Joint Venture Agreements

8/3/2019 Joint Venture Agreements

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THIS AGREEMENT is made the day of ,

BETWEEN

(1) ABC, a company organised in ___________ under the laws of

____________and having its principal office, at ________________ (hereinafter

referred to as "ABC" which expression shall unless repugnant to the context ormeaning thereof include its successors and permitted assigns) of the One Part; and

(2) DEF, a company organised and existing under the laws of _______ and having

its registered office at ______________ (hereinafter referred to as "DEF" which

expression shall unless repugnant to the context or meaning thereof include its

successors and permitted assigns) of the Other Part;

(The expressions "ABC" and "DEF" are collectively referred to as the "Parties" and

any of them singly as "Party").

WHEREAS

A. ABC is, inter alia, engaged in the business of ______________________.

B. DEF is, inter alia, engaged in the business of _________________.

C. ABC and DEF propose entering into a joint venture to carry on the

business of ______________________ through the medium of a joint

venture company (“COMPANY”).

D. The Company shall be legally formed in a manner consistent with the

applicable provisions of the Indian Companies Act and shall be equally-owned by ABC and DEF.

E. Following the above, the Parties now wish to set out their definitive and

binding agreement for their participation in and to determine their

relationship with each other as Shareholders and certain aspects of the affairs

of and their dealings with the Company.

NOW IT IS HEREBY AGREED as follows:-

ARTICLE - I: DEFINITIONS AND INTERPRETATION

1.1 In this Agreement, unless the context otherwise requires, the following

expression shall have the meaning hereinafter assigned to them:-

"Act" means the Indian Companies Act, 1956 as amended from time to time

pursuant to which the Company will be incorporated and shall include any

statutory modifications or re-enactment of laws governing companies in

India.



"Agreement" means this Agreement and all Appendices hereto and

amendments thereto made specifically in writing and signed by theauthorised representatives of the Parties in accordance with the provisions

contained in this behalf hereunder.

"Agreed Proportions" means the proportions in which the percentages bear in

the Share Capital of the Company to be subscribed by the Parties in

accordance with Clause 4.2.

"Affiliate" means in relation to ABC, a person approved in writing by DEF,

and in relation to DEF, a person approved in writing by ABC.

"Annual Budget" means the annual budget for each fiscal year of the

Company to be prepared pursuant to and in accordance with Article II.

"Associates" means in respect of any Party, its Controlled Nominees or

holding company or subsidiaries.

"Auditors" means the independent statutory auditors of the Company for thetime being.

"Board" means Board of Directors of the Company as constituted from time

to time.

"Business" means the business of the Company referred to in Article III.

"Business Plan" means the rolling three year business plans of the Company

to be prepared pursuant to Article XI.

"CEO" means the Chief Executive Officer of the Company by whatevername called whether or not a member of the Board.

"CFO" means the Chief Financial Officer of the Company by whatever name

called whether or not a member of the Board.

"Controlled Nominee" means (1) in relation to ABC, any corporation inwhich it beneficially owns and controls directly or through any one or more

of its wholly owned subsidiaries more than half of the voting power of such

corporation or is in control of its management, and (2) in relation to DEF, a

corporation in which it, directly or indirectly through or together with its

Associates, nominees or subsidiaries jointly or severally holds or controls notless than half of the voting power of such corporation or is directly or

indirectly in control of the board of directors of such corporation or is incontrol of its management and shall include bodies corporate listed in

Appendix 'A' hereto.

“Confidential Information” means any data or information, oral or wr itten, in

any medium that relates to any Party‟s (or if any Party is bound to protect the



confidentiality of any third party‟s information, such third party‟s) past,

present, or future research, development, business activities, including anyunannounced product(s) and service(s), and including any information

relating to services, developments, inventions, processes, plans,

documentation, financial information, customer and distributor lists, forecastsand projections Confidential and Information shall also include the terms of

this Agreement.

"Debt' means all forms of long term borrowings (i.e. borrowings maturing

after one year) from and credit extended by sources other than the

Shareholders for a period exceeding one year.

"Directors" means the directors of the Company for the time being and shall

include their duly appointed alternates.

"Effective Date" means ____________

"Encumbrance" means and includes any interest or equity of any person

including without prejudice to the generality of the foregoing, any right toacquire, option or right of pre-emption or any mortgage, charge, pledge, lien

or assignment, or any other encumbrances, priority or security interest or

arrangement of whatsoever nature over or in the relevant property.

"Equity Capital" means the equity share capital of the Company to be issued

and paid up.

"Executive Committee" means the committee of the Board appointed

pursuant to Clause 6.11.

"Group" means in relation to a Party and to the Company, their respectiveAssociates.

“Lease Agreement” means the agreement between ABC or DEF and theCompany to provide the land, building, equipment and/or utilities to the

Company under a lease arrangement on payment of rentals.

"Memorandum and Articles of Association" means the Memorandum and

Articles of Association of the Company, and references to "Memorandum of Association" and "Articles of Association" shall mean the Memorandum of

Association and Articles of Association respectively of the Company.

"Plant" means the manufacturing facility of the Company whether owned by

itself or on lease.

"Product" means --------------------------------.

"Project" means the Business to be established pursuant hereto and to be

carried on by and through the Company.



“Proprietary Information” means all (a) copyrights, copyright registrations

and applications, trademark rights including registrations and applications,patent rights, trade names, mask work rights, trade secrets, know-how, trade

dress, moral rights, algorithms, rights, goodwill and other intellectual

property rights, and improvements, renewals, and extensions thereof,regardless of wherever such rights arise and (b) all derivatives of the

foregoing”.

"Rupees" and the sign "Rs." means the lawful currency of the Republic of

India.

"Secretary" means the person appointed by the Board holding the office of

the secretary of the Company for the time being.

"Shareholder" means persons who are registered holders of any Shares forthe time being of the Company and shall include the Parties for so long as

they hold Shares.

"Shareholders' Loans" means the loans for the time being extended by aShareholder to the Company on terms set out in a written loan agreement

between the Shareholder as lender and the Company as borrower, and suchother borrowings as may be agreed between the Parties from time to time

including by means of the issuance of debentures, bonds, notes, or otherwise

of the Company.

"Shares" means equity shares of par value of Rs.1O/- each in the issued,

subscribed and paid-up Equity Capital of the Company.

"Total Equity" means the total Equity Capital, agreed by the Parties to be

issued by the Company including convertible bonds, and convertibledebentures (whether fully or partially) for the time being of the Company.

"Transferee" means any person to whom or which Shares are transferred in a

manner as setout in this Agreement and who or which, as a condition to the

permitted transfer thereof, agrees in writing to be bound as a Shareholder.

1.2 References to Articles, Clauses, Recitals, Appendices and Schedules are to

articles, clauses, recitals, appendices and schedules of and to this Agreement.

1.3 Any reference to a statutory provision shall include such provision and any

regulations made in pursuance thereof as from time to time modified or re-enactedwhether before or after the date of this Agreement so far as such modification or re-enactment applied or is capable of applying to any transactions entered into prior to

this Agreement and (so far as liability thereunder may exist or can arise) shall

include also any past statutory provisions or regulations (as from time to timemodified or re-enacted) which such provisions or regulations have directly or

indirectly replaced.



1.4 Words importing the singular include the plural, words importing any gender

include every gender, and words importing persons include bodies corporate and

unincorporate and (in each case) vice versa.

1.5 Words and phrases the definitions of which are contained or referred to in the

Companies Act shall be construed as having the meaning thereby attributed to them

but excluding any statutory modification thereof not in force on the date of this

Agreement.

1.6 Words and phrases the definitions of which are contained or referred to in the

Articles of Association shall be construed as having the meaning thereby attributed

to them.

1.7 Unless otherwise prohibited by law, if the definition of any words or phrases

provided herein conflicts with the definition of said words or phrases contained inthe Companies Act or the Articles of Association, the definition provided herein

shall control.

1.8 Headings contained in this Agreement are for convenience of reference onlyand shall not govern the construction or interpretation of this Agreement including

any Article, Clause, Recital, Appendix or Schedule hereof.

ARTICLE - II: COLLABORATION AND CONDITIONS PRECEDENT

2.1 In consideration of the mutual agreements, covenants and undertakings hereinset out, the Parties have granted the rights and accepted the obligations hereinafter

appearing.

2.2 Parties agree to collaborate for carrying on the Business in the manner and

subject to and on the terms and conditions setout hereinafter.

2.3 ABC undertakes to fulfill all the requirements of the relevant Indian Authorities

for equity participation. DEF shall provide ABC with all such information as ABC

may require for satisfying the requirements of Indian Authorities.

ARTICLE - III: BUSINESS OF THE COMPANY AND ITS CONDUCT

3.1 The Company shall principally carry on the business of ______________.

3.2 The Parties shall at all times respectively endeavour to the best of their ability

to promote the Business of the Company.

3.3 The Business of the Company shall at all times be conducted independently

from the business of the Parties, but subject thereto, the Company may transact

business with any of the Parties, including the purchase of products and servicessupplied by any of the Parties, provided that such products or services are supplied



on terms mutually agreed between the Parties and are competitive, and only with

written consent of the other party per section 13.1.1 hereto.

3.4 Except as ABC and DEF may otherwise agree in writing or save as otherwiseprovided or contemplated in this Agreement or in the Annual Budget or Business

Plan, ABC and DEF shall exercise their powers in relation to the Company so as to

ensure that:

3.4.1 the Company carries on and conducts its Business and affairs in aproper and efficient manner and for its own benefit and in accordance with

the Business Plan;

3.4.2 save as may be provided in the agreements referred to in Clause 3.5, the

Company shall not enter into any agreement or arrangement restricting its

competitive freedom to provide and take goods and services by such means

and from and to such persons as it may think fit;

3.4.3 the Business of Company shall be carried on pursuant to policies laid

down from time to time by the Board;

3.4.4 the Company shall maintain adequate insurance against all risks usually

insured against by companies carrying on the same or similar business and(without prejudice to the generality of the foregoing) for the full replacement

or reinstatement value of all its assets of an insurable value;

3.4.5 the Company shall keep books of account and therein make true and

fair entries of all its dealings and transactions of and in relation to its business

so as to give true and fair view of the business and affairs of the Company;

3.4.6 the Company shall adopt such accounting policies consistent with theAct as may from time to time be generally acceptable in India;

3.4.7 the Company will provide ABC and DEF or to their respectivedesignated nominees within 4 weeks after the end of each month with

unaudited management accounts for such month, details of its order book and

forecast profit and loss to the end of the current half yearly accounting periodand such other data and information as may reasonably be required by ABC

or DEF;

3.4.8 the Company will provide each Party or a designated member of its

Group within 4 weeks of the date of receipt of request in this behalf fromsuch Party, such data and information regarding its business and operations

as such Party may reasonably request;

3.4.9 the Company shall prepare such accounts in respect of each accounting

reference period and fiscal year as are required by statute and procure that

such accounts are audited as soon as. practicable and in any event not later

than four months after the end of the relevant accounting reference period;



3.4.10 if the Company requires any approval, consent or license for the

carrying on of its business in the places and in the manner in which it is fromtime to time carried on or proposed to be carried on, the Company will use its

best endeavours to maintain the same in full force and effect.

3.4.11 the Company will promptly observe, perform and comply with its

obligations under each of the agreements referred to in Clause 3.5.

3.5 ABC and DEF agree to the following :

3.5.1 ABC shall lease to the Company its entire facilities located at_______comprising of land, building, utilities, off-site facilities and process

equipment . A detailed Lease Agreement evidencing said lease shall be

agreed to separately. The principal terms and conditions of the lease as

agreed to between ABC and DEF are set out in Annexure-A, which forms an

integral part of this Agreement.

3.5.2 ABC shall cause to transfer the employment of such personnel as are

willing to accept the transfer to the Company. The terms and conditions of employment in the Company in respect of these transferred personnel shall

remain unchanged from the terms and conditions of their employment atABC. DEF shall have the right to interview/select the personnel to be

employed in the Company within 30 days of the Effective Date. The details

of the personnel to be transferred is enclosed in Annexure-B .

3.5.3 DEF shall provide to the Company the necessary know-how andtechnology as may be required. The principal terms and conditions as agreed

to between ABC and DEF are set out in Annexure-C, which forms an integral

part of this agreement.

ARTICLE - IV: SHARE CAPITAL AND SHAREHOLDING PATTERN OF

THE COMPANY

4.1 The Company shall have only one class of Shares. The Parties hereto agree thatthe authorised share capital of the Company shall be __________ divided into

______ equity Shares of the face value of Rs.10/- each.

4.2(1) The issued and paid up Equity Capital of the Company shall be

____________ divided into __________ equity shares of the par value of Rs.10/-

(Rupees ten) each.

4.3 The shareholding pattern of the Equity Capital shall be as follows:

4.3.1 Fifty percent (50%) of the issued and paid up Equity Capital shall besubscribed for and be held by ABC and its Associates against cash inward

remittance in freely convertible foreign currency, save as expressly provided

in Clause 4.5.



4.3.2 50 percent (50%) of the issued and paid up Equity Capital shall be

subscribed for and be held by DEF and its Associates for cash at par save as

expressly provided in Clause 4.5.

4.3.3 ABC and DEF undertake to keep their equity holdings unchanged at

50% each during the life of the agreement.

4.4 Each Party shall bear its own costs and expenses (including travel andaccommodation expenses, salaries, allowances, out-of-pocket expenses and othercosts involved in the preparation, negotiation and execution of this Agreement) as

may be incurred before the Effective Date, except for the following, which the

Parties shall procure the Company (to the extent certified by the Auditors) to

reimburse to the Party incurring such expenses namely:-

4.4.1 the costs of incorporation of the Company including stamp duties andregistration charges payable in connection with the registration of the

Company; and

4.4.2 Costs and expenses of the Company including salary and wages of Company personnel pending induction of Shareholders Funds.

4.5 It is agreed that notwithstanding anything to the contrary contained in thisAgreement, at ABC's and DEF‟s option they shall be entitled to have issued tothem Shares in lieu of expenses incurred and falling within the scope and ambit of

Clause 4.4. However, no issuance of shares under this Clause 4.4 shall be permitted

if such issuance would directly or indirectly result in either Party holding more or

less than that Party‟s

4.6 The Parties shall hold their Shares subject to such conditions as may be

prescribed under applicable Indian regulations and/or the Articles of Association.

4.7 Unless otherwise agreed by all the Parties in writing, any further Shares to be

issued by the Company shall, subject to the par value of all issued Shares not

exceeding the Total Equity Capital, be offered and issued to the Shareholders in the

Agreed Proportions.

4.8 Notwithstanding anything to the contrary contained in Clause 4.7, if any of the

Parties (the "Rejecting Party") fails to subscribe and pay or cause to be subscribed

and paid for by their Associates any of the Shares offered to it in accordance with

this Agreement (the "Rejected Shares") within 30 days of such offer, such

Rejecting Party shall be deemed to be in breach of this Agreement. Withoutprejudice to the foregoing, the Rejected Shares shall be offered to the other Party

hereto according to the procedure set out below:-

4.8.1 Where the Rejecting Party is ABC the Board must offer the Rejected

Shares to DEF or its Associates nominated in this behalf by DEF;



4.8.2 Where the Rejecting Party is DEF the Board must offer the Rejected

Shares to ABC or its Associates nominated in this behalf by ABC;

4.8.3 Any Rejected Shares not accepted by the ABC or DEF or theirrespective Associates, those shares, may be offered by the Board to a third

party on terms no more favourable than those offered to ABC or DEF.

Provided, where Rejected Shares cannot be accepted by ABC or DEF or any

of their Associates as a result of any applicable Indian laws or regulations,ABC or DEF may, with prior written approval of DEF or ABC, as the case

may be, nominate an Affiliate who satisfies such laws and regulations to

subscribe for such Rejected Shares;

4.8.4 If DEF or ABC does not approve of such Affiliate, ABC or DEF shallsubscribe or cause any of its Associates to subscribe for such Rejected

Shares;

4.8.5 For the purpose of this Clause 4.8, any offer to subscribe Shares must

be made in writing by the Board. Any Party or its Associate wishing to

accept such offer from the Board must do so by giving notice in writing,which notice must be received by the Board no later than 60 days after the

day the offer was first made by the Board.

ARTICLE - V: SALE OF SHARES

5.1 Notwithstanding anything to the contrary contained herein, neither Party shall

sell, transfer, assign, hypothecate, mortgage, or otherwise encumber the whole orpart its Shareholding in the Company nor shall it permit its Associates and

Affiliates who are bound by the terms of this Agreement to do the same for a

period of 5 (five) years from the date of allotment of the Shares or for so long as

the Company owes any moneys to term lending financial institutions and banks,whichever is later ("Lockin Period"), without the prior written consent of the other

Party and after the said Lockin Period neither Party or its Associates and Affiliates

shall sell, transfer, assign, hypothecate, mortgage or otherwise encumber all or anypart of its/their Shares save and except with the prior consent in writing of the other

Party or as expressly provided in this Agreement.

5.2 In the event of either Party or its Associates or Affiliates desiring to sell or

dispose of its/their Shares, such Party shall, subject to Clause 5.3, give to the otherthe right of first refusal in the manner as provided hereinafter. If, on account of

laws or regulations in India, either Party is unable to acquire shares so offered to it,

it will be entitled to designate a person of its choice to whom the Shares in wholeor in part shall be transferred.

5.3 RIGHT OF FIRST REFUSAL.

5.3.1 Neither Party shall sell, give away, or otherwise dispose of or transfer

any of its Shares until (i) it has delivered to the Company an irrevocablewritten offer to sell ("Offer") all of its Shares or portion thereof ("Sale



Shares") and to the other Party (the "Remaining Party") at a price (the "Offer

Price") stated in the Offer and (ii) the Remaining Party shall have failed toaccept the Offer within 60 days after the receipt of the Offer. The Remaining

Party shall convey its acceptance, if any, to the Shareholder offering Sale

Shares pursuant hereto ("Selling Member") within 60 days of receipt of theOffer in respect thereof. If the Remaining Party accepts the Offer but does

not agree to the Offer Price, the price shall be determined by the Statutory

Auditors of the Company at the request of either Party and the price sodetermined shall be deemed to be the Offer Price for the purposes of this

Clause 5.3.

5.3.2 Within 60 days of the receipt of any requisite approvals for the

purchase of the Sale Shares by the Remaining Party, the Remaining Party

shall promptly pay or cause any person nominated by him to purchase theSale Shares and to pay the Offer Price for the Sale Shares in full in cash

against transfer of the Shares. If the approvals are at a price different from the

Offer Price, the Selling Member shall be entitled to withdraw its offer not

later than 15 days of the receipt of such approvals by it or to sell and transfer

the Sale Shares to the Remaining Party or its nominee at the price containedin such approvals. If the Offer is withdrawn, any subsequent sale shall always

be subject to the right of first refusal of the Remaining Party as contained in

this Article 5.3.

