus agent considerations,
as well as licensing application guidance.
Apart from providing more extensive
disclosures on the Group’s revenue transactions, the directors do not anticipate that the application of IFRS 15 will have
a significant impact on the financial position and/or financial performance of the Group.
IFRS 16 introduces a comprehensive
model for the identification of lease arrangements and accounting treatments for both lessors and lessees. IFRS 16 will supersede
the current lease guidance including IAS 17 Leases and the related interpretations when it becomes effective.
IFRS 16 distinguishes leases
and service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of operating leases
(off balance sheet) and finance leases (on balance sheet) are removed for lessee accounting, and is replaced by a model where a
right-of-use asset and a corresponding liability have to be recognized for all leases by lessees (i.e. all on balance sheet) except
for short-term leases and leases of low value assets.
The right-of-use asset is initially
measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment
losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of
the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments,
as well as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows will also be affected
as operating lease payments under IAS 17 are presented as operating cash flows; whereas under the IFRS 16 model, the lease payments
will be split into a principal and an interest portion, which will be presented as financing and operating cash flows respectively.
In contrast to lessee accounting,
IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify
a lease as either an operating lease or a finance lease.
As at March 31, 2018, the Group
has non-cancellable operating lease commitments of Rs. 2,648,665 Thousands. The Group is under the process of evaluating the impact
of this IFRS.
IFRIC 22 addresses how to determine
the ‘date of transaction’ for the purpose of determining the exchange rate to use on initial recognition of an asset,
expense or income, when consideration for that item has been paid or received in advance in a foreign currency which resulted in
the recognition of a non-monetary asset or non-monetary liability (e.g. a non-refundable deposit or deferred revenue).
The Interpretation specifies
that the date of transaction is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability
arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the Interpretation
requires an entity to determine the date of transaction for each payment or receipt of advance consideration.
The Interpretation is effective
for annual periods beginning on or after January 1, 2018 with earlier application permitted. Entities can apply the Interpretation
either retrospectively or prospectively. Specific transition provisions apply to prospective application.
The directors of the Group do
not anticipate that the application of the amendments in the future will have an impact on the Group’s consolidated financial
statements. This is because the Group already accounts for transactions involving the payment or receipt of advance consideration
in a foreign currency in a way that is consistent with the amendments.
Since, the procurement of goods during
the period were done by availing the exemption from payment of aforesaid duties, the amount capitalized for the said plant and
machinery as on the put to use date, is cost of property, plant and equipment (PPE) net-off tax and duty benefit availed. In compliance
with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance’, the Group has grossed up the value
of its PPE by the amount of duty benefit availed by the Group is after considering the same as government grant.
The amount of grant capitalized will be
depreciated as per useful life of plant and machinery. The amount of deferred liability shall be amortized based of the fulfilment
of export obligation with credit to consolidated statement of profit and loss under the head ‘Other operating income’.
The Group has recognized Government grant of Rs. 7,772 thousands from the date of capitalization of plant.
Intangible assets under development comprises
of the cost related to assets or projects that are not yet ready for their intended use at the reporting date.
The cost of inventories recognized as an
expense during the period in respect of continuing operations was Rs. 483,652 thousands (for the year ended 31st March, 2017: Rs
240,842 thousands).
The Company is having only one class of Equity Shares having
a par value of Rs. 10/- each. Each holder of Equity shares is entitled to one vote per share. In the event of liquidation of the
Company, the holders of the Equity shares will be entitled to receive remaining assets of the company. The distribution will be
in proportion to the number of Equity shares held by shareholders.
Compulsorily convertible preference shares,
which have a par value of Rs. 10 each, are entitled to receive a discretionary non-cumulative 0.01% preference dividend before
any dividends are declared to the equity shareholders. The convertible preference shares can be converted into equity shares on
a one-for-one basis at any time during 20 years from the date of issuance and allotment at the option of the holder or if the Company
goes for IPO. Convertible preference shares have no right to share in any surplus assets or profits. The preference shareholder
will have a right to vote only on resolutions placed before the company which directly affect the rights attached to the preference
shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share
capital and his voting right on a poll will be in proportion to his share in the paid-up preference share capital of the Company.
Securities premium account is created when
shares are issued at premium. The reserve can be utilized in accordance with the provisions of the Indian Companies Act, 2013.
18.6 Authorized Share Capital of the Company
has been increased from Rs. 1,750,000 thousands divided into 140,000,000 Equity Shares of Rs. 10 each and 35,000,000 Redeemable
Preference Shares Rs. 10 each to Rs. 2,750,000 thousands divided into 225,000,000 Equity Shares of Rs. 10 each and 50,000,000 Redeemable
Preference Shares Rs. 10 each on July 27, 2017.
18.7 During the current
year, Company has issued 39,443,000 Compulsorily Convertible Redeemable Preference Shares of Rs. 10 each fully paid at a premium
of Rs 27.92 each shares aggregating to Rs 1,495,679 thousands.
18.8 During the current year, Company has
converted 21,266,288 Optionally Convertible Preference Shares issued to AHA Holdings Private Limited into 21,266,288 Equity shares
of Rs. 10 each on September 15, 2017.
Exchange differences relating to the translation
of the results and net assets of the foreign subsidiary from their functional currency to the Group’s presentation currency
(i.e. INR) are recognized directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange
differences previously accumulated in the foreign currency translation reserve will be reclassified to profit or loss on the disposal
of the foreign subsidiary.
During the financial year 2014-15 and 2015-16,
the Company has received duty credit entitlement certificate issued by Director General of Foreign Trade (DGFT) under Served from
India Scheme (SFIS) aggregating Rs. 30,797 thousands and Rs.18,781 thousands respectively from a related party for Rs. Nil and
thus the same is accounted as deemed contribution in the financial statements of the Group.
Share application money pending allotment
represents the share application money received to the extent not refundable and against which allotment of the preference shares
is pending.
The Company has received Rs. 32,000 thousands
as share application money from investors. Subsequent to the year-end, the Company has issued 843,883 fully paid-up Compulsorily
Convertible Preference Shares (CCPS) of Rs. 10/- each at a premium of Rs. 27.92 per CCPS aggregating to Rs. 32,000 thousands.
This reserve represents the cumulative
gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net
of amounts reclassified to accumulated deficit when those assets have been disposed of.
20.2 Accumulated
deficit represents the surplus. The amount that can be distributed by the Company as dividends to its equity shareholders is determined
based on the separate financial statements of the Company. Thus, the amounts reported above are not distributable in entirety.
a) Pledge of shares of 26.13% held by Promoters
in the Company on fully diluted basis.
b) Creation of exclusive charge on all
fixed, movable and current assets of the Company.
c) Exclusive charge by way of mortgage
on certain immovable properties owned by the promoter / relatives of promoter in favour of debenture trustee.
Issuer is required to repay to debenture
holder 20%, 20% and 60% of investment amount at the end of 3rd, 4th and 5th anniversary from the allotment date August 03, 2016.
1. A-2/5, A-2/6 in building no. A known
as Prithvi Apartments of Prithvi Apartments Co-op. Hsg. Soc. Ltd. situated at Altamount Road, Mumbai- 400 026 property owned by
Mrs. Kalpana Morakhia
2. Plot No. 10, Survey No 108 & 109,
Village – Kunenama, Taluka – Maval, Dist – Pune 410401, property owned by AHA Holdings Private Limited.
3. SAM Family Trust to create mortgage
over its immovable properties situated at Plot No. 1, Survey No 108 & 109, Village – Kunenama, Taluka – Maval,
District Pune 410401
4. B-4501, B4601 at Lodha Bellissimo, Lodha
Pavillion, Apollo Mill Compound, Mahalaxmi, Mumbai – 400011 owned by AHA Holding Private Limited
5. Mr. Sushil Karalkar and Elements Learning
Centre Private Limited to create mortgage over its immovable properties situated at Gut No. 219A & 219B at Village Atone, Tal.
Sudhagad, Dist. Raigad.
6. Pledge 100% shareholding of AHA Holdings
Private Limited.
7. Pledge 78.40% shareholding of Elements
Learning Centre Private Limited.
8. Pledge 100% shareholding of Gir Holiday
Resorts Private Limited.
9. Pledge 100% shareholding of Smaaash
Leisure Limited (Formerly known as PVR BluO Entertainment Limited).
10. Pledge over equity shares of Smaaash
Entertainment Private Limited held by AHA Holdings Private Limited.
11. Charge on investments held in Kotak
India Venture Fund – I, Kotak India Growth Fund – II and Kotak Alternate Opportunities (India) Fund held by AHA Holdings
Private Limited
12. Exclusive charge over all fixed, movable
& current assets of Smaaash Entertainment Private Limited
13. Charge over warrants of Yoboho New
Media Private Limited held by AHA Holdings Private Limited.
14. Mr. Paresh Patel to create mortgage
over its immovable properties situated at Survey No – 361, Village Gadhiya, Taluka Dhari, District Amreli, Gujarat.
15. Corporate Guarantee by AHA Holdings
Private Limited
16. Personal Guarantee by Mr. Shripal Morakhia
& Mrs. Kalpana Morakhia
17. Corporate Guarantee by SMAAASH Entertainment
USA Limited
18. Corporate Guarantee by Elements Learning
Centre Private Limited.
Issuer is required to repay to debenture
holder 50%, 4%, 13% 15% and 18% of investment amount in F.Y 2019, F.Y. 2020, F.Y. 2021, F.Y. 2022 and F.Y. 2023 respectively.
11% p.a. from the date of disbursement
to end of 12 months,
a) Exclusive hypothecation charge on current
and movable fixed assets of the Company both present and future including sponsorship money for Gurgaon and Noida center to be
routed through the Yes Bank.
b) Also guaranteed by corporate guarantee
of Aha Holdings Private Limited and personal guarantee of Mr.Shripal Morakhia (Director).
The term loan will bear interest at 13.50%
p.a with immediate reset and the same is payable monthly.
- Exclusive charge on current asset and
moveable fixed assets of the Company both present and future including sponsorship money from PVR Limited to be routed through
Yes Bank account.
The term loan will bear interest at 2.50%
(Spread) over and above the 6M YBL MCLR with half-yearly reset and the same is payable monthly.
Mortgage of certain immovable property
owned by promoter associates (situated at 1230,31,32,33,34,35,36,37,38,39,40,41,42,43,44,45,46,47 and 1248 Police station Bhangar,
Sonapore, 24 Parganas (South)). having clear and marketable title standing in the name of Borrower / Mortgagor.
Security in form of fixed deposit of Rs
60 million with bank as acceptable and same provided by Aha Holding Private Limited.
Principal will be repaid in 36 months after
the moratorium period of 12 months and the same will be repayable in balance 24 equated monthly instalments start from date of
first tranche disbursement.
The term loan will bear interest of long
term reference rate of TCFSL +/- prevailing spread, present effective rate being 12.25% p.a. and the interest is payable every
month.
First pari passu charge over the movable
and current assets of Smaaash pertaining to the Bangalore, Ludhiana and Mumbai go-karting projects.
First charge by way of mortgage of all
immovable properties owned by Shri Nitya Gopal Bank situated at Harihar Para, Gobindapur, Baruipur road, Harinabhi, P.S. Sonarpur
District 24, Parganas (South), Kolkata, bearing survey/block/plot no. JL no. 76, Touzi no. 70/71, Khatian no. 30,31,627,325,329,330,327,
Plot no. 602, 619, 607, 620, 644, 597, 598, 497, 623,500,585,625,621,586,622,617,P.S Sonarpur district 24 Pargana (South), admeasuring
4 acres.
Irrevocable and unconditional guarantee
of Shripal Morakhia, Ami Javeri, Nitya Gopal Banik, Aha holding Private Limited and Mrs Kalpana Morakhia. The guarantee shall be
joint and several.
Loan is required to be repaid in 72 monthly
instalments after a moratorium of 24 month commencing from April 10, 2018.
The term loan will bear interest at 12.95%
p.a (fixed) with monthly reset and the same is payable monthly.
The loan amount is secured by second charge
on all movables assets including current assets of the Company. The charge would be subservient to all the existing and prospective
charges created/to be created by the Company on the said assets in favour of those banks/ financial institution which have extended/would
extend business loans (viz. term loans for machineries, business premises and working capital) to the Company for the same business
for which SIDBI has extended this sub-debt. All such aforesaid lenders would be referred to as ’senior secured lenders’.
Irrevocable and unconditional guarantee
of Shripal Morakhia, Kalpana Morakhia and Ms Ami Zaveri. The guarantee will be joint and several.
Loan is required to be repaid in 84 monthly
instalments after a moratorium of 36 month commencing from February 10, 2018. After 36 month the loan amount will be repaid in
47 instalments of Rs 2,100 thousands each and balance Rs 1,300 thousands in last instalment.
The term loan will bear interest at 15.50%
p.a (fixed) with monthly reset and the same is payable monthly.
a) Mortgage of property situated at Khatian
number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)
b) Charge on cashflows from Mumbai Lower
Parel Smaaash, Convention center, Verbena Brew Pub & Sky Garden, Pravas Restaurant, Mumbai Go-Karting.
d) Personal Guarantee of Mr. Shripal Morakhia
a) Mortgage of property situated at Khatian
number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)
c) Personal Guarantee of Mr. Shripal Morakhia
a) Mortgage of property situated at Khatian
number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)
c) Personal Guarantee of Mr. Shripal Morakhia
During the year 2016-17, the Company has
entered into a Preference Shares subscription agreement (PSSA) with Aha holding Private Limited. In accordance with the PSSA, the
Company has issued 21,266,288 0% Non-cumulative optionally convertible redeemable preference Shares of Rs. 10/- each (including
conversion of outstanding loan aggregating to Rs. 12,663 thousands). The preference shares are convertible at any time into equal
number of equity shares of face value of Rs. 10/- each until the date falling 18 months from the date of issuance of the preference
shares, at the option of the holders, at Rs. 10/- per equity share and carry dividend @ 0% p.a. In the event of failure of the
Company to convert in to equity shares and/or in the event to redeem the Preference shares upon exercise of the rights contempt
above, the entire preference shares will become payable forthwith. The Optional convertible preference shares are converted into
equity shares during the F.Y 2017-18.
VI: For the current maturities of long
term borrowings, refer to note 22 other financial liabilities.
The table below details changes in the
Group’s liabilities arising from financing activities, including both cash and non–cash changes. Liabilities arising
from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated
statement of cash flows as cash flows from financing activities.
The above comprises costs associated with
the opening and organizing of new centers, including pre-opening utility and service related costs and other related costs for
employees engaged in such pre-launch activities
The BMC and its officers demolished the
Pravas restaurant and part of the Smaaash centre being operated by the Company. The loss incurred on account of this demolition,
net off Rs. 670 thousands recovered from the sale of scrap, aggregating to net loss of Rs. 15,201 thousands is recognized as exceptional
items in the financial statements. The Company has lodged the insurance claim against this loss and also filed a writ petition
in the Bombay High Court against the demolition.
The tax rate used for the year ended March
31, 2018, and March 31, 2017 in reconciliations above is the corporate tax rate of 30% (plus surcharge and cess as applicable)
on taxable profits under Income Tax Act, 1961.
During the F.Y 2016-17, pursuant
to the decision taken and approved by the Board of directors of Adrenaline Foods Private Limited (Subsidiary), the entity has decided
to discontinue its Mall Food Court Quick Service Restaurant (QSR) business model effective March 17, 2017. The closing down and
discontinuation of Mall Food court business model was due to the lack of business in mall.
The combined results of the discontinued
operations (i.e. QSR business) included in the profit for the year are set out below. The comparative profit and cash flows from
discontinued operations have been presented as if these operations were discontinued in the prior year as well.
The carrying amount of net asset
Rs. 658 thousands (Total assets Rs. 668 thousands less total liabilities Rs.10 thousands) (previous year: net liabilities Rs. 1,568
thousands {Total assets Rs. 1,244 thousands less total liabilities Rs. 2,812 thousands}). The carrying amount of total assets and
liabilities as at the balance sheet date relating to the discontinuing business are as under:
For the purpose of the Group’s
capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity
holders of the Group. The primary objective of the Group’s capital management is to maximize the shareholder value.
The Group manages its capital
structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To
maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders
or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
The Group includes within net debt, interest bearing loans and borrowings, trade payables, less cash and cash equivalents.
In order to achieve this overall objective, the Group’s
capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans
and borrowings that define capital structure requirements.
Breaches in meeting the financial covenants would
permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing
loans and borrowing in the current period.
No changes were made in the objectives, policies or
processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
The Group’s principal financial liabilities,
comprises of borrowing from banks and financial institutions, debentures and other payables. The main purpose of these financial
liabilities is to support its operations and business expansion. The Group’s principal financial assets include trade and
other receivables, investments and cash and deposits that derive directly from its operations.
The Group’s senior management oversees
the management of these risks. The Group’s senior management is supported by a financial risk committee that advises on financial
risks and the appropriate financial risk governance framework for the Group. This financial risk committee provides assurance to
the Group’s senior management that the Group’s financial risk activities are governed by appropriate policies and procedure
and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives.
The Board of Directors reviews and agrees policies for managing each risk, which are summarized as below:
Credit risk refers to the risk
that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted
a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The
Group uses publicly available financial information and its own trading records to rate its major customers. The Group’s
exposure to financial loss from defaults are continuously monitored.
(i) The Group’s management
is responsible for liquidity, funding as well as settlement management. Ultimate responsibility for liquidity risk management rests
with the board of directors, which has established an appropriate liquidity risk management framework for the management of the
Group’s short, medium, and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows,
and by matching the maturity profiles of financial assets and liabilities.
The above table details the Group’s
remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed
in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the Group can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based
on the earliest date on which the Group may be required to pay.
The Group is exposed to market risks associated
with foreign currency rates and interest rate risk. In the normal course of business and in accordance with our policies, we manage
these risks through a variety of strategies.
The Group undertakes transactions denominated in foreign currencies;
consequently, exposures to exchange rate fluctuations arise. The exchange gains or losses are recognized in profit or loss on the
date of settlement and restatement at each reporting date.
The carrying amounts of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the end of the reporting period are as follows:
Interest rate risk is the risk that fair value or future cash
flows of a financial instrument will fluctuate because of changes in market interest rates. The Group has borrowed funds with both
fixed and floating interest rate.
A change of 1% in interest rates would have following
impact on profit before tax
As at the reporting date, the Group does not have any financial
liability measured at fair values.
The management believes the carrying
amounts of financial assets and financial liabilities measured at amortized cost approximate their fair values.
The Groups’ contribution
to Provident fund for the year ended March 31, 2018: Rs. 16,780 thousands and for year ended March 31, 2017: Rs 10,806 thousands)
has been recognized in consolidated statement of profit or loss under the heading employee benefits expense.
The Group operates a gratuity
plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity
Act, 1972 or the Group scheme applicable to the employee. The benefit vests upon completion of five years of continuous service
and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the
gratuity is payable irrespective of vesting. The Group makes annual contribution to the Group gratuity scheme administered by the
Life Insurance Corporation of India through its Gratuity Trust Fund.
The present value of the defined
benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary
of the plan participants will increase the plan’s liability.
The defined benefit obligation
calculated uses a discount rate based on government bonds. All other aspects remaining same, if bond yields fall, the defined benefit
obligation will tend to increase. In addition, an inadequate return on underlying plan assets can result in an increase in cost
of providing these benefits to employees in future.
This is the risk of variability
of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of
these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase,
medical cost inflation, discount rate and vesting criteria.
i) The Current service cost and the next interest expense for
the period are included in the ‘Employee benefits expense’ line item in the consolidated statement of profit and loss.
ii) The remeasurement of the net define benefits liability is
included in other comprehensive income
The plan does not invest directly in any property occupied by
the Group nor in any financial securities issued by the Group.
Gratuity is a lump sum plan and the cost
of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions
to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The
following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting
period arising on account of an increase or decrease in the reported assumption by
50 basis points
.
The Group expects to contribute Rs. 2,000 thousands (as at March
31, 2017: Rs 400 thousand) to the gratuity trusts during the next financial year.
The table below shows the expected cash flow profile of the
benefits to be paid to the current membership of the plan based on past service of the employees as at the valuation date:
The weighted average duration of the defined
benefit obligation as at March 31, 2018: 9.13 years (March 31, 2017: 10.32 years)
The remuneration of directors and other
members of key managerial personnel during the year was as follows:
The remuneration of directors and key executives
is determined by the remuneration committee having regard to the performance of individuals and market trends. As the liabilities
for defined benefit plan are provided on actuarial basis for the Group as a whole, the amount pertaining to key managerial persons
are not included.
The Group has taken various loans from
banks, financial institutions and others. Various related parties has provided guarantees and mortgages to the banks, financial
institutions and others on behalf of the Group. Refer note 21 for detail description of guarantees and mortgages provided by related
parties.
Information reported to the chief operating
decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods
or services delivered or provided, and in respect of the ‘India’ and ‘America’. The directors of the Company
have chosen to organize the Group around differences in areas where products and services are delivered or provided. No operating
segments have been aggregated in arriving at the reportable segments of the Group.
Specifically, the Group’s reportable
segments under IFRS 8 are as follows:
The following is an analysis of the Group’s
revenue and results from continuing operations by reportable segment.
Segment revenue reported above represents
revenue generated from external customers. The intersegment services provided for the year ended March 31, 2018: Rs. Nil thousands
(for the year ended March 31, 2017: Rs. 6,484 thousands).
The accounting policies of the reportable
segments are the same as the Group’s accounting policies described in note 3.
* Non-current assets includes assets other than financial instruments,
deferred tax assets and post-employment benefit assets.
The Group’s information about its non-current assets by
location of assets are detailed below.
* Non-current assets includes assets other
than financial instruments, deferred tax assets and post-employment benefit assets.
No other single customers contributed 10% or more to the Group’s
revenue for the year ended March 31, 2018 and for year ended March 31, 2017.
i) The Group has entered into operating
lease arrangements for commercial premises and warehouses at various locations. The leases are non-cancellable and are for period
as specified in the agreement and may be renewed based on mutual agreement of the parties.
The Group acquired business of SVM, Ahlada
and Smaaash Leisure Limited (Formerly known as PVR Bluo Entertainment Ltd) to expand their business in new locations.
Acquisition-related costs amounting to
Rs. 1,006 thousands for SVM and Ahlada have been excluded from the consideration transferred and have been recognized as an expense
in profit or loss in the current year, within the ‘other expenses’ line item.
Acquisition-related costs amounting to
Rs. 40,061 thousands for Smaaash Leisure Limited (Formerly known as PVR BluO Entertainment Ltd) have been recognized as transaction
cost and added to the cost of the investment.
The Group has acquired business of SVM
and Ahlada without acquiring or controlling the legal entity and they have acquired 100% equity interest in Smaaash Leisure Limited
(Formerly known as PVR BluO Entertainment Ltd). Therefore, there is no non-controlling interests (NCI) in these business acquisitions.
Revenue for the year ended March
31, 2018 includes Rs. 75,123 thousands in respect of SVM and Ahlada and Rs. 334,857 thousands in respect of Smaaash Leisure Limited.
Included in the loss for the year ended March 31, 2017 is Rs. 9,863 thousands attributable to the additional business generated
by Smaaash Leisure Limited (Formerly known as PVR BluO Entertainment Ltd).
Had these business combinations been effected at April
1, 2017, the revenue of the Group from continuing operations would have been Rs. 2,712,336 thousands, and the loss for the period
from continuing operations would have been Rs. 348,031 thousands. The directors consider these ‘pro-forma’ numbers
to represent an approximate measure of the performance of the combined group on an annualized basis and to provide a reference
point for comparison in future periods.
On May 02, 2018, I-AM Capital
Acquisition Company (I-AM Capital) has entered into a Definitive agreement with Smaaash Entertainment Private Limited to infuse
up to $49 million equity, which translate into a 27.5% ownership interest in Smaaash. Smaaash intends to use the cash proceeds
to grow its business, fund inorganic growth initiatives, partly repay debt and for working capital.
I-AM Capital, Co-Founded and
led by CEO F. Jacob Cherian and CFO Suhel Kanuga, is a blank check company, also commonly referred to as a Special Purpose Acquisition
Company, or SPAC, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses or entities.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
I-AM Capital Acquisition Company (the “Company”),
is a blank check company organized under the laws of the State of Delaware on April 17, 2017. The Company was formed for the purpose
of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses (“Business Combination”). Although the Company is not limited to a particular industry or geographic
region for purposes of consummating a Business Combination, the Company intends to focus on businesses with a connection to India.
The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with
early stage and emerging growth companies.
The Company’s sponsor is I-AM Capital
Partners LLC (the “Sponsor”). The Company has selected May 31 as its fiscal year end.
At May 31, 2018, the Company had not commenced
any principal operations nor generated revenue to date. All activity for the period from April 17, 2017 (inception) through May
31, 2018 related to the Company’s formation and the initial public offering (the “Initial Public Offering”),
which is described below, and identifying a target company for a business combination. The Company will not generate any operating
revenues until after completion of its initial Business Combination, at the earliest. The Company will generate non-operating income
in the form of interest income from the proceeds held in trust derived from the Initial Public Offering. Accordingly, the
Company’s activities are subject to significant risks and uncertainties, including failing to consummate the Initial Business
Combination. Organizational costs and administrative expenses that are not related to the Initial Public Offering and concurrent
private placement are expensed as incurred.
Financing
The registration statement for the Company’s
Initial Public Offering (as described in Note 3) was declared effective by the United States Securities and Exchange Commission
(the “SEC”) on August 16, 2017. The Company intends to finance a Business Combination with the net proceeds from the
sale of $50,000,000 of units in the Initial Public Offering (the “Public Units”) and the sale of $2,545,000 of units
(the “Private Units” and, together with the Public Units, the “Units”) in the simultaneous private placement
(the “Private Placement” as described in Note 3). Upon the closing of the Initial Public Offering and the Private Placement
on August 22, 2017, $50,750,000 was deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee
(the “Trust Account”) as discussed below.
Contained in the underwriting agreement
for the Initial Public Offering is an over-allotment option allowing the underwriters to purchase from the Company up to an additional
750,000 Public Units (the “Over-Allotment Units”) and, in addition, the Company received a commitment from the Sponsor
to purchase up to an additional 26,250 Private Units in order to maintain the amount of cash in the Trust Account equal to $10.15
per Public Unit sold in the Initial Public Offering. On September 13, 2017, the underwriters partially exercised their option and
purchased 200,000 Over-Allotment Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $2,000,000.
Also on September 13, 2017, simultaneously with the sale of the Over-Allotment Units, the Company consummated the sale of an additional
7,000 Placement Units (the “Over-Allotment Placement Units”), generating gross proceeds of $70,000.
Trust Account
The Trust Account will be invested only
in U.S. government treasury bills with a maturity of one hundred and eighty (180) days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act of 1940, which invest only in direct U.S. government obligations.
Funds will remain in the Trust Account until the earlier of (i) the consummation of its first Business Combination or (ii) the
distribution of the Trust Account as described below. The remaining proceeds outside the Trust Account may be used to pay for business,
legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
The Company’s amended and restated
certificate of incorporation provides that, other than the withdrawal of interest to pay taxes or up to a maximum of $600,000 of
working capital expenses, if any, none of the funds held in trust will be released until the earlier of: (i) the completion of
the initial Business Combination; or (ii) the redemption of 100% of the shares of common stock included in the Public Units sold
in the Initial Public Offering if the Company is unable to complete its initial Business Combination within 12 months (or 21 months
if extended) from the closing of the Initial Public Offering (subject to the requirements of law).
Business Combination
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although it initially intends
to focus its efforts on businesses with a connection to India. Substantially all of the net proceeds of the Initial Public Offering
are intended to be generally applied toward consummating a Business Combination with a Target Business. As used herein, “Target
Business” must be with one or more target businesses that together have a fair market value equal to at least 80% of the
balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the
Company’s signing a definitive agreement in connection with its initial Business Combination. Furthermore, there is no assurance
that the Company will be able to successfully effect a Business Combination.
The Company will have until 12 months from
the closing of the Initial Public Offering to consummate a Business Combination. However, if the Company anticipates that it may
not be able to consummate a Business Combination within 12 months, the Company may extend the period of time to consummate a Business
Combination up to three times, each by an additional three months (for a total of up to 21 months to complete a Business Combination).
Pursuant to the terms of the Company’s amended and restated certificate of incorporation and the trust agreement entered
into between the Company and Continental Stock Transfer & Trust Company, in order to extend the time available for the Company
to consummate its initial Business Combination, the Sponsor or its affiliates or designees, upon five days advance notice prior
to the applicable deadline, must deposit into the Trust Account approximately $303,160 ($0.0583 per Unit), on or prior to the date
of the applicable deadline, for each three month extension, up to an aggregate of approximately $910,000 if extended three times,
or $0.1750 per Unit. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time
for the Company to complete its initial Business Combination. In the event that interest in the trust is available for withdrawal
for working capital purposes and has not been used to pay taxes or other working capital expenses, the Company may apply the accrued
interest in the Trust Account or such withdrawn interest to the Sponsor’s obligation to loan the Company money in connection
with an extension, and the amount that the Sponsor would be obligated to loan the Company in connection with such extension would
be reduced by the amount of interest so applied. If the Company does not complete a Business Combination within this period of
time (“Combination Period”), it shall, as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably possible following
such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject
in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
In the event of such distribution, it is
possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets)
will be less than the initial public offering price per Public Unit in the Initial Public Offering. The Company, after signing
a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting
called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote
for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less
taxes payable and up to a maximum of $600,000 of working capital released to the Company, or (ii) provide stockholders with the
opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote)
for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business
days prior to commencement of the tender offer, including interest but less taxes payable. The decision as to whether the Company
will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will
be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would otherwise require the Company to seek stockholder approval unless a vote is required
by NASDAQ rules. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the
outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event will the Company
redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon consummation of
the initial Business Combination. In such case, the Company would not proceed with the redemption of its public shares and the
related Business Combination, and instead may search for an alternate Business Combination.
As a result of the public stockholders’
redemption rights, such shares of common stock will be recorded at redemption amount and classified as temporary equity upon the
completion of the Initial Offering, in accordance with FASB ASC 480, “Distinguishing Liabilities from Equity.” The
amount in the Trust Account is initially anticipated to be $10.15 per public common share, subject to increase of up to an additional
$0.1750 per share in the event that the Sponsor elects to extend the period of time to consummate a Business Combination, as described
in more detail in the prospectus. The per-share amount to be distributed to investors who properly redeem their shares will not
be reduced by the deferred underwriting commissions paid to the underwriters. There will be no redemption rights upon the completion
of the initial Business Combination with respect to the warrants. The initial stockholders have entered into letter agreements,
pursuant to which they have agreed to waive their redemption rights with respect to their Founder Shares (defined in Note 4), shares
of common stock underlying the Private Units and the Public Units, and any additional shares they may acquire during or after the
Initial Public Offering in connection with the completion of the Business Combination. Prior to acquiring any securities from the
initial stockholders, permitted transferees must enter into a written agreement with the Company agreeing to be bound by the same
restriction.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements
are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with
new or revised financial accounting standards until private companies (that is, those that have not had a registration statement
under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities
registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with
the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed
the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management
believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the balance sheet.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires the Company’s management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Offering Costs
The Company complies with the requirements
of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. Offering costs
of approximately $3,728,000 consisting principally of underwriter discounts of $3,250,000 (including approximately $1,820,000 of
which payment is deferred) and approximately $478,000 of professional, printing, filing, regulatory and other costs have been charged
to additional paid in capital upon completion of the Initial Public Offering.
Common stock subject to possible redemption
The Company accounts for its common stock
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“
Distinguishing Liabilities from Equity
.” Common stock subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. Conditionally redeemable common stock (including common stock that feature
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events
not solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified
as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside
of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at May 31, 2018, 4,560,757 shares
of common stock subject to possible redemption at the redemption amount are presented as temporary equity, outside of the stockholders’
equity section of the Company’s balance sheet.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
Net income (loss) per share
The Company complies with accounting and
disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net
income (loss) by the weighted average number of shares of common stock outstanding for the period. Shares of common stock subject
to possible redemption at May 31, 2018 have been excluded from the calculation of basic income (loss) per share and diluted loss
per share year ended May 31, 2018 since such shares, if redeemed, only participate in their pro rata share of the Trust Account
earnings. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and Private Placement to
purchase shares of common stock, (2) rights sold in the Initial Public Offering and Private Placement that convert into shares
of common stock, and (3) the unit purchase option granted to the underwriters in the calculation of diluted income (loss) per share,
since the exercise of the warrants and the conversion of the rights into shares of common stock is contingent upon the occurrence
of future events.
Income Taxes
The Company complies with the accounting
and reporting requirements of ASC Topic 740, “
Income Taxes
,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts,
based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition
threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities.
On December 22, 2017, the U.S. Tax Cuts
and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was
lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect
of tax law changes in the period of enactment; therefore, the Company was required to revalue its deferred tax assets and liabilities
at the new rate. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118") to address the application of GAAP in
situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations)
in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The ultimate impact may differ from this
provisional amount, possibly materially, as a result of additional analysis, changes in interpretations and assumptions the Company
has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of Tax Reform.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet adopted accounting pronouncements, would have a material effect on the Company’s financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
AND PRIVATE PLACEMENT
Initial Public Offering
On August 22, 2017, the Company sold 5,000,000
Public Units at a purchase price of $10.00 per Public Unit in the Initial Public Offering, generating gross proceeds of $50.0 million.
The Company incurred offering costs of approximately $3.7 million, inclusive of approximately $3.2 million of underwriting fees.
The Company paid $1 million of underwriting fees upon the closing of the Initial Public Offering, issued 50,000 shares of common
stock for underwriting fees, and deferred $1.82 million of underwriting fees until the consummation of the initial Business Combination.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
Each Unit consists of one share of the
Company’s common stock, one right to receive one-tenth of one share of the Company’s common stock upon consummation
of the Company’s initial Business Combination (“Right”), and one redeemable warrant (“Warrant”).
Each Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share, subject to adjustment.
No fractional shares will be issued upon exercise of the Warrants. The Warrants will become exercisable on the later of (i) 30
days after the completion of the initial Business Combination and (ii) 12 months from the closing of the Initial Public Offering,
and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.
The Company may redeem the Warrants, in
whole and not in part, at a price of $0.01 per Warrant upon 30 days’ notice ("30-day redemption period”), only
in the event that the last sale price of the common stock equals or exceeds $21.00 per share for any 20 trading days within a 30-trading
day period ending on the third trading day prior to the date on which notice of redemption is given, provided there is an effective
registration statement with respect to the shares of common stock underlying such Warrants and a current prospectus relating to
those shares of common stock is available throughout the 30-day redemption period. If the Company calls the Warrants for redemption
as described above, the Company’s management will have the option to require all holders that wish to exercise Warrants to
do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless
basis,” management will consider, among other factors, the Company’s cash position, the number of Warrants that are
outstanding and the dilutive effect on the Company’s stockholders of issuing the maximum number of shares of common stock
issuable upon the exercise of the Warrants.
Each holder of a Right will receive one-tenth
(1/10) of one share of common stock upon consummation of a Business Combination. No fractional shares will be issued upon exchange
of the Rights. No additional consideration will be required to be paid by a holder of Rights in order to receive its additional
shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase
price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination
in which the Company will not be the surviving entity, each holder of a right will be required to affirmatively convert its rights
in order to receive the 1/10 share of common stock underlying each right (without paying any additional consideration).
There will be no redemption rights or liquidating
distributions with respect to the Warrants and Rights, which will expire worthless if the Company fails to complete it Business
Combination within the Combination Period.
The Company granted the underwriters a
45-day option to purchase up to 750,000 additional Public Units to cover any over-allotment, at the initial public offering price
less any underwriting discounts and commissions. On September 13, 2017 the underwriters purchased 200,000 additional public units
for gross proceeds of $2,000,000 less commissions of 110,000, of which $70,000 are deferred.
The Company issued Maxim Group LLC (“Maxim”),
as compensation for the Initial Public Offering, an aggregate of 52,000 shares (including 20,000 shares issued in connection with
the partial exercise of the over-allotment option. The Company accounted for the fair value of these shares as an expense of the
Initial Public Offering resulting in a charge directly to stockholders’ equity.
Unit Purchase Option
At the time of the closing of the Initial
Public Offering, the Company sold to Maxim, for an aggregate of $100, an option (the “UPO”) to purchase 250,000 Units
(which increased to 260,000 units upon the partial exercise of the underwriters’ over-allotment option) (See Note 5). The
Company has accounted for the fair value of the UPO, inclusive of the receipt of the $100 cash payment, as an expense of the Initial
Public Offering resulting in a charge directly to shareholders’ equity. The Company estimates that the fair value of this
UPO is approximately $743,600 (or $2.86 per Unit) using the Black-Scholes option-pricing model. The fair value of the UPO is estimated
as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.73% and
(3) expected life of five years. The UPO may be exercised for cash or on a “cashless” basis, at the holder’s
option (except in the case of a forced cashless exercise upon the Company’s redemption of the Warrants, as described above),
such that the holder may use the appreciated value of the UPO (the difference between the exercise prices of the UPO and the underlying
Warrants and Rights, and the market price of the Units and underlying shares of common stock) to exercise the UPO without the payment
of any cash. The Company will have no obligation to net cash settle the exercise of the UPO or the Warrants or Rights underlying
the UPO. The holder of the UPO will not be entitled to exercise the UPO or the Warrants or Rights underlying the UPO unless a registration
statement covering the securities underlying the UPO is effective or an exemption from registration is available. If the holder
is unable to exercise the UPO or underlying Warrants or Rights, the UPO, Warrants or Rights, as applicable, will expire worthless.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
The Company granted the holders of the
UPO, demand and “piggy back” registration rights for periods of five and seven years, respectively, from the effective
date of the registration statement relating to the Initial Public Offering, including securities directly and indirectly issuable
upon exercise of the UPO.
Private Placement
Concurrently with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 254,500 Private Units at $10.00 per Private Unit, generated gross proceeds
of $2,545,000 in a Private Placement. The proceeds from the Private Units was added to the proceeds from the Initial Public Offering
held in the Trust Account. The Private Units (including their component securities) will not be transferable, assignable or salable
until 30 days after the completion of the initial Business Combination and the warrants included in the Private Units (the “Private
Placement Warrants”) will be non-redeemable so long as they are held by the Sponsor or their permitted transferees. If the
Private Placement Warrants are held by someone other than the Sponsor or their permitted transferees, the Private Placement Warrants
will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants included in the Public Units
sold in the Initial Public Offering. Otherwise, the Private Placement Warrants and the Rights underlying the Private Units have
terms and provisions that are identical to those of the Warrants and Rights, respectively, sold as part of the Public Units in
the Initial Public Offering and have no net cash settlement provisions.
On September 13, 2017, the Sponsor purchased
7,000 additional Private Units for gross proceeds of $70,000 upon partial exercise of the underwriter’s over-allotment option.
If the Company does not complete a Business
Combination within the Combination Period, the proceeds of the Private Placement will be part of the liquidating distribution to
the public stockholders and the Private Units and their component securities issued to the Sponsor will expire worthless.
NOTE 4 — RELATED PARTY TRANSACTIONS
Founder Shares
On May 31, 2017, the Company issued 1,437,500
shares of the Company’s common stock to the Sponsor (the “Founder Shares”) in exchange for a capital contribution
of $25,000. 137,500 Founder Shares were forfeited by the Sponsor upon the partial exercise of the underwriters’ over-allotment
option.
The Founder Shares are identical to the
shares of common stock included in the Units and holders of Founder Shares have the same stockholder rights as public stockholders,
except that (i) the Founder Shares and the shares of common stock underlying the Private Units are subject to certain transfer
restrictions, and (ii) the Sponsor has entered into a letter agreement, pursuant to which it has agreed (A) to waive its redemption
rights with respect to the Founder Shares, and the shares of common stock underlying the Private Units and the Public Units in
connection with the completion of a Business Combination and (B) to waive its rights to liquidating distributions from the Trust
Account with respect to the Founder Shares and the shares of common stock underlying the Private Units if the Company fails to
complete a Business Combination within 12 months from the closing of the Initial Public Offering (or up to 21 months from the closing
of the Initial Public Offering if the Company extends the period of time to consummate a Business Combination).
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
With certain limited exceptions, the Founder
Shares are not transferable, assignable or salable (except to the Company’s officers and directors and other persons or entities
affiliated with the Sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of one year after
the completion of an initial Business Combination or earlier of (i) subsequent to the Company’s Business Combination, the
last sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after an
initial Business Combination, or (ii) the date following the completion of an Initial Business Combination on which the Company
completes a liquidation, merger, stock exchange or other similar transaction that results in all stockholders having the right
to exchange their shares of common stock for cash, securities or other property.
Private Units
In addition, the Sponsor purchased, pursuant
to a written agreement, an aggregate of 254,500 Private Units at $10.00 per Private Unit for proceeds of $2,545,000 in the aggregate
in the Private Placement. This purchase took place on a private placement basis simultaneously with the completion of the Initial
Public Offering. This issuance was be made pursuant to the exemption from registration contained in Section 4(a) (2) of the Securities
Act.
On September 13, 2017, the Sponsor purchased
7,000 additional Private Units at $10.00 per Private Unit upon the partial exercise of the underwriter’s over-allotment option.
Administrative Service Fee
The Company has agreed, commencing on the
effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination
or its liquidation, to pay the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative
support. For the year ended May 31, 2018, the Company has paid an aggregate of $100,000 which is presented as general and administrative
expense on the accompanying statement of operations.
Loan
The Sponsor has loaned the Company $201,707
in the aggregate, to be used for a portion of the expenses of the Initial Public Offering and working capital purposes. The loan
is non-interest bearing, unsecured and due at the earlier of December 31, 2017 or the closing of the Initial Public Offering. As
of May 31, 2018, $120,089 of the Sponsor’s loan has been repaid. As of May 31, 2018 and 2017 the balance of the sponsor loan
is $81,618 and $30,672, respectively.
