Exhibit 10.2

 

SHAREHOLDERS AGREEMENT

AMONG

INDIA GLOBALIZATION CAPITAL, INC., USA

AND

TECHNI BHARATHI LIMITED

AND

THE PROMOTERS

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SHAREHOLDERS AGREEMENT

THIS SHAREHOLDERS AGREEMENT (this “Agreement”) is made as on this 16th day of
September 2007 BETWEEN:

INDIA GLOBALIZATION CAPITAL, INC. (IGC-USA) a company incorporated under the
laws of the State of Maryland and having its office address at 4336 Montgomery
Avenue Bethesda, MD 20814, acting directly or indirectly through one or more of
its newly formed non US Affiliates, alongwith such newly formed non-US
Affiliates (hereinafter collectively referred to as “IGC” which expression
shall, unless it be repugnant to the context or meaning thereof, be deemed to
mean and include its successors and permitted assigns) of the FIRST PART;

AND

TECHNI BHARATHI LIMITED, a company incorporated under the laws of India and
having its office address at By pass road, Edappally, Kochi – 682 024, India
(hereinafter referred to as "the Company", which expression shall, unless
repugnant to the context or meaning thereof, be deemed to mean and include its
successors) of the SECONDPART;

AND

THE PERSONS whose names and addresses are set out in Schedule 1 hereto
(hereinafter referred to as "Promoters", which expression shall, unless
repugnant to the context or meaning thereof, be deemed to mean and include their
heirs, executors, and administrators) of the THIRDPART.

IGC, Company and Promoters are individually referred to as "Party" and
collectively as "Parties".

WHEREAS:

A.  
The Company is engaged in the business of infrastructure development
specialising in construction of roads (the “Business”);

B.  
IGC is currently engaged in making investments in India especially in sectors
which inter alia includes power, infrastructure, and wishes to make a foray into
the Business;

C.  
The Parties have entered into a Share Subscription Agreement (“SSPA”) of even
date, setting out the terms and conditions subject to which IGC shall subscribe
to certain Equity Shares and convertible preference shares in the Company;

D.  
The Parties have agreed to enter into this Agreement for the purposes of
regulating their relationship with each other as members of the Company and
regulating, as between themselves, certain aspects of the affairs of the
Company.

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

1.  
DEFINITIONS AND INTERPRETATION

1.1  
Definitions

In this Agreement, the following terms, to the extent not inconsistent with the
context thereof or otherwise defined herein, shall have the following meanings
assigned to them herein below:

(a)  
“Act or Companies Act” shall mean the Indian Companies Act, 1956 and any
amendment thereto or any other succeeding enactment for the time being in force.

(b)  
”Affiliate” means (i) when used in respect of a specified legal person, each
legal person that directly or indirectly through one or more intermediaries,
Controls or is Controlled by, or is under common Control with the person
specified (ii) when used in respect of an individual party, such person’s
relative within the meaning of section 6 of the Act. In this definition
“Control” (and its derivatives) means both (i) holding beneficially more than
fifty per cent (50%) of equity interests and (ii) the ability to cast more than
fifty (50%) per cent of the voting rights attaching to voting shares or (iii)
power to direct the management or policies of such entity by contract or
otherwise.

 

 

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(c)  
“Agreement” shall mean this Shareholders Agreement together with the annexures
thereto as from time to time made, amended, supplemented or replaced or
otherwise modified in accordance with the terms of this Agreement.

(d)  
“Applicable Law(s)” means any statute, law, regulation, ordinance, rule,
judgment, order, decree, bye-law, approval, directive, guideline, policy,
requirement or other governmental restriction or any similar form of decision
of, or determination by, or any interpretation or administrative order having
the force of law of any of the foregoing, by any Government Authority having
jurisdiction over the matter in question.

(e)  
”Board” shall mean the board of directors of the Company.

(f)  
“Budget” means the budget of the Company from time to time approved by the
Shareholders in accordance with the provisions of this Agreement.

(g)  
“Business” has the meaning given in recital A.

(h)  
“Business Plan” means the operating and capital budget for the Company prepared
on an annual basis for a Financial Year, with reference to the Business, which
business plan shall identify and set out, inter alia, the time scales and
financial projections with key assumptions listed, including all planned
commitments, borrowings, amount and timing of capital contributions to be made
by the Shareholders, projected profit and loss, balance sheet, cash flow for
such Financial Year in a form to be mutually agreed in writing between the
Parties.

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

(j)  
“Company” means Techni Bharathi Limited, incorporated under the laws of India
having its registered office is at By pass road, Edappally, Kochi – 682 024,
India.

(k)  
“Completion” and “Completion Date” shall have the meanings ascribed to it in the
SSA.

(l)  
“Confidential Information” means the provisions of this Agreement and (i) any
information concerning the organisation, business, technology, trade secrets,
know-how, finance, transactions or affairs of the Company, any subsidiary or any
other Shareholder or any of their respective Affiliates, directors, officers or
employees (whether conveyed in written, oral or in any other form and whether
such information is furnished before, on or after the date hereof) and (ii) any
information or materials prepared by a Party or its Representatives that
contains or otherwise reflects, or is generated from, Confidential Information.

(m)  
“CPS” means the convertible preference shares subscribed to by IGC pursuant to
the provisions of the SSA.

(n)  
“Directors” means the directors of the Company and “Director” means any one of
them (as the context requires).

(o)  
“Effective Date” shall mean the date of execution of this Agreement by the
Parties.

(p)  
“Encumbrances” means any encumbrance, lien, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention or non-disposal
agreement or other restriction of a similar kind, and all other easements,
encroachments and title defects of every type and nature, or any conditional
sale contract, title retention contract, or other contract to give or to refrain
from giving any of the foregoing.

(q)  
“Financial Year” means the financial year of the Company ending 31st March or
other financial year agreed by the Shareholders at a general meeting.

(r)  
“Government Authority” or “Government Authorities” means (a) central, state,
city, municipal or local government, governmental authority or political
subdivision thereof having jurisdiction; or (b) any agency or instrumentality of
any of the authorities referred to in Clause (a); or (c) any regulatory or
administrative authority, body or other organisation having jurisdiction, to the
extent that the rules, regulations, standards, requirements, procedures or
orders of such authority, body or other organisation have the force of
Applicable Laws; or (d) any court or tribunal having jurisdiction.

(s)  
“IGC Competitor” means any person (alone or together with any of its affiliates
and successors and permitted assigns of such person) who is engaged in similar
Business.

(t)  
‘INR’ means the lawful currency of India.

 

 

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(u)  
‘Key Employees’ shall mean the Managing Director, the Chief Financial Officer
and the Chief Executive Officer of the Company.

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

(w)  
'Party' shall mean IGC, the Company or the Promoters referred to individually
and 'Parties' shall mean IGC, the Company and the Promoters referred to
collectively.

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

(y)  
“Pro Rata Share” means, with respect to any Shareholder, the proportion that the
number of fully paid up Shares held by such Shareholder bears to the aggregate
number of fully paid up Shares held by all Shareholders, in each case on
a  fully diluted basis.

(z)  
“Securities” means, with respect to any person, such person's equity capital,
registered capital, joint venture or other ownership interests (including,
without limitation, in the case of the Company, shares) or any options,
warrants, loans or other securities that are directly or indirectly convertible
into, at or exercisable or exchangeable for, at the sole option of such person,
such equity capital, registered capital, joint venture or other ownership
interests (whether or not such Derivative Securities are issued by such person).

(aa)  
'Shares' shall mean the equity shares of the Company.

(bb)  
"Share Capital” means the amount derived by multiplying the total number of
Shares by Rs. Ten (10).

(cc)  
'Shareholder' or 'Shareholders' shall mean IGC and the Promoters and / or any
person to whom Shares are issued or transferred in accordance with the terms of
this Agreement.

(dd)  
“Shareholding” in relation to a Shareholder, means ownership of the Shares by
such Shareholder, at any time.

(ee)  
“Share Subscription Agreement” or “SSA” shall have the meaning ascribed to it in
Recital C.

(ff)  
“Subscribed Shares” shall mean such number of Shares of the Company agreed to be
subscribed by IGC pursuant to the provisions of the SSA.

(gg)  
“Transfer” means to sell, gift, assign, amalgamate, merge, transmit (whether by
operation of Law or otherwise) or create any Encumbrance on any Shares or any
right, title or interest therein or otherwise to dispose of the Shares in any
manner whatsoever.

(hh)  
‘Warrantors’ means the Company and the Promoters and ‘Warrantor’ means any one
of them.

1.2  
Other Defined Terms:

(i)  
‘Business Days’ means the days on which the banks are open for business in
Mumbai, India.

(ii)  
‘Dispute’ shall have the meaning as ascribed to it in Clause 16.1 of this
Agreement.

(iii)  
‘Losses’ shall have the meaning as ascribed to it in Clause 14.1 of this
Agreement.