5.3.3 If the Remaining Party does not accept the Offer of Sale Shares, then atany time within 90 days after the expiration of the 60-day period referred to

in Sub-clause 5.3.1 above, the Selling Member may sell all, but not less than

all, of the Sale Shares to the Transferees selected by the Remaining Party andif the Remaining Party does not procure any buyer(s) for the Sale Shares of

the Selling Member at any time within 90 days after the expiration of the

above referred 90-day period, the Selling Member shall have the option toeither withdraw the Offer or to sell the Sale Shares through prospectus/publicoffer at Stock Exchange. For any sale subsequent to the withdrawal of the

Offer the procedure setout in this Clause 5.3 shall have to be complied again.

5.3.4 Any period of time for the purchase of a Selling Member's Shares shall

be extended, if the transfer of the Sale Shares requires any consent orapproval from Indian authorities, to the earlier of (i) the date when the

requisite consents/approvals are obtained, or (ii) the end of the twelfth

calendar month immediately following the month in which the Selling

Member submitted an Offer in accordance with Clause 5.3.1 above. If, within

the twelve-month period described in the immediately preceding sentence,the Selling Member is unable to obtain any requisite consent for its transfer

of the Sale Shares, the Selling Member's Offer to sell the Sale Shares shall bedeemed to have expired and the Selling Member shall not be entitled to

transfer the Shares to any person except by again making an Offer under

Article 5.3.1 above.



5.3.5 If any Person purports to acquire any of the Shares, or any interest

therein, in a manner not specifically permitted by this Agreement (whether byoperation of law or by voluntary act or otherwise), the Remaining Party or

any person(s) nominated by the Remaining Party shall have the right, but not

the obligation, to purchase at book value any or all of the Shares purported tohave been thus acquired. But the failure of the Remaining Party to purchase

the Shares at book value shall not be deemed or construed to validate the

purported transfer of the Shares in violation of this Agreement, whichpurported transfer shall be null and void. As used in this Clause 5.3.5, "book value" shall mean the book value of the Shares in question determined in

accordance with the generally accepted accounting principles consistently

applied in the Company's financial statements. The determination of book value by a chartered public accountant or firm of chartered public

accountants then acting as the Company's regular Auditors shall be final,

conclusive and binding on the Company, the Parties, the person purporting to

have acquired the Shares in violation of this Agreement, and their successors

in interest.

5.3.6 In the event the Parties interest and control in the Controlled Nomineesgoes below 51% then the Shares held by such Controlled Nominee in the

Company shall be offered to the Other Party in accordance with the

provisions of Clause 5.3.1 above.

5.4 Clauses 5.2 and 5.3 shall not apply to any transfer inter-se between a Party andits Associates and Affiliates who have agreed to be bound by the terms of this

Agreement and the same shall not be subject to the right of pre-emption and first

refusal contained hereinabove and no such transfer shall be deemed to be, nor shall

it constitute, a breach of the provisions of Clauses 5.2 and 5.3 hereof.

ARTICLE - VI: BOARD OF DIRECTORS AND MANAGEMENT OF THECOMPANY

6.1 The Board of Directors shall be responsible for the overall policy and the

conduct of the business, affairs and operations of the Company except to the extent

that applicable laws, regulations, the Memorandum, Articles of Association or thisAgreement otherwise provide or allocate responsibility over any particular matter

to the Shareholders. The Board shall be entitled to delegate any of its power to such

of its members or officers of the Company as may be deemed appropriate by itsubject always to applicable laws, the Memorandum, the Articles of Association

and the provisions of this Agreement.

6.2 The Board shall, exclusive of alternate Directors, comprise and be not less than

4 and not more than 12 Directors of whom not more than one third shall be non-

retiring Directors.

6.3 The Board shall so long as DEF and/or its Associates and ABC and/or itsAssociates are Shareholders be comprised of 4 Directors. The representation of the

Parties on the Board shall be in equal proportion, provided that if there is



subsequently any change in the ratio of shareholdings of DEF and ABC in the

Company, the Parties shall procure that the representation of Parties on the Boardshall be in proportion to the respective shareholdings of the Parties in the

Company.

6.3.1 DEF and ABC shall be entitled to appoint non-retiring Directors in

proportion to their representation on the Board pursuant to sub-clause 6.3

above with the right to remove, replace or fill any vacancy with respect toany member they nominated or had authority to nominate, howsoever caused

therein by a communication in writing to the Company.

6.3.2 If the financial and other term lending institutions and banks require as

a condition of lending to the Company, appointment of nominee/otherDirector(s) for the period their loans are outstanding, the Parties hereby agree

for their such appointment. [In the event of such financial/term lending

Institutions and the banks requiring appointment of any independent

Directors, the same shall be selected by DEF and ABC by mutual agreement,or failing such mutual Agreement, they shall be selected by the Parties in

equal proportion.]

6.4 Upon a Party ceasing to hold at least 10% of the Shares, it will procure that the

Directors nominated by it will tender their resignation from their respective officesin the Company forthwith without any claim for compensation or loss of office or

otherwise except for salary (if any) and any other entitlements which may have

accrued up to the date of their resignation.

6.5 For the purposes of this Agreement, “Shareholding of a Party” shall mean the

aggregate of its shareholding and that of its Associates and Affiliates, in the

Company.

6.6. The Chairman of the Board shall be a nominee of DEF from amongst the

Directors nominated by DEF and the Parties shall procure his appointment as

Chairman of the Board. The Chairman of the Board shall be non-executive andshall not have a second or casting vote at meetings of the Board or the meetings of

Shareholders where the Chairman presides.

6.7 The Chairman shall be ex-officio Chairman of general meetings of the

Company in accordance with applicable provisions of the Act and the Articles of Association. At all Board meetings, if the Chairman is present, he shall preside, and

in his absence a Director designated by DEF shall be elected Chairman for that

meeting and shall preside.

6.8 The Board shall appoint Chief Executive Officer (the "CEO") and the Chief

Financial Officer (the "CFO") of the Company. The CEO shall be subject to the

supervision, direction and control of the Board and the Executive Committee. TheCEO shall be in charge of and responsible for the conduct of day to day business

and operations of the Company in accordance with the Board‟s instructions or

powers delegated to him/her without prejudice to the authority of the Board. The



CEO shall hold the office for such period and on such terms as the Board may

determine from time to time. The CFO shall report to the CEO and shall be the

controller of finance and accounts of the Company in accordance with the Board‟s

instructions or powers delegated to him/her by the Board

6.9 The CEO shall be nominated by DEF and ABC shall nominate the CFO. The

CEO and/or CFO may, at the option of the relevant Party, be on the Board, in

which case they shall be out of their respective nominee Directors

6.10 The Parties agree and acknowledge that appointment of nominees of the

Parties to the positions referred to in Clause 6.9 shall be in the short term only and

that it is the objective of the Parties that at the appropriate time, the CEO and CFO

and all other senior executives and employees of the Company shall be individualswho have commitment to and who look for their future career prospects only with

the Company and not with any Party hereto.

6.11 The Board shall select an executive management committee of the Board

("Executive Committee"), consisting of such number of Directors as the Board

may, while appointing the Executive Committee, decide, provided it shall have atleast one nominee Director each of DEF, ABC and the CEO. All decisions of the

Executive Committee shall be by majority. In the event there is a tie in respect of

any matter at the Executive Committee, the same shall be referred to the Board forits consideration and decision. Such other Directors or executives of the Company

may be invited to participate in the Executive Committee from time to time as the

Board, the Chairman of the Executive Committee or the Executive Committee maydeem appropriate. The Executive Committee shall, subject to the supervision and

control of the Board, be responsible for overseeing the day to day management of

the business and operations of the Company by the CEO and other officers and for

which purpose it shall have adequate authority and power with right to sub-

delegate. The Executive Committee‟s responsibilities shall include the following:

6.11.1 Developing long term and annual business plans for the approval of

the Board;

6.11.2 Establishing and modifying personnel policies, compensation,

retirement benefits etc., for all personnel excluding members of the Executive

Committee. The CEO shall determine these for other members of the

Executive Committee.

6.11.3 Management & deployment of surplus funds;

6.11.4 Developing & approval of marketing plans;

6.11.5 Day-to-day management of operations.

6.12 The Parties shall procure that the person nominated as aforesaid by them or

selected by the Executive Committee are appointed by the Company.



6.13 The Board shall determine the functions and duties of the CEO and CFO. The

Parties shall procure that the Board delegates appropriate powers to the CEO andCFO to discharge their respective functions and duties. The CEO shall report to

and function subject to the supervision, direction and control of the Executive

Committee and the Board. The CFO shall report to the CEO.

Senior managers selected by the Executive Committee shall be appointed by the

CEO and shall report to him. The CEO shall assign to the senior managers, subjectto directions if any of the Executive Committee, their duties, obligation and

functions.

6.14 The Auditors of the Company shall be selected jointly by the Parties.

6.15 The Company, if so statutorily required, shall have a Secretary as defined in

the Act. The Executive Committee shall select the Secretary and recommend himto the Board for appointment. The Board may appoint the person so recommended

as Secretary, if found suitable by it.

6.16 The responsibilities of the Secretary shall include statutory compliances andfilings in accordance with the Act and maintenance of statutory records as required

by the Act and such other duties as the Board/Executive Committee may assign to

him from time to time.

6.17 If any Party shall not be satisfied with the performance of the CEO or the

CFO, it shall be entitled to require his/their removal. On such requisition, the

Parties shall cause their respective nominees on the Board to vote and remove theCEO, or the CFO as the case may be. In the event of such removal, such person's

replacement shall be appointed in accordance with the procedure set out herein.

6.18 The right of nomination conferred on a Party hereunder shall include the rightof that Party to require the other Party to procure the Board to remove at any time

from office such person nominated by that Party as a Director and the right of thatParty at any time and from time to time to determine the period during which such

person shall hold the office of Director.

6.19 Whenever for any reason a person ceases to be a Director, the Party which had

nominated him or would be entitled to nominate him hereunder shall nominateforthwith another person for appointment as Director in substitution thereof, and

the Parties shall procure the appointment of such nominee as a Director.

6.20 Alternate Directors to be appointed for nominee Directors ("OriginalDirector") of each Party shall be persons proposed by such Party only and on such

nomination the Parties shall cause their respective nominee Directors to vote forand appoint him as such alternate Director. Such alternate Director shall be entitled

while holding office as such to receive notices of meetings of the Board or any

committee of the Board to which such Director has been appointed and to attend

and vote as a Director at any such meetings of the Board or any such committee atwhich the Original Director is not present and generally to exercise all the powers,



rights, duties and authorities and to perform all functions of the Original Director.

Further, such alternate Director shall be entitled to exercise the vote of the Original

Director at any meeting of the Board or any such committee.

6.21 The Company may pay such sitting fees to Directors, not exceeding the

maximum permissible under the Act, as may be determined by the Board from time

to time. In addition, a Director shall be entitled to receive such remuneration for

services performed for the Company as the Board may decide from time to time.

6.22 The Board shall meet at such time and at such place as it shall deem necessary

provided that at least one meeting of the Board shall be held in each quarter.

6.23 The Secretary shall, as and when directed by any Director, call a meeting of

the Board. Notice of every Board meeting whether first convened or adjourned

shall be sent to each Director and his alternate so as to be received not less than 14

days before the day such meeting is scheduled to take place.

6. 24 Except in emergent cases or unless the Parties or a majority of the Directors

agree otherwise (i) at least 14 days' written notice will be given to all Directors forconvening a Board meeting; and (ii) such notice shall be accompanied by an

agenda of the matters to be discussed. It is agreed that (unless in any particular casethe Parties shall otherwise agree) no resolution relating to any other business may

be proposed or passed at any Board meeting unless the nature of the business is

specified in the agenda for the meeting.

6. 25 The Chairman of the Board shall preside as Chairman of any meeting of theBoard or any committee of the Board if he is a member thereof, but if at any

meeting the Chairman be not present within 15 minutes after the time appointed for

holding the same, a substitute for that meeting shall be appointed from amongst the

nominee Directors of DEF on the Board.

6.26 No business shall be transacted at any Board meeting unless a quorum ispresent at the meeting. In the first instance the quorum for meetings of the Board

shall be at least one third of the Board including at least one Director nominated by

DEF and at least one Director nominated by ABC. A Director represented by hisalternate shall be deemed to be present for the purpose of determining whether a

quorum exists. If within half an hour from the time appointed for a meeting a

quorum as aforesaid is not present, the meeting shall stand adjourned to the sameday in the next week at the same time and place or to such other later day and at

such other time and place as the Directors may determine. If at such adjourned

meeting, a quorum is not present, the meeting shall stand adjourned for a furtherhalf hour and if the quorum as aforesaid is still not present but the Directors present

being at least one third of the Board, they shall constitute a quorum.

6.27 Subject to the provisions of the Act a resolution signed by a majority of theDirectors for the time being shall be as valid and effectual as if it has been a

resolution passed at a meeting of the Board of Directors duly convened and held.

Any such resolution may be contained in a single document or may consist of





d. issue of convertible debentures whereupon conversion thereof, the

issued share capital as agreed between the Parties is exceeded or wherethe respective proportions of the Shareholding of the Parties are altered;

and

7.5.5 amendment of the Memorandum and/or Articles of Association.

8. DEADLOCK

8.1 In the event that any of the following events occur, the provisions of this Clause

shall apply.

8.1.1 If the approval or modification of the Annual Budget or the Business Plan of

the Company for any year ("such Matter") has been consistently considered orraised at a Board meeting and has consistently resulted in an equality of votes. For

avoidance of doubt, any Such Matter shall be deemed to have been consistently

considered or raised at a Board meeting if Such Matter has been tabled for

discussion or discussed at more than 3 Board meetings in any 3 consecutive

months period;

8.1.2 any Such Matter having been consistently considered or raised at General

Meetings of the Company and on which there has been an equality of votes. Foravoidance of doubt, any Such Matter shall be deemed to have been consistentlyconsidered or raised at a General Meeting if Such Matter has been tabled for

discussion or discussed at more than 2 General Meetings in any 6 month period.

8.2 Upon the occurrence of an event under Clause 8.1 but in any event no later than

60 days after such occurrence, a Party shall be entitled to give a notice in writing

("Conciliation Notice") to the other Party.

8.3 Upon receipt of the Conciliation Notice, such matter stated in such ConciliationNotice shall be referred to the Chairmen of the Parties who shall confer with each

other in good faith and shall use their best efforts in order to resolve the same.

8.4 In the event Parties are unable resolve the Deadlock within 90 days of the

receipt of Conciliation Notice, either Party can serve on the other a notice inwriting requiring it to purchase its Shares ("Notice") The Party receiving the Notice

shall elect to purchase the shares if at all within 30 days of receipt of such notice. If

a Party so elects to purchase the Shares, the price payable therefor shall be as

determined by the Auditors of the Company and the provisions of Clause 8.5 shall

apply.

8.5 In the event that the sale of the Shares is prohibited or would otherwise result in

the purchasing Party being in contravention of any applicable laws or regulations

the purchasing Party shall be entitled:-

8.5.1 to have such Shares transferred to and registered in the name of a thirdparty who is qualified to hold such Shares, provided that such third party



shall first enter into an agreement with the other Party to the effect that it

shall adhere to the provisions of this Agreement in so far as such provisions

are applicable to the Parties at such time; or

8.5.2 to apply for the requisite Indian Government approvals for the sale of

the Shares or for the purchasing Party to purchase such shares provided that

where such approvals cannot be obtained within 120 days (or such other

number of days as may be agreed between the Parties based on the typicalresponse time of such authorities as the case may be) from the date the

purchasing Party has agreed to purchase such Shares, the purchasing Party

may within 30 days after the expiry of such period elect by giving written

notice to the selling Party to proceed under sub-clause (a) above.

8.6 Where a Party has purchased the Shares of the other Party, such purchasing

Party shall pay to such other Party the full amount of the purchase price by way of

a cashier's order against the delivery of the original share certificates and duly

executed instruments of transfer in respect of such Shares. This Agreement will beterminated with respect to a Party who sells all of its Shares under this Article 8,

effective as of the closing date of such sale of the Shares under this Article 8.

8.7 If, in any case, the other Party after having become bound to transfer its Shares

pursuant to the provisions of this Article 8 or otherwise, shall fail or refuse to doso, the Secretary or any other person appointed by the Board shall be deemed to

have been irrevocably authorized by the other Party with full power to execute,

complete and deliver, in the name and on behalf of the selling Party, transfers of the Shares to the purchasing Party thereof against payment of the purchase price

therefor to the Company, and the Board may then register the purchasing Party as

holder of the Shares and issue to the purchasing Party a certificate of the same and

thereupon the selling Party shall be bound to deliver up the certificates for the

Shares and upon such delivery shall be entitled to receive the purchase pricetherefor without interest.

8.8 If the Party receiving the Notice pursuant to Clause 8.4 elects not to purchase

the shares of the Party giving the Notice or does not respond to the Notice within

the period set out in Clause 8.4, the selling Party shall be entitled to sell its Sharesto the public through an offer letter/prospectus at same price as offered to the other

Party.

ARTICLE - IX: FUNDING

9.1 Each Party shall contribute to the funding requirements of the Company for theProject in the form of Equity Capital and/or Unsecured Loans, each such injection

being in the Agreed Proportions

9.2 It is agreed that the actual composition of the Shareholders' funds in terms of equity and Shareholders Loans and the timing thereof will be subject to further

discussion and mutual agreement of the Parties.



9.3 It is estimated that the Company would be able to start production of PV

modules within 18 months of the Effective Date. The expenses of the Companyduring this 18 months period are estimated at Rs. 4.3 million per month as per

details given in Annexure-D.

9.4 The Parties agree that various financial parameters such as but not limited to

the Equity Capital and maximum debt/equity ratio, will be subject to determination

as part of the rolling three-year Business Plan to be approved pursuant to ArticleXI. The Parties shall, acting reasonably and in good faith, and as and when

necessary, review and revise such financial parameters based on latest and best

projection of the funding requirements of the Project and prudent financingconsideration, so as to, at all times, ensure and enhance the business viability of the

Company and returns to the Shareholders.

9.5 The Parties agree that subject to mutual agreement, if any Shareholders

guarantees are required by any bank or financial institution lending monies to the

Company, the Parties shall provide the same in equal proportion.

ARTICLE - X: ACCOUNTS AND AUDIT

10.1 The Parties shall procure that:-

10.1.1 the Company at all times maintain accurate and complete accountingand other financial records in accordance with the requirements of all

applicable laws and generally accepted accounting standards and principles

applicable in India;

10.1.2 annual audited accounts of the Company containing the balance sheet

and profit and loss account and all such other information as may be required

under Indian law and prepared in accordance with generally acceptedaccounting standards and principles applicable in India consistently applied

shall be prepared and despatched to the Parties within six months of the end

of each financial year of the Company.

10.1.3 Each of the Parties or their authorized representatives shall, subject to

at least 7 days prior notice in writing to the Company be allowed access at all

reasonable times to examine the books and records of the Company.

ARTICLE - XI : ANNUAL BUDGET AND BUSINESS PLAN

11.1. The Parties shall procure that:

11.1.1 immediately after the Effective date, the Parties representatives shall

meet to prepare and finalize Annual Budget for the first year and a rollingthree-year Business Plan for the first three financial years of the Company.