NOTE 5 — COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement
the Company entered into with its initial stockholders and initial purchasers of the Private Units (and constituent securities)
at the closing of the Initial Public Offering, the Company is required to register certain securities for sale under the Securities
Act. These holders are entitled under the registration rights agreement to make up to three demands that the Company register certain
of its securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale
pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration
statements filed by the Company. The Company will bear the costs and expenses of filing any such registration statements.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
Unit Purchase Option
The Company sold to the underwriters (and/or
their designees), for $100, an option to purchase up to a total of 250,000 Units (which increased to 260,000 Units upon the partial
exercise of the underwriters’ over-allotment option), exercisable at $11.50 per Unit (or an aggregate exercise price of $2,990,000)
upon the closing of the Initial Public Offering. The UPO may be exercised for cash or on a cashless basis, at the holder’s
option, at any time during the period commencing on the later of the first anniversary of the effective date of the registration
statement relating to the Initial Public Offering and the closing of the Company’s initial Business Combination, and terminating
on the fifth anniversary of such effectiveness date. The Units issuable upon exercise of this UPO are identical to those offered
in the Initial Public Offering, except that the exercise price of the warrants underlying the Units sold to the underwriters is
$13.00 per share.
Deferred Legal Fees
The Company has committed to pay its attorneys
a deferred legal fee of $100,000 upon the consummation of the Initial Business Combination relating to services performed in connection
with the IPO. This amount has been accrued in the accompanying balance sheet.
NOTE 6 — STOCKHOLDERS’ EQUITY
Common Stock
The Company is authorized to issue 20,000,000
shares of common stock with a par value of $0.0001 per share. Holders of the shares of the Company’s common stock are entitled
to one vote for each share. At May 31, 2018, there were 6,813,500 shares of common stock issued and outstanding, which reflects
the 137,500 shares that were forfeited by the Sponsor due to the underwriters’ over-allotment option being exercised in part,
and includes 4,560,757 shares of the Company’s common stock subject to possible redemption.
Preferred Stock
The Company is authorized to issue 1,000,000
shares of preferred stock with a par value of $0.0001 per share. At May 31, 2018, there were no shares of preferred stock issued
or outstanding.
NOTE 7 — TRUST ACCOUNT AND FAIR VALUE MEASUREMENTS
The Trust Account can be invested in U.S.
government securities, within the meaning set forth in the Investment Company Act, having a maturity of 180 days or less or in
any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of
Rule 2a-7 of the Investment Company Act.
The Company’s amended and restated
certificate of incorporation provides that, other than the withdrawal of interest to pay income taxes and up to $600,000 of interest
to pay working capital expenses if any, none of the funds held in the Trust Account will be released until the earlier of: (i)
the completion of the Business Combination; (ii) the redemption of 100% of the shares of common stock included in the Public Units
sold in the Initial Public Offering if the Company is unable to complete its initial Business Combination within 12 months (or
21 months if extended) from the closing of the Initial Public Offering (subject to the requirements of law).
The Company follows the guidance in ASC
820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial
assets and liabilities that are re-measured and reported at fair value at least annually.
I-AM CAPITAL ACQUISITION COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2018 and 2017
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize
the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal
assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify
assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at May 31, 2018 and May 31, 2017, and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
May 31,
2018
|
|
|
May 31,
2017
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
52,895,652
|
|
|
$
|
—
|
|
NOTE 8 - INCOME TAX
The Company’s net
deferred tax assets are as follows:
|
|
May 31,
2018
|
|
Deferred tax asset
|
|
|
|
|
Net Operating Loss
|
|
$
|
2,000
|
|
Total deferred tax assets
|
|
|
2,000
|
|
Valuation allowance
|
|
|
(2,000
|
)
|
Deferred tax asset, net of allowance
|
|
$
|
—
|
|
As
of May 31, 2018, the Company had U.S. federal and state net operating loss carryovers (“NOLs”) of $9,534 available
to offset future taxable income. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s
NOLs may be subject to an annual limitation in the event of a change in control as defined under the regulations.
In
assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion
of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment. After consideration of all of the information available, management believes that significant uncertainty
exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.
For the year ended May 31, 2018, the change in the valuation allowance was $2,000.
A
reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2017 is as follows:
|
|
Year
Ended
May 31,
2018
|
|
Statutory federal income tax rate
|
|
|
28.0
|
%
|
State taxes, net of federal tax benefit
|
|
|
0.0
|
%
|
Deferred tax rate change
|
|
|
(7.0
|
)%
|
Change in valuation allowance
|
|
|
(21.0
|
)%
|
Income tax provision
|
|
|
—
|
%
|
On
December 22, 2017, the Tax Cuts and Jobs Act was signed into legislation. As part of the legislation, the U.S. corporate income
tax rate was reduced to 21%. The Company has a recorded full valuation allowance against its deferred tax assets.
The
Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination
by the various taxing authorities.
NOTE 9 – SUBSCRIPTION AGREEMENT
On May 3, 2018, the Company entered into
a share subscription agreement (the “Subscription Agreement”), with Smaaash Entertainment Private Limited, a private
limited company incorporated under the laws of India (“Smaaash”), Shripal Morakhia (“Morakhia”), and AHA
Holdings Private Limited (“AHA Holdings”, and together with Morakhia, the “Smaaash Founders”), pursuant
to which the Company agreed to contribute a cash amount of up to $49 million (the “Investment Amount”) to Smaaash in
exchange for (i) up to 76,641,157 newly issued equity shares of Smaaash (“Subscription Shares”), (ii) the right to
act as the sole distributor of Smaaash’s active entertainment games in North and South America and (iii) the right to act
as the master franchisee for Smaaash’s active entertainment centers in North and South America (the transactions contemplated
by the Subscription Agreement, collectively, the “Transaction”). Assuming a cash contribution amount of $49 million,
the Subscription Agreement provided that the equity shares received by the Company would represent approximately 24.53% of the
equity capital of Smaaash; provided that such percentage shall be decreased proportionately depending on the number of shares of
the Company’s common stock that the public holders of the Company’s common stock elect to redeem in connection with
the vote on the Transaction and the resulting reduction in funds available for contribution to Smaaash. On June 22, 2018, the Company,
Smaaash and the Smaaash Founders entered into that certain
Amendment Cum Addendum to the
Subscription Agreement
, pursuant to which the Subscription Agreement was amended to, among other things, increase the number
of Subscription Shares that the Company would receive for the full Investment Amount from 76,641,157 shares to
89,583,215
shares, which shares would represent approximately 27.53% of the equity capital of Smaaash.
ANNEX A
SHARE SUBSCRIPTION AGREEMENT
By
and Among
I-AM
CAPITAL ACQUISITION COMPANY
And
PROMOTERS
And
SMAAASH ENTERTAINMENT PRIVATE LIMITED
SHARE SUBSCRIPTION AGREEMENT
This share subscription agreement is executed
on this 3
rd
day of May, 2018 at New Delhi:
By
and Amongst
I-AM Capital Acquisition Company
,
a company incorporated in the United States of America and having its registered office at 1345 Avenue of the Americas, 11
th
Floor, New York, NY 10105 (hereinafter referred to as the “
Investor
", which expression shall, unless it
be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns) of the
First
Part
;
And
T
he
Persons listed in SCHEDULE 1
(hereinafter referred to collectively, as the “
Promoters
” and individually,
as a “
Promoter
", which expression shall, unless it be repugnant or contrary to the context thereof, mean and
include each of their heirs, permitted assigns and successors-in-interest, as the case may be) of the
Second
Part
;
And
Smaaash Entertainment Private Limited
,
a private limited company incorporated under the laws of India, having its office at 1
st
Floor, Ambience Mall, Plot
no. 2, Phase II, Nelson Mandela Marg, Delhi-110070, India (hereinafter referred to as the “
Company
", which expression
shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns)
of the
Third Part.
The Company, the Investor and the Promoters
shall hereinafter be individually referred to as a “
Party
” and collectively referred to as the “
Parties
".
WHEREAS
:
A.
|
The Company is engaged in the Business (
defined below
).
|
B.
|
As on the Effective Date (
defined below
), the shareholding pattern of the Company on a Fully Diluted Basis (
defined below
) is set out in Part A of
SCHEDULE 4
.
|
C.
|
The Company is in need of further capital to carry on its Business and for this purpose, has approached the Investor with a request to make an investment in the Company. Relying on the representations, warranties and covenants of the Company and the Promoters under this Agreement, the Investor has agreed to infuse capital in the Company by way of subscription to the Subscription Shares (
defined below
) on the terms and conditions recorded herein.
|
D.
|
Accordingly, the Parties have agreed to execute this Agreement in order to set out the terms and conditions of the investment of the Investment Amount (
as defined below
) by the Investor in the Company.
|
NOW, THEREFORE
, in consideration
of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the sufficiency
of which is acknowledged by the Parties, the Parties hereby agree as follows:
1.
|
DEFINITIONS AND INTERPRETATION
|
In this Agreement, the following
words and expressions shall, except where the context otherwise requires, have the following meanings respectively:
"
Accounts
" means
the IFRS audited financials including balance sheet, income statement, statement of cash flows, for the last two financial years
(that is, financial year ended March 31, 2017 and March 31, 2016) and financials for the period from April 1, 2017 to December
31, 2017, prepared by Prager Matis, a copy of each of which is annexed to this Agreement as
SCHEDULE 8
;
"
Accounts Date
"
means December 31, 2017;
"
Act
" means
the (Indian) Companies Act, 1956, as substituted by the provisions of the Companies Act, 2013 to the extent notified as having
become effective and any amendment thereto and, wherever applicable, the rules framed thereunder and any subsequent amendment or
re-enactment thereof for the time being in force;
"
Action
" means
any claim, demand, dispute, litigation, petition, suit, investigation, inquiry, proceeding, mediation, arbitration, conciliation,
enforcement proceeding, hearing, complaint, assessment, fine, penalty, judgment, order, injunction, decree or award (administrative
or judicial (criminal or otherwise)) by or before any Governmental Authority, and shall without limitation include any insolvency
proceedings;
"
Affiliate
"
of a Person (the “
Subject Person
") means, (a) in the case of any Subject Person other than a natural person,
any other Person that, either directly or indirectly through one or more intermediate Persons and whether alone or in combination
with one or more other Persons, Controls, is Controlled by or is under common Control with the Subject Person, and (b) in the case
of any Subject Person that is a natural Person, (i) any other Person that, either directly or indirectly through one or more intermediate
Persons and whether alone or in combination with one or more other Persons, is Controlled by the Subject Person, or (ii) any other
Person who is a Relative of such Subject Person;
"
Agreement
"
means this share subscription agreement and shall include any schedules, annexures, or exhibits that may be annexed to this agreement
now or at a later date and any amendments made to this agreement by all the Parties in writing;
"
Applicable Law
"
means any statute, law, regulation, ordinance, rule, judgment, notification, order, decree, bye-law, permits, licenses, approvals,
consents, authorisations, government approvals, directives, guidelines, requirements or other governmental restrictions, or any
similar form of decision of, or determination by, or any interpretation, policy or administration, having the force of law of any
of the foregoing, by any Governmental Authority, whether in effect as of the date of this Agreement or thereafter;
"
Articles
" means
the articles of association of the Company as modified from time to time;
"
Assets
" means
all assets, properties, rights and interests of every kind, nature, specie or description whatsoever including Intellectual Property,
whether movable or immovable, tangible or intangible, owned, leased and/or used by the Company;
"
Bank Account
"
means the bank account maintained by the Company, details of which are set out at
SCHEDULE 7
;
"
Board
" means
the board of directors of the Company, as constituted from time to time;
"
Business
" means
the business of the Company as described in
SCHEDULE 2
to this Agreement;
"
Business Plan
"
shall have the meaning ascribed to it in the Shareholders’ Agreement;
"
CCPS
” means
the compulsorily convertible preference shares of face value of INR 10 (Rupees Ten only) having terms that are recorded in
the Articles;
"
Closing
" shall
mean the issuance and allotment of Subscription Shares to the Investor and completion of other actions mentioned in Clause 5.2;
"
Closing Date
"
means the date on which Closing occurs;
"
Consents
" shall
mean any and all authorisations, consents, licences, permits, permissions, ratifications, grant, certificate, no objection certificate,
order, registrations, waivers, exemptions, privileges, acknowledgements, agreements, concessions, approvals from Shareholders pursuant
to the Prior Agreements and the Articles, third Persons and Governmental Authorities;
"
Contract
" means
any agreement, arrangement, contract, subcontract, understanding, instrument, note, warranty or insurance policy (whether or not
the same is absolute, revocable, contingent, conditional, binding or otherwise and whether the same is written, in oral form or
created by conduct);
"
Control
" (including
the terms “
Controlled
” by or under common “Control” with), as used with respect to any Person means
the direct or indirect beneficial ownership of or the right to vote in respect of, directly or indirectly, more than 50% (fifty
percent) of the voting shares or securities of a Person and/or the power to control the majority of the composition of the board
of directors of a Person and/or the power to create or direct the management or policies of a Person by contract or otherwise or
any or all of the above;
"
Director
" means
a director duly appointed on the Board from time to time;
"
Disclosure Schedule
"
means the disclosures set out in
SCHEDULE 6
;
"
Effective Date
"
means the date of this Agreement;
"
Encumbrance
"
means (including, the terms “
Encumber
” and “
Encumbered
") with respect to any Asset, any mortgage,
lien, pledge, hypothecation, charge, option, claim, right of other Persons, security interest, equitable interest, beneficial interest,
encumbrance, title retention agreement, voting trust agreement, commitment, restriction or limitation of any nature whatsoever,
including restriction on voting, transfer, non-disposal undertaking, rights of pre-emption, or exercise of any other attribute
of ownership or any other adverse claim of any kind in respect of such Asset;
"
Equity Shares
"
means equity shares of the Company having face value of INR 10 (Rupee Ten only) each;
"
FDI Policy
"
as on a particular date means the government policy and the regulations (including the applicable provisions of the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017) issued by the Government
of India from time to time;
"
Financial Year
"
means the financial year of the Company, which begins on April 1
st
of a calendar year and ends on March 31
st
of the next calendar year;
"
Fully Diluted Basis
”
means the total of Securities (after giving effect to any anti-dilution/valuation protection provisions) on an “as if converted”
basis;
"
Fundamental Warranties
"
means the warranties set out in Paragraph 1 (other than Paragraph 1.6) of
SCHEDULE 3
of this Agreement;
"
Governmental Approval
"
means a permit, license, consent, approval, certificate, qualification, specification, registration or other authorisation including
filing of a notification, report, assessment obtained or to be filed as the case may be as per the Applicable Laws in India or
such other jurisdictions where the Company/ Subsidiaries have business and operations with any governmental, semi-governmental,
administrative, fiscal or judicial body or entity in India or such other jurisdictions where the Company/ Subsidiaries have business
and operations;
"
Governmental Authority
"
shall mean any international, national or federal governmental authority, city, provisional or statutory authority, regulatory
authority, government department, agency, commission, board, rule or regulation making entity/authority having or purporting to
have jurisdiction over any Party, or other subdivision thereof or any municipality, district or other subdivision thereof to the
extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or organisation have
the force of any Applicable Law or any court or tribunal having jurisdiction;
"
Indebtedness
"
means with respect to any Person, all indebtedness of such Person (whether present, future or contingent) and includes without
limitation (a) all obligations of such Person for borrowed money or with respect to advances of any kind, whether or not evidenced
by a Contract; (b) all obligations of such Person for the deferred purchase price of property, goods or services; (c) all
indebtedness of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured by) any Encumbrance on property of such Person; (d) all guarantees by such Person; and (e) all liabilities
or obligations of such Person to pay any sums or amounts whether under a Contract or otherwise;
"
Intellectual Property
"
means and includes collectively or individually, the following worldwide rights relating to intangible property, whether or not
filed, perfected, registered or recorded and whether now or hereafter existing, filed, issued or acquired: (a) rights in trademarks,
trademark registrations, and applications therefor, trade names, service marks, service names, logos, or trade dress; (b) rights
relating to the protection of confidential information; (c) internet domain names, Internet and World Wide Web (WWW) URLs or addresses;
and (d) all other intellectual, information or proprietary rights anywhere in the world including rights of privacy and publicity,
rights to publish information and content in any media;
"
Investment Amount
"
means an amount of up to USD 49,000,000 (United States Dollars Forty Nine Million only) proposed to be invested by the Investor
in the Company for the subscription of the Subscription Shares, in accordance with this Agreement;
"
IFRS
" means
the international financial reporting standards;
"
Key Employees
"
means Mr. Shripal Morakhia, chief executive officer, chief financial officer, chief operations officer, chief technical officer
or any other “CXO’ level employees/department/designated business heads, any key managerial personnel or any other
employee whose total annual remuneration is over INR 50,00,000 (Rupees Fifty Lakhs only) (inclusive of all perquisites, allowances
and withholdings);
"
Liabilities
"
means all existing Indebtedness and liabilities of any kind or nature whatsoever of the Company, whether actual or contingent,
and whether or not of a nature required to be disclosed in the financial statements;
"
Material Adverse Effect
"
means any change or occurrence, the consequence of which is, will, or is likely to materially and adversely affect: (a) the
Assets, Business, Liabilities, financial condition, results or operations of the Company; or (b) the ability of the Company
and/or the Promoters to perform their obligations under this Agreement or any other Transaction Documents or the Memorandum or
the Articles; or (c) the validity or enforceability of this Agreement or of the rights or remedies of the Investor; or (d) the
status and validity of any Intellectual Property or material Contracts or approvals required by the Company to carry on its Business;
but shall not include any change or occurrence which is caused by: (i) changes in interest rates, exchange rates or securities
or commodity prices or in economic, financial, market or political conditions generally; or (ii) changes or effects, including
legal, tax or regulatory changes, that generally affect the industry in which the Company or the Business operates; or (iii) change
or effect that arise out of or are attributable to the commencement, occurrence, continuation or intensification of any war, armed
hostilities or acts of terrorism, hurricanes, nuclear incidents, earthquake, flood, draught, fire, explosion, civil unrest, explosion,
or any other natural disaster;
"
Memorandum
"
means the memorandum of association of the Company, as amended from time to time;
"
Permitted Encumbrances
"
means the Encumbrances created pursuant to the financing documents executed by the Company prior to the date of this Agreement
and subsisting as on the Effective Date and the Closing Date, as set out in the colum “Details of Security Interest’
in the list attached as
ANNEXURE A
hereto;
"
Person
" means
any natural person, limited or unlimited liability company, corporation, partnership (whether limited or unlimited), proprietorship,
Hindu undivided family, trust, union, association, government or any agency or political subdivision thereof or any other entity
that may be treated as a person under Applicable Law;
"
Prior Agreements
"
means the agreements set out in
ANNEXURE B
hereto;
"
Related Party/ies
"
means the Company, the Promoters and their respective Affiliates and associates, shareholders, directors and senior management
personnel of the foregoing Persons and shall include the Persons considered to be related parties in accordance with the Act;
"
Relative
"
shall have the same meaning as defined under the Act;
"
Representations and
Warranties
” means the express representations and warranties made by each of the Promoters and the Company to the Investor
pursuant to Clause 6 and
SCHEDULE 3
to this Agreement;
"
Restated Articles
"
means the restated draft of the Articles to be adopted as a Condition Precedent to Closing, including the terms of this Agreement
and the Shareholders’ Agreement, in a form satisfactory to the Investor;
"
Securities
"
means any and all classes and series of shares, Equity Shares, options, warrants, preference shares, convertible securities of
all kinds, debentures or any other arrangement relating to the Company’s share capital;
"
Shareholders
"
means the holders of Securities in the Company;
"
Shareholders’
Agreement
” means the agreement of even date executed between the Company, the Promoters, Investor and certain other Shareholders;
"
Subscription Shares
"
means upto 7,66,41,157 (Seven Crores Sixty Six Lakhs Forty One Thousand One Hundred and Fifty Seven) Equity Shares proposed to
be subscribed to by the Investor in terms of Clause 3.1 of this Agreement;
"
Subsidiaries
"
shall have the meaning assigned to the term under the Act;
"
Tax
" or “
Taxation
”
means all direct and indirect taxes, charges or levies recoverable or payable under or by reason of any Applicable Law for the
time being in force, including stamp duty, tax on central, state or local income, tax on sales, value added, excise, customs, duties
or other taxes, of any kind whatsoever, including any interest, penalties or additions to tax;
"
Transaction Documents
"
means this Agreement, the Shareholders’ Agreement, the Restated Articles and any other contract/document required to be executed
and/or delivered pursuant to this Agreement and in respect of the transactions contemplated in this Agreement and the Shareholders’
Agreement;
"
Updated Disclosure Schedule
”
shall have the meaning ascribed to it in Clause 6.1.6.
|
(a)
|
Heading and bold typeface are only for convenience and shall be ignored for the purpose of interpretation.
|
|
(b)
|
Where any statement in this Agreement is qualified by the expression ‘knowledge’, ‘aware of’ or any similar expression, that statement shall, with respect to the Company and the Promoters, be deemed to include an additional statement that it has been made after due and careful enquiry by the Company or the Promoters.
|
|
(c)
|
Unless the context of this Agreement otherwise requires:
|
|
(i)
|
words of any gender are deemed to include the other gender;
|
|
(ii)
|
words using the singular or plural also include the plural or singular respectively;
|
|
(iii)
|
the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement or specified Clauses of this Agreement, as the case may be;
|
|
(iv)
|
the term “Clause” refers to the specified Clause of this Agreement and paragraph refers to the specified paragraph of the Schedules to this Agreement;
|
|
(v)
|
reference to any statute or statutory provision shall include (a) any subordinate legislation rules and regulation framed thereunder made from time to time; and (b) such statute or provision as may be amended, modified, repealed, re-enacted or consolidated;
|
|
(vi)
|
reference to the term ‘pro-rata’ means on the basis of the proportionate shareholding of a Shareholder on a Fully Diluted Basis unless otherwise indicated in this Agreement;
|
|
(vii)
|
reference to the word “include” shall be construed without limitation;
|
|
(viii)
|
the Recitals and Schedules annexed hereto shall constitute an integral part of this Agreement;
|
|
(ix)
|
time is of the essence in the performance of the Parties’ respective obligations. If any time period specified herein is extended, such extended time shall also be of the essence;
|
|
(x)
|
words and expressions used under this Agreement, but not specifically defined in Clause 1.1 shall have the same meaning as assigned to them in the specific clause/ sub clause/ paragraph;
|
|
(xi)
|
capitalised words and expressions used herein, but not defined shall have the same meaning assigned to them in the Act in so far as the context so admits;
|
|
(xii)
|
reference to days, months and years are to calendar days, calendar months and calendar years, respectively, unless defined otherwise or inconsistent with the context or meaning thereof.
|
2.
|
CAPITAL STRUCTURE OF THE COMPANY
|
The authorised share capital
of the Company as on the Effective Date is INR 275,00,00,000 (Rupees Two Hundred and Seventy Five Crores only) divided into (a) 21,50,00,000
(Twenty One Crores Fifty Lakhs) Equity Shares; and (b) 6,00,00,000 (Six Crores) CCPS; and the paid-up share capital of the Company
as on the Effective Date is INR 235,81,89,450 (Rupees Two Hundred and Thirty Five Crores Eighty One Lakhs Eighty Nine Thousand
Four Hundred and Fifty only) comprising 18,57,34,979 (Eighteen Crores Fifty Seven Lakhs Thirty Four Thousand Nine Hundred and Seventy
Nine) Equity Shares and 5,00,83,966 (Five Crores Eighty Three Thousand Nine Hundred and Sixty Six) CCPS. The shareholding pattern
of the Company as on the Effective Date is set out in Part A of
SCHEDULE 4
.
3.1
|
Subject to and in accordance with the terms and conditions of this Agreement, including fulfilment of the Conditions Precedent, the Company hereby, agrees to issue and allot the Subscription Shares, to the Investor, free from all Encumbrances and together with all rights, title and interests now and hereafter attaching thereto, upon receipt of the Investment Amount on the Closing Date, and the Investor, relying upon the Representations and Warranties and the indemnities provided by the Company and the Promoters, hereby agrees to subscribe to the Subscription Shares.
|
3.2
|
The Investor shall remit the Investment Amount to the Bank Account on the Closing Date, subject to the terms and conditions of this Agreement. The payment of the Investment Amount in accordance with Clause 3.1 above to the Company in its Bank Account shall constitute full, final and complete discharge of the obligation of the Investor with respect to payment of the Investment Amount for the Subscription Shares.
|
3.3
|
The Promoters and the Company shall ensure that the existing Shareholders waive any right of pre-emption or other rights conferred upon them under the Articles or any other document for the purpose of issuance and allotment of the Subscription Shares to the Investor, prior to Closing.
|
3.4
|
The Company and the Promoters shall ensure that the Investment Amount is used to fuel the growth of the Company in accordance with the Business Plan, principally to fund acquisitions and for the repayment of existing debt of the Company availed from Edelweiss up to an amount of USD 22.5 million.
|
3.5
|
The shareholding pattern of the Company immediately following the Closing Date shall be as set out in Part B of
SCHEDULE 4
.
|
The Company and the Promoters
agree and acknowledge that the Investor shall (a) be the sole distributor of Smaaash games in South America and North America;
(b) be the master franchise for Smaaash centres in South America and North America; (c) assist in facilitating the consolidation
of the active entertainment industry in the United States of America thereby ensuring that Smaaash centres transition over a period
of time from traditional and active entertainment tools into more aspirational sports games and virtual/ augmented reality game
tools.
4.1
|
The Parties agree that the obligation of the Investor to proceed to Closing is conditional upon fulfilment of each of the following conditions ("
Conditions Precedent
") set out below to the satisfaction of the Investor, unless specifically waived, in whole or in part, in writing by the Investor:
|
|
(a)
|
the Company shall have ensured the finalization and execution of the Shareholders’ Agreement, and any other Transaction Documents;
|
|
(b)
|
no administrative, investigatory, judicial or arbitration proceedings shall have been brought by any Person seeking to enjoin or seek damages from any party in connection with the allotment or issuance of the Subscription Shares, and there being no order, injunction, or other action issued, pending or threatened (in writing), which involves a challenge or seeks to or which prohibits, prevents, restrains, restricts, delays, makes illegal or otherwise interferes with the consummation of any of the transactions contemplated under this Agreement;
|
|
(c)
|
the Company and Promoters having confirmed that, as on the date of CP Fulfilment Certificate, no Material Adverse Effect has occurred, and that there shall not have been, on or prior to the Closing Date, any event(s) or condition(s) of any character that constitute a Material Adverse Effect;
|
|
(d)
|
the Company and the Promoters shall have obtained all authorisations, approvals, permits, consents and waivers, necessary or appropriate, for (i) execution of the Transaction Documents (including but not limited to consents required from Shareholders or any third party), (ii) consummation of the transactions contemplated by the Transaction Documents, including issue of the Subscription Shares to the Investor; (iii) appointment of an authorized Person to execute the Transaction Documents on behalf of the Company; and the Company shall have provided the Investor with satisfactory evidence of such authorisations, approvals, permits, consents and waivers;
|
|
(e)
|
the Company, the Promoters and the Investor having agreed on the form of the Board and Shareholders’ resolutions, the Restated Articles and any other documents necessary for giving effect to the provisions of this Agreement;
|
|
(f)
|
the Company and the Promoters shall have obtained, in writing, the consent of all the Shareholders of the Company and such other Persons whose consents may be required, to the form of Restated Articles, under Contract or the Act;
|
|
(g)
|
the Company shall and the Promoters shall have caused the Company, to undertake all corporate actions with respect to the adoption of the Restated Articles, including but not limited to, obtaining the requisite approvals from the Board and the Shareholders and making necessary filings with the Registrar of Companies, which Restated Articles shall be effective from the Closing Date;
|
|
(h)
|
the Company shall have presented a draft of duly filled up Form FC-GPR (for reporting the allotment of the Subscription Shares to the Reserve Bank of India) to the Investor for confirmation and satisfaction;
|
|
(i)
|
the Company and the Promoters shall have procured a valuation report from a registered valuer in respect of the price of the Subscription Shares under applicable foreign exchange laws of India, to the satisfaction of the Investor;
|
|
(j)
|
the Company and the Promoters shall have provided a copy of the Accounts to the Investor;
|
|
(k)
|
the Company shall and the Promoters shall have caused the Company to provide complete financial projections, including balance sheet, income statement and cash flows, for next 3 years (i.e. year ended March 31, 2018, 2019 and 2020), with and without infusion of capital, to the Investor; and
|
|
(l)
|
the Representations and Warranties set forth in this Agreement, being true, complete and correct as on the date of execution of this Agreement and remaining true, complete and correct as on the Closing Date.
|
4.2
|
Fulfilment of Conditions Precedent
|
The Company and the Promoters
jointly and severally undertake to use best endeavours to fulfil the Conditions Precedent as set out in Clause 4.1
(Conditions
Precedent to Closing)
above as soon as possible and no later than the Long Stop Date. If the Company or the Promoters become
aware of any event or circumstance that may prevent any of the Conditions Precedent from being satisfied, then the Company and
the Promoters shall forthwith nofity the Investor of the same in writing. On fulfilment of the Conditions Precedent, the Company
and the Promoters shall deliver to the Investor an original, duly executed certificate, in the form set out in
SCHEDULE 5
to this Agreement ("
CP Fulfilment Certificate
"), certifying that the Conditions Precedent set out in Clause 4.1
(Conditions Precedent to Closing)
above have been fully satisfied in all respects, together with certified copies of all
the requisite documents and instruments evidencing the fulfilment of the same.
5.
|
PRE-CLOSING, CLOSING AND POST CLOSING COVENANTS
|
5.1
|
Conduct prior to Closing
|
During the period between the
Effective Date and the Closing Date, the Company shall continue to conduct the Business of the Company in its ordinary course consistent
with past practices, and shall not (other than to the extent required under Clause 4.1
(Conditions Precedent to Closing))
,
without the prior written consent of the Investor (which consent shall not be unreasonably withheld):
|
(a)
|
issue or permit to be subscribed any Securities convertible or capable of being converted into Equity Shares at a later date; or
|
|
(b)
|
alter the share capital of the Company in any manner including by way of buy-back of any Securities; or
|
|
(c)
|
change the face value of or rights attached to any of the Securities; or
|
|
(d)
|
take any action that has the effect of re-organisation, consolidation, merger, demerger of the Company or sale of all or substantially all of the Assets; or
|
|
(e)
|
sell, transfer or in any other manner Encumber any of the material Assets; or
|
|
(f)
|
make or declare any dividend or other distribution or effect any direct or indirect redemption of any share capital dividend which renders its financial position less favourable than as at the Effective Date; or
|
|
(g)
|
enter into any commitment or transaction of value over INR 50,00,000 (Rupees Fifty Lakhs only) or do anything which results in any material breach of this Agreement or which may prejudice the transactions contemplated under this Agreement; or
|
|
(h)
|
dissolve, wind-up or liquidate the Company, whether or not voluntary, or permit any restructuring of the Company; or
|
|
(i)
|
compromise or settle any legal proceedings of value over INR 5,00,000 (Rupees Five Lakhs only); or
|
|
(j)
|
avail any loans or other facilities of value over INR 50,00,00,000 (Rupees Fifty Crores only) from any bank, financial institutions or any other Person; or
|
|
(k)
|
grant, issue or redeem any mortgage, charge, debenture or other security or give any guarantee or indemnity of value over INR 10,00,000 (Rupees Ten Lakhs only); or
|
|
(l)
|
make any change in the terms and conditions of employment (including making or announcing any proposal to make, any change or addition to any benefit to) of any of its Promoters, Directors and Key Employees or employ or terminate the employment of such Persons or appoint or settle the terms of appointment of any Key Employees; or
|
|
(m)
|
amend the accounting policies or tax policies or practices previously adopted or change the Financial Year of the Company; or
|
|
(n)
|
make any alteration or amendment to the constitutional documents of the Company; or
|
|
(o)
|
make adjustments or modifications to terms of transactions or entering into transactions involving (i) the interest of any Director or Shareholder of the Company and/or (ii) the Promoters and/or the Affiliates of the Company; or
|
|
(p)
|
do or permit anything which would constitute a breach of any of the Representations and Warranties or any covenant under this Agreement.
|
Where the consent of the Investor
is required for any manner set out in Clause 5.1(b) and Clause 5.1(j), the Investor shall provide a response within 7 (seven) Business
Days from the date of receipt of the notice from the Company seeking such consent.
The delivery of the CP Fulfilment
Certificate shall take place in no event later than 30 (thirty) days from the Effective Date, or such other extended date as may
be acceptable to the Investor ("
Long Stop Date
"). Upon delivery of the CP Fulfilment Certificate and on reasonable
satisfaction of the Investor of fulfillment of the Conditions Precedent as per Clause 4.1
(Conditions Precedent)
above,
Closing shall take place at a place and time as may be mutually agreed upon by the Parties within 7 (seven) days of receipt of
the CP Fulfilment Certificate or such other date as may be agreed between the Company and the Investor ("
Closing Date
").
At Closing, the Parties shall do the following simultaneously:
|
(a)
|
The Company and the Promoters shall deliver to the Investor, a certificate as of the Closing Date to the effect that:
|
|
(i)
|
the Representations and Warranties are true and correct in all respects as on the Closing Date;
|
|
(ii)
|
there has been no default by the Company and the Promoters of any Transaction Documents and no Material Adverse Effect has taken place since the date of the CP Fulfilment Certificate until the Closing Date; and
|
|
(iii)
|
the Company has conducted the Business in the ordinary course of business from the Execution Date until the Closing Date and in compliance with Clause 5.1 above.
|
|
(b)
|
The Investor shall remit the Investment Amount to the Bank Account through normal banking channels.
|
|
(c)
|
The Company shall (and the Promoters shall procure that the Company shall), convene a meeting of the Board where the following businesses will be transacted:
|
|
(i)
|
approval of the allotment of the Subscription Shares by the Company in favour of the Investor in terms of this Agreement;
|
|
(ii)
|
approval for issuance of share certificates in respect of the Subscription Shares to the Investor, if the Subscription Shares are proposed to be issued in physical form or take requisite actions for issuance of the Subscription Shares to the Investor in dematerialized form;
|
|
(iii)
|
entering the name of the Investor as the registered holder of the Subscription Shares in the statutory records of the Company;
|
|
(iv)
|
approval to sign and file the necessary forms for the issue and allotment of the Subscription Shares and appointment of Directors with the concerned Registrar of Companies, together with other necessary documents;
|
|
(v)
|
approve the appointment of 2 (two) persons nominated by the Investor, as Directors on the Board of the Company, subject to the approval of the Shareholders; and
|
|
(vi)
|
issue a notice to convene, at shorter notice, an extraordinary general meeting of the Shareholders of the Company on the Closing Date.
|
|
(d)
|
On the Closing Date, the Company shall, in a meeting of its Shareholders, appoint the Directors nominated under Clause 5.2(c)(v) to the Board.
|
|
(e)
|
The Company shall file Form PAS - 3 with the relevant Registrar of Companies with respect to the allotment of the Subscription Shares.
|
|
(f)
|
Mr. Shripal Morakhia shall be appointed as a director on the board of the Investor with effect from the Closing Date.
|
|
(g)
|
Immediately after completion of the actions specified in the preceding Clauses, the Company shall deliver to the Investor, the original duly stamped share certificates in respect of the Subscription Shares, if the Subscription Shares are issued in physical form. The Company shall further deliver to the Investor, the certified true copy of the resolutions of the Board and Shareholders for all the businesses transacted in accordance with Clause 5.2
(Closing)
, certified true copies of the Restated Articles and updated statutory registers of the Company.
|
|
(h)
|
The Parties to this Agreement agree to take all measures which may be required so as to ensure that all the events contemplated under this Clause are initiated and completed on the Closing Date.
|
5.3
|
Consummation of transactions at the Closing
|
|
(a)
|
All transactions contemplated by this Agreement to be consummated at Closing shall be deemed to occur simultaneously and no such transaction shall be consummated unless all such transactions are consummated. If the Closing (as contemplated under this Agreement) does not take place on or before the Long Stop Date due to failure by the Company or any of the Promoters to comply with any of their obligations under this Agreement (including but not limited to the fulfilment of the Conditions Precedent), the Investor may by notice in writing to the Company, at its sole discretion, either extend the Long Stop Date by such number of days as may be decided by the Investor or terminate this Agreement.
|
|
(b)
|
If any of the provisions in Clause 5.2
(Closing)
of this Agreement are not complied with, then, unless otherwise agreed by the Investor in writing, the Company shall and the Promoters shall procure that the Company shall, immediately repay the Investment Amount (if already paid by the Investor) to the Investor in accordance with Applicable Law, and thereafter this Agreement shall terminate and cease to have effect but without prejudice to any rights and liabilities accrued or incurred upto the date of such termination.
|
5.4
|
Conditions Subsequent to Closing
|
|
(a)
|
The Company shall and the Promoters shall procure that the Company shall, within 30 (thirty) days, to the satisfaction of the Investor, from the Closing Date:
|
|
(i)
|
file Form DIR – 12 with the relevant Registrar of Companies with respect to the appointment of Directors by the Investor;
|
|
(ii)
|
file Advance Reporting Form along with the supporting documents to the Reserve Bank of India on the e-Biz platform with regard to the Investment Amount;
|
|
(iii)
|
file Form FC-GPR along with the supporting documents to the Reserve Bank of India on the e-Biz platform with regard to the Subscription Shares.
|
|
(b)
|
The Company and the Promoters shall deliver original or certified copies, as the case may be, of the forms, reports and documents to the Investor within the aforesaid period of 30 (thirty) days. The Company and the Promoters shall ensure that all forms, reports and documents to be filed and/or delivered under this Clause are in the prescribed format, accurately completed and accompanied by all the required documents.
|
|
(c)
|
Within 30 (thirty) days from the Closing Date, the Company, the Promoters and the Investor shall agree on the Business Plan to be adopted by the Company, with such approvals as may be required under the Shareholders’ Agreement and the Restated Articles.
|
|
(d)
|
The Company shall and the Promoters shall cause the Company to appoint key experienced executives, as recommended by the Investor, within such timelines as may be notified by the Investor, subject to the decision of the Board.
|
|
(e)
|
The Company shall and the Promoters shall cause the Company to appoint such number of independent Directors as may be agreed, in accordance with the Shareholders’ Agreement within 30 (thirty) days from the Closing Date or such other period as may be agreed between the Investor and the Promoters.
|
6.
|
REPRESENTATIONS AND WARRANTIES
|
6.1
|
Company and Promoters
|
6.1.1.
|
The Promoters and the Company hereby jointly and severally represent, warrant, assure, declare and confirm what has been stated and/or contained in
SCHEDULE 3
hereto are true and accurate except as set forth in the Disclosure Schedule attached as
SCHEDULE 6
to this Agreement or the Updated Disclosure Schedule, as the case may be, which exceptions shall be deemed to be part of the relevant Repesentations and Warranties against which such disclosure is made, subject to Clause 7.11. The Promoters and the Company acknowledge that the Investor is entering into this Agreement in consideration of and reliance on the Representations and Warranties, and covenants of the Promoters and the Company and the indemnities provided by the Promoters under this Agreement.
|
6.1.2.
|
All the Representations and Warranties contained herein shall be deemed to have been relied upon by the Investor, notwithstanding any investigation, due diligence or inspection made by or on behalf of the Investor or prior knowledge of the Investor and shall not be affected in any respect by any such investigation, due diligence or inspection.
|
6.1.3.
|
Each of these Representations and Warranties shall be deemed to have been repeated by the Company and each of the Promoters, as being true as on the Effective Date and as on the Closing Date.
|
6.1.4.
|
Each of the Representations and Warranties shall be construed as a separate representation, warranty, covenant or undertaking (as the case may be) and shall not be limited by the terms of any of the other Representations or Warranties or by any other term of this Agreement.
|
6.1.5.
|
All information relating to the Business which is known or would on reasonable enquiry be known to the Promoters and/or the Company and which may be material to an investor in the Company has been disclosed in writing to the Investor. It shall not be a defense to any claim against the Promoters and/or the Company that the Investor ought to have known or had knowledge of any information relating to the circumstances giving rise to such claim. The Promoters and the Company are aware of and acknowledge that the Investor has entered into this Agreement and has agreed to subscribe to the Subscription Shares by relying on the Representations and Warranties and covenants contained herein and/or otherwise made to the Investor, subject to the Disclosure Schedule or the Updated Disclosure Schedule, as the case may be, subject to Clause 7.11.
|
6.1.6.
|
The Promoters and the Company shall be entitled to deliver to the Investor, an updated disclosure schedule at least 3 (three) days prior to the Closing Date, provided that such update shall only disclose matters that have first occurred on or after the Effective Date ("
Updated Disclosure Schedule
"). If the Updated Disclosure Schedule is acceptable to the Investor, the Investor shall proceed with Closing in the manner set out in this Agreement. Notwithstanding anything contained in this Agreement, if the Updated Disclosure Schedule is not acceptable to the Investor, the Investor shall be entitled to terminate this Agreement forthwith.
|
6.1.7.
|
Limitation on Warranties
. The Investor shall not be entitled to make a Claim under Clause 7 below for a breach of Representations and Warranties, unless such Claim has been made by the Investor to the Company on or before the expiry of the relevant Claim Period. For the purposes of this Clause 6.1.7, “
Claim Period
” shall mean:
|
|
(a)
|
Claims for indemnity for a breach of any Fundamental Warranty (notwithstanding anything contained in this Agreement, Disclosure Schedule and the Updated Disclosure Schedule) shall be valid and effective in perpetuity;
|
|
(b)
|
the period commencing on and from the Effective Date and ending upon expiry of 7 (seven) years from the end of the financial year in which the Closing occurs, for Claims for indemnity for a breach of a warranties set out in Paragraph 3 of
SCHEDULE 3
of this Agreement;
|
|
(c)
|
the period commencing on and from the Effective Date and ending upon expiry of 18 (eighteen) months from the Closing Date for Claims for a breach of any Representation and Warranty, other than Fundamental Warranties and the Representations and Warranties set out in Paragraph 3 of
SCHEDULE 3
of this Agreement.
|
The provisions of this Clause
6.1.7 shall not be applicable to any other Claims that may be made by the Investor pursuant to Clause 7 of this Agreement, including
Claims arising out of any fraud by, or wilful misconduct of the Company, and any such Claims may be made by the Investor at any
time following the Closing Date.
