EXHIBIT 10.1a
 
 
 
 
 
SHARE SUBSCRIPTION AGREEMENT

BETWEEN

MILLENNIUM INDIA ACQUISITION COMPANY INC

 

 
AND

 

 
SMC GLOBAL SECURITIES LIMITED

AND

 

 
PROMOTERS OF SMC GLOBAL SECURITIES LIMITED

Dated ___ day of May, 2007
 
 
 
 
 
[aralogo.jpg]

 
3/F, Mahatma Gandhi Memorial Building,
7, Netaji Subhash Road, Charni Road (West),
Mumbai 400 002
Tel: (+91) 22 2281 1700
Fax: (+91) 22 2284 1800
E-mail: rajesh@aralaw.com
 
 
 
 
 
 

 
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SHARE SUBSCRIPTION AGREEMENT
 
 
1.
DEFINITIONS AND INTERPRETATION
3
     
2.
SUBSCRIPTION ON COMPLETION DATE
8
     
3.
CONDITIONS PRECEDENT
9
     
4.
COMPLETION
10
     
5.
CONDITIONS SUBSEQUENT TO COMPLETION AND COVENANTS
12
     
6.
REPRESENTATIONS AND WARRANTIES
13
     
7.
INDEMNITY
14
     
8.
CO-OPERATION
16
     
9.
RESOLUTION OF DISPUTES
17
     
10.
GOVERNING LAW
18
     
11.
NOTICES
18
     
12.
TERM
19
     
13.
CONFIDENTIALITY AND PUBLICITY
19
     
14.
AUTHORIZED PERSON
20
     
15.
TERMINATION
20
     
16.
MISCELLANEOUS PROVISIONS
22
     
SCHEDULE 1 — PROMOTER AND PROMOTER GROUP 
26
     
SCHEDULE 2 — COMPANY AND SMC GROUP COMPANIES 
27
     
SCHEDULE 3 — POST COMPLETION SHAREHOLDING STRUCTURE 
28
     
SCHEDULE 4 — CONDITIONS PRECEDENT 
30
     
SCHEDULE 5 — RESTRICTED ACTIONS 
33
     
SCHEDULE 6 — CONDITION SUBSEQUENT 
35
     
SCHEDULE 7 — REPRESENTATIONS AND WARRANTIES 
36
     
SCHEDULE 8 — PRE-COMPLETION SHAREHOLDING OF SMC GROUP COMPANIES 
53
     
SCHEDULE 9 — LIST OF REGULATORY APPROVALS 
56
     
SCHEDULE 10 — LIST OF CLOSING DELIVERABLES 
57
     
ANNEXURE 1 — FORM OF SHAREHOLDERS AGREEMENT 
58
     
ANNEXURE 2 — FORM OF NO OBJECTION LETTER 
59
     
ANNEXURE 3 — DISCLOSURE SCHEDULE 
61
     
ANNEXURE 4 — INVESTOR DISCLOSURE SCHEDULE 
62

 

 
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SHARE SUBSCRIPTION AGREEMENT

THIS SHARE SUBSCRIPTION AGREEMENT (this “Agreement”) is made as on this ______
day of May, 2007.

BETWEEN:

(1)    
MILLENNIUM INDIA ACQUISITION COMPANY INC. a company organised under the laws of
the State of Delaware, United States of America and having its office address at
330 East, 38th Street, suite 46C, New York, NY 10016, USA (hereinafter referred
to as “Investor”, which expression shall, unless it be repugnant to the context
or meaning thereof, be deemed to mean and include its successors and
assigns);AND

(2)   
SMC GLOBAL SECURITIES LIMITED, a company incorporated under the Indian Companies
Act, 1956, having its registered office 17, Netaji Subhash Marg, Darya Ganj, New
Delhi (hereinafter referred to as “Company”);AND

(3)   
MR. S.C. AGGARWAL (“Promoter No.1”), son of Mr. M. G. Aggarwal, Indian
inhabitant, residing at C-335, Saraswati Vihar, New Delhi - 110088 ; AND

(4)   
MR. M.C. GUPTA (“Promoter No.2”), son of Mr. S.S. Gupta, Indian inhabitant
residing at C-39, Anand Vihar I.P. Extention, New Delhi – 110 092; AND

(5)   
Person and entities listed at Schedule 1 (“Promoter Group”) represented jointly
by Mr. S.C. Aggarwal and Mr. M. C. Gupta.

Promoter No.1 and Promoter No.2 are collectively referred to as “Promoters”.
 
 

 
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W H E R E A S:

A.           
The Company is in the business of dealing in security market as stock broker,
distribution of mutual fund units, IPO distribution and has made an application
to Securities and Exchange Board of India for registration as portfolio manager.
The Company through SMC Group Companies (defined below) is engaged in the
business of commodities trading, insurance broking, merchant banking as more
specifically defined in Schedule 2 of this Agreement;

 
B.           
On the request of the Company and the Promoters, the Investor proposes to invest
in the Company in accordance with the terms and subject to the conditions of
this Agreement;

C.           
The subscription to the Subscription Shares (defined below) by the Investor
shall be in accordance with the terms and subject to the conditions of this
Agreement and the number of Subscription Shares (defined below) shall be such,
that post subscription and acquisition of Subscription Shares of the Company,
the Investor shall be the direct, legal and beneficial owner of 14.90% of the
total issued and paid up equity share capital of the Company on a fully diluted
basis and indirect proportionate shareholder in the SMC Group Companies as
contemplated in Schedule 3;

D.           
The Parties hereto wish to record in the manner herein mentioned the terms and
conditions on which the Investor shall subscribe to and acquire the Subscription
Shares of the Company.

NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED
HEREIN AND OTHER GOOD AND VALUABLE CONSIDERATION THE ADEQUACY OF WHICH IS HEREBY
ACKNOWLEDGED, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AND THIS
AGREEMENT WITNESSETH AS UNDER:
 
1.            
DEFINITIONS AND INTERPRETATION

 
1.1.  
Definitions:

 
In this Agreement, the following terms, to the extent not inconsistent with the
context thereof or otherwise defined herein, shall have the following meanings
assigned to them herein below:
 
i.  
‘Act’ shall mean the Indian Companies Act, 1956.

 
ii.  
‘Affiliate’ in relation to the Investor, being a corporate entity, means any
entity, which is a subsidiary (with Investor, directly or indirectly, holding
50.1% or more shares) of the Investor including the Investor’s Dubai Subsidiary.

 
iii.  
‘Agreement’ shall mean this Share Subscription Agreement together with the
schedules, Disclosure Schedule, and annexure thereto as from time to time made,
amended, supplemented or replaced or otherwise modified in accordance with the
terms of this Agreement.

 
iv.  
‘Alternative Transaction’ shall mean (a) (i) any direct or indirect acquisition
or purchase of any Securities of the Company or SMC Group Companies (including
but not limited to, a subscription for new Securities or purchase of existing
Securities, unless otherwise contemplated in this Agreement) or any tender offer
or exchange offer or irrevocable contribution in favor of any Person, (ii) any
direct or indirect acquisition or purchase of any material assets of the Company
or SMC Group Companies (unless otherwise agreed in writing by the Investor),
other than in the Ordinary Course of Business; or (b) any merger, consolidation,
business combination, sale of a material portion of the assets,
recapitalization, liquidation, dissolution, incurrence of material indebtedness
or similar transaction involving the Company or SMC Group Companies; or (c) any
other transaction the consummation of which would prevent or materially delay
the transactions contemplated hereby.
 
 
 

 
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v.  
‘Applicable Law’ shall mean any applicable constitution, treaty, statute, rule,
regulation, ordinance, order, directive, code, judgment, decree, injunction, or
any interpretation, determination, award, permit, license, authorization,
directive requirement, ruling or decision of, agreement with, or by a Government
Authority.

 
vi.  
 ‘Authorised Dealer’ shall mean ICICI Bank Limited or such other bank as is
notified to the Investor by the Company.

 
vii.  
‘Bankruptcy Matter’ shall mean any matter in connection with any liquidation;
dissolution; reorganization; winding up; readjustment of debts; insolvency;
bankruptcy; suspension of payments, inability to repay debts as such debts
become due within the meaning of Section 434 of the Companies Act; general
assignment for the benefit of creditors; administration or re-organization;
action to appoint or application for a consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator,
administrator, operating agency or similar officer for all or any part of a
Person’s assets or revenues; a case of Proceeding under any applicable
suspension of payments or bankruptcy laws or regulations; or a petition seeking
to take advantage of any Applicable Laws providing for relief of debtors.

 
viii.  
’Business’ means the business carried on by the Company including the business
carried on by each of the SMC Group Companies.

 
ix.  
‘Claim’ includes any notice, demand, assessment, letter or other document issued
or action taken by any tax, fiscal or other statutory or governmental authority,
body or official whatsoever (whether of India or elsewhere in the world) whereby
the Company is or may be placed or sought to be placed under a liability to make
a payment or deprived of any relief, allowance, credit or repayment otherwise
available.

 
x.  
‘Completion’ shall mean completion of the events specified in Clause 4.3 below
and the Investor being registered as a member in respect of the Subscription
Shares in the register of members of Company.

 
xi.  
‘Completion Date’ shall mean date mentioned in Clause 4.3 hereof.

 
xii.  
‘Conditions Precedent’ shall mean the conditions precedent mentioned in Clause 3
of this Agreement.

 
xiii.  
 ‘Derivative Securities’ of a Person shall mean any subscriptions, options,
debentures, bonds, conversion rights, warrants, phantom stock rights or similar
agreements, Securities or commitments of any kind obligating such Person to
issue, grant, deliver or sell or cause to be issued, granted, delivered or sold
(i) any shares or Securities of such Person; (ii) any Securities convertible
into or exchangeable for any shares of such Person  or (iii) any rights to
participate in the equity of such Person or to participate in or direct the
election of any directors or officers of such Person.

 
 
 
 
 
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xiv.  
‘Effective Date’ shall mean the date of signing this Agreement by the Parties.

 
xv.  
‘Encumbrances’ shall mean any encumbrance, lien, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention or
non-disposal agreement or other restriction of a similar kind, and all other
easements, encroachments and title defects of every type and nature, or any
conditional sale contract, title, retention contract, or other contract to give
or to refrain from giving any of the foregoing.

 
xvi.  
‘Environment Law’ shall mean any Applicable Law pertaining to land use, air,
soil, surface water groundwater (including the protection, cleanup, removal,
remediation or damage thereof), public of employee health or safety or other
environmental matter and any Applicable Law.

 
xvii.  
‘Fully Diluted’ shall mean the total of all classes and series of Company or SMC
Group Companies shares outstanding combined with all Derivative Securities
(including both issued and un-issued), approved stock incentive plans for the
employees and convertible Securities of all kinds and effect of any
anti-dilution protection regarding previous financings, all on an “as if
converted” basis.

 
xviii.  
‘Governmental Authority’ shall mean any administrative agency, commission, court
or other governmental or regulatory authority or instrumentality, whether
central, state, local or municipal or judicial, quasi-judicial or administrative
forum, including but not limited to, ministries and departments of the
Government of India and Tax authorities.

 
xix.  
‘Group Companies’ shall mean (i) SMC Comtrade Limited, (ii) DSP Insurance
Brokers Private Limited, (iii) Nexgen Capitals Limited, (iv) SMC Comex
International DMCC, (v) Abhichaya Investment Private Limited, and (vi) Pulin
Investment Private Limited, (vii) SAM Global Securities Limited.

 
xx.  
‘INR’ or ‘Rs’ or ‘Rupees’ shall mean the lawful currency of India.

 
xxi.  
‘Indian GAAP’ shall mean the generally accepted accounting principles
recommended by the Institute of Chartered Accountants of India and where there
are no such principles recommended, the accounting principles accepted in India
and consistently applied from period to period and throughout any period in
accordance with past practices of Company and SMC Group Companies.

 
xxii.  
‘Investor’s Dubai Subsidiary’ shall mean the company proposed to be formed under
the laws of the United Arab Emirates and Controlled by the Investor.

 
xxiii.  
‘Knowledge’ as used with respect to Company or SMC Group Companies shall mean
matters as to which any of Promoters or any director, officer manager or
employee of Company or SMC Group Companies has knowledge or matters which are
not actually known but could have been known by such Persons based upon
reasonable inquiry in the course of business or in connection with the
verification of the representations and warranties under the Agreement.

 
xxiv.  
‘Liabilities’ shall mean any and all current liabilities, obligations, payables,
forms of taxation whether of India or elsewhere in the world, past, present and
deferred (including, without limitation, income tax, stamp duty, customs and
other import or export duties) and all other statutory or governmental
impositions, duties and levies and all penalties, charges, costs and interest
relating to any Claim.

 
 
 
 
 
 
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xxv.  
“Licenses” shall mean all approvals, licenses, permits and other authorizations
issued by central, state or local Government Authorities and required for the
Business of the Company or SMC Group Companies.

 
xxvi.  
‘Material Adverse Effect’ shall mean the occurrence or reasonably likely
occurrence of any event, change, circumstance or effect that individually or in
the aggregate (taking into account all other such events, changes, circumstances
or effects), is or is reasonably likely to (a) have a material adverse effect to
the financial conditions, properties, assets (including intangible assets),
liabilities, business, operations, results of operations or prospects of Company
or SMC Group Companies, or (b) materially hinder or delay Company’s or SMC Group
Companies ability to consummate the transactions contemplated herein, or (C)
materially hinder Company’s or SMC Group Companies ability to operate its
business substantially in the manner previously conducted following the
Completion.

 
xxvii.  
‘Ordinary Course of Business’ shall mean the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency), but only to the extent consistent with Applicable Law and the custom
of entities engaged in the same business as the existing business of the Company
or SMC Group Companies, as the case may be.

 
xxviii.  
‘Party’ shall mean the Investor, the Promoters or the Company referred to
individually and ‘Parties’ shall mean the Investor, the Promoters and the
Company referred to collectively.

 
xxix.  
‘Person’ shall include an individual, an association, a corporation, a
partnership, a joint venture, a trust, an unincorporated organisation, a joint
stock company or other entity or organisation, including a government or
political subdivision, or an agency or instrumentality thereof and/or any other
legal entity.

 
xxx.  
‘Proceeding’ shall mean any action, suit, charge, hearing, claim, legal
quasi-judicial, administrative, regulatory, arbitration or other alternative
dispute resolution proceeding or investigation.

 
xxxi.  
‘Proprietary Rights’ shall mean (i) Indian and foreign patents, patent
applications, patent disclosures and improvements thereto; (ii) Indian and
foreign trademarks, service marks, domain names, trade dress, logos, designs,
slogans, trade names and corporate names, the goodwill associated therewith, and
the registrations and applications for registration thereof; (iii) United States
and foreign copyrights, and the registrations and applications for registration
thereof; (iv) computer software (including source and object code) and related
specifications, flow charts and other documentation; and (v) confidential
information, trade secrets, inventions (whether patentable or not), business
information, customer lists, know-how, technology; and all documentation
relating to any of the foregoing.

 
xxxii.  
‘Representations and Warranties’ shall mean the representations, warranties
covenants and undertakings given by the Company and/or the Promoters in this
Agreement for themselves and for SMC Group Companies.

 
xxxiii.  
‘Securities’ shall have the meaning provided to the term under Section 2(h) of
the Securities Contract (Regulation) Act, 1956.

 
xxxiv.  
 ‘Shares’ or ‘Equity Shares’ shall mean the equity shares of the Company.

 
xxxv.  
‘Shareholder’ or ‘Shareholders’ shall mean any Person who holds any Shares.

 
 
 
 
 
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xxxvi.  
‘Shareholders Agreement’ shall mean the Shareholders Agreement to be executed
between the Parties hereto in a form and manner annexed hereto as Annexure 1.

 
xxxvii.  
 ‘SMC Group Companies’ shall mean (i) SMC Comtrade Limited, (ii) DSP Insurance
Brokers Private Limited, (iii) Nexgen Capitals Limited, (iv) SMC Comex
International DMCC, (v) Abhichaya Investment Private Limited, and (vi) Pulin
Investment Private Limited more specifically defined in Schedule 2.

 
xxxviii.  
‘Subscription Shares’ shall mean 1,314,054 Equity Shares of the Company to be
subscribed to and acquired by the Investor at a total consideration of
INR  1,376,905,203 constituting 14.90% of the Fully Diluted issued and paid-up
share capital of the Company post Completion representing more specifically the
Fully Diluted shareholding as set out in Schedule 3.

 
xxxix.  
‘Tax’ and, collectively ‘Taxes’ shall mean any and all foreign, central, state,
municipal and local (or equivalent) taxes of any country, assessments and other
governmental charges, customs duties, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits sales,
service, use and occupation, and value added, ad valorem, stamp duty, stamp
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other Person with respect to such amounts and including any liability
for Taxes of a predecessor entity.

 
xl.  
‘Tax Return’ shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto and including any amendment thereof.

 
xli.  
‘US GAAP’ shall mean the generally accepted accounting principles in the United
States.

 
xlii.  
‘Warrantors’ shall mean the Company and the Promoters for themselves and on
behalf of SMC Group Companies and ‘Warrantor’ means any one of them.