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1.3  
Interpretation

 
 

 
1.3.1
In this Agreement (unless the context requires otherwise), any express reference
to an enactment (which includes any legislation in any jurisdiction) includes
references to:

 
(i)
that enactment as amended, extended or applied by or under any other enactment
before, on or after the date of this Agreement;

 
(ii)
any enactment which that enactment re-enacts (with or without modification); and

 
(iii)
any subordinate legislation (including regulations) made (before, on or after
the date of this Agreement) under that enactment, as re-enacted, amended,
extended or applied as described in paragraph (i) above, or under any enactment
referred to in paragraph  (ii) above.

 
1.3.2
In this Agreement, reference to including and include shall be construed to mean
“including without limitation” and “include without limitation” respectively.

 
1.3.3
In this Agreement, references to a person shall be construed so as to include
any individual, firm, company, unincorporated association of persons,
government, state or agency of a state or any
joint venture, association, partnership, or employee representative body
(whether or not having separate legal personality).

 
                1.3.4
Where there is any inconsistency between the definitions set out in this Clause
l and the definitions set out in any other clause or schedule, then for the
purposes of construing such clause or schedule, the definitions set out in such
clause or schedule shall prevail.

 
1.3.5
In this Agreement:

 
 (i)
words importing the singular shall include the plural and vice versa; and

 
(ii)
references to IGC unless repugnant to the context shall for the purpose of this
Agreement mean and include the Affiliates of IGC.

 
1.3.6
The headings in this Agreement do not affect its interpretation and are for
convenience only. Any schedule or annex to this Agreement shall take effect as
if set out in this Agreement and references to this Agreement shall include its
schedules and annexure.

 
 
1.3.7
In this Agreement, unless the contrary intention appears, a reference to a
Recital, Clause, Subclause, paragraph, subparagraph, Schedule or item is a
reference to a Recital, Clause, sub-clause, paragraph, subparagraph, Schedule or
item of this Agreement.

 
1.3.8
For the purposes of any calculation under this Agreement any fraction will be
rounded off to the next integer.

 
1.3.9
Any time period prescribed for the performance of any obligation of IGC and/or
any of its Affiliate under this Agreement to Transfer or subscribe to Shares of
the Company shall be extended by as many days as necessary in order to
facilitate IGC and/or its Affiliate to obtain all such approvals (if any) from
Government Authorities required under Applicable Laws in order to fulfil such
obligations not being in any event more than 90 days from the date hereof or
such longer period as may specifically be agreed between the Parties.

1.4           BUSINESS OF THE COMPANY

The Business of the Company shall be to carry on the business of infrastructure
development especially in the sector of construction of roads and the Company
shall not carry on any other business unless otherwise agreed between the
Parties to this Agreement.

 

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2.           FINANCING OF THE COMPANY

2.1
The Company has, at the date of this Agreement, an authorised share capital of
INR 15,00,00,000 consisting of 80,00,000 equity shares of par value INR 10 each
and 70,00,000 15% redeemable preference shares of par value  INR 10 each. As of
date 4287500 Equity Shares have been issued and are held by the persons in the
number as set out in Schedule 2 A and 5,000,000 convertible preference shares
have been issued.

2.2
Upon Completion, the Shareholding pattern of the Company shall be as set out in
Schedule 2B and the CPS shall be issued to IGC.

2.3
Promoters and IGC agree that on Completion, the Parties would have only partly
funded the Company and that both Parties hereby agree to further fund the
Company, as and when required to the maximum extent as specified in the Business
Plan in proportion to their Shareholding in the Company. The Parties shall
mutually agree on the manner and time of such future funding.

2.4
In the event the Company does not have adequate resources to fund its operations
as envisaged in the Business Plan as amended or revised with approval of the
Board or the Shareholders, and provided the Shareholders have funded their full
share of funding commitment as set forth in the Business Plan, the Company shall
raise such additional funds (“Additional Funds”) (i) through external commercial
borrowings from IGC on reasonable effort basis, in compliance with the exchange
control regulations or alternatively, through other modes of non-convertible
debt on terms and conditions to be satisfactory to IGC within a period of 45
days from the requirement of the Additional Funds; or (ii) if the Board
determines that the Company is not able to raise external commercial borrowing
or non-convertible debt as referred to herein, by an offering of  Shares
(“Additional Shares”) to the Shareholders in proportion to their respective Pro
Rata Share in the Company and on terms and conditions to be mutually agreed
between the Parties. Such Additional Shares to be issued upon subscription to
the Shareholders shall be fully paid up by the respective Shareholder in cash.
In the event any Shareholder does not subscribe entirely to its Pro Rata Share
of Additional Shares, the other Shareholder shall have the right to subscribe to
the unsubscribed portion of the Pro Rata Share of the unsubscribing Shareholder
in the Additional Shares (“Unsubscribed Additional Shares”).  In the event that
any Shareholder nominates an Affiliate to subscribe to the Additional Shares or
the Unsubscribed Additional Shares, such Shareholder shall cause such Affiliate
to execute an Affiliate Deed of Adherence in the form set out in Schedule 4 and
the Company shall not issue the Additional Shares or the Unsubscribed Additional
Shares to such Affiliate unless a duly executed (by all parties thereto)
Affiliate Deed of Adherence has been lodged with it.

3.            CONDITIONS SUBSEQUENT TO COMPLETION
 
3.1           Key Persons Provisions
 
The Company shall maintain all the relevant insurances including but not
restricted to the Directors’ and Officers’ insurance in amounts considered
reasonable by the Company and consistent with market practice in India.
 
3.2           Key Man Insurance
 
 
The Company shall purchase key man insurance policy of such amounts as may be
decided by the Board, with benefits payable to the Company, covering the Key
Employees and such of the Promoters as may be identified by the Company.

 
4.
BOARD OF DIRECTORS CONSTITUTION, APPOINTMENT, NOMINATION AND MANAGEMENT

 
 
4.1
Constitution, Appointment and Nomination

 
 
(a)
Subject to the provisions of this Agreement and the Companies Act, the Board
shall be responsible for the management, supervision, direction and control of
the Company.  Subject to Applicable Laws, the Board shall initially consist of
five (5) Directors but may be increased up to seven (7) Directors subject to a
maximum of twelve (12) Directors and such Directors shall be appointed in
accordance with this Agreement.

 
(b)
Composition of the Board. The Parties agree that subject to Applicable Laws, the
Promoters shall be entitled to nominate three (3) Directors, out of which one
shall be Mr Jortin Antony and IGC shall be entitled to nominate two (2)
Directors on the Board. All Directors shall be persons whose period of office
shall be liable to determination by retirement of directors by rotation and
shall be required to be appointed by the Company in a general meeting. On the
restructuring of the Board, Mr Jortin Antony, shall be appointed as the Managing
Director of the Company.

 

 

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(c)
Appointment and Removal of Directors.  Subject to the Applicable Laws, Mr Jortin
Antony shall serve a term of five (5) years. Subject to the mutual consent of
the Board and Mr Jortin Antony, the five (5) year term of Mr Jortin Antony may
be extended to a further term not exceeding 5 years at any one time.

 
 

 
(d)
Alternate Directors. Any Director may, by prior written notice to the other
Shareholders and the Company, nominate one alternate at any time to act on his
behalf as a Director in circumstances and for such period as may be valid under
the Companies Act, and the Shareholders shall procure that the Board shall
approve any such nomination and appoint the relevant individual to act as
alternate Director.  The Shareholders shall procure that the Board will, unless
the nominating Director instructs the Board otherwise, automatically reappoint
any nominated alternate if, for any reason, the nominated alternate's office is
deemed to have been vacated. An alternate Director shall be entitled to receive
notice of all meetings of the Board, to attend and vote at any such meeting at
which the Director appointing him is not personally present and at the meeting
to exercise and discharge all the functions, powers and duties of his appointee
or as a Director. An alternate Director shall automatically vacate his office as
an alternate Director if the Director who appointed him ceases to be a Director.

 
(e)
Voting. Subject to quorum requirements under Clause 4.1(i) being met each
Director shall have one vote on the Board and, except as otherwise specifically
provided in Clause 4.5 below and/or as specifically required by the Companies
Act, all decisions of the Board shall be taken by a simple majority of the
Directors present and voting or deemed to be present at the meeting or in the
case of resolution by circulation by majority of Directors to whom the
resolution is circulated in accordance with Clause 4.1(k) below. Notwithstanding
anything to the contrary contained herein, a resolution in respect of
Fundamental Issue shall require the affirmative vote of a Director nominated by
IGC, for it to be validly passed.

 
(f)
Chairman. The Chairman of the Board shall be elected by the majority of the
Board. In case the Chairman is unavailable, any IGC Director may be appointed by
the Board as the Chairman for that particular meeting to act as the Chairman of
the Board. The Chairman shall not have a casting vote.

