Standard Mandate Letter
AGREEMENT FOR ADVISORY SERVICES
THIS AGREEMENT is made (on this day of ____________, 2003) BY AND BETWEEN THE GOVERNOR OF PUNJAB acting through the Director-cum-Secretary, Disinvestment, Government of Punjab (hereinafter referred to as "GoP", which expression shall mean and include its successors and assigns) of the ONE PART and (ADVISOR NAME--------------------), a company incorporated under the Companies Act, 1956 and registered as a Category I Merchant Banker with the Securities and Exchange Board of India, having its registered office at (ADDRESS OF ADVISOR--------------------------------) (hereinafter referred to as "(ADVISOR NAME)" which expression shall mean and include its successors and permitted assigns and liquidators) acting through Shri ----------------, Director & Head of Corporate Finance & Advisory and Shri ---------, Associate Director duly appointed and authorised on its behalf of the OTHER PART.
(CO. NAME-----------------) (hereinafter referred to as "(CO. NAME)" or the "Company") is a public sector company, controlled by the Government of Punjab and is predominantly a (NATURE AND DESCRIPTION OF BUSINESS-------------------------------------------------);
Government of Punjab wishes to identify and conclude a contract with an appropriate strategic partner (hereinafter referred to as "Strategic Partner") involving disinvestment of ------% (out of -----%) of the paid-up equity of (CO. NAME) held by GoP at the best possible price;
(ADVISOR NAME) submitted an Expression of Interest dated -----------------------------to Director (Finance) (CO.
NAME---------------------place) in accordance with the instructions as contained in the advertisement dated ----------------------------------------issued by the Government of Punjab;
Further to the Expression of Interest, (ADVISOR NAME) made presentations to the Inter Ministerial Group (hereinafter referred to as "IMG") constituted by the Government of Punjab to appoint the advisor and submitted a fee bid by letter dated ------------------------------------ addressed to the Director (Finance), (CO. NAME) Co. Limited proposing a fee structure for (ADVISOR NAME) to act as advisor;
Pursuant to the fee bid made by (ADVISOR NAME) and other investment bankers, the GoP appointed (ADVISOR NAME) as advisor in relation to the Transaction (as
defined in Recital F below) and communicated its decision to (ADVISOR NAME) by letter dated ------------------------------------------ as issued by the Directorate of Disinvestment and the Parties are desirous of recording the detailed terms of the appointment of (ADVISOR NAME) as advisor.
It is considered appropriate and desirable by the Parties hereto to formalise the terms on which (ADVISOR NAME) has been engaged as the exclusive adviser (the "Engagement") in relation to the proposed sale by the Governor of Punjab, acting through Director-cum-Secretary, Directorate of Disinvestment, Government of Punjab, of -------% shareholding along with management control (the "Stake") to a Strategic Partner in (CO. NAME) Co. Limited (the "Transaction").
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AFORESAID, THE PARTIES HEREBY AGREE AS FOLLOWS:
Role of (ADVISOR NAME)
(ADVISOR NAME) shall, in accordance with all applicable laws, provide the following financial advice and assistance together with any additional assistance agreed in writing between (ADVISOR NAME) and the GoP:
To carry out the valuation and assist in the sale of ------% shareholding of the GoP in (CO. NAME);
- To carry out the valuation of (SUBSIDIARIES , IF ANY);
- To advise on the modalities for transfer of (CO. NAME)ís stake in (SUBSIDIARIES , IF ANY);
For the avoidance of doubt, the duties and responsibilities of (ADVISOR NAME) shall not include other than as set out above. In particular, (ADVISOR NAME) is not responsible for:
Giving tax, legal, regulatory, accountancy or other specialist or technical advice or services; or
Giving general financial or other advice that is not related to the
Valuation of assets and other intangibles of the Company
The valuation advice which (ADVISOR NAME) provides will be given on the understanding that unless otherwise expressly agreed in writing, (ADVISOR NAME) shall not be responsible for the accounting or other data and commercial assumptions on which such a valuation is based, the assessment and evaluation of which shall remain the Companyís responsibility.
In this Agreement, where any obligation is imposed on the Company, the GoP agrees that it will ensure the Company complies with such obligation.
Fees and Expenses
The GoP has agreed with (ADVISOR NAME) the following fee(s);
If the Transaction is completed, a fee inclusive of all applicable taxes (the "Success Fee"), equal to ----- percentage of the total amount of the Consideration that is paid or is payable by the Strategic Partner to acquire the Stake from the GoP in connection with the Transaction, whether by way of cash, equity, debt or in kind or by way of any waiver, release or assignment of any rights or obligations (the "Consideration"). The Success Fee will be payable 15 days from the date of full payment by the Strategic Partner (the "Closing Date").