 
1.2.  
Other Defined Terms:

 
i.  
 ‘Business Days’ means the days on which the banks are open for business in New
Delhi.

 
ii.  
 ‘Dispute’ shall have the meaning as ascribed to it in Clause 9.1 of this
Agreement.

 
iii.  
 ‘Losses’ shall have the meaning as ascribed to it in Clause 7.1 of this
Agreement.

 
1.3.  
Interpretation:

 
i.  
 The terms referred to in this Agreement shall, unless defined otherwise or
inconsistent with the context or meaning thereof, bear the meaning ascribed to
it under the relevant statute/legislation.

 
ii.  
All references in this Agreement to statutory provisions shall be construed as
meaning and including references to:

 
a.  
Any statutory modification, consolidation or re-enactment (whether before or
after the date of this Agreement) for the time being in force;

 
b.  
All statutory instruments or orders made pursuant to a statutory provision; and

 
 
 
 
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c.  
Any statutory provisions of which these statutory provisions are a
consolidation, re-enactment or modification.

 
d.  
Words denoting the singular shall include the plural and words denoting any
gender shall include all genders.

 
e.  
Headings to clauses, sub-clauses and paragraphs are for information only and
shall not form part of the operative provisions of this Agreement or the
Schedules and shall be ignored in construing the same.

 
f.  
References to recitals, clauses or schedules are, unless the context otherwise
requires, are references to recitals, to clauses of or schedules to this
Agreement.

 
g.  
 Reference to days, months and years are to Gregorian days, months and calendar
years respectively.

 
h.  
Any reference to the words “hereof,” “herein”, “hereto” and “hereunder” and
words of similar import when used in this Agreement shall refer to clauses or
annexures of this Agreement as specified therein.

 
i.  
Any expression importing a natural person includes any company, trust,
partnership, joint venture, association, body corporate or governmental agency.

 
j.  
Where a word or phrase is given a defined meaning, another part of speech or
other grammatical form in respect of that word or phrase has a corresponding
meaning

 
k.  
Reference to “Investor” shall unless repugnant to the context shall for the
purpose of this Agreement, mean and include the Affiliates of the Investor. The
rights under this Agreement shall be exercised by the Affiliate holding 7.451%
of the issued and paid-up share capital of the Company at Completion. For
computing the paid-up equity share capital of the Company, the bonus shares and
subsequent increase in the capital pursuant to the merger with SAM Global
Securities Limited and any 100% subsidiary of the Company shall be included.

 
l.  
The words “include” and “including” shall be construed without limitation.

 
 
2.            
SUBSCRIPTION ON COMPLETION DATE

 
2.1.  
Subject to the terms and conditions set forth in this Agreement, and relying on
the Representations and Warranties and the indemnities given by the Promoters
and the Company under this Agreement, the Investor agrees on the Completion Date
to subscribe for and the Company agrees to issue and allot to the Investor the
Subscription Shares of face value of INR10/- each at issue price of INR
1,047.83/- each aggregating to an amount of INR 1,376,905,203 such that post
acquisition of Subscription Shares of the Company, the Investor is the legal and
beneficial owner of 14.90% of the total issued and paid up equity share capital
of the Company and indirect shareholder of SMC Group Companies as set out in
more detail at Schedule 3. The consideration to be paid for Subscription Shares
shall be referred to as the Investment Amount (“Investment Amount”).

 
2.2.  
The Subscription Shares shall be acquired by Investor on Completion Date free
from all Encumbrances and together with all rights, title and interests now or
hereafter attaching thereto. The Investment Amount shall be fixed and firm and
shall not be subject to escalation unless mutually agreed upon in writing
between the Parties hereto.

 
2.3.  
All payments under this Agreement shall be paid in Indian Rupees and shall be by
way of pay order or banker’s draft drawn on scheduled bank in India or by way of
telegraphic transfer to such account as may be notified to the Investor.

 
 
 
 
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2.4.  
The Subscription Shares shall rank pari pasu with the existing issued Equity
Shares of the Company with respect to all stock activities including but not
limited to voting rights, dividends and rights issuance.

 
 
3.            
CONDITIONS PRECEDENT

 
3.1.  
The Parties agree that the obligation of the Investor to acquire the
Subscription Shares, is conditional upon the fulfillment of the conditions
stipulated in Schedule 4 hereto to the satisfaction of the Investor, unless
specifically waived in writing by the Investor and the Representations and
Warranties continue to be true and correct on the Completion Date.

 
3.2.  
If the Conditions Precedent mentioned in Schedule 4 are not fulfilled or
satisfied or waived in writing by the Investor on or before 165 days from the
Effective Date or such other date as may be mutually agreed between the Parties
in writing, the Investor shall have the right to terminate this Agreement
forthwith.

 
3.3.  
The Promoters and the Company shall co-operate and provide all information and
assistance to the Investor and/or its advisors and authorised representatives as
reasonably requested by the Investor to enable them to verify the
records/documents of the Company and SMC Group Companies, including as may be
required for the purposes of the proxy statement filed by the Investor in
accordance with the requirements of the laws of United States.

 
3.4.  
Conduct Prior to Completion: During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Completion, the Promoters and the Company agree (except to the extent expressly
contemplated by this Agreement or as consented to in writing by Investor) that
Company and SMC Group Companies shall and Promoters shall cause the Company and
SMC Group Companies to and shall ensure that each of the Company and SMC Group
Companies shall, (i) carry on its business in the Ordinary Course of Business;
(ii) pay its debts and taxes when due, subject to good faith disputes over such
debts or Taxes, (iii) pay or perform other obligations when due, subject to good
faith disputes; and (iv) use all reasonable efforts to preserve intact its
present business organizations, and preserve its relationship with clients,
lessors, licensors and others having business dealings with it, to the end that
its goodwill and ongoing ability to provide services shall be unimpaired at the
Completion. The Promoters agree to promptly notify the Investor of any event or
occurrence not in the Ordinary Course of Business, and of any event which, in
the opinion of the Company and/or the Promoters could reasonably be expected to
have a Material Adverse Effect. Without limiting the foregoing, except as
expressly contemplated by this Agreement, the Company shall not and the
Promoters shall cause the Company and SMC Group Companies not to and shall
ensure that Company and SMC Group Companies do not engage in any of the actions
set out at Schedule 5, without the prior written consent of Investor which may
be withheld in its sole discretion.

 
3.5.  
No Solicitation on Promoters, Company and SMC Group Companies.

 
i.  
From and after the date of this Agreement until the earlier of the Completion or
the termination of this Agreement, the Company, SMC Group Companies and each of
the Promoters shall not and the Promoters shall ensure that the Company and SMC
Group Companies shall not directly or indirectly through any officer, director,
employee, representative or agent of the Promoters or the Company or SMC Group
Companies or otherwise, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to an
Alternative Transaction; (ii) engage or participate in negotiations or
discussions concerning, or provide any information to any Person with respect
to, or afford any access to the properties, books or records of Company or SMC
Group Companies, or take any other action to facilitate any inquiries or the
making of any proposal that may reasonably be expected to lead to an Alternative
Transaction; or (iii) authorize, agree into, accept, approve or recommend any
agreement or understanding with respect to any Alternative Transaction. The
Promoters, the Company and SMC Group Companies have terminated all and any
pending discussions or negotiations relating to any Alternative Transaction and
represent and warrant that they had the legal right to terminate such
discussions without payment of any fee or other penalty.

 
 
 
 
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ii.  
The Company, the SMC Group Companies and the Promoters shall immediately notify
the Investor (and no later than 24 hours) after (a) receipt by the Promoters or
the Company or the SMC Group Companies (or its advisors) of Knowledge of any
Alternative Transaction, or (b) if any discussions are sought to be initiated
with regard to any Alternative Transaction, or (c) receipt of any request for
information or for access to the properties, books or records of Company or SMC
Group Companies by any Person that intends to enter into or has entered into an
Alternative Transaction. Such notice shall be made orally and in writing and
shall communicate to Investor the identity of the Person making such request or
inquiry and any other terms of such request or inquiry and any other terms of
such request or inquiry.

 
iii.  
It is acknowledged and agreed between the Parties that the Subscription Shares
are not an ordinary article of commerce and are of special value of interest to
the Investor and any breach or violation of the provisions of this Clause 3.5
shall cause to Investor irreparable harm and damages for which payment in
damages shall not constitute adequate relief, and that therefore, without
prejudice to any and all other rights and remedies the Investor may have, the
Investor shall be entitled without proof of special damage to the remedies of
injunction, specific performance and other equitable relief for any threatened
or actual breach of the provisions of this Clause 3.5. Provided, however, that
any sum payable to the Investor under this section as liquidated damages,
compensation or costs shall not exceed US$ 2 million.

 
3.6.  
No Solicitation by Investor. From and after the date of this Agreement until the
earlier of the Completion or the termination of this Agreement the Investor
shall not directly or indirectly solicit, initiate, or encourage any inquiries
or proposals that constitute, or could reasonably be expected to lead to any
acquisition or subscription or purchase of Securities of any company in India
engaged in similar line of Business. Any breach of this clause 3.6 by the
Investor shall cause irreparable harm and damages to the Promoters and the
Company for which payment in damages shall not constitute adequate relief and
therefore without prejudice to any and other rights available to the Company and
the Promoters, the Company and the Promoters shall be entitled jointly without
proof of special damage to the remedies of injunction, specific performance and
other equitable relief for any threatened or actual breach of the provisions of
this Clause 3.6 provided that the Promoters and the Company can jointly claim
actual liquidated damages, compensation or  costs incurred to the extent of US$
2 million.

 
 
4.            
COMPLETION 

 
4.1.  
The Promoters and the Company shall notify the Investor of the fulfillment of
the Company Conditions Precedent and provide to the Investor, all the requisite
documents evidencing fulfillment of such Conditions Precedent applicable to the
Promoters and/or the Company and/or SMC Group Companies. The Investor through
its advisors/counsel shall then satisfy itself as to the fulfillment of the
Company Conditions Precedent. The Investor shall notify the Promoters and the
Company within 7 days from the date of receipt of all the documents/information
from the Promoters of its satisfaction or dissatisfaction with the same or of
waiving the fulfillment of any of the Company Conditions Precedent applicable to
the Promoters and/or the Company and/or the SMC Group Companies.

 
 
 
 
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4.2.  
 In case the Investor notifies the Promoters or the Company of its
dissatisfaction under Clause 4.1 above, the Promoters shall fulfill the
unfulfilled Conditions Precedent on receipt of such notice and shall provide to
the Investor, all requisite documents evidencing fulfillment of that Condition
Precedent. The procedure referred to in Clause 4.1 above shall be followed
thereafter until the fulfillment of all Company Conditions Precedent applicable
to the Promoters and/or Company and/or SMC Group Companies, to the satisfaction
of the Investor.

 
4.3.  
Upon fulfillment of all the Conditions Precedents to the satisfaction of the
Investor or if specifically waived in writing by the Investor, the Parties shall
proceed to complete the subscription and purchase of Subscription Shares to the
Investor (‘Completion’) in the manner provided in this Clause 4 and shall agree
upon a date on which the Completion shall take place. The date so agreed between
Investor, the Company and the Promoters shall hereinafter be referred to as the
‘Completion Date’, which in any case shall not be later than 165 days from the
Effective Date. This date may however be extended upon mutual agreement between
the Parties.

 
4.4.  
The Completion shall take place at the time and place mutually agreed between
the Parties and on simultaneous completion of the following actions and receipt
of the Investment Amount as indicated in Clause 4.5:

 
i.  
The Promoters shall convene meeting of the Board of Directors of the Company,
wherein the Board shall pass the following resolutions:

 
ii.  
Approve issue and allotment of Subscription Shares.

 
iii.  
Appoint one nominee of Investor as director.

 
iv.  
Enter the name of the Investor as the legal and beneficial owner of the
Subscription Shares free of all Encumbrances, in the register of members of the
Company.

 
v.  
Notify/intimate regulatory authorities as required under Applicable law.

 
4.5.  
The Promoters shall convene meeting of the Board of Directors and/or
shareholders as may be required under Applicable Law for the SMC Group
Companies, wherein the Board of Directors and the shareholders of respective
companies shall pass the following resolutions:

 
i.  
Noting the indirect change in the shareholding, pursuant to investments made by
Investor in the Company and reflecting the proposed shareholding as contemplated
under Schedule 3.

 
ii.  
Pass necessary board resolutions, shareholders resolution and take such actions
as may be necessary to adopt the revised Articles of Association as set out in
Schedule 4 of the Shareholders Agreement.

 
iii.  
Notify/intimate regulatory authorities as required under Applicable law.

 
 
 
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4.6.  
The Promoters shall deliver and cause the Company and SMC Group Companies to
deliver, wherever required, the following documents to the Investor:

 
i.  
A certificate signed by the Promoters and the Company to the effect that the
Representations and Warranties contained in this Agreement, continue to be true
and correct as on the Completion Date with the same effect as though such
Representations and Warranties had been made as of such date;

 
ii.  
Original share certificates evidencing the Subscription Shares or credit of the
Subscription Shares in the depository account provided by the Investor to the
Company; and

 
iii.  
Other documents as specifically identified as Schedule 10.

 
4.7.  
Simultaneously upon completion of all the steps contemplated in Clause 4.4 above
(but prior to the issue of share certificate or credit of the Subscription
Shares in the depository account provided by the Investor to the Company), the
Investor shall remit the Investment Amount, for credit to the account of the
Company as intimated to the Investor in accordance with Clause 2.3.

 
4.8.  
Immediately after subscription and purchase of Subscription Shares by the
Investor, the shareholding pattern of the Company and the SMC Group Companies
shall be as set out in Schedule 3.

 
4.9.  
The Parties agree to take all measures that may be required to ensure to the
extent possible, that all the events contemplated in this Clause 4 on the
Completion Date are completed on the same day unless otherwise specifically
agreed in writing by the Parties.

 
4.10.  
Notwithstanding the provisions of Clause 4.7, all proceedings to be taken and
all documents to be executed and delivered by the Parties at Completion shall be
deemed to have been taken and executed simultaneously to the extent possible and
no proceedings shall be deemed to have been taken nor documents executed or
delivered until all have been taken, executed and delivered.

 
 
5.            
CONDITIONS SUBSEQUENT TO COMPLETION AND COVENANTS

 
5.1.  
The Investor’s obligation to subscribe for and purchase of Subscription Shares
at the Completion is subject to the fulfillment after the Completion of each of
the conditions as set out in Schedule 6, unless waived in writing by such
Investor at the Completion.

 
5.2.  
No Guarantee/Pledge. The Investor shall not at any point in time be required to
pledge their Subscription Shares or provide any guarantee or other support to
any third party, including without limitation lenders of Company and/or SMC
Group Companies.

 
5.3.  
Ethical Business Practices. The Company and SMC Group Companies shall and the
Promoters shall ensure that the Company and SMC Group Companies shall ensure
that the business practices of Company and SMC Group Companies are ethical and
in accordance with Applicable Laws.

 
5.4.  
Variances to annual operating budget & business plan. Any proposed variance to
the annual operating budget, business plan or estimations in relation to capital
expenditure or indebtedness (including giving of security for or guaranteeing
debts but excluding (i) loan taken against the investments as appearing in the
stock-in trade and investments in third party securities and given as security
to exchanges/banks/institution by Company on behalf of SMC Group Companies/SAM
Global Securities Limited or SMC Group Companies/SAM Global Securities Limited
on behalf of the Company, and (ii) any guarantees given to exchanges on behalf
of the Company or any Group Companies or vice versa) beyond 25% of what is
stated in the annual operating budget, business plan or estimations along with
reasons for such variance shall be brought to the immediate attention of the
Board and shall not be implemented without the prior written consent of
Investor.

 
 
 
 
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5.5.  
Financial and accounting records. The Company and SMC Group Companies shall
maintain true and accurate financial and accounting records of all operations in
accordance with Indian GAAP, and in accordance with all relevant Indian
statutory and accounting standards and the policies from time to time adopted by
the respective Board of Directors. The financial statements and accounts of
Company and SMC Group Companies shall be prepared in English and shall be
audited on an annual basis.

 
5.6.  
Inspection & Audit Rights of Investor. The Company and SMC Group Companies shall
and the Promoters shall ensure that the Company and SMC Group Companies, on
receiving a request from Investor provide as soon as practicable to Investor
copies of any documents, secretarial, accounting or other records which are
prepared and maintained by Company and SMC Group Companies as may be required by
Investor. The Investor shall have full and complete access to the premises,
records, accounts, documents of Company, SMC Group Companies and their
subsidiaries with rights, by itself or through its authorised representatives,
to inspect such accounts, records and documents.