The Parties will submit such business plan to a meeting of the Board for

approval within thirty (30) days immediately following the Effective Date;

and



11.1.2 before the first full financial year of the Company, and, thereafter for

subsequent financial years, an Annual Budget and an updated rolling three-year Business Plan for the following three financial years will be finalised by

Executive Committee and thereafter approved by the Board. For this purpose

the CEO shall, with the assistance of CFO, prepare and submit an AnnualBudget and an updated rolling three-year Business Plan at least six weeks

before the beginning of every new financial year of the Company and submit

the same to the Board for its consideration and approval. The Annual Budgetand the updated rolling three-year Business Plan as approved by the Board

shall be the one to be implemented by the CEO.

ARTICLE - XII: DIVIDEND POLICY

12.1. The Parties shall procure that the Board in making any decision in relation to

the declaration of dividends and the appropriation of surplus shall consider the

following factors:-

12.1.1. the maintenance of prudent and proper reserves including allowance

for future working capital and provision for tax;

12.1.2 the due and prudent provision for all actual and carried forward losses

of the Company;

12.1.3. the due and prudent provision for the payment of all indebtedness,

borrowings and loans owed by the Company to the Parties or to banks and

financial institutions or to unsecured creditors; and

12.1.4. any other factors which the parties may agree to be taken into

account.

12.2 The Parties shall procure any dividend recommended by the Board to beapproved by the Shareholders and distributed by the Company within 42 days of

such approval by the Shareholders. The right to dividends will vest in the

Shareholders immediately upon the approval thereof by the Company in theGeneral Meeting whose names appear on the Register of Members of the Company

as on the record date. For purposes of this Clause, “record date” shall mean the date

on which the Register of Members is closed, which is before the issue of notice for

the General Meeting.

ARTICLE - XIII: CO-OPERATION AND GENERAL UNDERTAKING

13.1 Each of the Parties hereby agrees that each will exercise its voting rights forthe time being in the Company and each of the Parties hereto shall take all such

steps for the time being as shall lie within its power, to procure that:-

13.1.1 the Company will not contract with any of the Parties hereto without

the prior consent of the other.



13.1.2 the provisions of Clause 13.1.1 above shall apply mutatis mutandis to

the transactions between the Company and the Directors, employees and

Associates of each Party;

13.1.3. save with the written consent of the Parties and except in the ordinary

course of its business and on an arm's length basis the Company will not

enter into any contract or transaction with any third party whereby the third

party will receive more than a fair commercial price or where the Companywill receive less than a fair commercial price for any services rendered or

goods sold by it (less customary trade discounts and allowances); and

13.1.4 the Directors appointed by each of them shall observe, comply with

and implement the provisions of this Agreement.

13.2 The Parties shall at all times:-

13.2.1 co-operate in good faith and execute such documents and take such

action as may be reasonably required to give full effect to the provisions and

intent of this Agreement; and

13.2.2 promptly notify the other Party and the Company of all matters

coming to its notice which may affect the title to or enjoyment of theCompany's premises, assets or properties, and all significant, orders anddemands, and other communications received from any government or quasi

government authority in relation to the Company's licenses.

ARTICLE - XIV : FORCE MAJEURE AND CONDITIONAL EVENTS

14.1 In the event that any Party hereto shall be rendered unable to carry out the

whole or any part of its obligations under this Agreement for any reason beyondthe reasonable control of that Party, including but not limited to decrees or restrainsby governmental authorities, acts of God, force majeure, strikes, war, riot and any

other causes of such nature, then the performance of the obligations hereunder of

that Party or all the Parties hereto as the case may be and as they are affected bysuch cause shall be excused during the continuance of any inability caused, but

such inability shall as far as possible be remedied with all reasonable dispatch

provided the Party claiming force majeure has notified the other Parties withreasonable dispatch about the circumstances constituting force majeure and its

likely duration with such evidence in support thereof as may be reasonably

available with it.

ARTICLE - XV: DEFAULT

15.1. In the event that a Party ( the "Defaulting Shareholder"):-

15.1.1 commits any breach of any of its material obligations under this

Agreement and fails (where such breach is capable of remedy) or is unable(where such breach is not capable of remedy) to take appropriate steps to



cure such breach within 30 days after being given notice so to do by the Party

not in default;

15.1.2 goes into liquidation, whether compulsory or voluntary (except for thepurposes of a bona fide reconstruction or amalgamation with the consent of

the other Shareholders, such consent not to be unreasonably withheld);

15.1.3 has an administrator, receiver, receiver and manager, judicial manageror similar officer appointed over the whole or a substantial part of the assets

or undertaking of the Defaulting Shareholder;

15.1.4 becomes insolvent or is unable to pay its debts or admits in writing its

inability to pay its debts as they fall due or enters into any composition or

arrangement with its creditors or makes a general assignment for the benefit

of its creditors; or

15.1.5 ceases to carry on the whole or any substantial part of its business

other than in the course of reconstruction or amalgamation;

then the party not in default shall be entitled (but not after 90 days of the event in

question first coming to the attention of the non-defaulting party) to give a notice (a

"Default Notice") to the Defaulting Shareholder.

15.2 At any time within 90 days of the service of the Default Notice on the

Defaulting Shareholder, the Party not in default ("Other Party”) shall be entitled togive a written notice (a "Default Sale Notice") to the Defaulting shareholder with

copies given to the other Shareholders, and upon service of a Default Sale Notice,

the Defaulting Shareholder shall be deemed to have offered all its Shares for sale to

the Other Party on the date of receipt of the Default Sale Notice at the price equal

to the Fair Value as defined in clause 15.5 (the "Default Sale Price").

15.3 A sale of Shares pursuant to the provisions of this Article XV shall be

completed at the registered office of the Company at 12.00 noon on the day falling

60 days after the date of the Default Sale Notice given under Clause 15.2, or at

such time as any required approvals are obtained.

15.4 The rights of the Other Party under this Article XV shall be in addition and

without prejudice to any other rights of the Other Party against the Defaulting

Shareholder at law or in equity including, but not limited to, the right to damages.

15.5 For the purposes of this Agreement, the “Fair Value” of the Defaulting Shareholder's Shares shall be the value of such Shares as determined by theAuditors for the time being of the Company on the basis of book value. In so

certifying the Fair Value of such shares, the Auditors shall be acting as an expert

and not an arbitrator and the costs of such valuation and certification shall be borne

by the Defaulting Shareholder unless otherwise agreed by the parties.



15.6 Notwithstanding any other provision in this Article, Clauses 15.1 to and

including 15.5 shall be read subject to the following provisions:-

15.6.1 If the Defaulting Shareholder is ABC -

(a) the offer for sale of its Shares shall be deemed to be first made to

DEF.

(b) if the Shares are not accepted by DEF or any Associates/ person

designated in this behalf by DEF, they shall then be deemed to have

been offered to the public through prospectus or offer letter.

15.6.2 If the Defaulting Shareholder is DEF -

(a) the offer for sale of its Shares shall be deemed to be first made to

ABC

(b) if the Shares are not accepted by ABC or any Associate/person

designated in this behalf by ABC, they shall then be deemed to havebeen offered to the public through prospectus or offer letter.

15.7 It is hereby agreed that a Party agreeing to purchase the Shares of the Other

Party pursuant to and in accordance with this Agreement, including that of a

Defaulting Shareholder hereunder, shall be entitled to purchase the same itself or

nominate a buyer or buyers therefor.

15.8 In the event that the sale of the Shares is prohibited or would otherwise result

in a purchasing party being in contravention of any applicable laws or regulations

the provisions of Clause 4.8 shall apply mutatis mutandis.



ARTICLE - XVI: GENERAL

16.1 Each time the Company has an opportunity to exercise a right or privilege

granted by, pertaining to or otherwise involving DEF, or to take an action or file aclaim against, pertaining to or otherwise involving DEF, DEF shall vote its/their

Shares to cause the Company to exercise the right or privilege, or to take the action

or file the claim, in each case as ABC alone deems or determines appropriate.

Without limiting the generality of the immediately preceding sentence, with respectto any matter or transaction involving DEF (which matter or transaction is not

integral to DEF‟s rights and role as a Shareholder of the Company), ABC alone

shall determine the Company's course of action. The provisions of this Clause 16.1shall apply reciprocally to the Company's exercise of rights or privileges involving

ABC and to the Company's taking of actions or filing of claims against or

involving ABC. For the purposes of such reciprocal application, each reference inthe first two sentences of this Clause 16.1 to DEF shall be read as a reference to

ABC, as appropriate, and each reference in the first two sentences of this Section

Clause 16.1 to ABC shall be read as a reference to DEF.

16.2 COSTS

DEF and ABC shall pay their own costs and expenses incurred in relation to

the negotiation, preparation and execution of this Agreement.

16.3 NOTICES

All notices which are required to be given hereunder shall be in writing andshall be sent to the address of the recipient set out in this Agreement or in any

Deed of Adherence or such other address as the recipient may designate by

notice given in accordance with the provisions of this Clause. Any such

notice may be delivered personally, by prepaid certified letter electronic mail,or facsimile transmission and shall be deemed to have been served if by

personal delivery when delivered, if by certified prepaid post, 7 days after

posting, and if by electronic mail or facsimile transmission when dispatched.

16.4 SUCCESSORS BOUND

This Agreement shall be binding on and shall ensure for the benefit of the

successors and assign of each of the Parties hereto.

16.5 ASSIGNMENT

None of the Parties hereto may assign its rights or obligations in whole or inpart hereunder without the prior written consent of the other Parties hereto;

Provided that this Clause shall not prevent a transfer of Shares pursuant to

this Agreement.

16.6 CONTINUING AGREEMENT



All provisions of this Agreement shall so far as they are capable of being

performed and observed continue in full force and effect except in respect of

those matters then already performed.

16.7 GOOD FAITH

Each of the Parties hereto undertakes with each of the others to do all things

reasonably within its power which are necessary or desirable to give effect tothe spirit and intent of this Agreement and the Articles of Association.

16.8 FURTHER ASSURANCE

The Parties shall, use their respective reasonable endeavours to procure that

any necessary third parties shall, do, execute and perform all such furtherdeeds, documents, assurances, acts and things as any of the Parties hereto

may reasonably require by notice in writing to the others to carry the

provisions of this Agreement and the Articles of Association into full force

and effect.

16.9 ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Parties heretowith respect to the matters dealt with therein and supersedes any previous

agreement between the Parties hereto in relation to such matters. Each of the

Parties hereto hereby acknowledges that in entering into this Agreement ithas not relied on any representation or warranty save as expressly set out

herein or in any document referred to herein. No variation of this Agreement

shall be valid or effective unless made by one or more instruments in writing

signed by such of the Parties hereto which would be affected by such

variation.



16.10 LAW

This Agreement shall be governed by and construed in accordance with the

laws of India, without reference to the choice of laws provisions thereof.

16.11 NO PARTNERSHIP

Nothing in this Agreement shall constitute or be deemed to constitute apartnership between any of the Parties hereto and none of them shall have

any authority to bind the others in any way, except as provided herein..

16.12 DURATION

16.12.1 The terms of this Agreement shall remain in full force and effect for

so long as any of DEF and ABC or any of their respective Associates

continues to hold Shares, but in relation to a Shareholder which hastransferred all of its Shares as permitted by this Agreement and the Articles

of Association they shall thereupon cease to have further force and effect

except as provided in Clause 16.12.2.

16.12.2 This Agreement shall be deemed to be terminated by mutual consent

with effect from the date upon which either Party together with its Associatesceases to hold not less than 10 per cent of the issued and paidup Equity

Capital of the Company for the time being.

16.13 RIGHTS INCIDENT TO EQUITY CAPITAL OWNERSHIP

16.13.1 In the event of DEF ceasing voluntarily to hold 20% (twenty percent)

or more of the issued and outstanding Shares, its right to nominate non

retiring Directors shall cease and its rights to nominee Directors shall berestricted to have Directors in proportion to its such reduced shareholding.

16.13.2 In the event of ABC ceasing voluntarily to hold 20% (twenty

percent) or more of the issued and outstanding Shares, its right to nominate

non retiring Directors shall cease and its rights to nominee Directors shall be

restricted to have Directors in proportion to its such reduced shareholding.

16.13.3 In the event of a Party hereto ceasing voluntarily to hold 15% (fifteen

percent) or more of the issued and outstanding Shares, all rights of such Party

under this Agreement shall cease.

16.13.4 In the event of the Shareholding of a Party hereto falls voluntarily

below 10% (ten percent) of the issued and outstanding Shares, the other Partyshall, subject to Article V hereinabove, have the option exercisable at any

time thereafter to purchase the Shares remaining with such Party.

16.13.5 For the purpose of this Article 16.13.





16.16 EXERCISE OF POWERS

Where DEF or ABC is required under this Agreement to exercise its powers

in relation to the Company to procure a particular matter or-thing, suchobligation shall be deemed to include an obligation as a Shareholder

(including where an Associate is a Shareholder) and as a Director (where

applicable) of the Company and to ensure that any Directors appointed by it

or a member of its Group will procure such matter or thing.

16.17 This Agreement shall not be altered, changed, supplemented, or amended

except by written instruments signed by the parties hereto.

16.18 DISPUTE SETTLEMENT

16.18.1 The Parties will first use their best endeavors to resolve through

mutual consultation any dispute, difference or question arising between the

Parties or their respective representatives or assigns which may arise out of,

in connection with or in relation to this Agreement.

16.18.2 All disputes, differences or questions arising out of this Agreement

including the following:-

(a) the intention of the Parties or construction or interpretation of this

Agreement or any statute, legislation, regulation, governmental order or

directive affecting the Company;

(b) the transactions or consequences of or anything done, executed,

omitted or suffered as a result of this Agreement.

(c) any breach of this Agreement or any claim on account of suchbreaches; or

(d) any statute, legislation, governmental order or directive affecting

the Company or the affairs of the company;

which cannot be amicably resolved between the Parties shall be finally

settled by arbitration by a Board of three arbitrators, one each to be appointedby DEF and ABC and the third in accordance with the Rules of Arbitration of

the International Chamber of Commerce, Paris. Arbitration shall be in the

English language and shall be conducted in accordance with the Rules of

Arbitration of the said International Chamber of Commerce. Any arbitrationaward made shall be final and binding on the parties and is not subject to

appeal and shall be enforceable in any court of competent jurisdiction. The

venue of the arbitration shall be New Delhi.

16.18.3 Excepting the dispute, difference or question as may have beenreferred to arbitration, the Parties shall during the period of submission and

pending its adjudication, continue to perform the rest of their obligations



under this Agreement without prejudice to a final adjustment in accordance

with the said award as may be issued by such arbitration tribunal duly

constituted in accordance with this Clause.

16.19 All rights of DEF hereunder shall be exercised by Mr.

__________________, failing him through such representative as its Board of

Directors may appoint (with power to remove and replace) in this behalf.

16.20 All rights of ABC hereunder shall be exercised by the person authorised in

this behalf by the Board of ABC (with power to remove and replace).

16.21 CONFIDENTIALITY

16.21.1 Scope of Disclosure: Each Party, to the extent of its right to do so,shall disclose to the other Party only such Confidential and Proprietary

Information which the disclosing Party deems necessary to fulfill the

objectives of this Agreement.

16.21.2 Nondisclosure: The Party receiving Confidential or ProprietaryInformation (the “Receiving Party”) from the other Party (the “DisclosingParty”) hereby covenants that, for a period of 10 (ten) years after any

Confidential or Proprietary Information is received, to the following:

1. To protect and keep said Confidential and Proprietary Information in

strict confidence, using the same degree of care as it uses to protect itsown Confidential and Proprietary Information, but in no case should

the Receiving Party use any less than reasonable care:

2. To disclose the Confidential or Proprietary Information only on a

need to know basis and solely for the purpose specified in thisAgreement. Said Confidential or Proprietary Information shall be

disseminated by the Receiving Party only within the Receiving Party‟sorganization or to such third parties who agree to be bound by the

terms of this Agreement.

3. To not use the Confidential or Proprietary Information, in whole orin part, for any purpose other than the purpose of this Agreement

without the prior written consent of the Disclosing Party.

16.21.3 Property Rights: Any Confidential or Proprietary Information and

copies thereof disclosed by a Party to the other shall remain the property of the Disclosing Party and shall be returned by the Receiving Partyimmediately upon request. It is expressly understood and agreed by the

Parties that the disclosure and provision of Confidential or Proprietary

Information under this Agreement, by a Party to the other Party shall not beconstrued as granting to the Receiving Part, under the laws of any country,

any rights, whether express or implied by license or otherwise, on the

matters, inventions, discoveries, copyrights, trademarks, trade secrets, or



other intellectual property right to which such Confidential or Proprietary

Information pertains.

16.21.4 Limitation: Except as provided herein, the Receiving Party shall haveno obligation with respect to any Confidential or Proprietary Information

which:

1. Has come into the public domain prior to or after the disclosurethereof and in such case through no wrongful act of the Receiving

Party;

2. Is already known to the Receiving Party, as evidenced by written

documentation in the files of the Receiving Party or is independently

developed in good faith by an employee or employees of the Receiving

Party who did not have access to the Confidential or Proprietary

Information.

3. Is not properly designated or confirmed as Confidential or

Proprietary as required in Section 16.21.2 above.

4. Survival of Confidentiality Obligations: The rights and obligations

imposed by this Clause with respect to the use of Confidential orProprietary Information shall survive the termination of this

Agreement.

22. INTELLECTUAL PROPERTY RIGHTS

16.22.1 Rights Acquired Prior to Effective Date: Any intellectual property

rights in any protectable interest, including without limitation, inventions,

know-how, data, software, designs, customer lists, business plans, or anyother protectable interest, whether protected or entitled to protection underpatent, copyright, trademark, trade secret or any other category of intellectual

property protection, owned by either Party prior the Effective Date or

developed and/or acquired by said Party outside the scope of this Agreement

or shall be and remain the right of said Party.

16.22.2 Rights Resulting from Work Performed Pursuant this Agreement :

The ownership of or rights to any intellectual property resulting from

collective efforts of the Parties pursuant to the carrying out the Company

Business under this Agreement, shall be determined by the Parties in separate

agreement hereto.



16.23. SHAREHOLDERS' CONSENT

Where this Agreement provides that any particular transaction or matter

requires the consent, approval or agreement of any Shareholder, suchconsents approval or agreement shall be given subject to such terms that

Shareholder may impose and any breach of conditions by any person subject

thereto shall ipso facto be deemed to be a breach of the terms of this

Agreement.

16.24 PARTIES BOUND

16.24.1 The Company undertakes with each of the other Parties to be bound

by and comply with the terms and conditions of this Agreement insofar as the

same relate to the Company and to act in all respects as contemplated by this

Agreement.

16.24.2 Each of the parties undertakes with each of the others to exercise

their powers in relation to the Company so as to ensure that the Company

fully and promptly observes, performs and complies with its obligationsunder this Agreement.

16.24.3 Each of DEF and ABC undertakes with the other that whilst itremains a party to this Agreement it will not (except as expressly providedfor in this Agreement) agree to cast any voting rights exercisable in respect of

any of the shares held by it or a member of its Group, in accordance with the

directions, or subject to the consent of, any other person.

16.25 FURTHER ASSURANCE

ABC AND DEF further agrees not to deal with any third party directly orindirectly in any manner whatsoever in India relating to the Business and theProducts. ABC shall give DEF the right of first refusal in the event it desires

to source the Products from any third party.