 
(g)
Meeting and Minutes of Board Meeting. The Board shall meet as may be necessary
to discharge its duties but in any case no less frequently than holding at least
one meeting every three calendar months.  The minutes of the Board shall be
circulated within ten (10) Business Days of the date of the meeting of the
Board.  At the beginning of each meeting of the Board, the Board minutes of the
previous meeting shall be approved if agreed to by all Directors.

 
(h)
Notice. At least fifteen (15) Business Days' notice of each Board meeting shall
be given to each Director unless, in any particular case, all of the Directors
otherwise agree in writing. The notice of the meeting of the Board shall be
accompanied by an agenda of the business to be transacted at that meeting
together with all papers to be circulated or presented to the same. No business
shall be discussed at a Board meeting unless such business was included in the
agenda.

 
(i)
Quorum. The quorum at meetings of the Board shall be comprised in accordance
with the provisions of the Companies Act, and provided further that it also
comprises of one Director nominated by IGC and/or its Affiliates.

 
(j)
Determination of Quorum. If within two (2) hours from the time appointed for the
holding of a meeting of the Board a quorum as set forth in Clause 4.1(i) is not
present, the meeting of the Board shall stand adjourned to the next day in the
same week (or if that day is a public holiday, to the next Business Day
thereafter) at the same time and place as the original meeting, or to such other
day and at such other time and place as the Board may determine.  If at such
adjourned meeting a quorum is not present within one (1) hour from the time
fixed for holding the meeting, the meeting shall stand adjourned to the same day
in the next week (or if that day is a public holiday, to the next Business Day
thereafter), at the same time and place as the reconvened meeting, or to such
other day and such other time and place as the Board may determine. If at such
re-adjourned meeting a quorum is not present within one (1) hour from the time
fixed for holding the meeting notwithstanding anything mentioned in Clause
4.1(i) or elsewhere in this Agreement, the Directors present shall constitute a
quorum at such meeting.

 
(k)
Resolution by Circulation. A resolution by circulation must be circulated to all
Directors and approved by majority of the Directors subject to Clause 4.4 in
accordance with Applicable Laws and shall be as valid and effectual as if it had
been passed at a meeting of Directors duly convened and constituted.  The
resolution may be contained in one document or in several documents in like form
each signed or approved by one or more Directors concerned, but a resolution
signed or approved by an alternate Director need not also be signed or approved
by the Director appointing such alternate Director and, if it is signed or
approved by a Director who has appointed an alternate Director, it need not be
signed or approved by the alternate Director in that capacity.

 
(l)
Shareholders Meeting Quorum. The quorum at meetings of the Shareholders shall be
as required by the Companies Act and shall comprise of at least one (1)
representative of IGC and/or its Affiliates.

 
(m)
Determination of Quorum for Shareholders Meeting. In the event the quorum is not
present at any Shareholders meeting, the meeting shall be reconvened in
accordance with the provisions of the Companies Act and provisions of the
Companies Act shall apply to the adjourned meeting. Voting at a meeting of the
Shareholders shall only be by poll.

 
(n)
Shareholders Meeting: Notwithstanding anything to the contrary contained herein,
if at a general meeting a resolution in respect of Fundamental Issue is proposed
to be passed such resolution shall require the affirmative vote of the
authorised representative of IGC for it to be validly passed.

 

 

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4.2           Committees

 
4.2.1
If the Board finds it necessary to constitute further other working committee or
committees, the powers of such working committee or committees shall be
determined by the Board. The members of any such working committee or committees
shall not decide the powers of such committee unless delegated by the Board or
otherwise required by law.

 
4.2.2
Subject to Applicable Laws, each Party shall have the right to nominate one
person each on all the working committees constituted by the Board, but the
Chairman shall be appointed by IGC.

4.3           Right of IGC

4.3.1
IGC shall have the sole and absolute right to appoint the CFO of the Company,
including the right to decide on the terms of employment, duties, scope of work
and the key responsibilities of the CFO including but not limited to financial
planning, financial control, audit and treasury functions of the Company.  The
CFO shall report to the Managing Director.  The CFO’s employment may not be
terminated under any circumstances without prior written approval from IGC.

4.3.2
The Company and the Promoters acknowledge that IGC as a company follows
stringent compliance, reporting and audit requirements including but not limited
to timely and accurate closure and reporting of financial statements compliant
with US GAAP and the appointment and removal of the statutory auditors and
internal auditors shall not be without the affirmative vote of IGC, including
the right of the IGC Director to nominate an auditor at the Board meeting.

4.3.3
Subject to the terms of this Agreement, the Company shall not without the prior
approval of IGC

4.3.3.1  
Authorize, create, alter the rights attaching to or issue any Securities that
are dilutive of IGC’s ownership of the Subscribed Shares or the CPS, on an
as-converted, fully diluted basis or that have rights, preferences, or
privileges senior to or on a parity with the Subscribed Shares or the CPS; or

   4.3.3.2   Authorize, create, alter or issue any Securities that are dilutive
of IGC’s economic interest in the Company.

4.3.4
IGC shall have the right to receive US GAAP financial statements of the Company
reviewed by the statutory auditor of the Company within 10 days of the end of
each financial quarter. IGC shall also have the right to receive the US GAAP
financial statements audited by the statutory auditor of the Company within 45
days of the end of each financial year.

4.4           Veto Rights

Any action with respect to the following Fundamental Issues by the Company shall
require affirmative vote of the representative of IGC in any general meeting of
Shareholders of the Company, at any meeting of the Board of Directors or other
working committee(s) (if such matters are delegated by the Board to such other
working committee), as the case may be. The Fundamental Issues shall be in
respect of the following matters:

(i)  
Any capital expenditure or indebtedness (including giving of security for or
guaranteeing debts) beyond 15% of the Budget in the Business Plan (including a
revised Business Plan) that is approved by the Board of Directors.

(ii)  
Investments in any other companies / assets / entities.

 
 

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(iii)  
Amendments or any proposal to amend the Memorandum or Articles of Association of
the Company including change in the number of Board members of the Company.

(iv)  
Commencement of any new line of business or acquisition of shares of a company,
which is unrelated to the Business of the Company, including spending/lending
any funds or furnishing any guarantee or credit or any type of assistance to any
party which carries on or proposes to carry on any business unrelated to the
Business of the Company.

(v)  
Commencement or settlement of litigation in any particular Financial Year other
than those arising as part of the Company’s normal course of business.

(vi)  
Changes to material tax policies or practices other than those required by
Applicable Laws.

(vii)  
Recommend, giving or renewing of security for or the guaranteeing of debts or
obligations of the Company or any subsidiary and / or Affiliates of any Person,
other than in the normal course of business.

(viii)  
Any change in the Financial Year for preparation of audited accounts of the
Company.

(ix)  
Winding up and / or liquidation of the Company.

(x)  
Divestment of or sale or Encumbrances of assets, investments, lease, license or
exchange or pledge in any other way, proposing to dispose off any assets or
undertaking of the Company, other than in the normal course of business and on
normal and reasonable commercial terms and conditions.

(xi)  
Any agreement, arrangement, transaction to sell or assignment of intellectual
property rights including those relating to copyrights, trademarks, patents and
designs belonging to the Company, other than in the normal course of business
and on normal and reasonable commercial terms.

(xii)  
Shifting of registered office, outside the city of Nagpur.

(xiii)  
Commencement of new business/unit/division outside India, or applying for
pre-qualification for bids and appointing representatives for liaison in a
foreign country.

(xiv)  
Any increase in the issued, subscribed or paid up equity or preference Share
Capital of the Company or its subsidiary or any other company where it has a
substantial investment, or re-organization of the Share Capital of the Company
or its subsidiary or any other company where it has investment, including new
issue of Shares or other Securities of the Company or its subsidiary or any
other company where it has investment or any preferential issue of Shares or
redemption of any Shares, issuance of convertible warrants, or grant of any
options over its Shares by the Company or its subsidiary or any other company
where it has investment.

(xv)  
Any transfer of Equity Shares of the Company otherwise than contemplated by this
Agreement.

(xvi)  
Approval of any new scheme or plan for grant of employee stock options, or sweat
equity shares to any person or entity, including any modification to any new
scheme.

(xvii)  
Granting of loan and/or procuring, selling to or any other dealings with any
subsidiary or related Party or Affiliates or Promoters of the Company, which has
or is likely to have an actual or potential effect on the financials of the
Company.

(xviii)  
Save as required by Applicable Laws any adoption or change of the dividend or
distribution policy or accounting principle or policy (e.g., depreciation, asset
devaluation, etc.) which has a material impact on the Shareholding of the
Shareholders.