 
5.7.  
Listing of Subscription Shares. Company shall take necessary steps and the
Promoters shall ensure that the Company makes necessary applications and ensure
that the Subscription Shares of the Investors are listed on the regional stock
exchanges where the Equity Shares of the Company are currently listed as soon as
possible after Completion.

 
5.8.  
Investor shareholding. Promoters and the Company shall ensure that on completion
of the proposed merger of SAM Global Securities Limited with the Company, the
Investor will continue to hold at least 14.90% of the post merger issued and
paid-up share capital of the Company, provided that, the Investor acquires
14.90% of the issued and paid-up share capital of SAM Global Securities Limited,
pursuant to the Share Subscription Agreement executed between the Promoters of
SAM Global Securities Limited, SAM Global Securities Limited and the Investor.
It is clarified that such shareholding may not be maintained if the Investor
divests its shareholding in the Company or SAM Global Securities Limited after
Completion.

 
5.9.  
Listing. The Company shall and the Promoters shall ensure that the Equity Shares
of the Company are listed on the Bombay Stock Exchange Limited and/or National
Stock Exchange Limited within four (4) years from the date of Completion.

 
 
6.            
REPRESENTATIONS AND WARRANTIES

 
6.1.  
True and Accurate: The Warrantors represent, warrant and undertake to the
Investor, that each of the statements set out in this Clause and Part 1 of
Schedule 7 hereof, as applicable to the Warrantors, is now and will be true and
accurate at the Completion Date. The Warrantors acknowledge that the Investor,
in entering into this Agreement, is relying on such representations, warranties
and undertakings and shall be entitled to treat the same as conditions of the
Agreement.

 
6.2.  
Investor Representation: The Investor hereby represents and warrants that
subject to the fulfillment of the Condition Precedent to this Agreement, it has
the corporate power and authority to execute, delivers and perform this
Agreement and the transactions contemplated herein. The execution, delivery and
performance by the Investor of this Agreement has been duly authorized and
approved by its board of directors. Investor additionally makes the
representations and warranties as set out in this Clause and Part 2 of
Schedule 7, is true now and will be true and accurate at the Completion Date.

 
 
 
 
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6.3.  
Separate and Independent: Each of the Representations and Warranties shall be
separate and independent and, save as expressly provided to the contrary, shall
not be limited by reference to or inference from any other Representations and
Warranty or any other term of this Agreement, which is not expressly referenced
to the Representations and Warranty concerned.

 
6.4.  
Knowledge: If any Representation or Warranty is qualified by Knowledge, then it
means that the Representation or Warranty has been made to the Knowledge of the
Warrantors, after the Warrantors have made and caused to be made such due and
proper inquiries as may be required in respect of the relevant matter to obtain
informed Knowledge.

 
6.5.  
Undertaking: None of the Warrantors shall do, allow or procure any act or
omission before the Completion Date which would respectively constitute a breach
of any of the Representations and Warranties if they were given at the
Completion Date, or which would make any of the Representations and Warranties
inaccurate or misleading if they were so given.

 
6.6.  
Notification of breach: Each of the Warrantors hereby agree to disclose promptly
to the Investor in writing immediately upon becoming aware of the same, any
matter, event or circumstance (including any omission to act) which may arise or
become known to it after the date of this Agreement which:

 
i.  
would render any of the Representations and Warranties to be inaccurate;

 
ii.  
in the Knowledge of the Warrantors has, or is likely to have, a Material Adverse
Effect on the Company or SMC Group Companies.

 
6.7.  
Survival: The Representations and Warranties provided in this Agreement shall
survive the Completion Date for a period of three (3) years.

 
6.8.  
Investor’s Reliance. The Company and the Promoter hereby agree and acknowledge
that the Investor has agreed to subscribe to the Subscription Shares inter alia
relying upon the Representations and Warranties.

 
 
7.            
INDEMNITY 

 
7.1.  
Without prejudice to any other right available to the Investor in law or under
equity, the Company and the Promoters (“Indemnifying Party”) shall jointly and
severally indemnify, defend and hold harmless the Investor, their Affiliates,
directors, advisors, officers, employees and agents, (collectively the “Investor
Indemnified Party”), from and against any and all direct and actual liabilities,
damages, demands, Claims including third-party claims (“Third-Party Claims”),
actions, judgments or causes of action, assessments, interest, fines, penalties,
and other costs or expenses (including, without limitation, amounts paid in
settlement, court costs and all reasonable attorneys’ fees and out of pocket
expenses) (“Losses”) (excluding any indirect and remote Third Party Claims or
loss of profit or opportunities or such punitive damages), directly or
indirectly, based upon, arising out of, or in relation to or otherwise in
respect of:

 
i.  
any willful misrepresentation or false information in or any breach of any
Representation and Warranty, covenant or agreement of the Promoters or Company
contained in this Agreement or any document or other papers delivered by any of
them to the Investor (other than relating to forward looking statement and
future projections or disclosed in the Disclosure Schedule) in connection with
or pursuant to this Agreement;

 
 
 
 
 
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ii.  
any liability arising out of non compliance of any obligation undertaken by the
Company or the Promoters;

 
iii.  
any liabilities and obligations of whatever nature relating to any litigation,
Claim or governmental investigation pending or relating to the business or
operations of the Promoters or the business of the Company or SMC Group
Companies prior to the date of execution of this Agreement and as on the
Completion Date and not disclosed in the Disclosure Schedule;

 
iv.  
any liability due to any non-compliance of any Applicable Law, rules or
regulations prior to the date of execution of this Agreement and as on the
Completion Date and not disclosed in the Disclosure Schedule.

 
v.  
Irrespective of any disclosures made in the Disclosure Schedule, any Losses
arising  out of the termination of license obtained by the Company from National
Stock Exchange

 
7.2.  
Limitation of Liability. The Company’s and the Promoters’ obligation to
indemnify the Investor under Clause 7.1 and Clause 7.3 shall not exceed an
amount equal to the Investment Amount. Provided further that, Promoters’
obligation to indemnify the Investor under Clause 7.1 and Clause 7.3 will be
limited to the extent of and for the amount of shortfall in the Losses that the
Company has failed to pay to the Investors in the first place.  Further, for the
purposes of this Clause 7.1 and Clause 7.3, the term Promoters shall only
include: (i) Mr. M.C. Gupta, (ii) Mr. S.C. Gupta, (iii) Mrs. Sushma Gupta, and
(iv) Mrs. Hemlata Aggarwal and no other Promoters as indicated in the Promoter
Group.

 
7.3.  
Any compensation or indemnity as referred to in Clause 7.1 above shall be such
as to place the Investor in the same position as it would have been in, had
there not been any such breach and as if the Representation and Warranty under
which Investor is to be indemnified, had been correct.

 
7.4.  
The Investor shall not assume in any manner, any responsibility or liability
whatsoever in respect of the business of the Company, the SMC Group Companies,
or its operations or activities, to any Person, firm, the company, body
corporate or other entity and any authority, whether central, state, local,
municipal or otherwise, in respect of any time prior to or after the Completion
Date, nor assume any responsibility or liability for any non-compliance, of any
Applicable Law, rules, regulations, any monetary or other liability.

 
7.5.  
Procedure for Indemnification:

 
i.  
The Investor Indemnified Party shall give notice to the Indemnifying Part of any
Claim, specifying in reasonable detail the factual basis for the Claim, the
amount thereof, estimated in good faith, all with reasonable particularity and
containing a reference to the provisions of this Agreement in respect of which
such Claim shall have occurred.

 
ii.  
With respect to Claim solely between the parties hereto, following receipt of
written notice from the Indemnified Party of a Claim, the Indemnifying Party
shall have fifteen (15) days to make such investigation of the Claim as the
Indemnifying Party deems necessary or desirable, and the Investor Indemnified
Party agrees to make available to the Indemnifying Party to substantiate the
Claim. If the Investor Indemnified Party and the Indemnifying Party agree at or
prior to the expiration of the fifteen (15) day period to the validity and
amount of such Claim, or if the Indemnifying Party fails to notify the
Indemnified Party of any dispute with respect to the validity or amount of such
Claim within such fifteen (15) day period, the Indemnifying Party shall
immediately pay to the Indemnified Party the full amount of the Claim, subject
to the terms hereof. If the Investor Indemnified Party and the Indemnifying Part
do not agree within the fifteen (15) day period, the Indemnifying Party shall
immediately pay to the Indemnified Party the amount of such Claim to the extent
the parties agree or remains undisputed, and the Investor Indemnified Party may
seek appropriate remedy at law or equity, as applicable, subject to the
limitations hereof, with respect to any portion of its Claim not paid by the
Indemnifying Party hereunder.

 
 
 
 
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iii.  
Third-Party Claims: The obligations and liabilities of each party to this
Agreement under Clause 7.1 hereof related to Third-Party Claims shall be subject
to the following terms and conditions:

 
a.  
At any time after receipt of notice of any Third-Party Claim asserted against,
imposed upon or incurred by an Investor Indemnified Party, the Investor
Indemnified Party shall notify the Indemnifying Party of such claim in writing.
The Indemnifying Party shall be entitled, at its own expenses, to participate in
and, upon written request from the Investor Indemnified Party, shall undertake
the defense thereof in good faith by counsel of the Indemnifying Party’s own
choosing, which counsel shall be satisfactory to the Investor Indemnified Party;
provided, however, that (i) the Investor Indemnified Party shall at all times
have the option, at its own expense, to participate fully therein (without
controlling such action) and (ii) if in the Investor Indemnified Party’s
judgment a conflict of interest exists, such Investor Indemnified Party shall be
entitled to select counsel of its own choosing reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall be obligated to pay the
fees and expenses of such counsel.

 
b.  
If within thirty (30) days after written notice to the Investor Indemnified
Party of the Indemnifying Party’s intention to undertake the defense of any
Third-Party Claim the Indemnifying Party shall fail to defend the Investor
Indemnified Party against such Third Party Claim, the Investor Indemnified Party
will have the right (but not the obligation) to undertake the defense and/or
enter into a compromise or settlement of such Third-Party Claim on behalf of,
and for the account and at the risk of, the Indemnifying Party.

 
iv.  
Each Party shall provide the other with access to all records and documents
within the first named party’s possession, custody or control relating to any
Third Party Claim, and shall otherwise co-operate with the other Party with
respect to defending any Third-Party Claim.

 
7.6.  
Other Rights and Remedies Not Affected: The Parties hereto acknowledge and agree
that damages alone would not provide an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and therefore that,
without prejudice to any and all other rights and remedies the Investor may have
(including but not limited to, damages), the Investor shall be entitled to the
remedies of injunction, specific performance and other equitable relief for any
threatened or actual breach of the provisions of this Agreement. The remedies
set forth in this Clause 7 are cumulative and shall in no way limit any other
remedy any party hereto has at law, in equity or pursuant hereto.

 
 
8.            
CO-OPERATION

 
8.1.  
The Parties shall use their best efforts to ensure that the transactions
contemplated by this Agreement are consummated as per the terms hereof,
including without limitation, obtaining all approvals from the applicable
government and/or regulatory authorities and other Persons as may be necessary
or reasonably requested by Investor in order to consummate the transaction
contemplated by this Agreement.

 
 
 
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8.2.  
The Promoters, Promoter Group and the Company, in so far as the SMC Group
Companies is concerned undertake to ensure that they, their representatives and
proxies representing them at the general meetings of the Company and the SMC
Group Companies, shall at all times exercise their votes and through their
respective appointed/nominated Directors (or alternate Directors) at Board
meetings and otherwise, act in such manner so as to comply with, and to fully
and effectually implement the spirit, intent and specific provisions of this
Agreement.

 
 
9.            
RESOLUTION OF DISPUTES

 
9.1.  
Amicable Settlement: If any dispute arises between Investor and/or the Promoters
and/or Company during the subsistence of this Agreement or thereafter, in
connection with the validity, interpretation, implementation or alleged breach
of any provision of this Agreement or regarding a question, including the
question as to whether the termination of this Agreement by one Party hereto has
been legitimate (“Dispute”), the disputing Parties hereto shall endeavour to
settle such Dispute amicably. The attempt to bring about an amicable settlement
shall be considered to have failed if not resolved within 60 days from the date
of the Dispute.

 
9.2.  
Conciliation: If the Parties are unable to amicably settle the Dispute in
accordance with Clause 9.1 within the period specified therein, the Parties
shall forthwith but not later than 30 days after expiry of the aforesaid period,
refer the Dispute to conciliation for resolution of the said Dispute to a
retired High Court Judge or a reputed Chartered Accountant acceptable to the
Parties. The attempt to bring about such resolution shall be considered to have
failed if not resolved within 30 days from the date of receipt of a written
notification in this regard.

 
9.3.  
Arbitration: If the Parties are unable to amicably settle the Dispute in
accordance with Clause 9.2 within the period specified therein, any Party to the
Dispute shall be entitled to serve a notice invoking this Clause and making a
reference to an arbitration panel of three arbitrators. Each party to the
dispute shall appoint one arbitrator within 30 days of receipt of the notice of
the Party making the reference, and the two arbitrators, so appointed shall
appoint a third arbitrator. The Arbitration proceedings shall be held in
accordance with the rules of the Singapore International Arbitration Centre. The
decision of the arbitration panel shall be binding on all the Parties to the
Dispute.

 
i.  
The place of the arbitration shall be Singapore.

 
ii.  
The proceedings of arbitration shall be in the English language.

 
iii.  
The Arbitrator’s award shall be substantiated in writing. The court of
arbitration shall also decide on the costs of the arbitration proceedings. In
case the arbitrators have not decided on the costs of the arbitration
proceedings, each Party to the Dispute shall bear its own costs, in relation to
the arbitration proceedings.

 
iv.  
The award shall be binding on the Parties subject to the Applicable Laws in
force and the award shall be enforceable in any competent court of law.

 
v.  
The Indian courts shall have exclusive jurisdiction.

 
 
 
 
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10.           
GOVERNING LAW

 
This Agreement shall be governed by and construed under the laws of India,
without regard to the conflicts of law provisions thereof.
 
 
11.           
NOTICES

 
11.1.  
Any notice or other communication that may be given by one Party to the other
shall always be in writing and shall be served either by (i) hand delivery duly
acknowledged; or (ii) sent by registered post with acknowledgment due; or
(iii) by facsimile at the respective addresses set out herein below or at such
other address as may be subsequently intimated by one party to the other in
writing as set out herein. If the notice is sent by facsimile, the said notice
shall also be sent by registered post acknowledgment due.

 
                                                  
The Investor:
Mr. F. Jacob Cherian

Address:
330 East, 38th Street, suite 46C, New York, NY 10016, USA

Tel:
 
+1 917 528 5632

 
With a copy to:

(i)    
Ira Roxland

Sonnenschein Nath & Rosenthal LLP
1221 Aevnue of the Americas
New York, NY 10020-1089
Fax: +1 212 768 6800

(ii)  
Rajesh Begur

A.R.A. LAW
3/F Mahatma Gandhi Road
Charni Road (West)
Mumbai – 400 002
Fax: +91 222 2284 1800
 
The Company:      SMC Global Securities Limited
Address:
17, Netaji Subhash Marg, Darya Ganj, New Delhi - 110002

Tel:
 
011-30111000

Facsimile:
011-23263297

 
 
 
 
 
 

 
The Promoter No.1:   Mr. S.C Aggarwal
Address:
C-335, Saraswati Vihar, New Delhi - 110088

Tel:
 
011 - 3111000

Facsimile:
011 - 23263297

The Promoter No.2:   Mr. M.C Gupta
Address:
C-39, Anand Vihar, I.P. Extention, New Delhi - 110092

Tel:
 
011 - 3111000

Facsimile:
011 - 23263297

 
11.2.  
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, or (ii) the business date of receipt, if
sent by courier or hand delivery; or (iii) the expiry of seven days after
posting, if sent by registered post.

 
 
 
 
 
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11.3.  
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 Party
not less than 10 days prior written notice. 

 
 
12.          
TERM

 
This Agreement shall come into effect and force and be binding on the Parties
from the date first written above and shall remain in full force for a period of
three years unless:

(i)  
terminated in accordance with the provisions of this Agreement, or

(ii)  
the Investor failing to hold at least 7.451% of the issued and paid-up share
capital of the Company at Completion. For computing the paid-up equity share
capital the bonus shares and subsequent increase in the capital pursuant to the
merger with SAM Global Securities Limited and any 100% subsidiary of the Company
shall be included, whichever is earlier.

 
13.          
CONFIDENTIALITY AND PUBLICITY

 
13.1.  
The Parties recognize that each of them will be given and have access to
confidential and proprietary information of the other Parties. The Parties
undertake not to use any of such confidential information for their own
corporate purposes without the prior written consent of the Party owning such
information and shall use their best efforts to keep confidential and not to
disclose to any third party any of the other Parties’ confidential and
proprietary information. The Parties shall also cause their respective
directors, employees, officers and any other persons to whom the above mentioned
information is disclosed to execute a letter of confidentiality to the effect
provided in this Clause. The obligations of confidentiality shall not apply to
any information that: 

 
i.  
was developed independently by the Parties;

 
ii.  
was known to the Party prior to its disclosure by the disclosing Party;

 
iii.  
has become generally available to the public (other than by virtue of its
disclosure by the receiving Party);

 
iv.  
may be required in any report, statement or test, the Company submitted to any
governmental or regulatory body;

 
v.  
 may be required in response to any summons or subpoena or in connection with
any litigation; or

 
vi.  
 may be required to comply with any law, order, regulation or ruling applicable
to any Party hereto.