If, for any reason, GoP decides to terminate this Agreement and the Engagement in accordance with clause 5 prior to completion of the Transaction or in case the GoP decides not to go ahead with the Transaction for any reason whatsoever, then (ADVISOR NAME) will be paid a drop-dead fee ("Drop Dead Fee") of Rs -------------- (Rupees --------------only).
For the purposes of calculating the Success Fee, the Consideration will be translated, if necessary, into Indian Rupees at the State Bank of Indiaís buying spot rate at the close of business on the day prior to the Closing Date.
No payments, other than those made by the GoP for and on behalf of (ADVISOR NAME) in pursuance of orders / judgement of a court, to third parties other than persons belonging to (ADVISOR NAME), shall be reduced from amounts owed by the GoP to (ADVISOR NAME) pursuant to this Agreement.
The GoP will be responsible for its own legal fees and the costs of accountants (including the cost of audit and accounting reports) and other advisors, including technical advisors. (ADVISOR NAME) will be responsible for its own travel and all other out-of-pocket expenses in connection with the Engagement.
All fees and payments to (ADVISOR NAME) shall be subject to deductions as per applicable laws of Punjab.
The GoP will comply with all applicable legal and regulatory provisions (including Stock Exchange requirements).
Information and Announcements
The GoP will:
provide (ADVISOR NAME) and its advisors with such access to the directors and management of, and the auditors and advisors to, the Company and its subsidiaries, if any, for the purpose of the Transaction/Engagement as (ADVISOR NAME) may reasonably require; and
provide (ADVISOR NAME) with, and/or give access to, all information which is relevant for the purposes of the Transaction/Engagement and will ensure that, in so doing, GoP will not breach any confidentiality obligation and that the information so supplied is and remains complete, true and accurate in all material respects and not misleading, whether by omission or otherwise. The GoP will immediately notify (ADVISOR NAME) if it subsequently discovers that any information provided by it is incomplete, untrue, inaccurate or misleading.
The GoP will ensure that all announcements and documents published or statements made by the GoP/Company or on their behalf in the course of, and relevant to, the Transaction/Engagement will only be made or published after consultation with (ADVISOR NAME) and will be true and accurate and not misleading and, where appropriate, will contain all information necessary for legal or regulatory purposes (including the Stock Exchange requirements).
The GoP undertakes that it will at all times keep (ADVISOR NAME) fully informed of all strategies, developments and discussions relevant to the Transaction and that no initiatives relevant to the Transaction/Engagement will be taken without prior consultation with (ADVISOR NAME).
(ADVISOR NAME) represents many other companies, individuals, and other entities. At present, there is no conflict of interest resulting from the (ADVISOR NAME)ís representation of GoP for the disinvestment of (CO. NAME) and (ADVISOR NAME)ís representation of its other clients. It is possible, however, that during (ADVISOR NAME)ís representation of GoP in connection with the disinvestment of (CO. NAME), some of (ADVISOR NAME)ís present or future clients may have disputes or transactions with GoP/(CO. NAME). GoP agrees that (ADVISOR NAME) may represent those clients (present or future) in any matter that is not directly related to (ADVISOR NAME)ís work for GoP described here. (ADVISOR NAME) agrees however, that GoPís prospective consent to the above shall not apply in any instance where, as a result of (ADVISOR NAME)ís representation of GoP for the (CO. NAME) disinvestment, (ADVISOR NAME) as
obtained any proprietary or confidential information that, if known to such other client, could be used in any such matter by such client to GoPís material disadvantage. It needs to be understood that, in similar engagement letters with many of their clients, (ADVISOR NAME) is requesting similar agreements to preserve the ability of (ADVISOR NAME) to represent other enterprises that are or become clients of (ADVISOR NAME) in comparable situations.
(ADVISOR NAME) and each of its directors, officers, employees and agents will ensure that all information, whether written or oral, acquired from the GoP or (CO. NAME) and their respective agents and advisors in connection with the Transaction is kept strictly confidential and used solely and exclusively for the purposes expressly specified in this Agreement. This obligation of confidentiality shall not apply to any information already in the public domain at the time of disclosure other than as a result of breach of this clause by (ADVISOR NAME) or which (ADVISOR NAME), is required to disclose by law, regulation or court order, provided that before making such disclosure (ADVISOR NAME) will, to the extent permitted by law, in writing advise GoP and consult with GoP about any information that (ADVISOR NAME) proposes to disclose pursuant to this exception.