IN WITNESS WHEREOF the parties hereto have hereunto set their respective

hands the day and year first above written:

SIGNED BY

for and on behalf of DEF

in the presence of

SIGNED BY

for and on behalf of ABC

in the presence of





JOINT VENTURE AGREEMENT

This Agreement is made on this ___________________ day of ______________,

__________________

BETWEEN

1. ABC, a company organized and existing under the laws of the Republic of India and having its

Registered Office at ______________(hereinafter referred to as “ABC” which expression shallunless repugnant to the context or meaning thereof include its successors, administrators and

permitted assigns) of the One Part;

And

2. DEF a company organized and existing under the laws of the Republic of India and having its

Registered Office at ___________________ (hereinafter referred to as “DEF” which expression

shall unless repugnant to the context or meaning thereof include its successors, administrators and

permitted assigns) of the Other Part.

(Wherever the context so permits or requires the expressions “ABC” and “DEF” are collectively

referred to as the “Parties” and either of them singly as “Party”).

WHEREAS

A. ABC is, inter alia, engaged in the business of _________ and has its manufacturing

facility at _____________

In addition to the aforesaid, the ABC Undertaking also includes plant utilities, necessary

industrial, administrative and social infrastructure for supporting the activities and operations

of the ABC Undertaking and current assets, benefits of existing contracts, operating Licenses,

concessions, intellectual properties owned by ABC and used for the benefit of the

Undertaking and all other intangible property rights and privileges pertaining or belonging to

the Undertaking.

B. DEF is, inter alia, engaged in the business of _________________ and having its

manufacturing facilities _____________

In addition to the above, the DEF Undertaking also includes plant utilities, necessary

industrial, administrative and social infrastructure for supporting the activities and operations

of the DEF Undertaking and current assets, benefits of existing contracts, operating Licenses,

concessions, intellectual properties owned by DEF and used for the benefit of the

Undertaking and all other intangible property rights and privileges pertaining or belonging to

the Undertaking.

C. With a view to emerging as a globally competitive manufacturer through economies of

scale, increase in efficiency and rationalization of operations and to generally enhance

stakeholders value, ABC and DEF have agreed to consolidate their respective undertakingsinto a single entity in the manner as contemplated hereinafter.

D. In order to undertake the Business, ABC is in the process of promoting a public company

with limited liability under the provisions of the Companies Act, 1956 under the name and

style of XYZ (the “Company” or “XYZ”) and to acquire therein the Undertakings, of ABC

and DEF as briefly described herein above and for the participation of the Parties in XYZ in

the manner as envisaged in this Agreement.



E. It is deemed necessary and expedient to enter into this Agreement for giving effect to the

consolidation of the two Undertakings as contemplated here in above and define the

relationship between the Parties inter se and with XYZ including conduct of business of

XYZ, pending grant of requisite approvals including of the concerned Financial Institutions

and banks (collectively the “Lenders”) and the shareholders of ABC and DEF respectively

and such other approvals, consents and authorizations as may be necessary or required to

give effect to the transactions and the joint venture contemplated herein (collectively

“Approvals”).

NOW THEREFORE IN CONSIDERATION OF THE PREMISES SET FORTH HEREINABOVE

AND OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREINAFTER

THE PARTIES HERETO HEREBY AGREE AND THIS AGREEMENT WITNESSETH AS

FOLLOWS :

1. Definitions and Interpretation

1.1 Definitions

In this Agreement unless the context otherwise requires the following expressions

shall have the meaning hereinafter respectively assigned to them:

“Agreement” means this Agreement as amended from time to time in accordance withthe provisions contained in this behalf in this Agreement.

"Agreed Proportions" means the ratio which the the Share holdings of the Parties

(together with their respective Associates, Investor Affliates and Party Lenders with

whom they have firm buy back agreement to purchase their share holding within a

period not exceeding 3 (three) years) in the Equity Capital bear to each other e.g. if

the percentage of Shareholding of one party is 55% and the other Party is 45% then

the agreed proportion as between them shall, be 55:45.

“Approvals” shall have the meaning ascribed thereto in Recital above.

“Articles” means the proposed Memorandum and Articles of Association of XYZ as

set out in Schedule 1.

“Associate” means in relation to a Party, any holding company or subsidiary direct or

indirect, of that Party or any other subsidiary or subsidiaries of any such holding

company or subsidiary or any company under common control, or any person holding

not less than 10% (ten percent) of such Party‟s issued and paidup equity share capital

(the “investment associate”), or any holding company or any other subsidiary or

subsidiaries of any such holding company or subsidiary of such investment associate,

whether situate in India or elsewhere in the world.

“Audited Accounts” mean the Auditors Report and audited accounts of the Company

for any financial year of the Company.

“Auditor‟ means such firm of Chartered Accountants as are appointed statutory

auditors of the Company from time to time.

“Board” means the board of directors of the Company.

“Budget” means the annual operating budget of the Company as approved and/or

modified from time to time by the Board.



“Business” shall have the meaning ascribed thereto in Clause 3.2 hereinafter.

“Business Plan” means the business plan for the Company as approved and/or

modified from time to time by the Board.

“Chairman” means the Chairman of the Board for the time being.

“Company” or “XYZ” shall have the meaning ascribed thereto in Recital D

hereinabove.

“Company Lenders” means term lending financial institutions, and banks who lend

and advance or agree to continue loans, advances and other financial facilities to the

company including working capital loans, advances and facilities, and as security for

whole or part of which they hold a charge on the whole or part of the XYZ

Undertaking (other than assets taken on lease and forming part of the XYZ

Undertaking) including current assets, and leasing finance companies who have

provided on lease equipment and other assets forming part of the XYZ Undertaking at

the Effective Date or the Vesting Date or at any time thereafter.

“Companies Act” means the Companies Act, 1956 as amended from time to time and

shall include any statutory re-enactment thereof.

“Control” means in relation to a company, where a person (or persons acting in

concert) has or has agreed to obtain direct or indirect control (1) of the affairs of that

company, or (2) over more than 50 per cent of the voting rights of shareholders in that

company which are ordinarily exercisable in general meting or (3) of the composition

of the board of directors of that company. For these purposes “persons acting in

concert” are persons which actively co-operate, pursuant to an agreement or

understanding (whether formal or informal) with a view to obtaining or consolidating

Control of that Company.

“Deed of Adherence” means a deed in the form set out in Schedule “II”.

"Directors" means the directors of the Company for the time being and shall include

their duly appointed alternates.

“Effective Date” shall have the meaning ascribed thereto in Clause 2.1.3.

"Encumbrance" means any mortgage, charge, lien, hypothecation, pledge, or any other

security interest or encumbrance.

"Equity Capital" means the issued and paid up equity share capital of the Company.

"FIs" means term lending financial institutions, development and other banks, finance

companies, leasing companies and financial and investment corporations.

“Undertakings” means the DEF Undertaking and the ABC Undertaking collectively.

“Financial Year” means the period of twelve months ending on the [31st March] or

any other day in each year or such other period as may be determined by the Board

from time to time or any time.

“Intellectual Property” means the all r ights and benefits of use and exploitation, to the

extent such rights and benefits are vested in or available to the parties and subject to

such restrictions as are applicable thereto, of all intangible assets relating to and



forming part of the business of their respective Undertakings including but not limited

to goodwill, trade marks, patents, technical know-how, processes, quality control

know-how, and processes, confidential information, basic and detailed engineering

drawings, civil, structural, mechanical, electrical and instrumentation drawings and

specifications, operation and maintenance manuals and safety manuals relating to the

operation and maintenance of manufacturing facilities, utilities and services facilities

of and relating to manufacture, processing and handling of the Products and the

marketing and sale thereof.

“Lead Bank” means in case of DEF, the Canara Bank, and in the case of ABC,, the

State Bank of Patiala, who act as leaders of the respective consortiums of banks who

have lent and advanced moneys to DEF and ABC respectively for meeting the

working capital requirements of their respective Undertakings.

“Lead Institution” means in case of DEF, the ICICI Limited (“ICICI”) and in the case

of ABC, the Industrial Development Bank of India Limited („IDBI”), who act as

leaders of the respective consortiums of financial institutions who have lent and

advanced term loans to DEF and ABC respectively for their respective Undertakings.

“Managing Director” means the Managing Director from time to time of the

Company.

“Operating Licenses” means all licenses, permits, consents, approvals, and

registrations required or necessary under applicable laws and regulations for

undertaking and carrying on the Business including manufacture, processing,

handling, marketing and sale of the Products and all operations at XYZ Undertaking

and the maintenance thereof.

“Party Lenders” means term lending financial institutions and banks who have lent

and advanced loans and provided fiscal facilities including working capital loans and

advances and facilities to DEF and ABC respectively for their respective

Undertakings and as security, for the whole or part of which, they hold a charge on the

whole or part of the ABC Undertaking or DEF undertaking (other than assets taken on

lease and forming part of their respective Undertakings) including current assets, as

the case may be, and leasing finance companies who have provided on leaseequipment and other assets forming part of the respective Undertakings of ABC and

DEF respectively, at the Effective Date or the Vesting Date or at any time thereafter.

“Products” means ____________ -.

“Remaining Shareholder” means, for the purposes of Clause 6, where the transferor is

DEF and its Associates, ABC, and where the Transferor is ABC and its Associates,

DEF.

“Shareholders” mean all persons holding Shares for the time being in the issued and

subscribed Equity capital of the Company.

“Shares” mean the equity shares in the Equity Capital of the Company.

“Transferee” means for the purposes of Clause 6, a person to whom a Shareholder

wishes to transfer all or some of its Shares.

“Transferor” means, for the purposes of Clause 6, a shareholder wishing to transfer all

or some of its Shares.



“Transfer Agreements” shall have the meaning ascribed thereto in Clause 3.3

“Transfer Date” means the date (i) in relation to the DEF Undertaking, on which the

right and title to whole or substantially the whole of the DEF Undertaking is

transferred to and vested in the XYZ and (ii) in relation to the ABC Undertaking, on

which the right and title to whole or substantially the whole of the ABC Undertaking

is transferred to and vested in the XYZ

“XYZ Undertaking” means DEF Undertaking and ABC Undertaking collectively.

“Vesting Date” means the earlier of the date -

(i) on and from which the business of the ABC Undertaking and DEF

Undertaking is commenced to be carried on or is deemed to be carried on by

XYZ on its own account, or

(ii) on which ABC and DEF have received all of the following

approvals/consents:

(a) Party Lenders have accorded their consent to DEF and ABC

respectively for the transfer and vesting their respective Undertakings

into XYZ;

(b) Consent/approval of the respective Board of Directors and

shareholders of DEF and ABC to the transfer and vesting their

respective Undertakings into XYZ; and

(c) Consent/no objection by the Income tax authorities to DEF under

Chapter XX-A of the Income tax Act, 1961 to DEF for the transfer and

vesting of the immoveable property comprised in the DEF Undertaking

into XYZ.

1.2 Construction of certain references

1.2.1 Except as the context otherwise requires, references in this Agreement to:

(i) a document in “agreed terms” shall be to a document in writing in the terms

agreed between the Parties thereto and signed by them or on their behalf by

their duly authorised representatives;

(ii) information means books, records or other information in any form

including in writing on paper, electronically stored data, magnetic media.

(iii) “this Agreement” shall be to this Agreement as from time to time

amended, modified or superseded and shall include its Schedules.

(iv) a “Clause” or “Schedule” shall, unless otherwise stated, be to a Clause or

(as the case may be ) Schedule of this Agreement.

(iv) a time of day shall be to Indian time;

(vi) the words denoting singular shall include plural and vice versa, and words

denoting natural persons shall include firms, partnerships, companies and other

bodies corporate and entities whether or not having a separate legal activity);



(vii) any agreement, consent, approval, authorisation, notice, communication or

information required under or pursuant to this Agreement from or by any Party

to the other of them shall be valid and effectual only if it is in writing and

under the hands of duly authorised representative of such Party and not

otherwise; and

(viii) any reference to a statute or statutory provision shall include such statute

or provision as is from time to time modified or re-enacted or consolidated so

far as such modification or re-enactment or consolidation applies or is capable

of applying to any transaction entered into hereunder or pursuant hereto.

1.2.2 Headings are for convenience of reference only and shall be ignored in the

construction or interpretation of this Agreement.

2. Conditions Precedent

2.1 Effective Date

2.1.1 The conditions precedent to performance of obligations of the Parties under

Clause 4.2, 4.3, 4.4, 4.5 and 4.6 and Articles 6,7,8 and 10 of this Agreement are:

(i) receipt of all consents and approvals from Party Lenders for transfer of DEFUndertaking and ABC Undertaking to XYZ and assignment of debt pertaining

to DEF Undertaking and ABC Undertaking as on the vesting Date on terms

and to the extent as acceptable to DEF and ABC;

(ii) receipt by DEF and ABC respectively of all corporate consents and

approvals for transfer of DEF Undertaking and ABC Undertaking to XYZ on

terms acceptable to DEF and ABC; and

(iii) receipt by XYZ of all consents and approvals including from Company

Lenders for issue of Shares to DEF and ABC in consideration of the Transfer

of DEF Undertaking and ABC Undertaking to XYZ.

2.1.2 DEF and ABC may in their discretion waive all or any of the conditions setforth

in Clause 2.1.1 above.

2.1.3 The date on which all of the conditions setforth in Clause 2.1.1 are satisfied or

are waived by DEF and ABC pursuant to clause 2.1.2 above, is for the sake of brevity

hereinafter referred to as the “Effective Date”.

2.2 Responsibility of the Parties

2.2.1 Each of ABC and DEF shall make requisite applications to their respective

Lenders for grant of requisite approvals and consents for transfer and vesting of ABC

Undertaking and DEF Undertaking and assignment of associated debt respectively to

XYZ.

2.2.2 Each Party and/or XYZ shall make requisite applications to the concerned GOI

and other governmental and regulatory authorities, Central or State, for grant of

requisite approvals for transfer of all Operating Licenses to the Company and/or issue

of new Operating Licenses to XYZ.

2.2.3 Parties shall take necessary steps including applying for and making good faith

efforts to obtain requisite approvals and all procedural and statutory compliances for



the transfer and vesting of the Undertakings in XYZ in accordance with law and in a

tax efficient and mutually beneficial manner.

2.2.4 Each Party undertakes to use all reasonable endeavors to procure that the

condition precedent setforth in clause 2.1.1 is satisfied as soon as reasonably

practicable. All requests and enquires from Lenders shall be dealt with by the

receiving Party in consultation with the other of them. Parties shall co-operate with

each other and provide all necessary information and assistance to the other as may

reasonably required by Lenders.

2.3 Parties acknowledge that earliest occurrence of the Vesting Date is in their mutual

interest and they shall accordingly take all such steps and do all such acts deeds and things as

may reasonably be necessary and required for the said purpose.

2.4 Non satisfaction

If the Vesting Date has not occurred by _________ then this Agreement (other than the provisions

of Clause ___) may be terminated by either Party by a communication in writing to the other Party

without being liable for the same in any manner whatsoever.

3. Incorporation of Company

3.1 ABC shall promote and incorporate XYZ as a public company with limited liability under

the Companies Act, with its Registered Office in the State of Uttar Pradesh.

3.2 The main objects of XYZ shall, inter alia, be to engage in the business of production,

marketing, sale and distribution of the Products and to that end Parties would cause XYZ to

acquire the DEF Undertaking and ABC Undertaking.

3.3 Parties shall cause XYZ to enter into appropriate agreements with DEF and ABC for the

transfer of DEF Undertaking and ABC Undertaking respectively in form and content

including consideration as agreed between the Parties, the XYZ and the Party Lenders (the“Transfer Agreements”).

The transfer and vesting of Undertakings in XYZ shall be free from all encumbrances

charges and liens, save and except as is otherwise expressly setforth in the Transfer

Agreements.

3.4 Parties agree that on and from the Effective Date and till the Vesting Date:

3. 4.1 the business and affairs of the their respective Undertaking shall be conducted

in the ordinary course of business and there shall be no sale, transfer, assignment and

nor shall there be created any lien, charge or eEncumbrances on the whole or any part

of the their respective Undertakings including their assets and stocks other than in the

normal course of business and unless it is necessary in the interest of the relevant

uUndertakings; and

3. 4.2 Neither Party will prior to the Transfer Date, save and except with the previous

consent of the Other party or in the normal course of business :

(i) create, expend, grant or issue or agree to create, expend, grant of or issue

any Encumbrances on whole or any part of its Undertakings;



(ii) enter into any long term, material or abnormal capital commitments in

respect of its respective Undertakings other than in the ordinary course of the

business;

(iii) do or suffer anything whereby their financial position of Undertakings

shall be rendered less favorable than at the date hereof save and except in the

ordinary course of business;

(iv) cause to pass any resolution in its Board or any General Meeting creatingor granting any special rights or privileges in favor of any person other than

XYZ in respect of the whole or any part of its Undertakings;

(v) pay or, agree to pay all or any of the officers or workmen of its

Undertakings any additional or further remuneration, bonus or allowance other

than in the ordinary course of business;

(vi) dispose of any material part of the fixed assets or other assets of its

Undertakings other than in the ordinary course of business.

3.5 Each Party shall bear its own costs and expenses (including travel and accommodation

expenses, salaries, allowances and out-of-pocket expenses) involved in the preparation,

negotiation and execution of this Agreement. All expenses, costs, duties and levies forincorporation of XYZ and on and from the date of incorporation thereof shall be borne by the

Parties in equal proportion and the parties shall procure that the Company (to the extent

certified by the Auditors) to reimburse to the Party incurring such expenses, the same.

4. Share Capital OF THE COMPANY

4.1 Authorised Capital

The initial authorised share capital of XYZ shall be Rs.1,00,000 (Rupees one lakh)

divided into 10,0000 (ten thousand) equity shares of the par value of Rs.10.00

(Rupees ten) each. After the Effective Date the authorized share capital of XYZ shall

be increased to a level consistent with the capital requirements of XYZ having regard

to the consideration payable by XYZ for the Undertakings and the funding pattern

approved by the company Lenders. Such increase in authorised share Capital of XYZ

could be partly equity and partly unclassified or preference share capital as the Board

may deem appropriate and is permissible in law.

4.2 Issued and Paidup Share Capital

4.2.1 The issued and paid up Equity Capital of XYZ shall be determined on the basis

of consideration payable by XYZ for the Undertakings.

4.2.2 The initial issued and paidup Equity Capital shall be issued for consideration

other than cash and accordingly each Party shall be issued, subject to Clause 4.2.3

below, such number of Shares in the Equity Capital as is agreed between the Parties asconsideration payable by the Company to such Party for its Undertaking pursuant to

the relevant Transfer Agreement provided, however the ratio of Share holding of the

Parties in such initial issued and paidup Equity Capital shall be as follows :

4.2.3 Notwithstanding anything to the contrary contained in Clause 4.2.2 above, in the

event Party Lenders seek issue of Shares in the Equity Capital of the Company in

satisfaction of whole or part of the debt owed to them by a Party (the “Party Debt”)

the Shares to be issued to such Party Lenders on account of such conversion of Party



Debt (the “FI Shares”) shall be reduced from the number of Shares to be issued or

allotted to such Party pursuant to Clause 4.2.2 above and upon such issue and

allotment of Shares to party Lenders the Agreed Proportions shall be adjusted to

reflect the same.