 
Provided that prior to any disclosure in respect of a request to disclose
confidential information under subclauses (iv), (v) and (vi), above a Party must
first notify the Party owning such confidential information, who shall then have
the opportunity to respond to and/or dispute such request. The provisions of
this Clause shall survive the termination of this Agreement.
 
13.2.  
Upon termination of this Agreement, the Parties shall cause the Company to
either (i) return to the Investor and the Promoter, as applicable, and the
Parties shall return to each other, all documents and information belonging to
such Person and all copies thereof in the possession or under the control of a
Party which does not own such property, and all confidential information in
whatever media; or (ii) destroy all documents and information belonging to the
other Party and all copies thereof in the possession or under the control of a
Party.

 
 
 
 
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13.3.  
Publicity. Except as required by Applicable Law, the Company, Promoters and the
Investor (or any of their respective Affiliates) shall not, and the Promoters
shall cause the Company not to, without the prior written consent of each other
Party hereto, which consent shall not be unreasonably withheld or delayed, make
any public announcement or issue any press release with respect to the
transactions contemplated by this Agreement. Prior to making any public
disclosure required by Applicable Law, the disclosing party shall consult with
the other Parties hereto, to the extent feasible, as to the content and timing
of such public announcement or press release.

 
 
14.          
AUTHORISED PERSON

 
For the purposes of this Agreement, the SMC Group Companies and Promoter Group
shall be represented by Mr. S.C. Aggarwal and Mr. M.C. Gupta, jointly and
severally. Accordingly, the SMC Group Companies and Promoter Group hereby
authorise Mr. S.C. Aggarwal and Mr. M.C. Gupta to, jointly and severally,
represent and take any decision which may be required to be taken, do all acts
and execute all documents which are or may be required by the SMC Group
Companies and Promoter Group for the proper and effective fulfillment of the
rights and obligations under this Agreement. Any action taken or deed performed
or document executed by Mr. S.C Aggarwal and/or Mr. M.C. Gupta shall be deemed
to be acts or deeds done or documents executed by all the SMC Group Companies
and/or Promoter Group, and shall be binding on all the SMC Group Companies and
Promoter Group.
 
 
15.          
TERMINATION

 
15.1.  
Termination before Completion:

 
i.  
Grounds of Termination. This Agreement may be terminated at any time prior to
Completion upon the occurrence of any of the following events:

 
a.  
By mutual written agreement of the Parties.

 
b.  
By the Investor upon written notice to the Promoters and Company, if there shall
have been: (i) a breach of any Representation and Warranty made under this
Agreement, or if any Representation and Warranty shall have become untrue in any
respect, or (ii) a breach by the Warrantors of any of their covenants or
agreements hereunder and such breach is not cured within thirty (30) days after
notice thereof by the Non-defaulting Party, or (iii) in case of Material Adverse
Effect.

 
c.  
By the Investor only, upon written notice to Promoters and Company, if any
Governmental Authority of competent jurisdiction shall have issued any judgment,
injunction, order, ruling or decree or taken any other action restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement.

 
d.  
By the Investor only, in the event the Company or any SMC Group Companies or any
Promoter becomes or is declared insolvent or bankrupt, makes an assignment for
the benefit of all or substantially all of its creditors, enters into an
agreement for the composition, extension or readjustment of all or substantially
all or of its obligations, or becomes the subject of any Proceedings related to
its liquidation or insolvency or for the appointment of a receiver or similar
officer.

 
 
 
 
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e.  
By the Promoters only, in the event the if the Investor becomes or is declared
insolvent or bankrupt, makes an assignment for the benefit of all or
substantially all of its creditors, enters into an agreement for the
composition, extension or readjustment of all or substantially all or of its
obligations, or becomes the subject of any Proceedings related to its
liquidation or insolvency or for the appointment of a receiver or similar
officer.

 
f.  
By Investors only, on termination of the Share Subscription Agreement and/or
Shareholders Agreement with SAM Global Securities Limited for any reason
whatsoever attributable to the Company and the Promoters.

 
ii.  
The Parties acknowledge and agree that Promoters must exercise the right to
terminate this Agreement pursuant to Clause 15 as a group and that no individual
Promoter shall have the right to exercise such right without agreement of the
other Promoters.

 
iii.  
Effect of Termination Before Closing: The provisions of Clause 7 (Indemnity),
Clause 9 (Resolution of Disputes), Clause 10 (Governing Law), Clause 13
(Confidentiality), Clause 16 (Miscellaneous Provisions) and this Clause
15.1(iii)shall survive the termination hereof. 

 
15.2.  
Termination after Completion.

 
i.  
Grounds of Termination. This Agreement may be terminated after Completion as
follows:

 
a.  
If so agreed in writing by Promoters and Investors.

 
b.  
By the Investor with immediate effect by notice in writing to the Promoters if
the Company or any of the SMC Group Companies is declared insolvent, bankrupt,
industrially sick, or is unable to pay its debts, or enters into a compromise or
any arrangement with its creditors, or in the event that a trustee, receiver or
liquidator is appointed to take over all or a substantial part of the assets of
the Company or any SMC Group Companies or if the Company or any SMC Group
Companies are liquidated or dissolved.

 
c.  
If the Promoters or Company or SMC Group Companies or any of them (the
“Defaulting Party”) commits any material breach under this Agreement which has
Material Adverse Effect, the Investors may terminate this Agreement with
immediate effect if such material breach is not remedied within thirty (30) days
after receipt by the Defaulting Party of a written notification of default from
the Investor

 
d.  
By the Promoters with immediate effect by notice in writing to the Investor, if
the Investor is declared insolvent, bankrupt, industrially sick or is unable to
pay its debts, or enters into a compromise or any arrangement with its
creditors, or in the event that a trustee, receiver or liquidator is appointed
to take over all or a substantial part of the assets of the Investor or if the
Investor is liquidated or dissolved.

 
e.  
By the Investor, if at any time the facts emerge indicating that the Company and
/ or Promoters have intentionally withheld or suppressed information or made any
misrepresentations which would have had a Material Adverse Effect.

 
 
 
 
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f.  
By Investors only, on termination of the Share Subscription Agreement and/or
Shareholders Agreement with SAM Global Securities Limited for any reason
whatsoever attributable to the Company and the Promoters.

 
g.  
By the Investor, if within four years from the signing of this Agreement,
conditions exist that would allow for a listing of the Company’s equity shares
on any agreed Indian stock exchange(s) as contemplated in Clause 5.8 of the
Agreement and the Company and/or the Promoters decide for reasons of their own
not to seek a listing or unless such listing is postponed at the request of  the
Investor.

 
ii.  
The provisions of Clause 6 (Representation and Warranty), Clause 7 (Indemnity),
Clause 9 (Resolution of Disputes), Clause 10 (Governing Law), Clause 13
(Confidentiality), Clause 16 (Miscellaneous Provisions) and this Clause 15.2
(ii)shall survive the termination hereof.

 
 
16.          
MISCELLANEOUS PROVISIONS

 
16.1.  
Reservation of Rights: No forbearance, indulgence or relaxation or inaction by
any Party at any time to require performance of any of the provisions of this
Agreement shall in any way affect, diminish or prejudice the right of such Party
to require performance of that provision, and any waiver or acquiescence by any
Party of any breach of any of the provisions of this Agreement shall not be
construed as a waiver or acquiescence of any continuing or succeeding breach of
such provisions, a waiver of any right under or arising out of this Agreement or
acquiescence to or recognition of rights other than that expressly stipulated in
this Agreement.

 
16.2.  
Cumulative Rights: All remedies of either Party under this Agreement whether
provided herein or conferred by statute, civil law, common law, custom or trade
usage, are cumulative and not alternative and may be enforced successively or
concurrently.

 
16.3.  
Partial Invalidity: If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each provision of this
Agreement shall be valid and enforceable to the fullest 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. Provided however, if said
provision is fundamental provision of this Agreement or forms part of the
consideration or object of this Agreement, the provision of this Clause shall
not apply. 

 
16.4.  
Amendments: No modification or amendment of this Agreement and no waiver of any
of the terms or conditions hereof shall be valid or binding unless made in
writing and duly executed by all the Parties. The Parties may mutually agree to
amend or waive any terms of this Agreement.

 
16.5.  
Assignment: This Agreement and the rights and liabilities hereunder shall bind
and inure to the benefit of the respective successors of the Parties hereto, but
no Party shall assign or transfer any of its rights and liabilities hereunder to
any other Person without the prior written consent of the other Parties which
will not be unreasonably withheld. Notwithstanding anything stated above, the
Investor shall be entitled to assign its rights and obligations hereunder to any
of its Affiliates without the consent of the other Parties provided that
Investor shall continue to be liable for the Investment Amount, subject to terms
of this Agreement, irrespective of such assignment.

 
 
 
 
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16.6.  
Entire Agreement: This Agreement constitutes the entire Agreement between the
Parties with respect to the subscription and purchase of Subscription Shares and
supersedes and cancels any prior oral or written agreement, representation,
understanding, arrangement, communication or expression of intent relating to
the subject matter of this Agreement.

 
16.7.  
Relationship: None of the provisions of this Agreement shall be deemed to
constitute a partnership between the Parties hereto and no Party shall have any
authority to bind the other Party otherwise than under this Agreement or shall
be deemed to be the agent of the other in any way.

 
16.8.  
Costs: Each Party shall bear its own expenses incurred in preparing this
Agreement. The stamp duty and other costs payable: (i) on this Agreement, (ii)
the issue of Subscription Shares to the Investor and (iii) transfer of shares in
order to restructure the shareholding of SMC Group Companies as contemplated
under this Agreement, shall be borne by the Company or SMC Group Companies.

 
16.9.  
Force Majeure: No Party shall be liable to the other if, and to the extent, that
the performance or delay in performance of any of its obligations under this
Agreement is prevented, restricted, delayed or interfered with due to
circumstances beyond the reasonable control of such Party, including but not
limited to, Government legislations, fires, floods, explosions, epidemics,
accidents, acts of God, wars, riots, strikes, lockouts, or other concerted acts
of workmen, acts of Government and/or shortages of materials. The Party claiming
an event of force majeure shall promptly notify the other Parties in writing,
and provide full particulars of the cause or event and the date of first
occurrence thereof, as soon as possible after the event and also keep the other
Parties informed of any further developments. The Party so affected shall use
its best efforts to remove the cause of non-performance, and the Parties shall
resume performance hereunder with the utmost dispatch when such cause is
removed. However, it is agreed between the Parties that if such event continues
for more than 60 (sixty) days the affected Party may terminate this Agreement
thereafter, unless mutually agreed between the Parties.

 
16.10.  
Severance: Any provision of this Agreement which is invalid or unenforceable
under Applicable Law shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the validity, legality and
enforceability of the remaining provisions hereof. Should any provision of this
Agreement be or become ineffective for reasons beyond the control of the Parties
including any provisions under Applicable Law, the Parties shall use reasonable
efforts to agree upon a new provision which shall as nearly as possible have the
same commercial effect as the inefficient provision.

 
16.11.  
Good Faith Negotiations and Further Assurances: Subject to Clause 15.1, the
Parties agree that if the transactions contemplated in this Agreement cannot be
completed in the manner set forth herein, then the Parties shall use reasonable
endeavours to enter into other transaction, no later than sixty (60) days from
the expiration of one hundred and sixty five (165) days period from the
Effective Date, that (a) would result in a substantially similar outcome and
(b) do not materially prejudice any of the Parties. Each of the Parties further
agrees that, during any such negotiations, it shall refrain from initiating any
legal actions against the other Parties.

 
16.12.  
Execution in Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.

 
 
 
 
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16.13.  
Authorisation: The persons signing this Agreement on behalf of the Parties
represent and covenant that they have the authority to so sign and execute this
document on behalf of the Parties for whom they are signing.

 
Signature Page Follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET AND SUBSCRIBED THEIR RESPECTIVE
HANDS TO THESE PRESENTS ON THE DAY, MONTH AND YEAR HEREIN WRITTEN:
                                                                                                                  

Millennium India Acquisition Company Inc.
 
SMC Global Securities Limited
               
Name: Mr. F Jacob CHERIAN
 
Name: Mr. S.C. AGGARWAL
Title: CEO & President
 
Title: Chairman and
       
Managing Director
                     
Name: Mr. Suhel KANUGA
     
Title: CFO and Exec Vice President
                         
PROMOTERS AND PROMOERS GROUP
                           
Mr. M.C. GUPTA
   
Mr. S.C. AGGARWAL
                                                       
Mr. M.C. GUPTA  and Mr. S.C. AGGARWAL
     
(for and on behalf of following companies: (i) SMC Comtrade Limited, (ii) DSP
Insurance Brokers Limited, (iii) Nexgen Capitals Limited, (iv) SMC Comex
International DMCC, (v) Abhichaya Investment Private Limited, and (vi) Pulin
Investment Private Limited pursuant to respective board resolution dated
May      , 2007)
                             
Mr. S.C. AGGARWAL and Mr. M.C. Gupta (for and on behalf of the Promoter Group)
                                                       

 

 

 
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SCHEDULE 1 -   PROMOTER AND PROMOTER GROUP
 

PROMOTERS

Name of Shareholders
No. of Shares
Percentage
 
 
 
Mahesh C. Gupta
1024850
13.66
Subhash Chand Aggarwal
1009550
13.45

 

 

PROMOTERS GROUP

Name of Shareholders
No. of Shares
Percentage
Sushma Gupta
833100
11.10
Hemlata Aggarwal
828500
11.04
Ginni Devi
220000
2.93
Madan Gopal Aggarwal
98400
1.31
Dinesh Chand Gupta
100100
1.33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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SCHEDULE 2 — COMPANY AND SMC GROUP COMPANIES
 

S. No.
Name of Company
Status
Activity
       
1.
 
 
 
 
 
 
 
 
 
2.
SMC Global Securities Limited
 
 
 
 
 
 
 
 
 
SMC Group Companies
 
 
·  Registered as Member with NSE for Capital Market
·  Registered as Member with NSE as trading and clearing member in F&O segment
Dealer of OTCEI and Member of Ludhiana Stock Exchange
·  AMFI registered mutual fund distributor
·  Trading/ Broking in:
- Capital Market Segment
- Future & Option Market Segment
·  Mutual Fund Distribution
·  IPO Distribution
·  Online trading
·  Clearing member (F & O)
 
 
 
 
 
a)
SMC Comtrade Limited
Member NCDEX and MCX
Trading/Broking in Commodities
b)
SMC Comex International DMCC
Member DGCX
Trading/Broking in Commodities
c)
DSP Insurance Brokers Private Limited
Direct broker registered with IRDA
Broking and distribution of life and non-life insurance products
d)
Pulin Investment Private Limited
Investment Company
Investment
e)
Abhichhaya Investment Private Limited
Investment Company
Investment
f)
Nexgen Capitals Limited
Category-I Merchant Banker
Merchant Banking Activities

 
 
 
 
 
 
 
 
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SCHEDULE 3 – POST COMPLETION SHAREHOLDING STRUCTURE

SMC GLOBAL SECURITIES LIMITED

Name of Shareholders
 No. of Shares
Percentage
Mahesh C. Gupta
      1,024,850
11.62
Subhash Chand Aggarwal
      1,009,550
11.45
Sushma Gupta
         833,100
9.45
Hemlata Aggarwal
         828,500
9.39
Ginni Devi
         220,000
2.49
Madan Gopal Aggarwal
           98,400
1.12
Dinesh Chand Gupta
         100,100
1.14
Millennium India Acquistion Company Inc
      1,314,054
14.90
Others
      3,390,600
38.45
 
 
 
Total
      8,819,154
100.00

SMC COMTRADE LIMITED

Name of Shareholder
No. of shares held
Percentage
 
 
 
SMC GLOBAL SECURITIES LTD.
99,994
99.994
M.G. Aggarwal
1
0.001
Sushma Gupta
1
0.001
Hemlata Aggarwal
1
0.001
Shyam Sunder Gupta
1
0.001
S.C. Aggarwal
1
0.001
Mr. Mahesh C. Gupta
1
0.001
 
 
 
TOTAL
100,000
100

SMC COMEX INTERNATIONAL DMCC

Name of Shareholder
No. of shares held
Percentage
 
 
 
SMC Comptrade Limited
1,300
100
 
1,300
100

ABHICHHAYA INVESTMENTS PRIVATE LIMITED

Name of Shareholder
No. of shares held
Percentage
 
 
 
Promoters
 
 
SMC Comtrade Limited
18,200
39.91
SAM Global Securities Ltd.
12,200
26.75
Others
15,200
33.34
TOTAL
45,600
100

 
 

 
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PULIN INVESTMENTS PRIVATE LIMITED

Name of Shareholder
No of shares held
Percentage
 
 
 
SMC Comtrade Limited
14,000
39.88
SAM Global Securities Ltd.
9,400
26.78
Others
11,700
33.34
TOTAL
35,100
100

NEXGEN CAPITALS LIMITED

Name of Shareholder
No of shares held
Percentage
 
 
 
Abhichhaya Investments (P) Ltd.
1,141,897
44.93
Pulin Investments (P) Ltd.
1,195,363
47.03
SMC Comtrade Limited
69,600
2.74
Others
134,800
5.3
TOTAL
2,541,660
100

DSP INSURANCE BROKERS (PRIVATE) LIMITED

Name of Shareholder
No of shares
Percentage
 
 
 
SMC Comtrade Limited
599,900
99.983
Mahesh C Gupta
100
0.017
TOTAL
600,000
100

 
 
 
 
 
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SCHEDULE 4 - CONDITIONS PRECEDENT

 
PART 1: CONDITIONS PRECEDENT OF PROMOTERS AND THE COMPANY

1.  
Board approval by Company: The Board of Directors shall have passed necessary
resolutions at duly constituted meetings approving the issue of the Subscription
Shares.