Advice (including any opinion or report) whether written or oral by (ADVISOR NAME) to the GoP /Company, or any communications between (ADVISOR NAME) and the GoP/Company in connection with the Transaction may only be used and relied upon by the GoP and may not be used or relied upon by any third party and may not be disclosed to any third party without the prior written approval of (ADVISOR NAME).
This Agreement and the Engagement may be terminated with or without cause by the GoP or by (ADVISOR NAME) by written notice at any time and without continuing obligation.
- In case the GoP terminates the Agreement and the Engagement without cause the following shall survive any termination and remain in full force and effect:
Success Fee provision (Clause 2 (i) Ė for Success Fee earned by (ADVISOR NAME)
but not yet paid by the GoP as at the date of termination (if at the date of the termination, the Transaction has already been completed);
Drop Dead Fee provision (Clause 2 (ii), if at the date of the termination, the Transaction has not yet been completed); and
The conflicts of interest and indemnity provisions of this Agreement
- In case the GoP terminates the Agreement and the Engagement with cause the following shall survive any termination and remain in full force and effect:
The conflicts of interest and indemnity provisions of this Agreement
- Notwithstanding the foregoing, it is hereby clarified that if:
any order is made by any competent court or any resolution is passed for the dissolution or winding-up of (ADVISOR NAME) or for the appointment of a liquidator, receiver, administrator or manager of (ADVISOR NAME) or all or a substantial part of its assets or anything analogous occurs in any other jurisdiction to (ADVISOR NAME), other than in connection with a solvent re-organisation, reconstruction, amalgamation or merger which does not adversely affect the interest of (CO. NAME) or GoP; or
(ADVISOR NAME) is found guilty of any criminal offence in any jurisdiction that materially adversely affects its ability to carry out the Engagement; or
(ADVISOR NAME) fails to comply with any final decision reached as a result of arbitration proceedings pursuant to para 11 and Schedule II of this agreement;
(ADVISOR NAME) is in breach of its obligation under this agreement and has not remedied the same within 30 days (or such longer period as the other party may have subsequently approved in writing) following the receipt by (ADVISOR NAME) of a notice from GoP specifying the breach; or
In the event of a conflict of interest during the engagement that materially adversely affects the ability of (ADVISOR NAME) to carry out the engagement and not remedied within 15 days of arising due to handling of the transaction by (ADVISOR NAME) as Advisor to the GoP for disinvestment in (CO. NAME).
the GoP shall have the right to immediately terminate this Agreement and such termination shall be deemed to be a termination for cause.
Conflicts of Interest
(ADVISOR NAME) Group is involved in a wide range of commercial banking, investment banking and other activities (including investment management, corporate finance, securities trading, research and private equity) out of which conflicting interests or duties may arise. GoP acknowledges and accepts that (ADVISOR NAME) Group (other than (ADVISOR NAME)) may have interests or duties which conflict with GoPís interests and which would or might otherwise conflict with the duties owed by (ADVISOR NAME) to GoP. GoP further accepts that any other entity in the (ADVISOR NAME) Group or any other division of (ADVISOR NAME) will not restrict its activities in any way nor have any obligation to advise GoP of any conflict of interest which exists or may arise. In relation to the Engagement, information which is held elsewhere within (ADVISOR NAME)/ (ADVISOR NAME) Group but of which none of the individual executives in the Corporate Finance & Advisory division of (ADVISOR NAME) having the conduct of the Engagement could reasonably have access to shall not for any purpose be taken into account in determining (ADVISOR NAME)ís responsibilities to the GoP or the Company and such responsibilities shall be entirely determined by the regulatory rules and principles and the contractual terms applicable to the Engagement.
(ADVISOR NAME)/(ADVISOR NAME) Group shall not have any duty to disclose to the GoP /Company or utilise for the GoP /Companyís benefit any non-public information acquired in the course of carrying on any business for, or in connection with the provision of services to any other person.
The indemnity provision in connection with this Engagement are set out in the attached Schedule I (the "Indemnity") and forms a part of this Agreement
If subsequent event(s) makes (ADVISOR NAME) liable for disqualification from engagement, then a notice of 15 days may be given by GoP to (ADVISOR NAME) to cure the disqualification and/or eliminate the conflicts of interest and if after the expiry of 15 days notice, the said disqualification is not cured, then GoP may, at its option, terminate this Agreement with cost if (ADVISOR NAME) fails to withdraw from the transaction.