6.2.1.
|
The Investor represents and warrants to the Promoters and the Company on the Effective Date and the Closing Date that:
|
|
(a)
|
The Investor is a duly registered company and has the power and capacity to execute and deliver this Agreement and to consummate the transactions under this Agreement and all approvals required by it for executing this Agreement and entering into and consummation of the transactions contemplated herein have been obtained.
|
|
(b)
|
The execution of this Agreement and entering into and consummation of transactions under this Agreement has been duly authorised and approved by the Investor’s board / other appropriate authority and does not require any further authorisation or consent of any other Person and upon execution and delivery by it, will be a legal, valid and binding obligation of the Investor, enforceable in accordance with its terms.
|
|
(c)
|
The execution and delivery of this Agreement by the Investor, the transactions contemplated in this Agreement do not contravene the provisions of Applicable Law or contravene provisions of and/or constitute a default under its formation/constitutional documents, or any Contract to which the Investor is a party or which are applicable to it.
|
6.2.2.
|
The Investor undertakes to promptly notify the Promoter and Company in writing if it becomes aware of any fact, matter or circumstance which would cause any of the aforesaid representations and warranties to become untrue or inaccurate in any material respect.
|
7.1
|
Without prejudice to any other right available to the Investor under law or equity, the Promoters ("
Indemnifying Parties
") hereby, jointly and severally, agree to indemnify and shall keep indemnified, save, defend and hold harmless the Investor, its Affiliates and its directors, employees, agents, representatives, successors and assigns ("
Indemnified Parties
") from and against any and all direct (and not remote) losses, costs, claims, damages and expenses (including reasonable attorney fees) and interest ("
Loss
") incurred or suffered by the foregoing Persons in relation to any and all claims, demands, notices of claims issued by any Person, Actions, causes of actions, suits, litigation or any proceeding (collectively “
Claims
") by virtue of:
|
|
(a)
|
any inaccuracy in or misrepresentation or breach of any of the Representations and Warranties (except as disclosed in the Disclosure Schedule or the Updated Disclosure Schedule, as the case may be), provided where such breach is capable of being remedied, the Indemnified Parties shall be entitled to make a Claim only if the Indemnifying Parties fail to cure such breach within 30 (thirty) days of the Indemnified Party notifying the Indemnifying Parties of such breach;
|
|
(b)
|
notwithstanding anything contained in this Agreement or the Disclosure Schedule and/or the Updated Disclosure Schedule, failure to obtain the licenses / registrations set out in Part B of Annexure I of the Disclosure Schedule;
|
|
(c)
|
any fraudulent conduct, gross negligence, wilful misconduct or intentional concealment of information, of or by the Promoters or the Company;
|
|
(d)
|
any breach of or default by any of the Promoters and/or the Company of any covenants or undertakings of the Promoters and/or the Company or any other provision contained in the Transaction Documents; or
|
|
(e)
|
any and all Actions, causes of Action and suits arising out of, relating to or in connection with the operation of the Company, pursuant to which the Investor is named a party.
|
7.2
|
Any compensation or indemnity as referred to above shall be such, so as to place the Investor or, at the election of the Investor, the Company, in the same position as it would have been in, had there not been any breach or inaccuracy, and as if the provisions of Clause 7.1 of this Agreement under which the Investor or, at the election of the Investor, the Company is to be indemnified, have not been triggered.
|
|
(a)
|
If any Claim comes to the notice of any Indemnified Party or if any Indemnified Party is notified of any Claim by reason of or in consequence of which any of the Indemnifying Parties may be liable, then the Indemnified Party shall promptly notify the Indemnifying Parties and in any case, within 10 (ten) days of being notified of any Claim, setting out, with particulars, the details of the Claim and provide copies of all related notices and communications with the relevant Governmental Authority or third party (to the extent practicable) to the Indemnifying Parties ("
Claim Notice
"). It is hereby clarified that failure or omission to notify the Indemnifying Parties within 10 (ten) days of the Indemnified Party being notified of any Claim shall not discharge the Indemnifying Parties in respect of such Claim, except to the extent such failure shall have actually prejudiced the Indemnifying Party (and in that case only to such extent).
|
|
(b)
|
Pursuant to receipt of the Claim Notice, the Indemnifying Parties shall have the right, upon written notice thereof to the Indemnified Person, assume control of the defence of such Claim, at their own cost and expense, and cost, compromise or settle any such Claim through competent legal counsel/professionals of their choice. The Indemnifying Parties shall be required to exercise this right by taking control of the defence of such Claim within (i) 10 (ten) days from the date of receipt of the Claim Notice, by way of notification in writing to the Indemnified Party, or (ii) no later than 5 (five) days prior to the expiry of the time period prescribed under Applicable Law in this regard, whichever is earlier. The Indemnified Parties agrees to cooperate fully with the Indemnifying Party in connection with the defence, negotiation or settlement of the Claim including providing all necessary documents and information in a timely manner.
|
|
(c)
|
If the Indemnifying Parties fail to take control of the defence or proceedings in relation to a Claim in the manner set out above, the Indemnified Parties shall be entitled to assume control of the defence of such Claim at the cost of the Indemnifying Parties.
|
|
(d)
|
It is hereby agreed between the Parties that the obligation of the Indemnifying Parties to indemnify the Indemnified Parties shall arise immediately upon occurrence of any of the following: (a) the Promoters not choosing to defend the Claim or Promoters fail to assume defence within the stipulated timelines or fail to respond to the Claim Notice; or (b) having preferred to defend the Claim, the Promoters are in receipt of an order from a court or statutory/ regulatory authority (as the case may be), requiring payment of whole or part of Claim from which no appeal/review can be preferred or the Promoters choose not to prefer an appeal/review. Provided however that if during the process of defence of the Claim, if the Indemnified Parties are required to incur any costs/expenses (including but not limited to pursuant to a notice from any Governmental Authority or interim order passed by a court of law requiring the payment of whole or in part of the Claim), the Indemnifying Parties shall immediately upon receipt of a notice from the Indemnified Party in this regard, remit the said amounts to the Indemnfied Party.
|
7.4
|
Subject to Clause 7.5, the total aggregate liability of the Promoters in respect of all Claims made by an Indemnified Person pursuant to Clause 7.1 shall not exceed the Investment Amount.
|
7.5
|
The provisions of Clause 7.4 shall not apply to any Claims pursuant to fraud, willful misconduct, breach of Fundamental Warranties (notwithstanding anything contained in the Disclosure Schedule or the Updated Disclosure Schedule) and Claims pursuant to Clause 7.1(b).
|
7.6
|
Notwithstanding the liability of the Indemnifying Parties under this Clause 7, each of the Indemnifying Parties agree and undertake that they shall not have any right for any reason to seek contribution or reimbursement from, or make any claim against or claim restitution against the Company in respect of any indemnification payments to be made by such Indemnifying Party under this Clause 7. The Company shall not have any obligation to reimburse any of the Indemnifying Parties for any such amounts.
|
7.7
|
The Indemnified Parties shall not be entitled to recover damages or obtain payment, reimbursement, restitution or indemnity more than once in respect of any one liability, Loss, cost, shortfall, damage, deficiency, breach or other set of circumstances. Any Indemnified Parties having recovered completely the damages from the Indemnifying Parties or otherwise in respect of a particular Claim, shall not be entitled to claim the same damages from the other parties.
|
7.8
|
The Indemnified Parties shall make commercially reasonable efforts to avoid or mitigate any Loss which it may suffer in consequence of any breach by the Indemnifying Parties of the Representation and Warranties covered in Clause 6.1 and
SCHEDULE 3
or the Promoters’ and Company’s obligations under this Agreement.
|
7.9
|
The Indemnified Parties shall not be able to claim for any punitive, special, indirect, incidental or consequential Loss or damages.
|
7.10
|
The amount of Losses that can be claimed under this Clause 7 will be determined net of any amounts recovered, if any, by the Indemnified Person under insurance policies with respect to such Losses. It is clarified that the provisions of this Clause 7.10 will apply only if the Indemnifed Party has recovered such amounts at the time when the payment is due from the Indemnifying Parties in accordance with Clause 7.3 of this Agreement.
|
7.11
|
It is hereby clarified that nothing in this Agreement or the Disclosure Schedule or the Updated Disclosure Schedule shall affect the ability of the Investor to make a Claim for breach of any Fundamental Warranty.
|
8.
|
EFFECTIVE DATE AND TERMINATION
|
This Agreement shall come into
effect on the date hereof and shall remain valid unless it is terminated pursuant to the Clause 8.2
(Termination)
below.
|
(a)
|
Mutual termination and Automatic termination
|
The Parties may discuss and mutually
terminate this Agreement at any time prior to Closing by expressing the same in writing.
|
(b)
|
Termination prior to Closing
|
Without prejudice to any other
rights that the Investor has under this Agreement, the Investor, shall have the right, but not the obligation, to terminate this
Agreement (to the extent of its rights and obligations) with immediate effect (without prejudice to any rights and obligations
accrued or incurred prior to such termination and subject to the survival of certain clauses of this Agreement as set out herein)
if:
|
(i)
|
any of the Conditions Precedent set out in Clause 4.1 (
Conditions Precedent to Closing)
of this Agreement have not been fulfilled, to the satisfaction of the Investor, by the Promoters and/or the Company by the Long Stop Date; or
|
|
(ii)
|
there is a breach by the Promoters and/or the Company of any of the covenants of this Agreement or the Shareholders’ Agreement, and/or the Representations and Warranties; or
|
|
(iii)
|
the Updated Disclosure Schedule is not acceptable to the Investor; or
|
|
(iv)
|
there occurs any event that has a Material Adverse Effect.
|
8.3
|
Consequences of Termination
|
On the termination of this Agreement
in accordance with Clause 8.2 above, all rights and obligations of the Parties shall terminate forthwith, save for the rights
that are already accrued and the rights and obligations of the Parties under Clause 7 (
Indemnification
), Clause 8
(Effective
Date and Termination)
, Clause 9
(Confidentiality)
, Clause 10 (Notices), Clause 11
(Governing Law)
and Clause
12
(Arbitration)
of this Agreement and all such provisions of this Agreement that expressly or by their nature survive termination.
9.1
|
Except as provided in Clause 9.4 of this Agreement, each of the Promoters and the Company jointly and severally undertake that they shall treat as confidential the provisions of the Transaction Documents and all information it has received or obtained in relation to the Investor.
|
9.2
|
Except as provided in Clause 9.4 below, the Investor undertakes that it shall treat as confidential the provisions of the Transaction Documents and all information it has received or obtained relating to each of the Promoters and the Company.
|
9.3
|
Notwithstanding the foregoing, the obligation of confidentiality of the Company, Promoters and the Investor shall not apply to any disclosure (i) of information that is in or enters the public domain; or (ii) of information that was in the possession of such Party prior to disclosure under the Transaction Documents, as evidenced in writing, except to the extent that such information was unlawfully appropriated; or (iii) of information that was obtained independently, without violating any Applicable Law, wherein such information was not received subject to any confidentiality obligation; or (iv) of information which has been independently developed as a result of the efforts of such Party.
|
9.4
|
A Party may disclose, or permit the disclosure of, information which would otherwise be confidential if and to the extent:
|
|
(a)
|
required by Applicable Law, regulatory or Governmental Authority;
|
|
(b)
|
disclosed to its Affiliates, investment committees, board of directors, officers, employees, legal counsels, accounting consultants, potential co-investors, transferee of Shares or Assets of the Company and other professional advisers on a need-to-know basis for fund and/or inter-fund reporting purposes (provided that such persons are required to treat such information as confidential and shall be subject to the same confidentiality obligations under this Agreement); or
|
|
(c)
|
it comes into the public domain other than as a result of a breach by a Party of this Clause 9,
|
provided that written notice
(wherever reasonably possible) of any prospective disclosure of confidential information pursuant to this Clause 9 shall be
given to the non-disclosing Parties, and the disclosing Party shall assist the non-disclosing Parties in obtaining an exemption
or protective order preventing such disclosure.
9.5
|
The confidentiality restrictions in this Clause
9 shall continue to apply after the termination of this Agreement pursuant to Clause 8
(Effective Date and Termination)
of this Agreement without limit in time.
|
10.1
|
Notices, demands or other communication required or permitted to be given or made under this Agreement shall be in writing and shall be given by email (provided that it is supplemented by a registered mail/internationally recognised courier service within 2 (two) days), addressed/sent to the intended recipient at its address / number set forth below, or to such other address number as any Party may from time to time duly notify to the others:
|
If to the
Investor
:
Attention
|
:
|
Directors
|
Address
|
:
|
1345 Avenue of the Americas, 11
th
Floor
New York, NY 10105
USA
|
Email
|
:
|
sk@i-amcapital.com
|
If to the
Company
:
Attention
|
:
|
Mr. Vishwanath Kotian
|
Address
|
:
|
2
nd
Floor, Trade View Building,
Oasis Complex, PB Marg,
Lower Parel, Mumbai – 400013, Maharashtra
|
Email
|
:
|
vishwanath.kotian@smaaash.in
|
If to
AHA Holdings Pvt. Ltd.
Attention
|
:
|
Mr. Santosh Apraj
|
Address
|
:
|
2
nd
Floor, Trade View Building,
Oasis Complex, PB Marg,
Lower Parel, Mumbai – 400013, Maharashtra
|
Email
|
:
|
santoshapraj@ahaholdings.co.in
|
If to
Mr. Shripal Morakhia
Address
|
:
|
2
nd
Floor, Trade View Building,
Oasis Complex, PB Marg,
Lower Parel, Mumbai – 400013, Maharashtra
|
Email
|
:
|
shripal@smaaash.in
|
10.2
|
All notices shall be deemed to have been validly given on (a) the expiry of 7 (seven) days after posting if sent by registered mail, or (b) the date of receipt, if sent by courier, or (c) the date of receipt, if sent by email.
|
10.3
|
Any Party may, from time to time, change its address or representative for receipt of notices provided for in this Agreement by giving to the other Parties, not less than 10 (ten) days prior written notice in the same manner provided for in this Clause.
|
This Agreement shall be governed
and interpreted by, and construed in accordance with the laws of India, without regard to conflict of law principles. Subject to
the provisions of Clause 12
(Arbitration)
hereof, the courts of New Delhi shall have jurisdiction in respect of all
matters relating to or arising out of this Agreement.
12.1
|
If any controversies, conflicts, disputes and/or differences ("
Dispute
") arises between the disputing Parties hereto during the subsistence of this Agreement or thereafter, the disputing Parties shall endeavour to settle such Dispute amicably and attempt to reach a resolution of the matter.
|
12.2
|
If amicable settlement is not arrived at as above, within 30 (thirty) days of the date of Dispute, the Dispute shall be exclusively and finally resolved and settled by arbitration and the disputing Party may issue a notice of Dispute ("
Notice of Dispute
") to the other disputing Parties.
|
12.3
|
Within 30 (thirty) days of the issue of a Notice of Dispute, the disputing Parties shall mutually agree on the appointment of a sole arbitrator. If such mutual agreement is not arrived at within the aforesaid 30 (thirty) days’ period, the disputing Parties shall refer the appointment of the sole arbitrator to Singapore International Arbitration Centre ("
SIAC
").
|
12.4
|
All pertinent evidence on the subject matter in Dispute shall be made available to the arbitrator appointed as above and each Party shall have the right to present both orally and in writing its arguments and views on the Dispute. The arbitrator shall also decide on the costs of the arbitration proceedings. The decision of the arbitrator shall be rendered in writing and shall be binding upon the Parties. The costs, charges and expenses of the arbitration shall be at the discretion of the arbitrator. Such arbitration shall be governed by the SIAC Arbitration Rules (in force at such time when the Dispute is referred to arbitration), which rules are deemed to be incorporated by reference in this Clause. The seat of arbitration shall be Singapore and the arbitration proceedings shall be conducted in English language.
|
12.5
|
The award rendered by the arbitrator shall be final and binding on all Parties hereto and judgment thereon may be entered in any court of competent jurisdiction.
|
12.6
|
The Parties hereto agree that their consent for resolution of Disputes through arbitration shall not preclude or restrain either of them from seeking suitable injunctive relief in appropriate circumstances from the competent courts.
|
The Company shall bear all stamp
duty payable in connection with this Agreement, the Transaction Documents and the subscription of the Subscription Shares. Subject
to Closing, all costs related to the transactions contemplated under the Transaction Documents, including appointment of legal
and financial advisors, preparation of the Transaction Documents shall be borne by the Company at actuals.
13.2
|
Independent Contractors
|
The Parties are independent contractors.
None of the Parties shall have any right, power or authority to enter into any agreement for or on behalf of, or incur any obligation
or liability of, or to otherwise bind, the other Parties except as specifically provided by this Agreement. Nothing in this Agreement
shall be interpreted or construed to create an association or partnership between the Parties, deem them to be persons acting in
concert or to impose any liability attributable to such relationship upon any of the Parties nor, unless expressly provided otherwise,
to constitute any Party as the agent of any of the other Parties for any purpose.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors,
permitted assigns, heirs, executors and administrators of the Parties hereto whose rights or obligations hereunder are affected
by such amendments. No Party hereto (except the Investor) shall assign or transfer its rights and liabilities hereunder to any
Person without the prior written consent of the Investor. The Investor shall be entitled to assign or transfer its rights and obligations
under this Agreement to any of its Affiliates (including the right to subscribe to the Subscription Shares), without requiring
prior consent of any other Party.
Any or all provisions of this
Agreement may be amended, restated or waived (either generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Investor. Any such amendment, waiver or restatement shall be binding on all Parties to this
Agreement.
This Agreement, supercedes all
prior discussions and agreements (whether oral or written, including all correspondence) if any, between the Parties with respect
to the subject matter of this Agreement, and this Agreement (together with the Schedules and any amendments or modifications thereof
read with the other Transaction Documents) contain the sole and entire Agreement between the Parties hereto with respect to the
subject matter hereof.
13.6
|
Invalidity and Severability
|
Any provision of this Agreement,
which is invalid or unenforceable, shall be ineffective to the extent of such invalidity or unenforceability, without affecting
in any way the remaining provisions hereof. The illegality, unenforceability or invalidity of any provision of this Agreement shall
not affect the enforceability, legality or validity of the remaining provisions of this Agreement which shall remain in full force
and effect to the maximum extent permitted by law. Any invalid or unenforceable provision of this Agreement shall be replaced with
a provision, which is valid and enforceable and most nearly reflects the original intent of the unenforceable provision.
It is agreed between the Parties
hereto that no publicity or dissemination of information in any manner with regard to the transactions contemplated herein shall
be made without the prior written consent of the Investor.
13.8
|
Conflict with the Articles
|
All the provisions of this Agreement
and the Shareholders’ Agreement, to the extent relevant, shall be incorporated into the Articles. If and to the extent that
there are inconsistencies between the provisions of this Agreement and those of the Articles, the Parties agree to take all actions
necessary or advisable, as promptly as practicable after the discovery of such inconsistency, to amend the Articles so as to eliminate
such inconsistency.
Each Party shall from time to
time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such further acts, deeds,
conveyances, consents, documents and assurances without further consideration, which may be required to effect the transactions
contemplated by this Agreement.
The
Parties shall use their best efforts to cause the transactions contemplated by this Agreement to be consummated, including without
limitation, obtaining, making and causing to become effective all approvals of Governmental Authorities and other Persons as may
be necessary or reasonably requested by the Investor and its nominees in order to achieve the objectives of this Agreement.
|
(a)
|
The Parties acknowledge and agree that the Investor would suffer irreparable damages in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached, so that the Investor shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically this Agreement (which do not include claims for monetary damages) and the terms and provisions hereof in addition to any other remedy to which the Investor may be entitled, at law or in equity.
|
|
(b)
|
Except the relief set out in Clause 13.11(a) above and other non-monetary remedies that may be available to the Investor, all monetory Claims by the Investor pursuant to this Agreement, shall be settled in the manner provided in Clause 7 of this Agreement.
|
This Agreement may be executed
in any number of counterparts, all of which, taken together, shall constitute one and the same instrument, and any Party (including
any duly authorised representative of a Party) may enter into this Agreement by executing a counterpart. The delivery of signed
counterparts by facsimile transmission or electronic mail in “portable document format” (".pdf”) shall be
as effective as signing and delivering the document in person.
The Persons executing this Agreement
on behalf of the respective Parties represent and covenant that they have the authority to sign and execute this document on behalf
of the Parties for whom they are signing.
IN WITNESS WHEREOF
, the Parties
have entered into and executed this SHARE SUBSCRIPTION AGREEMENT as of the day and year first above written.
THIS
SIGNATURE PAGE FORMS AN INTEGRAL PART OF THE SHARE SUBSCRIPTION AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY;
(2) MR.SHRIPAL MORAKHIA; (3) AHA HOLDINGS PRIVATE LIMITED; AND (4) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
SMAAASH ENTERTAINMENT PRIVATE LIMITED
Name: Vishwanath Kohan
Designation: CFO
IN WITNESS WHEREOF
, the Parties
have entered into and executed this SHARE SUBSCRIPTION AGREEMENT as of the day and year first above written.
THIS
SIGNATURE PAGE FORMS AN INTEGRAL PART OF THE SHARE SUBSCRIPTION AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY;
(2) MR.SHRIPAL MORAKHIA; (3) AHA HOLDINGS PRIVATE LIMITED; AND (4) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered by
MR.
SHRIPAL MORAKHIA
Name: SHRIPAL MORAKHIA
IN WITNESS WHEREOF
, the Parties
have entered into and executed this SHARE SUBSCRIPTION AGREEMENT as of the day and year first above written.
THIS
SIGNATURE PAGE FORMS AN INTEGRAL PART OF THE SHARE SUBSCRIPTION AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY;
(2) MR.SHRIPAL MORAKHIA; (3) AHA HOLDINGS PRIVATE LIMITED; AND (4) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
AHA HOLDINGS PRIVATE LIMITED
Name: SHRIPAL MORAKHIA
Designation: Director
IN WITNESS WHEREOF
, the Parties
have entered into and executed this SHARE SUBSCRIPTION AGREEMENT as of the day and year first above written.
THIS
SIGNATURE PAGE FORMS AN INTEGRAL PART OF THE SHARE SUBSCRIPTION AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY;
(2) MR.SHRIPAL MORAKHIA; (3) AHA HOLDINGS PRIVATE LIMITED; AND (4) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
I-AM CAPITAL ACQUISITION COMPANY
Name: F. Jacob Cherian
Designation: CEO
IN WITNESS WHEREOF
, the Parties
have entered into and executed this SHARE SUBSCRIPTION AGREEMENT as of the day and year first above written.
THIS
SIGNATURE PAGE FORMS AN INTEGRAL PART OF THE SHARE SUBSCRIPTION AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY;
(2) MR.SHRIPAL MORAKHIA; (3) AHA HOLDINGS PRIVATE LIMITED; AND (4) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
I-AM CAPITAL ACQUISITION COMPANY
Name: Suhel Kanuga
Designation: CFO
AMENDMENT
CUM ADDENDUM TO THE SHARE SUBSCRIPTION AGREEMENT DATED MAY 03, 2018
By
and Among
I-AM
CAPITAL ACQUISITION COMPANY
And
PROMOTERS
And
SMAAASH ENTERTAINMENT PRIVATE LIMITED
AMENDMENT CUM ADDENDUM TO THE SHARE SUBSCRIPTION
AGREEMENT DATED MAY 03, 2018
This amendment cum addendum agreement ("
Agreement
")
to the share subscription agreement dated May 03, 2018 is executed on this 22
nd
day of June, 2018 at New Delhi:
By
and Amongst
I-AM Capital Acquisition Company
,
a company incorporated in the United States of America and having its registered office at 1345 Avenue of the Americas, 11
th
Floor, New York, NY 10105 (hereinafter referred to as the “
Investor
", which expression shall, unless it
be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns) of the
First
Part
;
And
T
he
Persons listed in
SCHEDULE 1
(hereinafter referred to collectively, as
the “
Promoters
” and individually, as a “
Promoter
", which expression shall, unless it be repugnant
to the context or meaning thereof, be deemed to mean and include each of their respective heirs, permitted assigns and successors-in-interest,
as the case may be) of the
Second Part
;
And
Smaaash Entertainment Private Limited
,
a private limited company incorporated under the laws of India, having its office at 1
st
Floor, Ambience Mall, Plot
no. 2, Phase II, Nelson Mandela Marg, Delhi-110070, India (hereinafter referred to as the “
Company
", which expression
shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns)
of the
Third Part.
The Company, the Investor and the Promoters
shall hereinafter be individually referred to as a “
Party
” and collectively referred to as the “
Parties
".
WHEREAS
:
A.
|
The Parties have entered into a share subscription agreement dated May 03, 2018 pursuant to which the Investor has agreed to invest an amount of upto USD 49,000,000 (United States Dollars Forty Nine Million only) into the Company for subscription to Equity Shares in accordance with the terms and conditions set out therein ("
SSA
").
|
B.
|
The Parties have also entered into a shareholders’ agreement dated May 03, 2018 governing the terms of management and transfer restrictions in the Company with respect to the Investor ("
SHA
").
|
C.
|
The Parties are entering into this Agreement, (a) to amend certain provisions of the SSA; and (b) to record their understanding with respect to further agreement by the Promoters and further investment by the Investor into the Company.
|
NOW, THEREFORE
, in consideration
of the mutual covenants and agreements set forth in this Agreement and the SSA, and for other good and valuable consideration,
the sufficiency of which is acknowledged by the Parties, the Parties hereby agree as follows:
1.
|
DEFINITIONS AND INTERPRETATION
|
1.1
|
The terms used in capitalized form in this Agreement but not defined herein shall have the meaning ascribed to such terms in the SSA.
|
1.2
|
The principles of interpretation set out in Clause 1.2 of the SSA shall
mutatis mutandis
apply to this Agreement.
|
2.1
|
The definition of ‘Agreement’ in Clause 1.1 of the SSA shall stand replaced with the below:
|
"
Agreement
"
means this share subscription agreement, the amendment cum addendum agreement dated May 3, 2018 and shall include any schedules,
annexures, or exhibits that may be annexed to such agreement now or at a later date and any further amendments made to any such
agreement by all the Parties in writing.
2.2
|
The definition of ’Subscription Shares’ in Clause 1.1 of the SSA shall stand replaced with the below:
|
"
Subscription Shares
”
means up to 89,583,215 (Eighty Nine Million Five Hundred Eighty Three Thousand Two Hundred and Fifteen) Equity Shares proposed
to be subscribed to by the Investor in terms of Clause 3.1 of this Agreement.
2.3
|
Part B of Schedule 4 of the SSA (
Shareholding pattern as on the Closing Date
) shall stand replaced with Schedule 2 of this Agreement and all references to the same in the SSA shall be construed accordingly. It is hereby clarified that the Investor shall hold up to 27.53% (twenty seven point five three percent) in the share capital of the Company on a Fully Diluted Basis as on the Closing Date, pursuant to an investment of up to USD 49,000,000 (United States Dollars Forty Nine Million only) into the Company.
|
3.
|
FURTHER INVESTMENT BY THE INVESTOR
|
3.1
|
The Investor has issued certain warrants to its investors, which warrants are outstanding as on the date of this Agreement. The Parties agree that the Investor shall invest any and all monies received by it pursuant to conversion of such outstanding warrants, subject to Clause 3.3, into the Company as consideration towards the subscription of Equity Shares of the Company, which investment shall, subject to Applicable Law, be at the same valuation at which the Investor raised such funds.
|
3.2
|
Further, in the event the Investor raises any further funds, outside India, whether from the public or otherwise, subject to Clause 3.3, the Investor shall invest any and all monies received by it pursuant to such fund raising, into the Company as consideration towards the subscription of Equity Shares of the Company, which investment shall, subject to Applicable Law, be at the same valuation at which the Investor raised such funds.
|
3.3
|
Any investment by the Investor into the Company pursuant to Clause 3.1 or Clause 3.2 shall be subject to the following conditions:
|
|
(a)
|
the investment shall be made within 6 (six) months (or such other period as may be mutually agred between the Parties in writing) from the date on which the Investor receives such additional funds; and
|
|
(b)
|
the Investor shall be entitled to deduct such amounts that the Investor requires for operational expenses from the funds raised, prior to investment into the Company.
|
3.4
|
All Equity Shares issued and allotted by the Company to the Investor pursuant to such additional investment shall be free from all Encumbrances and together with all rights, title and interests attached to such Equity Shares.
|
3.5
|
The Promoters and the Company shall ensure that the existing Shareholders waive any right of pre-emption or other rights conferred upon them under the Articles or any other document, to allow the actions contemplated by this Agreement. In the event the Shares of the Company are listed on any recognized stock exchange in accordance with the terms of the SHA prior to such additional investment, the Company and the Promoters shall ensure that the provisions of the securities laws of India are duly complied with prior to such allotments.
|
3.6
|
The Company and the Promoters shall ensure that the additional funds proposed to be infused by the Investor under the terms of this Agreement are used to fuel the growth of the Company in accordance with the Business Plan.
|
3.7
|
The Company and the Promoters hereby agree to provide to the Investor, at least 5 (five) days prior to any further investment by the Investor, a copy of the shareholding pattern of the Company on a Fully Diluted Basis immediately following such investment.
|
3.8
|
The Parties may enter into further agreements with respect to such additional investment to record any specific terms governing such additional investment.
|
4.
|
further agreement by promoters
|
4.1
|
The Promoters hereby covenant to the Investor that if the Company does not meet the projected EBITDA target of USD 45 million as per the audited financial statement of the Company for the Financial Year ending March 31, 2020, the Promoters shall, at the sole discretion of the Investor, either (a) transfer such number of Shares constituting 5% (five percent) of the share capital of the Company as of the date hereof, as held by the Promoters in the Company , to the Investor, or (b) dilute their shareholding in the Investor (if any as on that date) to the extent of 5% (five percent) or more (as may be agreed between the Promoters and the Investor), at no cost or at the lowest permissible price under Applicable Laws, in the most tax efficient manner as envisaged under Applicable Laws. With respect to this Section 4.1, references to 5% shall mean 5% of the outstanding equity of the Company on the date of the execution of the Agreement.
|
4.2
|
The Promoters hereby convenant to the Investor that, within six months following the Closing Date, they shall transfer all of their ownership interest in the Company (33.6% of the share capital of the Company on a fully diluted basis) to the Investor in exchange for newly issued shares of common stock of the Investor in an amount which will enable Promoters to retain their 33.6% ownership interest of the Company through their interest in the Investor.
|
5.
|
further agreement by the company
|
The Company hereby covenants
to the Investor that it shall, on the Closing Date, make a lump sum payment of USD250,000 to the Investor to be used as working
capital and to set up entertainment centers in North America. The Company further covenants to the Investor that it shall arrange
for a line of credit for the Investor under Applicable Law in an amount of up to USD2,000,000, which amount is subject to review
from time to time by the board of directors of the Company and the Investor, until such time that the revenue the Investor generates
is sufficient to meet its ongoing expenses.
6.
|
applicability of the provisions of the SSA
|
6.1
|
Any further investment by the Investor into the Company shall be subject to the fulfilment of such conditions precedent as the Parties may agree in writing, including but not limited to the following:
|
|
(a)
|
Undertaking the requisite corporate actions and obtaining the necessary consents (from existing Shareholders or otherwise) for issuance of the additional Equity Shares;
|
|
(b)
|
There being no Material Adverse Effect; and
|
|
(c)
|
Obtaining a valuation report from a registered valuer in respect of the price of the Equity Shares under applicable foreign exchange laws of India, to the satisfaction of the Investor.
|
6.2
|
The provisions regarding Clause 4.2 (
Fulfilment of Conditions Precedent
), Clause 5.2 (
Closing
), Clause 5.3 (
Consummation of transactions at Closing
), Clause 5.4 (Conditions Subsequent to Closing), Clause 6 (Representations and Warranties) and Schedule 3 of the SSA shall
mutatis mutandis
apply to each investment made pursuant to this Agreement. The limitation on the Representations and Warranties with respect to each additional investment shall be with reference to the date of closing of each such investment.
|
6.3
|
The indemnification provisions set out in Clause 7 of the SSA shall
mutatis mutandis
apply to all further investments under this Agreement.
|
7.
|
representations of each party
|
7.1
|
Each Party severally represents and warrants as follows:
|
|
(a)
|
In case of a company, it is a duly registered company and has the power and capacity to execute and deliver this Agreement and to consummate the transactions under this Agreement and all approvals required by it for executing this Agreement and entering into and consummation of the transactions contemplated herein have been obtained.
|
|
(b)
|
In case of a company, the execution of this Agreement and entering into and consummation of transactions under this Agreement has been duly authorised and approved by such Party’s board / other appropriate authority and does not require any further authorisation or consent of any other Person.
|
|
(c)
|
Upon execution and delivery by such Party, this Agreement will constitute a legal, valid and binding obligation of such Party, enforceable in accordance with its terms.
|
|
(d)
|
The execution and delivery of this Agreement by such Party, the transactions contemplated in this Agreement does not contravene the provisions of Applicable Law or provisions of and/or constitute a default under its formation/constitutional documents (where applicable), or any Contract to which such Party is a party or which are applicable to it
|
8.1
|
t
he Parties may discuss and terminate this Agreement at any time in writing, however no such termination shall be valid unless signed by all Parties hereto.
|
8.2
|
Any or all provisions of this Agreement may be amended, restated or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of all the Parties.
|
8.3
|
This Agreement shall be read together with the SSA.
|
8.4
|
The provisions of Clause 9 (
Confidentiality
), Clause 10 (
Notices
), Clause 11 (
Governing Law
), Clause 12 (
Arbitration
) and Clause 13 (
Miscellaneous
) of the SSA shall
mutatis mutandis
apply to this Agreement.
|
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Remainder of the page has been intentionally
left blank
]
SCHEDULE
1
DETAILS OF THE PROMOTERS
Sl. No.
|
|
Name of the Promoter
|
|
Particulars
|
1.
|
|
AHA Holdings Private Limited
|
|
Attention: Mr. Santosh Apraj
Address: 2
nd
Floor, Trade View Building, Oasis Complex,
PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
Phone number: 022-67400900
Fax no: +91 22 67400988
E-mail:
santoshapraj@ahaholdings.co.in
|
2.
|
|
Shripal Morakhia
|
|
Address: 2
nd
Floor, Trade View Building, Oasis Complex,
PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
Email:
shripal@smaaash.in
|
SCHEDULE 2
SHAREHOLDING PATTERN OF THE COMPANY ON
A FULLY DILUED BASIS AS ON THE CLOSING DATE
[
To be inserted
]
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Agreement as of the day and year first above written.
SIGNED AND DELIVERED
by the within
named Investor
, I-AM Capital Acquisition Company
/s/Suheal Kanuga
|
|
/s/ F. Jacob Cherian
|
Name: Suhel Kanuga,CFO
|
|
Name: F. Jacob Cherian
|
SIGNED AND DELIVERED
by the within
named Company
, Smaaash Entertainment Private Limited
by the hand of Shripal Morakhia, authorised signatory.
SIGNED AND DELIVERED
by the within
named Promoter
, AHA Holdings Private Limited
by the hand of Shripal Morakhia, authorised signatory.
SIGNED AND DELIVERED
by
Mr. Shripal
Morakhia
SECOND AMENDMENT CUM ADDENDUM TO THE
SHARE SUBSCRIPTION AGREEMENT DATED MAY 3, 2018
This second amendment cum addendum agreement
("
Agreement
") to the share subscription agreement dated May 3, 2018, as amended, is executed on this 2
nd
day of August, 2018 at New Delhi:
By
and Amongst
I-AM Capital Acquisition Company
,
a company incorporated in the United States of America and having its registered office at 1345 Avenue of the Americas, 11
th
Floor, New York, NY 10105 (hereinafter referred to as the “
Investor
", which expression shall, unless it
be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns) of the
First
Part
;
And
T
he
Persons listed in
SCHEDULE 1
(hereinafter referred to collectively, as
the “
Promoters
” and individually, as a “
Promoter
", which expression shall, unless it be repugnant
to the context or meaning thereof, be deemed to mean and include each of their respective heirs, permitted assigns and successors-in-interest,
as the case may be) of the
Second Part
;
And
Smaaash Entertainment Private Limited
,
a private limited company incorporated under the laws of India, having its office at 1
st
Floor, Ambience Mall, Plot
no. 2, Phase II, Nelson Mandela Marg, Delhi-110070, India (hereinafter referred to as the “
Company
", which expression
shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns)
of the
Third Part.
The Company, the Investor and the Promoters
shall hereinafter be individually referred to as a “
Party
” and collectively referred to as the “
Parties
".
WHEREAS
:
A.
|
The Parties have entered into a share subscription agreement dated May 3, 2018 pursuant to which the Investor has agreed to invest an amount of up to USD 49,000,000 (United States Dollars Forty Nine Million only) into the Company for subscription to Equity Shares in accordance with the terms and conditions set out therein ("
SSA
").
|
B.
|
The Parties have also entered into a shareholders’ agreement dated May 3, 2018 governing the terms of management and transfer restrictions in the Company with respect to the Investor ("
SHA
").
|
C.
|
The Parties have entered into an amendment cum addendum agreement on June 22, 2018, pursuant to which the parties amended certain provisions of the SSA and recorded their understanding with respect to the further agreements by the Promoters and a further investment by the Investor into the Company (“
Addendum
”).
|
D.
|
The Parties are entering into this Agreement to remove the arbitration provision of the SSA and the Addendum.
|
NOW, THEREFORE
, in consideration
of the mutual covenants and agreements set forth in this Agreement and the SSA, and for other good and valuable consideration,
the sufficiency of which is acknowledged by the Parties, the Parties hereby agree as follows:
1.
|
DEFINITIONS AND INTERPRETATION
|
1.1
|
The terms used in capitalized form in this Agreement but not defined herein shall have the meaning ascribed to such terms in the SSA.
|
1.2
|
The principles of interpretation set out in Clause 1.2 of the SSA shall
mutatis mutandis
apply to this Agreement.
|
2.
|
AMENDMENTS TO THE SSA and ADDENDUM
|
2.1
|
Clause 8.3 of the SSA shall be amended and replaced in its entirety with the below:
|
|
“8.3
|
Consequences of Termination
|
On the termination of this Agreement
in accordance with Clause 8.2 above, all rights and obligations of the Parties shall terminate forthwith, save for the rights that
are already accrued and the rights and obligations of the Parties under Clause 7 (
Indemnification
), Clause 8 (
Effective
Date and Termination
), Clause 9 (
Confidentiality
), Clause 10 (
Notices
), and Clause 11 (Governing Law) of this
Agreement and all such provisions of this Agreement that expressly or by their nature survive termination.”
2.2
|
Clause 11 of the SSA shall be amended and replaced in its entirety with the below:
|
This Agreement shall be governed
and interpreted by, and construed in accordance with the laws of India, without regard to conflict of law principles. The courts
of New Delhi shall have jurisdiction in respect of all matters relating to or arising out of this Agreement.”
2.3
|
Clause 12 of the SSA shall be amended and replaced in its entirety with the below.
|
2.4
|
Clause 8.4 of the Addendum shall be amended and replaced in its entirety with the below:
|
“The provisions of Clause 9 (
Confidentiality
),
Clause 10 (
Notices
), Clause 11 (
Governing Law
) and Clause 13 (
Miscellaneous
) of the SSA shall
mutatis
mutandis
apply to this Agreement.”
3.
|
representations of each party
|
3.1
|
Each Party severally represents and warrants as follows:
|
|
(a)
|
In case of a company, it is a duly registered company and has the power and capacity to execute and deliver this Agreement and to consummate the transactions under this Agreement and all approvals required by it for executing this Agreement and entering into and consummation of the transactions contemplated herein have been obtained.
|
|
(b)
|
In case of a company, the execution of this Agreement and entering into and consummation of transactions under this Agreement has been duly authorised and approved by such Party’s board / other appropriate authority and does not require any further authorisation or consent of any other Person.
|
|
(c)
|
Upon execution and delivery by such Party, this Agreement will constitute a legal, valid and binding obligation of such Party, enforceable in accordance with its terms.
|
|
(d)
|
The execution and delivery of this Agreement by such Party, the transactions contemplated in this Agreement does not contravene the provisions of Applicable Law or provisions of and/or constitute a default under its formation/constitutional documents (where applicable), or any Contract to which such Party is a party or which are applicable to it.
|
5.1
|
t
he Parties may discuss and terminate this Agreement at any time in writing, however no such termination shall be valid unless signed by all Parties hereto.
|
5.2
|
Any or all provisions of this Agreement may be amended, restated or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of all the Parties.
|
5.3
|
This Agreement shall be read together with the SSA and the Addendum.
|
5.4
|
The provisions of Clause 9 (
Confidentiality
), Clause 10 (
Notices
), Clause 11 (
Governing Law
) and Clause 13 (
Miscellaneous
) of the SSA shall
mutatis mutandis
apply to this Agreement.
|
[
Remainder of the page has been intentionally
left blank
]
SCHEDULE
1
DETAILS OF THE PROMOTERS
Sl. No.
|
|
Name of the Promoter
|
|
Particulars
|
1.
|
|
AHA Holdings Private Limited
|
|
Attention: Mr. Santosh Apraj
Address: 2
nd
Floor, Trade View Building, Oasis Complex,
PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
Phone number: 022-67400900
Fax no: +91 22 67400988
E-mail:
santoshapraj@ahaholdings.co.in
|
2.
|
|
Shripal Morakhia
|
|
Address: 2
nd
Floor, Trade View Building, Oasis Complex,
PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
Email:
shripal@smaaash.in
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Agreement as of the day and year first above written.
SIGNED AND DELIVERED
by the within
named Investor
, I-AM Capital Acquisition Company
/s/ Suhel Kanuga
|
|
/s/ F. Jacob Cherian
|
|
Name: Suhel Kanuga, CFO
|
|
Name: F. Jacob Cherian, CEO
|
|
SIGNED AND DELIVERED
by the within
named Company
, Smaaash Entertainment Private Limited
by the hand of Shripal Morakhia, authorised signatory.