2.  
Shareholders approval by Company: The Company shall have been passed at a
resolution at its general meeting approving resolution under section 81(1A) of
the Act the preferential allotment of the Subscription Shares to the Investor.

3.  
Increase Authorized Share Capital: The Company shall have increased its
authorized share capital as necessary to issue the Subscription Shares to
Investor and the Company shall have paid the necessary stamp duties and filed
necessary forms with Registrar of Companies.

4.  
Articles of Association.  Shareholders approval shall have been obtained for
amending Articles of Association of the Company and SMC Group Companies in a
manner necessary to facilitate the transaction contemplated by this Agreement.

5.  
Shareholding of SMC Group Companies: Each of the SMC Group Companies shall have
changed the existing shareholding structure in a manner to ensure that the
shareholding of SMC Group Companies reflects the proposed shareholding structure
as specified in Schedule 8 hereto.

6.  
Material Adverse Effect. There shall not have been any event, such as, (i)
termination or cancellation of material Licenses of the Company or SMC Group
Company, (ii) any event that materially hinders the ability to consummate the
transaction contemplated by this Agreement, (iii) any event that effects the
business or operations of the Company or SMC Group Companies that has Material
Adverse Effect.

7.  
Listing. Obtain in-principal approval for listing of Subscription Shares on the
regional stock exchanges where the shares of the Company are currently listed.

8.  
Agreement. The Promoters of SAM Global Securities Limited, Investor and SAM
Global Securities Limited shall have executed a Share Subscription Agreement and
Shareholders Agreement in a form acceptable to the Parties and shall have
completed the Closing as contemplated in such agreement.

9.  
Dubai Subsidiary: The Promoters shall obtain certificate confirming that the
Dubai subsidiary is in compliance of all applicable laws and regulations and in
good standing.

10.  
Employment Agreements. (i) The directors of the companies forming part of the
SMC Group shall have entered into employment contracts with their respective
companies setting out the specific terms and conditions of their employment with
the company, (ii) All Key Employees (as set out in Annexure “3”) of the SMC
Group Companies shall have entered into a standard format employment agreement,
incorporating provisions relating to the adoption of Chinese walls, handling of
price sensitive information and non-compete and non-solicitation obligations,
and (iii) All employees, on or before Completion or within 60 days from
Completion, shall have entered into a standard format employment agreement,
incorporating provisions relating to the adoption of Chinese walls, handling of
price sensitive information and non-compete and non-solicitation obligations.

11.  
Compliance Certificate.  The Company and each of SMC Group Companies shall have
obtained a certificate from a practicing Company Secretary confirming that the
statutory records have been updated as required under Applicable Laws.

 
 
 

 
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12.  
Bank details: The Company shall have provided details of the bank account of the
Company maintained with the Authorised Dealer to the Investor for the purpose of
receiving the Investment Amount under this Agreement.

13.  
Financial Statements: The Investor shall have received from the Promoters and
the Company (i) two years Balance Sheet and Profit and Loss Account for the
period ended March 31, 2007 and March 31, 2006, and (ii) three years Profit and
Loss Account for the period ended March 31, 2007, March 31, 2006 and March 31,
2005 (“Financial Statement”) prepared and translated in accordance with US GAAP
and re-audited by a Public Company Accounting Oversight Board accounting firm
acceptable to the Investor.

14.  
No Objection Letter: The Promoters, the Company and SMC Group Companies shall
have delivered to the Investor a No Objection Letter pursuant to Press Note No.
1 and Press Note No. 3 of 2005, in a form attached as Annexure “2” of this
Agreement and shall be signed and delivered to the Investor by the Promoters,
the Company and SMC Group Companies on or before Completion.

15.  
Change of Name. Make application for change of corporate name of DSP Insurance
Brokers Private Limited to such other name as is approved by the Board of
Directors and the Registrar of Companies and Insurance Regulatory and
Development Authority of India dropping the words “DSP” from the corporate name.

16.  
Regulatory Approvals: The Promoters, the Company and SMC Group Companies shall
have obtained necessary regulatory approvals as specified in Schedule 9 attached
hereto and complied with the requirements of Listing Agreement with respect to
the transaction as contemplated in this Agreement and the resulting change in
the shareholding of the SMC Group Companies, directly or indirectly, shall be in
compliance with the requirements of Applicable Laws.

17.  
Financial Statement. The translation and re-audit of Financial Statements in US
GAAP shall not have resulted in any variance of more than 25% to the Financial
Statements prepared under Indian GAAP.

18.  
Name License Agreement. Mr. M.C. Gupta, Mr. S.C. Aggarwal and SAM Global
Securities Limited shall have executed a Name License Agreement with the Company
for assigning the use of the words “SMC” as part of its corporate name at a
nominal fee and agreeing that a similar license shall not be given to any other
entity engaged in the similar line of Business except as provided in the
Disclosure Schedule. Provided that such companies shall execute similar
agreement with the Company confirming that it shall not permit use of the word
“SMC” to any other entity without prior approval of the Company.

 
PART 2:   CONDITIONS PRECEDENT OF INVESTOR

1.  
Financial Statements: The translation and re-audit of Financial Statements in US
GAAP shall not have resulted in any variance of more than 25% from the Financial
Statements prepared under Indian GAAP.

2.  
Consent by Investor: (i) US Securities and Exchange Commission would have
advised that there are no further comments to the proxy statement filed by the
Investor in accordance with the requirements of the laws of United States, (ii)
the shareholders of the Investor would have passed resolution approving the
investments in the Company, and (iii) holders of no greater than 19.9% of equity
interest of the Investor should have sought redemption of their equity shares;

 
 

 
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3.  
KYC Compliance:  The Investor shall have satisfied the Know Your Client norms to
ascertain that the Investor is an ‘eligible investor’ in accordance with the
laws of United States;

4.  
Regulatory Approvals: The Investor shall have obtained Foreign Investment
Promotion Board approval as specified in Schedule 9 attached hereto.

5.  
Agreement. The Promoters of SAM Global Securities Limited, Investor and SAM
Global Securities Limited shall have executed a Share Subscription Agreement and
Shareholders Agreement in a form acceptable to the Parties and shall have
completed the Closing as contemplated in such agreement.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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SCHEDULE 5 – RESTRICTED ACTIONS
 
Any and all of the following actions by Promoters, the Company and/or SMC Group
Companies prior to the Completion Date shall be subject to prior consent of the
Investor:
 
1.  
Charter Documents. Cause or permit any amendments to its Memorandum of
Association or Articles of Association save and except as may be required to
give effect to the transactions contemplated by this Agreement.

 
2.  
Dividends. Declare or pay any dividends on or make any other distributions
(whether in cash, shares, securities or property) in respect of any of its share
capital.

 
3.  
Share Capital. Issue or split, combine or reclassify any of its share capital or
issue or authorize the issuance of any Derivative Securities, or repurchase or
otherwise acquire, directly or indirectly, any shares or Derivative Securities.

 
4.  
Transfer.  Transfer of any shares or Securities in the Company by Promoter or
Promoter Group (except amongst Promoter Group or Promoters spouse and lineal
antecedent and descendent) or the Company in SMC Group Companies to any third
party.

 
5.  
Issuance of Securities. Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of Company or Derivative Securities, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating Company to issue any such shares or Securities.

 
6.  
Dispositions. Sell, lease, license or otherwise dispose of or encumber any of
its properties or assets, except in the Ordinary Course of Business, consistent
with past practice.

 
7.  
Payment of Obligations. Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
arising other than in the Ordinary Course of Business.

 
8.  
Capital Expenditures. Make any capital expenditures, capital additions or
capital improvements in excess of rupee equivalent of INR 82 Million in the
aggregate in each Financial Year.

 
9.  
Insurance. Materially reduce the amount of any insurance coverage provided by
existing insurance policies other than in the Ordinary Course of Business.

 
10.  
Termination or Waiver. Terminate or waive any right or benefit of substantial
value other than in the Ordinary Course of Business.

 
11.  
Employee Benefit Plans, New Hires, Pay Increases. Amend any company employee
plan or adopt any plan that would constitute a company employee plan, pay any
special bonus, special remuneration or special non-cash benefit, or increase the
benefits, salaries or wage rates of its employees, save and except in the
Ordinary Course of Business.

 
12.  
Severance Arrangements. Grant or pay any severance or termination pay or
benefits (i) to any director or officer, or (ii) except for payments made
pursuant to written agreements outstanding on the date hereof, to any other
employee.

 
13.  
Lawsuits. Commence a lawsuit other than in such cases where the company in good
faith determines that a failure to commence such suit would result in the
material impairment of a valuable aspect of the company’s business, provided
that it consults with the Investor prior to the filing of such a suit.

 
 
 
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14.  
Acquisitions. Acquire or agree to acquire by merging with, or by purchasing a
substantial portion of the shares, Securities or assets of, or by any other
manner, any business or any company, partnership, association or other business
organization division thereof or otherwise acquire or agree to acquire any
assets that are material individually or in the aggregate, to the Business other
than in the Ordinary Course of Business.

 
15.  
Taxes. Other than in the Ordinary Course of Business, make or change any
election in respect of taxes, adopt or change any accounting method in respect
of taxes, file any tax return or any amendment to a tax return, settle any claim
or assessment in respect of taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of taxes.

 
16.  
Revaluation. Revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the Ordinary Course of Business or as required by changes in Indian
GAAP.

 
17.  
Listing: All decisions with respect to listing of the Company.

 
18.  
Liquidation: Voluntary liquidation or dissolution of the company or any
bankruptcy action in relation to the company.

 
19.  
Other. Take or agree in writing or otherwise to take, any of the actions
described in Clause 1 through 18 above.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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SCHEDULE 6 - CONDITION SUBSEQUENT
 
1)  
Key Persons Provisions: The Company shall maintain Directors’ and Officers’
insurance for members of its Board of Directors in amounts considered reasonable
by the Company and consistent with market practice in India.

2)  
Key Man Insurance: The Company shall purchase Key Man Insurance policy of such
amounts as may be decided by the Board, with benefits payable to the Company,
covering the Key Employees and such of the Promoters as may be identified by the
Company.

3)  
RBI Reporting. The Company shall also ensure that within 30 days from the
Completion Date, the relevant forms of the Company are filed with the concerned
regulatory authorities including the Registrar of Companies, Reserve Bank of
India, etc. in accordance with the provisions of Applicable Law.

4)  
Condition Precedent. Any Conditions Precedent not fulfilled at the time of
Completion and not entirely waived in writing.

5)  
Periodical Financial Statements. The Company shall and the Promoters shall
ensure that the Investor is furnished with its quarterly financial statements
prepared under Indian GAAP duly translated and audited (if required under
Applicable Laws) as per the US GAAP within 42 days of closure of the quarter and
annual financial statements prepared in accordance with US GAAP and audited by a
Public Company Accounting Oversight Board top 6 accounting firm within 87 days
of closure of the financial year, so that the Investor may file the same with
the US Securities Exchange Commission.  The Company and the Promoters shall
ensure that the Investor is informed of any and all material occurrences on an
ongoing basis within 4 working days of such occurrence so that the Investor may
file the same with the US Securities Exchange Commission.

6)  
Continued guarantee. Promoters shall continue to maintain the personal guarantee
issued by them for the financial facilities obtained by the Company and SMC
Group Companies from the lenders.

7)  
Employment Contracts. All employees, on or before Completion or within 60 days
from Completion, shall have entered into a standard format employment agreement,
incorporating provisions relating to the adoption of Chinese walls, handling of
price sensitive information and non-compete and non-solicitation obligations.

8)  
Listing. The Company shall and the Promoters shall ensure that the Equity Shares
of the Company are listed on the Bombay Stock Exchange Limited and/or National
Stock Exchange Limited within four (4) years from the date of Completion.

9)  
Name License Agreement. The Promoters or the Company shall not permit the use of
words “SMC” to any other entity engaged in the similar line of Business.

10)  
Any other items specifically agreed between the Parties and reasonably requested
by the Investor.

 
 
 
 
 
 
 
 
 
 
 
 
 
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SCHEDULE 7 - REPRESENTATIONS AND WARRANTIES
 
PART 1 -  REPRESENTATION AND WARRANTY FROM THE COMPANY AND PROMOTERS

REPRESENTATIONS AND WARRANTIES

Prior to the execution and delivery of this Agreement, the Company and the
Promoters, have together delivered to the Investor a disclosure schedule with
numbered sections corresponding to the relevant sections in this Agreement (the
“Disclosure Schedule” as set out in Annexure 3).

Any exception or qualification set forth in the Disclosure Schedule with respect
to a particular representation or warranty contained in this Agreement, shall be
deemed to be an exception or qualification with respect to all other applicable
representations and warranties contained in this Agreement, but only where the
relevance of such disclosure to such other representations or warranties is
reasonably apparent from the text of such disclosure.

The Company and the Promoters (for themselves and on behalf of the SMC Group
Companies) are hereinafter referred to as “Warrantors”.

1             
The Promoters, jointly and severally, represent and warrant to the Investor as
follows:

 
1.1  
Binding Agreement.

 
i)  
Each of the Promoters have the full legal right, power, authority and capacity
to execute, deliver and fully perform such Promoter’s obligations under this
Agreement and any documents contemplated hereby to which any of Promoters is a
party according to their respective terms.

 
ii)  
This Agreement and any documents contemplated hereby to which any of Promoters
is a party have been duly executed and delivered by such Promoter and constitute
the legal, valid and binding agreement of such Promoter enforceable against such
Promoter in accordance with its terms, except to the extent that: (a) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor’s rights
generally, and (b) the remedy of specific performance or injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefore may be brought.

 
1.2  
Bankruptcy. No Bankruptcy Matter of any character affecting all or any of the
Promoters are pending or threatened, and none of the Promoters have made any
assignment for the benefit of creditors or taken any action in contemplation of,
or which would constitute the basis for any Bankruptcy Matter.

 
1.3  
Non-Contravention. The execution, delivery and performance by all and any of the
Promoters of this Agreement and the documents contemplated hereby (with or
without the giving of notice, the lapse of time, or both) and the consummation
by each of the Promoters of the transactions contemplated hereby or thereby do
not: (a) other than for Clause 2.5 hereof require the consent of any third
party; (b) conflict with, result in a breach of, or constitute a default under,
any Applicable Law; (c) violate any agreement, indenture, instrument, note,
mortgage, lease, license, franchise, permit or other authorization, right,
restriction or obligation to which any of the Promoters is a party or by which
any of the Promoters may be bound; (d) violate any order, injunction judgment or
decree of any Government Authority by which any of the Promoters may be bound;
(e) constitute an act of bankruptcy, preference, insolvency or fraudulent
conveyance under any bankruptcy act or other Applicable Law for the protection
of debtors or creditors; or (f) conflict with or result in any breach or
violation of the terms, conditions or provisions of the Charter Documents
(defined below). None of the Promoters is a party to, or bound by, any agreement
or commitment that prohibits or restricts the execution and delivery by any of
the Promoters of this Agreement or the consummation of the transactions
contemplated hereby.

 
 
 
 
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1.4  
Litigation. There is no action, claim, suit, Proceedings or investigation
pending or threatened by or against or affecting all or any of the Promoters
which questions the validity of this Agreement or the right of any of the
Promoters to enter into it, or to consummate the transactions contemplated
hereby, or which could result in any change in the equity ownership of all or
any of the Promoters in the Company. None of the Promoters is a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
Governmental Authority, and there is no investigation pending or threatened that
could prohibit or restrict the execution and delivery by any of the Promoters of
this Agreement or the consummation of the transactions contemplated hereby.