Each provision of this Agreement and the Indemnity is severable and, if any provision is or becomes invalid or unenforceable or contravenes any applicable regulations or law, the remaining provisions will not be affected.
Amendments and Modifications
This Agreement constitutes the entire understanding between both parties relating to the Transaction and it shall not be amended or modified except as agreed in writing by both the GoP and (ADVISOR NAME).
Any notice or other communication required to be given pursuant to this Agreement shall be in writing and shall be sufficiently given or served if delivered by hand or by courier with acknowledgement or faxed at the numbers given below or sent by registered post to the respective persons at the addresses given below:
Director & Head of Corporate Finance & Advisory
(ADVISOR NAME) ------------------------------------
Directorate of Disinvestment,
Government of Punjab,
SCO 53-55, Sector 17D,
Any controversy or dispute which arises between the parties to this Agreement concerning its construction or application, or the rights, duties or obligations of any party hereunder shall be referred to arbitration subject to procedures set out in Schedule II attached hereto which forms integral part of this engagement Agreement.
This Agreement shall be governed by and construed in accordance with the laws of the Republic of India. Neither the GoP nor (ADVISOR NAME) shall have the right to transfer or assign their responsibilities resulting from the acceptance of this Agreement.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED AND DELIVERED THIS AGREEMENT AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN
For and on behalf of the Governor of Punjab by the Director-cum-Secretary, Directorate of Disinvestment, Government of Punjab
2. For and on behalf of
(ADVISOR NAME) Witnesses:
Director & Head of Corporate Finance & Advisory
GoP hereby agrees to indemnify and hold harmless each of the Indemnified Persons as defined below from and against any and all expenses (including the fees and expenses of its counsel), losses, claims, actions, suits, damages, of liabilities, joint or several (including the aggregate amount paid in settlement of any action, suit proceeding or claim that may be made against any Indemnified Person) that any Indemnified person suffers or incurs which are determined by a judgement of a court or an arbitration of competent jurisdiction to have resulted from any dishonest, illegal or fraudulent act or the willful default or negligence on the part of any GoP indemnified Party as defined below. Subject to the foreGoPng, the (ADVISOR NAME) agrees that no GoP Indemnified party shall have any liability whatsoever (Whether in contract, tort, otherwise) to the (ADVISOR NAME) for or in connection with things done or omitted to be done pursuant to the Engagement.
Each of (ADVISOR NAME) and the Indemnified Persons agree that promptly after receiving a notice of an action, suit, proceeding or claim against any of the Indemnified Person or receipt of a notice of the commencement of any investigation which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the GoP, (ADVISOR NAME) or Indemnified Party will notify the GoP in writing of the particulars thereof and, will provide copies of all relevant documentation of the GoP and, unless the GoP assumes the defence thereof, will keep the GoP informed of the progress thereof and will discuss all significant actions proposed. The omission so to notify the GoP shall not relieve the GoP of any liability which the GoP may have to (ADVISOR NAME) or any Indemnified Person except only to the extent that any such delay in or failure to give notice as herein required prejudices the defence of such action, suit, proceeding, have under this indemnity had (ADVISOR NAME) or any other Indemnified Persons not so delayed in or failed to give the notice required hereunder.
the GoP shall be entitled, at its own expense, to participate in and, to the extent it may wish to do so, assume the defence of such action, suit ,proceeding, claim or investigation, provided such defence is conducted by experienced and competent counsel. Upon the GoP notifying (ADVISOR NAME) or any Indemnified Person in writing of its election to assume the defence and retaining counsel, the GoP shall not be liable to (ADVISOR NAME) or any other Indemnified Person for any legal expenses subsequently incurred by them in connection with such defence. If such defence is assumed by the GoP, the GoP throughout the course of thereof will provide copies of all relevant documentation to (ADVISOR NAME), will keep (ADVISOR NAME) advised of the progress thereof and will discuss with (ADVISOR NAME) all significant actions proposed.
No Indemnified Person shall admit any liability or settle any action, writ proceeding, claim or investigation without the prior written consent of the GoP, which shall not be unreasonably withheld. The GoP will not be liable for any settlement of any action, suit, proceeding, claim or investigation that any Indemnified Person makes without the written consent of the GoP.