(xix)  
Creation, allotment, issue, acquisition, reduction, repayment, conversion or
redemption of any share or loan capital, including but not limited to the issue
or otherwise, of options, warrants, or other Shares or of any instrument
convertible into, exercisable or exchangeable for Shares; or entering into an
agreement, arrangement or undertaking to do any of those things, or any action
which alters the Share Capital of the Company, or the variation of rights of any
Shares of the Company, except raising of Additional Funds by issuance of
Additional Shares as contemplated under Clause 2.4.

(xx)  
Borrowing by the Company other than as agreed in Clause 2.4 of the Agreement.

 
 

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(xxi)  
Entering into or amendments of any existing agreements, joint venture
agreements,  partnership or consortium agreements as well as new mergers,
acquisitions, consolidations or amalgamations with other entity.

(xxii)  
Change in the number of Directors, creation or modification of an executive
committee or any other working committee.

(xxiii)  
Any commitment or agreement to do any of the foregoing.

(xxiv)  
Delegation of powers to the working committees constituted by the Board.

(xxv)  
Approval of or modification to the Business Plan.

(xxvi)  
Determination of the remuneration and the other employment terms of the Key
Employees, Directors, and/or officers including revisions/amendments.

(xxvii)  
Any significant change to the HR policy of the Company.

(xxviii)  
Appointment of the Managing Director, Chairman or members of the working
committees, in the event the existing Chairman is absent for any reason.

(xxix)  
Capital expenditure, including constructions and leases, and indebtedness in
excess of the levels agreed upon in the annual Business Plan / Budgets of the
Company;

(xxx)  
Any substantial deviation in operations and strategies compared to Business Plan
of the Company;

(xxxi)  
Affiliated or related party transactions, agreements or arrangements between the
Company and the Promoters, directors, officers, Key Employees or their
Affiliates;

(xxxii)  
Formation of or entry by the Company or its subsidiaries into joint venture,
consortium, partnership or similar arrangement with any other person or
business;

(xxxiii)  
Adoption of a dividend policy, declaration of any dividend outside the dividend
policy or amending any dividend policy of the Company;

(xxxiv)  
Make any application of any insurance proceeds or compensation for compulsory
acquisition or expropriation in each of the aforementioned cases;

(xxxv)  
The making by the Company or its subsidiaries of any arrangement with its
creditors and the moving for insolvency, receivership or bankruptcy;

(xxxvi)  
Timing, size, split between new and existing Shares, and final pricing of any
Initial Public Offering (including appointment of advisers and their terms of
appointment), or follow on offering, rights issue or any offer for sale;

 
(xxxvii)  Applying for the appointment of a receiver or an administrator or
similar officer over the Company's assets;

 (xxxviii)  Any change in the name of the Company;

(xxxix)  
To sub-let or assign or dispose of or create any Encumbrance on any other
material asset of the Company;

(xl)  
To take any decisions relating to the employment of any person or take any
decision relating to any seconded person;

(xli)  
To approve, enter into, revoke or vary any material insurance policies;

(xlii)  
Appointment of the statutory and internal auditors to the Company;

(xliii)  
The administration, setting of exercise of any ESOP.

 

 

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4.5           Earn out

Mr. Jortin Antony or his designate shall be entitled to be allotted new Shares
in the manner provided in Schedule 5 hereto, every year, for a period of five
years, at the end of the periods ended March 31, 2008, March 31, 2009, March 31,
2010, March 31, 2011 and March 31, 2012 respectively, subject to the Company
meeting certain thresholds and targets, more particularly set out in Schedule
5.  However, IGC reserves the option to allot these Shares from IGC’s existing
shareholding in the Company.

4.6           Employee Stock Option Plan

The Parties agree that an employee stock option plan (ESOP) will be instituted
with 350,000 Shares on terms to be mutually agreed between the Parties. The ESOP
will carry three year vesting and shall vest at an IPO. The Board of the Company
will administer the ESOP and set the exercise price.
 
5.           DIVIDEND POLICY
 

Subject to the availability of profits, the adequacy of projected cash flows and
any capital expenditure requirements, the Company shall maximise the
distribution of profits to its Shareholders.  Dividends (if any) may be declared
and paid on a final (or annual) basis and paid on an interim (or semi-annual)
basis.

In deciding whether and in respect of any accounting year the Company has
profits available for distribution the Parties hereto shall procure that the
Auditors shall certify whether such profits are available or not and the amount
thereof (if any). In giving such certificate the Auditors shall act as experts
and not arbitrators and their determination shall be binding on the Parties
hereto.

6.           RESTRICTIONS ON TRANSFER OF SHARES

          (a) Transfer

 
No Shareholder shall Transfer or attempt to Transfer any Shares or any right,
title or interest therein except as expressly permitted by the provisions of
Clauses 6 (Transfer), 7 (Sale to Third Party Pre-emption Rights), 8 (Drag Along
Rights), 9 (Tag Along Rights) ,10 (Term and Termination) and 18 (Lock-in).  Any
Transfer of Shares pursuant to Clauses 6, 7, 8, 9, 10 and 18 shall comply with
the conditions of this Clause 6.

 
 
A Transfer of Shares shall be valid only if the transferee executes Transferee
Deed of Adherence together with a no objection certificate substantially similar
to the form contained in Schedule 3 or if the transferee is an Affiliate of the
Transferor then an Affiliate Deed of Adherence substantially similar to the form
contained in Schedule 4.

 
(b)  
Transfer to a Competitor: Notwithstanding anything to the contrary contained in
this Agreement, for so long as IGC (or any of its Affiliates) is a Shareholder,
no Shareholder (other than IGC and/or its Affiliate) shall Transfer or attempt
to Transfer any Shares to an IGC Competitor.

Any Transfer or attempt to Transfer Shares in violation of Clause 6(a) and 6(b)
shall be null and void ab initio, and the Company shall not register any such
Transfer.
 
 

 
(c)  
Transfer to an Affiliate: Notwithstanding the restriction on Transfer of Shares
set forth in Clauses 6, 7, 8, 9, 10 and 18, anytime during the term of this
Agreement, any Shareholder may Transfer Shares held by it to its respective
Affiliates, (“Permitted Transferee”) provided such Permitted Transferee executes
the deed of adherence in the format prescribed in Schedule 4 hereto (the
“Affiliate Deed of Adherence”).

(d)  
Notice of Sale to a Permitted Transferee: At least five (5) Business Days prior
to the permitted Transfer under Clause 6(c), any Shareholder intending to
Transfer any of its Shares to a Permitted Transferee shall send a notice to the
other Shareholders stating the date on which the intended Transfer is to occur,
the name of the Permitted Transferee, the number and class of Shares involved
and attaching (i) a completed and duly executed (by the Permitted Transferee and
the transferor Shareholder) Affiliate Deed of Adherence and (ii) copies of all
approvals and consents required to be obtained under Law. Each Shareholder
shall, within three (3) days of the receipt of such notice, execute the
Affiliate Deed of Adherence and file the same with the Company.  Provided
however that nothing contained herein shall require a Shareholder to execute an
Affiliate Deed of Adherence in relation to a Transfer of Shares in contravention
of this Agreement.

(e)  
The Company shall register a Transfer of Shares to a Permitted Transferee only
upon the receipt (a) of a valid Affiliate Deed of Adherence duly executed by all
parties thereto and (b) a copy of all consents required under Law sanctioning
such transfer and documentary proof that conditions stipulated by Government
Authority, if any, for such Transfer have been fulfilled.

(f)  
Within five (5) Business Days of registering any Transfer by a Shareholder of
Shares to a Permitted Transferee in its register of members, the Company shall
send a notice to the other Shareholders stating that such Transfer has taken
place and setting forth the name of the transferor, the name of the Permitted
Transferee and the number of Shares transferred.

(g)  
Any Transfer or attempt to Transfer the Shares in contravention of the
provisions of this Agreement, including without a proper and duly executed
Affiliate Deed of Adherence shall constitute a material breach of this
Agreement.

7.           PRE EMPTION RIGHTS

Except in the case of Transfer of Shares to a Permitted Transferee, if any
Shareholder, (the“Seller”) wishes to sell all or part of its Shares (“Transfer
Shares”) to any person other than to a Permitted Transferee (“Proposed
Transferee”), it shall first make an offer to the Shareholder(s) (other than the
Seller) (“Offeree”) (equal to their respective Pro-Rata Share of the Transfer
Shares) stipulating the terms and conditions of the offer (“Transfer Notice”),
which Transfer Notice shall include the Transfer Terms (as defined below).
 
 

--------------------------------------------------------------------------------

 
(a)       
The Transfer Notice shall inter alia provide: (i) the sale price (on a 'per
Share’ basis) (“Offer Price”) (ii) the number of Shares proposed to be sold by
the Seller (the “Transfer Shares”) (iii) the terms of the Transfer (collectively
with the Offer Price the “Transfer Terms”). A Transfer Notice shall be
irrevocable. The Parties agree that the Offer Price shall only be a cash price.