SIGNED AND DELIVERED
by the within
named Promoter
, AHA Holdings Private Limited
by the hand of Shripal Morakhia, authorised signatory.
SIGNED AND DELIVERED
by
Mr. Shripal
Morakhia
ANNEX B
MASTER
LICENSE AND DISTRIBUTION AGREEMENT
This Master License
and Distribution Agreement ("
Agreement
") is made and entered into on the [•] day of [•], 2018 (the "
Effective
Date
") at Mumbai, by and between Smaaash Entertainment Private Limited, an Indian company, with an address at Trade View,
Level 2, Kamala Mills, Lower Parel, Mumbai 400013, India ("
Licensor
"), and I-AM Capital Acquisition Company, a
company incorporated in the United States of America, with an address at 1345 Avenue of the Americas, 2
nd
floor, New
York, 10105 ("
Licensee”)
.
RECITALS
A.
WHEREAS,
Licensor operates entertainment centers throughout India as well as at the Mall of the Americas in Minneapolis Minnesota where
Licensor, through its virtual reality and sports simulation technology, provides specialized equipment and related products so
that Licensor’s customers may experience the opportunity to experience various sport and recreational activities through
the use of such equipment and products, the details of which are morefully set out in Exhibit A to this Agreement (the “
Products
");
and
B.
WHEREAS,
Licensee is [•] (
add the business of the Licensee
); and
C.
WHEREAS,
Licensor desires to appoint Licensee, and Licensee desires to be so appointed, to act as Licensor’s exclusive licensee and
distributor of Products in the territories of North America and South America ("
Territory
"), upon the terms and
subject to the conditions hereinafter provided.
NOW, THEREFORE
, the parties agree as
follows:
1.
Grant
of License and Distribution Rights and Grant Limitations
1.1
Grant
of License and Distribution Rights
. Licensor hereby grants to Licensee the exclusive right to purchase Products directly from
Licensor and distribute Products in the Territory in the name of the Licensor and on its own account to customers located in the
Territory ("
Distribution Right
"). All the Products sold by Licensor to Licensee shall be further sold to the third
party sub-licensees of Licensee.
1.2
Additional
Considerations
(a)
Pricing
.
Licensee shall be entitled to sell the Products further to any third party franchisees of the Licensee at a minimum of 15% (fifteen
percent) margin over and above the price at which the Licensor sold the Products to Licensee. If requested by Licensor, Licensee
shall furnish to Licensor a list of prices for Products to Licensee’s customers prior to the date Licensee commences distributing
any Product to any third party. Although Licensee is free to establish its wholesale prices for Products in its discretion, Licensee’s
wholesale prices for Products shall be maintained at a level which would encourage the development of sales of Products while maintaining
the image of Products and the Marks (as hereinafter defined).
(b)
Operation of Licensee’s Business
. Licensee shall maintain good customer relations in accordance with prudent and reasonable
business practices. Licensee shall perform its obligations hereunder without using subcontractors, sub-distributors, independent
sales representatives, agents, Licensee’s affiliates or other non-employees ("
Third Parties
") to perform
the obligations of Licensee under this Agreement unless they have been approved, in writing, in advance, by Licensor, such approval
not to be unreasonably withheld.
2.
Term
The term of this Agreement shall commence as of the Effective Date and shall continue until terminated as hereinafter provided
(the “
Term
"). Each calendar year during the Term is sometimes hereinafter referred to as a “
Contract
Year
.”
3.
Purchase
of Products
3.1
Purchase
Price of Products; Risk of Loss
. Unless otherwise agreed by the Parties in writing and subject to Section 1.2 (a), Products
shall be purchased by Licensee from Licensor at such prices and on such terms as may be agreed by the parties from time to time.
Title to and risk of loss of Products purchased by Licensee from Licensor shall pass at the delivery point (on ex-works basis)
as specified in the applicable purchase order. Upon sale of the Products, Licensor shall only be responsible for any inherent manufacturing
defects in the Products, provided that such manufacturing defect is notified to Licensor at least within a period of 2 (two) months
from the date of installation of the Products. Licensor shall also maintain an inventory of the required spare parts for the Products.
3.2
Purchase
Orders
.
(a) Unless
otherwise agreed by the Parties in writing, Licensee shall place with Licensor, Licensee’s orders for Products at regular
intervals during each Contract Year sufficiently in advance of Licensor’s order deadlines and scheduled delivery dates.
(b) Licensee
shall place its orders for Products upon Licensor through purchase order forms (or purchase order forms acceptable to Licensor),
the terms of which shall be applicable thereto except that, if any terms thereof are inconsistent with the terms set forth in this
Agreement, the terms set forth herein shall prevail and control. Licensor shall issue its confirmation of such order if Licensor
deems such order acceptable, including in such confirmation the anticipated date of delivery and prices of the Products subject
to such order.
3.3
Payment
Terms
. Unless otherwise agreed in writing by Licensor, all invoices from Licensor to Licensee are payable, by wire transfer
in U.S. Dollars, to such bank account designated by Licensor to Licensee in writing.
3.4
Maintenance.
Licensor shall be responsible for providing all maintenance services with respect to the Products during the first Contract
Year, free of any charges. From the second Contract year, the maintenance services shall be provided by Licensor to Licensee on
the basis of an annual maintenance contract entered between the parties for this purpose. In the event of any defects in the products
including any manufacturing defects brought by the customer / Licensee beyond the time period mentioned in Section 3.1, then any
services provided by Licensor shall be covered under the annual maintenance contract, or the customer or Licensee shall be required
to purchase the spare parts from Licensor.
4.
Grant
of License in the Trademarks
4.1
License
.
Subject to the terms of this Agreement (including all obligations to first obtain Licensor’s written approval), Licensor
hereby grants to Licensee the right to use the Trademarks (the details of which are set out in Exhibit B to this Agreement), on
a royalty-free basis, for the purpose of promoting the sale of Products in the Territory. Licensee is in particular entitled to:
(a) offer,
market and/or distribute Products under the Trademarks; and
(b) use
the Trademarks on business stationery and/or in advertising in connection with the advertising, promotion and distribution of Products
in the Territory.
4.2
Exclusivity
of License
. Except as provided in the next sentence, the license granted herein shall be exclusive. “Exclusivity”
shall mean that Licensor shall not grant any further licenses to third parties in the Trademarks for use in connection with sales
of Products in the Territory, and the Licensee shall not enter into any arrangement or agreement with any third parties for the
sale of any products (either directly or indirectly) identical or similar to the Products, in the Territory; provided, however,
that Licensor may continue to use the Trademarks in the Territory in connection with the operation of Licensor’s entertainment
centers and/or at other locations owned by Licensor or third parties.
4.3
Form
of Use
. Unless otherwise provided herein or agreed by the parties in writing, Licensee shall use the Trademarks that are registered
in the Territory in their registered form.
5.
Compliance
with Law
Licensee shall ensure that all Products will be offered for sale, sold, manufactured, labeled, packaged, distributed,
advertised, marketed, promoted, publicized and otherwise exploited, in accordance with all applicable laws and regulations in the
Territory, including without limitation, all customs requirements and country of origin regulations, those laws and regulations
relating to health and safety.
6.
Marketing
and Promotional Activities
6.1
Best
Efforts.
(a) Licensee
shall exercise its best efforts to effectively market, promote, and sell Products throughout the Territory. Licensee shall represent
Licensor at IAAPA and any other conferences as may be requested by Licensor.
(b) Unless
otherwise agreed by Licensor in writing, throughout the Term, Licensee shall maintain an organizational structure and sales force
reasonably necessary to adequately support the advertising, marketing, sales and distribution of Products throughout the Territory.
Licensor shall ensure that the services of at least 2 (two) of its employees are provided to Licensee for coordinating and remedying
any maintenance claims with respect to the Products.
6.2
Promotional
Material and Products
. Licensee shall submit to Licensor, for Licensor’s prior written approval, samples of all advertising
and promotional materials that Licensee desires to use to promote the Products, including without limitation, print and online
advertising designs, trade show display materials, press releases and interviews for publication in any media ("
Promotional
Material
"). Licensee shall modify any disapproved Promotional Material to satisfy Licensor’s reasonable objections
so that it is acceptable to Licensor. Licensor shall provide Licensee with the creative elements of any Promotional Materials that
Licensor creates or acquires for use in connection with the advertising and sale of Products outside the Territory.
7.
Intellectual
Property
7.1
Ownership
.
(a) Licensor
is the sole owner of any intellectual property rights relating to the Products existing as of the Effective Date, including, but
not limited to, the Trademarks and all the goodwill relating thereto (the “
Licensor Property
"). Licensee, by
reason of this Agreement, has not acquired any right, title, interest or claim of ownership in any of the Licensor Property in
the Territory or elsewhere, except to the extent provided under the license granted under Section 4.
(b) Licensee
acknowledges that (i) Licensor is the sole and exclusive owner of all right, title and interest in any Licensor Property; (ii)
nothing contained in this Agreement shall give to Licensee any right, title or interest in any Licensor Property; and (iii) Licensee’s
use of the Licensor Property, and any associated goodwill, shall inure only to the benefit of Licensor and shall be deemed to be
solely the property of Licensor should this Agreement be terminated for any reason.
7.2
Registration
and Cooperation
. Licensee shall not, directly or indirectly, seek or obtain any new registration for Licensor Property (including
without limitation, any colorable imitations, translations, or transliterations thereof), anywhere in the world without Licensor’s
prior written consent. If Licensee has obtained or obtains in the future, in any country, any right, title or interest in any Licensor
Property notwithstanding the previous sentence (including any colorable imitations, translations, or transliterations thereof),
Licensee will be deemed to have so acted as an agent and for the benefit of Licensor for the limited purpose of obtaining such
registrations and assigning them to Licensor. Licensee shall execute, for no additional consideration, any and all documents deemed
necessary by Licensor or its attorneys to be necessary to transfer such right, title or interest to Licensor.
7.3
No
Challenges.
Licensee shall not do anything or suffer anything to be done which may adversely affect any rights of Licensor
in and to any Licensor Property, or any registrations thereof or which, directly or indirectly, may reduce or dilute the value
or distinctiveness of such Licensor Property, in particular the Trademarks, or disparage or detract from Licensor’s reputation.
Licensee shall not challenge, directly or indirectly, Licensor’s interest in, or the validity of, any Licensor Property,
or any application for registration or trademark registration thereof or any rights of Licensor therein. The provisions of this
Section 7.3 shall survive the termination of this Agreement.
8.
Third
Party Infringements; Attacks on Use of the Marks; Cooperation
8.1
Third
Party Infringements.
(a)
Mutual
Information
. Each of the parties shall inform the other without undue delay when such party becomes aware of any infringements
of any of the Licensor Property in the Territory.
(b)
Initiation
of Action
. Any actions against infringers of any of the Licensor Property, whether or not such actions involve litigation (including
any actions taken to oppose a third party application to register an infringing trademark or a cancellation action against a third
party’s infringing trademark registration), shall be exclusively reserved to Licensor, unless otherwise agreed by Licensor
in writing. Notwithstanding the foregoing, Licensor shall be under no obligation to initiate any such action. If requested by Licensor,
Licensee shall support Licensor, at Licensor’s expense, in any such proceedings and, if requested by Licensor, Licensee shall
promptly provide Licensor with any any relevant documentation in Licensee’s possession.
8.2
Attacks
on the Use of the Licensor Property
. Each of the parties shall inform the other if it becomes aware of a claim by a third party
that the use of any of any of the Licensor Property infringes on the rights of such third party. If requested by Licensor, Licensee
shall support Licensor, at Licensor’s expense, in connection with Licensor’s defense against any such third party claims.
Unless otherwise agreed by Licensor in writing, Licensor shall take the lead in any defense against a third party action, whether
brought against Licensor and/or Licensee. The decision whether or not a defense is appropriate shall be in Licensor’s sole
discretion. Licensee shall not settle any third party claims against it regarding its use of any of the Licensor Property without
the prior written consent of Licensor.
8.3
Indemnity
.
The Licensee shall indemnify and hold the Licensor, its affiliates and their respective agents and employees harmless from all
claims, actions, suits, damages, costs and expenses in relation to or arising out of the breach of any representations, warranties,
covenants and obligations of the Licensee as set out in this Agreement. The indemnification rights of the Licensor shall be without
prejudice to, and independent of any other rights and remedies that the Licensor may have at law or in equity, including the right
to seek specific performance, injunctive relief or restitution, none of which rights or remedies shall be affected or diminished
thereby. The provisions of this Section 8.3 shall survive the termination of this Agreement.
9.
Termination
9.1
Termination
by Mutual Agreement.
This Agreement may be terminated at any time upon the mutual written agreement of the parties.
9.2
Termination
by Licensor with Notice
. Licensor may terminate this Agreement upon thirty (30) days written notice to Licensee upon the occurrence
of any of the following:
(a) Licensee
fails to make any payment required under or in connection with this Agreement; or
(b) Licensee
fails to use its best efforts to market, promote and sell the Products within the Territory and such failure is not cured within
thirty (30) days of Licensor’s notification to Licensee of such failure.
9.3
Termination
by Licensee with Notice.
Licensee may terminate this Agreement, for any reason or no reason, upon not less than one hundred
twenty (120) days’ notice to Licensor.
9.4
Termination
for Cause
. This Agreement may be terminated by either party for “Cause” without the need of providing a notice
period prior to such termination becoming effective. “Cause” shall exist if circumstances occur which, taking into
consideration the substance and purpose of this Agreement, would make it unreasonable for one or both of the parties to continue
the contractual relationship and the other party fails to cure the cause (assuming that such cause is susceptible to cure) within
thirty (30) days after the date of receipt of a corresponding written notice ("
Remedy Notice
"). If such cause
by its nature is not curable, then no such Remedy Notice is required. Without limiting the generality of the foregoing, a party
may terminate this Agreement for “Cause” if:
(a) the
other party to this Agreement is in breach of one or more of its material obligations; or
(b) the
other party to this Agreement becomes insolvent, generally cannot pay its obligations when due or otherwise suffers a substantial
deterioration of its financial situation, or if insolvency/bankruptcy proceedings are initiated against such party or such party
initiates any dissolution or liquidation of its business and/or assets.
9.5
Effects
of Termination
.
(a) Upon
the termination of this Agreement any indebtedness of Licensee to Licensor shall become immediately due and payable. Within ten
(10) days after any such termination of this Agreement, Licensee shall furnish to Licensor a full and complete statement setting
forth (i) the inventory of Products then on hand, including Licensee’s wholesale price thereof, and (ii) a list of outstanding
orders received, accepted and approved by Licensee at the time of the termination of this Agreement, including the relevant details
of each such order. Licensee shall cease to accept new orders for Products as of the date of termination of this Agreement. Licensee
shall consult with Licensor regarding Licensee’s pending orders for Products and Licensor shall determine whether to permit
Licensee to continue distribution of Products to fill the pending orders, to direct Licensee to cancel the pending orders, or to
assume or have a third party assume the obligation to fill pending orders.
(b) All
benefits which may accrue by reason of the activities of Licensee hereunder shall be deemed transferred automatically to Licensor,
and all licenses and other rights granted to Licensee hereunder shall immediately cease. Unless otherwise agreed by Licensor in
writing, Licensee shall immediately discontinue the advertising and marketing of Products.
(c) Each
of the parties shall continue to maintain in confidence any and all confidential information received from the other party. At
Licensor’s election, Licensor may purchase from Licensee any materials used by Licensee for the distribution, sale, advertising,
marketing, promotion, publicizing or other exploitation of Products, including all Promotional Materials, Licensor Property, or
any other materials which contain any of the Trademarks.
(d) Subject
to the provisions of subsections (a) and (e) hereof, upon the termination of this Agreement, Licensee shall have a period of one
hundred eighty (180) days to sell and ship to its customers, on a non-exclusive basis, current inventory of Products within the
Territory to fill pending orders
(“Sell-Off Period”
). All sales during the Sell-Off Period are expressly subject
to all of the terms and conditions contained in this Agreement, including without limitation, prohibitions against selling Products
outside of the Territory (or to parties who may sell Products outside the Territory). Any Products remaining in Licensee’s
inventory at the end of the Sell-Off Period shall be shipped to Licensor or its designee at Licensor’s expense. Licensor
shall pay to Licensee Licensee’s landed cost for any such Products then remaining in Licensee’s inventory as of the
end of the Sell-Off Period.
(e) Notwithstanding
the provisions of subsection (d) above, Licensor shall have the right to purchase all or part of Licensee’s inventory of
Products then remaining upon the termination of this Agreement, at Licensee’s landed cost for any such Products then remaining
in Licensee’s inventory, in which case Licensee shall have no Sell-Off Period for such Products.
(f) The
termination of this Agreement for any reason shall not affect obligations accrued prior to the effective date of such termination
of this Agreement or any obligations which, either expressly or from the context of this Agreement, are intended to survive the
termination of this Agreement.
10.
Notices
and Other Communications
All reports, approvals, requests, demands, notices and other communications (collectively “
Communications
")
required or permitted by this Agreement shall be in writing and signed by a duly authorized officer of or such other individual
designated in writing by a party. Communications will be duly given if delivered personally, if mailed (by registered mail, return
receipt requested) or if delivered by nationally-recognized courier or mail service which requires the addressee to acknowledge,
in writing, the receipt thereof, to the party concerned at the following addresses (or at any other address as a party may specify
by notice in writing to the other):
If to Licensor:
|
Smaaash Entertainment Private Limited
|
|
Trade View, Level 2
|
|
Kamala Mills
|
|
Lower Parel, Mumbai 400013, India
|
|
Attention: Mr. Vishwanath Kotian
|
|
|
If to Licensee:
|
1345 Avenue of the Americas, 11
th
floor,
|
|
New York, NY 101015, USA
|
|
Attention: Mr. Suhel Kanuga
|
11.
Miscellaneous
11.1
Entire
Agreement
. This Agreement contains the entire understanding and agreement between the parties with respect to its subject
matter, supersedes all prior oral or written understandings and agreements relating thereto and may not be modified, discharged
or terminated, nor may any of the provisions hereof be waived, orally.
11.2
Representations
and warranties
. Each of the parties represents and warrants to the other party that, (i) the Agreement constitutes a valid,
legal and binding obligation of such party and is enforceable against such party in accordance with its terms, (ii) it has the
power and authority to execute the Agreement and perform all its terms, and (iii) the execution and performance of this Agreement
shall not violate any charter documents of such party, contravene any provisions of law as applicable to such party (including
any order, decree, injunction of any competent court) or conflict with the provisions of any material agreement or contract executed
by such party. The provisions of this Section 11.2 shall survive the termination of this Agreement.
11.3
Governing
Law
. (a) The parties hereto have expressly agreed that this Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, applicable to contracts executed and fully to be performed therein, to the exclusion of any
other applicable body of governing law.
(b) Except
as hereafter provided, the parties hereby consent to the jurisdiction of the New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York to resolve any dispute arising under this Agreement.
(c) In
the event of any litigation or other action arising out of this Agreement, the court shall award to the substantially prevailing
party all reasonable costs and expenses including reasonable attorneys fees.
11.4
WAIVER
OF JURY.
THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT, WHETHER NOW OR EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THE TRIAL BY JURY COURT, AND THAT
ANY PROCEEDINGS WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION
BY A JUDGE SITTING WITHOUT A JURY.
11.5
Force
Majeure
. The parties will not be liable to each other for any failure or delay in performance, other than failure to make timely
payments due under this Agreement, if it is because of earthquake, flood, fire, acts of God, civil unrest, terrorism, acts of any
governmental authority or any other reason beyond the reasonable control of either or both of the parties ("
Force Majeure
").
However, either party may terminate this Agreement by and upon notice to the other if the other is unable to perform any of its
material obligations for a period of thirty (30) days by reason of a Force Majeure.
11.6
No
Joint Venture
. Nothing herein is intended to constitute the parties as partners or as joint venturers, or either as agent of
the other, and neither party may obligate or bind the other.
11.7
Headings,
Definitions and other particulars
. Headings and titles of sections and/or paragraphs are for convenience only. The definitions
in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The use of ‘including’ in this Agreement
shall be construed as illustrative.
11.8
Amendment.
This Agreement shall, from the Effective Date, bind the parties to the terms herein and cannot be amended without the consent
of the parties. Further, this Agreement cannot be terminated by any party except in accordance with Clause 9 of this Agreement.
11.9
Assignment.
The Licensor shall be entitled to assign, transfer, encumber or dispose of any of its rights and or obligations under this
Agreement, including to an affiliate, without the prior written consent of the Licensee. The Licensee shall not be entitled to
assign, transfer, encumber or dispose of any of its rights and or obligations under this Agreement, including to an affiliate,
without the prior written consent of the Licensor.
11.10
Expenses.
The Licensee shall bear all the costs and expenses in relation to the execution of this Agreement and the consummation of all
the transactions hereunder.
11.11
Counterparts
.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The delivery of signed counterparts by facsimile transmission or electronic mail in “portable
document format” (".pdf”) shall be as effective as signing and delivering the document in person.
IN WITNESS WHEREOF
, the parties hereto have duly executed
this Agreement the day and year first above written.
|
SMAAASH ENTERTAINMENT PRIVATE LIMITED
|
|
I-AM CAPITAL ACQUISITION COMPANY
|
(
exhibits follow
)
Exhibit A
Products
Products shall include the following:
|
●
|
Finger Coaster
|
|
●
|
Super Keeper
|
|
●
|
Cricket Lanes
|
|
●
|
Walk the Plank
|
|
●
|
Human Claw
|
|
●
|
Camel ride
|
|
●
|
Arcade games
|
|
●
|
Any other game as and when finalized and any new games which may be launched.
|
Exhibit B
Trademarks
Separately annexed.
ANNEX C
MASTER
FRANCHISE AGREEMENT
This Master Franchise
Agreement ("
Agreement
") is made and entered into on the [•] day of [•], 2018 (the “
Effective
Date
") at Mumbai, by and between Smaaash Entertainment Private Limited, an Indian company, with its address at Trade View,
Level 2, Kamala Mills, Lower Parel, Mumbai 400013, India ("
Franchisor
") and I-AM Capital Acquisition Company,
a company incorporated in the United States of America, with an address at 1345 Avenue of the Americas, 2
nd
floor, New
York, 10105 ("
Franchisee”)
.
RECITALS
A.
WHEREAS,
Franchisor operates entertainment centers and gaming arcades throughout India as well as at the Mall of the Americas in Minneapolis
Minnesota where Franchisor, through its virtual reality and sports simulation technology and proprietary gamification technologies
provides sport and recreational activities/services; and
B.
WHEREAS,
Franchisee is [•] (
add the business of the Franchisee
); and
C.
WHEREAS,
Franchisor desires to appoint Franchisee, and Franchisee desires to be so appointed, to act as Franchisor’s exclusive Franchisee
in the territories of North America and South America ("
Territory
") in the manner set out in this Agreement, for
setting up, managing and operating entertainment centres and gaming arcades involving virtual reality, sports simulation technology
and proprietary gamification technologies to provide sport and recreational activities/services to the public ("
Smaaash
Centres
"), upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE
, the parties agree as
follows:
1.
Grant
of Franchise
1.1
Rights
granted to the Franchisee
. Subject to Section 1.2, Franchisor hereby grants to Franchisee the exclusive right, (a) to establish
and operate Smaaash Centres in the Territory, (b) to sub-license the right to establish and operate Smaaash Centres to third party
franchisees in and for the Territory, (c) a license to use the products and other services developed by Franchisor with respect
to the Smaaash Centres (including a right to authorise the use of products and services developed by the Franchisor by third party
franchisees), in the Territory, and (d) to identify third party franchisees for the Smaaash Centres in the Territory. The rights
granted herein include the limited license to use the Trademarks of the Franchisor (the details of which are morefully set out
in Exhibit A), as set out in Section 3 of this Agreement, for the purposes of establishing and operating the Smaaash Centres in
the Territory. It is clarified that if third party franchisees shall be establishing and operating Smaaash Centres in the manner
contemplated under this Agreement, then the Franchisee shall ensure that such third party franchisees complies with all the obligations
and duties of the Franchisee, as recorded under this Agreement, and to this extent, Franchisee may enter into relevant agreements
with such third party franchisees.
1.2 Notwithstanding
the right granted to the Franchisee in Section 1.1, the Franchisor and its affiliates shall retain the right on the terms and conditions
that the Franchisor may deem fit and without granting any rights therein to the Franchisee, (i) to own, acquire, establish and
/ or operate, and to a grant a license to third parties to establish and operate Smaaash Centres at any location outside the Territory,
and (ii) to own, acquire, establish and / or operate, and to grant a license to third parties to establish and operate, gaming
and entertainment centres under other proprietary marks or other systems, whether such centres are the same, similar or different
from the Smaaash Centres, at any location within or outside the Territory.
1.3 This
arrangement has been entered into by the parties on an arms’ length basis. All commercials between the parties in relation
to the transactions contemplated under this Agreement, if not specifically provided in this Agreement, shall be agreed mutually
between the parties.
1.4
Additional
Considerations
(a)
Pricing
.
Franchisor and Franchisee shall agree upon and decide the locations at which the Smaaash Centres shall be set up within the Territory.
The Franchisee shall not be entitled to set up any new Smaaash Centres without consulting with, and obtaining the prior written
consent of Smaaash.
(b) The
prices of the products and services offered in each of the Smaaash Centres shall be decided mutually among the parties. Any revision
to the agreed fees, including any discounts or prizes or other promotional measures shall require the prior written consent from
Franchisor.
(c) Franchisee
or the third party franchisee, as the case may be, shall be entitled to receive the revenue generated from each of the Smaaash
Centres. If third party franchisees are operating the Smaaash Centres, then the Franchisee shall be entitled to receive, (i) 5%
(five percent) of the capital expenditure as agreed among the parties for the particular Smaaash Centre as sign -on fees or upfront
advance, and (ii) 5% (five percent) fee or commission of the revenue generated by such third party franchisees from the Smaash
Centres on an annual basis.
1.5
Operation of Smaaash Centres
. Franchisee or third party sub – franchisees shall be under an obligation to set up at
least 6 (six) Smaaash Centres during the first Contract Year or any other time period as may be provided by Franchisor. The Smaaash
Centres shall be established and operated in the Territory using the assumed trade name ’Smaaash’ or any other trade
name that the Franchisor may designate. Franchisee shall maintain good customer relations in accordance with prudent and reasonable
business practices. Franchisee shall perform its obligations hereunder without using subcontractors, sub-distributors, independent
sales representatives, agents, Franchisee’s affiliates or other non-employees ("
Third Parties
") to perform
the obligations of Franchisee under this Agreement except to the contrary specifically stated in this Agreement or unless they
have been approved, in writing, in advance, by Franchisor, such approval not to be unreasonably withheld.
2.
Term
The term of this Agreement shall commence as of the Effective Date and shall continue until terminated as hereinafter provided
(the “
Term
"). Each calendar year during the Term is sometimes hereinafter referred to as a “
Contract
Year
.”
3.
Grant
of License in the Trademarks
3.1
License
.
Subject to the terms of this Agreement (including all obligations to first obtain Franchisor’s written approval), Franchisor
hereby grants to Franchisee the right to use the Trademarks (the details of which are set out in Exhibit A to this Agreement) (including
sub-licensing this right to third party franchisees with the approval of Franchisor), on a royalty-free basis, for the purpose
of operating and promoting the Smaaash Centres in the Territory. Franchisee is, in particular entitled to:
(a) offer,
market and/or distribute any products and services in connection with the Smaaash Centres under the Trademarks; and
(b) use
the Trademarks on business stationery and/or in advertising in connection with the advertising, promotion and distribution of Smaaash
Centres in the Territory.
3.2
Exclusivity
of License
. Except as provided in the next sentence, the license granted herein shall be exclusive. “Exclusivity”
shall mean that Franchisor shall not grant any further licenses to third parties in the Trademarks for use in connection with Smaaash
Centres in the Territory, and the Franchisee shall not enter into any arrangement or agreement with any third parties for establishing
or operating any gaming and entertainment centres identical or similar to Smaaash Centres, in the Territory except as otherwise
provided in this Agreement; provided, however, that Franchisor may continue to use the Trademarks in the Territory in connection
with the operation of Franchisor’s entertainment centers already set up as of the Effective Date in the Territory. The restriction
contained in this Agreement shall apply on the parties throughout the Term.
3.3
Form
of Use
. Unless otherwise provided herein or agreed by the parties in writing, Franchisee shall use the Trademarks that are
registered in the Territory in their registered form.
4.
Compliance
with Law
Franchisee shall ensure that the Smaaash Centres shall be set up, established, operated, managed, advertised,
marketed, promoted, publicized and otherwise exploited, in accordance with all applicable laws and regulations in the Territory,
including without limitation, all customs requirements and country of origin regulations.
5.
Marketing
and Promotional Activities
5.1
Best
Efforts.
(a) Franchisee
shall exercise its best efforts to effectively market, promote, and publicise the Smaaash Centres throughout the Territory. Franchisee
shall also be obligated to identify suitable locations to set up the Smaaash Centres. Franchisee shall comply with, and ensure
that the third party sub-franchisees comply with the standards prescribed by Franchisor (as provided in the operating manuals which
shall be shared by Franchisor with Franchisee) with respect to the services, products and operations of the Smaaash Centres and
shall operate the Smaaash Centres in strict conformity with such standards and specifications as Franchisor may from time to time
prescribe to Franchisee. Franchisee shall refrain from deviating from such standards and specifications without Franchisor’s
prior written consent and from otherwise operating in any manner which reflects adversely on the Trademarks and Smaaash Centres.
(b) Unless
otherwise agreed by Franchisor in writing, throughout the Term, Franchisee shall maintain, and shall ensure that the third party
sub – franchisees maintain an organizational structure or local management reasonably necessary to adequately support the
advertising, marketing and promotion of the Smaaash Centres and the services and products offered by Smaaash Centres throughout
the Territory. The third party sub – franchisees shall also be responsible for all employee related compliances as per the
relevant applicable laws. Towards this purpose, Franchisee shall appoint a qualified chief operating officer, in consultation with
Franchisor, to undertake and manage the obligations of Franchisee as set out in this Agreement. Franchisor shall also be entitled
to designate and appoint personnel from its managerial team to assist and train the personnel and staff of the Franchisee or any
other third party sub - franchisee in setting up the Smaaash Centres, and further provide technical and design knowledge to the
third party sub - franchisees.
5.2
Promotional
Material and Products
. Franchisee shall submit to Franchisor, for Franchisor’s prior written approval, samples of all
advertising and promotional materials that Franchisee desires to use to promote Smaaash Centres, including without limitation,
print and online advertising designs, trade show display materials, press releases and interviews for publication in any media
("
Promotional Material
"). Franchisee shall modify any disapproved Promotional Material to satisfy Franchisor’s
reasonable objections so that it is acceptable to Franchisor. Franchisor shall provide Franchisee with the creative elements of
any Promotional Materials that Franchisor creates or acquires for use in connection with the advertising and sale of Products outside
the Territory.
6.
Intellectual
Property
6.1
Ownership
.
(a) Franchisor
is the sole owner of any and all intellectual property rights relating to the Smaaash Centres and their products and services existing
as of the Effective Date, including, but not limited to, the Trademarks and all the goodwill relating thereto (the “
Franchisor
Property
"). Franchisee, or any third party franchisee, by reason of this Agreement, has not and shall not acquire any
right, title, interest or claim of ownership in any of the Franchisor Property in the Territory or elsewhere, except to the extent
provided under the license granted under Sections 1 and 3 of this Agreement.
(b) Franchisee
acknowledges that, (i) Franchisor is the sole and exclusive owner of all right, title and interest in any Franchisor Property;
(ii) nothing contained in this Agreement shall give to Franchisee any right, title or interest in any Franchisor Property; and
(iii) Franchisee’s use of the Franchisor Property, and any associated goodwill, shall inure only to the benefit of Franchisor
and shall be deemed to be solely the property of Franchisor should this Agreement be terminated for any reason.
6.2
Registration
and Cooperation
. Franchisee shall not, directly or indirectly, seek or obtain any new registration for Franchisor Property
(including without limitation, any colorable imitations, translations, or transliterations thereof), anywhere in the world without
Franchisor’s prior written consent. If Franchisee has obtained or obtains in the future, in any country, any right, title
or interest in any Franchisor Property notwithstanding the previous sentence (including any colorable imitations, translations,
or transliterations thereof), Franchisee will be deemed to have so acted as an agent and for the benefit of Franchisor for the
limited purpose of obtaining such registrations and assigning them to Franchisor. Franchisee shall execute, for no additional consideration,
any and all documents deemed necessary by Franchisor or its attorneys to be necessary to transfer such right, title or interest
to Franchisor.
6.3
No
Challenges.
Franchisee shall not do anything or suffer anything to be done which may adversely affect any rights of Franchisor
in and to any Franchisor Property, or any registrations thereof or which, directly or indirectly, may reduce or dilute the value
or distinctiveness of such Franchisor Property, in particular the Trademarks, or disparage or detract from Franchisor’s reputation.
Franchisee shall not challenge, directly or indirectly, Franchisor’s interest in, or the validity of, any Franchisor Property,
or any application for registration or trademark registration thereof or any rights of Franchisor therein. The provisions of this
Section 6.3 shall survive the termination of this Agreement.
7.
Third
Party Infringements; Attacks on Use of the TradeMarks; Cooperation
7.1
Third
Party Infringements.
(a)
Mutual
Information
. Each of the parties shall inform the other without undue delay when such party becomes aware of any infringements
of any of the Franchisor Property in the Territory.
(b)
Initiation
of Action
. Any actions against infringers of any of the Franchisor Property, whether or not such actions involve litigation
(including any actions taken to oppose a third party application to register an infringing trademark or a cancellation action against
a third party’s infringing trademark registration), shall be exclusively reserved to Franchisor, unless otherwise agreed
by Franchisor in writing. Notwithstanding the foregoing, Franchisor shall be under no obligation to initiate any such action. If
requested by Franchisor, Franchisee shall support Franchisor, at Franchisor’s expense, in any such proceedings and, if requested
by Franchisor, Franchisee shall promptly provide Franchisor with any any relevant documentation in Franchisee’s possession.
7.2
Attacks
on the Use of the Franchisor Property
. Each of the parties shall inform the other if it becomes aware of a claim by a third
party that the use of any of any of the Franchisor Property infringes on the rights of such third party. If requested by Franchisor,
Franchisee shall support Franchisor, at Franchisor’s expense, in connection with Franchisor’s defense against any such
third party claims. Unless otherwise agreed by Franchisor in writing, Franchisor shall take the lead in any defense against a third
party action, whether brought against Franchisor and/or Franchisee. The decision whether or not a defense is appropriate shall
be in Franchisor’s sole discretion. Franchisee shall not settle any third party claims against it regarding its use of any
of the Franchisor Property without the prior written consent of Franchisor.
7.3
Indemnity
.
The Franchisee shall indemnify and hold the Franchisor, its affiliates and their respective agents and employees harmless from
all claims, actions, suits, damages, costs and expenses in relation to or arising out of the breach of any representations, warranties,
covenants and obligations of the Franchisee as set out in this Agreement. The indemnification rights of the Franchisor shall be
without prejudice to, and independent of any other rights and remedies that the Franchisor may have at law or in equity, including
the right to seek specific performance, injunctive relief or restitution, none of which rights or remedies shall be affected or
diminished thereby. The provisions of this Section 7.3 shall survive the termination of this Agreement.
8.
Termination
8.1
Termination
by Mutual Agreement.
This Agreement may be terminated at any time upon the mutual written agreement of the parties.
8.2
Termination
by Franchisor with Notice
. Franchisor may terminate this Agreement upon thirty (30) days written notice to Franchisee upon
the occurrence of any of the following:
(a) Franchisee
fails to make any payment required under or in connection with this Agreement;
(b) Franchisee
ceases to operate or otherwise abandon the Smaaash Centres without the consent of Franchisor, or otherwise forfeit the right to
do or transact business in the Territory;
(c) Franchisee
fails to use its best efforts to market and promote Smaaash Centres and the services and products offered by Smaaash Centres within
the Territory and such failure is not cured within thirty (30) days of Franchisor’s notification to Franchisee of such failure.
8.3
Termination
for Cause
. This Agreement may be terminated by either party for “Cause” without the need of providing a notice
period prior to such termination becoming effective. “Cause” shall exist if circumstances occur which, taking into
consideration the substance and purpose of this Agreement, would make it unreasonable for one or both of the parties to continue
the contractual relationship and the other party fails to cure the cause (assuming that such cause is susceptible to cure) within
thirty (30) days after the date of receipt of a corresponding written notice ("
Remedy Notice
"). If such cause
by its nature is not curable, then no such Remedy Notice is required. Without limiting the generality of the foregoing, a party
may terminate this Agreement for “Cause” if:
(a) the
other party to this Agreement is in breach of one or more of its material obligations; or
(b) the
other party to this Agreement becomes insolvent, generally cannot pay its obligations when due or otherwise suffers a substantial
deterioration of its financial situation, or if insolvency/bankruptcy proceedings are initiated against such party or such party
initiates any dissolution or liquidation of its business and/or assets.
8.4
Effects
of Termination
.
(a) Upon
the termination of this Agreement, any indebtedness of Franchisee to Franchisor shall become immediately due and payable. Franchisee
shall immediately cease to operate the Smaaash Centres and shall not thereafter, directly or indirectly, represent to the public
or hold itself out as as a franchisee of Franchisor. Franchisor shall have the right to suspend the performance of any of their
obligations under this Agreement. Franchisor shall have the right to provide the rights and license granted herein to Franchisee
to any other third party entity that Franchisor may deem fit.
(b) All
benefits which may accrue by reason of the activities of Franchisee hereunder shall be deemed transferred automatically to Franchisor,
and all licenses and other rights granted to Franchisee hereunder shall immediately cease. Unless otherwise agreed by Franchisor
in writing, Franchisee shall immediately discontinue the advertising and marketing of Smaaash Centres and the products and services
offered by Smaaash Centres.
(c) Each
of the parties shall continue to maintain in confidence any and all confidential information received from the other party. At
Franchisor’s election, Franchisor may purchase from Franchisee any materials used by Franchisee for the advertising, marketing,
promotion, publicizing or other exploitation of Smaaash Centres and the products and services offered by the Smaaash Centres, including
all Promotional Materials, Franchisor Property, or any other materials which contain any of the Trademarks.
(d) The
termination of this Agreement for any reason shall not affect obligations accrued prior to the effective date of such termination
of this Agreement or any obligations which, either expressly or from the context of this Agreement, are intended to survive the
termination of this Agreement.
9.
Notices
and Other Communications
All reports, approvals, requests, demands, notices and other communications (collectively “
Communications
")
required or permitted by this Agreement shall be in writing and signed by a duly authorized officer of or such other individual
designated in writing by a party. Communications will be duly given if delivered personally, if mailed (by registered mail, return
receipt requested) or if delivered by nationally-recognized courier or mail service which requires the addressee to acknowledge,
in writing, the receipt thereof, to the party concerned at the following addresses (or at any other address as a party may specify
by notice in writing to the other):
If to Franchisor:
|
Smaaash Entertainment Private Limited
|
|
Trade View, Level 2
|
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Kamala Mills
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Lower Parel, Mumbai 400013, India
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Attention: Mr. Vishwanath Kotian
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If to Franchisee:
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1345 Avenue of the Americas, 11
th
floor,
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New York, NY 101015, USA
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Attention: Mr. Suhel Kanuga
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10.
Miscellaneous
10.1
Entire
Agreement
. This Agreement contains the entire understanding and agreement between the parties with respect to its subject matter,
supersedes all prior oral or written understandings and agreements relating thereto and may not be modified, discharged or terminated,
nor may any of the provisions hereof be waived, orally.
10.2
Right
to inspect and request information
. During the Term, Franchisor shall have the right to conduct audits of Franchisee with respect
to the Smaaash Centres, and inspect the Smaaash Centres, after providing a written notice of 5 (five) days. Franchisee shall be
under an obligation to provide any information as may be requested by Franchisor with respect to the Smaaash Centres, including
the books of accounts and other relevant documents or records maintained in relation to the Smaaash Centres.
10.3
Insurance
.
During the Term, Franchisee shall maintain policies of insurance as may be requested by Franchisor, subject to applicable law,
in relation to the Smaaash Centres.
10.4
Representations
and warranties
. Each of the parties represents and warrants to the other party that, (i) the Agreement constitutes a valid,
legal and binding obligation of such party and is enforceable against such party in accordance with its terms, (ii) it has the
power and authority to execute the Agreement and perform all its terms, and (iii) the execution and performance of this Agreement
shall not violate any charter documents of such party, contravene any provisions of law as applicable to such party (including
any order, decree, injunction of any competent court) or conflict with the provisions of any material agreement or contract executed
by such party. The provisions of this Section 10.4 shall survive the termination of this Agreement.
10.5
Governing
Law
. (a) The parties hereto have expressly agreed that this Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, applicable to contracts executed and fully to be performed therein, to the exclusion of any
other applicable body of governing law.
(b) Except
as hereafter provided, the parties hereby consent to the jurisdiction of the New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York to resolve any dispute arising under this Agreement.
(c) In
the event of any litigation or other action arising out of this Agreement, the court shall award to the substantially prevailing
party all reasonable costs and expenses including reasonable attorneys fees.
10.6
WAIVER
OF JURY.
THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT, WHETHER NOW OR EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THE TRIAL BY JURY COURT, AND THAT
ANY PROCEEDINGS WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION
BY A JUDGE SITTING WITHOUT A JURY.
10.7
Force
Majeure
. The parties will not be liable to each other for any failure or delay in performance, other than failure to make timely
payments due under this Agreement, if it is because of earthquake, flood, fire, acts of God, civil unrest, terrorism, acts of any
governmental authority or any other reason beyond the reasonable control of either or both of the parties ("
Force Majeure
").
However, either party may terminate this Agreement by and upon notice to the other if the other is unable to perform any of its
material obligations for a period of thirty (30) days by reason of a Force Majeure.
10.8
No
Joint Venture
. Nothing herein is intended to constitute the parties as partners or as joint venturers, or either as agent of
the other, and neither party may obligate or bind the other.