 
1.5  
No conflicting interest. Except as disclosed in Section 1.5 of the Disclosure
Schedule, none of the Promoters own, beneficially or of record, directly or
indirectly, any share capital or other ownership or proprietary interest in any
partnership, association, trust joint venture, limited liability company, or
other entity that is in direct or indirect competition with the Company or SMC
Group Companies.

 
2             
The Warrantors, jointly and severally represent and warrant to the Investor as
follows:

 
2.1  
Binding Agreement:

 
i)  
The Company and SMC Group Companies have all requisite corporate power and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby and subject to receipt of proposed necessary regulatory
approvals as specified in Schedule 9, to perform their obligations hereunder and
thereunder and consummate the transactions contemplated hereby and thereby.
There are no other regulatory approvals required for consummating the
transaction contemplated under this Agreement other than the approvals as set
out in Schedule 9.

 
ii)  
The execution and delivery of this Agreement and the other agreements
contemplated hereby, by the Company and SMC Group Companies, the performance by
the Company and SMC Group Companies of their obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby or
thereby have been duly authorized by the board of directors of the Company and
SMC Group Companies, and no other action on the part of the Company and SMC
Group Companies is necessary to authorize the execution and delivery of this
Agreement or any other agreements contemplated hereby by the Company and SMC
Group Companies or the performance by the Company and SMC Group Companies of
their obligations hereunder and thereunder or the consummation by the Company
and SMC Group Companies of the transactions contemplated hereby or thereby,
except for the receipt of proposed regulatory approvals as specified in Schedule
9 and lenders consent (as referred to in Schedule 2).

 
 
 
 
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iii)  
This Agreement has been duly executed and delivered by the Company and SMC Group
Companies, and this Agreement constitutes, and the other agreements contemplated
hereby upon execution and delivery by the Company and SMC Group Companies will
each constitute (in each case assuming due authorization, execution and delivery
by the other parties thereto), a legally valid and binding obligation of the
Company and SMC Group Companies, enforceable against the Company and SMC Group
Companies in accordance with its terms, except as such enforceability may be
limited by principles of public policy, and subject to: (a) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditor’s rights generally,
and (b) the remedy of specific performance or injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.

 
2.2  
Organization:

 
i)  
The Company and SMC Group Companies are companies incorporated, validly existing
and in good standing under the Indian Companies Act, 1956, and each of them have
all requisite corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it, and to carry on its
business in all material respects as currently conducted. The Company and SMC
Group Companies are duly qualified to do business as an Indian corporation and
in good standing under the laws of India..

 
ii)  
True and complete copies of the Memorandum and Articles of Association of the
Company and SMC Group Companies, as amended and in effect as of the date of this
Agreement, have been made available to the Investor (“Charter Documents”).

 
iii)  
The Company and SMC Group Companies are not in violation of any of the
provisions of the Charter Documents.

 
iv)  
True and complete copies of the minutes of all meetings of the board of
directors and the shareholders of the Company and SMC Group Companies have been
made available by the Company and SMC Group Companies to the Investor.

 
2.3  
Bankruptcy. No Bankruptcy Matter of any character affecting the Company or SMC
Group Companies is pending or threatened, and Company or SMC Group Companies
have not made any assignment for the benefit of creditors or taken any action in
contemplation of, or which would constitute the basis for any Bankruptcy Matter.

 
2.4  
Capitalization:

 
i)  
Section 2.4 of the Disclosure Schedule, sets out the existing authorized, issued
and paid-up share capital of the Company and SMC Group Companies. Except as set
forth in Section 2.4, no other Securities of the Company and SMC Group Companies
are issued or outstanding. All such issued and outstanding Securities shall have
been duly authorized and validly issued, and were not issued in violation of any
preemptive or similar rights created by statute or the Charter Documents.

 
 
 
 
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ii)  
The Company and SMC Group Companies or any agreement to which the Warrantors are
a party or by which they are bound, and have been issued in compliance with
Applicable Law.

 
iii)  
The Company has complete and unrestricted power and the unqualified right to
issue, transfer and deliver to the Investor, and upon consummation of the
transactions contemplated by this Agreement, the Investor will acquire good and
valid and marketable title to all of the Subscription Shares, free and clear of
all Liens. Section 2.4 of the Disclosure Schedule sets out the indirect
shareholding of the Investor in SMC Group Companies, upon Completion.

 
iv)  
As of the date of this Agreement, there are: (a) no outstanding options,
warrants, calls, rights of conversion or other rights, agreements, arrangements
or commitments of any kind or character, whether written or oral, relating to
the Shares to which the Warrantors are a party, or by which they are bound,
obligating the Warrantors to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire any Securities,
(b) no outstanding or authorized share appreciation, phantom share, profit
participation, or other similar rights with respect to the Company and SMC Group
Companies, and (c) no voting agreements, member agreements, proxies or other
agreements or understandings in effect to which the Warrantors are a party, or
by which they are bound, with respect to the governance of the Company and SMC
Group Companies or the voting or transfer of any Securities.

 
2.5  
Third Party Consents. Other than consents and regulatory approvals required for
consummating the transaction as set out in Schedule 9, no consent, approval,
authorization, order, filing, registration, declaration or qualification of or
with any Government Authority or third Person is required to be obtained by the
Warrantors in connection with the execution and delivery by the Warrantors of
this Agreement or consummation of the transactions contemplated hereby. The
Warrantors specifically represent and warrant that the proposed transaction does
not require any consent from the lenders of the Company or SMC Group Companies.

 
2.6  
Financial Statements:

 
i)  
The audited consolidated financial statements of the Company and SMC Group
Companies (including the balance sheet and the related statements of income and
cash flows) as of and for each of the 12-month periods ended March 31, 2006,
March 31, 2005 and March 31, 2004, and the un-audited and unconsolidated
financial statements of the Company for the nine months period ended on December
31, 2006 (the “The Financial Statements”) are attached in Section 2.6 of the
Disclosure Schedule.

 
ii)  
Except as set forth therein, the Financial Statements have been prepared in
accordance with Indian GAAP applied on a consistent basis throughout the periods
indicated therein.

 
iii)  
The Financial Statements present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and SMC Group Companies as of the respective dates and during the
respective periods indicated therein.

 
iv)  
All accounts receivable, including without limitation, all trade amounts
receivable and other obligations from clients and customers, whether or not
evidenced by a note (collectively, “Accounts Receivable”): (a) are bona fide
receivables incurred in the Ordinary Course of Business, and (b) are not
currently the subject of any counterclaim, or a claim for a chargeback,
deduction, credit, set off or other offset, other than in the Ordinary Course of
Business and as reflected by the reserve for bad debts recorded on the Financial
Statements. No Person has any Encumbrance on any Accounts Receivable or any part
thereof.

 
 
 
 
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v)  
There are no agreement for deduction, free services, discount or other deferred
price or quantity adjustment made by the Company or SMC Group Companies
exceeding in aggregate of INR 4,000,000.

 
vi)  
Undisclosed Liabilities: The Company or SMC Group Companies do not have any
Liabilities of a nature that is required to be reflected on a balance sheet or
in the financial notes thereto in accordance with Indian GAAP, except as:
(i) reflected in, reserved against or disclosed in the Financial Statements;
(ii) disclosed in Section 2.6 of the Disclosure Schedule, (iii) incurred in the
Ordinary Course of Business since March 31, 2006.

 
2.7  
Certain Changes or Events: Except as expressly contemplated by this Agreement or
as disclosed in Section 2.7 of the Disclosure Schedule, since the Audited
Financial Statements Date and through the date of this Agreement, the Company
and SMC Group Companies have conducted its business (including, without
limitation, its cash management customs and practices (e.g., collection of
receivables, payment of payables, and maintenance of credit practices)) only in
the Ordinary Course of Business. Since such date through the date of this
Agreement, there has not been, occurred or arisen:

 
i)  
any material damage to, or destruction or loss of, any of the material assets or
properties of the Company and/or SMC Group Companies other than related to
information technology;

 
ii)  
any declaration, setting aside or payment of any dividend, or other distribution
or capital return in respect of any Shares or Securities or other equity
security, or any redemption, repurchase or other acquisition by the Company
and/or SMC Group Companies;

 
iii)  
any sale, pledge, assignment, transfer, lease, guarantee, encumbrance, license
or other disposition, or agreement to sell, pledge, assign, transfer, lease,
guarantee, encumber, license or otherwise dispose of, any property, asset or
interest therein of the Company and/or the SMC Group Companies otherwise than in
the Ordinary Course of Business;

 
iv)  
any acquisition (by merger, consolidation or other combination, or acquisition
of shares or assets or otherwise) by the Company and/or SMC Group Companies
other than over INR 41 million for each such acquisition;

 
v)  
any change in any method of accounting or accounting practice used by the
Company and/or SMC Group Companies, other than such changes as are required by
Indian GAAP;

 
vi)  
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, share option, share purchase
or other employee benefit plan (other than any such increases required under the
applicable terms of any such plan or Applicable Law), or any other increase in
the compensation payable or to become payable to any officers of the Company
and/or SMC Group Companies, other than in the Ordinary Course of Business;

 
 
 
 
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vii)  
any issuance by the Company and/or SMC Group Companies of any Securities
convertible, exchangeable or exercisable into any equity securities or warrants,
options or other rights to acquire equity shares;

 
viii)  
any termination, cancellation or any modification of a material term of any
Listed Contracts, other than this Agreement.

 
2.8  
Intellectual Property.

 
i)  
Section 2.8 of the Disclosure Schedule contains a true, correct and complete
list of all (i) Indian and foreign patent and patents applications, the number,
issue date, title and priority information for each country in which such patent
has been issued, or the application number, date of filing, title and priority
information for each country in which a patent application is pending;
(ii) registered and unregistered trademarks, trade names or service marks,
logos, designs and slogans, the application serial number or registration number
thereof, if applicable, the class of goods or services or the description of the
goods or services covered thereby, the jurisdiction in which such trade name or
trademark is registered or filed, and the expiration date for each jurisdiction
in which such trademark or trade name has been registered or filed;
(iii) registered copyrights, the number and date of registration thereof for
each country in which a copyright has been registered and (iv) domain names and
applications for registration of domain names, in each case included in the
Proprietary Rights.

 
ii)  
Except as disclosed in Section 2.8 of the Disclosure Schedule, (i) the operation
of the business, including the use of the Owned Proprietary Rights, does not
infringe or misappropriate or otherwise materially violate the Proprietary
Rights of any third party, and no claim is pending or, to the Knowledge of the
Warrantors, threatened against the Company or any SMC  Group Companies alleging
any of the foregoing, (ii) the Company and SMC Group Companies owns, or has
necessary licenses all of the Proprietary Rights necessary for the conduct of
the business, and (iii) except for the Owned Proprietary Rights and the Licensed
Proprietary Rights, no material right, license, lease, consent, or other
agreement is required with respect to any Proprietary Right for the conduct of
the Business.

 
iii)  
Subject only to the terms of the licenses listed in Section 2.8 of the
Disclosure Schedule or licenses that are immaterial to the Ordinary Course of
Business of the Company and/or any SMC Group Companies, or except as disclosed
in Section 2.8 of the Disclosure Schedule, the Company or an SMC Group Companies
is (i) the sole owner of the entire and unencumbered right, title and interest
in and to each item of the Owned Proprietary Rights, and (ii) entitled to use
the Owned Proprietary Rights and Licensed Proprietary Rights in the ordinary
course of its business to the extent such Proprietary Rights are used in the
operation of the business.

 
iv)  
Except as disclosed in Section 2.8 of the Disclosure Schedule, the Owned
Proprietary Rights and Licensed Proprietary Rights include all of the material
Proprietary Rights used in the business, and there are no other items of
Proprietary Rights that are material to the business of the Company and SMC
Group Companies.

 
 
 
 
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v)  
The Company and SMC Group Companies have made available to Investor for
inspection during the due diligence by the Investor all material correspondence
and all written opinions in its possession relating to potential infringement or
misappropriation (a) by the Company or any SMC Group Companies of any
Proprietary Rights of any third party, or (b) by any third party of any of the
Owned Proprietary Rights or Licensed Proprietary Rights.

 
vi)  
Except as disclosed in Section 2.8 of the Disclosure Schedule, to the Knowledge
of the Warrantors, (i) no third party is engaging in any activity that infringes
or misappropriates the Owned Proprietary Rights or Licensed Proprietary Rights
and (ii) the Company and the SMC Group Companies have not granted any material
license or other right to any third party with respect to the Owned Proprietary
Rights or Licensed Proprietary Rights.

 
vii)  
The Company and the SMC Group Companies have a license to use all software
development tools, library functions, compilers and other third-party software
that are used in the operation of the business and are material to the business,
taken as a whole.  To the Knowledge of Warrantors, all material software used in
the business is free of all viruses, worms and Trojan horses, and does not
contain any critical bugs, errors, or problems, in each case that reasonably
would be expected to have a material adverse impact on the business, taken as a
whole.

 
viii)  
The Company and each of the SMC Group Companies have secured valid written
assignments or agreements from all current and former consultants and employees
who contributed to the creation or development of the material Owned Proprietary
Rights used or held for use by the Company or the SMC Group Companies, in each
case assigning such Person’s ownership interest therein.  All employees of,
consultants to or vendors of the Company or any SMC Group Companies with access
to confidential information of the Company or any SMC Group Companies are
parties to written agreements under which, among other things, each such
employee, consultant or vendor is obligated to maintain the confidentiality of
confidential information of the Company or any SMC Group Companies.  To the
Knowledge of Warrantors, none of the employees, consultants or vendors of the
Company or any SMC Group Companies is in violation of such agreements.

 
3             
Contracts.

 
3.1  
As of the date of this Agreement, Section 3.1 of the Disclosure Schedule
contains a true, correct and complete list of all contracts in excess of INR 41
Million referred to in clauses (i) through (xv), inclusive, of this Section 3.1
to which the Company or any SMC Group Companies is a party (each, a “Listed
Contract” and, collectively, the “Listed Contracts”).  True, correct and
complete copies of each Listed Contract have been made available to the
Investor:

 
i)  
Contract notes (other than in the Ordinary Course of Business), debentures,
other evidences of indebtedness, guarantees, loans, credit or financing
agreements or instruments, or other Listed Contracts for money borrowed,
including any agreements or commitments for future loans, credit or financing;

 
 
 
 
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ii)  
Contracts with any labor union or contracts for the employment of any Person on
a full-time, part-time or consulting basis or any consulting, termination or
severance agreements to the extent there remain payment obligations to be
performed by the Company or any SMC Group Companies;

 
iii)  
leases of real property from or to a Person;

 
iv)  
leases, rental or occupancy agreements, installment and conditional sale
agreements, and other Contracts affecting the ownership of, leasing of, title
to, use of, or any

 
v)  
leasehold or other interest in, any personal property or asset involving
individual annual aggregate payments in excess of INR 20.5 million and which are
not terminable by the Company or an SMC Group Companies  without penalty or
further payment or without more than 90 days’ notice;

 
vi)  
joint venture, partnership or limited liability company agreements involving a
share of profits, losses, costs or liabilities (excluding agreements with third
parties involving the co-branding and hosting of websites under a revenue
sharing arrangement);

 
vii)  
Contracts explicitly requiring fixed expenditures after the date of this
Agreement in an amount in excess of INR 20.5 million which are not terminable by
the Company or an SMC Group Companies without penalty at its discretion;

 
viii)  
Contracts with any Person that generated consolidated net revenues for the
Company and SMC Group Companies during the twelve months ended March 31, 2007 in
excess of INR 20.5 million other than brokerage contracts;

 
ix)  
licensing agreements with respect to proprietary rights that obligate the
Company or any SMC Group Companies to make royalty payments, license fee
payments or other similar payments after the date of this Agreement;

 
x)  
Listed Contracts between the Company or an SMC Group Companies, on the one hand,
and any director, officer, equity holder or Affiliate of the Company or any SMC
Group Companies, on the other hand, or any former director, officer, equity
holder or Affiliate to the extent there remain payment or issuance of equity
obligations to be performed by the Company or any SMC Group Companies pursuant
to such Listed Contracts;

 
xi)  
Listed Contracts containing covenants limiting the freedom of the Company or any
SMC Group Companies in any material respect to compete with any Person in any
line of business or in any area or territory;

 
xii)  
all Listed Contracts that result in any Person holding a power of attorney from
the Company or any SMC Group Companies that relates to the Company, any SMC
Group Companies or their respective businesses (other than powers of attorney
granted in the ordinary course of business to (i) patent counsel engaged in the
prosecution of patents, trademark counsel and their agents engaged in applying
for trademarks and accountants engaged in filing tax returns, and (ii) employees
of the Company or any SMC Group Companies to act on behalf of the Company or
such SMC Group Companies with respect to Taxes); and

 
 
 
 
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xiii)  
all other Listed Contracts, whether or not made in the ordinary course of
business, the termination of which would reasonably be expected to have a
Material Adverse Effect.

 
xiv)  
Except for such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) each Listed
Contract is in full force and effect and represents a legally valid and binding
obligation of the Company or an SMC Group Companies which is a party thereto,
(ii)  the Company and each SMC Group Companies has performed, in all material
respects, all obligations required to be performed by it under each of the
Listed Contracts to which it is a party and, to the Knowledge of the Warrantors,
each other party to such Listed Contracts has performed, in all material
respects, all obligations required to be performed by it under such Listed
Contracts, and (iii) neither the Company nor any SMC Group Companies is in
material breach or violation of, or material default under, any of the Listed
Contracts to which it is a party, nor has the Company or any SMC Group Companies
received any written notice that it has materially breached, violated or
defaulted under any of the Listed Contracts to which it is a party except for
income from brokerage.

 
xv)  
Except as set forth on Section 3.1 of the Disclosure Schedule, as of the date of
this Agreement, neither the Company nor SMC Group Companies nor the Warrantors
have received any notice, nor has any Knowledge, that any Person that generated
consolidated net revenues for the Company or SMC Group Companies during the
twelve months ended Match 31, 2006 in excess of INR 20.5 million intends to
terminate, materially reduce (i.e., reduction by more than 5% from actual
consolidated net revenues for such twelve month period) or otherwise materially
alter its business or relationship with the Company or any SMC Group Companies
and no such Person has terminated, materially reduced or otherwise materially
altered its business or relationship with the Company or any SMC Group Companies
in the last twelve (12) months.