(b)       
If a Seller issues a Transfer Notice, the Offeree shall have the right (but not
the obligation), exercisable within thirty (30) days from receipt of the
Transfer Notice (“Offer Period”), to:

 
(i)
accept the Transfer Terms, by issuing a letter of acceptance (“Acceptance
Notice”) to the Seller, in which case, Clause 7(c) shall apply; and

 
(ii)
issue a Tag Along Notice in accordance with Clause 8 below and accordingly
Clause 8 shall apply.

 
(c)
If the Acceptance Notice is issued the Offeree shall be obliged to purchase all
the Transfer Shares and the sale and purchase of the Transfer Shares in favour
of the Offeree shall be completed within thirty (30) days from the date of issue
of the Acceptance Notice by the Offeree. At such completion, the Seller shall
deliver to the Offeree certificates and other documents representing its title
to the Transfer Shares, accompanied by duly executed and valid instruments of
transfer. Such Transfer Shares shall be free and clear of any Encumbrance (other
than Encumbrances specifically permitted hereunder), and the Seller shall so
represent and warrant and shall further represent and warrant that it is the
legal and beneficial owner of such Transfer Shares. The Offeree shall at such
completion deliver payment in full of the Offer Price in accordance with the
terms set forth in the Transfer Notice. In the event that the Offeree nominates
an Affiliate or a nominee for the purpose of purchasing the Transfer Shares or
part thereof, it shall cause such Affiliate or nominee to execute a Deed of
Adherence in the format contained in Schedule 3 (“Transferee Deed of
Adherence”). At such completion, all of the Parties to the transaction shall
execute such additional documents as may be necessary or appropriate to effect
the sale of the Transfer Shares to the Offeree.  Any stamp duty payable on the
transfer of any Transfer Shares shall be borne and paid by the Offeree.

 
(d)
The failure of an Offeree to give the Acceptance Notice or the Tag Along Notice
within the Offer Period shall be deemed to be a waiver of such Offeree's right
of first refusal or its tag along right.

 
(e)
If no Acceptance Notice or Tag Along Notice, as the case may be, is issued by an
Offeree within the Offer Period, then subject to Clause 6(b) the Seller shall be
entitled to Transfer the Transfer Shares to a Proposed Transferee on terms no
more favourable than the Transfer Terms within thirty (30) days of the expiry of
the Offer Period. Provided that the Proposed Transferee duly executes a
Transferee Deed of Adherence. In the event the Seller is IGC (and/or its
Affiliates or nominees holding Shares in the Company) then so long as IGC,
together with its Affiliates and nominees holding Shares in the Company (“IGC
Group”), is the majority shareholder in the Company and so long as it wishes to
Transfer all (but not less than all) of the outstanding Shares held by IGC
Group, IGC shall have a further right (but not an obligation) to require the
Promoters and its Affiliates and nominees holding Shares in the Company
(“PromotersGroup Shareholders”) to sell to such Proposed Transferee all the then
outstanding Shares held by Promoters Group Shareholders (“Promoters Outstanding
Shares”) in accordance with Clause 8 below.

 
(f)
If the Seller fails to Transfer the Transfer Shares to theProposed Transferee
within the said period of thirty (30) days calculated as above, it will not be
entitled to Transfer the Transfer Shares thereafter to any person, without
re-offering the Transfer Shares to the Offeree in accordance with provisions of
this Clause 7.

 
(g)
Any Transfer of the Transfer Shares pursuant to this Clause 7 shall be valid
only upon the execution of a Transferee Deed of Adherence and shall be
registered by the Company upon a validly and duly executed (by all parties
thereto) Transferee Deed of Adherence being lodged with it. The other
Shareholders undertake to execute such Transferee Deed of Adherence, as may be
required in order to give effect to such Transfer of the Transfer Shares to the
Offeree, its Affiliate, or a proposed transferee.  Provided however that nothing
contained herein shall require a Shareholder to execute a Transferee Deed of
Adherence where the Transfer is in contravention of the provisions of this
Agreement.

8.           DRAG ALONG RIGHTS

 
(a)
Subject to Clause 7(e) above and notwithstanding anything to the contrary stated
in Clause 9 below if at any time IGC Group wishes to Transfer all (but not less
than all) of the Shares held collectively by IGC Group to a Proposed Transferee
as provided under Clause 7 above, IGC shall have a right and an obligation to
serve a written notice on the Promoters (“Drag Along Notice”) requiring the
Promoters Group Shareholders to Transfer all (but not less than all) the Shares
held by the Promoters Group Shareholders to the Proposed Transferee identified
by IGC under Clause 7 above on the Transfer Terms.

 
 
(b)
If a Drag Along Notice is issued by IGC, the Transfer and purchase of the IGC
Transfer Shares and Promoter Outstanding Shares shall, subject to Clause 8(b),
be completed within thirty (30) days from the date of issue of the Drag Along
Notice by IGC, the time taken to obtain any regulatory approval being excluded
for the calculation. At such closing, IGC and Promoter Group Shareholders shall
deliver certificates and other documents representing their title to the IGC
Transfer Shares and the Promoter Outstanding Shares, respectively, accompanied
by duly executed and valid instruments of transfer, to the Proposed
Transferee.  IGC shall procure that the third party shall deliver at such
closing, payment in full of the Offer Price in accordance with the terms set
forth in the Transfer Notice and execute the Transferee Deed of Adherence.  At
such closing, all of the Parties to the transaction shall execute such
additional documents as may be necessary or appropriate to effect the sale of
the IGC Transfer Shares and Promoter Outstanding Shares to the Proposed
Transferee.  Any stamp duty or transfer charges payable on the transfer of any
IGC Transfer Shares and the Promoter Outstanding Shares shall be borne in
accordance with the Transfer Terms.

 
(c)
Any Transfer of the IGC Transfer Shares pursuant to this Clause 8 shall be valid
only upon the execution of a Transferee Deed of Adherence and shall be
registered by the Company upon a validly and duly executed (by all parties
thereto) Transferee Deed of Adherence being lodged with it.

 

 

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9.           TAG ALONG RIGHTS

 
(a)
Subject to Clause 7(b)(ii) above, if at any time any Shareholder (“Proposed
Transferor”) intends to Transfer its Transfer Shares to the Proposed Transferee,
each of the other Shareholders shall have a right but not an obligation to serve
a written notice on the Proposed Transferor (“Tag Along Notice”) stating that
the Proposed Transferor procures an offer from the Proposed Transferee to
purchase such number of Shares from each of the other Shareholders as is
calculated in accordance with paragraph (c) below (“Tag Along Shares”) on the
Transfer Terms. Each of the Shareholders who exercise such a right and the
Proposed Transferor shall be collectively referred to as the Transferors.
Accordingly, the number of shares purchased by the Proposed Transferee from each
of the Transferors shall be amount calculated under paragraph (c).

 
(b)
A Transfer of the Transfer Shares by IGC to the Proposed Transferee under this
Clause 9 shall not be registered unless the Tag Along Shares are purchased by
the Proposed Transferee simultaneously with the Transfer Shares and the Proposed
Transferee has executed a Transferee Deed of Adherence. The sale and purchase of
the Transfer Shares and the Tag Along Shares shall be completed within thirty
(30) days from the date of issue of the Tag Along Notice and the time taken to
obtain any regulatory approval being excluded for the calculation. At such
closing, IGC and such Shareholders shall deliver certificates and other
documents representing their title to the Transfer Shares and the Tag Along
Shares, respectively, accompanied by duly executed and valid instruments of
transfer, to the Proposed Transferee.  IGC shall procure that the Proposed
Transferee shall deliver, at such closing, payment in full of the Offer Price in
accordance with the terms set forth in the Transfer and shall execute a
Transferee Deed of Adherence.  At such closing, all of the parties to the
transaction shall execute such additional documents as may be necessary or
appropriate to effect the sale of the Transfer Shares and the Tag Along Shares
to the Proposed Transferee. IGC shall procure that any stamp duty or transfer
charges payable on the transfer of any Transfer Shares and the Tag Along Shares
shall be borne by the Proposed Transferee.

 
(c)
The number of Tag Along Shares shall be calculated in the following manner:

 
For Transferors 1 to N

Tag Along Shares = (An / B) x C

Where:

“An” is the number of Shares held by Transferor N

“B” is the aggregate number of Shares held by the Transferors

“C” is the total number of Transfer Shares.

 
(d)
Any Transfer of the Transfer Shares pursuant to this Clause 9 shall be valid
only upon the execution of a Transferee Deed of Adherence and shall be
registered by the Company upon a validly and duly executed (by all parties
thereto) a Transferee Deed of Adherence being lodged with it.