4.3 Additional Capital

4.3.1 Subject to provisions of Clause 4.4, for business exigencies at a future date, the

Parties agree in principle to the following:

(i) dilution of their respective shareholding to less than the percentage

contemplated by Clauses 4.2.2 and 4.2.3 above, and

(ii) listing of the shares of the Company on the Stock Exchanges in India.

4.3.2 Subject to the provisions of Clause 4.3.1 above

(i) the ratio of the combined equity Share holding of each Party hereto together

with the equity share holding of its Associates and Investor Affiliates and any

of its Party Lenders, who had converted part of their debt into equity pursuant

to Clause 4.2.3 above and who have entered into with such Party a firm buy

back agreement for the sale of their Share holding by such Party not later thanfive years from the date of this Agreement shall be basis for determination of

Agreed Proportions;

(ii) the listing of the Shares of the Company on the Stock Exchanges in India

would be by mutual consent of the Parties or as agreed between the Parties and

Company Lenders or as envisaged in the Business Plan of Company as

approved by its Board or as otherwise provided in this Agreement; and

(iii) Neither Party shall without the prior consent of the Other Party acquire any

Shares out of the Shares issued by the Company for securing the listing of theCompany‟s Shares on Stock Exchange(s) in India or elsewhere or from the

Party Lenders of the Other Party or any third party save and except as

otherwise expressly permitted by this Agreement.

4.4 Rights Issue

4.4.1 In case of a Rights Issue of Shares (“Rights Issue”) in accordance with this

Agreement, the Company shall offer Shares in Rights Issue (the “Rights Shares”) to

the existing shareholders in proportion to their existing share holding in the Company

in accordance with the Companies Act. A Party shall be entitled to subscribe either

itself to its entitlement of such Rights shares or to renounce in favor of its Associates

or Investor Affiliates (who agree to be bound in writing by the terms of this

Agreement) or the other Party to subscribe to its entitlement of such Rights Shares.

4.4.2 If either Party desires to get its entitlement of Rights Shares (the “non -subscribing party”) funded, it may renounce in favor of any Banks, FIs mutual funds

and any other financier (the “Investor Affiliate”) to subscribe to its entitlement of

Rights Shares (the “Loan Shares”) provided (i) such Investor Affiliate and the Non -

Subscribing party shall have entered into a firm buy-back agreement whereby the

Investor Affiliate s) has agreed to sell and the Non-Subscribing Party has agreed to

buy back such Loan Shares within a period not exceeding 3 (three) years from the date

of allotment of the Loan Shares to such Investor Affiliate (s) by the Company and (ii)

the Investor Affiliate (s) shall not be entitled to transfer, assign, sell or otherwise

encumber or dispose off or transfer such Loan Shares in any manner whatsoever



during the said 3 (three) year period without giving to the other Party the right of first

refusal in accordance with Clause 6 below. During the said 3 (three) year period for so

long as the Investor Affiliate (s) holds the Loan Shares, for the purposes of

determining the rights of the Non-subscribing Party under this Agreement, the

aggregate of the Shareholding of such Non-Subscribing Party and Investor Affiliate

(s) shall be deemed to be the Share holding of such Non-Subscribing Party.

4.4.3 Should the Non-Subscribing Party fail to acquire the Loan Shares within the 5

(five) year period referred to in Clause 4.4.2 above, unless otherwise mutually agreed

between the Parties , the Investor(s) shall be entitled to retain such Loan Shares in its

own right but subject always to the provisions of Clause 6 below, and in such an event

the Agreed Proportion shall be adjusted by deduction of the Loan Shares so retained

or sold to a person other than the Non-Subscribing pParty and the rights of the parties

under this Agreement shall be adjusted accordingly.

4.5 Unless otherwise agreed by DEF and ABC in writing, any additional issue of Shares by

the Company in its Equity Capital (other than a Rights Issue) shall be offered and issued to

the Parties in the Agreed Proportions.

4.6 Notwithstanding anything to the contrary contained in Clause 4.4 above if the Parties

shall fail to subscribe and pay or cause their Associates or Investor Affiliates to subscribe and

pay for any of the Rights Shares offered to it in accordance with this Agreement (the"Rejected Shares") within such period not being less than 30 (thirty) days from the date of

offer of Rights Shares by the Company, as the Board may determine, the following shall

apply to the disposal of such Rejected Shares:

4.6.1 The Board shall offer the Rejected Shares to all the other Shareholders (the“Other Shareholders”) in proportion to their respective Shareholding in the Company

and such Shareholders shall be entitled to subscribe to such Rejected Shares

themselves, or if such Shareholder is a Party to this Agreement, to cause its

Associate(s), nominated in this behalf by it and who agree(s) in writing to be bound

by the terms of this Agreement, to subscribe to the same within the period prescribed

in this behalf by the Board.

4.6.2 Any Other Shareholder receiving an offer pursuant to Clause 4.6.1 above shallbe entitled to apply for issue and allotment of additional shares i.e. for more shares

than the number of Shares it is entitled in a Rights Issue on the basis of its existing

Share holding. In case of any Rejected Shares being available after issue and

allotment to the Other Shareholders in proportion to their respective Share holding in

the Company as on the date of offer of Rejected Shares to them (the “Surplus

Shares”), such Surplus Shares shall be issued and allotted to such of the Other

Shareholders who had applied for additional Shares in proportion to their existing

Share holding as on the date of offer pursuant to Clause 4.6.1.

4.6.3 Any Rejected Shares, not accepted by any Share holders and/or their respective

Associates and/or Investor Affiliates , may be offered by the Board to any third party

or parties on terms no more favorable than those offered to the other Shareholders or,

in the alternative, the Board may in its discretion decide to seek listing of Shares of the Company on one or more Stock exchanges in India. In such an event the

provisions of Clause 5 shall apply.

4.6.4 For the purposes of Clauses 4.5 and 4.6 any offer to the Shareholders to

subscribe to any Shares must be made in writing by the Board. Any Party or its

Associate(s) and/or Investor Affiliates , nominated in this behalf by such Party,

wishing to accept such offer from the Board must do so by giving notice in writing

and which notice must be received by the Board no later than 30 (thirty) days after the

date the offer was made by the Board.



4.7 The issue and allotment of shares by the Company to the Parties and/or to their

Associates/Investor Affiliates pursuant to Clause 4.2 above shall be only upon the transfer

and vesting of their respective Undertakings in the Company in accordance with Transfer

Agreements to be entered into between DEF and the Company and ABC and the Company

for their respective Undertakings.

4.8 The Parties and other person(s) subscribing to the Shares pursuant hereto shall hold their

Shares subject to the Memorandum and Articles of Association of the Company, this

Agreement, the applicable laws and approvals and such other conditions as may be

prescribed by the Company in general meeting or the Board.

4.9 Notwithstanding anything to the contrary contained in this Agreement DEF and ABC

shall hold directly and in their own respective names not less than 26% (twenty six percent)

each of the issued and paidup Share capital of the Company i.e. excluding the Share holding

of their respective Associates and Investor Affiliates .

5. Listing of Shares on Stock Exchanges

5.1 In the event of

5.1.1 the Parties agreeing; or

5.1.2 a Party requiring pursuant to Clause 6.4(a); or

5.1.3 the Board deciding in accordance with the provisions of Clause 4.6.3 to seek

listing of the shares on one or more Stock Exchanges in India, the provisions of

Clause 5.2 shall apply.

5.2 In the event:

5.2.1 the Parties mutually agreed to seek listing of Shares for any reason other than

those setforth in Clauses 5.1.2 and 5.1.3, the Parties shall cause the Company to issue

and offer such number of additional shares as may be necessary to list the Shares of

the Company on one or more Stock Exchanges in India or abroad in accordance withapplicable laws and regulations and to make public offer thereof for subscription.

5.2.2 In the event of the Shares being required to be listed for the reason setforth in

Clause 5.1.2 above, the Shares held by the Selling Member not being less than the

minimum number required for securing listing on a Stock Exchange shall be offered

by such Selling Member to public for sale.

5.2.3 In the event of the Shares being required by the Board to be listed for the reason

setforth in Clause 5.1.3, the Board shall offer the Shares available pursuant to Clause

4.6.3 for subscription to public provided the number of shares so available are

sufficient to meet the minimum number required under applicable laws and regulation

to secure listing of the Shares on one or more Stock Exchanges in India or abroad.

5.2.4 The Board shall determine the Stock Exchange or Exchanges on which the

Company shall seek listing of its shares and shall offer the shares, required to be

offered for securing such listing, to public through prospectus in accordance with the

procedure prescribed, and the applicable laws and regulations, for cash at par or such

premium as the Board may in its sole discretion determine save and except in case of

offer for the reason setforth in Clause 5.1.2 above, in which case subject to applicable

regulations the offer price shall be as determined by he Selling Party.



5.2.5 Costs of all public offer of Shares pursuant to this Clause 5.2 shall be met and be

borne by the Company

5.3 For the purposes of seeking listing of Shares of the Company on one or more Stock

Exchange(s) pursuant to this Agreement, the Parties agree to cause (subject to it being

feasible under applicable regulations) the Board and the Company to undertake the same

through book building process in accordance with the applicable regulations and to seek

listing of Shares through such book building process not later than 3 (three) months from the

date the Board determines or the parties agree or a Party requires listing, as the case may be.

5.4 The Parties agree and covenant that in the event of shares of the Company being required

to be listed in one or more Stock Exchanges pursuant to any provision of this Agreement, the

Parties shall cause the company to amend its Articles of Association to the extent necessary

and required to permit listing of the shares of the Company and to facilitate offer of Shares to

public for the said purpose. Parties agree to do all such acts, deeds and things as may be

necessary or required or incidental to secure listing of shares of the Company on one or more

Stock Exchanges in India or abroad including for offer of shares to public for the purpose.

6. TRANSFER AND SALE OF SHARES

6.1(a) Notwithstanding anything to the contrary contained herein, no Party shall, nor permit

its Associates and Investor Affiliates to sell, transfer or assign or create any Encumbrance on(except to the extent required by the Lenders) the whole or part of its share holding in the

Company save and except in accordance with and as expressly provided in this Agreement.

(b) A party and its Associates and Investor Affiliate may assign, or create any

Encumbrance on all or any of the Shares held by it/them in favor of any FIs or other

lenders (the "Encumbrance Holder") provided it is a term of such Encumbrance that the

Encumbrance Holder thereof shall be bound by the terms of this Agreement and in the

event of any sale of any of the Shares which are subject to any Encumbrance (the

"Encumbered Shares") by such encumbrance holder, the same shall always be subject to

the right of first refusal of the Other party under and in accordance with Clauses 6.3 and

6.4.

6.2 Parties covenant that they shall abide by the provisions of this Agreement and agree andundertake that they shall cause the Company to not register any transfer of Shares in

contravention of any provision of this Agreement.

6.3 subject to Clause 6.5 below, in the event of either DEF or ABC or their respective

Associate(s) or Investor Affiliates holding Shares in the Equity Capital desiring to sell or

dispose of its/their share holding in the Company, it shall give to the other of them the right

of first refusal in the manner as provided in Clause 6.4 hereinafter. If on account of

applicable laws or regulations either Party or its Associates are unable to acquire shares so

offered to it, such Party will be entitled to designate a person of its choice to whom the shares

in whole or in part shall be transferred.

6.4 Right of First Refusal.

(a) Subject to Clauses 6.1(b) and 6.5 neither DEF and/or its Associate and/or InvestorAffiliates nor ABC and/or its Associate and/or Investor Affiliates (the “Selling

Member”) shall sell, transfer, gift, or otherwise dispose of in any way or manner any

of its Shares until (i) it has delivered to the Company and to the other of them (the

"Remaining Party") an irrevocable written offer to sell all or part of its share holding

(the "offer") in the Company ("Sale Shares") at a price (the "Offer Price") stated in the

offer and (ii) the Remaining Party shall have failed to accept the offer for all of the

Sale Shares within 90 (ninety) days after the receipt of the offer. The Remaining Party



shall convey its acceptance, if any, to the Selling Member within 90 (ninety) days of

receipt of the offer by it. If the Remaining Party accepts the offer but does not agree to

the Offer Price and the Selling Member and the Remaining Member are unable to

mutually agree on the sale price within 60 (sixty) days of the date of acceptance of the

Offer by the Remaining Party, the Selling Member shall be obliged to sell all the Sale

shares to a third Party selected by the Remaining Party at the Offer Price and if the

Remaining Party shall fail to procure any third party to purchase the Sale Shares

within 30 (thirty) days of his failure to accept the Offer Price or to mutually agree on

the sale price with the Selling member, which ever is later, the Selling Member shall

be entitled to sell the Sale Shares to any third party at price and on terms not morefavorable than those setforth in the offer or, in its discretion, sell on a Stock Exchange

in India the Sale Shares together with such further Shares from its Shares holding in

the Company as is necessary or required to secure listing of the Company's Shares on

Stock Exchange(s) in India or such further Shares from its holding as the Selling

Member may deem appropriate. In the event of the Selling Member deciding to sell

the Sale Shares on the Stock Exchange as setforth in the immediately preceding

sentence, the parties shall cause the Company to do all such acts, deeds and things as

are necessary under applicable regulations including amendments to the articles to

enable such sale on the Stock Exchange(s) and the listing of the Shares thereon.

(b) In the event of Selling Member exercising pursuant to sub-clause (a) above the

option to sell the whole or any part of its Share holding on Stock Exchange and

provided the Shares proposed to be offered for sale to public by the Selling memberare sufficient in number to secure listing of the Company's Shares on Stock

Exchange(s), the provisions of clause 5 shall apply.

(c) Parties shall cause the Company to take all procedural steps necessary for making

such sale by public offer on Stock Exchange(s) pursuant to and in accordance with

Clause 6.4 (a) read with Clause 5 expeditiously.

(d) On acceptance of Offer, within 60 days thereof the sale and purchase of the SaleShares shall take place (the “Closing”). At the Closing the Remaining Party shall pay

or cause the person or persons nominated by it to purchase and pay the Offer Price for

the Sale Shares in full in cash against delivery of the Sale Shares together with such

number of duly executed share transfer deeds (with name of the Transferee left blank)

as the Remaining Member or its such nominee may require.

(e) if the transfer of the Sale Shares requires any consent or approval or notice, the

period prescribed for cClosing under sub-clause (d) above shall be extended to the

earlier of (i) the date when the requisite consents/approvals are obtained and/or expiry

of the notice period, or (ii) the end of the 3 (three) calendar months immediately

following the month in which the Remaining Member conveyed its irrevocable

written acceptance of the offer in accordance with sub-clause (a) above. If within the

said 3 (three) month period described in the immediately preceding sentence the

Selling Member or the Remaining Member, as the case may be, is unable to obtain

any requisite consent/approval for transfer or purchase of the Sale Shares and

provided notice period, if any, prescribed under any applicable regulations has

expired, the Selling Member's irrevocable written offer to sell the Sale Shares shall,

unless extended by mutual agreement of the Parties, be deemed to have expired andthe Selling Member shall not be entitled to transfer the Shares to any person except by

again making an irrevocable written offer under and in accordance with sub-clause (a)

above.

6.5 If any person purports to acquire any of the Shares, or any interest therein, in a manner

not specifically permitted by this Agreement (the "Default Shares"), whether by operation of

law or by voluntary act or otherwise, the Remaining Party or any person(s) nominated by the

Remaining Party shall have the right, but not the obligation, to purchase at lower of (i) the



Book Value minus 10% of Book Value or (ii) the apparent consideration paid therefor, any or

all of the Default Shares purported to have been thus acquired. However, the failure of the

Remaining Party to purchase the Default Shares at lower of the Book Value minus 10% of

Book Value or the apparent consideration paid therefor shall not be deemed or construed to

validate the purported transfer of the Default Shares in violation of this Agreement, which

purported transfer shall be null and void. As used in this Clause 6.5, "book value" shall mean

the book value of the Default Shares in question determined in accordance with the last

available audited balance sheet of the Company. The determination of book value by a

chartered public accountant or firm of chartered public accountants then acting as the

Company's regular independent statutory auditors shall be final, conclusive, and binding onthe Company, the Parties and the person(s) purporting to have acquired the Default Shares in

violation of this Agreement, and their respective successors in interest.

6.65 Provisions of Clauses 6.1, 6.2, 6.3 and 6.4 above shall not apply to any transfer of

Shares inter-se between a Party and its Associates and/or Investor Affiliates or inter se

between its Associates and/or between Investor Affiliates and Associates who have agreed to

be bound by the terms of this Agreement and the same shall not be subject to the right of

preemption and first refusal contained therein and no such transfer shall be deemed to be nor

shall it constitute a breach of this Agreement.

6.7 Notwithstanding anything to the contrary contained in this Agreement a party shall,

before transferring to any third party its Share holding or control in an Associate holding any

Shares, cause such Associate to transfer or otherwise assign its right, title and interest in the

shares to itself or to any other Associate who agrees in writing to be bound by the terms of

this Agreement. In the event of a Party transferring to any third party its Share holding or

control in such Associate in contravention of this clause 6 and such contravention is not

remedied within 30 days of the date of receipt of notice in this behalf from the other party,

such Associate and the defaulting Party shall be deemed to have offered the shares of the

Company held by such Associate for sale to the other Party irrevocably in the manner

provided in Clause 6.5.

7. REGULATION OF RIGHTS AND CONDUCT OF BUSINESS

7.1 The Parties acknowledge that their respective rights in the Company shall be regulated by

this Agreement and the Articles and agree and undertake to be bound by and comply with the

provisions of this Agreement and the Articles . The Parties shall procure that the Company

acts in accordance with this Agreement and the Articles and that the business of the

Company is confined to the Business in accordance with the Business Plans and Budgets .

7.2 The Parties shall at all times respectively endeavor to the best of their ability to promote

the Business of the Company.

7.3 The Business of the Company shall at all times be conducted independently from the

business of the Parties, but subject thereto the Company may in its discretion transact

business with any of the Parties, including the purchase of goods and/or provision of services

supplied by any of the Parties provided such goods or services are supplied on terms

mutually agreed between ABC and DEF and are competitive. Without prejudice to the

foregoing the Company may but shall not be obliged to purchase polyester chips from FlexChemicals Ltd., a Associate of DEF and may sell any of the Products to DEF on terms

mutually agreed between DEF, ABC and the Company.