 
3.2  
Taxes:

 
i)  
The Company and the SMC Group Companies have timely filed and if there has been
a delay, with late fee payment) with the appropriate taxing authorities each Tax
Return required to be filed prior to the date that such Tax Return became
delinquent.

 
ii)  
All such Tax Returns filed are complete and accurate in all material respects,
and all Taxes shown to be due and payable on such Tax Returns have been paid,
except for those Taxes which are being challenged in good faith and for which
adequate reserves have been made.

 
iii)  
All unpaid Taxes payable by the Company and SMC Group Companies for periods (or
portions thereof) ending on or before March 31, 2007, whether or not disputed,
are adequately reserved in accordance with Indian GAAP on the Financial
Statements.

 
iv)  
Neither the Company nor SMC Group Companies are the beneficiaries of any
extension of time within which to file any Tax Return.

 
v)  
There are no material Encumbrances for Taxes on any of the assets of the Company
and SMC Group Companies.

 
 
 
 
 
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3.3  
Except as set forth in Section 3.3 of the Disclosure Schedule:

 
i)  
no deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Tax has been proposed, asserted or assessed by any
taxing authority against the Company and/or SMC Group Companies;

 
ii)  
there is no Action or audit now in progress, pending or, to the Knowledge of the
Company and SMC Group Companies and/or the Promoters, threatened against or with
respect to the Company and/or SMC Group Companies with respect to any Tax;

 
iii)  
neither the Company nor the SMC Group Companies is a party to or bound by any
Tax allocation or Tax sharing agreement or has any current or potential
contractual obligation to indemnify any other Person with respect to Taxes;

 
iv)  
no claim has ever been made by a taxing authority in a jurisdiction where the
Company and SMC Group Companies does not pay Tax or file Tax Returns that the
Company and SMC Group Companies are or may be subject to Taxes assessed by such
jurisdiction; and

 
v)  
The Company and SMC Group Companies have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.

 
3.4  
Section 3.4 of the Disclosure Schedule contains a list of states, territories
and jurisdictions (whether foreign or domestic) in which the Company and SMC
Group Companies are required to file Tax Returns relating to its operations.

 
3.5  
Litigation and Governmental Orders: Except as set forth in Section 3.5 of the
Disclosure Schedule, (a) there are no material Actions pending or, to the
Knowledge of the Warrantors, threatened against the Warrantors, any of the
assets or properties of the Warrantors, or any of the, directors and/or officers
of Warrantors, and (b) none of the Warrantor or their respective assets or
properties are subject to any material Governmental Authority relating
specifically to Warrantor or any of their respective assets or properties.

 
3.6  
Compliance with Laws:

 
i)  
The business of the Company and SMC Group Companies are being conducted in
compliance with all Applicable Laws.

 
ii)  
The Company and SMC Group Companies are in compliance with the terms and
requirements of all Licenses. The Company and SMC Group Companies have not
received any written notice or other written communication from any Governmental
Authority regarding: (a) any revocation, withdrawal, suspension, termination or
modification of, or the imposition of any conditions with respect to any
Licenses, (b) any violation of any Applicable Law by Company or SMC Group
Companies, or (c) any other limitations on the conduct of business by
Warrantors.

 
iii)  
The Company and SMC Group Companies are not in violation of any term of
provision of: (a) its Charter Documents, or (b) any Applicable Law or regulatory
approval applicable to, or which is binding upon, or affects it or any of its
assets or revenues or the operation of their business. Any non-compliances have
been disclosed in Section 3.6 of the Disclosure Schedule and there are no
outstanding penalties payable to any Governmental Authority except as set out in
Section 3.6 of the Disclosure Schedule.

 
 
 
 
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iv)  
The Company has completed necessary filings with the authorized dealer in
connection with the incorporation of SMC Comex International DMCC in Dubai
including filing of Form ODA in accordance with the FEMA (Transfer and Issue of
any Foreign Security) Regulations.

 
v)  
There has not been any breach with respect to compliance of the requirements of
the listing agreement by the Company.

 
vi)  
All contract notes (issued to the clients) used by the Company or SMC Group
Companies are in compliance with the requirements of Applicable Law.

 
3.7  
Licenses:

 
i)  
Set forth in Section 3.7 of the Disclosure Schedule is a list of all Licenses
held by the Company and SMC Group Companies which are required for the Business.

 
ii)  
The Company and SMC Group Companies have all Licenses required to permit the
Company and SMC Group Companies to conduct their respective parts of the
business.

 
iii)  
All of the Licenses held by or issued to the Company and SMC Group Companies are
in full force and effect, and the Company and SMC Group Companies is a party
thereto is and has been in full compliance with each such Licenses held by or
issued to it and all applicable laws, rules, regulations, bye-laws, and
circulars in this regard, including all reporting and filing requirements.

 
3.8  
Immovable Property. Section 3.8 of the Disclosure Schedule lists all real
property owned by the Company and SMC Group Companies (“Owned Real
Property”).  Section 3.8 of the Disclosure Schedule also lists all real property
leased from or to a third party by the Company or any SMC Group Companies
(“Leased Real Property”). Except as set forth on Section 3.8 of the Disclosure
Schedule, the Company or one of the SMC Group Companies has a valid and
subsisting title to all Owned Real Property and/or has a valid and subsisting
leasehold estate in, and enjoys peaceful and undisturbed possession of, all
Leased Real Property, subject only to any (i) Permitted Encumbrance, and
(ii) except where the failure to have such interests or possession would not,
individually or in the aggregate, reasonably be expected to materially impair
the Company or the SMC Group Companies use of such parcel of Owned or Leased
Real Property for the uses for which it is currently intended.

 
3.9  
Employee Benefit Matters:

 
i)  
To the Knowledge of the Warrantors, there are no claimed and/or outstanding
dues, including salary, provident fund, or gratuity, of any employees, agents,
advisors, and/or consultants of the Company and SMC Group Companies.

 
 
 
 
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ii)  
The Company and SMC Group Companies have been in full and complete compliance of
all labour and industrial laws that are applicable to the Company and SMC Group
Companies as per Applicable Laws.

 
3.10  
Labor Matters: The Warrantors are not party to any labour agreement with respect
to its employees with any labour organization, group or association, nor, to the
Knowledge of the Warrantors, the Company and SMC Group Companies there been any
attempts to organize the employees of within the one (1) year period prior to
the date of this Agreement. There is no labor strike, labor disturbance or work
stoppage pending against the Company and SMC Group Companies.  There are no
labour disputes, administrative proceedings or court complaints pending or
threathened, to the Knowledge of Warrantors, before any Governmental Authority
or any court or agency concerning alleged employment discrimination or any other
matters relating to the employment of labor. No officer or key employee of the
Company and SMC Group Companies has given oral or written notice of termination
of his or her relationship with the Company and/or SMC Group Companies.
Employees of the Company and each of the SMC Group Companies are required to
adhere to the insider trading policy applicable to their respective employer
company and that there have been no breaches of the same and appropriate
indemnities in this regard.

 
3.11  
Environmental Matters: Company is into service industry and Environment Laws are
not applicable to the Company and any of the SMC Group Companies and
accordingly: (i) to the Knowledge of Warrantors, no hazardous material is
present at any Owned or Leased Real Property in violation of any Environmental
Law; (ii) neither the Company nor any of the SMC Group Companies has engaged in
any hazardous materials activity in violation of any Environmental Law and
(iii) no action is pending or, to the Knowledge of the Company or SMC Group
Companies, threatened against the Company or any SMC  Group Companies concerning
any of the hazardous materials activities of the Company and the SMC  Group
Companies, or hazardous materials activity on any Owned or Leased Real Property.

 
3.12  
Insurance:

 
i)  
All requisite insurance cover, including  indemnity, fire, crimes and liability,
errors and omissions, workers’ compensation, vehicular, and other insurance
including those prescribed by the exchanges and/or regulatory authorities have
been taken or held as of date by the Company and SMC Group Companies and the
same is valid and in full force and effect.

 
ii)  
The Company and SMC Group Companies are not in default with respect to any
material provision contained in any such insurance policies, nor has the Company
and SMC Group Companies failed to give any material notice or present any
material claim under any such insurance policies in due and timely fashion.

 
iii)  
The Company and SMC Group Companies have not received any written notice of
cancellation or non renewal of any such insurance policies.

 
3.13  
Websites:

 
i)  
Section 3.13 of the Disclosure Schedule sets forth a true, accurate and complete
list of all domain names for websites that are owned or used by the Company and
SMC Group Companies (the “Websites”). Except as disclosed in Section 3.13 of the
Disclosure Schedule with respect to each Website, the Company and SMC Group
Companies: (i) possesses all legal rights to the exclusive use of the domain
names with respect thereto; (ii) to the Knowledge of the Warrantors and based on
current traffic forecasts for its Websites, has adequate computer and personnel
resources to help ensure that no service outages will occur due to insufficient
data-storage, memory, server or other related reasons which would reasonably be
expected to have a Materially Adverse Effect on the operation of the business;
and (iii) has taken commercially reasonable steps to protect the
confidentiality, integrity and security of their software, databases, systems,
networks and Websites and all information stored or contained therein or
transmitted thereby from unauthorized or improper access, modification,
transmittal or use. Further, all domain name used by the Company or the SMC
Group Companies and registered in individual name of Ramanand Garg has been
transferred to and now owned by the Company.

 
 
 
 
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ii)  
The Company and SMC Group Companies do not distributes Spyware or Adware in
connection with the Business. “Spyware” means any software that covertly gathers
information regarding user online activity through the user’s Internet
connection (i.e., without notice that such information may be gathered), whether
or not such software is bundled as a hidden component of a toolbar or like
application, other than information: (i) reasonably gathered in connection with
services or information provided by the Company and SMC Group Companies to such
users, including without limitation through or via “cookies”, or (ii) that is
not associated with Personally Identifiable Information.  “Personally
Identifiable Information” means data that identifies a particular person, by
name, address, telephone number, electronic mail address, social security
number, permanent account number, unique client code, bank account number or
credit card number. “Adware” means any software that causes advertising to
pop-up as a new window (over or under) on the user’s computer based on the
user’s online activity (other than advertisements that the Company and SMC Group
Companies serves to visitors to their respective Websites while those visitors
are visiting or exiting such Websites) or which is used to distribute Spyware.

 
iii)  
The Company and SMC Group Companies and the Promoters have not: (i) violated in
any material respect the rights of any Person with respect to Personally
Identifiable Information provided under any applicable Law including, without
limitation, rights respecting (x) privacy generally, and (y) the obtaining,
storing, using, sharing or transmitting of Personally Identifiable Information
of any type, whether via electronic means or otherwise; or (ii) failed in any
material respect to comply with the published privacy policies as applicable
from time to time.

 
3.14  
Internal Controls. The Company and SMC Group Companies maintains a system of
internal accounting controls that is sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with the management’s general
or specific authorizations: (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with the management’s general or specific
authorization; and (iv) except as disclosed in Section 3.14 of the Disclosure
Schedule, the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.

 
 
 
 
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3.15  
Investor Proxy Statement: None of the information to be supplied by the
Warrantors for inclusion in the Investor Proxy Statement at the time of the
mailing of the Investor Proxy Statement and each amendment or supplement
thereto, and at the time of the Investor Special Meeting, will contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.

 
3.16  
Brokers: Except for Beejay Investments and Financial Consultants Private Limited
and Singhi Advisors Limited (the “Financial Advisors”), who are entitled to
certain investment banking and advisory fees to be mutually agreed in connection
with the transactions contemplated by this Agreement, no broker, finder,
investment banker or other person is entitled to any brokerage fee, finders’ fee
or other commission in connection with the transactions contemplated by this
Agreement. Prior to the date of this Agreement, the Warrantors have delivered to
the Investor a true and complete copy of all agreements between the Warrantors
and Financial Advisors pursuant to which the Financial Advisors would be
entitled to any payment.

 
3.17  
Competition and Trade Relations:

 
i)  
None of the Company and SMC Group Companies have entered into any restrictive
practices and/or arrangements.

 
ii)  
None of the Company and SMC Group Companies have received or are exchanging any
communications with or from, or any notifications (including pending
notifications) to, any governmental or regulatory authority under any anti-trust
regulatory or similar legislation.

 
iii)  
No judgment, ruling, finding, order or any other decision, preliminary or final,
of any anti-trust regulatory authority or of any court binding on the Company
and SMC Group Companies has been passed.

 
iv)  
There are no current or pending investigations by, or proceedings before, any
antitrust or relevant regulatory authority or any court, including any pending
threat by an anti-trust or relevant regulatory authority to open any such
investigations or proceedings in respect of the Company and SMC Group Companies.

 
3.18  
Related Party Transaction. All related party transactions between the Warrantors
and their relatives or group entities have been disclosed in Section 3.18 of the
Disclosure Schedule other than in the Ordinary Course of Business. All
transactions with the related parties have been at arms length except for the
transactions with employees and relatives and family members and their companies
are not disclosed separately which is an industry practice.

 
3.19  
Representations Complete. None of the representations or warranties made by the
Warrantors herein or in any schedule or exhibit hereto, including the Disclosure
Schedule, or certificate furnished pursuant to this Agreement or any written
statement furnished to the Investor pursuant hereto or in connection with the
transactions contemplated hereby, contain, or will contain at the Closing Date
any untrue statement of a material fact, or omits or will omit at the Closing
Date to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.

 
 
 
 
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PART 2 -REPRESENTATIONS AND WARRANTIES OF INVESTOR

Prior to the execution and delivery of this Agreement by the Investor, the
Investor has delivered to the Company and Promoters a disclosure schedule with
numbered sections corresponding to the relevant sections in this Agreement (the
“Investor Disclosure Schedule” attached as Annexure “4”).  Any exception or
qualification set forth in the Investor Disclosure Schedule with respect to a
particular representation or warranty contained in this Agreement shall be
deemed to be an exception or qualification with respect to all other applicable
representations and warranties contained in this Agreement, but only where the
relevance of such disclosure to such other representations or warranties is
reasonably apparent from the text of such disclosure.  Nothing in the Investor
Disclosure Schedule is intended to broaden the scope of any representation,
warranty or covenant of the Investor contained in this Agreement.  Subject to
the exceptions and qualifications set forth in the Investor Disclosure Schedule,
the Investor represents and warrants to the Company and Promoters as follows:

1             
Authority:  The Investor has all requisite corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
and to perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby.  The execution and delivery of
this Agreement and the other agreements contemplated hereby by the Investor, the
performance by the Investor of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby or thereby have been duly
authorized by the directors of the Investor, and, except for the approval of
this Agreement and the other agreements contemplated hereby and the transactions
contemplated hereby and thereby by the holders of a majority of the Investor’s
outstanding and publicly traded shares of common stock present and voting at a
special meeting of the Investor’s stockholders to be convened for that purpose
(the “Investor Stockholders’ Approval”), no other action on the part of Investor
is necessary to authorize the execution and delivery of this Agreement or any
other agreements contemplated hereby by the Investor or the performance by the
Investor of its obligations hereunder and thereunder or the consummation by the
Investor of the transactions contemplated hereby or thereby.  This Agreement has
been duly executed and delivered by the Investor, and this Agreement
constitutes, and the other agreements contemplated hereby upon execution and
delivery by the Investor will each constitute (in each case assuming due
authorization, execution and delivery by the other parties thereto), a legally
valid and binding obligation of the Investor, enforceable against the Investor
in accordance with its terms, except as such enforceability may be limited by
principles of public policy, and subject to (i) the effect of any Applicable Law
of general application relating to bankruptcy, reorganization, insolvency,
moratorium or similar Applicable Laws affecting creditors’ rights and relief of
debtors generally and (ii) the effect of rules of law and general principles of
equity, including rules of law and general principles of equity governing
specific performance, injunctive relief and other equitable remedies (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

2             
Organization:  The Investor is a company incorporated, validly existing and in
good standing under the General Corporation Law of the State of Delaware, and
has all requisite corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it, and to carry on its
business in all material respects as currently conducted.  True and complete
copies of the certificate of incorporation (the “Investor Charter Document”)
[and Bylaws (the “Investor’s Bylaws”)] of the Investor, [each] as amended and in
effect as of the date of this Agreement, have been made available to the Company
and Promoters.  The Investor is not in violation of any of the provisions of the
Investor Charter Document or the Investor’s Bylaws.