10.
TERM AND TERMINATION BY DEFAULT

(a)  
This Agreement shall come into effect on the Completion Date. Notwithstanding
anything to the contrary contained herein, all rights available to the Promoters
and/or their Affiliates under this Agreement shall terminate upon (i) the
Shareholding of the Promoters and/or their Affiliates falling below 23% or such
other percent as the case may be, in the event Mr. Jortin Antony receives his
entitlement referred to in Clause 4.5 or (ii) the Shares of the Company getting
listed on any recognised stock exchange, whichever is earlier.

(b)  
In the event that any Shareholder (a“Defaulting Shareholder”) suffers the
following event (a“Default”), the other Shareholder (“Non-Defaulting
Shareholder”) shall be entitled to exercise the options specified under
Clause10(c) below, the Defaulting Shareholder is in material breach of this
Agreement and such default has not been cured within 30 days of the issuance of
a written notice of such default by a Non-Defaulting Shareholder. For the
purposes of this Agreement the term ‘material breach’ shall include a breach of
the obligations under clauses 2.4 (future funding), 4.1(n) (shareholders
meeting), 6 (restrictions on transfer of shares) and 13 (representations and
warranties).

(c)  
Upon the occurrence of a Default, any Non-Defaulting Shareholder may for so long
as such default subsists issue a default notice to the Defaulting Shareholders
(the “Default Notice”) together with a copy to every other Shareholder and the
Company specifying the nature of the Default.  Upon the issuance of the Default
Notice, the Non-Defaulting Shareholders shall have following options:

 
(i)
to purchase all (but not less than all) the Shares held by the Defaulting
Shareholder and its Affiliates (as the case maybe) (the “Default Shares”) at the
Default Price to be determined in accordance with Clause 10 (k) ; or

 
(ii)
subject to Clause 6 Transfer its entire Shareholding to the Proposed Transferee
(not being an IGC Competitor) on the Transfer Terms with a right (but not an
obligation) to require the Defaulting Shareholder to Transfer the Default Shares
held by Defaulting Shareholders and its Affiliates (as the case maybe) at the
Default Price to be determined in accordance with Clause 10 (k) to such Proposed
Transferee.

 
 

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(d)
Any Non-Defaulting Shareholder desirous of purchasing the Default Shares or
requiring the Transfer of the Default Shares shall, no later than three months
(“Default Option Period”) from the issuance of the Default Notice, issue a
notice to the other Non-Defaulting Shareholders, the Defaulting Shareholders and
the Company of its intention to purchase all (but not part of the Default
Shares) at Default Price (the “Default Purchase Notice”) or its intention of
Transferring its entire Shareholding with/without requiring the Defaulting
Shareholder to Transfer its Default Shares to the Proposed Transferee  (the “Non
Default Purchase Notice”).  Provided however that where more than one
Non-Defaulting Shareholder chooses to exercise: (i) their option under Clause
10(c)(i) the Default Shares shall be sold to such Non-Defaulting Shareholders
pro rata to their Shareholding; or (ii) their option under Clause 10(c)(ii) the
Non Defaulting Shareholders shall have an option but not an obligation to
require the Defaulting Shareholder to Transfer their Default Shares on a
proportionate basis, to be calculated in accordance with the formula specified
under Clause 10(k). The Defaulting Shareholder shall be obligated to sell the
Default Shares to the Non-Defaulting Shareholders who exercise their option (the
“Opting Non-Default Shareholders”) either to purchase the Default Shares by
issuing the Default Purchase Notice or to the Proposed Transferee identified in
the Default Purchase Notice by an Opting Non-Default Shareholder.   

(e)
The Transfer of the Default Shares to the Opting Non-Default
Shareholders/Proposed Transferee shall occur on a date to be specified by the
Opting Non-Defaulting Shareholder (the “Default Option Settlement Date”) in a
written notice, which date shall be no less than seven days after the date of
such notice provided that such notice shall be issued no later than three months
after the last day of the Default Option Period. On the Default Option
Settlement Date, the Defaulting Shareholder shall either sell the Default Shares
to the Opting Non-Default Shareholders or to the Proposed Transferee depending
upon the option exercised by the Opting Non-Defaulting Shareholder in accordance
with Clause 10.

(f)
On the Default Option Settlement Date, the Defaulting Shareholder shall deliver,
or cause to be delivered, to Opting Non-Default Shareholders/Proposed Transferee
the following:

(i)           share certificates evidencing title of the Defaulting Shareholder
to the Default Shares in original; and

(ii)           duly executed and valid share transfer forms and such other
instruments necessary to transfer the Default Shares to the Opting Non-Default
Shareholders.

(g)
The Defaulting Shareholder shall warrant that the Defaulting Shareholder and/or
its Affiliate, as the case maybe, is the owner of the Default Shares and that
such Default Shares are free from Encumbrances.    

(h)
On the Default Option Settlement Date the Non-Defaulting Shareholders/third
party shall deliver or cause to be delivered to the Defaulting Shareholder their
Pro Rata Share of the Default Price by way of a bank cheque payable to the
Defaulting Shareholder. The Opting Non-Defaulting Shareholders further covenant
that in the event that they opt to purchase the Defaulting Shares through an
Affiliate,  they shall cause such Affiliate to execute an Affiliate Deed of
Adherence or if through a third party, they shall cause such third party to
execute a Transferee Deed of Adherence as the case may be and the Company shall
not register such a Transfer unless a validly executed Affiliate Deed of
Adherence or the Transferee Deed of Adherence is lodged with it.

(i)
Upon the transfer of the Default Shares to the Opting Non-Defaulting
Shareholders or the third party, the Defaulting Shareholder shall cease to have
any rights hereunder.

(j)
In the event that a transferee nominated by an Opting Non-Default Shareholder
fails to perform its obligations to complete the sale of the Default Shares the
person nominating such transferee shall be liable to complete such Transfer.

(k)
Default Price for the purposes of this Clause 10 means a price being an amount
equivalent to 90% of the FMV Price.  For the purposes of this Agreement, “FMV
Price” shall mean the fair market value of Shares as determined by any of the
big 4 accounting firms (“Valuer(s)”) as set forth in this Clause 10   Should
none of these Valuers be available to perform the valuation exercise, a
reputable international bank or Indian bank shall be appointed.  

(l)
The FMV Price shall be determined on the basis of:

(i)           a whole company valuation at a price reflecting the net asset
value of the ownership structure, using the fair market value of the Company
Assets and further accounting for all other assets and liabilities of the
ownership structure in an audited closing balance sheet,

(ii)           an assumption that the existing arrangements would continue on a
“going concern” basis; and

(iii)           specifically excluding any control premium or devaluation for a
minority interest.

(m)
The Shareholders shall engage an independent Valuer of international repute to
determine the fair market value of the Company Assets.  Company Assets’ in this
Clause means all the assets of the Company. The terms of the appointment of the
Valuer shall be decided by IGC.

(n)
The provisions of Clauses 13 (Representations and warranties), 14 (Indemnity),
16 (Resolution of Disputes), 17 (Notices), and 19 (Confidentiality) shall
survive the termination hereof pursuant to Clause 10.1.

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11.
NON-COMPETE

11.1
The Promoters and/or any of them or their Affiliates for so long as IGC and the
Promoters and/or any of them or their Affiliates are Shareholders in the
Company, shall not carry on or engage directly or indirectly, whether through
partnership or as a shareholder, joint venture partner, collaborator, consultant
or agent or in any other manner whatsoever, whether for profit or otherwise, in
any business which competes directly or indirectly with the whole or any part of
the Business or any other activity/business directly or indirectly carried on by
the Company or which can reasonably be construed as being same or similar to the
Business of the Company. Mr. V.C. Antony is required to resign as director
either from the Company or from Bhagheeratha Engineering Limited, Kochi.

 
11.2    The Promoters and/or any of them or their Affiliates hereby agree and
acknowledge that as long as IGC and/or any of its Affiliates and Promoters
and/or any of them or their Affiliates are Shareholders in the Company, they
shall carry on any activity/business in the nature of Business, in present or in
future, solely and exclusively through the Company.

 
11.3    The Promoters agree and acknowledge that the covenants and obligations
under Clauses 11.1 and 11.2 above relate to special, unique and extraordinary
matters, and that a violation of any of the terms of such covenants and
obligations will cause the other Parties irreparable injury. Therefore, IGC
and/or any of its Affiliates shall be entitled to an interim injunction,
restraining order or such other equitable relief as a court of competent
jurisdiction may deem necessary or appropriate to restrain the Promoters and/or
any of them or their Affiliates from committing any violation of the covenants
and obligations contained in this Agreement.

 
11.4     The Parties acknowledge and agree that the above restrictions are
considered reasonable for the legitimate protection of the business and goodwill
of the Company, but in the event such restriction shall be found to be void, but
would be valid, if some part thereof was deleted or the scope, period or area of
application were reduced, the above restriction shall apply with the deletion of
such words or such reduction of scope, period or area of application as may be
required to make the restrictions contained in this Clause valid and effective.
Notwithstanding the limitation of this provision by any law for the time being
in force, the Parties undertake, at all times to observe and be bound by the
spirit of this Clause. Provided however, that on the revocation, removal or
diminution of the law or provisions, as the case may be, by virtue of which the
restrictions contained in this Clause were limited as provided hereinabove, the
original restrictions would stand renewed and be effective to their original
extent, as if they had not been limited by the law or provisions revoked.