7.4 Except as ABC and DEF may otherwise agree in writing or save as otherwise provided or

contemplated in this Agreement or in the Business Plan and/or Budget, ABC and DEF shall

exercise their rights and powers in relation to the Company so as to ensure and procure that:



(a) the Company carries on and conducts its Business and affairs in a proper and

efficient manner and for its own benefit and in accordance with the Business Plan and

Budget;

(b) save as may be agreed between ABC and DEF, the Company shall not enter into

any agreement or arrangement with either Party or its Associates restricting its

competitive freedom to take goods and services by such means and from such persons

and on such terms as it may think fit;

(c) the Business of the Company shall be carried on pursuant to policies laid down

from time to time by the Board;

(d) Company shall maintain adequate insurance against all risks usually insured

against by companies carrying on the same or similar business and (without prejudice

to the generality of the foregoing) for the full replacement or reinstatement value of all

its assets of an insurable value;

(e) the Company shall keep books of account and therein make true and fair entries of

all its dealings and transactions of and in relation to its business so as to give true and

fair view of the business and affairs of the Company;

(f) Company shall adopt such accounting policies consistent with the Companies Actas may from time to time be generally acceptable in India;

(g) Company will provide ABC and DEF or to their respective designated nominees

on the Board within 4 weeks after the end of each month with unaudited management

accounts for such month, and such other data and information regarding its business

and operations as may reasonably be requested by ABC and DEF;

(h) the Company shall prepare such accounts in respect of each accounting reference

period and Financial year as are required by statute and applicable regulations and

procure that such accounts are audited as soon as practicable and in any event not later

than the period permitted under the relevant statute; and

(i) the Company will use its best endeavors to maintain the approvals, consents or

licenses required for carrying on its business in full force and effect.

8. BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANY

8.1 The Company shall have a Board of Directors (the “Board”) which shall be responsible

for the overall policy and the conduct of the business, affairs and operations of the Company

except to the extent that applicable law, the Articles and this Agreement allocate

responsibility over any particular matter to any of its members or officers or otherwise. The

Board shall be entitled to delegate any of its powers and functions to such of its committees

or directors or to such officers of the Company as may be deemed appropriate by the Board

but subject always to applicable laws and regulations, the Articles and this Agreement.

8.2 The Board shall, exclusive of alternate Directors, comprise and be not less than 9 (nine)

and nor more than 15 Directors of whom not more than one third shall be non-retiring

Directors.

8.3(a) Unless otherwise mutually agreed by the Parties and subject to the provisions of

Clause 10.2 so long as ABC and DEF are Shareholders, ABC and DEF shall be entitled to

appoint one non-retiring Director each with right to remove and replace or DEFl any vacancy

howsoever caused in their office by a communication in writing to the Company.



(b) In the event

(i) the aggregate share holding of DEF and its Associates and Investor AfDEFiates

including for the purposes of this Clause 8.3(b) share holding of any Party Lenders

allotted Shares pursuant to Clause 4.2.3 (the “Lender Shares”) is not less than 45% of

the issued and paidup Equity Capital,

(ii) DEF and/or its Associate(s) have a firm and subsisting buy back arrangement with

the Party Lenders referred to in Clause 8.3(b)(i) above whereunder such Lender sharesheld by such Party Lenders is required to be acquired by DEF and/or its Associate(s)

not late than 3 (three) years from the date of this Agreement and

(iii) the aggregate Share holding of ABC and its Associates and Investor Affiliates is

not less than 55% of the issued and paidup Equity Capital.

(iv) none of Party Lenders have appointed any nominee director on the Board by

virtue of their share holding, the representation of the Parties on the Board shall be in

equal proportion. In the event any of the conditions setforth in the preceding sentence

of this Clause 8.3(b) is not satisfied, the representation of the Parties on the Board

shall, subject to provisions of Clause 8.4 be in proportion to their respective share

holding in the issued and paidup Equity Capital.

The Chairman

8.4. Unless otherwise mutually agreed between the Parties, so long as DEF is a shareholder,

_________ shall be the Chairman of the Board subject, however, to Clause 10 below. The

Chairman of the Board shall be non-executive and shall not have a second or casting vote at

meetings of the Board or any Committee thereof or the meetings of Shareholders where the

Chairman presides.

8.5 The Chairman shall be ex-officio Chairman of general meetings of the Company in

accordance with applicable provisions of the Act and the Articles of Association. At all

Board meetings if the Chairman is present he shall preside, and in his absence the Managing

Director shall be elected as Chairman for that meeting and shall preside and in the absence of

the Managing Director, the Board may elect one of them to be the Chairman for that meeting.

Managing Director and Senior Managers

8.6 The Company shall have a Managing Director (the “MD”) who shall be responsible for

the conduct of the day to day management, business and affairs of the Company. Subject to

the provisions of Clause 10 the MD shall be __________ and if for any reason the said

_________ ceases to be MD, a nominee of ABC approved by the Board shall be appointed as

MD. The Parties shall procure that the said _________ or the person selected as aforesaid, as

the case may be, is appointed by the Board as MD. Senior Managers and other direct reports

of the MD in the Company ("Senior Managers") shall be selected by the MD.

8.7 The MD shall be delegated by the Board adequate power and authority to undertake,conduct and carry on the day to day management, business and affairs of Company. The

Parties shall procure that the Board delegates appropriate powers to the MD to discharge his

functions and duties. MD shall report to and function subject to the supervision, direction and

control of the Board.

8.8 Senior Managers shall be appointed by the MD and shall report to him. MD shall assignto the Senior Managers their duties and functions.



The Secretary

8.9 The Company shall have a Secretary as defined in the Companies Act. The Executive

Committee shall select the Secretary and recommend him to the Board for appointment. The

Board may appoint the person so recommended as Secretary, if found suitable by it.

8.10 The responsibilities of the Secretary shall include compliances in accordance with the

Companies Act and maintenance of statutory records as required by the Companies Act.

8.11 If any Party is not satisfied with the performance of the Secretary, it shall be entitled to

require his removal. On such requisition the Parties shall cause their respective nominees on

the Board to vote and remove the Secretary from his office. In the event of such removal,

such person's replacement shall be appointed in accordance with the procedure set out herein.

Nominee Director

8.12 The right of nomination conferred on a Party hereunder shall include the right to require

the other Party to procure that the Board and the Company shall remove at any time and from

time to time from office such person nominated by that Party as a Director and the right of

that Party at any time and from time to time to determine the period during which such

person shall hold the office of Director.

8.13 Whenever a person ceases to be a Director or any vacancy shall occur in his office for

any reason whatsoever, the Party who had nominated him shall be entitled to nominate

forthwith another person for appointment as Director in the vacancy so caused. The Parties

shall procure the appointment of such nominee as a Director.

Alternate Director

8.14 Alternate Directors to be appointed for any nominee Director (the "Original Director")

of each Party shall be persons proposed by such Party only and on such nomination the

Parties shall cause their respective nominee Directors to vote for and cause the Board to

appoint him as alternate Director for such Original Director. Such alternate Director shall be

entitled while holding office as such to receive notices of meetings of the Board or any

committee of the Board to which such Director has been appointed and to attend and vote as

a Director at any such meetings of the Board or subject to provisions of Clause 8.22 at any

such committee at which the Original Director is not present and generally to exercise all the

powers, rights, duties and authorities and to perform all functions of the Original Director. .

8.15 The Company may pay such sitting fees to Directors, not exceeding the maximum

permissible under the Companies Act, as may be determined by the Board. In addition to or

in substitution of the sitting fee Directors may be paid commission not exceeding the

maximum permissible under the Companies Act. A Director shall in addition be entitled to

receive such remuneration for services performed for the Company not exceeding the

maximum permissible under the Companies Act.

Board Meetings and Resolutions

8.16 The Board shall meet at such time or times and at such place or places as it may deem

appropriate provided at least one meeting of the Board shall be held in each quarter.

8.17 The Secretary shall as and when directed by the Chairman and/or the MD call a meeting

of the Board. Further any Director may request the Chairman to call a meeting of the Board.

Notice of every Board meeting whether first convened or adjourned shall be sent to each

Director and his alternate so as to be received not less than 7 (seven) days before the day



such meeting is scheduled to take place unless such notice is waived by at least one nominee

Director each of DEF and ABC.

8.18 Except in emergent cases, unless the Parties or a majority of the Directors agree

otherwise (i) at least 7 (seven) days' written notice shall be given to all Directors for

convening a Board meeting; and (ii) such notice shall be accompanied by an agenda of the

matters to be discussed. In the event the Chairman, the MD or any Director (acting

reasonably and in good faith) deems that circumstances exist which require a meeting to be

convened at shorter notice, the Chairman on his own or at the request of such director direct

the Secretary to call a meeting of the Board as aforesaid by giving less than 7 (seven) days'

notice of such meeting. It is further agreed that (unless in any particular case the Parties shall

otherwise agree) no resolution relating to any business may be proposed or passed at any

Board meeting unless the nature of the business is specified in the agenda for the meeting.

8.19 No business shall be transacted at any Board meeting unless a quorum is present at the

meeting. In the first instance the quorum for meetings of the Board shall be at least one third

of the Board including at least one Director each nominated by the Parties hereto. A Director

represented by his alternate shall be deemed to be present for the purpose of determining

quorum. If within half an hour from the time appointed for a meeting a quorum as aforesaid

is not present, the meeting shall stand adjourned to the same day in the next week at the same

time and place or to such other later day and at such other time and place as the Directors

may determine. If at such adjourned meeting also, a quorum is not present, the meeting shall

stand adjourned for further half an hour and if the quorum as aforesaid is still not present but

the Directors present are at least one third of the Board, they shall constitute a quorum

Provided however, no matter referred to in Clause 9.2 shall be considered at such adjourned

meeting and the business at such adjourned meeting shall be confined only to the remaining

items as specified in the agenda for such meeting and no matter not forming part of the

agenda circulated for the meeting shall be considered at such adjourned Board meeting.

8.20 Subject to the provisions of the Companies Act and Clause 9.2, a resolution signed by a

majority of the Directors for the time being shall be valid and effectual as if it is a resolution

passed at a meeting of the Board of Directors duly convened and held. Any such resolution

may be contained in a single document or may consist of several documents, all in like form.

For the purposes of this Clause "in writing" and "signed" shall include approval by facsimile.

Executive Committee

8.21 The Board shall constitute a 2 (two) member Executive Committee of the Board

comprising of one nominee Director each of the Parties. It is agreed that normally no

alternate Director shall be permitted to participate in Executive Committee Meetings.

However in unavoidable circumstances alternate Directors may be allowed to participate in

place of original Directors with the consent of the Parties.

8.22 The Chairman of the Executive Committee will be on annual rotation basis i.e. for first

year DEF nominee shall be the Chairman of the Executive Committee and for following year

ABC nominee shall be its Chairman and so on. Any member of the Executive Committee can

request the Chairman of the Executive Committee to convene a meeting of Executive

Committee and the Chairman of the Executive Committee shall promptly convene a meetingbut not later than 7 (seven) business days of receipt of such request.

8.23 The Executive Committee shall be generally responsible for, finalisation of business

plans and annual budgets, review of operations, review of performance of personnel and

HRD matters, approval of general meeting notices etc. It shall also be responsible for

approval of appointment of the Secretary, Head (Operations), Head (Marketing) and Head

(Finance) by whatever name called.



All matters to be put up to the Board and specified in Clauses 9.1 and 9.2 shall in the first

instance be put up for consideration of the Executive Committee. The Executive Committee

shall also act as a forum for inter-action and resolving all matters inter se between the Parties.

8.24 (a) All decisions of the Executive Committee shall be by unanimous vote. In the absence

of unanimity in respect of any matter, the same shall be referred to the Board for its decision.

(b) The Chairman of the Executive Committee shall be entitled to invite such of the

Senior Managers of the Company as he may determine provided if the chairman be anDEF nominee, such invitation to attend the meetings of the Executive Committee shall

be in consultation with MD . Such invitees however will have no vote.

8.25 Annual Budgets and Business Plans During each Financial Year, the Company shall

adopt an annual Budget for the next Financial Year and a Business Plan for the succeeding

two (2) Financial Years. Each such annual Budget and Business Plan shall be prepared under

the direction and supervision of the MD and submitted to the Executive Committee for its

consideration. upon the approval thereof by the Executive Committee or in the event of there

being no unanimity at the Executive Committee in respect thereof, the same shall be

submitted to the Board for its approval at least one (1) month prior to the end of each

Financial Year .

8.26 The Auditors

The Auditors of the Company shall be selected by the Board.

9. MATTERS TO BE DECIDED BY THE BOARD

9.1 Except as otherwise required by this Agreement, the Articles, or the Companies Act, all

resolutions and decisions of Directors shall be by vote of a majority of the Directors present

at a duly convened meeting of the Board. Except as otherwise required by this Agreement,

the Articles or the Companies Act, any action which can be taken by a Board at a duly

convened meeting may also be taken by a resolution by circulation signed by all or a majority

of the Directors. Subject to the provisions of Clause 9.4 Policy Matters setforth in Clause 9.2

below can be approved only by the Board with the affirmative vote of at least one nominee

Director each of DEF and ABC. No Director shall have a casting vote.

9.2 All matters to be decided by the Board shall be determined by simple majority, except

that no action or decision shall be taken nor any resolution passed in respect of any of the

following matters (the “Policy Matters”) by the Board or any Committee thereof shall be

valid and effective unless approved by majority and such majority comprises of affirmative

vote of at least one nominee Director each of ABC and DEF:

(i) Any change or modification in the rights of the Shareholders;

(ii) Any amendment to the Memorandum and/or Articles of Association of the

Company;

(iii) Any increase in authorized or issued share capital, other than on rights basis if

provided in Business Plan;

(iv) Any consolidation of or reduction in the Share capital of the Company or creation

of new classes of shares, whether voting or non-voting;

(v) Any issue of debentures, bonds or other instrument convertible into equity Shares;



(vi) Any proposal for placing of the Company in voluntary dissolution or winding up;

(vii) Any proposal for amalgamation or merger of the Company with any other

company;

(viii) Any sale, lease or transfer of the whole or substantial part of the undertaking or

assets of the Company;

(ix) creation of any mortgage, charge, lien or encumbrance on the assets of theCompany other than for working capital advances or as contemplated in the annual

Budget or Business Plan;

(x) Any loan or other borrowing carrying right or option to convert whole or any part

thereof or accrued interest thereon into shares of the Company or conversion of any

debt or obligation of the Company into shares of the Company; and

(xi) Any diversification or establishment of any subsidiary other than as contemplated

in the annual Budget or Business Plan.

9.3 no action or decision in respect of any of the following matters ("Special Matters") shall

be valid and effective unless part of or contemplated by an annual Budget or Business Plan or

approved by a resolution passed by the Board or any Committee thereof by majority:

(i) entering into of any material contract (over a value of Rs. 5 crore) outside the

ordinary course of its business;

(ii) the entering into, termination or variation of any contract or arrangement (whether

legally binding or not) by the Company with a Party or any company which is a

Associate of any Party;

(iii) the incurring of any material expenditure or liability of a capital nature exceeding

in aggregate Rs.5 (five) crore outside the Aannual Budget (including for this purpose

the acquisition of any asset under lease or hire purchase);

(iv) Borrowings and creation of charge on the assets of the Company other than as set

forth in the annual budgets or business plans or for working capital advances;

(v) Any proposal to confess any judgment of a value in excess of Rs.1 Crore against

Company,

(vi) Agreements or material transactions between the Company and any Director or

shareholder of the Company or an Associate of such shareholder or any service

contracts with any Party or its Associate(s) for provision of any service or

management support or consultancy to Company;

(vii) the recommendation for payment of any dividend or other distribution and

appropriation of profits.

(viii) the giving of any guarantee, indemnity or security in respect of the obligations of

any third party;

(ix) the entering into of any profit sharing, share option or similar other scheme for the

benefit of the officers or employees of the Company or any material variation of any

such scheme;





Agreement including nomination of a member to the Executive Committee or affirmative

vote right under Clause 9.2 above.

10.3 In case the voting share holding of DEF or ABC, as the case may be, falls below 10% of

the voting share capital of the Company, then this Agreement shall terminate provided

however the obligation under Clause 6.4 shall survive such termination. Further in such an

event such Party will procure its nominee Directors to tender their resignations from their

respective offices as Directors of the Company forthwith without any claim for compensation

for loss of office or otherwise except for salary (if any) and any other entitlements which may

have accrued upto the date of their resignation.

10.4 Notwithstanding anything to the contrary contained in this Agreement for the purposes

of this Article 10(i) Share holding of DEF shall mean the Share held by DEF in its own name

and excluding the Shares held by its Associates and Investor AfDEFiates, and (ii) Share

holding of ABC shall mean the Shares held by ABC in its own and excluding the Shares.

10.5 Subject to the provision of Clause 10.3 and other provisions of this Agreement, this

Agreement shall also terminate on the earlier of:

10.5.1 the DEF and ABC agreeing in writing to terminate this Agreement, or

10.5.2 an effective resolution is passed or a binding order is made for the winding-upof the Company.

11. Pull-Along Rights

11.1 Subject to the provisions of Clauses 6.3 and 6.4, if at any time during the subsistence of

this Agreement a Party holding not less than 30% (thirty percent) of the voting Shares (the

“Qualified party”) shall enter into an agreement (including an agreement in princip le) to

dispose off its entire Share holding in the issued and paidup Share capital of the Company to

any person or entity, the Qualified Party may require the other Party sell its Shares to such

person or entity at the same price and on the same terms and conditions as those on which the

Qualifying Party has agreed to sell such Shares.

12. RIGHT TO BUY OR SELL SHARES

12.1 If -

12.1.1 a Party (the “Defaulting Party”) is in breach of any of its obligations under this

Agreement in any respect, and such breach continues for sixty (60) days after the

other Party has given notice in writing, specifying the breach and demanding cure

thereof, to Defaulting Party; or

12.1.2 a court of competent jurisdiction shall enter a decree or order appointing a

trustee or receiver of the Defaulting Party or in respect of substantial part of its assets

or undertaking or shall approve a petition for or effecting an arrangement in

bankruptcy, a reorganization pursuant to a bankruptcy act, or other judicialmodification, or alteration of the rights of creditors of Defaulting Party, other than

amalgamation or merger, and the operation thereof is not stayed within sixty (60) days

from the date of entry thereof, or the Defaulting Party shall DEFe a petition for an

assignment for the benefit of its creditors, or any court of competent jurisdiction shall

enter a decree or order adjudicating Defaulting Party as bankrupt or insolvent;

then upon the occurrence of such an event the other Party shall have the right to require the

sale of shares by such defaulting Party to it in Company in accordance with Clause 6.5 6.4.





(ii) promptly notify the other Party and the Company of all matters coming to its

notice which may affect the title to or enjoyment of the XYZ Undertaking including

premises, assets or properties of the Company, and all significant, orders and

demands, and other communications received from GOI, GOUP or any government or

quasi government authority in relation to the Operating licenses.

(c) In the event that a Party hereto shall be rendered unable to carry out the whole or any

part of its obligations under this Agreement for any reason beyond the reasonable control

of that Party, including but not limited to decrees or restraints of governmental

authorities, orders of any court of competent jurisdiction, acts of God, strikes, war, riot

and any other cause of similar nature, then the performance of the obligations hereunder

of that Party, to the extent affected by such cause shall be excused during the

continuance of such disability, but such disability shall as far as possible be remedied

with all reasonable dispatch provided the Party claiming force majeure has notified the

other Party with reasonable dispatch about the circumstances constituting force majeure

and its likely duration with such evidence in support thereof as may reasonably be

available with it.