10.9
Headings,
Definitions and other particulars
. Headings and titles of sections and/or paragraphs are for convenience only. The definitions
in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The use of ‘including’ in this Agreement
shall be construed as illustrative.
10.10
Amendment.
This Agreement shall, from the Effective Date, bind the parties to the terms herein and cannot be amended without the consent
of the parties. Further, this Agreement cannot be terminated by any party except in accordance with Clause 8 of this Agreement.
10.11
Assignment.
The Franchisor shall be entitled to assign, transfer, encumber or dispose of any of its rights and or obligations under this
Agreement, including to an affiliate, without the prior written consent of the Franchisee. The Franchisee shall not be entitled
to assign, transfer, encumber or dispose of any of its rights and or obligations under this Agreement, including to an affiliate,
without the prior written consent of the Franchisor.
10.12
Expenses.
The Franchisee shall bear all the costs and expenses in relation to the execution of this Agreement and the consummation of
all the transactions hereunder.
10.13
Counterparts
.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The delivery of signed counterparts by facsimile transmission or electronic mail in “portable
document format” (".pdf”) shall be as effective as signing and delivering the document in person.
IN WITNESS WHEREOF
, the parties hereto have duly executed
this Agreement the day and year first above written.
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SMAAASH ENTERTAINMENT PRIVATE LIMITED
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I-AM CAPITAL ACQUISITION COMPANY
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(
exhibits follow
)
Exhibit A
Trademarks
Separately annexed
ANNEX D
SHAREHOLDERS’ AGREEMENT
By
and Among
I-AM
CAPITAL ACQUISITION COMPANY
And
FW
METIS LIMITED
And
MITESH R GOWANI
And
PROMOTERS
And
SMAAASH ENTERTAINMENT PRIVATE LIMITED
SHAREHOLDERS’ AGREEMENT
This
SHAREHOLDERS’ AGREEMENT
is
executed on this 3
rd
day of May, 2018 at New Delhi;
By
and Amongst
I-AM Capital Acquisition Company
,
a company incorporated in the United States of America and having its registered office at 1345 Avenue of the Americas, 11
th
Floor, New York, NY 10105 (hereinafter referred to as the “
Investor
", which expression shall, unless it
be repugnant to the context or meaning thereof, be deemed to mean and include its successors and assigns) of the
First
Part
;
And
FW
M
etis Limited
, a company incorporated in Mauritius and having its registered office at IFS Court, Twenty Eight,
Cybercity, Ebene, Mauritius (hereinafter referred to as “
Metis
", which expression shall, unless it be repugnant
to the context or meaning thereof, be deemed to mean and include its successors and assigns) of the
Second
Part
;
And
Mitesh R Gowani,
a Indian citizen,
presently residing at 511, Commerce House, 140, N.M. Road, Fort, Mumbai 400 023, Maharashtra, India (hereinafter referred to as
"
MRG
", which expression shall, unless it be repugnant or contrary to the context thereof, mean and include his
heirs, legal representatives, successors and permitted assigns) of the
Third Part
;
And
The Persons listed in
SCHEDULE
1
(hereinafter referred to collectively, as the “
Promoters
” and individually, as a “
Promoter
",
which expression shall, unless it be repugnant or contrary to the context thereof, mean and include each of their respective heirs
and successors-in-interest, as the case may be) of the
Fourth Part
;
And
Smaaash Entertainment Private Limited
,
a private limited company incorporated under the laws of India, having its office at 1
st
Floor, Ambience Mall, Plot
no. 2, Phase II, Nelson Mandela Marg, Delhi-110070, India (hereinafter referred to as the “
Company
", which expression
shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors) of the
Fifth
Part
.
The Company, the Investor, Metis, MRG and
the Promoters shall hereinafter be individually referred to as a “
Party
” and collectively referred to as the
"
Parties
".
WHEREAS
:
A.
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The Company is engaged in the Business (defined below).
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B.
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As of the Effective Date (defined below), the shareholding pattern of the Company is as specified in Part A of
SCHEDULE 4
hereto.
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C.
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The Investor has agreed to make an investment in the Company on the terms and subject to the conditions set out in the Share Subscription Agreement (defined below) and this Agreement.
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D.
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In furtherance to the Share Subscription Agreement, the Parties have negotiated and agreed to execute this Agreement to record their agreement on the governance, operation and management of the Company with respect to the Investor and the Investor’s rights and obligations as a Shareholder (defined below) of the Company and certain rights of Metis. MRG is executing this Agreement as a confirming party.
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NOW, THEREFORE
, in consideration
of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the sufficiency
of which is acknowledged by the Parties, the Parties hereby agree as follows:
1.
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DEFINITIONS AND INTERPRETATION
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In this Agreement, the following
words and expressions shall, except where the context otherwise requires, have the following meanings respectively:
"
Act
" means
the (Indian) Companies Act, 1956, as substituted by the provisions of the (Indian) Companies Act, 2013 to the extent notified as
having become effective and any amendment thereto and, wherever applicable, the rules framed thereunder and any subsequent amendment
or re-enactment thereof for the time being in force;
"
Affiliate
"
of a Person (the “
Subject Person
") means, (a) in the case of any Subject Person other than a natural person,
(i) any other Person that, either directly or indirectly through one or more intermediate Persons and whether alone or in combination
with one or more other Persons, Controls, is Controlled by or is under common Control with the Subject Person, and (ii) where the
Subject Person is the Investor, the term Affiliate, shall be deemed to include any fund, collective investment scheme, trust, partnership
(including any co-investment partnership), special purpose or other vehicle or any subsidiary or Affiliate (in accordance with
(a) above) of any of the foregoing, which is managed and/or advised by the Investor’s group or the Investor’s investment
manager and/or investment advisor and any sub-advisor to such investment advisor or an Affiliate (in accordance with (a) above)
of the investment manager and/or investment advisor and any sub-advisor to such investment advisor, or any other fund under the
management or advice of the Investor or any of its Affiliates (in accordance with (a) above) or companies/entities under the same
management as the Investor; (b) in the case of any Subject Person that is a natural person, (i) any other person that, either directly
or indirectly through one or more intermediate persons and whether alone or in combination with one or more other persons, is Controlled
by the Subject Person, or (ii) any other person who is a Relative of such Subject Person;
"
Agreement
"
means this Shareholders’ Agreement and shall include any schedules, annexures, or exhibits that may be annexed to this Agreement
now or at a later date and any amendments made to this Agreement in accordance with the terms of this Agreement;
"
AHA Holdings
"
means AHA Holdings Private Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 161,
Starcity Cinema, 2
nd
Floor, Manmala Tank Road, Mahim West, Mumbai – 400016, India;
"
Applicable Law(s)
”
means any statute, law, regulation, ordinance, rule, judgment, notification, order, decree, bye-law, permits, licenses, approvals,
consents, authorisations, government approvals, directive, guideline, requirement or other governmental restriction, or any similar
form of decision of, or determination by, or any interpretation, policy or administration, having the force of law of any of the
foregoing, by any Governmental Authority, whether in effect as of the date of this Agreement or thereafter;
"
Approved Auditor
”
means PricewaterhouseCoopers, Deloitte Haskins and Sells, Ernst & Young and KPMG (or their Affiliates or associates as known
in India) or any other auditor as acceptable to the Investor and the Promoters;
"
Articles of Association
"
or “
Articles
” means the articles of association of the Company as modified to reflect the terms of this Agreement
and the Share Subscription Agreement;
"
Assets
" means
all assets, properties, rights and interests of every kind, nature, specie or description whatsoever, whether movable or immovable,
tangible or intangible including without limitation Intellectual Property Rights, owned, leased and/or used by the Company and
its present and/or future subsidiaries;
"
BCCL
" means
Bennett Coleman and Company Limited, a public company having its registered office at Times of India Building, N Road, Mumbai –
400001, Maharashtra, India;
"
Board of Directors
"
or “
Board
” means the board of directors of the Company, as constituted from time to time;
"
Business
" means
the business of the Company as described in
SCHEDULE 2
to this Agreement;
"
Business Day
"
means a day (other than a Saturday or Sunday) on which banks are open for general business in India, Mauritius, Dubai and New York;
"
Business Plan
"
means the detailed business or operating plan for each Financial Year and the annual budget of the Company for each Financial Year
which includes a detailed financial plan providing head wise details of projected income, expenditure (including operating and
capital expenditure) and earnings by the Company, as approved by the Board in accordance with this Agreement;
"
Buyback Notice
"
shall mean a written notice by the Company to the Investor to buyback all or any of the SPAC Shares as provided in Clause 8.1(e);
"
Closing Date
"
shall have the same meaning ascribed to it in the Share Subscription Agreement;
"
Code
" means
the U.S. Internal Revenue Code of 1986;
"
Competitor
"
means any Person engaged in a business or activity (on its own or together with an Affiliate or associate of such Person, or through
any franchise, license or agreement or in any other manner whatsoever), or having any interest in a business or activity, which
is, identical to, similar to, connected with or of the same nature as, the Business or is in competition with the Business or any
other business or activity being carried on by the Company at the relevant point in time;
"
Contract
" shall
have the same meaning as has been ascribed to it under the Share Subscription Agreement;
"
Control
" (including
the terms “
Controlled
” by or under common “
Control
” with), as used with respect to any Person
means the direct or indirect beneficial ownership of or the right to vote in respect of, directly or indirectly, more than 50%
(fifty percent) of the voting shares or securities of a Person and/or the power to control the majority of the composition of the
board of directors of a Person and/or the power to create or direct the management or otherwise or any or all of the above;
"
Convertible Instruments
"
means warrants, convertible preference shares, convertible debentures, bonds, options or any other financial instruments issued
by the Company convertible into Equity Shares at a later date;
"
Deed of Adherence
"
means the deed of adherence substantially in the form attached hereto as
SCHEDULE 3
;
"
Director
" means
a director appointed on the Board of Directors from time to time in accordance with the provisions of this Agreement;
"
Effective Date
"
means the date of execution of this Agreement;
"
Eligible Employee
"
means the employees, officers and Directors of the Company and its subsidiaries;
"
Encumbrance
"
means (including, the terms “
Encumber
” and “
Encumbered
") with respect to any property or Asset,
any mortgage, lien, pledge, hypothecation, charge, interest, option, claim, prior interest, right of other Persons, security interest,
equitable interest, encumbrance, title retention agreement, voting trust agreement, commitment, restriction or limitation of any
nature whatsoever, including restriction on use, voting, non-disposal undertaking, rights of pre-emption, receipt of income or
exercise of any other attribute of ownership or any other adverse claim of any kind in respect of such property or Asset (excluding
any of the above restrictions created pursuant to this Agreement or the Articles);
"
Equity Shares
"
means equity shares of the Company having face value of INR 10 (Rupees Ten only) each;
"
ESOP
" means
a bonafide employee stock option plan adopted by the Company for the issue of options/shares to any Eligible Employee, consisting
of 1,01,06,798 Equity Shares (out of which no options have been granted as of the Effective Date);
"
Event of Default
"
means:
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(i)
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fraud, gross negligence, wilful misconduct committed by the Promoters, or the finding of any audit or investigation which reveals that the affairs of the Company have been conducted in a fraudulent manner;
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(ii)
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a petition for bankruptcy has been filed by a creditor for default in making any payments due by the Company and such petition has not been dismissed, stayed or if admitted, not vacated within 6 (six) months of such petition being filed;
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"
Fair Market Value
"
means the fair market value of the Securities of the Company as computed in accordance with Clause 9.2 of this Agreement;
"
Final Deadline Date
”
means the date of expiry of 6 (six) months from the Investor Exit Date;
"
Financial Year
"
means the financial year of the Company, which begins on April 1
st
of a calendar year and ends on March 31
st
of the next calendar year;
"
Financial
Statements
” includes a balance sheet, income statement, a statement of cash flows prepared in accordance with IFRS and
shall be accompanied by such other documents as may be required under Applicable Law;
"
Fully Diluted Basis
”
means that the total of Securities (after giving effect to any anti-dilution/valuation protection provisions) on an “as if
converted” basis, shall be included for the purposes of such calculation;
"
Governmental Authority
"
shall mean any international, national or federal governmental authority, city, provisional or statutory authority, regulatory
authority, government department, agency, commission, board, rule or regulation making entity/authority having or purporting to
have jurisdiction over any Party, or other subdivision thereof or any municipality, district or other subdivision thereof to the
extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or organisation have
the force of any Applicable Law or any court or tribunal having jurisdiction;
"
Group Companies
"
means a company which is a wholly owned subsidiary of one or more of AHA Holdings, Mr. Shripal Morakhia, Mrs. Kalpana Morakhia
and their Immediate Family Members;
"
IFRS
" means
the international financial reporting standards;
"
Immediate Family Members
"
for each individual, means his/her spouse and his/her natural and adopted children;
"
Indebtedness
"
means with respect to any Person, all indebtedness of such Person (whether present, future or contingent) and includes without
limitation (a) all obligations of such Person for borrowed money or with respect to advances of any kind, whether or not evidenced
by a Contract; (b) all obligations of such Person for the deferred purchase price of property, goods or services; (c) all indebtedness
of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured
by) any Encumbrance on property of such Person; (d) all guarantees by such Person;
"
Intellectual Property
Rights
” means and includes collectively or individually, the following worldwide rights relating to intangible property,
whether or not filed, perfected, registered or recorded and whether now or hereafter existing, filed, issued or acquired: (a) rights
in trademarks, trademark registrations, and applications therefor, trade names, service marks, service names, logos, or trade dress;
(b) rights relating to the protection of confidential information; (c) internet domain names, Internet and World Wide Web (WWW)
URLs or addresses; and (d) all other intellectual, information or proprietary rights anywhere in the world including rights of
privacy and publicity, rights to publish information and content in any media;
"
Investment Amount
"
shall have the meaning ascribed to it in the Share Subscription Agreement;
"
Investor Exit Date
”
means March 31, 2022;
"
Investor Exit Price
”
means a price per SPAC Share, which for all of the SPAC Shares aggregates to the higher of (a) the sum of (i) the Investment Amount;
and (ii) an amount equal to an IRR of 20% (twenty percent) on the Investment Amount; and (b) the Fair Market Value of the SPAC
Shares;
"
IRR
" means
the annual rate of return which, when used as a discount rate for a series of cash flows (including dividends paid by the Company),
gives a net present value of zero;
"
Key Employees
"
mean Mr. Shripal Morakhia, chief executive officer, chief financial officer, chief operations officer, chief technical officer
or any other ‘CXO’ level employees/department/designated business heads, any key managerial personnel or any other
employee whose total annual remuneration is over INR 50,00,000 (Rupees Fifty Lakhs only) (inclusive of all perquisites, allowances
and withholdings);
"
Liquidation Event
"
means, in relation to the Company, winding up, liquidation, reconstruction, consolidation, reorganization, amalgamation, merger,
sale of assets or business of the Company;
"
Memorandum
"
means the memorandum of association of the Company as amended from time to time;
"
Metis Exit Date
"
means June 30, 2019;
"
Metis SHA
"
means the subscription and shareholders’ agreement dated April 30, 2014 entered into between Metis, Promoter, Company and
certain other Persons;
"
Non-Transferring Shareholder(s)
”
(a) in case of any Promoter proposing to Transfer any Promoter Shares under Clause 4.2(a), shall mean the Investor, and (b) in
case of the Investor proposing to Transfer SPAC Shares, shall mean only the Promoters;
"
Person
" means
any natural person, limited or unlimited liability company, corporation, partnership (whether limited or unlimited), proprietorship,
Hindu undivided family, trust, union, association, government or any agency or political subdivision thereof or any other entity
that may be treated as a person under Applicable Law;
"
Promoter Sale Shares
”
means the number of Promoter Shares proposed to be Transferred by the Promoters under Clause 4.3;
"
Promoter Shares
"
shall mean Equity Shares, Convertible Instruments and other Securities held by the Promoters from time to time;
"
QIPO
" means
a public offering, listing of the Equity Shares of the Company and their admission to trading on Bombay Stock Exchange, National
Stock Exchange, New York Stock Exchange, NASDAQ, or any other recognised stock exchange;
"
Qualified Investors
"
shall mean a collective reference to the qualified investors (as defined under Part B of the Articles), the qualified investors
II (as defined under Part C of the Articles) and the qualified investors III (as defined under Part D of the Articles);
"
Related Party
"
shall have the meaning as defined under the Act;
"
Relative
" shall
have the meaning as defined under the Act;
"
Reserved Matters
"
mean the list of matters which require the consent of the Investor as set out in
SCHEDULE 7
;
"
Restricted Person
"
means (a) Competitor; and (b) any Person that (i) has been convicted of a criminal offence or an economic offence where the punishment
is not less than imprisonment of 6 (Six) months; and (ii) is the resident of North Korea, Iraq, Cuba, Iran, Myanmar, Libya or Sudan
or Persons that are the target of U.S. economic sanctions administered by the U.S. Treasury Department Oficce of Foreign Assets
Control;
"
SEBI
" means
the Securities and Exchange Board of India;
"
Securities
"
means any and all classes and series of shares, Equity Shares, options, warrants, preference shares, convertible securities of
all kinds, debentures or any other arrangement relating to the Company’s share capital;
"
Share Subscription Agreement
”
means the share subscription agreement of even date executed between the Investor, the Promoters and the Company hereto for the
subscription of the Subscription Shares by the Investor and shall include any schedules, annexures, or exhibits that may be annexed
to Share Subscription Agreement now or at a later date and any amendments made to Share Subscription Agreement by all the parties
thereto in writing;
"
Shareholders
"
means the holders of Securities in the Company (which are Equity Shares or convertible into Equity Shares);
"
SPAC Issue Price
"
means INR 41.56 (Rupees forty one and fifty six paise only);
"
SPAC Shares
"
means collective reference to the Equity Shares held by the Investor and includes any other Securities of the Company held from
time to time by the Investor;
"
SRT
" means
Mr. Sachin Ramesh Tendulkar;
"
Subscription Shares
"
shall have the meaning ascribed to it in the Share Subscription Agreement;
"
Transaction Documents
"
means this Agreement, the Share Subscription Agreement, Restated Articles (as defined in the Share Subscription Agreement) and
any other agreement required to be executed and/or delivered pursuant to this Agreement and in respect of the transactions contemplated
in this Agreement and the Share Subscription Agreement;
"
Transfer
" includes:
|
(i)
|
any (direct or indirect) transfer or other disposition of the Securities or voting interests or any interest therein, including, without limitation, by operation of law by court order, by judicial process, or by foreclosure, levy or attachment;
|
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(ii)
|
any (direct or indirect) sale, assignment, gift, donation, redemption, conversion or other disposition of such Securities or any interest therein, pursuant to an agreement, arrangement, instrument or understanding by which legal title to or beneficial ownership of such Securities or any interest therein passes from one Person to another Person or to the same Person in a different legal capacity, whether or not for value;
|
|
(iii)
|
the granting of or extending any Encumbrance in such Securities or any interest therein.
|
but excludes any transmission of Securities pursuant
to the Act;
"
Transferring Shareholder
"
shall mean the Promoter proposing to make a Transfer of Shares under Clause 4.2 or the Investor, as the case may be;
1.2
|
In addition to the terms defined in Clause 1.1, any other terms that are capitalised but not specifically defined hereunder shall have the same meaning as assigned to such term in the respective Clauses in this Agreement.
|
|
(a)
|
Heading and bold typeface are only for convenience and shall be ignored for the purpose of interpretation.
|
|
(b)
|
Unless the context of this Agreement otherwise requires:
|
|
(i)
|
words of any gender are deemed to include the other gender;
|
|
(ii)
|
words using the singular or plural also include the plural or singular respectively;
|
|
(iii)
|
the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement or specified Clauses of this Agreement, as the case may be;
|
|
(iv)
|
the term “Clause” refers to the specified Clause of this Agreement and paragraph refers to the specified paragraph of the Schedules to this Agreement;
|
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(v)
|
reference to any statute or statutory provision shall include (a) any subordinate legislation, rules and regulations framed thereunder from time to time; and (b) such statute or provision as may be amended, modified, repealed, re-enacted or consolidated;
|
|
(vi)
|
reference to the term ‘pro-rata’ means on the basis of the proportionate shareholding of a Shareholder on a Fully Diluted Basis unless otherwise indicated in this Agreement;
|
|
(vii)
|
reference to the word “include” shall be construed without limitation;
|
|
(viii)
|
the Recitals and Schedules annexed hereto shall constitute an integral part of this Agreement;
|
|
(ix)
|
time is of the essence in the performance of the Parties’ respective obligations. If any time period specified herein is extended, such extended time shall also be of the essence;
|
|
(x)
|
time taken for procuring regulatory approvals to consummate any transactions contemplated in this Agreement shall be excluded from the calculation of time periods stated in this Agreement;
|
|
(xi)
|
words and expressions used under this Agreement, but not specifically defined in Clause 1.1 shall have the same meaning as assigned to them in the specific clause/ sub clause/ paragraph;
|
|
(xii)
|
words and expressions used herein, but not defined shall have the same meaning respectively assigned to them in the Act in so far as the context so admits;
|
|
(xiii)
|
the shareholding of the Investor’s Affiliates shall be taken into account to determine the shareholding percentage of the Investor in the Company on a Fully Diluted Basis;
|
|
(xiv)
|
the term “as if converted” basis with respect to an instrument, option or Security refers to a calculation assuming as if such instrument, option or Security has been issued and converted/exercised/exchanged into Equity Shares in accordance with the prevailing terms; and
|
|
(xv)
|
capitalised terms used and not defined herein shall have the meaning set forth in the Share Subscription Agreement.
|
The shareholding pattern of the
Company on a Fully Diluted Basis immediately preceding the Closing Date is, and the shareholding pattern of the Company as on the
Closing Date on a Fully Diluted Basis shall be as set out in Part A and Part B of
SCHEDULE
4
to this Agreement respectively.
The Company agrees and undertakes
that it shall and the Promoters jointly and severally undertake that they shall, exercise all rights and powers available to them
to procure that the Company shall utilise the proceeds of the Investment Amount solely for the purposes identified in the Share
Subscription Agreement.
Other than as specifically set
out above, the Company shall be prohibited from using the proceeds of the Investment Amount without the prior written consent of
the Investor.
3.
|
FURTHER ISSUE OF SHARES
|
3.1
|
Issue of Further Shares
|
Subject
to the terms of this Agreement (including without limitation the provisions of Clause 5.15
(Reserved Matters)
), the Board
may, from time to time, determine the additional capital contributions of the Company from existing Shareholders or from third
parties (other than a Restricted Person), which shall be in the nature of Equity Shares, preference shares or any other Security.
The terms of such issue, including the valuation in respect of any fresh issue of Securities, shall be as determined by the Board
subject to Clause 5.15
(Reserved Matters)
("
New Securities
"). Nothing in this Clause 3.1 shall apply to
(i) issuance of Equity Shares in accordance with the ESOP plan, and/or (ii) issuance of Equity Shares upon conversion of the Convertible
Instruments in accordance with the terms set out in the Articles, and/or (iii) issuance of Securities pursuant to the QIPO; and/or
(iv) issuance of additional Equity Shares in order to give effect to the provisions of Clause 3.7 (
Valuation Protection
);
and/or (v) issuance of bonus Shares.
|
(a)
|
In the event the Board approves any fresh capital contributions in accordance with Clause 3.1 ("
New Investment
"), the Investor shall have the right (but not the obligation) to subscribe (simultaneous with the investment by the proposed subscriber in the New Investment) to such number of the New Securities, in order to maintain its shareholding in the Company on a Fully Diluted Basis, (i) at the same price; and (ii) on terms and conditions no less favourable than as offered by the Company to such proposed subscriber; to such number of New Securities required to maintain its shareholding on a Fully Diluted Basis (as of immediately prior to the New Investment) immediately following the New Investment ("
Entitlement
"), subject to the valuation protection of the Investor contained in Clause 3.7 and Applicable Law.
|
|
(b)
|
The Company shall give the Investor a written notice (the “
Offer Notice
") of its intention, describing the New Securities proposed to be so issued, the name, identity and beneficial ownership of the proposed subscriber of such New Securities, the price per New Security, nature of the instrument, total quantum of such proposed investment and the general terms upon which the Company proposes to issue such New Securities.
|
|
(c)
|
Upon receipt of such Offer Notice, the Investor shall have the right to purchase from or subscribe to its Entitlement of such New Securities of the Company (whether in full or in part), on the same terms and conditions as offered by the Company to the proposed subscriber and at such rate per New Security offered to such proposed subscriber.
|
|
(d)
|
The Investor shall have 30 (thirty) days from delivery of the Offer Notice ("
Notice Acceptance Period
") to agree to purchase all or any part of its Entitlement to such New Securities, by giving a written notice to the Company setting forth the number of New Securities that it wishes to purchase.
|
|
(e)
|
If the Investor so elects to purchase or subscribe to its Entitlement to the New Securities, whether in full or in part, such New Securities shall be sold or issued to the Investor in accordance with its election.
|
|
(f)
|
If any of the other Shareholders (other than the Investor) fail to exercise in full or expressly waives its entitlement rights as set out in the Articles, such Shareholder’s Entitlement to the New Securities or the concerned portion thereof not exercised by such Shareholder shall automatically devolve upon the Investor who shall be entitled to also accept and exercise such devolved entitlement in terms of this Clause 3.2 along with its original Entitlement. If the Investor chooses not to subscribe to any or all of the New Securities, the Company shall be entitled to issue and allot such New Securities to the proposed subscriber.
|
|
(g)
|
The Company shall have 60 (sixty) days from the expiry of the Notice Acceptance Period to issue the unsubscribed portion of the New Securities to the proposed subscriber specified in the Offer Notice, at a price and upon general terms no more favorable to such proposed subscriber thereof than specified in the Offer Notice. Upon such issuance, subject to the provisions of Clause 3.7 (
Valuation Protection
) below, the shareholding of the Investor shall stand diluted accordingly.
|
|
(h)
|
If the Company has not issued the New Securities within the said 60 (sixty) day period, the Company shall not thereafter issue any New Securities without first offering such New Securities to the Investor in the manner and as per the procedure provided in this Clause 3.2.
|
3.3
|
The Promoters shall, jointly and severally, cause all of the actions to be taken in accordance with this Clause 3 to ensure strict compliance herewith.
|
3.4
|
Any issuance of Securities by the Company in violation of the provisions of this Clause 3 shall be invalid and void ab initio.
|
3.5
|
Notwithstanding anything to the contrary contained elsewhere, the Investor shall be entitled to subscribe to any fresh issue by itself or through its Affiliates.
|
3.6
|
The right of the Investor to subscribe to any Securities shall extend to such other alternative instrument as may be issued in the event of any restriction under Applicable Law barring the Investor from subscribing to the Securities so offered as part of the New Investment.
|
If at
any time after the Closing Date, the Company issues to any Person any New Securities or undertakes any action, including effecting
any changes in the capital structure of the Company, at a price per Security that is lower than the SPAC Issue Price, then the
Investor shall be entitled to broad based weighted average anti-dilution protection in accordance with
SCHEDULE 6
hereto.
In such an event, the Company and the Promoters shall be bound to co-operate with the Investor to ensure that the Company forthwith
takes all necessary steps, subject to Applicable Law, to issue additional Equity Shares to the Investor or its Affiliates (whereby
such holders or its Affiliates (as the case may be) are not required to pay any additional amounts for the issuance of the additional
Equity Shares or if so required under Applicable Law, pay the lowest price required to be paid under Applicable Law) in accordance
with the formula provided in
SCHEDULE 6
or the Promoters shall transfer Equity Shares to the Investor at the lowest price
permissible under Applicable Law, in accordance with the formula provided in
SCHEDULE 6
. Nothing in this Clause 3.7 shall
apply to (i) issuance of Equity Shares in accordance with the ESOP plan, and/or (ii) issuance of Equity Shares upon conversion
of Convertible Instruments in accordance with the terms set out in the Articles, and/or (iii) issuance of Securities pursuant to
the QIPO; and/or (iv) issuance of bonus Shares.
4.
|
RESTRICTIONS ON TRANSFERABILITY OF SHARES
|
4.1
|
Transfer Restrictions
|
|
(a)
|
Transfer by the Investor
|
Subject to Clause 4.1(e) (
Execution
of a Deed of Adherence
), the Investor is entitled to freely Transfer all or any of the SPAC Shares at any time in the following
manner:
|
(i)
|
to any of its Affiliates without any restriction;
|
|
(ii)
|
till such date as Metis holds the minimum shareholding prescribed under Clause 22 of the Metis SHA ("
Metis Fall Away Date
"), to any Person who is not a Restricted Person, together with any or all of the rights of the Investor, subject to the rights of the Promoters in Clause 4.2 (
Right of First Offer
) below; and
|
|
(iii)
|
after the Metis Fall Away Date or upon the occurrence of an Event of Default (whichever is earlier), to any Person, including a Restricted Person but other than a Person who has been convicted of a criminal or an economic offence where the punishment is not less than imprisonment of 6 (six) months, without any restriction whatsoever or any obligation to make an offer to the Promoters, together with any or all of the rights of the Investor. It is hereby clarified that without prejudice to the generality of the foregoing, any Transfer of the SPAC Shares by the Investor after the Metis Fall Away Date or an Event of Default shall not be subject to restrictions under Clause 4.1(e) (
Execution of a Deed of Adherence
) and Clause 4.2 (
Right of First Offer
),
|
|
(aa)
|
Nothwithstanding anything contained in Clause 8.3.3 of the Metis SHA, in case of an Event of Default, Metis shall have the right to freely Transfer its securities to any Person including a Restricted Person but other than a Person who has been convicted of a criminal or an economic offence where the punishment is not less than imprisonment of 6 (six) months, without any restriction whatsoever or any obligation including the obligation to (A) to make an offer to the Promoters under Clause 8.4.1 of the Metis SHA; or (B) require the transferee to execute a deed of adherence, together with any or all of the rights of Metis under this Agreement, Metis SHA and the Articles.
|
|
(b)
|
Transfer by Promoters
|
The Promoters shall not Transfer
any Promoter Shares to any Person, in any manner whatsoever, without the prior approval of the Investor and the Promoter Shares
shall stand locked-in till such time as the Investor holds any Shares in the Company subject to Clause 13 of this Agreement; provided
however that each of the Promoters shall be entitled to Transfer their shareholding in the Company to 1 (one) or more of the Group
Companies or Immediate Family Members ("
Permitted Promoter Transferees
"); subject to Clause 4.1(e) (
Execution
of a Deed of Adherence
). In the event the Investor provides such approval in accordance with this Clause 4.1(b), then the Promoters
shall be entitled to Transfer the Promoter Shares subject to the provisions of Clause 4.1(e) (
Execution of a Deed of Adherence
),
Clause 4.1(f)
(Transfer to Restricted Person)
, Clause 4.2
(Right of First Offer)
and Clause 4.3
(Tag Along Right)
below. It is clarified that the transferees of Shares Transferred by the Promoters shall be bound by all obligations of the
Promoters under this Agreement. For the avoidance of doubt, it is hereby clarified that any Transfer of the Promoter Shares or
issuance of shares by the Company to give effect to any (i) full rachet adjustement under Clause 8.1. of the Metis SHA; (ii) broad
based weighted average adjustement under Clause 3.7 (
Valuation Protection
) of this Agreement; or (iii) drag along right
of the Investor and Metis under this Agreement, the Metis SHA and the Articles, shall not be subject to any (i) transfer restrictions
on the Promoter Shares under this Agreement, Metis SHA and the Articles, (ii) pre-emptive right to subscribe to securities and
veto right of the Investor and/or Metis under this Agreement and/or the Metis SHA and the Articles.
|
(c)
|
Covenants by Mr. Shripal Morakhia and AHA Holdings
|
Notwithstanding anything to the
contrary in this Agreement, Mr. Shripal Morakhia hereby expressly agrees that:
|
(i)
|
Mr. Shripal Morakhia shall not, and Mr. Shripal Morakhia shall ensure that his Immediate Family Members shall not, Transfer any ownership interests in AHA Holdings or any of the Group Companies that hold any of the Securities to any Person other than Permitted Promoter Transferees, without the prior approval of the Investor;
|
|
(ii)
|
he shall ensure that neither AHA Holdings nor any of the Group Companies that hold any of the Securities, issue any securities to any Person other than the Permitted Promoter Transferees, without the prior approval of the Investor;
|
|
(iii)
|
he shall ensure that he (together with the Permitted Promoter Transferees) shall at all points of time during the term of this Agreement, continue to own, legally and beneficially, all the ownership interests of AHA Holdings and the Group Companies that hold any of the Securities of the Company, free and clear from all Encumbrances and shall continue to have total control over and exercise all voting rights over AHA Holdings and each of the Group Companies that hold any of the Securities of the Company;
|
|
(iv)
|
the Promoters shall ensure that each Permitted Promoter Transferee executes a Deed of Adherence acceptable to the Investor, simultaneously with becoming a shareholder of AHA Holdings.
|
|
(d)
|
Transfer in violation of this Agreement
|
Any Transfer of Securities which
is not in compliance with the provisions of this Clause 4 shall be
void ab initio
and the Company shall not:
|
(i)
|
record or register any Transfer of Securities in violation of this Clause 4; and
|
|
(ii)
|
treat the Person to whom the Securities have been Transferred in violation of this Clause 4 as the owner of Securities of the Company or accord any rights to vote or pay dividend or otherwise to such Person, to which he may otherwise be entitled to, as the owner of the Securities.
|
|
(e)
|
Execution of Deed of Adherence
|
Subject to the provisions of this
Agreement, all Transfers by the Shareholders will be subject to the transferee entering into a Deed of Adherence. Upon execution
of the Deed of Adherence, the Parties agree that this Agreement shall stand automatically novated to the extent of making the transferee
a party to this Agreement. Provided that, any Transfer by the Investor to a transferee, after the Metis Fall Away Date or upon
the occurrence of an Event of Default or at any time thereafter, will not require such transferee to enter into a Deed of Adherence.
|
(f)
|
Transfer to Restriced Person
|
Notwithstanding the terms of this
Clause 4 or any other provision of this Agreement or the Articles, no Shareholder (except (i) the Investor who is bound only to
the extent provided in Clause 4.1(a) and (ii) Metis who is bound only to the extent provided in Clause 8.3 of the Metis SHA ) shall
be entitled to Transfer (whether in the form of gift, sale or otherwise) or Encumber or otherwise dispose of any Securities held
by them or any interest in such Securities (including any form of options, warrants, derivatives or arrangements relating to such
Securities), to a Restricted Person.
|
(g)
|
The Company and the Promoters shall ensure that the provisions of this Clause 4 shall be honored to the fullest extent permissible under Applicable Law and shall ensure that the terms of this Clause 4 are expressly stated in the Articles.
|
|
(a)
|
If any Promoter Shares are sought to be Transferred, or if the Investor seeks to Transfer any Securities held by it (such Shares sought to be Transferred, referred to as “
ROFO Shares
"), then the Transferring Shareholder shall provide to the Non-Transferring Shareholder(s) the right of first offer with respect to the Securities that are proposed to be Transferred by the Transferring Shareholder.
|
|
(b)
|
The Transferring Shareholder shall provide a written notice to the Non-Transferring Shareholder(s) of its intention to Transfer the ROFO Shares ("
ROFO Sale Notice
").
|
|
(c)
|
The Non-Transferring Shareholder(s) shall provide a written notice to the Transferring Shareholder within 30 (thirty) days of its receipt of the ROFO Sale Notice ("
ROFO Exercise Period
") setting out ("
ROFO Exercise Notice
"):
|
|
(i)
|
its intention to purchase all but not less than all of the ROFO Shares;
|
|
(ii)
|
the price that the Non-Transferring Shareholder is willing to pay for the ROFO Shares.
|
Once issued, a ROFO Exercise Notice
shall be irrevocable and shall constitute a binding offer by the Non-Transferring Shareholder(s) to purchase the ROFO Shares as
per the terms set out in the ROFO Exercise Notice.
|
(d)
|
Within 10 (ten) days from the date of receipt of the ROFO Exercise Notice ("
ROFO Acceptance Period
"), and in the event that the terms set out under the ROFO Exercise Notice are acceptable to it, the Transferring Shareholder shall confirm its acceptance to the ROFO Exercise Notice to the Non-Transferring Shareholder by way of issue of an acceptance notice ("
ROFO Acceptance Notice
"). The Transferring Shareholder and the Non-Transferring Shareholder shall, within 30 (thirty) days from the date of the ROFO Acceptance Notice, consummate the Transfer of the ROFO Shares on the terms and conditions set out in the ROFO Exercise Notice.
|
|
(e)
|
If, within the ROFO Exercise Period, the Non-Transferring Shareholder(s) have communicated that it does not wish to exercise the right under this Clause 4.2 or has failed to respond to the ROFO Sale Notice, then the Transferring Shareholder shall have the right to Transfer the ROFO Shares to a third party (other than a Restricted Person) within 90 (ninety) days from the end of the ROFO Exercise Period; provided the terms and price of such sale is commercially superior to those offered by the Non-Transferring Shareholder under the ROFO Exercise Notice.
|
|
(f)
|
In the event a Transfer of the ROFO Shares has not been compeleted within the said 90 (ninety) day period, then any Transfer of the ROFO Shares shall again be subject to the provisions of this Clause 4.2.
|
|
(g)
|
However, if the Non-Transferring Shareholder, being the Investor, has communicated that it wishes to exercise its Tag Right, then the Transferring Shareholder and the Non-Transferring Shareholder(s) shall follow the process set out in Clause 4.3 below.
|
|
(h)
|
It is hereby clarified that nothing in this Clause shall be deemed to grant an inter-se right of first offer between the Shareholders of the Company, other than the Promoter, in the event of Transfer of Shares by any of them.
|
|
(a)
|
In case any or all Promoters, individually or collectively, propose to Transfer any Shares held by them in the Company, then the Investor shall, in addition to its right under Clause 4.2, be entitled to exercise its Tag Right (as defined below), along with Metis and the other Shareholders of the Company ("
Tag Shareholders
"). All references to “
Transferring Shareholder
” in this Clause 4.3 mean a reference to such Promoter(s) who propose to Transfer the Promoter Sale Shares.
|
|
(b)
|
The Transferring Shareholder shall provide a written notice to the Tag Shareholders setting out the price at which the Promoter Sale Shares are proposed to be sold to the third party purchaser ("
Third Party Transferee
") and other terms and conditions of such sale to the Third Party Transferee ("
Tag Offer Notice
").
|
|
(c)
|
The Tag Shareholders shall be entitled to issue a written notice to the Transferring Shareholder(s) within 30 (thirty) days of the receipt of the Tag Offer Notice to exercise their respective Tag Right. The Transferring Shareholder shall ensure that the Third Party Transferee purchases from the Tag Shareholders, the Tag Securities (as defined below) at the price and on terms and conditions mentioned in the Tag Offer Notice ("
Tag Right
") simultaneously with the purchase of the Promoter Sale Shares. The “
Tag Securities
” shall mean (i) where the Promoters propose to Transfer less than 10% (ten percent) of the Promoter Shares in aggregate either in a single or a series of transactions, all or any part of
pro rata
number of the Securities held by the relevant Tag Shareholder on an “as if converted” basis; and (ii) where the Promoters propose to Transfer equal to or more than 10% (ten percent) of the Promoter Shares in aggregate either in a single or a series of transactions, all of the Securities held by the relevant Tag Shareholder in the Company. To the extent that a Tag Shareholder exercise its Tag Right in accordance with the terms and conditions of this Clause 4.3, the number of Securities that the Transferring Shareholder may sell as part of the total Securities in the Transfer to a Third Party Transferee shall be correspondingly reduced.
|
|
(d)
|
If all or any of the Tag Shareholders exercise their Tag Right, the Transfer of the Promoter Sale Shares by the Transferring Shareholder to the Third Party Transferee shall be conditional upon such Third Party Transferee acquiring the Tag Securities simultaneously with the acquisition of the Promoter Sale Shares in accordance with this Clause 4.3 (
Tag Along Right
), on the same terms and conditions set forth in the Tag Offer Notice provided that: (a) the Tag Shareholders shall not be required to give any representations and warranties for such Transfer, except those relating to title and the legal standing of the Tag Shareholders; and, (b) the Tag Shareholders shall be entitled to receive the cash equivalent of any non-cash component of the consideration received by the Transferring Shareholder.
|
4.4
|
Notwithstanding anything to the contrary contained elsewhere, the Parties agree that the Transfer restrictions in this Agreement and/or in the constitutional documents of the Company shall not be capable of being avoided by the holding of Securities indirectly through a company or other entity that can itself be sold in order to dispose of an interest in Securities free of such restrictions.
|
5.
|
BOARD, MANAGEMENT AND RELATED MATTERS
|
5.1
|
Appointment of Directors
|
Directors will be nominated by
the Shareholders in the manner set out in the Articles and shall be appointed in the manner prescribed under the Act and this Agreement.
Subject to Clause 5.2
(Number of Directors)
below, the Board may also appoint additional Directors from time to time, who
will hold office until the next annual general meeting of the Company.
|
(a)
|
The Board shall comprise of a maximum of 10 (ten) Directors.
|
|
(b)
|
Metis shall have the right to nominate 2 (two) Directors on the Board.
|
|
(c)
|
The Investor shall, on and from the Closing Date, have the right to nominate 2 (two) Directors on the Board ("
Investor Directors
").
|
|
(d)
|
The Promoters shall have the right to nominate 2 (two) Directors on the Board ("
Promoter Directors
"), out of which 1 (one) Promoter Director shall at all times be Mr. Shripal Morakhia and MRG shall have the right to nominate 1 (one) Director on the Board.
|
|
(e)
|
The directorship of a Promoter Director shall stand vacated from the Board at the option of Metis and the Investor upon any of the following events:
|
|
(i)
|
If such Promoter Director ceases to be in the employment of the Company; or
|
|
(ii)
|
If such Promoter Director ceases to hold any Securities in the Company (where such Promoter Director holds Securities in the Company); or
|
|
(iii)
|
Upon the occurrence of an Event of Default arising from any act or omission of such Promoter Director.
|
Mr.