 
11.5     The covenants of the Promoters and/or their Affiliates under this
Clause 11 shall survive for a period of 5 years from the date they cease to be
Shareholders of the Company or unless as specifically waived by IGC or its
nominees/assignees.

12.
PLEDGE OR ENCUMBRANCE OF SHARES OF PROMOTERS

 
The Promoters shall not pledge, mortgage, hypothecate, charge or otherwise
Encumber any of the Shares of the Company either directly or indirectly nor
otherwise use such Shares as collateral for any purpose which could result in an
involuntary Transfer of such Shares or any right, title or interest therein in
favour of any person, including but not limited to, any lenders of the Company
except with the prior written consent of IGC.  The Promoters shall also be
entitled to pledge their shares in favour of lenders i.e. banks and financial
institutions only with the prior written consent of IGC.

13.           REPRESENTATIONS AND WARRANTIES

Each Party represents, severally and not jointly, to the other Parties hereto
that:

 
 
(a)
such Party has the full power and authority to enter into, execute and deliver
this Agreement and to perform the transactions contemplated hereby and, if such
Party is not a natural person, such Party is duly incorporated or organised with
limited liability and existing under the Laws of the jurisdiction of its
incorporation or organisation;

 
 
(b)
the execution and delivery by such Party of this Agreement and the performance
by such Party of the transactions contemplated hereby have been duly authorised
by all necessary corporate or other action of such Party;

 
 
(c)
assuming the due authorisation, execution and delivery hereof by the other
Parties, this Agreement constitutes the legal, valid and binding obligation of
such Party, enforceable against such Party in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganisation, moratorium or similar laws affecting creditors' rights
generally;

 
 
(d)
the execution, delivery and performance of this Agreement by such Party and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of the organisational or governance documents of such Party; (ii)
require such Party to obtain any consent, approval or action of, or make any
filing with or give any notice to, any Government Authority in such Party's
country of organisation or any other person pursuant to any instrument, contract
or other agreement to which such Party is a party or by which such Party is
bound, other than such filing required as a result of the transactions
contemplated herein; (iii) conflict with or result in any material breach or
violation of any of the terms and conditions of, or constitute (with notice or
lapse of time or both constitute) a default under, any instrument, contract or
other agreement to which such Party is a party or by which such Party is bound;
(iv) violate any order, judgment or decree against, or binding upon, such Party
or upon its respective shares, properties or businesses; or (v) violate any Law
of such Party's country of organisation or any other country in which it
maintains its principal office;

 
 
(e)
there exists no Encumbrance on any of the Shares of the Company;

 
(f)
The Parties reiterate and confirm the representations, warranties and
undertakings and each statement made in Schedule 3 of the SSPA, as applicable to
the Parties, and confirm that the same are is now and will be true and accurate
at the Completion Date.

 
 

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13A
COMPANY WARRANTIES

 
(a)
The Company shall ensure that under the terms of this Agreement, it shall
perform its obligations so as to ensure that upon Completion,   the Subscribed
Shares and the CPS are transferred and registered to nominees of IGC being
[names of the nominees] at the face value of Shares Rs. 10 per Share.

 
(b)
The Company warrants that as on the date hereof the Company has not done or
committed to do any act, matter or thing or has not assumed any liability, other
than in the ordinary course of business.

14.           INDEMNITY

14.1
Without prejudice to any other right available to IGC in law or under equity,
the Company and the Promoters shall jointly and severally indemnify, defend and
hold harmless IGC, their Affiliates, directors, advisors, officers, employees
and agents, or, if so desired by IGC, the Promoters shall indemnify the Company,
from and against any and all liabilities, damages, demands, Claims (including
third party Claims), actions, judgments or causes of action, assessments,
interest, fines, penalties, and other costs or expenses (including, without
limitation, amounts paid in settlement, court costs and all reasonable
attorneys' fees and out of pocket expenses) (“Losses”) directly based upon,
arising out of, or in relation to or otherwise in respect of:

 
i.  
any inaccuracy in or any breach of any Representation and Warranty, covenant or
agreement of the Promoters or Company contained in this Agreement or in the SSPA
or any document or other papers delivered by any of them to IGC in connection
with or pursuant to this Agreement;

ii.  
any liability arising out of non compliance of any obligation undertaken by the
Company or the Promoters; save and except as may be disclosed in the audited
financial statements of the Company which have been disclosed to IGC prior to
the Completion Date;

iii.  
any liabilities and obligations of whatever nature relating to any litigation,
Claim or governmental investigation pending or relating to the Business or
operations of the Promoters or the Business of the Company prior to the date of
execution of this Agreement and as on the Completion Date; save and except as
may be disclosed in the audited financial statements of the Company which have
been disclosed to IGC prior to the Completion Date;

iv.  
any liability due to any non-compliance of any applicable law, rules or
regulations prior to the date of execution of this Agreement and as on the
Completion Date; save and except as may be disclosed in the audited financial
statements of the Company which have been disclosed to IGC prior to the
Completion Date.

14.2
Any compensation or indemnity as referred to in Clause 14.1 above shall be such
as to place IGC in the same position as it would have been in, had there not
been any such breach and as if the Representation and Warranty under which IGC
is to be indemnified, had been correct.

15.           CO-OPERATION

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

16.           RESOLUTION OF DISPUTES

16.1           Amicable Settlement

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

16.2
Conciliation

If the Parties are unable to amicably settle the Dispute in accordance with
Clause 16.1 within the period specified therein, the Parties shall forthwith but
not later than 30 days after expiry of the aforesaid period, refer the Dispute
to Mr. Ram Mukunda and Mr. Jortin Antony for resolution of the said Dispute. The
attempt to bring about such resolution shall be considered to have failed if not
resolved within 30 days from the date of receipt of a written notification in
this regard.
 
 

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16.3
Arbitration

 
(a)
If the Parties are unable to amicably settle the Dispute in accordance with
Clause 16.2 within the period specified therein, any Party to the Dispute shall
be entitled to serve a notice invoking this Clause and making a reference to an
arbitration panel of three arbitrators. Each party to the dispute shall appoint
one arbitrator within 30 days of receipt of the notice of the Party making the
reference, and the two arbitrators, so appointed shall appoint a third
arbitrator.  The Arbitration proceedings shall be held in accordance with the
Arbitration and Conciliation Act, 1996. The decision of the arbitration panel
shall be binding on all the Parties to the Dispute.

 
(b)
The place of the arbitration shall be Mumbai, India.

 
(c)
The proceedings of arbitration shall be in the English language.

 
(d)
The arbitration proceedings shall be governed by the laws of India and the
Mumbai courts (including any appellant court) in India shall have exclusive
jurisdiction.

 
(e)
Notwithstanding the foregoing, the Parties agree that any of them may seek
interim measures including injunctive relief in relation to the provisions of
this agreement or the Parties' performance of it from any court of competent
jurisdiction. Each Party shall co-operate in good faith to expedite (to the
maximum extent practicable) the conduct of any arbitral proceedings commenced
under this Agreement.

 
(f)
The costs and expenses of the arbitration, including, without limitation, the
fees of the arbitration and the Arbitrator, shall be borne equally by each Party
to the dispute or claim and each Party shall pay its own fees, disbursements and
other charges of its counsel, except as may be otherwise determined by the
Arbitrator. The Arbitrator would have the power to award interest on any sum
awarded pursuant to the arbitration proceedings and such sum would carry
interest, if awarded, until the actual payment of such amounts.

 
(g)
Any award made by the Arbitrator shall be final and binding on each of the
Parties that were parties to the dispute. The Parties expressly agree to waive
the applicability of any Applicable Laws and regulations that would otherwise
give the right to appeal the decisions of the Arbitrator so that there shall be
no appeal to any court of Law for the award of the Arbitrator, except a Party
shall not challenge or resist any enforcement action taken by any other Party in
any court of Law in whose favour an award of the Arbitrator was given.

 17.           NOTICES

17.1
Any notice or other communication that may be given by one Party to the other
shall always be in writing and shall be served either by (i) hand delivery duly
acknowledged; or (ii) sent by registered post with acknowledgment due; or (iii)
by facsimile at the respective addresses set out herein below or at such other
address as may be subsequently intimated by one party to the other in writing as
set out herein. If the notice is sent by facsimile, the said notice shall also
be sent by registered post acknowledgment due.