13.7 No party shall make any media or other announcements, releases, disclosures or

statements relating to this Agreement and the transactions which are the subject of this

Agreement without the prior consent of the other party unless such announcement or release

is required to be made by law or by a stock exchange or is to its employees, legal advisers

and other consultants and may not be disclosed to any other person except:

(a) to the shareholders or the Parties or their Associates;

(b) for the purpose of this Agreement;

(c) for securing or maintaining Operating Licenses or complying with the conditions

thereof or of any other approval consent or authorisation from any government or

statutory authority, agency or instrumentality;

(d) in connection with legal proceedings relating to this Agreement; or

(e) is otherwise not confidential.

13.8 All information received by the Parties from the Company or each other is either

marked "Confidential" or is by its nature intended to be exclusively for the knowledge of the

recipient alone shall be deemed confidential and exclusively for the knowledge of the Parties

alone and shall not be disclosed or used to the detriment of the Company or the Parties until

or unless the recipient can demonstrate (i) that it is or part of it, in the public domain,

whereupon to the extent that it is public, this obligation shall cease, or (ii) disclosure is

required by law or by the rules and regulations of any stock exchange or any other regulatory

authority.

13.9 All rights of ABC under this Agreement shall be exercised by ________ and failing him

by a Director of ABC authorised in this behalf by the Board of Directors of ABC and all

rights of DEF under this Agreement shall be exercised by _________ and failing him by a

Director of DEF authorised in this behalf by the Board of Directors of DEF

13.10(i) The Parties agree that during the subsistence of this Agreement neither party will

enter into any negotiations or agreements, directly or indirectly, with any third Pparty with

regard to the sale of its Undertaking including provision of technical Know-how, assistance

and/or services in any manner whatsoever relating to production and marketing of the

Products.



(ii) Neither Party shall for a period of 3 (three) years after it ceases hold 10% or more of

voting share capital of the Company engage, directly or indirectly, in the business of

manufacture marketing and/or dealing in Products including provision of technical

know-how, assistance and/or services in any manner whatsoever relating to production

and marketing of the Products in India or abroad. For the purposes of this clause the

expression party shall include their promoters .

13.11 Subject to and excluding Article 10, for the purposes of other previsions of this

Agreement Share holding of DEF shall mean the aggregate of its Share holding and that of its

Associates and Investor Affiliates, and of ABC shall mean the aggregate of its Share holding

and that of its Associates and Investor Affiliates , in the Company.

13.12 Notices

All notices which are required to be given hereunder shall be in writing and shall be

sent to the address of the recipient set out in this Agreement or such other address as

the recipient may designate by notice given in accordance with the provisions of this

Clause 13.11. Any such notice shall in case of DEF be marked “Attention:

_________” and in case of ABC be marked “Attention: ___________. Any such

notice may be delivered personally or by prepaid post letter with copy by electronic

mail or facsimile transmission and shall be deemed to have been served if by personal

delivery when delivered and if by prepaid post 15 days after posting.

13.13 Successors Bound

This Agreement shall be binding on and shall enure for the benefit of the successors of

the Parties.

13.14 Assignment

No party may assign its rights or obligations in whole or in part hereunder without the

prior consent of the other party Provided that this Clause 13.143 shall not prevent a

transfer of shares pursuant to Clause 6.

13.15 Continuing Agreement

All provisions of this Agreement shall so far as they are capable of being performed

and observed continue in full force and effect except in respect of those matters then

already performed.

13.16 Good Faith

Each Party covenants with the other Party to do all things reasonably within its power

which are necessary or desirable to give effect to the spirit and intent of this

Agreement and the Articles.

13.17 Further Assurance

The Parties shall, and shall use their respective reasonable endeavors to procure that

any necessary third parties shall, do, execute and perform all such further deeds,

documents assurances, acts and things as any of the parties hereto may reasonably

require by notice in writing to the others to carry the provisions of this Agreement and

the Articles into full force and effect.

13.18 Entire Agreement



This Agreement constitutes the entire agreement between the parties hereto with

respect to the subject matters of this Agreement and supersedes any previous

agreement, understandings and writings including the MOU dated ___________ between the Parties other than the agreement titled “Basis of Acquiring Business and

Valuation thereof” of even data in respect thereof. No variation of or amendment to

this Agreement shall be valid or effective unless made in accordance with Clause

13.24

13.19 No Partnership

Nothing in this Agreement shall constitute or be deemed to constitute a partnership

between any of the parties hereto and none of them shall have any authority to bind

the others in any way.

13.20 Accrued rights

The termination of this Agreement however caused and the ceasing by any

Shareholder to hold any Shares shall be without prejudice to any obligations or rights

of either Party which have accrued prior to such termination or ceasure and shall not

affect any provision of this Agreement which is expressly or by implication provided

to come into effect on or continue in effect after such termination or ceasure.

13.21 Waiver

No failure to exercise and no delay in exercising on the part of a Party of any right,

power or privilege hereunder shall operate as a waiver thereof nor shall any single or

partial exercise of any right, power or privilege preclude any other or further exercise

thereof or the exercise of any other right, power or privilege. The rights and remedies

provided in this Agreement are cumulative and not exclusive of any rights or,

remedies otherwise provided by law.

13.22 Severability

Notwithstanding that any provision of this Agreement may prove to be illegal or

unenforceable, the remaining provisions of this Agreement shall continue in full force

and effect. Parties shall in good faith negotiate and agree upon a replacement

provision which shall be as close as permissible in law to such illegal or

unenforceable provision.

13.23 Exercise of powers

Where DEF or ABC is required under this Agreement to exercise its powers in

relation to the Company to procure a particular matter or thing, such obligation shall

be deemed to include an obligation as a Shareholder (including where a Associate is a

Shareholder) and as a Director (where applicable) of the Company and to ensure that

any Directors appointed by it or an Associate will procure such matter or thing.

13.24 Amendment

This Agreement shall not be altered, changed, supplemented, or amended except by a

written instrument signed by the Parties and expressly stated to be an amendment to

this Agreement.

13.25 No Consequential Loss or Damage







JOINT VENTURE AGREEMENT

AGREEMENT

dated

Between:

(1) [ABC] a company incorporated in [country of incorporation] ("ABC");

(2) [DBF] a company incorporated in [country of incorporation] ("DEF");

(3) [Newco Limited], a company incorporated in [ ] ("the Company");

1. RECITALS

1.1 ABC carries on [in ] the business of [ ].

1.2 DEF carries on [in ] the business of [ ].

1.3 The parties wish to participate in and operate the Company as a joint

venture company to carry on the Business on the terms and conditions of

this Agreement.

1.4 The Company, details of which are set out in Schedule 1, has not

traded and has no assets or liabilities.

2. INTERPRETATION

2.1 In this Agreement, unless the context otherwise requires--

(a)."A Director" means a director of the Company appointed inaccordance with the Articles by the holders of a majority in

nominal value of the A Shares;

(b) "B Director" means a director of the Company appointed in

accordance with the Articles by the holders of a majority in

nominal value of the B Shares;

(c)."the Ancillary Agreements" means the agreements referred to

in clause 5.5;



(d) "the Annual Business Plan" means the annual business plan

referred to in clause 8.5(c);

(e) "the Articles" means the new articles of association of the

Company adopted pursuant to in clause 5.3(a)(iii), as the same may

be amended from time to time;

(f) "A Share" means an A share of Rs. ____in the capital of the

Company;

(g) "the Auditors" means the auditors for the time being of the

Company;

(h) "Bankers Draft" means a draft drawn by a clearing bank on a

branch of that bank in ______ and available for immediate credit

through the town clearing system;

(i)" Share"means a B share of Rs. ______ in the capital of the

Company;

(j) "the Board" means the board of directors (as constituted from

time to time) of the Company;

(k) "the Business" means the business and activities referred to in

clause 3.2, as carried on by the Company from time to time;

(l) "Business Day" means a day on which banks are open for

business ;

(m) "Completion" means performance by the parties of their

respective obligations under clauses 5.3, 5.4 and 5.5;

(n) "Force Majeure" has the meaning given to that expression by

clause 16.1;

(o) "Group" means, in relation to any company, that company and

any other company which, at the relevant time, is its HoldingCompany or Subsidiary, or a Subsidiary of any such Holding

Company; and "Member" of a Group shall be construed

accordingly;

(p) "the Memorandum" means the memorandum of association of

the Company as amended pursuant to clause 5.3(a)(ii), and as thesame may be further amended from time to time;

(q) "Reserved Matter" means any matter referred to in clause 9.1;

(r) "Restricted Information" has the meaning given to that

expression by clause 13.1;



(s) "the Shareholders" means each of the registered holders of

Shares at the relevant time;

(t) "Shares" means A Shares, B Shares and other shares in the

capital of the Company issued from time to time, and includes the

beneficial interest therein;

(u) "the Share Transfer Provisions" mean the provisions of theArticles relating to the transfer of Shares and expressions defined

in those provisions have the same meaning in this Agreement; and

(v) "the Territory" means .

2.2 In this Agreement, unless the context otherwise requires, any reference to--

(a) "writing", or any cognate expression, includes a reference toany communication effected by telex, facsimile transmission or

similar means;

(b) a statute or a provision of a statute is a reference to that statuteor provision as amended, re-enacted or extended at the relevant

time, [and includes any corresponding provision in a statute

replacing that statute or provision];

(c) a document "in the agreed terms" is a reference to the form of the draft initialled for the purposes of identification on behalf of

the parties;

(d) "this Agreement" is a reference to this Agreement and each of

the Schedules, as amended or supplemented at the relevant time;

(e) a Schedule is a reference to a schedule to this Agreement; and

(f) a clause or a paragraph is a reference to a clause of thisAgreement (other than the Schedules) or a paragraph of the

relevant Schedule.

2.3 In this Agreement--

(a) any reference to the parties includes a reference to their

respective [personal representatives, heirs,] successors in title and

permitted assignees;

(b) any reference to a person includes any body corporate,

unincorporated association, partnership or other legal entity;

(c) the singular includes the plural and vice versa; and

(d) words importing any gender include any other gender.



2.4 The headings in this Agreement are for convenience only and shall not affect its

interpretation.

3. THE JOINT VENTURE

3.1 ABC and DEF shall promote the Company as a joint venture between

them on and subject to the terms of this Agreement.

3.2 The business of the Company shall be [ ], or such variation, extension

or limitation of those activities as may be made from time to time in

accordance with this Agreement.

4. CONDITIONS

4.1 The provisions of this Agreement (other than this clause 4 and clause 24) are

conditional on--

(a) the terms of this Agreement being approved by an ordinary

resolution of each of ABC and-DEF in general meeting; and

(b) the obtaining of any consent required for Completion, the

promotion of the Company or the carrying on of the Business by

the Company.

4.2 ABC and DEF shall use all reasonable commercial endeavours to

procure that the conditions specified in clause 4.1 are duly fulfilled.

4.3 Subject as provided in clause 4.2, if any of the conditions specified inclause 4.1 is not duly fulfilled on or before [ ] , this Agreement shallautomatically terminate and no party shall have any claim against any

other.

5. COMPLETION

D-06

5.1 [Within [] Business Days after the fulfilment [or waiver] of the

conditions set out in clause 4.1] [Forthwith upon the execution of this

Agreement], the parties shall comply with their obligations under clause5.3, 5.4 and 5.5.

5.2 Completion shall take place at the offices of [ ] at _______, or at

such other place or time as the parties may agree.

5.3 ABC and DEF shall procure that an extraordinary general meeting of

the Company is duly convened and held at which there are proposed and

passed--



(a) special resolutions of the Company to--

(i) change the name of the Company to"[ ] Limited";

(ii) change the main objects of the Company to those

contained in the form of the memorandum of association

set out in Schedule 2;

(iii)adopt, subject to the passing of the other resolutionsreferred to in this clause 5.3, new articles of association in

the form set out in Schedule 3;

iv. convert each of the two issued Ordinary Shares into an A Share [and a B Share];

v. (v) redesignate the authorised but unissued Ordinary Shares as [ ] A Share

[and [ ] B Shares]; and

(b) ordinary resolutions of the Company to--

(i) increase the authorised share capital of the Company to[ ]; and

(ii) authorise the Board to allot and issue the Shares

referred to in clause 5.4(b) and(c) on the terms referred to

therein.

5.4 Forthwith upon the provisions of clause 5.3 being complied with--

(a) the issued A Share shall be transferred to ABC [and the issued

B Share shall be transferred to DEF, in either case] for nil

consideration;

(b) ABC shall subscribe for [ ] A Shares [for cash at par];

(c) DEF shall subscribe for [ ] B Shares [for cash at par];

(d) ABC and DEF shall each appoint their nominees as A Directors

or B Directors as the case may be;

(e) the Board shall approve the execution and exchange of the

Ancillary Agreements; and

(f) the Board shall pass such other resolutions and do such other

things as are necessary in order to comply with the provisions of

clause 8.

5.5 Upon the provisions of clause 5.4 being complied with the following

agreements shall be entered into and, to the extent provided for therein,

duly completed by the parties thereto —



(a) [an agreement in the agreed terms for the sale by ABC and the

purchase by the Company of certain premises and other business

assets;]

(b) [[an exclusive] licence agreement in the agreed terms to begranted by DEF to the Company in respect of certain technology

owned by DEF;]

(c) [[an exclusive] distribution agreement in the agreed terms to be

entered into between the Company and ABC in respect of the

distribution by ABC of the Company" s products.]

5.6 Each of ABC and DEF undertakes with the other of them, and the Company

undertakes with each of ABC and DEF, that--

(a) it will hold its Shares subject to and comply in all respects with

the provisions of this Agreement and the Share TransferProvisions, and will duly perform and observe the obligations

undertaken by it under any of the Ancillary Agreements; and

(b) any warranty or representation given or made by it under any of

the Ancillary Agreements is and shall at Completion remain true

and accurate.

6 FINANCIAL PROVISIONS

6.1 If and to the extent that the Company requires finance in accordance

with its Annual Business Plan in addition to that obtained under clause

5.4--

(a) the Board shall seek to obtain the same by way of bank

overdraft facility or other commercial borrowing from third

parties; or

(b) the [Shareholders] [Parents] shall loan, or procure that aMember of their respective Groups loans, the same to the

Company pro rata to the number of Shares held by any Member of

their respective Groups at the relevant time, on terms that each

such loan shall carry interest at [ ] per cent above the base

rate from time to time or

(c) the Shareholders shall provide the same by subscribing in cashfor further Shares or Loan Stock issued by the Company pro rata to

the number of Shares held by each of them at the relevant time.

6.2 Where the Board seeks to obtain loans from third parties, each of the

[Shareholders] [Parents] shall use it's best efforts to procure the provision

of the same on normal commercial terms--





7.3 Office administration and company secretarial services shall, subject

to either [ ] or the Company giving the other not less than [ ]months' notice in writing, be provided by [ ], which shall be entitled to

charge the Company on such basis as may from time to time be agreed

with the Company for all reasonable expenses incurred in providing those

services.

7.4 Where any Shareholder or any Member of its Group makes personnelavailable to the Company, the terms of such availability, including any

question as to whether such personnel are to be seconded to or employed

by the Company, shall be determined by and subject to agreement. Wheresuch personnel are seconded, the Company shall pay to the party

supplying such personnel all employment costs (including, without

limitation, salary, pension, national insurance and the cost of any fringe

benefits) of such personnel during the period of such secondment.

8. MANAGEMENT OF THE COMPANY

D-09

8.1 The following persons shall be appointed as directors of the Company pursuant to the

Articles--

A

Directors

B Directors

8.2 [ ] shall be appointed as the first Chairman of the Board pursuant to the

Articles.

8.3 The Board shall appoint for the purposes specified in clause 8.4 and 8.5--

(a) a chief executive (who [shall] [need] [not] be a director) on

such terms as it may think fit, the first chief executive being

[ ]; and

(b) a management committee comprising [the chief executive], one

A Director and one B Director.

8.4 The chief executive shall--

(a) be responsible for the day to day management of the businessof the Company within the terms of the Annual Business Plan

approved by the Board;

(b) report to the Board with such frequency and in such manner as

may be required by the Board;



(c) [be entitled to attend meetings of the Board but [, if not a

Director,] shall not vote or be counted in a quorum;] and

(d) comply with all decisions and directions of the Board.

8.5 The Management Committee shall, unless otherwise required by the Board--

(a) perform such duties as may be delegated to it by the Board;

(b)have the power to co-opt such persons (including A Directorsand B Directors) as it thinks appropriate to assist it in the

management of the Company;

(c)cause to be prepared for approval by the Board an annual

business plan outlining the proposed objectives of the business of

the Company; and

(d)comply with all decisions and directions of the Board.

8.6 The Board shall, not later than _______ before the beginning of eachfinancial period of the Company, consider and seek to approve the Annual

Business Plan.

8.7 Subject to clause 14, each Director shall be entitled to make full

disclosure to the Shareholder appointing him of any information relatingto the Company which that Director may acquire in the course of his

appointment.

8.8 Meetings of the Board shall take place at such time or times as may be

required or as requested by [the chief executive] [either Shareholder] but

not in any event at intervals of more than three months calculated from the

date of Completion. Unless otherwise agreed in writing by all theDirectors, at least [seven] clear Business Days' notice in writing shall be

given of each meeting of the Board, which notice shall specify in as great

a detail as is practicable the business to be considered at the meeting, [andunless all the Directors (or their duly appointed alternates) agree otherwise

no matters shall be resolved at any meeting of the Board except those

specified in the notice of the meeting].

8.9 [The quorum necessary to constitute a meeting of the Board shall be at

least one A Director (or his alternate) and one B Director (or his alternate),

but if within 15 minutes of the time fixed for a Board meeting a quorum is

not present, then unless otherwise agreed between at least one A Directorand one B Director the meeting shall stand adjourned to the same time and

place on the seventh [day] [Business Day] following the original date of the meeting, [and at the adjourned meeting any two Directors (or their

alternates), whether A Directors or B Directors, shall constitute a quorum,

and if no such quorum is present the adjourned meeting shall be

dissolved].]



8.10 [Any question arising at any meeting of the Directors shall be

decided by a majority of votes-of the Directors (or their alternates)present. [The Directors (or their alternates) appointed by a Shareholder

and present at any Board meeting shall between them carry a total number

of votes equal to that total number of Directors which that Shareholder is

entitled to appoint.]]