Shripal Morakhia shall not resign from full time employment of the Company till such time as the Investor hold any Securities.
|
(f)
|
The Board shall appoint and remove (as the case may be) by Notice to the Company, 3 (three) individuals as independent directors to the Board of the Company at the instance of and upon procuring the consent of the Promoters, the Investor and Metis, provided however that the Parties agree that Mr. Vijayendar Tulla shall continue to be on the Board of the Company as an independent Director. Any person appointed as an independent Director pursuant to the resignation/ termination of Mr. Vijayendar Tulla shall be appointed with the consent of the Promoters, Investor and Metis.
|
|
(g)
|
The Investor shall have the right to appoint 1 (one) observer to the Board at all times. The Person appointed by the Investor as observer on the Board pursuant to this Clause shall hereinafter be referred to as the “
Investor Observer
". The Investor Observer shall be entitled to attend all meetings of the Board and all committees thereof, provided that the Investor Observer will not be entitled to vote at any such meetings.
|
The Promoters
agree, undertake and covenant that they shall not veto nor otherwise obstruct the appointment of the Investor Observer in accordance
with this Clause 5.2(g). The Investor Observer will be entitled to receive all documents, communication and information as received
by a Director and will be entitled to attend all meetings of the Board and its committee as an observer, without exercising any
voting rights.
|
(h)
|
The removal and re-appointment of the Investor Director(s) and the Investor Observer shall be subject to the prior written consent of the Investor.
|
|
(i)
|
Subject to the other provisions of this Clause 5.2, the Investor Directors may be removed by the Investor by giving a written notice to the Company. Subject to the other provisions of this Clause 5.2, the Investor shall be entitled to nominate another Director in its place for appointment by giving notice in writing to the Company. Any such removal shall take effect upon receipt of such notice by the Company subject to approval of the Investor and any appointment shall take effect from the date the nominee is appointed by a resolution of the Board or the Shareholders, as the case may be.
|
5.3
|
Qualification Shares and Rotation
|
The
Investor Directors shall not be required to hold any qualification shares and shall not be liable to retire by rotation.
|
(a)
|
The mandatory quorum for the meetings of the Board, or of any committee of the Board of Directors, shall be the presence, in person, of at least 2 (two) Directors or alternate Directors (as the case may be) (or such higher number as required under Applicable Law) throughout each meeting of the Board, provided that no quorum shall be constituted unless at least 1 (one) Promoter Director and 1 (one) Investor Director are present throughout each meeting of the Board. Provided, however, that so long as the Investor Directors have not been appointed to the Board, the presence of such Investor Directors shall not be required to constitute quorum, and in such circumstances, the presence, in person, of any 2 (two) Directors (which shall include 1 (one) Promoter Director) shall be required throughout each meeting of the Board to constitute quorum. Subject to Clause 5.4(b) below, if the Investor expressly in writing waives the presence of the Investor Director(s) (or the alternate Director) at a meeting of the Board, it shall be deemed that the Directors present at such meeting shall constitute a valid quorum (subject to Applicable Law).
|
|
(b)
|
In the event there is no valid quorum at a meeting of the Board or its committee and such absence of valid quorum subsists for up to 30 (thirty) minutes after the scheduled time of commencement of the meeting, that meeting ("
Initial Board Meeting
") will be re-scheduled to a day that falls at least 7 (seven) days after the Initial Board Meeting ("
Subsequent Board Meeting
"), unless at least 1 (one) Investor Director consents to an earlier date in which case the Subsequent Board Meeting shall take place on such earlier day. If there is no valid quorum at such Subsequent Board Meeting and such absence of valid quorum subsists for up to 30 (thirty) minutes after the scheduled time of commencement of such Subsequent Board Meeting, then, the Directors present at such Subsequent Board Meeting shall be deemed to constitute a valid quorum and subject to Clause 5.4(c) below, the Board may proceed to discuss and decide on the matters on the same agenda as the Initial Board Meeting and nothing other than such agenda. Subject to Clause 5.4(c) below, any decisions so taken in the Subsequent Board Meeting shall be binding.
|
|
(c)
|
Notwithstanding anything contained in this Agreement, no resolution shall be passed or modified or decision be taken in relation to a Reserved Matter in any Board meeting, or in any adjourned meetings without the consent of the Investor.
|
5.5
|
Alternate Director and Casual Vacancy
|
In
the event of any Investor Director(s) ("
Original Director
") being likely to be absent from India for a period
of not less than 3 (three) months, the Board may at a meeting or by a circular resolution appoint an alternate Director for such
Original Director. The Original Director in whose place such alternate Director is to be appointed or the Investor shall designate
the Person to be appointed as an alternate Director to the Board.
In
the event of a casual vacancy arising on account of the resignation of an Investor Director(s) or the office of the Investor Director(s)
becoming vacant for any reason, the Investor shall be entitled to designate a Director to fill the vacancy.
Unless
otherwise agreed by a simple majority of the Directors in attendance at any duly convened meeting of the Board, one of the Promoter
Directors shall be the chairman of the Board. The chairman shall not have a casting vote.
5.7
|
Meetings of the Board
|
|
(a)
|
The Board shall meet at least once in every calendar quarter during regular business hours on Business Days and at least 4 (four) such meetings shall be held in every year.
|
|
(b)
|
Subject to Applicable Law, the Directors or members of any committee of the Board of Directors may participate in meetings of the Board or committee of the Board through video or telephonic conference.
|
|
(a)
|
At least 7 (seven) days’ clear written notice shall be given for any meeting of the Board, whether in India or outside India. In the case of an Investor Director(s) residing outside India, notice of such meeting shall be sent to him either by registered air mail or by electronic mail or by facsimile transmission. In case of an alternate Director, notice shall be sent to the alternate Director as well as the Original Director. A meeting of the Board may be called by shorter notice with the written consent of the majority of the Directors including at all times, an Investor Director.
|
|
(b)
|
Every such notice convening a Board meeting shall have a schedule containing the agenda for the Board meeting identifying in sufficient detail, each business to be transacted at the Board meeting together with all relevant supporting documents in relation thereto and the conference details to enable any Investor Director(s)/alternate Director to participate in such meeting by video/ telephone conference. No matter which has not been detailed in the agenda, shall be transacted at any meeting of the Board, provided however that with the written consent of the majority of the Directors including at all times, the consent of the Investor or at least 1 (one) Investor Director, a matter not included in the agenda may be transacted at the meeting, subject to Clause 5.15
(Reserved Matters)
.
|
|
(a)
|
Subject to relevant provisions of the Act, a written resolution (circulated in draft form, along with all the relevant supporting documents) signed (either in favour of or against the resolution) by the majority of the Directors (whether in India or abroad) entitled to vote thereon shall be as valid and effectual as a resolution duly passed at a meeting of the Board and may consist of several documents in the like form each signed by one or more Directors.
|
|
(b)
|
Notwithstanding anything contained in Clause 5.9(a) above, no Reserved Matter shall be resolved by circular resolution without the consent of the Investor.
|
5.10
|
Day to Day Management
|
Subject
to the provisions of Clause 5.11
(Decision making by the Board)
and 5.15
(Reserved Matters)
below and except as may
be otherwise determined by the Board with approval of the Investor:
|
(a)
|
The day to day management of the Company shall be conducted by the Promoters, who shall exercise such powers subject to the overall supervision and control of the Board.
|
|
(b)
|
The Board may establish separate audit committee, compensation committee and such other committees as may be decided by the Board to manage the affairs of the Company. The composition of all committees as may be established by the Company and the Board from time to time shall be such as may be agreed by the Board provided that the Investor shall at all times have a right to nominate 1 (one) member having voting rights on such committees (including any committees that are established at present). The nominees of the Investor and 1 (one) of the Promoters shall be required to be present to form a valid quorum at any meeting of such committees and the provisions of quorum for Board meetings shall apply,
mutatis mutandis
, for meetings of all committees of the Board. The Promoters agree, undertake and covenant that neither of them shall veto nor otherwise obstruct the appointment of the nominee of the Investor on the committees, in accordance with this Clause 5.10. No Reserved Matter can be resolved upon by a committee except with the prior written consent of the Investor in accordance with the provisions of Clause 5.15
(Reserved Matters)
.
|
|
(c)
|
The Investor Directors shall be non-executive Directors and shall not be liable to retire by rotation. The Investor Directors shall not be responsible for the day-to-day management of the Company and shall not be considered (unless otherwise specified under Applicable Law) as a “person-in-charge” “officer in default” or “occupier of premises” or “assessee in default” or “employer” or such similar positions. The Investor Directors being non-executive Directors shall not be liable for any default or failure of the Company in complying with the provisions of any Applicable Law.
|
5.11
|
Decision making by the Board
|
Subject
to Clause 5.15
(Reserved Matters)
below, resolutions of the Board shall be passed by a simple majority of votes of the Directors
entitled to vote thereon and each Director shall be entitled to 1 (one) vote.
5.12
|
Insurance for the Board
|
The Company shall procure and
maintain a directors and officers insurance policy for the Directors on the Board consistent with insurances obtained generally
by companies operating in the same or similar industry and line of business as the Company and as acceptable to the Investor. The
Company shall get the limits for the directors’ and officers’ insurance policy approved by the Investor Director(s)
or the Investor (if the Investor has not appointed Investor Directors).
The Company shall indemnify and
keep indemnified all the Investor Directors to the maximum extent permitted by Applicable Law and the Articles shall contain a
provision for providing the broadest permissible indemnification by the Company to the Investor Directors.
5.14
|
Decision making principles of the Shareholders
|
|
(a)
|
At least 21 (twenty one) days clear written notice shall be given for any meeting of the Shareholders, whether in India or outside India. In the case of a Shareholder residing outside India, notice of such meeting shall be sent to it either by registered air mail or by electronic mail or by post at its address outside India, if any. A meeting of the Shareholders may be called upon at shorter notice in accordance with the Applicable Law, and subject to prior written consent of the Investor, having been obtained. Subject to Applicable Law, the Shareholders may participate in the meetings through video or telephonic conferencing.
|
|
(b)
|
Every such notice convening a meeting of the Shareholders shall contain an agenda for the meeting identifying in sufficient detail, each business to be transacted at the general meeting together with an explanatory statement, all relevant documents in relation thereto and the conference details to enable any Shareholder to participate in such meeting by video conference/telephone conference.
|
|
(c)
|
Voting on all matters to be considered at a general meeting of the Shareholders shall be by way of a poll unless otherwise agreed upon in writing between the Parties.
|
|
(d)
|
Any Shareholder may appoint another person as his proxy, and in case of a corporate Shareholder, an authorised representative, to attend a Shareholders’ meeting and vote thereat on such Shareholder’s behalf; provided however that, the power given to such proxy or representative must be in writing. Any person possessing a proxy or other such written authorisation with respect to any shares shall be able to vote on such shares and participate in meetings as if such person were a Shareholder.
|
|
(e)
|
The quorum for a meeting of the Shareholders shall be as per Applicable Law, provided always that the presence of the representatives of one of the Promoters and the Investor shall be required to constitute quorum.
|
|
(f)
|
Subject to Clause 5.14(g) below, if any Shareholder expressly in writing waives its presence at a Shareholders’ meeting, it shall be deemed that the Shareholders present at such Meeting shall constitute a valid quorum (subject to Applicable Law) and the other requirements of Clause 5.14(e).
|
|
(g)
|
In the event there is no valid quorum at a Shareholders’ meeting and such absence of valid quorum subsists for up to 30 (thirty) minutes after the scheduled time of commencement of the meeting, the meeting ("
Initial Shareholders’ Meeting
") will be re-scheduled to a day that falls at least 7 (seven) days after the Initial Shareholders’ Meeting ("
Subsequent Shareholders’ Meeting
") in which case the Subsequent Shareholders’ Meeting shall take place on such earlier day. If there is no valid quorum at such Subsequent Shareholders’ Meeting and such absence of valid quorum subsists for up to 30 (thirty) minutes after the scheduled time of commencement of such Subsequent Shareholders’ Meeting, then, the Shareholders present at such Subsequent Shareholders’ Meeting shall be deemed to constitute a valid quorum (subject to minimum quorum requirements under Applicable Law) and subject to Clause 5.14(h) below, the Shareholders may proceed to discuss and decide on the matters on the same agenda as the Initial Shareholders’ Meeting and nothing other than such agenda. Subject to Clause 5.14(h) below, any decisions so taken in the Subsequent Shareholders’ Meeting shall be binding.
|
|
(h)
|
Notwithstanding anything contained in this Agreement, no resolution shall be passed or modified or decision be taken in relation to a Reserved Matter at any Shareholders’ meeting, or in any adjourned meetings thereof, without the consent of the Investor.
|
|
(a)
|
Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents but subject to Clause 5.15(c), the Company and Promoters confirm that no action shall be taken by the Company or resolution be passed by the Board, or committees of the Board or by the Shareholders, except with the affirmative vote (in person or in writing) of the Investor, or the prior written consent of the Investor or such Person(s) as may be nominated by the Investor in this regard, in respect of the matters listed in
Schedule 7
("
Reserved Matters
").
|
|
(b)
|
If any decision and/or resolution is effected without complying with the provisions of this Clause 5.15 (
Reserved Matters
), (a) such decision or resolution shall not be valid or binding on any Person including the Company; and (b) the Company shall not take any action pursuant to such decision or resolution unless consent of the Investor is obtained for the same.
|
|
(c)
|
Nothwithstanding anything contained in this Clause 5.15, any corporate action undertaken to give effect to the exit right of Metis under Clause 9 of the Metis SHA, Clauses 8.1(a) and 8.2(a) of this Agreement shall not be subject to the Reserved Matters.
|
5.16
|
Covenants in relation to meetings
|
|
(a)
|
The Parties agree that no action shall be taken by or on behalf of the Company, whether at a committee meeting, Board meeting or Shareholders’ meeting or otherwise, in respect of any of the matters which are Reserved Matters, unless such matter has been approved in accordance with this Clause 5
(Board, Management and Related Matters)
.
|
|
(b)
|
The Promoters shall not act in any matter that is prejudicial to the rights of the Investor.
|
6.
|
FINANCIAL ACCOUNTING, AUDIT & INSPECTION
|
6.1
|
An annual audit of the books of accounts, records and affairs of the Company shall be made by one of the Approved Auditors, immediately following the close of the Financial Year within a period of 120 (one hundred and twenty) days after the end of each Financial Year. The Company shall maintain a system of accounting adequate to identify its material Assets, liabilities and transactions and to permit the preparation of Financial Statements in accordance with IFRS.
|
6.2
|
The Company and the Promoters jointly and severally covenant that the Company shall deliver to the Investor the following information:
|
|
(a)
|
Unaudited annual Financial Statements including cash flow statements certified by the CEO, within 60 (sixty) days from the end of each Financial Year;
|
|
(b)
|
Unaudited quarterly Financial Statements certified by the CEO or chief financial officer of the Company within 45 (forty five) days after the end of each quarter;
|
|
(c)
|
Audited annual Financial Statements within 120 (one hundred and twenty) days after the end of each Financial Year;
|
|
(d)
|
Business Plan and headcount (in a form and manner acceptable to the Investor), no later than 45 (forty five) days prior to the commencement of the following Financial Year;
|
|
(e)
|
Certified true copies of the minutes of the meetings of the committees, Board as well as the Shareholders within 7 (seven) Business Days from the date of such meetings;
|
|
(f)
|
Management Information System ("
MIS
") (in a form and manner acceptable to the Investor) for every calendar month, within 15 (fifteen) days of the end of such month;
|
|
(g)
|
Half yearly capitalisation table (in a form and manner acceptable to the Investor) signed by the CEO or chief financial officer of the Company no later than 30 (thirty) days from the end of that period;
|
|
(h)
|
Copies of any specific reports filed by the Company with any Governmental Authority including copies of all filings (including Tax returns) made with any Governmental Authority as may be requested by the Investor;
|
|
(i)
|
A written notification setting out sufficient details of any litigation which may be made or threatened by or against the Company or any Promoters, or any circumstances which may give rise to the same. Such notification shall be provided forthwith to the Investor but in no event later than 7 (seven) Business Days from the date on which either the Company or any of the Promoters becomes aware of the same;
|
|
(j)
|
A written notification of any event that in the CEOs’ reasonable opinion is likely to have a material impact on the Business. Such notification shall be provided forthwith to the Investor but in no event later than 7 (seven) Business Days from the date on which either the Company or any of the Promoters becomes aware of the same;
|
|
(k)
|
Information relating to the termination of employment/ resignation of Key Employees within 15 (fifteen) Business Days of the occurrence of such event; and
|
|
(l)
|
All other information/documents/certificates as may be reasonably required by the Investor. Such information/documents/certificates shall be forthwith provided to the Investor but in no event later than 15 (fifteen) days from the date of receipt by the Company of the request for such information from the Investor.
|
6.3
|
The Investor and its designated officers, employees, accountants, attorneys, advisors and agents shall have the right, at any time and from time to time during normal business hours and upon written notice of at least 48 (forty eight) hours to (i) inspect the books, records and other documents of the Company; (ii) conduct an audit of the Business; and (iii) consult with the Promoters, auditors and attorneys of the Company. Such investigations and/or audit, however, shall not affect the representations and warranties made by the Company and the Promoters pursuant to this Agreement and/or the Transaction Documents.
|
6.4
|
A copy of all notices, circulars, minutes of meetings and such other information, which is available to the Board or the Shareholders, shall be provided to the Investor promptly at the same time as is provided to the Directors/other Shareholders.
|
7.
|
COVENANTS OF THE COMPANY
|
7.1
|
The Company shall comply with the following covenants:
|
|
(a)
|
All Contracts with any Affiliate or Related Party of the Company and the Promoters shall be at an arm’s length basis with full disclosures to the Board.
|
|
(b)
|
The Company shall use commercially reasonable efforts to avoid being a passive foreign investment company ("
PFIC
"). The Company shall make due inquiry with its U.S. tax advisors at least annually regarding the Company’s status as a PFIC and if the Company becomes a PFIC, or if there is a likelihood of the Company being a PFIC for any taxable year, the Company shall promptly notify the Investor of such status or risk, as the case may be. The Company shall, as soon as reasonably practicable following the end of each taxable year of the Company (but in no event later than 60 (sixty) days following the end of each taxable year) provide the Investor with an accurate and complete PFIC Annual Information Statement in the form set out in
Schedule 5
.
|
|
(c)
|
The Company shall make or refrain from making (and shall cause its subsidiaries to make or refrain from making) any U.S. tax election that the Investor requests the Company or its subsidiaries to make or refrain from making.
|
|
(d)
|
If the tax advisors of the Investor or its Partners determine that it is subject to U.S. information and reporting requirements that require the disclosure of information about the Company or Company transactions not readily available to the Investor or its Partners, the Company agrees to provide such information to the Investor and its Partners as may be necessary to allow the Investor and its Partners to fulfill their U.S. tax reporting obligations.
|
The term “
Partner
"
means each shareholder, partner, member or other equity holder of the Investor and any person holding an option to acquire a share,
partnership interest, membership interest or other equity interest in the Investor and any direct or indirect equity owner of such
shareholder, partner, member, other equity holder or option holder.
|
(e)
|
To the extent any consent, affirmative vote, or other action is required by the Company, its officers or Directors, or any of the Shareholders to implement the provisions of this Clause 7, such consent, vote or other action is hereby given or will be given at the applicable time and the Company, its officers and Directors, and each Shareholder shall fully cooperate in carrying out the provisions of this Clause 7 as required.
|
7.2
|
The Company and the Promoters agree and undertake to ensure that, unless otherwise approved by the Investor, the business and activities of the Company at all times are such that all investments in the Company are under the automatic route as per the exchange control laws of India, and do not require the prior approval of any Governmental Authority.
|
7.3
|
Intellectual Property
|
The Promoters hereby agree and
acknowledge that all intellectual property that is developed by, (a) the Promoters, (b) any Group Companies, (c) Immediate Family
Members; and (d) employees of the Company, AHA Holdings and the Group Companies, in relation to or in connection with the business
of the Company, shall be registered in the name of the Company and the Promoters shall ensure that all such intellectual property
shall be registered in the name of the Company.
The Company and the Promoters
shall provide the Investor with a certificate of compliance, on a quarterly basis, and within 15 (fifteen) days from the end of
the quarter, in relation to compliance with money laundering laws of India and the United States of America, in a form and substance
to be intimated by the Investor.
8.1
|
Exit by the Company
. The Company and the Promoters agree and covenant to endeavour to provide an exit to the Investor (at the option and with the approval of the Investor) by way of a QIPO or secondary sale), at any time after the Investor Exit Date, but prior to the Final Deadline Date, on terms and conditions set out in this Clause 8.
|
|
(a)
|
QIPO triggered by Metis
. The Company shall not file the draft red herring prospectus with respect to the QIPO at any time prior to the expiry of 3 (three) months from the Closing Date. Subject to the aforesaid, the Investor shall have the right to participate in a QIPO. It is clarified that the Investor shall not have the right to block any QIPO till the earlier of an exit being provided to Metis in accordance with the terms of the Metis SHA or the Investor Exit Date. Further, where the QIPO is effected by way of an offer for sale of all or any of the existing Securities, the Investor shall have the right (but not an obligation) to offer the Securities held by them, in priority to the Promoters and any other Shareholders of the Company but after Metis and the Qualified Investors have offered all or any of their Securities in such an offer for sale. The provisions of Clause 8.1(b)(vii) to Clause 8.1(b)(x) shall apply mutatis mutandis to a QIPO triggered by Metis.
|
|
(b)
|
QIPO by the Investor
. Any exit proposed to be provided to the Investor by way of a QIPO after the Investor Exit Date, shall be subject to the following conditions:
|
|
(i)
|
The Investor has provided its consent to the price and other terms of the QIPO. The price or price band shall not be disclosed in any offer document or disclosed to any third party or governmental authority unless the approval as mentioned above has been granted by the Investor;
|
|
(ii)
|
The QIPO shall be effected through the issue of new Securities; and/or at the option of the Investor, an offer for sale of all or any of the existing Securities;
|
|
(iii)
|
The Equity Shares representing at least 25% (twenty five percent) of the issued and outstanding share capital of the Company on a Fully Diluted Basis, or such higher number of Equity Shares as may be required by Applicable Law to be held by the public investors, are offered to the public investors in the QIPO;
|
|
(iv)
|
All advisors/consultants to the QIPO including the book running lead managers, underwriters, bankers, counsels and transfer agents shall be appointed only after obtaining the consent of the Investor. The appointment of such advisors/consultants shall be at the cost of the Company;
|
|
(v)
|
The QIPO will be underwritten at least to the extent required under Applicable Law;
|
|
(vi)
|
Subject to Applicable Law, the Investor shall have the right to offer the Securities held by it in a QIPO, in priority to all other Shareholders of the Company;
|
|
(vii)
|
The Company and the Promoters hereby agree and undertake that they shall, without any recourse to the Investor whatsoever, at their own cost (i) obtain all the relevant permits and approvals, statutory or otherwise that are necessary to provide for a QIPO, and (ii) complete the process of the QIPO, in accordance with the terms of this Agreement. All costs related to such listing shall be borne by the Company in accordance with Applicable Law;
|
|
(viii)
|
Upon the Investor offering the Securities held by them for sale at the time of QIPO, the Company and the Promoters hereby undertake that they shall comply with and complete all necessary formalities to ensure such listing;
|
|
(ix)
|
For the purposes of a QIPO and any filings to be made by the Company under any Applicable Law whether in relation to a QIPO or thereafter, the Investor shall not be deemed to be a sponsor and/or a promoter of the Company and shall not be required to offer or make available their Securities for the purpose of mandatory lock-in applicable to promoters under the SEBI regulations in respect of public offerings or otherwise.
|
|
(x)
|
The Investor shall not give any representation, warranty or indemnity whatsoever in connection with the QIPO, including to the QIPO investment bank(s), other than that the Securities, if any, offered for sale by the Investor in the QIPO, have clear title.
|
|
(xi)
|
Clear Market Obligation
: In the event the Company undertakes a QIPO, then
|
|
I.
|
No fresh issuance of Equity Securities shall be undertaken for a period of 18 (eighteen) months from the date of listing of the Equity Shares on a recognized stock exchange at a price which is lower than the price at which the QIPO was undertaken;
|
|
II.
|
The Promoters shall not sell any Equity Shares held by them for a period of 18 (eighteen) months from the date of listing of the Equity Shares on a recognized stock exchange at a price which is lower than the price at which the QIPO was undertaken, provided that, subject to Applicable Law, the Promoters shall not be restricted by this Clause to sell up to Permitted Promoter Sale Shares in the Company as on the date of listing of the Equity Shares on the recognized stock exchange.
|
The Investor shall be provided
customary registration rights in case of a public offering of its Securities in the USA.
|
(i)
|
In the event the Company intends to provide an exit by way of a secondary sale (as approved by the Investor), the Company shall deliver a notice to the Investor (the “
Secondary Sale Notice
"), setting out the following: (A) the identity of the proposed acquirer or transferee, as the case may be; (B) the salient terms of the transaction including the price and other terms on which the Securities are proposed to be sold; (C) the estimated time for completion of the secondary sale; and (D) any other material terms of the proposed secondary sale
.
Provided however that the consideration to be received by the Investor pursuant to such secondary sale shall not be less than the sum of the Investment Amount and an IRR of 20% (twenty percent).
|
|
(ii)
|
In the event that the Investor approves the secondary sale (the “
Approved Secondary Sale
"), the Investor shall indicate the number of Securities that the Investor proposes to offer in such Approved Secondary Sale and the Company and the Promoters shall take all steps necessary to complete the Approved Secondary Sale on the terms set out in the Secondary Sale Notice, within a period of 90 (ninety) days from the date on which the Investor consents to the Approved Secondary Sale, as extended by any additional time required to obtain any governmental approvals, and providing representations, warranties, covenants and indemnities customary to such transactions. All costs and expenses relating to the Approved Secondary Sale shall be borne entirely by the Company. The Investor shall not be required to provide any guarantees or indemnities, or be subject to any restrictive covenants pursuant to, or be required to bear any costs and expenses related to an Approved Secondary Sale. The Investor shall not be responsible for obtaining government approvals, permits or consents, or for providing any representations, warranties or covenants for effecting the Approved Secondary Sale.
|
|
(iii)
|
In the event that the Approved Secondary Sale has not been completed within 90 (ninety) days from the date of consent of the terms contained in the Secondary Sale Notice, the Company and the Promoters shall seek the written consent of the Investor to continue with the Approved Secondary Sale by sending a fresh Secondary Sale Notice.
|
|
(iv)
|
The Company and the Promoters shall, in good faith, consider all opportunities relating to a secondary sale that are brought to its notice by the Investor.
|
|
(e)
|
Buy-back of Shares/ Promoter Purchase
|
|
(i)
|
In the event the Company fails to provide a complete exit to the Investor on or prior to the Final Deadline Date, then without prejudice to the provisions of Clause 8.2, the Investor may require the Company by delivering a Buyback Notice, to buyback all or any of the SPAC Shares in one or more tranches, subject to Applicable Law; and/or require the Promoters by way of a Notice, to purchase all or any of the SPAC Shares, in each case, at a price not less than the sum of the Investment Amount and an IRR of 20% (twenty percent).
|
|
(ii)
|
The Company and the Promoters shall take all steps to expeditiously complete the buy-back within 30 (thirty) days from the issuance of the Buyback Notice, including obtaining required consents and government approvals, and providing representations, warranties, covenants and indemnities customary to such transactions. All costs and expenses relating to such exit shall be borne entirely by the Company. The Investor shall not be required to provide any guarantees or indemnities, or be subject to any restrictive covenants pursuant to, or be required to bear any costs and expenses related to the transactions contemplated in Clause 8.1(e)(i).
|
|
(a)
|
Drag Along Right of Metis
.
|
|
(i)
|
Metis shall have the right, at any time after the Metis Exit Date but prior to the Investor Exit Date, to require the Investor, by way of a written notice in this regard, to undertake a sale of any or all of their shareholding in the Company on the same terms and conditions as have been offered to Metis as part of such drag sale.
|
|
(ii)
|
It is hereby agreed between the Promoters and the Investor that the Investor shall be entitled to receive, as consideration for such drag sale, at least the Investor Drag Entitlement. For the purposes of this Clause, “
Investor Drag Entitlement
” shall mean the Investment Amount, along with 20% IRR. The Promoters hereby agree to undertake all such acts and deeds as may be necessary to ensure that the Investor receives its Investor Drag Entitlement pursuant to such sale, including but not limited to (a) an issue of additional Shares to the Investor at the lowest price permissible under Applicable Law; (b) Transfer of Shares held by the Promoter to the Investor at the lowest permissible price under Applicable Law; (c) reduction of the sale proceeds receivable by the Promoters.
|
|
(iii)
|
Without prejudice to the generality of the provisions of Clause 8.2(a)(ii), if the consideration proposed to be received by the Investor is less than the Investor Drag Entitlement, then Promoters shall open a cash escrow account which cash escrow account shall be used for receiving the consideration from the sale of the Promoter Shares ("
Promoter Drag Sale Consideration
"). The amount of deficit between Investor Drag Entitlement and the actual consideration received by the Investor pursuant to the sale of shares in accordance with Clause 8.2(a)(i) shall be transferred to the bank account of the Investor directly from the escrow account without any further consent of/ action on the part of the Promoters or Metis or any other Person. For the avoidance of doubt, it is hereby clarified that the sale of shares by the Investor pursuant this Clause 8.2(a)(i) and the receipt of the sale consideration into the account of the Investor from the transferee and/or the Promoters/ escrow account shall be simulatenous. For the avoidance of doubt, it is hereby clarified that nothing contained in Clauses 8.2(a)(ii) and 8.2(a)(iii) shall preclude the ability of Metis to exercise and give effect to its drag along right in accordance with Clause 8.2(a)(i).
|
|
(b)
|
Drag Along Right of the Investor.
In case (i) the Company and the Promoters fail to provide a complete exit to the Investor on or prior to the Final Deadline Date or (ii) in case the Promoters have committed fraud or embezzlement in relation to the affairs of the Company, then in case of (i), the Investor solely, and in case of (ii), the Investor, jointly with Metis, shall have the right but not the obligation to require the Promoters (including Group Companies or the Immediate Family Members) to and cause the Promoters to require BCCL, SRT and Mr. Samir Patel ("
Drag Shareholders
"), by way of a written notice in this regard ("
Sale Notice
") to undertake a sale of all or a part of their shareholding of the Company ("
Sale
"). The Promoters agree that, if so required under Applicable Law to consummate a Sale, within a period of 30 (thirty) days from receipt of the Sale Notice, a meeting of the Board and the Shareholders shall be convened and at all such meetings of the Shareholders and the Board, the Drag Shareholders shall, and the Promoters shall cause such Drag Shareholders to, consent to the Sale of the Company in a manner and on the terms and conditions determined by the Investor. Each Promoter agrees to employ best efforts to procure that each Shareholder agrees to vote for, consent to, and raise no objections against and take all actions necessary or advisable in order to effect such Sale of the Company and the distributions on such Sale.
|
|
(i)
|
In the event of a Sale as set out in this Clause 8.2(b)
(Drag Along Right of the Investor),
the Investor shall issue a Sale Notice to the Drag Shareholders stating the intention of the Investor to sell all or part of the Securities held by them and all or part of the Securities of the Drag Shareholders ("
Drag Along Shares
") to a bona fide third party purchaser ("
Drag-Along Purchaser
"). The Investor shall provide the Drag Shareholders with the terms and conditions on which the Drag-Along Purchaser is willing to purchase the Drag Along Shares and the Drag Shareholders will be bound to sell along with the Investor, on the same terms and conditions and price (subject to sub-clause (iii) below), such number of their Securities as may be required to enable the Investor to complete the transaction as agreed with the Drag-Along Purchaser. It is further clarified that all the other Shareholders would also be required to undertake a sale of all or a part of their shareholding of the Company, as may be required.
|
|
(ii)
|
The Investor shall deliver the share certificates in respect of the Drag Along Shares, to the Company within 15 (fifteen) days of receipt of the Sale Notice, along with the transfer forms duly filled in, and if the Shares have been dematerialized, the Drag Shareholders shall issue appropriate instructions to their depository participant to give effect to the Transfer in accordance with the Sale Notice.
|
|
(iii)
|
All costs and expenses incurred in relation to the Sale shall be borne entirely by the Company. The Company and all the Shareholders shall co-operate and take all necessary and desirable actions in connection with the consummation of the Sale including without limitation, timely execution and delivery of any agreements and instruments to complete the Sale, providing access and information as may be requested by any potential purchaser and co-operating in any due diligence conducted by the potential purchaser. The Company and the Promoters shall, and the Promoters shall cause the other Shareholders to, provide such customary representations and warranties, indemnities and covenants as may be required by any potential purchaser in connection with the completion of the Sale. The Investor shall not be required to provide any representations, warranties, guarantees or indemnities, or be subject to any restrictive covenants pursuant to or in relation to the Sale, except in relation to the title and transferability of the shares held by the Investor.
|
|
(iv)
|
If a Drag Shareholder fails, refuses or is otherwise unable to comply with its obligations in this Clause, the Company shall have the authority and be obliged to designate a Person to execute and perform the necessary Transfer on behalf of such Drag Shareholder. The Company may receive and hold the purchase consideration in trust for the Drag Shareholder and cause the Drag-Along Purchaser to be registered as the holder of the Drag Along Shares being sold by the relevant Drag Shareholder. The receipt by the Company of the purchase consideration shall be a good discharge to the Drag Along Purchaser. Further, the relevant Drag Shareholder shall also entitled to designate a Person who shall be deemed to be appointed as the attorney-in-fact of the Drag Shareholder, and shall take all necessary actions on their behalf to cause the consummation of such transaction.
|
|
(v)
|
Further, if any Drag Shareholder fails or refuses to Transfer any Drag Along Shares, after the Company has received the entire purchase money in respect of the Drag Along Shares in trust for the Drag Shareholder in accordance with sub-clause (iv) above, the Drag-Along Purchaser may serve a default notice on the relevant defaulting Drag Shareholder and the defaulting Drag Shareholder shall not be entitled to exercise any of its powers or rights in relation to the Drag Along Shares, including voting rights attached thereto or the right to participate in the profits of the Company.
|
|
(vi)
|
If the Company or the Promoters have, before the Final Deadline Date, (a) made an offer to the Investor for buyback or purchase of SPAC Shares pursuant to Clause 8.1(e), which fulfills the conditions set out in Clause 8.1(e); or (b) provided an offer for secondary sale to the Investor under Clause 8.1(d), which fulfills all the conditions set out in Clause 8.1(d) and the Investor has declined to accept such offer, then the obligation of the Company and the Promoters to provide an exit to the Investor under this Agreement shall fall away.
|
|
(c)
|
Exemption of Rights.
Notwithstanding anything contained in this Agreement, in case of the exercise of the exit rights pursuant to, and in accordance with Clause 8 (
Exit Rights
) (as applicable) including a secondary sale and Sale (each, an “
Exempted Exercise
"), the provisions of Clause 4 (
Restrictions on Transferability of Shares
) (as the case may be) shall, to the extent of Shares required to be Transferred by the Promoters and/or the Shareholders (other than the Investor), ceases to be applicable to such Exempted Exercise.
|
9.
|
LIQUIDATION PREFERENCE AND COMPUTATION OF FAIR MARKET VALUE
|
9.1
|
Liquidation Preference
|
|
(a)
|
Upon the occurrence of a Liquidation Event, the Investor shall be entitled to be paid an amount equal to the Investor Exit Price pari passu and simultaneously with the payment of liquidation preference amounts to Metis, Qualified Investors, BCCL and SRT, as set out in the Articles.
|
|
(b)
|
It is clarified that if a Liquidation Event is effected by way of sale of Shares, the Company and the Promoters shall ensure that the purchaser or transferee(s) distribute the consideration under such transaction to the Shareholders who are participating in such transaction, in proportion to the Shares that are being transferred by each such Shareholder as part of such transaction, in accordance with their respective entitlement as set out in this Clause 9 (
Liquidation Preference
) and further nothing in this Clause 9 (
Liquidation Preference
) and the definition of ‘Liquidation Event’ shall be deemed to entitle any Shareholder a right to participate in such transaction or to a tag along right in such transaction, unless such right is expressly provided for and exercised in accordance with this Agreement.
|
9.2
|
Computation of Fair Market Value
|
|
(a)
|
The Investor and the Promoters shall each appoint 1 (one) independent valuer to conduct a valuation of the Company in order to arrive at the fair market value of the Securities, within 30 (thirty) days from the appointment. Each independent valuer shall submit their report setting out the fair market value computed by such independent valuer to the Party that has appointed such independent valuer. The Investor and the Promoters shall, on a mutually agreed date and in any case, within 7 (seven) days from the end of the 30 (thirty) day period set out above, share the fair market value computed by the independent valuer appointed by it with the other Party. In the event that (i) the fair market value computed by one of the two independent valuers is acceptable to the Investor and the Promoters, then such acceptable fair market value shall be the “
Fair Market Value
"; or (ii) there is a variance of not more than 10% (ten percent) between the fair market value computed by the two independent valuers, then the average of the two fair market values shall be the “
Fair Market Value
".
|
|
(b)
|
In the event that there is a variance of more than 10% (ten percent) (computed on the lower valuation), in the fair market value of the securities of the Company, as computed by the two independent valuers, then either of the Investor or the Promoters may issue a notice to the other setting out in reasonable detail, the grounds on which such Party disagrees with the computation of the fair market value by the valuer appointed by the other Party ("
Variance Notice
").
|
|
(c)
|
Upon the issue of a Variance Notice, Mr. Shirpal Morakhia and an authorized representative of the Investor shall use all commercially reasonable efforts to resolve their disagreements as soon as practicable, and in any case within 15 (fifteen) days from the date of receipt of the Variance Notice by the other Party ("
Resolution Period
"). In the event Mr. Shripal Morakhia and the authorized representative of the Investor are unable to resolve the disagreements within the Resolution Period, then the Investor and Promoters shall take the steps set out in Clause 9.2(d) below.
|
|
(d)
|
Within 10 (ten) days from the end of the Resolution Period, the Investor and the Promoters shall appoint a mutually acceptable accounting firm selected from the following Persons (acting as an expert and not as a statutory auditor) ("
Accounting Firm
"):
|
|
(i)
|
Pricewaterhouse Coopers or their respective affiliates in India;
|
|
(ii)
|
Deloitte Touche Tohmatsu India Private Limited or their respect affiliates in India;
|
|
(iii)
|
KPMG or their respect affiliates in India;
|
|
(iv)
|
Ernst and Young or their respect affiliates in India;
|
|
(v)
|
Grant Thorton or their respect affiliates in India;
|
|
(ix)
|
JP Morgan Chase and Co.; and
|
|
(x)
|
Goldman Sachs Group Inc.
|
to compute the fair market value
of the Securities. The Accounting Firm shall compute the fair market value of the Securities within 30 (thirty) days from the date
of its appointment ("
Fair Market Value
"). The Fair Market Value arrived at by the Accounting Firm shall be finally
and conclusively binding on the Investor and the Promoters.
|
(e)
|
The fees and expenses of the independent valuers appointed by the Investor and the Promoters pursuant to Clause 9.2(a) and the fees and expenses of the Accounting Firm, shall be borne by the Company.
|
10.1
|
Non-compete, Non Solicitation
|
|
(a)
|
Each Promoter covenants and agrees that, so long as the Investor holds any Securities, the Promoter shall not, directly or indirectly, in any capacity, whether through partnership or as a shareholder, joint venture partner, collaborator, consultant or agent or in any other manner whatsoever, whether for profit or otherwise:
|
|
(i)
|
carry on or participate (whether as a partner, shareholder, principal, agent, director, employee or consultant) in any business and/or activity which is the same as or substantially similar to the Business other than through the Company including in the business of any Competitor;
|
|
(ii)
|
render any services to a Competitor or enter into employment with any of the Competitors;
|
|
(iii)
|
solicit or influence or attempt to influence any client, customer or other Person to direct its purchase of the products and/or services of the Company to itself or any Competitor; and/or
|
|
(iv)
|
solicit or attempt to influence any Person, employed or engaged by the Company (whether as an employee consultant, advisor or distributor or in any other manner) to terminate or otherwise cease such employment or engagement with the Company or become the employee of or directly or indirectly offer services in any form or manner to himself or any other Person including a Competitor.
|
|
(b)
|
Each Promoter covenants and agrees that, so long as the Investor holds any Securities, the Promoter shall not, directly or indirectly:
|
|
(i)
|
attempt in any manner to contact any client/customer/business associate or solicit from any client/customer/ business associate, except on behalf of the Company, business of the type carried on by the Company or to persuade any Person, which is a client/customer/ business associate of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company and/or its Subsidiaries or damage in any way the business relationship that the Company has with any customer/client/business associate, whether or not the relationship between the Company and such client/customer/ business associate was originally established in whole or in part through his efforts; or
|
|
(ii)
|
employ or attempt to employ or assist anyone else to employ or otherwise associate any person who is in the employment of the Company or associated with the Company, or was in the employment of the Company or otherwise associated with the Company at any time during the preceding 12 (twelve) months.
|
|
(i)
|
The Promoters agree and acknowledge that the restrictions contained in this Clause 10.1 are considered reasonable for the legitimate protection of the Business and goodwill of the Company. However, in the event that such restrictions shall be found to be void, but would be valid if some part thereof was deleted or the scope, period or area of application were reduced, the above restrictions shall apply with the deletion of such words or such reduction of scope, period or area of application as may be required to make the restrictions contained in this Clause 10.1 valid and effective. For the purposes of this Clause 10.1, the term ‘Company’ shall include its subsidiaries.
|
|
(ii)
|
Notwithstanding the limitation of this provision by any law for the time being in force, the Promoters undertake to, at all times, observe and be bound by the spirit of this Clause 10.1 provided, however, that on the revocation, removal or diminution of the law or provisions, as the case may be, by virtue of which the restrictions contained in this Clause 10.1 were limited as provided hereinabove, the original restrictions would stand renewed and be effective to their original extent, as if they had not been limited by the law or provisions revoked.
|
|
(iii)
|
The Promoters undertake to ensure that all business opportunities known to him or made known to him at any time, with respect to and/or connected with the Business are referred to the Company.
|
|
(iv)
|
The Promoters shall make full and true disclosure in writing to the Investor of any direct or indirect interest or benefit that they are likely to derive through or in connection with any contractual arrangements, dealings, transactions or affairs of the Company.
|
|
(d)
|
Mr. Shripal Morakhia hereby agrees to be appointed on the board of directors of the Investor on and from the Closing Date and shall continue on the board for a period of not less than 3 (three) years from the Closing Date.
|
11.
|
REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNIFICATION
|
11.1
|
The Promoters jointly and severally represent and warrant to the other Parties that:
|
|
(a)
|
This Agreement has been duly executed and delivered by each of them and constitutes a legal, valid and binding obligation of each of them enforceable against each of them in accordance with its terms;
|
|
(b)
|
The execution, delivery and performance of this Agreement and all instruments or agreements required hereunder by each of them does not contravene, violate or constitute a default of or require any consent under the provisions of any other agreement or instrument to which each of them is bound including any order, judgment, decree or injunction of any court of law; and
|
|
(c)
|
Each of them have the full power and authority to enter into this Agreement, to execute this Agreement and to perform its obligations and observe the terms and conditions hereof. No legal proceedings are pending or threatened against any of them before any court, tribunal or authority which do or may restrain any of the Promoters’ ability to perform or observe the terms and conditions of this Agreement or which do or may in any other manner question the validity, binding effect or enforceability of this Agreement.
|
11.2
|
The Company, Investor, MRG and Metis severally (solely with respect to itself) represent and warrant to the other Parties that:
|
|
(a)
|
This Agreement has been duly executed and delivered by its duly authorised representatives and constitutes a legal, valid and binding obligation on it, enforceable against it in accordance with its terms;
|
|
(b)
|
It is duly organised and validly existing under the laws of the country of its incorporation (where applicable);
|
|
(c)
|
The execution, delivery and performance of this Agreement and all instruments or agreements required hereunder by it does not contravene, violate or constitute a default of or require any consent under the provisions of any other agreement or instrument to which it is bound, including the constitutional documents thereof, or any order, judgment, decree or injunction of any court of law; and
|
|
(d)
|
It has the full power and authority to enter into this Agreement to execute this Agreement and to perform its obligations and observe the terms and conditions hereof.
|
11.3
|
The Company and the Promoters jointly and severally agree with, undertake to and covenant to the Investor as follows:
|
|
(a)
|
Business of the Company
|
The business of the Company shall
be restricted to the Business (as defined in this Agreement). The Promoters shall assist the Company in the procurement of necessary
permits, licenses, consents, approvals, financing and guarantees necessary for the Business and operations of the Company.
|
(b)
|
Borrowings by the Company
|
The financing requirements including
working capital requirements of the Company shall be met in the first instance by internal accruals and any external financing
shall be availed of only in accordance with the Business Plan or otherwise with the prior consent of the Investor. In the event
of any future borrowings or Indebtedness, the Investor shall not be required to provide any guarantees/collaterals or any other
security. The Investor shall not be required to pledge their Securities or provide any other support or a negative lien to any
third Person, including without limitation the lenders of the Company. The Promoters shall provide all support including without
limitation guarantees or any other security in respect of the borrowings and Indebtedness by the Company subject to the provisions
of this Agreement.
|
(c)
|
Related Party Transactions
|
The Company shall maintain and
update all statutory registers required to be maintained under Applicable Laws for disclosing Related Party transactions.
|
(d)
|
The Company covenants that it shall not, and shall not permit any of its directors, officers, managers, employees, independent contractors, representatives or agents to promise, authorise or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, in each case, in violation of the Foreign Corrupt Practices Act, 1977 ("
FCPA
") or any other applicable anti-bribery or anti-corruption law. The Company further undertakes that it shall cause to cease all of its activities, as well as remediate any actions taken by the Company or any of its directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA or any other applicable anti-bribery or anti-corruption law. The Company further undertakes that it shall maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with FCPA or any other applicable anti-bribery or anti-corruption law. Upon request by a Principal Investor, the Company agrees to provide responsive information and/or certifications concerning its compliance with applicable anti-corruption laws.
|
|
(e)
|
The Company is the sole entity through which the Business shall be carried out at all times and the Promoters undertake to carry on the Business only through the Company and no other entity.
|
12.
|
EFFECTIVE DATE AND TERMINATION
|
This Agreement shall come into
effect on the Closing Date and shall remain valid so long as the Investor holds any Securities unless terminated earlier in accordance
with Clause 12.2
(Termination)
.
|
(a)
|
Automatic termination
|
The Agreement shall automatically
terminate
vis-à-vis
a Shareholder, upon such Shareholder ceasing to hold any Securities.
|
(b)
|
Termination by the Investor
|
The Investor shall be entitled
to terminate this Agreement forthwith, by giving a notice in writing, upon the occurrence of one or more Events of Default.