IGC:                    Ram Mukunda
Address:            At the address mentioned above
Tel:                     +1 301 529 4996
Facsimile:           + 1 240 465 0273

The Company:  Techni Bharathi Ltd.
Address:            As mentioned above
Tel:
Facsimile:

The Promoter:    Jortin Antony
Address:            As mentioned in Schedule 1 hereto
Tel:
Facsimile:

17.2
All notices shall be deemed to have been validly given on (i) the business date
immediately after the date of transmission with confirmed answer back, if
transmitted by facsimile transmission, or (ii) the business date of receipt, if
sent by courier or hand delivery; or (iii) the expiry of seven days after
posting, if sent by registered post.

17.3
Any Party may, from time to time, change its address or representative for
receipt of notices provided for in this Agreement by giving to the other Party
not less than 10 days prior written notice.

 
 

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18.           LOCK-IN

The Promoters hereby unconditionally and irrevocably undertake not to Transfer
their Shareholding from the date of this Agreement till the expiry of 36 months
from such date, without the prior written permission of IGC. The provisions
pertaining to Clause 6, 7, 8 and 9 shall be applicable post the completion of
such period.

19.           CONFIDENTIALITY

 
19.1
General Obligation.  Each Party undertakes that it shall not reveal, and shall
ensure that its directors, officers, managers, partners, members, employees,
legal, financial and professional advisors and bankers (collectively,
“Representatives”) do not reveal, to any third party any Confidential
Information without the prior written consent of the Company or the concerned
Party, as the case may be regardless of whether this Agreement is terminated or
not.

 
19.2
Exceptions. The provisions of Clause 19.1 shall not apply to:

 
(a)
disclosure of Confidential Information that is or becomes generally available to
the public other than as a result of disclosure by or at the direction of a
Party or any of its Representatives in violation of this Agreement;

 
(b)
disclosure by a Party to its Representatives and Affiliates (and their officers
and directors) or to transferee of Shares in accordance with this Agreement
provided such Representatives, Affiliates and transferees are bound by similar
confidentiality obligations;

 
(c)
disclosure by the Company of Confidential Information concerning the Company
that is reasonably necessary in the ordinary course of business or otherwise in
connection with transactions or proposed transactions of the Company; and

 
(d)
obligations disclosure, after giving prior notice to the other Parties to the
extent practicable under the circumstances and subject to any practicable
arrangements to protect confidentiality, to the extent required under the rules
of any stock exchange or by Applicable Laws or governmental regulations or
generally accepted accounting principles applicable to any Party or judicial or
regulatory process or in connection with any judicial process regarding any
legal action, suit or proceeding arising out of or relating to this Agreement.

20.          AUTHORISED PERSON

For the purposes of this Agreement, the Promoters shall be represented by Mr
Jortin Antony. Accordingly, all the Promoters hereby authorise Mr Jortin Antony
to represent the Promoters and take any decision which may be required to be
taken, do all acts and execute all documents which are or may be required by the
Promoters for the proper and effective fulfilment of the rights and obligations
under this Agreement. Any action taken or deed performed or document executed by
Mr Jortin Antony shall be deemed to be acts or deeds done or documents executed
by all the Promoters, and shall be binding on all the Promoters.

21.          COVENANTS OF THE COMPANY, IGC AND PROMOTERS

                The parties hereby agree and undertake to abide by the
conditions at all times, as outlined in Schedule 6 of this agreement.

22.          MISCELLANEOUS PROVISIONS

22.1         Reservation of Rights

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

22.2        Cumulative Rights

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

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22.3         Partial Invalidity

If any provision of this Agreement or the application thereof to any Person or
circumstance shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. Any invalid or unenforceable
provision of this Agreement shall be replaced with a provision, which is valid
and enforceable and most nearly reflects the original intent of the
unenforceable provision. Provided however, if said provision is fundamental
provision of this Agreement or forms part of the consideration or object of this
Agreement, the provision of this Clause shall not apply.

22.4         Amendments

No modification or amendment of this Agreement and no waiver of any of the terms
or conditions hereof shall be valid or binding unless made in writing and duly
executed by all the Parties.

22.5         Assignment

This Agreement and the rights and liabilities hereunder shall bind and inure to
the benefit of the respective successors of the Parties hereto, but no Party
shall assign or transfer any of its rights and liabilities hereunder to any
other Person without the prior written consent of the other Parties which will
not be unreasonably withheld. Notwithstanding anything stated above, IGC shall
be entitled to assign its rights and obligations hereunder to any of its
Affiliates or ultimate parent company or their Affiliates, without the consent
of the other Parties. However IGC must inform the company of such assignment.

22.6        Entire Agreement

As on the date of this Agreement, this Agreement contains the whole agreement
between the Parties relating to the transactions contemplated by this Agreement
and supersedes all previous agreements between the Parties or their Affiliates
relating to these transactions.

22.7         Relationship

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

22.8        Governing law

This Agreement shall be governed and construed in accordance with the laws of
India.

22.9         Costs
 
Each Party shall bear its own expenses incurred in preparing this Agreement and
the stamp duty, legal  and costs for US GAAP audit  shall be borne equally
between the Parties.

22.10       Force Majeure

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

22.11      Severance

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

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22.12       Good Faith Negotiations and Further Assurances
 
22.12.1
The Parties agree that if the understanding contemplated in this Agreement
cannot be completed in the manner set forth herein, then the Parties shall use
reasonable endeavours to enter into such understanding that (a) would result in
a substantially similar outcome and (b) do not materially prejudice any of the
Parties.  Each of the Parties further agrees that, during any such negotiations,
it shall refrain from initiating any legal actions against the other Parties;
and

 
22.12.2
Each Party agrees to perform (or procure the performance of) all further acts
and things, and execute and deliver (or procure the execution and delivery of)
such further documents, as may be required by law or as the other Parties may
reasonably require, whether on or after the date of this Agreement, to implement
and/or give effect to this Agreement and the understanding contemplated by it
and for the purpose of vesting in IGC the full benefit of the assets, rights and
benefits to be transferred to IGC under this Agreement.

 

22.13       Public announcements

Neither the Promoters nor the Company shall make any disclosure or announcements
about the subject matter of this Agreement to any Person without the prior
written consent of IGC. IGC shall be entitled to make any disclosures or
announcements about the subject matter of this Agreement.

22.14       Execution in Counterparts

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

22.15       Authorisation

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

22.16  
Survival. In the event of termination of this Agreement pursuant to Clause 10,
notwithstanding anything mentioned herein, Clauses which by their nature survive
termination shall survive the termination of this Agreement.

22.17  
Consent to Specific Performance. The Parties declare that it is impossible to
measure in money the damages that would be suffered by a Party by reason of the
failure by any other Party to perform any of the obligations
hereunder.  Therefore, if any Party shall institute any action or proceeding to
seek specific performance or enforcement of the provisions hereof any Party
against whom such action or proceeding is brought hereby waives any claim or
defence therein that the other Party has an adequate remedy at Law.

22.18  
Covenants Reasonable.  The Parties agree that, having regard to all the
circumstances, the covenants contained herein are reasonable and necessary for
the protection of the Parties and their Affiliates.  If any such covenant is
held to be void as going beyond what is reasonable in all the circumstances, but
would be valid if amended as to scope or duration or both, the covenant will
apply with such minimum modifications regarding its scope and duration as may be
necessary to make it valid and effective

22.19  
No Implied Representation. Each of the Parties acknowledges that, in agreeing to
enter into this Agreement, it has not relied on any representation, warranty,
collateral contract or other assurance except those set out in this Agreement
and the documents referred to in made by or on behalf of the other Party before
the signature of this Agreement.

22.20  
Without prejudice The Parties agree that the rights and remedies of the Parties
hereunder are in addition to their rights at Law or equity.

Execution Page Follows:

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

SIGNED AND DELIVERED
)
BY THE WITHINNAMED " INDIA GLOBILIZATION CAPTIAL INC., USA"
)
BY THE HAND OF MR. RAM MUKUNDA
)
(Authorised Signatory)
)
   
ON THE 16TH  DAY OF  SEPTEMBER   2007
)

IN THE PRESENCE OF:
)
WITNESS:
)
   
NAME AND ADDRESS:
)
           

SIGNED AND DELIVERED
)
 
BY THE WITHINNAMED "TECHNI BHARATHI LIMITED "
)
 
BY THE HAND OF MR. JORTIN ANTONY
)
 
(AUTHORISED SIGNATORY) PURSUANT TO THE
)
 
RESOLUTION PASSED BY THE BOARD
)
 
ON THE   16TH  DAY OF  SEPTEMBER   2007
)
       
IN THE PRESENCE OF:
)
 
WITNESS:
)
 
ADDRESS:
)
                   
SIGNED AND DELIVERED
)
BY THE WITHINNAMED "PROMOTERS"
)
 
)
   
ON THE 16TH  DAY OF  SEPTEMBER   2007
)
   
IN THE PRESENCE OF:
)
WITNESS:
)
ADDRESS:
   
)
   

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