 
 
 

 
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3             
Investor Capitalization:

3.1  
As of the date of this Agreement, 9,062,500  shares of Investor’s common stock
are issued and outstanding.  Except as set forth under Section 3(a) of the
Investor Disclosure Schedule, no other equity securities of the Investor are
issued or outstanding.  All such issued and outstanding shares of common stock
have been duly authorized and validly issued, and were not issued in violation
of any preemptive or similar rights created by statute, the Investor Charter
Documents, the Investor’s Bylaws or any agreement to which the Investor is a
party or by which it is bound, and have been issued in compliance with
applicable U.S. Federal securities Laws.

3.2  
As of the date of this Agreement, except as set forth in Section 3.2 of the
Investor Disclosure Schedule, there are (i) no outstanding options, warrants,
calls, rights of conversion or other rights, agreements, arrangements or
commitments of any kind or character, whether written or oral, relating to the
shares of common stock to which the Investor is a party, or by which it is
bound, obligating the Investor to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of common stock, and (ii) no outstanding or
authorized share appreciation, phantom share, profit participation, or other
similar rights with respect to the Investor.

3.3  
As of the date of this Agreement, except as set forth in Section 3.3 of the
Investor Disclosure Schedule, there are (i) no rights, agreements, arrangements
or commitments of any kind or character, whether written or oral, relating to
the shares of common stock to which the Investor is a party, or by which it is
bound, obligating the Investor to repurchase, redeem or otherwise acquire any
issued and outstanding shares of common stock ; and (ii) no voting agreements,
member agreements, proxies or other agreements or understandings in effect to
which the Investor is a party, or by which it is bound, with respect to the
governance of Investor or the voting or transfer of any shares of common stock. 

4             
Investor Subsidiaries:

4.1  
Section 4(a) of the Investor Disclosure Schedule sets forth (i) the legal name
of the Investor’s Dubai Subsidiary as of the date of this Agreement and (ii) the
proposed capitalization thereof and the proposed ownership of interest in the
Investor’s Dubai Subsidiary. All issued and outstanding equity interests in the
Investor’s Dubai Subsidiary will be owned beneficially and of record by the
Investor, free and clear of all Encumbrances of any kind or any restrictions on
the right to vote, sell or otherwise dispose of such equity interest. No Person
other than the Investor will have any economic interest in, or right to
participate in, the earnings of the Investor’s Dubai Subsidiary.

4.2  
When incorporated the Investor’s Dubai Subsidiary will be duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and have the requisite power and authority to own, operate or
lease the respective properties and assets that it may own, operate or lease,
and carry on its business in all material respects. The Investor’s Dubai
Subsidiary will be duly qualified to do business as a foreign entity, and be in
good standing, under the Laws of the jurisdiction in which the character of its
properties are owned, operated or leased, or the nature of its activities, makes
such qualification necessary.

5             
Conflicts and Consents:  The execution and delivery by the Investor of this
Agreement and the other agreements contemplated hereby, the performance by the
Investor of its obligations hereunder and thereunder and the consummation by the
Investor of the transactions contemplated hereby and thereby does not and will
not (i) conflict with or result in a violation of the Investor Charter Document
or the Investor’s Bylaws or any equivalent organizational documents of any
Investor Subsidiary; (ii) conflict with or result in a violation of any
Governmental Order or Law applicable to the Investor, or any Investor Subsidiary
or any of their respective assets or properties; or (iii) except for the
Investor Shareholders Approval, require any consent or approval under, result in
a breach of, or constitute a material default (or event which with the giving of
notice or lapse of time, or both, would become a material default) under, or
give rise to any rights of termination, amendment, modification, acceleration or
cancellation of or loss of any benefit under, or result in the creation of any
Encumbrance on any of the assets or properties of the Investor or any Investor
Subsidiary pursuant to any Contract or any material Permit.

 
 
 

 
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6             
Governmental Consents, Approvals, Etc.:  Except as set forth in Section 6 of the
Investor Disclosure Schedule, no consent, waiver, approval, authorization, order
or permit of, or declaration, filing or registration with, or notification to,
any Governmental Authority is required to be made or obtained by the Investor or
any Investor Subsidiary in connection with the execution and delivery of this
Agreement by the Investor or the consummation by the Investor of the
transactions contemplated by this Agreement.

7             
Litigation and Governmental Orders:  There are no material Actions pending or,
to the Knowledge of the Investor, threatened against the Investor or any
Investor Subsidiary, any of the assets or properties of the Investor or any
Investor Subsidiary, or any of the directors and officers of the Investor or any
Investor Subsidiary in their capacity as directors or officers of the Investor
or any Investor Subsidiary, and none of the Investor, any Investor Subsidiary or
their respective assets or properties is subject to any material Governmental
Order relating specifically to the Investor, any Investor Subsidiary or any of
their respective assets or properties.

8             
Compliance with Laws:  Neither the Investor nor any Investor Subsidiary has
received any written notice from any Governmental Authority to the effect that
the Investor or any Investor Subsidiary is not in compliance with any applicable
Law.

9             
Investor SEC Reports:  Since its inception, the Investor has filed all reports,
registration statements and other documents, together with any amendments
thereto, required to be filed under the Securities Act and the Exchange Act, and
the Investor will file all such reports, registration statements and other
documents required to be filed by the Investor from the date of this Agreement
to the Closing Date (all such reports, registration statements and documents
filed or to be filed with the SEC, are collectively referred to as “Investor SEC
Reports”).  As of their respective dates, the Investor SEC Reports complied or
will comply in all material respects with all rules and regulations promulgated
by the SEC and did not or will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.  The Investor has provided to the Company
and Promoters a true and complete copy of all Investor SEC Reports filed on or
prior to the date hereof, and will promptly provide to the Company and Promoters
a true and complete copy of any such reports filed after the date hereof and
prior to the Closing Date.

10           
Investor Proxy Statement:  None of the information to be supplied by the
Investor or any Investor Subsidiary for inclusion in the Investor Proxy
Statement at the time of the mailing of the Investor Proxy Statement and each
amendment or supplement thereto, and at the time of the Investor Special
Meeting, will contain any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.

 
11           
Brokers:  Except for Step Two Corporation Limited (the “Investor Financial
Advisor”), which is entitled to certain investment banking and advisory fees in
connection with the transactions contemplated by this Agreement, no broker,
finder, investment banker or other person is entitled to any brokerage fee,
finders’ fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Investor, any Investor Subsidiary, or any of their respective Affiliates.

 
 
 

 
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SCHEDULE 8 – PRE-COMPLETION SHAREHOLDING OF SMC GROUP COMPANIES
 

[chart.jpg]

 
 
 
 
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SMC Global Securities Limited

Name of Shareholders
No. of Shares
Percentage
Mahesh C. Gupta
1024850
13.66
Subhash Chand Aggarwal
1009550
13.45
Sushma Gupta
833100
11.10
Hemlata Aggarwal
828500
11.04
Ginni Devi
220000
2.93
Madan Gopal Aggarwal
98400
1.31
Dinesh Chand Gupta
100100
1.33
Others
3390600
45.18
Total
7505100
100.00

SMC Comtrade Limited

Name of Shareholder
No of shares
Percentage
 
 
 
SMC GLOBAL SECURITIES LTD.
99994
99.994
M.G. Aggarwal
1
0.001
Sushma Gupta
1
0.001
Hemlata Aggarwal
1
0.001
Shyam Sunder Gupta
1
0.001
S.C. Aggarwal
1
0.001
Mr. Mahesh C. Gupta
1
0.001
 
 
 
TOTAL
100000
100

SMC Comex International Limited

Name of Shareholder
No of shares
Percentage
 
 
 
 
 
 
SMC Comtrade Limited
1300
100
 
 
 
TOTAL
1300
100

DSP Insurance Brokers Private Limited

Name of Shareholder
No of Shares
Percentage
 
 
 
SMC Comtrade Limited
599,900
99.983
Mahesh C Gupta
100
0.017
TOTAL
600000
100

 
 

 
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Abhichhaya Investments Private Limited

Name of Shareholder
No. of shares held
Percentage
 
 
 
Promoters
 
 
SMC Comtrade Limited
18,200
39.91
SAM Global Securities Ltd.
12,200
26.75
Others
15,200
33.34
TOTAL
45600
100

Pulin Investments Private Limited

Name of Shareholder
No of shares held
Percentage
 
 
 
SMC Comtrade Limited
14,000
39.88
SAM Global Securities Ltd.
9,400
26.78
Others
11,700
33.34
TOTAL
35100
100

Nexgen Capitals Limited

Name of Shareholder
No of shares held
Percentage
 
 
 
Abhichhaya Investments (P) Ltd.
1141897
44.93
Pulin Investments (P) Ltd.
1195363
47.03
SMC Comtrade Limited
69,600
2.74
Others
134,800
5.3
TOTAL
2541660
100

 
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SCHEDULE 9 – LIST OF REGULATORY APPROVALS
 
Regulatory approval for Investor in India:

»   
Approval from Foreign Investment Promotion Board for Investor to acquire
Investor Shares in the Company and for Company to hold downstream investments in
SMC Group Companies.

Regulatory approval for the Company, Promoters and SMC Group Companies:

Name of Company
Activities
FDI regulations
Regulatory Approval required prior change in shareholding
SMC Global Securities Limited
»  Investment is Shares & Securities
»  NSE Trading,  Clearing Member & F&O Segment
 
» 100% permitted to certain capitalization requirements
 
·  NSE
·  Ludhiana Stock Exchange
·  Calcutta Stock Exchange
·  Delhi Stock Exchange
·  Ahmedabad Stock Exchange
 
SMC Comtrade Limited (100% subsidiary of SMC Global Securities Limited)
Member – NCDEX & MCX
FDI up to 49% is permitted subject ot FIPB’s approval.
Prior approval from for change in shareholding in Dominant Promoter Group :
·  MCX
·  NCDEX
 
SMC Comex International DMCC
License Certificate issued by UAE Securities and Commodities Authority and
Trading License issued by the Dubai Multi-Commodities Centre
-
Intimation required before change in shareholding
DSP Insurances Brokers Private Limited (100 % subsidiary of SMC Comtrade)
Direct Brokers licensed with IRDA
FDI upto 26% is permissible under the Automatic Route
 
Subject to Licensing by the Insurance Regulatory & Development Authority.
Regulation 10(2) of the IRDA (Insurance Brokers) Regulations, 2002 restricts
non-resident interest in insurance broking companies to 26%.
Approval from IRDA
Pulin Investment Private Limited
Investment Company
NIL
NIL
Abhichaya Investments Private Limited
Investment Company
NIL
NIL
Nexgen Capitals Limited
Category I Merchant Banker
 
FDI upto 100% is permissible under the automatic route subject to certain
minimum capitalization requirements
Prior approval as per Regulation 9A (1) (a) and (b) SEBI (MB) Regulation, 1992

 
 
 
 
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SCHEDULE 10 – LIST OF CLOSING DELIVERABLES
 
 
1)  
A certificate signed by the Promoters and the Company to the effect that the
Representations and Warranties contained in this Agreement, continue to be true
and correct as on the Completion Date with the same effect as though such
Representations and Warranties had been made as of such date.

 
2)  
A certificate signed by the Promoters and the Company confirming the fulfillment
of the Conditions Precedent.

 
3)  
A certificate from the Warrantors confirming that there has not been any
Material Adverse Effect from the Effective Date to the Completion Date.

 
4)  
Original share certificates or credit to the depository account provided by the
Investor that evidences the Subscription Shares being issued and allotted to the
Investor in accordance with the provisions of this Agreement.

 
5)  
Certified true copies of the Register of Member of the Company and SMC Group
Companies confirming the proposed shareholding as set out in Schedule 3.

 
6)  
No Objection Letter pursuant to Press Note No. 1 and Press Note No. 3 of 2005,
in a form set out in Annexure “2” shall be signed and delivered to the Investor
by the Promoters, the Company and SMC Group Companies.

 
7)  
Articles of Association of the Company and SMC Group Companies amended in a form
acceptable to the Investor to reflect the provisions of the Shareholders
Agreement to be adopted on or at Completion Date.

 
8)  
Certified copies of board and shareholders resolutions of the Company approving
execution of the Agreement and issue of Subscription Shares and transfer of
Purchased Shares to Investor.

 
9)  
Certified true copies of the regulatory approvals as specified in Schedule 9.

 
10)  
Chartered accountant certificate for fair value of shares as required under
Foreign Exchange Management Act, 1999 and the guidelines of Reserve Bank of
India.

 
11)  
Certificate from Company Secretary in Whole Time Practice confirming that the
statutory records of the Company and SMC Group Companies are in accordance with
the requirements of the Act.

 
12)  
Such other documents as are required under this Agreement and not specifically
set out above and reasonably requested by the Investor.

 
 
 
 
 
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 ANNEXURE 1 – FORM OF SHAREHOLDERS AGREEMENT
 
 
[Attached separately with this Agreement]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ANNEXURE 2 – FORM OF NO OBJECTION LETTER

[On the letterhead of SMC Limited]

NO OBJECTION LETTER
[         , 2007]

Millennium India Acquisition Company Inc.
330 East, 38th Street,
Suite 46C,
New York,
NY 10016, USA

Dear Sirs,

Re:  No Objection Letter from SMC Global Securities Limited (the “Company”)

We write with reference to the understanding and arrangement with the
Shareholders Agreement dated l 2007, entered into by and between Millennium
India Acquisition Company Inc., SMC Global Securities Limited (“Company”) and
the Promoters of the Company.

1.    
We hereby irrevocable declare, acknowledge and confirm that Millennium India
Acquisition Company Inc., their nominees, assignees, affiliates, subsidiaries
and/or group companies (Collectively “Millennium”), shall not be subject to any
restrictions or objections from us from entering into any business,
opportunities, investments, joint ventures, collaborations, partnerships,
alliances, enterprise, technology transfer, technology license, trademark
agreement or any other collaboration, agreement or arrangement, by itself or
through its subsidiaries, affiliates, joint ventures, partnerships, offices,
representatives, contractors, or otherwise howsoever, in or outside India.

2.    
We hereby irrevocably waive, for purposes of any Indian legal or regulatory
requirements, any objection we may have in connection with any proposal by
Millennium for investment in any business / arrangement with any person,
including but not limited to waiver of our rights under Press Note 1 and 3 of
2005 of the Department of Industrial Promotion and Policy, Government of India
in any business or activity other than financial services (i.e. stock broking,
commodities broking, insurance broking and merchant banking) for a period of 5
years from the date of issue of this letter or termination of the Shareholders
Agreement, whichever is earlier. However, this restriction will exclude proposed
investments by Millennium in SAM Global Securities Limited.

3.    
This no objection letter may be produced by Millennium to any government or
regulatory authority in support of any proposal by Millennium for investment in
any business / arrangement with any person. This letter may be treated as a
declaration waiving our rights under Press Note 1 and 3 of 2005 of the
Department of Industrial Promotion and Policy, Government of India. Our
declaration and waiver under this letter is irrevocable. The contents of this
letter shall be binding on us and on our heirs, executors, administrators,
successors and permitted assigns.

 
 
 

 

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Yours sincerely,

_____________________________
Name: Mr. S.C. Aggarwal

 
_____________________________
Name: Mr. M.C. Gupta

SMC Global Securities Limited

_____________________________
Name:  Mr. S.C. Aggarwal
Title:    Chairman & Managing Director

_____________________________
Mr.S.C. Aggarwal  (for and on behalf of following companies: (i) SMC Comtrade
Limited, (ii) DSP Insurance Brokers Limited, (iii) Nexgen Capitals Limited, (iv)
SMC Comex International DMCC, (v) Abhichaya Investment Private Limited, and (vi)
Pulin Investment Private Limited pursuant to respective board resolution dated
l)

_____________________________
Mr. S.C. Aggarwal and Mr. M.C. Gupta (for and on behalf of the Promoter Group)
 
 
 
 
 
 
 
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ANNEXURE 3 – DISCLOSURE SCHEDULE
 

[Attached Separately]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ANNEXURE 4 – INVESTOR DISCLOSURE SCHEDULE
 

[Attached Separately]

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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