12.3
|
Consequences on Event of Default
|
|
(a)
|
Upon the occurrence of an Event of Default, it is hereby agreed that the Board shall determine the defaulting Promoter and the impugned Promoter shall not have the right to participate in such determination by the Board. After the determination by the Board, the Investor shall, at its option and subject to Applicable Law, be entitled to exercise the Drag Along Right, jointly with Metis, under Clause 8.2 of this Agreement, and the provisions of Clause 8.2 shall
mutatis mutandis
apply to this Clause. Provided that the expiry of any time period or any other criteria for the drag along otherwise applicable under Clause 8.2 shall not apply in the case of an occurrence of an Event of Default.
|
|
(b)
|
All costs and expenses incurred in relation to the Sale or Transfer of Securities pursuant to this Clause 12.3 shall be borne entirely by the Company. The Company and the Promoters shall co-operate and take all necessary and desirable actions in connection with the consummation of such Sale or Transfer of Securities pursuant to this Clause 12.3 including without limitation, timely execution and delivery of any agreements and instruments to complete such Sale or Transfer of Securities pursuant to this Clause 12.3, providing access and information as may be requested by any potential purchaser and co-operating in any due diligence conducted by the potential purchaser. The Company and such defaulting Promoter(s) shall provide customary representations and warranties, indemnities and covenants as may be required by any potential purchaser in connection with the completion of the Sale or Transfer of Securities pursuant to this Clause 12.3. The Investor shall not be required to provide any representations, warranties, guarantees or indemnities, or be subject to any restrictive covenants pursuant to or in relation to the Sale or Transfer of Securities pursuant to this Clause 12.3, except in relation to the title and transferability of the Securities held by the Investor.
|
|
(c)
|
All rights of the Promoters under this Agreement and the Transaction Documents shall cease and the directorships of the Promoters shall stand vacated, immediately and automatically upon the occurrence of an Event of Default.
|
|
(d)
|
The termination of this Agreement shall be without prejudice to any claim or rights of action, including but not limited to the right to seek damages, previously accrued to any party hereto against the other party.
|
|
(e)
|
Except for provisions of this Agreement that expressly or by their nature survive termination, all rights and obligations of the Parties shall cease upon termination of this Agreement. The rights and obligations of the Parties under this Agreement pursuant to Clauses which by their nature survive the termination of this Agreement shall not be extinguished by termination of this Agreement.
|
13.
|
FALL AWAY OF RIGHTS AND OBLIGATIONS
|
13.1
|
The rights and obligations of the Investor under this Agreement:
|
(a)
|
shall cease and no longer be applicable, on the Investor (along with its Affiliates) having ceased to hold 10% (ten percent) of the equity share capital of the Company on a Fully Diluted Basis at the relevant point of time, other than with respect to the following limited rights:
|
|
(i)
|
Clause 5.2 (
Number of Directors
);
|
|
(ii)
|
Clause 4.3 (
Tag Along Right
);
|
|
(iii)
|
Clause 8.1(b) (vi) (
right of the Investor to offer its shares in case of a QIPO
);
|
|
(iv)
|
Clause 8.1(d) (
Secondary Sale
);
|
|
(v)
|
Clause 6 (
Financial Accounting, Audit & Inspection
);
|
|
(vi)
|
Clause 10.1 (
Non-compete, Non-solicitation
), which shall continue to apply for a period of 18 (eighteen) months from the date of listing of the Equity Shares; and
|
|
(vii)
|
Clause 7.3 (
Intellectual Property
).
|
(b)
|
shall cease and no longer be applicable, upon the successful completion of a QIPO (or such earlier time as may be required by SEBI or any Applicable Law for conducting the QIPO); provided however that, in the event of QIPO, the following Clauses shall continue to apply, subject to Applicable Law, and the Investor holding at least 5% (five percent) of the equity share capital of the Company on a Fully Diluted Basis, at the relevant point of time:
|
|
(i)
|
Clause 5.2 (
Number of Directors
);
|
|
(ii)
|
Clause 8.1(b)(xi) (
Clear Market Obligation
);
|
|
(iii)
|
Clause 6 (
Financial Accounting, Audit & Inspection
);
|
|
(iv)
|
Clause 10.1 (
Non-compete, Non-solicitation
), which shall continue to apply for a period of 18 (eighteen) months from the date of listing of the Equity Shares; and
|
|
(v)
|
Clause 7.3 (
Intellectual Property
).
|
13.2
|
Notwithstanding anything to the contrary set out in Clause 13.1 above, in the event that the shareholding of the Investor falls below any of the thresholds set out in Clause 13.1 above as a result of a partial exit provided by the Promoters or the Company under Clause 8, then all the rights of the Investor shall continue till such time as a complete exit is provided to the Investor by the Promoters or the Company.
|
13.3
|
Notwithstanding anything to the contrary set out in Clause 13.1 above, the obligation of the Investor under Clause 8.2(a) shall continue to apply till the Investor Exit Date. Metis shall not have the right to transfer the right under Clause 8.2(a) to any other party which is not its Affiliate.
|
14.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
14.1
|
The Memorandum and Articles of the Company shall be amended to reflect all the terms of the Share Subscription Agreement, this Agreement and other consequential amendments, in a manner satisfactory to the Investor.
|
14.2
|
The Company hereby undertakes to and the Promoters agree, undertake and confirm to cause the Company to, amend and alter the Memorandum and/or the Articles of Association from time to time to reflect any changes made to this Agreement from time to time.
|
15.1
|
Notices, demands or other communication required or permitted to be given or made under this Agreement shall be in writing and shall be given by email (provided that it is supplemented by a registered mail/internationally recognised courier service within 2 (two) days), addressed/sent to the intended recipient at its address number set forth below, or to such other address number as either Party may from time to time duly notify to the others:
|
If to
Metis:
Address:
|
IFS Court, Twenty Eight, Cybercity, Ebene, Mauritius
|
E-mail:
|
ifs@ifsmauritius.com
|
Tel:
|
+230 467 4000
|
If to
the Investor:
Address:
|
1345 Avenue of the Americas, 11
th
Floor, New York, NY 10105
|
E-mail:
|
sk@i-amcapital.com
|
Tel:
|
+1 347 748 8147
|
If to the
Company:
Address:
|
Mr. Vishwanath Kotian, 2
nd
Floor, Trade View Building, Oasis Complex, PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
|
E-mail:
|
vishwanath.kotian@smaaash.in
|
Tel:
|
9821772971
|
If to
Shripal Morakhia
Address:
|
2
nd
Floor, Trade View Building, Oasis Complex, PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
|
E-mail:
|
shripal@smaaash.in
|
Tel:
|
022-67400900
|
If to
AHA Holdings Pvt. Ltd.
Attention
|
Mr. Santosh Apraj
|
Address:
|
2
nd
Floor, Trade View Building, Oasis Complex, PB Marg, Lower Parel, Mumbai – 400013, Maharashtra
|
E-mail:
|
santoshapraj@ahaholdings.co.in
|
Tel:
|
022-67400900
|
If to
MRG
:
Address:
|
511, Commerce House, 140, N.M. Road, Fort, Mumbai 400 023, Maharashtra, India
|
E-mail:
|
mitesh.gowani@kamala.co.in
|
Tel:
|
+91 (22) 24982428
|
15.2
|
All notices shall be deemed to have been validly given on (i) the business date immediately after the date of transmission with confirmed answer back, if transmitted by facsimile transmission (subject to a confirming copy being sent by registered mail), or (ii) the expiry of 7 (seven) days after posting if sent by registered mail, or (iii) the business date of receipt, if sent by courier, or (iv) date of receipt, if sent by email.
|
15.3
|
Parties may, from time to time, change their address or representative for receipt of notices provided for in this Agreement by giving to the other not less than 10 (ten) days prior written notice in the same manner provided for in this Clause.
|
16.1
|
Each of the Parties shall and shall ensure to their best efforts that their respective employees, directors, successors, assigns, shareholders, officers, partners, and representatives and agents maintain utmost confidentiality, regarding the contents of this Agreement and information pertaining to the affairs of the Company at all times. The Parties shall be permitted to disclose all aspects of the financing to (a) the Company’s other investors, (b) the Parties’ investors, (c) Parties’ investment bankers, (d) Parties’ lenders, (e) Parties’ accountants, (f) Parties’ legal or financial advisors, (g) Parties’ and their Affiliates’ employees involved in the monitoring of such Parties’ investment in the Company and (h)
bona fide
prospective investor of the Company or of any Party, in each case only where such Persons are under appropriate non-disclosure obligations imposed by professional ethics, law or contracts and where they have been specifically informed about the confidential nature of the information disclosed to them. The Company shall ensure that all the Directors are bound by confidentiality and non-disclosure obligations as set forth in this Clause. Nothing contained herein shall affect the ability of the Parties to make disclosure to any Governmental Authority or any arbitration tribunal (including a sole arbitrator) in India or otherwise or to any other Person under the provisions of any Applicable Law, provided, however, that in all such circumstances, the disclosing Party shall give prior Notice to the other Parties before making the disclosure, indicating the nature of information that is proposed to be disclosed and in sufficient time to allow the other Parties as soon as possible to seek confidentiality of the information being disclosed, to the extent permitted by Applicable Law.
|
16.2
|
Further, none of the Parties shall make any announcements to the public or to any third party regarding the arrangements contemplated by this Agreement, other than in accordance with Clause 19.6 of this Agreement. Parties shall be permitted to make announcements regarding the arrangements contemplated by this Agreement if such announcements are required to be made pursuant to and in compliance with, Applicable Law or valid legal process subject to the disclosing Party using reasonable efforts thereby allowing other Parties to be able to review and provide comments prior to publication of such announcements.
|
This Agreement shall be governed
and interpreted by, and construed in accordance with the laws of India. Subject to the provisions of Clause 18
(Arbitration)
hereof, the courts of New Delhi shall have jurisdiction in respect of all matters relating to or arising out of this Agreement.
18.1
|
If any controversies, conflicts, disputes and/or differences ("
Dispute
") arises between the disputing Parties hereto during the subsistence of this Agreement or thereafter, the disputing Parties shall endeavour to settle such Dispute amicably and attempt to reach a resolution of the matter.
|
18.2
|
If amicable settlement is not arrived at as above, within 30 (thirty) days of the date of Dispute, the Dispute shall be resolved and settled exclusively and finally by arbitration and either disputing Party may issue a notice of Dispute ("
Notice of Dispute
") to the other disputing Parties.
|
18.3
|
Within 30 (thirty) days of the issue of a Notice of Dispute, the disputing Parties shall mutually agree on the appointment of a sole arbitrator. If such mutual agreement is not arrived at within the aforesaid 30 (thirty) days’ period, the disputing Parties shall refer the appointment of the sole arbitrator to Singapore International Arbitration Centre ("
SIAC
").
|
18.4
|
All pertinent evidence on the subject matter in Dispute shall be made available to the arbitrator appointed as above and each Party shall have the right to present both orally and in writing its arguments and views on the Dispute. The arbitrator shall also decide on the costs of the arbitration proceedings. The decision of the arbitrator shall be rendered in writing and shall be binding upon the Parties. The costs, charges and expenses of the arbitration shall be the discretion of the arbitrator. Such arbitration shall be governed by the SIAC arbitration rules (in force at such time when the Dispute is referred to arbitration), which rules are deemed to be incorporated by reference in this Clause. The seat and venue of arbitration shall be Singapore and the arbitration proceedings shall be conducted in English language.
|
18.5
|
The award rendered by the arbitrator shall be final and binding on all Parties hereto and judgment thereon may be entered in any court of competent jurisdiction.
|
18.6
|
Parties hereto agree that their consent for resolution of Disputes through arbitration shall not preclude or restrain either of them from seeking suitable injunctive relief in appropriate circumstances from the competent courts.
|
The Company shall bear all stamp
duty payable in connection with this Agreement. Further, all costs related to the transactions contemplated under the Transaction
Documents, unless specifically stated in this Agreement, shall be borne in accordance with the provisions of the Share Subscription
Agreement.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors,
permitted assigns, heirs, executors and administrators of the Parties hereto whose rights or obligations hereunder are affected
by such amendments.
Any or all provisions of this
Agreement may be amended, restated or waived (either generally or in a particular instance and either retroactively or prospectively)
with the written consent of the Parties. Any such amendment, waiver or restatement shall be binding on all Parties to this Agreement.
This Agreement, supersedes all
prior discussions and agreements (whether oral or written, including all correspondence) if any, between the Parties with respect
to the right and obligations of the Investor as a Shareholder in the Company and this Agreement (together with the Schedules and
any amendments or modifications thereof) together with the other Transaction Documents contain the sole and entire agreement between
the Parties hereto with respect to the subject matter hereof.
19.5
|
Invalidity and Severability
|
Any provision of this Agreement,
which is invalid or unenforceable, shall be ineffective to the extent of such invalidity or unenforceability, without affecting
in any way the remaining provisions hereof. The illegality, unenforceability or invalidity of any provision of this Agreement shall
not affect the enforceability, legality or validity of the remaining provisions of this Agreement which shall remain in full force
and effect to the maximum extent permitted by law. Any invalid or unenforceable provision of this Agreement shall be replaced with
a provision, which is valid and enforceable and most nearly reflects the original intent of the unenforceable provision.
It is agreed between the Parties
hereto that no publicity or dissemination of information in any manner with regard to the transactions contemplated herein shall
be made without the prior written consent of the Investor and the Promoters.
19.7
|
Conflict with the Articles of Association
|
|
(a)
|
All the provisions of this Agreement, to the extent relevant, shall be incorporated into the Articles. If and to the extent that there are inconsistencies between the provisions of this Agreement, Metis SHA and those of the Articles, the Articles will prevail.
|
|
(b)
|
Nothwithstanding anything contained in this Agreement or the Share Subscription Agreement or any other document but subject to Clause 19.7(a):
|
|
(i)
|
the rights and obligation of the parties under the Metis SHA shall survive unless terminated in accordance with the terms thereof; and
|
|
(ii)
|
in case of any inconsistency in the rights of Metis as contained in this Agreement and those contained in the Metis SHA, the rights of Metis under the Metis SHA shall prevail except as specifically provided below and unless expressly provided elsewhere in this Agreement. Without prejudice to the generality of the above, (A) Clause 8.1(b)(xi) (
Clear Market Obligation
) and Clause 4.3 (
Tag Along
) of this Agreement shall prevail over Clause 9.3 and Clause 8.4.2 of the Metis SHA respectively in case of a conflict; and (B) the rights of Metis under Clause 8.1(a) of this Agreement, Clause 9.2.2 of the Metis SHA and Clause 9.7 of the Metis SHA shall survive even if Metis ceases to hold the minimum shareholding prescribed under Clause 22 of the Metis SHA; and (C) Clause 19.15 (
Amendment to the Metis SHA
) shall prevail over any other conflicting provision of the Metis SHA.
|
19.8
|
Adjustment for Share Splits etc.
|
Wherever in this Agreement there
is a reference to a specific number of the Subscription Shares or any other shares/Securities, then, upon the occurrence of any
subdivision, combination, etc. of the Securities, the specific number of Securities so referenced in this Agreement shall automatically
be proportionally adjusted to reflect the effect on the outstanding Securities of such class or series of Securities by such subdivision,
combination, etc. All Securities held or acquired by the relevant Affiliated entities or Persons shall be aggregated together for
the purpose of determining the availability of any rights of the Investor under this Agreement.
Each
Party shall from time to time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such
further acts, deeds, conveyances, consents, documents and assurances without further consideration, which may be required to effect
the transactions contemplated by this Agreement.
The
Parties shall use their best efforts to cause the transactions contemplated by this Agreement to be consummated, including without
limitation, obtaining, making and causing to become effective all approvals of Governmental Authorities and other Persons as may
be necessary or reasonably requested by the Investor in order to achieve the objectives of this Agreement.
|
(a)
|
The Parties acknowledge and agree that the Investor would suffer irreparable damages in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached, so that the Investor shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in addition to any other remedy to which the Investor may be entitled, at law or in equity.
|
|
(b)
|
All remedies of the Principal Investors under this Agreement whether provided herein or conferred by statute, civil law, common law, custom, trade, or usage are cumulative and not alternative and may be enforced successively or concurrently.
|
This Agreement may be executed
in any number of counterparts, all of which, taken together, shall constitute one and the same instrument, and any Party (including
any duly authorised representative of a Party) may enter into this Agreement by executing a counterpart. The delivery of signed
counterparts by facsimile transmission or electronic mail in “portable document format” (".pdf”) shall be
as effective as signing and delivering the document in person.
19.13
|
Independent Contractors
|
The Parties are independent contractors.
None of the Parties shall have any right, power or authority to enter into any agreement for or on behalf of, or incur any obligation
or liability of, or to otherwise bind, the other Parties except as specifically provided by this Agreement. Nothing in this Agreement
shall be interpreted or construed to create an association or partnership between the Parties, deem them to be persons acting in
concert or to impose any liability attributable to such relationship upon any of the Parties nor, unless expressly provided otherwise,
to constitute any Party as the agent of any of the other Parties for any purpose.
The persons executing this Agreement
on behalf of the respective Parties represent and covenant that they have the authority to sign and execute this document on behalf
of the Parties for whom they are signing.
19.15
|
Amendment to the Metis SHA
|
It is hereby agreed between the
Parties and the Promoters and Metis specifically undertake not to amend the Metis SHA without the prior written consent of the
Investor. Any such amendment to the Metis SHA without the prior written consent of the Investor shall be void ab initio. In case
of any conflict between this Clause 19.15 of this Agreement and any provision in the Metis SHA, this Clause 19.15 shall prevail.
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR.SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
SMAAASH ENTERTAINMENT PRIVATE LIMITED
/s/ Vishwanath Kohan
|
|
Name: Vishwanath Kohan
|
|
Designation: CFO
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
AHA HOLDINGS PRIVATE LIMITED
/s/ SHRIPAL MORAKHIA
|
|
Name: SHRIPAL MORAKHIA
|
|
Designation: Director
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered by
MR.
SHRIPAL MORAKHIA
/s/ SHRIPAL MORAKHIA
|
|
Name: SHRIPAL MORAKHIA
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
I-AM CAPITAL ACQUISITION COMPANY
/s/ F. Jacob Cherian
|
|
Name: F. Jacob Cherian
|
|
Designation: CEO
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
I-AM CAPITAL ACQUISITION COMPANY
/s/ Suhel Kanuga
|
|
Name: Suhel Kanuga
|
|
Designation: CFO
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered for an on behalf of
FW METIS LIMITED
/s/ Thiromagen Vaitilingon
|
|
Name: Thiromagen Vaitilingon
|
|
Designation: Director
|
|
IN WITNESS WHEREOF
, the Parties
have entered into and executed this Shareholders’ Agreement as of the day and year first above written.
THIS SIGNATURE PAGE FORMS AN INTEGRAL
PART OF THE SHAREHOLDERS’ AGREEMENT EXECUTED AMONG (1) I-AM CAPITAL ACQUISITION COMPANY; (2) FW METIS LIMITED; (3) MITESH
R. GOWANI; (4) MR. SHRIPAL MORAKHIA; (5) AHA HOLDINGS PRIVATE LIMITED; AND (6) SMAAASH ENTERTAINMENT PRIVATE LIMITED
Signed and delivered by
MR.
MITESH R. GOWANI
/s/ MITESH R. GOWANI
|
|
Name: MITESH R. GOWANI
|
|
ANNEX E
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
I-AM CAPITAL ACQUISITION COMPANY
[●], 2018
I-AM Capital Acquisition
Company, a corporation organized and existing under the laws of the State of Delaware (the “
Corporation
"),
DOES HEREBY CERTIFY AS FOLLOWS:
1. The
name of the Corporation is “
I-AM Capital Acquisition Company
". The original certificate of incorporation
of the Corporation was filed with the Secretary of State of the State of Delaware on April 17, 2017 (the “
Original
Certificate
"). An amended and restated certificate of incorporation was filed with the Secretary of State of
the State of Delaware on May 31, 2017 (the “
Amended and Restated Certificate
").
2. A
second amended and restated certificate of incorporation which restated and amended the provisions of the Amended and Restated
Certificate was filed with the Secretary of State of the State of Delaware on August 16, 2017 (the “
Second Amended
and Restated Certificate
").
3. This
Third Amended and Restated Certificate of Incorporation (the “
Third Amended and Restated Certificate
"),
which restates and amends the provisions of the Second Amended and Restated Certificate, was duly adopted in accordance with Sections
228, 242 and 245 of the General Corporation Law of the State of Delaware, as amended from time to time (the “
DGCL
").
4. This
Third Amended and Restated Certificate shall become effective on the date of filing with Secretary of State of Delaware.
5. The
text of the Second Amended and Restated Certificate is hereby restated and amended in its entirety to read as follows:
ARTICLE I
NAME
The name of the Corporation is Smaaash Entertainment
Inc.
ARTICLE II
PURPOSE
The purpose of the
Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE III
REGISTERED AGENT
The address of the
Corporation’s registered office in the State of Delaware is 1013 Center Road, Suite 403-B, Wilmington, DE 19805 in the County
of New Castle. The name of the Corporation’s registered agent at such address is Vcorp Services, LLC.
ARTICLE IV
CAPITALIZATION
Section 4.1
Authorized
Capital Stock
. The total number of shares of all classes of capital stock which the Corporation is authorized to issue
is 21,000,000 shares, consisting of (a) 20,000,000 shares of common stock, par value $0.0001 per share (the “
Common
Stock
") and (b) 1,000,000 shares of preferred stock, par value $0.0001 per share (the “
Preferred
Stock
").
Section 4.2
Preferred
Stock
. The Board of Directors of the Corporation (the “
Board
") is hereby expressly authorized
to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred Stock and to establish from time
to time the number of shares to be included in each such series and to fix the voting rights, if any, designations, powers, preferences
and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations
and restrictions thereof, as shall be stated in the resolution or resolutions adopted by the Board providing for the issuance of
such series and included in a certificate of designation (a “
Preferred Stock Designation
") filed pursuant
to the DGCL, and the Board is hereby expressly vested with the authority to the full extent provided by law, now or hereafter,
to adopt any such resolution or resolutions.
Section 4.3
Common
Stock.
(a)
Voting.
(i) Except
as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), the holders
of the shares of Common Stock shall exclusively possess all voting power with respect to the Corporation.
(ii) Except
as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), the holders
of shares of Common Stok shall be entitled to one vote for each such share on each matter properly submitted to the stockholders
of the Corporation on which the holders of the shares of Common Stock are entitled to vote.
(iii) Except
as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), at any
annual or special meeting of the stockholders of the Corporation, the holders of the shares of Common Stock shall have the exclusive
right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders of the
Corporation. Notwithstanding the foregoing, except as otherwise required by law or this Third Amended and Restated Certificate
(including any Preferred Stock Designation), the holders of the shares of Common Stock shall not be entitled to vote on any amendment
to this Third Amended and Restated Certificate (including any amendment to any Preferred Stock Designation) that relates solely
to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are
entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Third
Amended and Restated Certificate (including any Preferred Stock Designation) or the DGCL.
(b)
Dividends.
Subject to applicable law, the rights, if any, of the holders of any outstanding series of the Preferred Stock, the holders of
the shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital
stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Corporation
legally available therefor and shall share equally on a per share basis in such dividends and distributions.
(c)
Liquidation,
Dissolution or Winding Up of the Corporation.
Subject to applicable law, the rights, if any, of the holders of any outstanding
series of the Preferred Stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation,
after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of the shares of Common
Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders,
ratably in proportion to the number of shares of Common Stock held by them.
Section 4.4
Rights
and Options
. The Corporation has the authority to create and issue rights, warrants and options entitling the holders
thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and
options to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price,
duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration
to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.
ARTICLE V
BOARD OF DIRECTORS
Section 5.1
Board
Powers
. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board.
In addition to the powers and authority expressly conferred upon the Board by statute, this Third Amended and Restated Certificate
or the Bylaws of the Corporation ("
Bylaws
"), the Board is hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the
DGCL, this Third Amended and Restated Certificate, and any Bylaws adopted by the stockholders of the Corporation; provided, however,
that no Bylaws hereafter adopted by the stockholders of the Corporation shall invalidate any prior act of the Board that would
have been valid if such Bylaws had not been adopted.
Section 5.2
Number,
Election and Term
.
(a) The
number of directors of the Corporation, other than those who may be elected by the holders of one or more series of the Preferred
Stock voting separately by class or series, shall be fixed from time to time exclusively by the Board pursuant to a resolution
adopted by a majority of the Board.
(b) Subject
to
Section 5.5
hereof, the Board shall be divided into two classes, as nearly equal in number as possible
and designated Class I and Class II. The Board is authorized to assign members of the Board already in office to
Class I or Class II. The term of the current Class I Directors shall expire at the second annual meeting of
the stockholders of the Corporation following the effectiveness of this Third Amended and Restated Certificate and the term of
the current Class II Directors shall expire at the first annual meeting of the stockholders of the Corporation following the
effectiveness of Third Amended and Restated Certificate. At each succeeding annual meeting of the stockholders of the Corporation,
beginning with the first annual meeting of the stockholders of the Corporation following the effectiveness of this Third Amended
and Restated Certificate, each of the successors elected to replace the class of directors whose term expires at that annual meeting
shall be elected for a two-year term or until the election and qualification of their respective successors in office, subject
to their earlier death, resignation or removal. Subject to
Section 5.5
hereof, if the number of directors
that constitutes the Board is changed, any increase or decrease shall be apportioned by the Board among the classes so as to maintain
the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors constituting
the Board shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock,
voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election
of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy
at the meeting and entitled to vote thereon. The Board is hereby expressly authorized, by resolution or resolutions thereof, to
assign members of the Board already in office to the aforesaid classes at the time this Third Amended and Restated Certificate
(and therefore such classification) becomes effective in accordance with the DGCL.
(c) Subject
to
Section 5.5
hereof, a director shall hold office until the annual meeting for the year in which his or
her term expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier
death, resignation, retirement, disqualification or removal.
(d) Unless
and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot. The holders
of shares of Common Stock shall not have cumulative voting rights.
Section 5.3
Newly
Created Directorships and Vacancies
. Subject to
Section 5.5
hereof, newly created directorships
resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement,
disqualification, removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then
in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall
hold office for the remainder of the full term of the class of directors to which the new directorship was added or in which the
vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier
death, resignation, retirement, disqualification or removal.
Section 5.4
Removal
.
Subject to
Section 5.5
hereof, any or all of the directors may be removed from office at any time, but only
for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
Section 5.5
Preferred
Stock - Directors
. Notwithstanding any other provision of this
Article V
, and except as otherwise required
by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series,
to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such
directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Third Amended and Restated
Certificate (including any Preferred Stock Designation) and such directors shall not be included in any of the classes created
pursuant to this
Article V
unless expressly provided by such terms.
ARTICLE VI
BYLAWS
In furtherance and
not in limitation of the powers conferred upon it by law, the Board shall have the power and is expressly authorized to adopt,
amend, alter or repeal the Bylaws by the affirmative vote of a majority of the total number of directors present at a regular or
special meeting of the Board at which there is a quorum or by unanimous written consent. The Bylaws also may be adopted, amended,
altered or repealed by the stockholders of the Corporation; provided, however, that in addition to any vote of the holders of any
class or series of capital stock of the Corporation required by law or by this Third Amended and Restated Certificate (including
any Preferred Stock Designation), the affirmative vote of the holders of at least a majority of the voting power of all then outstanding
shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single
class, shall be required for the stockholders of the Corporation to adopt, amend, alter or repeal the Bylaws; and provided further,
however, that no Bylaws hereafter adopted by the stockholders of the Corporation shall invalidate any prior act of the Board that
would have been valid if such Bylaws had not been adopted.
ARTICLE VII
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT
Section 7.1
Special
Meetings
. Subject to the rights, if any, of the holders of any outstanding series of the Preferred Stock, and to the
requirements of applicable law, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board,
Chief Executive Officer of the Corporation, or the Board pursuant to a resolution adopted by a majority of the Board, and the ability
of the stockholders of the Corporation to call a special meeting is hereby specifically denied. Except as provided in the
foregoing sentence, special meetings of stockholders of the Corporation may not be called by another person or persons.
Section 7.2
Advance
Notice
. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders
before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
Section 7.3
Action
by Written Consent
. Except as may be otherwise provided for or fixed pursuant to this Third Amended and Restated Certificate
(including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of Preferred Stock,
any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or
special meeting of such stockholders and may not be effected by written consent of the stockholders of the Corporation.
ARTICLE VIII
LIMITED LIABILITY; INDEMNIFICATION
Section 8.1
Limitation
of Director Liability
. A director of the Corporation shall not be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the DGCL as the same exists or may hereafter be amended unless a director violated its duty of loyalty
to the Corporation or its stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments
of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from its actions as a director.
Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director
of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.
Section 8.2
Indemnification
and Advancement of Expenses
.
(a)
To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify
and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “
proceeding
")
by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee
benefit plan (an “
indemnitee
"), whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or
agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines,
ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such
proceeding. The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’
fees) incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition;
provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so
advanced if it shall ultimately be determined that the indemnitee is not entitled to be indemnified under this
Section 8.2
or
otherwise. The rights to indemnification and advancement of expenses conferred by this
Section 8.2
shall
be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions
of this
Section 8.2(a)
, except for proceedings to enforce rights to indemnification and advancement of expenses,
the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated
by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.
(b)
The rights to indemnification and advancement of expenses conferred on any indemnitee by this
Section 8.2
shall
not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Third Amended and Restated
Certificate, the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
(c)
Any repeal or amendment of this
Section 8.2
by the stockholders of the Corporation or by changes in law,
or the adoption of any other provision of this Third Amended and Restated Certificate inconsistent with this
Section 8.2
,
shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the
Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any
way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent
provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising
out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
(d)
This
Section 8.2
shall not limit the right of the Corporation, to the extent and in the manner authorized
or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.
ARTICLE IX
AMENDMENT OF THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Corporation reserves
the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Third Amended and
Restated Certificate (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware
at the time in force that may be added or inserted, in the manner now or hereafter prescribed by this Third Amended and Restated
Certificate and the DGCL; and, except as set forth in
Article VIII
, all rights, preferences and privileges of
whatever nature herein conferred upon stockholders, directors or any other persons by and pursuant to this Third Amended and Restated
Certificate in its present form or as hereafter amended are granted subject to the right reserved in this
Article IX
.
ARTICLE X
EXCLUSIVE
FORUM FOR CERTAIN LAWSUITS
Section 10.1
Forum.
Unless
the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall
be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding
brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim
against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Third Amended
and Restated Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or
employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the
Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and
the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery
does not have subject matter jurisdiction.
Section 10.2
Consent
to Jurisdiction
. If any action the subject matter of which is within the scope of Section 10.1 immediately above is filed in
a court other than a court located within the State of Delaware (a “
Foreign Action
") in the name of any
stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts
located within the State of Delaware in connection with any action brought in any such court to enforce Section 10.1 immediately
above (an “
FSC Enforcement Action
") and (ii) having service of process made upon such stockholder in any
such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
ARTICLE XI
SEVERABILITY
If any provision or
provisions (or any part thereof) of this Third Amended and Restated Certificate shall be held to be invalid, illegal or unenforceable
as applied to any person, entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, (i) the
validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Third
Amended and Restated Certificate (including, without limitation, each portion of any paragraph of this Third Amended and Restated
Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal
or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be
affected or impaired thereby, and (ii) the provisions of this Third Amended and Restated Certificate (including, without limitation,
each portion of any paragraph of this Third Amended and Restated Certificate containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and
agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent
permitted by law.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF,
I-AM Capital Acquisition Company has caused this Third Amended and Restated Certificate to be duly executed and acknowledged in
its name and on its behalf by an authorized officer as of the date first set forth above.
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I-AM CAPITAL ACQUISITION COMPANY
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By:
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Name:
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F. Jacob Cherian
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Title:
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Chief Executive Officer
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[Signature Page to Third
Amended and Restated Certificate of Incorporation]
ANNEX F
I-AM CAPITAL ACQUISITION COMPANY
2018 EQUITY INCENTIVE PLAN
1.
Purpose
.
The purpose of the I-AM Capital Acquisition Company 2018 Equity Incentive Plan is to provide a means through which the Company
and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, managers, employees,
consultants and advisors of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid
incentive compensation, which may (but need not) be measured by reference to the value of Common Shares, thereby strengthening
their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s
stockholders.
2.
Definitions
.
The following definitions shall be applicable throughout this Plan:
(a)
"
Affiliate
” means (i) any person or entity that directly or indirectly controls, is controlled by or is
under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the Company
has a significant interest as determined by the Committee in its discretion. The term “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity,
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such
person or entity, whether through the ownership of voting or other securities, by contract or otherwise.
(b)
"
Award
” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus Award or Performance Compensation Award granted under
this Plan.
(c)
"
Award Agreement
” means an agreement made and delivered in accordance with Section 15(a) of this Plan
evidencing the grant of an Award hereunder.
(d) "
Board
”
means the Board of Directors of the Company.
(e)
"
Business Day
"
means any day other than a Saturday, a Sunday or a day on which banking institutions in
New York City are authorized or obligated by federal law or executive order to be closed.
(f)
"
Cause
" means, in the case of a particular Award, unless the applicable Award Agreement states otherwise,
(i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined
in any employment or consulting agreement or similar document or policy between the Participant and the Company or an Affiliate
in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement, document or policy
(or the absence of any definition of “Cause” contained therein), (A) a continuing material breach or material default
(including, without limitation, any material dereliction of duty) by Participant of any agreement between the Participant and the
Company, except for any such breach or default which is caused by the physical disability of the Participant (as determined by
a neutral physician), or a continuing failure by the Participant to follow the direction of a duly authorized representative of
the Company; (B) gross negligence, willful misfeasance or breach of fiduciary duty to the Company or Affiliate of the Company by
the Participant; (C) the commission by the Participant of an act of fraud, embezzlement or any felony or other crime of dishonesty
in connection with the Participant’s duties to the Company or Affiliate of the Company; or (D) conviction of the Participant
of a felony or any other crime that would materially and adversely affect: (i) the business reputation of the Company or Affiliate
of the Company or (ii) the performance of the Participant’s duties to the Company or an Affiliate of the Company. Any determination
of whether Cause exists shall be made by the Committee in its sole discretion.
(g)
"
Change in Control
” shall, in the case of a particular Award, unless the applicable Award Agreement states
otherwise or contains a different definition of “Change in Control,” be deemed to occur upon:
(i) A
tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting
securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving
or resulting corporation or entity shall be owned in the aggregate by (A) the stockholders of the Company (as of the time immediately
prior to the commencement of such offer), or (B) any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;
(ii) The
Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than
50% of the outstanding voting securities of the surviving or resulting corporation or entity shall be owned in the aggregate by
(A) the stockholders of the Company (as of the time immediately prior to such transaction); provided, that a merger or consolidation
of the Company with another company which is controlled by persons owning more than 50% of the outstanding voting securities of
the Company shall constitute a Change in Control unless the Committee, in its discretion, determine otherwise, or (B) any employee
benefit plan of the Company or its Subsidiaries, and their Affiliates;
(iii) The
Company shall sell substantially all of its assets to another entity that is not wholly owned by the Company, unless as a result
of such sale more than 50% of such assets shall be owned in the aggregate by (A) the stockholders of the Company (as of the time
immediately prior to such transaction), or (B) any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;
(iv) A
Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving
or resulting corporation or entity shall be owned in the aggregate by (A) the stockholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), or (B) any employee benefit plan of the Company or its Subsidiaries,
and their Affiliates; or
(v) The
individuals who, as of the date hereof, constitute the members of the Board (the “Current Board Members”) cease, by
reason of a financing, merger, combination, acquisition, takeover or other non-ordinary course transaction affecting the Company,
to constitute at least a majority of the members of the Board unless such change is approved by the Current Board Members.
For purposes of this Section 2(g), ownership
of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i)
(as in effect on the date hereof) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition,
for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter
temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.
(h)
"
Code
” means the Internal Revenue Code of 1986, as amended, and any successor thereto. References in this
Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance issued by any governmental
authority under such section, and any amendments or successor provisions to such section, regulations or guidance.
(i)
"
Committee
” means a committee of at least two people as the Board may appoint to administer this Plan
or, if no such committee has been appointed by the Board, the Board. Unless altered by an action of the Board, the Committee shall
be the Compensation Committee of the Board.
(j)
"
Common Shares
” means the common stock, par value $0.0001 per share, of the Company (and any stock or
other securities into which such common shares may be converted or into which they may be exchanged).
(k)
"
Company
” means I-AM Capital Acquisition Company, a Delaware corporation, together with its successors
and assigns.
(l)
"
Current Board Members
” has the meaning given such term in the definition of “Change in Control.”
(m)
"
Date of Grant
” means the date on which the granting of an Award is authorized, or such other date as
may be specified in such authorization.
(n)
"
Disability
” means a “permanent and total” disability incurred by a Participant while in the
employ or service of the Company or an Affiliate. For this purpose, a permanent and total disability shall mean that the Participant
is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. The
determination of whether a Participant has incurred a permanent and total disability shall be made by a physician designated by
the Committee, whose determination shall be final and binding.
(o)
"
Effective Date
” means the date as of which this Plan is adopted by the Board, subject to Section 3 of
this Plan.
(p)
"
Eligible Director
” means a person who is a “non-employee director” within the meaning of
Rule 16b-3 under the Exchange Act.