The GoPís right to assume the defence set out above shall be subject to the following conditions:
No admission of liability or compromise whatsoever in connection with the claim or action may take place without (ADVISOR NAME)ís prior written consent; which shall not be unreasonably withheld.
Notwithstanding the foregoing, the Indemnified Person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified person unless (a) the employment of such counsel shall have been authorised in writing by the GoP in connection with the defence of such action, and (b) the GoP have not employed counsel to take charge of the defence of such action, within a reasonable time after notice of commencement of the action.
(ADVISOR NAME) hereby assumes full and absolute responsibility for each and every act or omission of all its directors, officers, employees and agents. Subject to the foregoing and without prejudice to any claim the GoP may have against (ADVISOR NAME), no proceedings may be taken against any director, officer, employee or agent of (ADVISOR NAME) in respect of any claim the GoP may have against (ADVISOR NAME).
(ADVISOR NAME) hereby agrees to indemnify and hold harmless each of the Company, the GoP, their directors, officers and employees ( collectively the "GoP Indemnified Parties") and (individually, a "GoP Indemnified Party") from and against any and all expenses (including the fees and expenses of its counsel), losses, claims, actions, suits, damages, or liabilities, joint or several (including the aggregate amount paid in settlement of any action, suit, proceeding or claim that may be made against any GoP Indemnified Party) that any GoP Indemnified Party suffers or incurs which are determined by a judgement of a court or an arbitration of competent jurisdiction to have resulted from any dishonest, illegal or fraudulent act or the willful default or negligence on the part of any Indemnified Person. Subject to the foregoing, the GoP agrees that no Indemnified Person shall have any liability whatsoever (whether in contract, tort, or otherwise) to the GoP for or in connection with things done or omitted to be done pursuant to the Engagement.
The GoP will notify (ADVISOR NAME) if the GoP becomes aware of any claim, which may give rise to a liability pursuant to this indemnity.
" Indemnified Persons" means (ADVISOR NAME) and all directors, officers, employees of (ADVISOR NAME).
Any and all claims, disputes, questions or controversies involving the parties or any two or more of them and arising out of or in connection with this Agreement or the execution, interpretation, validity, performance, breach or termination hereof (including, without limitation, the provisions of this Schedule (collectively, hereinafter referred to as " Disputes") which cannot be finally resolved by such parties within sixty (60) calendar days of the arising of a Dispute by amicable negotiation and conciliation shall first be submitted for settlement by informal arbitration to an arbitral panel consisting of one nominee of each of such party as applicable. If any such panel, negotiating in good faith is unable to resolve and settle the Dispute within sixty (60) calendar days after the Dispute is first submitted to it, then any party shall be entitled to cause the Dispute to be submitted for arbitration pursuant to the terms of paragraph (b) hereof.
Any dispute which is not settled after an attempt by the parties to the Dispute at amicable negotiations and conciliation under paragraph (a) hereof, shall be finally resolved by final and binding arbitration under the provisions of the Arbitration and Conciliation Act, 1996 as modified from time to time and rules framed thereunder, the arbitration rules of Indian Council of Arbitration and by three arbitrators appointed in accordance with the said rules. The Arbitration shall be held in Chandigarh and all arbitration proceedings shall be conducted in English.
In connection with the arbitration proceedings, the parties to the Dispute hereby agree to co operate in good faith with each other and the arbitral tribunal and to use their respective best efforts to respond promptly to any reasonable discovery demand made by such party and the arbitral tribunal.
Except as otherwise required by law or any applicable stock exchange rules and regulations, the arbitral proceedings and the arbitral award ( the "Award") shall not be made public without the joint consent of the parties to the Dispute and, if not a party, (ADVISOR NAME) and each such party shall maintain the confidentiality of such proceedings or the Award, unless otherwise permitted by other such party in writing . The costs of the arbitration shall be borne by the parties to the Dispute in accordance with the provisions of the Arbitration and Conciliation Act 1996 as modified from time to time and rules framed thereunder and applicable provisions of the arbitration rules of Indian Council of Arbitration. The Award may include interest from the date of any breach or other violation of this Agreement and rate of such interest, if any, shall be specified by the arbitral tribunal and shall be calculated from the date of any such breach or other violation to the date when the Award is paid in full. Each of the parties expressly understands and agrees that the Award shall be the sole, exclusive, final and binding remedy between them regarding any and all Disputes presented to the arbitral tribunal. Application shall be made to any court with jurisdiction over the party ( or its assets) against whom the Award is rendered for a judicial acceptance of the Award and an order of enforcement.