9. RESERVED MATTERS

D-10

9.1 Except in respect of any matter expressly provided for herein, for the

purposes of this Agreement the following matters are Reserved Matters--

(a) the creation or issue of any share or loan capital or any

obligation convertible into share capital or loan capital of the

Company;

(b) the grant of any option or right to subscribe for any share or

loan capital of the Company;

(c) the consolidation, sub-division or alteration of any rights

attached to any share capital of the Company, the purchase by theCompany of its own shares, the reduction of its share capital, the

capitalisation of any amount standing to the credit of any reserve

of the Company or the reorganisation of any of the share capital of

the Company;

(d) the incorporation or acquisition of any subsidiary or thesubscription for or the acquisition of any shares or other securities

or interest in any company;

(e) the giving of any guarantee or indemnity not in the ordinary

course of business;

(f) the declaration and/or payment of any dividend otherwise than

in accordance with clause 11;

(g) the appointment or dismissal of the chief executive or (if there

is one) any managing director;

(h) the grant to any person of a right to appoint any director of the

Company, the entering into of any agreement for the managementof the Company or the incurring of any management charges;

(i) the entering into of any partnership, joint venture or profit-

sharing arrangement with any other person;

(j) the appointment or removal of the Auditors (other than the re-

appointment of the first auditors of the Company);



(k)the incurring of any expenditure or the entering into of any

commitment by the Company--

(i)which would [reasonably be expected to cause overhead

costs for the year in total to] exceed [by more than 10 percent] the total provided for in the current Annual Business

Plan; or

(ii) for any item of capital expenditure exceeding [ ] even if

so provided for; (I) the changing of any of the accounting

principles or conventions of the Company, otherwise thanas required by law or in order to comply with any

applicable statement of standard accounting practice or

Financial Reporting Standard;

(m). the alteration of any provision of the Memorandum or Articles

or the passing of any resolution inconsistent with any such

provision;

(n) the provision of any credit or making of a loan or advance forany person other than in the normal course of the Business;

(o) any [material] variation, extension or limitation of the nature orscope of the Business; (p) the commencement or defence of any

legal proceedings or arbitration, other than routine debt collection;

(q) the purchase, lease or acquisition of any site or building for use

in the Business and/or any immovable property which is

substantial in relation to the Company or the acquisition of any

other business;

(r) the sale, lease, transfer, mortgage, charge, pledge or otherdisposition of the whole or a substantial part of the Company's

undertaking or any material asset of the Company or any

agreement to effect any of the foregoing;

(s) any transaction between the Company and any Shareholder (or

any Member of its Group) otherwise than on arm's length terms;

(t) the presentation of any petition or passing of any resolution for

the Company to be put into administration or to be wound up; and

(u) the borrowing of any money or giving of any guarantee,

indemnity or security.

9.2 No Reserved Matter shall be undertaken or effected by the Company-(a) which under the Articles requires a resolution of the Board, unless a

majority of the Directors vote (whether in person or by proxy) in favour of

the resolution; or (b) which under the Articles requires a resolution of theShareholders, unless both the holder of the A Shares and the holder of the

B Shares vote in favour of the resolution.



9.3 If at any time [after the [ ] anniversary of this Agreement], a

resolution of the Board or the Shareholders on a Reserved Matter is duly

proposed but is not passed, either Shareholder may--

(a) give notice in writing to the other Shareholder within 30 daysafter the date of the proposal of the resolution, in which event the

Shareholders shall seek to resolve the issue by negotiation within a

further period of 30 days after the date of service of that notice;and

(b) if within that further period the proposed resolution on thatReserved Matter, with such amendments as the Shareholders may

agree, has not been passed or has been withdrawn, or the notice

given pursuant to (a) above has not been withdrawn, the otherShareholder shall at the end of that further period be deemed to

have given a sale notice pursuant to the Share Transfer Provisions

on the date of service of that notice.

9.4 If the offer of Shares in a sale notice deemed to be given pursuant to

clause 9.3 is not accepted within the offer period, the Shareholder whichgave the notice pursuant to clause 9.3(a) shall be deemed to have given asale notice pursuant to the Share Transfer Provisions on the date of expiry

of that offer period.

9.5 If the offer of Shares in a sale notice deemed to be given pursuant to

clause 9.4 is not accepted within the offer period, the parties shall, unless

otherwise agreed, forthwith take all steps necessary to wind up the

Company.

10. ADMINISTRATION

Unless otherwise agreed by the Board--

(a) the secretary of the Company shall be [ ];

(b) the registered office of the Company shall be at [ ];

(c) the first auditors of the Company shall be [ ];

(d) the accounting reference date of the Company shall be [ ];

and

(e) the Company's bankers shall be [ ].

11. DIVIDENDS



11.1 Subject to the provisions of Part VIII of the Companies Act 1985,

there shall be distributed by way of dividend [all] [not less than per cent]

of the distributable profits of the Company for each accounting period.

12. TRANSFER OF SHARES

12.1 No Shareholder shall sell, transfer, mortgage, charge, encumber or

otherwise dispose of any Share or any interest therein except in

accordance with the provisions of this clause 12.

12.2 A Shareholder may transfer its Shares to any other person provided

that--

(a) the transfer is made in accordance with the Share Transfer

Provisions;

(b) except in the case of a transfer from one Shareholder toanother, the proposed transferee has agreed in writing with the

other parties to this Agreement to assume all future obligations of

the transferor and any other Member of the transferor's Group

under this Agreement and the Ancillary Agreements, andotherwise to be bound by all the applicable provisions thereof, as if

it were a party thereto;

(c) where the transferee is not the ultimate Holding Company of its

Group, that Holding Company (or another Member of its Group

reasonably acceptable to the other Shareholder) has agreed inwriting with the other parties to this Agreement to be bound by all

the provisions of this Agreement [and the Ancillary Agreements]

applicable to the Parent of which the transferor is a Subsidiary; and

(d) any necessary consent has been obtained for the transfer.

12.3 The Shareholders shall procure that the Directors approve for

registration any transfer of Shares which complies with the provisions of

this clause 12, and decline to approve for registration any other transfer of

Shares.

12.4 Upon any Shareholder ceasing to hold any Shares, subject tocompliance with the provisions of clause 12.2--

(a) all future obligations of that Shareholder and, except where theShares are transferred to another Member of its Group, its Parent

shall cease; and





times during the continuance of this Agreement and within [ ]

years after its termination--

(a) use its best endeavours to keep confidential all Restricted

Information;

(b) not disclose any Restricted Information to any other person;

(c) not use any Restricted Information for any purpose otherwisethan as contemplated by and subject to the terms of this

Agreement;

(d) not make any copies of, record in any way or part with

possession of any Restricted Information; and

(e) ensure that none of its directors, officers, employees, agents oradvisers does any act which, if done by that party, would be a

breach of the provisions of (a), (b), (c) or (d) above.

13.3 The Recipient may--

(a) disclose any Restricted Information to--

(i) any sub-contractor, supplier or licensee of the Recipient;

(ii) any bona fide transferee of the Recipient's Shares;

(iii) any governmental or other authority or regulatory

body; or

(iv) any employees of that party or any of the

aforementioned persons; to such extent only as is necessaryfor the purposes contemplated by this Agreement, or asrequired by law, and in each case (except where the

disclosure is to any such body as is mentioned in (iii) above

or any employees of any such body) subject to the

Recipient first obtaining a written undertaking in favour of the Informant from the person in question, as nearly as

practicable in the terms of this clause, to keep the

Restricted Information confidential and to use it only forthe purposes for which the disclosure is made, and

submitting the same to the Informant; or

(b) use any Restricted Information for any purpose, or disclose it to any

other person, to the extent only that--

(i) [the Recipient can demonstrate from its written records

that] it was known to the Recipient at the time when it was

disclosed by the Informant;



(ii)[after being disclosed by the Informant it is disclosed to

the Recipient by any other person otherwise than in breachof any obligation of confidentiality owed to the Informant;

or]

(iii) it is at the date of this Agreement, or at any time after

that date becomes, public knowledge through no fault of

the Recipient, provided that in doing so the Recipient doesnot disclose any part of that Restricted Information which

is not public knowledge.

14.4 The provisions of this clause 14 shall continue in force in accordance

with their terms, notwithstanding the termination of this Agreement for

any reason.

14. COMPETITION

14.1 [ ] undertakes with the Company and [ ] that it willnot, and will procure that no Member of its Group will, for so long as it or

any Member of its Group holds any Shares, directly or indirectly carry on

or be interested in any business--

(a) in the Territory that competes with the Business; or

(b) which competes with the business of [ ] or a Member of its

Group.

14.2 [ ] undertakes with the Company and [ ] that it will not, and

will procure that no Member of its Group will, for so long as it or any

Member of its Group holds any Shares, directly or indirectly carry on or

be interested in any business--

(a) in the Territory that competes with the Business; or

(b) which competes with the business of [ ] or a Member of its

Group.

14.3 [The Company undertakes--

(a) with [ ] that it will not and will procure that no Member

of its Group will, for so long - as.it or any Member of its Groupholds any Shares carry on any business which competes with any

business carried on [ ] or any Member of its Group; and

(b) with [ ] that it will not and will procure that no Member

of its Group will for so long as it or any Member of its Group

holds any Shares or at any time thereafter compete with any



business carried on outside the Territory by [ ] or any

Member of its Group.]

14.4 Nothing in this clause 14 shall prohibit any Shareholder or any Member of its Group

from--

(a) being or becoming the owner for investment purposes of not

more than 20 per cent of the shares or other securities of any

company listed on a recognised stock exchange; or

(b) acquiring any shares or other securities or having any other interest in

any business or company if a minor part of that business or the business of

that company consists of the Business, provided that the acquisition of that

part of the business in question is not the principal reason for theacquisition and the Shareholder in question or the relevant Member of its

Group forthwith offers to dispose of that part of the business in question to

the Company on an arms-length basis and keeps such offer open for

acceptance within 90 days.

14.5 Each Shareholder undertakes with the other Shareholder and theCompany that it shall not, for so long as it owns any Shares and for a

period of twelve months after it ceases to own any Shares--

(a) solicit or entice away or attempt to solicit or entice away from

that other Shareholder or the Company the custom of any person

who is or has at any time within one year prior to the date inquestion been a customer, client, agent or correspondent of, or in

the habit of dealing with, that other Shareholder or the Company;

or

(b) solicit or entice away or attempt to solicit or entice away fromthat other Shareholder or the Company any employee of that other

Shareholder or the Company, whether or not that employee would

commit a breach of contract by leaving his employment.

15. GUARANTEE CLAUSE

Each of the Parents ("the Parent")--

(a) undertakes that it will procure the due and punctual

performance by any Shareholder which is a Member of its Groupof the obligations of that Shareholder under this Agreement; and

(b) as primary obligor and not merely as a surety undertakes to

indemnify each of the Company, the other Parent and anyShareholder which is a Member of the other Parent's Group ("the

Other Parties") against any loss, damage, costs or expense arising

out of any default by any Shareholder which is a Member of the



Parent's Group the due and punctual performance by the

Shareholder of all of the obligations of the Shareholder under this

Agreement.

16. FORCE MAJEURE

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16.1 For the purposes of this Agreement "Force Majeure" means anycircumstances beyond the reasonable control of either party (including,

without limitation, any strike, lock-out or other form of industrial action).

16.2 If any party is unable to comply with any of its obligations under thisAgreement [or any of the Ancillary Agreements] because of Force

Majeure it shall forthwith notify the other parties of the nature and extent

of the Force Majeure.

16.3 No party shall be deemed to be in breach of this Agreement, or

otherwise be liable to any other party, by reason of any delay in

performance, or the non-performance, of any of its obligations hereunder,to the extent that the delay or non-performance is due to any Force

Majeure of which it has notified the other parties, and the time for

performance of that obligation shall be extended accordingly.

16.4 If the performance by any party of any of its obligations under this

Agreement is affected by Force Majeure for a continuous period in excessof 6 months, [the parties shall enter into bona fide discussions with a view

to alleviating its effects, or to agreeing upon such alternative arrangements

as may be fair and reasonable] [any of the other parties shall be entitled to

terminate this Agreement by giving written notice to the other parties].

17. DURATION AND TERMINATION

17.1 Subject as provided in the following provisions of this clause, this

Agreement shall continue in force for a period of [ ] years from

its date, and shall terminate at the end of that period unless at any timebefore the expiry of that period the parties agree that it shall continue in

force.

17.2 If at any time before the termination of this Agreement pursuant to

clause 17.1 one of the Shareholders notifies the other in writing that itwishes it to continue in force, but the other does not wish it to do so, thatShareholder may, at any time before the termination of this Agreement

and provided that there is no agreement between the parties that this

Agreement shall continue in force has been reached, give a further notice

in writing to the other Shareholder, whereupon the other Shareholder shallbe deemed to have given a sale notice pursuant to the Share Transfer



Provisions, and the provisions of clause 9.4 and 9.5 shall apply, the

necessary changes being made.

17.3 If--

(a) an encumbrancer takes possession, or a receiver is appointed, of

any of the property or assets of either Shareholder or of any

company of which it is a Subsidiary;

(b) either Shareholder or any company of which it is a Subsidiarybecomes subject to an administration order or makes any voluntary

arrangement with its creditors ;

(c) either Shareholder or any company of which it is a Subsidiary

goes into liquidation (except for the purposes of amalgamation or

re-construction and in such a manner that the company resulting

therefrom effectively agrees to be bound by or assume the

obligations of that company);

(d) either Shareholder or any company of which it is a Subsidiaryceases, or threatens to cease, to carry on business; or

(e) control of either Shareholder or of any company of which it is aSubsidiary is acquired by any person not having control on the date

of this Agreement,

that Shareholder shall forthwith give written notice of the

occurrence of that event to the other Shareholder or, if it does not

do so, shall be deemed to have done so upon the other Shareholder

becoming aware of the relevant event.

17.4 The events specified in clause 17.3 shall be deemed to include, inrelation to any company which is subject to the law of any foreign

jurisdiction, any event which under the law of that jurisdiction is

equivalent to any of the events so specified.

17.5 If either Shareholder--

(a) commits any [serious or continuing] breach of any of the

provisions of this Agreement or of any of the Ancillary

Agreements and, if the breach is capable of remedy, fails to

remedy it within 30 days after being given a written notice

containing full particulars of the breach and requiring it to beremedied; or

(b) gives or is deemed to give a notice to the other Shareholder

pursuant to clause 17.3, the other Shareholder shall be entitled, at

any time within 30 days after the expiration of the 30-day periodreferred to in (a) above or receipt of the notice referred to in clause

17.3 (or after it has become aware of any event in respect of which



such a notice should have been so given, if earlier), to give written

notice to the first-mentioned Shareholder--

(i) requiring it to sell its Shares, in which event that

Shareholder shall be deemed to have given a sale noticepursuant to the Share Transfer Provisions on the date of

service of that written notice; or

(ii) requiring the Company to be wound up, in which event

the parties shall forthwith take all steps necessary to do so.

17.6 If for any reason the Company is at any time wound up, this Agreement shall

thereupon terminate.

17.7 For the purposes of clause 17.5(a), a breach shall be considered

capable of remedy if the party in breach can comply with the provision in

question in all respects other than as to the time of performance (provided

that time of performance is not of the essence).

17.8 The rights given by this clause 17 shall not prejudice any other rightor remedy of either Shareholder in respect of the breach concerned (if any)

or any other breach, whether of this Agreement or of any of the Ancillary

Agreements.

18. EFFECTS OF TERMINATION

18.1 If at any time any Member of the [ ] Group or any Member of

the [ ] Group, as the case may be, ceases to be a Shareholder so

that none of the Shares are held by any of the Members of that Group, then

within 28 days of that event occurring the other Shareholder shall procure

that the name of the Company be changed so that it does not include--

(a) where a Member of the [ ] Group has ceased to be a

Shareholder, the word " " or anything confusingly or deceptively

similar thereto; and

(b) where a Member of the [ ] Group has ceased to be a

Shareholder, the word " " or anything confusingly or deceptively

similar thereto, and all appropriate stationery and other materialincorporating such name or initials shall thereupon cease to be

used.

18.2 Upon the termination of this Agreement for any reason--

(a) [each of the Ancillary Agreements shall [, except to the extentotherwise specified therein,] terminate automatically in accordance

with their respective terms;]



(b) any provision of this Agreement which is expressed to continue

in force after termination shall continue in full force and effect;

and

(c) subject as provided in this clause 18, and except in respect of any accrued rights, the parties shall not be under any further

obligation to each other.

19. NATURE OF AGREEMENT

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19.1 This Agreement is personal to the parties and none-of them mayassign, mortgage, charge (otherwise than by floating charge) or sub-

licence any of its rights hereunder, or sub-contract or otherwise delegate

any of its obligations hereunder, except with the written consent of the

other parties.

19.2 Nothing in this Agreement shall create, or be deemed to create, a

partnership, or the relationship of principal and agent, between the partiesor any of them.

19.3 This Agreement contains the entire agreement between the partieswith respect to its subject matter and may not be modified except by an

instrument in writing signed by the duly authorised representatives of the

parties.

19.4 Each party acknowledges that, in entering into this Agreement, it

does not do so in consideration of or in reliance on any representation,warranty or other provision except as expressly provided in this

Agreement, and all conditions, warranties or other terms implied by statuteor common law are excluded to the fullest extent permitted by law.

19.5 If any provision of this Agreement is held by any court or other

competent authority to be invalid or unenforceable in whole or in part, thisAgreement shall continue to be valid as to its other provisions and the

remainder of the affected provision.

19.6 No failure or delay by any party in exercising any of its rights under

this Agreement shall be deemed to be a waiver thereof and no waiver of a

breach of any provision of this Agreement shall be deemed to be a waiver

of any subsequent breach of the same or any other provision.

19.7 Where any provision of this Agreement applies expressly or by

implication to the Company, the Shareholders shall procure that the

Company complies with that provision.

20. ARBITRATION



20.1 Subject as provided in clause 20.2, any dispute or difference between

the parties relating to the rights or obligations of the parties under thisAgreement (other than a failure to agree upon a Reserved Matter) shall be

referred to a single arbitrator appointed by agreement between the parties

or, failing agreement between the parties within 30 days after a request fora reference is made by any party, nominated on the application of any

party by the _________.

20.2 Clause 20.1 shall not preclude the making of an application to the

Court for injunctive relief.

21. NOTICES AND SERVICE

21.1 Any notice or other information required or authorised by this Agreement to be

given shall be, given by--

(a) delivering it by hand;

(b) sending it by pre-paid registered first class post ; or

(c) sending it by telex, cable, facsimile transmission, electronic

mail or comparable means of communication;

to the relevant parties at the addresses given in clause 21.4.

21.2 Any notice or information given by post in the manner provided by

clause 21.1 (b) which is not returned to the sender as undelivered shall be

deemed to have been given on the seventh day after the envelope

containing it was so posted; and proof that the envelope containing any

such notice or information was properly addressed, pre-paid, registeredand posted, and that it has not been so returned to the sender, shall be

sufficient evidence that the notice or information has been duly given.

21.3 Any notice or information sent by telex, cable, facsimile transmission

or comparable means of communication shall be deemed to have beenduly sent on the date of transmission, provided that a confirming copy of it

is sent as provided in clause 21.1 (b) to the relevant .parties at the

addresses given in clause 21.4 within 24 hours after transmission.

21.4 Service of any document for the purposes of any legal proceedings

concerning or arising out of this Agreement shall be effected by any partyby causing it to be delivered to the relevant party at its registered orprincipal office, or to such other address as may be notified to it by that

party in writing from time to time.

22. MISCELLANEOUS



22.1 Each party shall from time to time (both during the continuance of this Agreement

and after its termination) do all such acts and execute all such documents as may be

reasonably necessary in order to give effect to the provisions of this Agreement.

22.2 The parties shall bear their own costs of and incidental to the preparation, execution

and implementation of this Agreement.

23. PROPER LAW

23.1 Subject as provided in clause 23.2, ________--only shall apply to the

whole of this Agreement .

23.2 Any question arising out of this Agreement as to the construction or

effect of any Intellectual Property shall be decided in accordance with thelaws of the country in which the Intellectual Property in question has been

granted or filed or exists.

23.3 [The parties hereby submit to the exclusive jurisdiction of the High

Court of [ ] .

Documents

Joint Venture Agreements