(q)
"
Eligible Person
” means any (i) individual employed by the Company or an Affiliate;
provided
,
however
, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to
the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company or an Affiliate; or (iii) consultant or advisor to the Company or an Affiliate, provided
that if the Securities Act applies such persons must be eligible to be offered securities registrable on Form S-8 under the Securities
Act.
(r)
"
Exchange Act
” has the meaning given such term in the definition of “Change in Control,” and
any reference in this Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules,
regulations or other interpretative guidance issued by any governmental authority under such section or rule, and any amendments
or successor provisions to such section, rules, regulations or guidance.
(s)
"
Exercise Price
” has the meaning given such term in Section 7(b) of this Plan.
(t)
"
Fair Market Value
", unless otherwise provided by the Committee in accordance with all applicable laws,
rules regulations and standards, means, on a given date, (i) if the Common Shares are listed on a national securities exchange,
the closing sales price on the principal exchange of the Common Shares on such date or, in the absence of reported sales on such
date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Common Shares are
not listed on a national securities exchange, the mean between the bid and offered prices as quoted by any nationally recognized
interdealer quotation system for such date, provided that if the Common Shares are not quoted on an interdealer quotation system
or it is determined that the fair market value is not properly reflected by such quotations, Fair Market Value will be determined
by such other method as the Committee determines in good faith to be reasonable and in compliance with Code Section 409A, if applicable.
(u)
"
Immediate Family Members
” shall have the meaning set forth in Section 15(b) of this Plan.
(v)
"
Incentive Stock Option
” means an Option that is designated by the Committee as an incentive stock option
as described in Section 422 of the Code and otherwise meets the requirements set forth in this Plan.
(w)
"
Indemnifiable Person
” shall have the meaning set forth in Section 4(e) of this Plan.
(x)
"
Negative Discretion
” shall mean the discretion authorized by this Plan to be applied by the Committee
to eliminate or reduce the size of a Performance Compensation Award consistent with Section 162(m) of the Code.
(y)
"
Nonqualified Stock Option
” means an Option that is not designated by the Committee as an Incentive Stock
Option.
(z)
"
Option
” means an Award granted under Section 7 of this Plan.
(aa)
"
Option Period
” has the meaning given such term in Section 7(c) of this Plan.
(bb)
"
Participant
” means an Eligible Person who has been selected by the Committee to participate in this Plan
and to receive an Award pursuant to Section 6 of this Plan.
(cc)
"
Performance Compensation Award
” shall mean any Award designated by the Committee as a Performance Compensation
Award pursuant to Section 11 of this Plan.
(dd)
"
Performance Criteria
” shall mean the criterion or criteria that the Committee shall select for purposes
of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under this
Plan.
(ee)
"
Performance Formula
” shall mean, for a Performance Period, the one or more objective formulae applied
against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant,
whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance
Period.
(ff)
"
Performance Goals
” shall mean, for a Performance Period, the one or more goals established by the Committee
for the Performance Period based upon the Performance Criteria.
(gg)
"
Performance Period
” shall mean the one or more periods of time, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance Compensation Award.
(hh)
"
Permitted Transferee
” shall have the meaning set forth in Section 15(b) of this Plan.
(ii)
"
Person
” has the meaning given such term in the definition of “Change in Control.”
(jj)
"
Plan
” means this I-AM Capital Acquisition Company 2018 Equity Incentive Plan, as amended from time to
time.
(kk)
"
Retirement
” means the fulfillment of each of the following conditions: (i) the Participant is in good
standing with the Company and/or an Affiliate of the Company as determined by the Committee; (ii) the voluntary termination by
a Participant of such Participant’s employment or service to the Company and/or an Affiliate and (iii) that at the time of
such voluntary termination, the sum of: (A) the Participant’s age (calculated to the nearest month, with any resulting fraction
of a year being calculated as the number of months in the year divided by 12) and (B) the Participant’s years of employment
or service with the Company (calculated to the nearest month, with any resulting fraction of a year being calculated as the number
of months in the year divided by 12) equals at least 62 (provided that, in any case, the foregoing shall only be applicable if,
at the time of such Retirement, the Participant shall be at least 55 years of age and shall have been employed by or served with
the Company for no less than five years).
(ll)
"
Restricted Period
” means the period of time determined by the Committee during which an Award is subject
to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether
an Award has been earned.
(mm)
"
Restricted Stock Unit
” means an unfunded and unsecured promise to deliver Common Shares, cash, other
securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of this Plan.
(nn)
"
Restricted Stock
” means Common Shares, subject to certain specified restrictions (including, without
limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period
of time), granted under Section 9 of this Plan.
(oo)
"
SAR Period
” has the meaning given such term in Section 8(c) of this Plan.
(pp)
"
Securities Act
” means the Securities Act of 1933, as amended, and any successor thereto. Reference in
this Plan to any section of the Securities Act shall be deemed to include any rules, regulations or other official interpretative
guidance issued by any governmental authority under such section, and any amendments or successor provisions to such section, rules,
regulations or guidance.
(qq)
"
Stock Appreciation Right
” or
"
SAR
"
means an Award granted under Section 8 of
this Plan which meets all of the requirements of Section 1.409A-1(b)(5)(i)(B) of the Treasury Regulations.
(rr)
"
Stock Bonus Award
” means an Award granted under Section 10 of this Plan.
(ss)
"
Strike Price
” means, except as otherwise provided by the Committee in the case of Substitute Awards,
(i) in the case of a SAR granted in tandem with an Option, the Exercise Price of the related Option, or (ii) in the case of a SAR
granted independent of an Option, the Fair Market Value of Common Shares on the Date of Grant.
(tt)
"
Subsidiary
” means, with respect to any specified Person:
(i)
any corporation, association or other business entity of which more than 50% of the total voting power of shares of voting securities
(without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement
that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person (or a combination thereof); and
(ii)
any partnership or limited liability company (or any comparable foreign entity) (a) the sole general partner or managing member
(or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (b)
the only general partners or managing members (or functional equivalents thereof) of which are that Person or one or more Subsidiaries
of that Person (or any combination thereof).
(uu)
"
Substitute Award
” has the meaning given such term in Section 5(e).
(vv)
"
Treasury Regulations
” means any regulations, whether proposed, temporary or final, promulgated by the
U.S. Department of Treasury under the Code, and any successor provisions.
3.
Effective
Date; Duration
. The Plan shall be effective upon its approval by the stockholders of the Company, which date shall be within
twelve (12) months before or after the date of the closing of the Share Subscription Agreement, dated May 3, 2018, by and among
the Company, Smaaash Entertainment Private Limited, Shripal Morakhia and AHA Holdings Private Limited. The expiration date of this
Plan, on and after which date no Awards may be granted hereunder, shall be the tenth anniversary of the date on which the Plan
was approved by the stockholders of the Company;
provided
,
however
, that such expiration shall not affect
Awards then outstanding, and the terms and conditions of this Plan shall continue to apply to such Awards.
4.
Administration
.
(a)
The Committee shall administer this Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act (if the Board is not acting as the Committee under this Plan), it is intended that each member of the Committee
shall, at the time he takes any action with respect to an Award under this Plan, be an Eligible Director. However, the fact that
a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is
otherwise validly granted under this Plan. The acts of a majority of the members present at any meeting at which a quorum is present
or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee. Whether a quorum is present
shall be determined based on the Committee’s charter as approved by the Board.
(b)
Subject to the provisions of this Plan and applicable law, the Committee shall have the sole and plenary authority, in addition
to other express powers and authorizations conferred on the Committee by this Plan and its charter, to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Common Shares to be covered
by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled
or exercised in cash, Common Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended, and
the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to
what extent, and under what circumstances the delivery of cash, Common Shares, other securities, other Awards or other property
and other amounts payable with respect to an Award shall be made; (vii) interpret, administer, reconcile any inconsistency in,
settle any controversy regarding, correct any defect in and/or complete any omission in this Plan and any instrument or agreement
relating to, or Award granted under, this Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint
such agents as the Committee shall deem appropriate for the proper administration of this Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards; (x) to reprice existing Awards or to grant Awards in connection
with or in consideration of the cancellation of an outstanding Award with a higher price; and (xi) make any other determination
and take any other action that the Committee deems necessary or desirable for the administration of this Plan.
(c)
The Committee may, by resolution, expressly delegate to a special committee, consisting of one or more directors who may but need
not be officers of the Company, the authority, within specified parameters as to the number and types of Awards, to (i) designate
officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under this Plan, and (ii) to determine
the number of such Awards to be received by any such Participants; provided, however, that such delegation of duties and responsibilities
may not be made with respect to grants of Awards to persons (i) subject to Section 16 of the Exchange Act or (ii) who are, or who
are reasonably expected to be, “covered employees” for purposes of Section 162(m) of the Code. The acts of such delegates
shall be treated as acts of the Committee, and such delegates shall report regularly to the Board and the Committee regarding the
delegated duties and responsibilities and any Awards granted.
(d)
Unless otherwise expressly provided in this Plan, all designations, determinations, interpretations, and other decisions under
or with respect to this Plan or any Award or any documents evidencing Awards granted pursuant to this Plan shall be within the
sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities,
including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder
of the Company.
(e)
No member of the Board, the Committee, delegate of the Committee or any employee, advisor or agent of the Company or the Board
or the Committee (each such person, an “
Indemnifiable Person
") shall be liable for any action taken or
omitted to be taken or any determination made in good faith with respect to this Plan or any Award hereunder. Each Indemnifiable
Person shall be indemnified and held harmless by the Company against and from (and the Company shall pay or reimburse on demand
for) any loss, cost, liability, or expense (including court costs and attorneys’ fees) that may be imposed upon or incurred
by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person
may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under
this Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s
approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit
or proceeding against such Indemnifiable Person,
provided
, that the Company shall have the right, at its own expense, to
assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the
Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification
shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case
not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions of such Indemnifiable
Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s bad faith, fraud or willful criminal
act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation
or Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which any such
Indemnifiable Person may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise,
or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.
(f)
Notwithstanding anything to the contrary contained in this Plan, the Board may, in its sole discretion, at any time and from time
to time, grant Awards and administer this Plan with respect to such Awards. In any such case, the Board shall have all the authority
granted to the Committee under this Plan.
5.
Grant
of Awards; Shares Subject to this Plan; Limitations
.
(a)
The Committee may, from time to time, grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock
Bonus Awards and/or Performance Compensation Awards to one or more Eligible Persons. Subject to Section 12 of this Plan, the Committee
is authorized to deliver under this Plan an aggregate of 500,000 Common Shares.
(b)
Common Shares underlying Awards under this Plan that are forfeited, cancelled, expire unexercised, or are settled in cash shall
be available again for Awards under this Plan at the same ratio at which they were previously granted. Notwithstanding the foregoing,
the following Common Shares shall not be available again for Awards under the Plan: (i) shares tendered or held back upon the exercise
of an Option or settlement of an Award to cover the Exercise Price of an Award; (ii) shares that are used or withheld to satisfy
tax withholding obligations of the Participant; and (iii) shares subject to a Stock Appreciation Right that are not issued in connection
with the stock settlement of the SAR upon exercise thereof.
(c)
Awards that do not entitle the holder thereof to receive or purchase Common Shares shall not be counted against the aggregate number
of Common Shares available for Awards under the Plan.
(d)
Common Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury
of the Company, shares purchased on the open market or by private purchase, or any combination of the foregoing.
(e)
Subject to compliance with Section 1.409A-3(f) of the Treasury Regulations, Awards may, in the sole discretion of the Committee,
be granted under this Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired
by the Company or with which the Company combines ("
Substitute Awards
"). The number of Common Shares underlying
any Substitute Awards shall be counted against the aggregate number of Common Shares available for Awards under this Plan; provided,
however that Common Shares issued under Substitute Awards granted in substitution for awards previously granted by an entity that
is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Common Shares available
for Awards under the Plan.
(f)
Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 12), the Committee
shall not grant to any one Eligible Person in any one calendar year Awards (i) for more than 10% of the Available Shares in the
aggregate or (ii) payable in cash in an amount exceeding $5,000,000 in the aggregate.
6.
Eligibility
.
Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received written notification
from the Committee, or from a person designated by the Committee, that they have been selected to participate in this Plan.
7.
Options
.
(a)
Generally
. Each Option granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent
with this Plan as may be reflected in the applicable Award Agreement. All Options granted under this Plan shall be Nonqualified
Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.
Notwithstanding any designation of an Option, to the extent that the aggregate Fair Market Value of Common Shares with respect
to which Options designated as Incentive Stock Options are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified
Stock Options. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates,
and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under
the Code. No Option shall be treated as an Incentive Stock Option unless this Plan has been approved by the stockholders of the
Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code, provided that
any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such
approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In
the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion thereof
shall be regarded as a Nonqualified Stock Option appropriately granted under this Plan.
(b)
Exercise Price
. The exercise price ("
Exercise Price
") per Common Share for each Option shall
not be less than 100% of the Fair Market Value of such share determined as of the Date of Grant;
provided, however
, that
in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns shares representing
more than 10% of the voting power of all classes of shares of the Company or any Affiliate, the Exercise Price per share shall
not be less than 110% of the Fair Market Value per share on the Date of Grant;
and, provided further,
that notwithstanding
any provision herein to the contrary, the Exercise Price shall not be less than the par value per Common Share.
(c)
Vesting
and Expiration
. Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee
and as set forth in the applicable Award Agreement, and shall expire after such period, not to exceed ten (10) years from the Date
of Grant, as may be determined by the Committee (the “
Option Period
");
provided
,
however
,
that the Option Period shall not exceed five (5) years from the Date of Grant in the case of an Incentive Stock Option granted
to a Participant who on the Date of Grant owns shares representing more than 10% of the voting power of all classes of shares of
the Company or any Affiliate;
and,
provided
,
further
, that notwithstanding any vesting dates set by the Committee,
the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration shall not affect the
terms and conditions of such Option other than with respect to exercisability. Unless otherwise provided by the Committee in an
Award Agreement:
(i)
an Option shall vest and become exercisable with respect to one-third of the Common Shares subject to such Option on each of the
first three anniversaries of the Date of Grant;
provided, however,
that the Committee may designate a purchase price below
Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity
that is acquired by or merged with the Company or an Affiliate;
(ii)
the unvested portion of an Option shall expire upon termination of employment or service of the Participant granted the Option,
and the vested portion of such Option shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the Option Period;
(B)
for directors, officers and employees of the Company only, for ninety (90) days following termination of employment or service
by reason of such Participant’s Retirement;
(C)
90 calendar days following termination of employment or service for any reason other than such Participant’s death, Disability
or Retirement, and other than such Participant’s termination of employment or service for Cause, but not later than the expiration
of the Option Period; and
(iii)
both the unvested and the vested portion of an Option shall immediately expire upon the termination of the Participant’s
employment or service by the Company for Cause.
Notwithstanding the foregoing provisions
of Section 7(c) and consistent with the requirements of applicable law, the Committee, in its sole discretion, may extend the post-termination
of employment period during which a Participant may exercise vested Options.
(d)
Method
of Exercise and Form of Payment
. No Common Shares shall be delivered pursuant to the exercise of an Option until payment
in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to
any applicable federal, state, local and/or foreign income and employment taxes withheld. Options that have become exercisable
may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award
Agreement accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check (subject to collection),
cash equivalent and/or vested Common Shares valued at the Fair Market Value at the time the Option is exercised (including, pursuant
to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of Common Shares in lieu of
actual delivery of such shares to the Company);
provided
, however,
that such Common Shares are not subject to any
pledge or other security interest and; (ii) by such other method as the Committee may permit in accordance with applicable law,
in its sole discretion, including without limitation: (A) in other property having a fair market value (as determined by the Committee
in its discretion) on the date of exercise equal to the Exercise Price or (B) if there is a public market for the Common Shares
at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered a copy of
irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable upon the exercise of the Option and to
deliver promptly to the Company an amount equal to the Exercise Price or (C) by a “net exercise” method whereby the
Company withholds from the delivery of the Common Shares for which the Option was exercised that number of Common Shares having
a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which the Option was exercised. Any fractional
Common Shares shall be settled in cash.
(e)
Notification
upon Disqualifying Disposition of an Incentive Stock Option
. Each Participant awarded an Incentive Stock Option under
this Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition of any Common Shares
acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without
limitation, any sale) of such Common Shares before the later of (A) two years after the Date of Grant of the Incentive Stock Option
or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and
in accordance with procedures established by the Committee, retain possession of any Common Shares acquired pursuant to the exercise
of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence.
(f)
Compliance
with Laws, etc
. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a
manner that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other applicable law or
the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities
exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
8.
Stock Appreciation Rights
.
(a)
Generally
.
Each SAR granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email
or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each SAR so granted
shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with this Plan as
may be reflected in the applicable Award Agreement. Any Option granted under this Plan may include tandem SARs (i.e., SARs granted
in conjunction with an Award of Options under this Plan). The Committee also may award SARs to Eligible Persons independent of
any Option.
(b)
Exercise
Price.
The Exercise Price per Common Share for each Option granted in connection with a SAR shall not be less than 100%
of the Fair Market Value of such share determined as of the Date of Grant; provided, however, that the Committee may designate
a purchase price below Fair Market Value on the date of grant if the SAR is granted in substitution for an appreciation right previously
granted by an entity that is acquired by or merged with the Company or an Affiliate.
(c)
Vesting
and Expiration
. A SAR granted in connection with an Option shall become exercisable and shall expire according to the same
vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall vest and become
exercisable and shall expire in such manner and on such date or dates determined by the Committee and shall expire after such period,
not to exceed ten years, as may be determined by the Committee (the “
SAR Period
");
provided, however
,
that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability
of any SAR, which acceleration shall not affect the terms and conditions of such SAR other than with respect to exercisability.
Unless otherwise provided by the Committee in an Award Agreement:
(i)
a SAR shall vest and become exercisable with respect to one-third of the Common Shares subject to such SAR on each of the first
three anniversaries of the Date of Grant;
(ii) the
unvested portion of a SAR shall expire upon termination of employment or service of the Participant granted the SAR, and the vested
portion of such SAR shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the SAR Period;
(B)
for directors, officers and employees of the Company only, for the remainder of the SAR Period following termination of employment
or service by reason of such Participant’s Retirement;
(C)
90 calendar days following termination of employment or service for any reason other than such Participant’s death, Disability
or Retirement, and other than such Participant’s termination of employment or service for Cause, but not later than the expiration
of the SAR Period; and
(iii) both
the unvested and the vested portion of a SAR shall expire immediately upon the termination of the Participant’s employment
or service by the Company for Cause.
(d)
Method
of Exercise
. SARs that have become exercisable may be exercised by delivery of written or electronic notice of exercise
to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such
SARs were awarded. Notwithstanding the foregoing, if on the last day of the Option Period (or in the case of a SAR independent
of an Option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the SAR or the
corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired, such SAR shall
be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment therefor.
(e)
Payment
.
Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Common Shares subject to
the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one Common Share on the exercise
date over the Strike Price, less an amount equal to any applicable federal, state, local and non-U.S. income and employment taxes
withheld. The Company shall pay such amount in cash, in Common Shares valued at Fair Market Value, or any combination thereof,
as determined by the Committee. Any fractional Common Share shall be settled in cash.
9.
Restricted
Stock and Restricted Stock Units
.
(a)
Generally
.
Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each such grant shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with
this Plan as may be reflected in the applicable Award Agreement. Restricted Stock and Restricted Stock Units shall be subject to
such restrictions on transferability and other restrictions as the Committee may impose (including, for example, limitations on
the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately
or in combination at such times, under such circumstances, in such installments, upon the satisfaction of Performance Goals or
otherwise, as the Committee determines at the time of the grant of an Award or thereafter. Except as otherwise provided in an Award
Agreement, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units until such time
as Common Shares are paid in settlement of such Awards.
(b)
Restricted
Accounts; Escrow or Similar Arrangement
. Unless otherwise determined by the Committee, upon the grant of Restricted Stock,
a book entry in a restricted account shall be established in the Participant’s name at the Company’s transfer agent
and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than held in such restricted
account pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and
deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate share power
(endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute an agreement
evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank share power within the amount of time
specified by the Committee, the Award shall be null and void
ab initio
. Subject to the restrictions set forth in this Section
9 and the applicable Award Agreement, the Participant generally shall have the rights and privileges of a stockholder as to such
Restricted Stock, including without limitation the right to vote such Restricted Stock and the right to receive dividends, if applicable.
To the extent shares of Restricted Stock are forfeited, any share certificates issued to the Participant evidencing such shares
shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto shall
terminate without further obligation on the part of the Company.
(c)
Vesting;
Acceleration of Lapse of Restrictions
. Unless otherwise provided by the Committee in an Award Agreement: (i) the Restricted
Period shall lapse with respect to one-third of the Restricted Stock and Restricted Stock Units on each of the first three anniversaries
of the Date of Grant ; and (ii) the unvested portion of Restricted Stock and Restricted Stock Units shall terminate and be forfeited
upon the termination of employment or service of the Participant granted the applicable Award.
(d)
Delivery
of Restricted Stock and Settlement of Restricted Stock Units
. (i) Upon the expiration of the Restricted Period with respect
to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of no further force or
effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon
such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the share certificate evidencing
the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has expired (rounded
down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular
share of Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the Committee, in shares
of Common Stock having a Fair Market Value equal to the amount of such dividends, upon the release of restrictions on such shares
of Restricted Stock and, if such shares of Restricted Stock are forfeited, the Participant shall have no right to such dividends
(except as otherwise set forth by the Committee in the applicable Award Agreement).
(ii)
Unless otherwise provided by the Committee in an Award Agreement, upon the expiration of the Restricted Period with respect to
any outstanding Restricted Stock Units and no later than the 75
th
day of the calendar year following the calendar year
in which such expiration occurs, the Company shall deliver to the Participant, or his beneficiary, without charge, one Common Share
for each such outstanding Restricted Stock Unit;
provided
,
however
, that the Committee may, in its sole discretion
and subject to the requirements of Section 409A of the Code, elect to (i) pay cash or part cash and part Common Share in lieu of
delivering only Common Shares in respect of such Restricted Stock Units or (ii) defer the delivery of Common Shares (or cash or
part Common Shares and part cash, as the case may be) beyond the 75
th
day of the calendar year following the calendar
year in which the expiration of the Restricted Period occurs if such delivery would result in a violation of applicable law until
such time as is no longer the case. If a cash payment is made in lieu of delivering Common Shares, the amount of such payment shall
be equal to the Fair Market Value of the Common Shares as of the date on which the Restricted Period lapsed with respect to such
Restricted Stock Units, less an amount equal to any applicable federal, state, local and non-U.S. income and employment taxes withheld.
Notwithstanding anything contained herein to the contrary, the Committee in an Award Agreement may, in a manner consistent with
the applicable requirements of Section 409A of the Code, enable a Participant to elect to defer the date on which settlement of
the Restricted Stock Units shall occur.
10.
Stock
Bonus Awards
. The Committee may issue unrestricted Common Shares, or other Awards denominated in Common Shares, under this
Plan to Eligible Persons, either alone or in tandem with other awards, in such amounts as the Committee shall from time to time
in its sole discretion determine. Each Stock Bonus Award granted under this Plan shall be evidenced by an Award Agreement (whether
in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract
with the Company)). Each Stock Bonus Award so granted shall be subject to such conditions not inconsistent with this Plan as may
be reflected in the applicable Award Agreement.
11.
Performance
Compensation Awards
.
(a)
Discretion
of Committee with Respect to Performance Compensation Awards
. With regard to a particular Performance Period, the Committee
shall have sole discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be
issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance
Goals(s) that is (are) to apply and the Performance Formula. Within the first 90 calendar days of a Performance Period, the Committee
shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with
respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.
(b)
Performance
Criteria
. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment
of specific levels of performance of the Company and/or one or more Affiliates, divisions or operational units, or any combination
of the foregoing, as determined by the Committee, which criteria may be based on one or more of the following business criteria:
(i) revenue; (ii) sales; (iii) profit (net profit, gross profit, operating profit, economic profit, profit margins or other corporate
profit measures); (iv) earnings (EBIT, EBITDA, earnings per share, or other corporate earnings measures); (v) net income (before
or after taxes, operating income or other income measures); (vi) cash (cash flow, cash generation or other cash measures); (vii)
stock price or performance; (viii) total stockholder return (stock price appreciation plus reinvested dividends divided by beginning
share price); (ix) economic value added; (x) return measures (including, but not limited to, return on assets, capital, equity,
investments or sales, and cash flow return on assets, capital, equity, or sales); (xi) market share; (xii) improvements in capital
structure; (xiii) expenses (expense management, expense ratio, expense efficiency ratios or other expense measures); (xiv) business
expansion or consolidation (acquisitions and divestitures); (xv) internal rate of return or increase in net present value; (xvi)
working capital targets relating to inventory and/or accounts receivable; (xvii) inventory management; (xviii) service or product
delivery or quality; (xix) customer satisfaction; (xx) employee retention; (xxi) safety standards; (xxii) productivity measures;
(xxiii) cost reduction measures; and/or (xxiv) strategic plan development and implementation. Any one or more of the Performance
Criteria adopted by the Committee may be used on an absolute or relative basis to measure the performance of the Company and/or
one or more Affiliates as a whole or any business unit(s) of the Company and/or one or more Affiliates or any combination thereof,
as the Committee may deem appropriate, or any of the above Performance Criteria may be compared to the performance of a selected
group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or
as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award
based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph. To the extent required
under Section 162(m) of the Code, the Committee shall, within the first 90 calendar days of a Performance Period (or, if longer
or shorter, within any maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating
the Performance Criteria it selects to use for such Performance Period and thereafter promptly communicate such Performance Criteria
to the Participant.
(c)
Modification
of Performance Goal(s)
. In the event that applicable tax and/or securities laws change to permit Committee discretion to
alter the governing Performance Criteria without obtaining stockholder approval of such alterations, the Committee shall have sole
discretion to make such alterations without obtaining stockholder approval. For purposes of clarity and without limiting the Committee’s
authority set forth above, at the time it establishes Performance Criteria to be used with any Performance Compensation Award,
the Committee may specify one or more events requiring an adjustment to the calculation of the Performance Goal, including but
not limited to: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws,
accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring
programs; (v) acquisitions or divestitures; (vi) any other specific items that are unusual in nature or infrequently occurring,
or objectively determinable category thereof; (viii) foreign exchange gains and losses; and (ix) a change in the Company’s
fiscal year. The Committee may reserve discretion to make or not make one or more adjustments as specified in a Performance Compensation
Award, but only to the extent that such discretion is Negative Discretion.
(d)
Payment
of Performance Compensation Awards
.
(i)
Condition to Receipt of Payment
. Unless otherwise provided in the applicable Award Agreement, a Participant must
be employed by, or in service to, the Company on the last day of a Performance Period to be eligible for payment in respect of
a Performance Compensation Award for such Performance Period.
(ii)
Limitation
. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only
to the extent that: (A) the Performance Goals for such period are achieved; and (B) all or some of the portion of such Participant’s
Performance Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to
such achieved Performance Goals.
(iii)
Certification
. Following the completion of a Performance Period, the Committee shall review and certify in writing
whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify
in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee
shall then determine the amount of each Participant’s Performance Compensation Award actually payable for the Performance
Period and, in so doing, may apply Negative Discretion.
(iv)
Use of Negative Discretion
. In determining the actual amount of an individual Participant’s Performance Compensation
Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under
the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction
or elimination is appropriate. The Committee shall not have the discretion, except as is otherwise provided in this Plan, to (A)
grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such
Performance Period have not been attained; or (B) increase a Performance Compensation Award above the applicable limitations set
forth in Section 5 of this Plan.
(e)
Timing
of Award Payments
. Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon
as administratively practicable following completion of the certifications required by this Section 11, but in no event later than
two-and-one-half months following the end of the fiscal year during which the Performance Period is completed in order to comply
with the short-term deferral rules under Section 1.409A-1(b)(4) of the Treasury Regulations. Notwithstanding the foregoing, payment
of a Performance Compensation Award may be delayed, as permitted by Section 1.409A-2(b)(7)(i) of the Treasury Regulations, to the
extent that the Company reasonably anticipates that if such payment were made as scheduled, the Company’s tax deduction with
respect to such payment would not be permitted due to the application of Section 162(m) of the Code.
12.
Changes
in Capital Structure and Similar Events
. In the event of (a) any dividend or other distribution (whether in the form of cash,
Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger,
amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities of the
Company, issuance of warrants or other rights to acquire Common Shares or other securities of the Company, or other similar corporate
transaction or event (including, without limitation, a Change in Control) that affects the Common Shares, or (b) unusual or nonrecurring
events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial statements of
the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body
or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is
determined by the Committee in its sole discretion to be necessary or appropriate in order to prevent dilution or enlargement of
rights, then the Committee shall make any such adjustments that are equitable, including without limitation any or all of the following:
(i)
adjusting any or all of (A) the number of Common Shares or other securities of the Company (or number and kind of other securities
or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under this Plan (including,
without limitation, adjusting any or all of the limitations under Section 5 of this Plan) and (B) the terms of any outstanding
Award, including, without limitation, (1) the number of Common Shares or other securities of the Company (or number and kind of
other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price
or Strike Price with respect to any Award or (3) any applicable performance measures (including, without limitation, Performance
Criteria and Performance Goals);
(ii)
subject to the requirements of Section 409A of the Code, providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to
the occurrence of such event; and
(iii)
subject to the requirements of Section 409A of the Code, canceling any one or more outstanding Awards and causing to be paid to
the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of such
Awards, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to
be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option
or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee)
of the Common Shares subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR, respectively
(it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess
of, the Fair Market Value of a Common Share subject thereto may be canceled and terminated without any payment or consideration
therefor);
provided
,
however
, that in the case of any “equity restructuring” (within the meaning
of the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004) or ASC Topic 718,
or any successor thereto), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such
equity restructuring. Any adjustment in Incentive Stock Options under this Section 12 (other than any cancellation of Incentive
Stock Options) shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3)
of the Code, and any adjustments under this Section 12 shall be made in a manner that does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon
notice, such adjustment shall be conclusive and binding for all purposes.
13.
Effect
of Change in Control.
Except to the extent otherwise provided in an Award Agreement, in the event of a Change in Control, notwithstanding
any provision of this Plan to the contrary, with respect to all or any portion of a particular outstanding Award or Awards:
(a)
all of the then outstanding Options and SARs shall immediately vest and become immediately exercisable as of a time prior to the
Change in Control;
(b) the
Restricted Period shall expire as of a time prior to the Change in Control (including without limitation a waiver of any applicable
Performance Goals);
(c) Performance
Periods in effect on the date the Change in Control occurs shall end on such date, and the Committee shall (i) determine the extent
to which Performance Goals with respect to each such Performance Period have been met based upon such audited or unaudited financial
information or other information then available as it deems relevant and (ii) cause the Participant to receive partial or full
payment of Awards for each such Performance Period based upon the Committee’s determination of the degree of attainment of
the Performance Goals, or assuming that the applicable “target” levels of performance have been attained or on such
other basis determined by the Committee.
To the extent practicable, any actions
taken by the Committee under the immediately preceding clauses (a) through (c) shall occur in a manner and at a time which allows
affected Participants the ability to participate in the Change in Control transactions with respect to the Common Shares subject
to their Awards.
14.
Amendments
and Termination
.
(a)
Amendment
and Termination of this Plan
. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof
at any time;
provided
, that (i) no amendment to the definition of Eligible Person in Section 2(q), Section 5(b),
Section 11(b) or Section 14(b) (to the extent required by the proviso in such Section 14(b)) shall be made without stockholder
approval and (ii) no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval
if such approval is necessary to comply with any tax or regulatory requirement applicable to this Plan (including, without limitation,
as necessary to comply with any rules or requirements of any national securities exchange or inter-dealer quotation system on which
the Common Shares may be listed or quoted or to prevent the Company from being denied a tax deduction under Section 162(m) of the
Code);
and,
provided
,
further
, that any such amendment, alteration, suspension, discontinuance or termination
that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore
granted shall not to that extent be effective without the prior written consent of the affected Participant, holder or beneficiary.
(b)
Amendment
of Award Agreements
. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive
any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted or the associated Award Agreement, prospectively or retroactively;
provided, however
,
that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect
the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent
of the affected Participant.
15.
General
.
(a)
Award
Agreements
. Each Award under this Plan shall be evidenced by an Award Agreement, which shall be delivered to the Participant
(whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party
under contract with the Company)) and shall specify the terms and conditions of the Award and any rules applicable thereto, including
without limitation, the effect on such Award of the death, Disability or termination of employment or service of a Participant,
or of such other events as may be determined by the Committee. The Company’s failure to specify any term of any Award in
any particular Award Agreement shall not invalidate such term, provided such terms was duly adopted by the Board or the Committee.
(b)
Nontransferability;
Trading Restrictions
.
(i)
Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable
law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the
Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.
(ii)
Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to
be transferred by a Participant, with or without consideration, subject to such rules as the Committee may adopt consistent with
any applicable Award Agreement to preserve the purposes of this Plan, to: (A) any person who is a “family member” of
the Participant, as such term is used in the instructions to Form S-8 under the Securities Act (collectively, the “
Immediate
Family Members
"); (B) a trust solely for the benefit of the Participant and his or her Immediate Family Members; or
(C) a partnership or limited liability company whose only partners or stockholders are the Participant and his or her Immediate
Family Members; or (D) any other transferee as may be approved either (I) by the Board or the Committee in its sole discretion,
or (II) as provided in the applicable Award Agreement (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a “
Permitted Transferee
");
provided,
that the Participant gives the Committee advance
written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing
that such a transfer would comply with the requirements of this Plan.
(iii)
The terms of any Award transferred in accordance with subparagraph (ii) above shall apply to the Permitted Transferee and any reference
in this Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except
that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution;
(B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration
statement on an appropriate form covering the Common Shares to be acquired pursuant to the exercise of such Option if the Committee
determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C)
the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice
is or would otherwise have been required to be given to the Participant under this Plan or otherwise; and (D) the consequences
of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under the terms of this
Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including, without limitation,
that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in this Plan
and the applicable Award Agreement.
(iv)
The Committee shall have the right, either on an Award-by-Award basis or as a matter of policy for all Awards or one or more classes
of Awards, to condition the delivery of vested Common Shares received in connection with such Award on the Participant’s
agreement to such restrictions as the Committee may determine.
(c)
Tax Withholding
.
(i)
A Participant shall be required to pay to the Company or any Affiliate, or the Company or any Affiliate shall have the right and
is hereby authorized to withhold, from any cash, Common Shares, other securities or other property deliverable under any Award
or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other
property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or
under this Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all
obligations for the payment of such withholding and taxes. In addition, the Committee, in its discretion, may make arrangements
mutually agreeable with a Participant who is not an employee of the Company or an Affiliate to facilitate the payment of applicable
income and self-employment taxes.
(ii)
Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy,
in whole or in part, the foregoing withholding liability by (A) the delivery of Common Shares (which are not subject to any pledge
or other security interest) owned by the Participant having a fair market value equal to such withholding liability or (B) having
the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to the exercise or settlement
of the Award a number of shares with a fair market value equal to such withholding liability (but no more than the maximum individual
statutory rate for the applicable tax jurisdiction).
(d)
No
Claim to Awards; No Rights to Continued Employment; Waiver
. No employee of the Company or an Affiliate, or other person,
shall have any claim or right to be granted an Award under this Plan or, having been selected for the grant of an Award, to be
selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries
of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto
need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants
are similarly situated. Neither this Plan nor any action taken hereunder shall be construed as giving any Participant any right
to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as giving any Participant any
rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment
or discontinue any consulting relationship, free from any liability or any claim under this Plan, unless otherwise expressly provided
in this Plan or any Award Agreement. By accepting an Award under this Plan, a Participant shall thereby be deemed to have waived
any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the
Award beyond the period provided under this Plan or any Award Agreement, notwithstanding any provision to the contrary in any written
employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is
executed before, on or after the Date of Grant.
(e)
International Participants
. With respect to Participants who reside or work outside of the United States of America
and who are not (and who are not expected to be) “covered employees” within the meaning of Section 162(m) of the Code,
the Committee may in its sole discretion amend the terms of this Plan or outstanding Awards (or establish a sub-plan) with respect
to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other
treatment for such Participants, the Company or its Affiliates.
(f)
Designation
and Change of Beneficiary
. Unless otherwise provided by the Committee in an Award Agreement, each Participant may file
with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive the amounts
payable with respect to an Award, if any, due under this Plan upon his or her death. A Participant may, from time to time, revoke
or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the
Committee. The last such designation filed with the Committee shall be controlling;
provided
,
however
, that
no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s
death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant,
the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.
Upon the occurrence of a Participant’s divorce (as evidenced by a final order or decree of divorce), any spousal designation
previously given by such Participant shall automatically terminate.
(g)
Termination
of Employment/Service
. Unless determined otherwise by the Committee at any point following such event: (i) neither a temporary
absence from employment or service due to illness, vacation or leave of absence nor a transfer from employment or service with
the Company to employment or service with an Affiliate (or vice-versa) shall be considered a termination of employment or service
with the Company or an Affiliate; and (ii) if a Participant’s employment with the Company and its Affiliates terminates,
but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity (or vice-versa),
such change in status shall not be considered a termination of employment with the Company or an Affiliate for purposes of this
Plan unless the Committee, in its discretion, determines otherwise.
(h)
No
Rights as a Stockholder
. Except as otherwise specifically provided in this Plan or any Award Agreement, no person shall
be entitled to the privileges of ownership in respect of Common Shares that are subject to Awards hereunder until such shares have
been issued or delivered to that person.
(i)
Government
and Other Regulations
.
(i)
The obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all applicable laws,
rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions
of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from
offering to sell or selling, any Common Shares pursuant to an Award unless such shares have been properly registered for sale pursuant
to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory
to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom
and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register
for sale under the Securities Act any of the Common Shares to be offered or sold under this Plan. The Committee shall have the
authority to provide that all certificates for Common Shares or other securities of the Company or any Affiliate delivered under
this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under this Plan,
the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the Securities
and Exchange Commission, any securities exchange or inter-dealer quotation system upon which such shares or other securities are
then listed or quoted and any other applicable federal, state, local or non-U.S. laws, and, without limiting the generality of
Section 9 of this Plan, the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference
to such restrictions. Notwithstanding any provision in this Plan to the contrary, the Committee reserves the right to add any additional
terms or provisions to any Award granted under this Plan that it in its sole discretion deems necessary or advisable in order that
such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.
(ii)
The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions
and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public
markets, the Company’s issuance of Common Shares to the Participant, the Participant’s acquisition of Common Shares
from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable.
If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless doing so would violate
Section 409A of the Code, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market
Value of the Common Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or
the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price
(in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Common Shares (in the case
of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such
Award or portion thereof. The Committee shall have the discretion to consider and take action to mitigate the tax consequence to
the Participant in cancelling an Award in accordance with this clause.
(j)
Payments
to Persons Other Than Participants
. If the Committee shall find that any person to whom any amount is payable under this
Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee
so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or
any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(k)
Nonexclusivity
of this Plan
. Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the
Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of stock options or other equity-based awards otherwise than
under this Plan, and such arrangements may be either applicable generally or only in specific cases.
(l)
No
Trust or Fund Created
. Neither this Plan nor any Award shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person
or entity, on the other hand. No provision of this Plan or any Award shall require the Company, for the purpose of satisfying any
obligations under this Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of
the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights
under this Plan other than as general unsecured creditors of the Company, except that insofar as they may have become entitled
to payment of additional compensation by performance of services, they shall have the same rights as other employees under general
law.
(m)
Reliance
on Reports
. Each member of the Committee and each member of the Board shall be fully justified in acting or failing to
act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report
made by the independent public accountant of the Company and/or its Affiliates and/or any other information furnished in connection
with this Plan by any agent of the Company or the Committee or the Board, other than himself.
(n)
Relationship
to Other Benefits
. No payment under this Plan shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such
other plan.
(o)
Governing
Law
. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware, without
giving effect to the conflict of laws provisions.
(p)
Severability
.
If any provision of this Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction or as to any person or entity or Award, or would disqualify this Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws in the manner that most
closely reflects the original intent of the Award or the Plan, or if it cannot be construed or deemed amended without, in the determination
of the Committee, materially altering the intent of this Plan or the Award, such provision shall be construed or deemed stricken
as to such jurisdiction, person or entity or Award and the remainder of this Plan and any such Award shall remain in full force
and effect.
(q)
Obligations
Binding on Successors
. The obligations of the Company under this Plan shall be binding upon any successor corporation or
organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and business of the Company.
(r)
Expenses;
Gender; Titles and Headings
. The expenses of administering this Plan shall be borne by the Company and its Affiliates.
Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections
in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather than such titles
or headings shall control.
(s)
Other
Agreements
. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the receipt of
Common Shares under an Award, that the Participant execute lock-up, stockholder or other agreements, as it may determine in its
sole and absolute discretion.
(t)
Section
409A
.
The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, the requirements
of Section 409A of the Code. The Plan and all Awards granted under this Plan shall be administered, interpreted, and construed
in a manner consistent with Section 409A of the Code to the extent necessary to avoid the imposition of additional taxes under
Section 409A(a)(1)(B) of the Code. Notwithstanding anything in this Plan to the contrary, in no event shall the Committee exercise
its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation
within the meaning of Section 409A of the Code unless, and solely to the extent that, such accelerated payment or settlement is
permissible under Section 1.409A-3(j)(4) of the Treasury Regulations. If a Participant is a “specified employee” (within
the meaning of Section 1.409A-1(i) of the Treasury Regulations) at any time during the twelve (12)-month period ending on the date
of his termination of employment, and any Award hereunder subject to the requirements of Section 409A of the Code is to be satisfied
on account of the Participant’s termination of employment, satisfaction of such Award shall be suspended until the date that
is six (6) months after the date of such termination of employment.
(u)
Payments
.
Participants shall be required to pay, to the extent required by applicable law, any amounts required to receive Common Shares
under any Award made under this Plan.
FOR THE SPECIAL MEETING IN LIEU OF AN
ANNUAL MEETING OF STOCKHOLDERS OF
I-AM CAPITAL ACQUISITION COMPANY