CITIUS POWER LIMITED
 
SHARE SUBSCRIPTION AGREEMENT
 
March 1, 2008
 
- i -

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

 
CITIUS POWER LIMITED
 
SHARE SUBSCRIPTION AGREEMENT
 
This agreement (the “Agreement”) is entered into as of March 1, 2008 (the
“Effective Date”) by and between:
 

 
1.
Citius Power Limited, a limited liability company incorporated under the laws of
the Republic of Mauritius with a Category 1 Global Business Licence and having
its registered office at c/o Matco Limited, Suite 137 2nd Floor, Harbour Front
Building, President John Kennedy Street, Port Louis, Mauritius (the “Company”);

 

 
2.
Phoenix India Acquisition Corp., a Delaware corporation having its registered
office at 590 Madison Avenue, 6th Floor, New York, NY 10022, USA (“PIAC,” which
expression shall, unless inconsistent with the subject or context, be deemed to
include its successors and permitted assigns); and

 

 
3.
The persons named in Schedule I hereto (hereinafter referred to collectively as
the “Promoters” and individually as a “Promoter”), indirectly holding Equity
Shares in the Company through its wholly owned subsidiaries set forth opposite
each such Promoter’s name in Schedule I hereto.

 
The Company, PIAC and the Promoters are hereinafter referred to individually as
a “Party” and collectively as the “Parties”.
 
Unless the context otherwise requires, all capitalized terms used but not
otherwise defined herein shall have the meanings set forth in Schedule II. Other
terms may be defined elsewhere in the text of this Agreement and, unless
otherwise indicated, shall have such meaning throughout this Agreement.
 
WHEREAS,
 

 
A.
The Company desires to allot, issue and deliver to PIAC, and PIAC desires to
subscribe to 4,500,000 (Four Million Five Hundred Only) Convertible Preference
Shares; and

 

 
B.
The Parties hereto desire to enter into this Agreement and the Shareholders’
Agreement to record their respective representations, warranties, covenants and
agreements with respect to the transactions contemplated hereby, as set forth
herein.

 
NOW, THEREFORE, in consideration of the representations, promises and mutual
covenants and agreements set forth herein, the Parties agree as follows:
 

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

1.
Authorization, Allotment And Issuance Of Convertible Preference Shares

 
Amendment of Constitutional Documents; Authorization of Issuance of Convertible
Preference Shares 
 
The Company and the Group Company (to the extent required) will, before Closing,
adopt the restated Memorandum and Articles of Association to make such changes
as are necessary or appropriate to carry out the provisions of this Agreement
and to incorporate the provisions of the Shareholders’ Agreement, in form and
substance satisfactory to PIAC. The Company will, before Closing, authorize the
issuance to PIAC of 4,500,000 (Four Million Five Hundred Thousand Only)
Convertible Preference Shares.
 
Allotment and Issuance of Convertible Preference Shares
 
Subject to the terms and conditions of this Agreement, PIAC agrees to subscribe
to, and the Company agrees to allot, issue and deliver to PIAC, 4,500,000 (Four
Million Five Hundred Thousand Only) Convertible Preference Shares at the
subscription price of USD 10 per Convertible Preference Share and thus an
aggregate subscription price of USD 45,000,000 (the “Aggregate Subscription
Price”).
 

2.
Closing of the Convertible Preference Shares; Use of Proceeds

 
Closing
 
The Company shall allot, issue and deliver 4,500,000 (Four Million Five Hundred
Only) Preference Shares to PIAC at closing (“Closing”). Closing shall take place
at a time and place mutually agreed between the Parties on a date to be
specified by the Company and PIAC, which date shall be no later than two (2)
Business Days after the satisfaction or waiver (subject to Applicable Law) of
the latest to occur of the conditions set forth in Sections 4 and 5 (other than
those conditions that by their nature are to be satisfied or waived at Closing),
unless extended by mutual agreement of the Company and PIAC. 
 
Delivery  
 
At Closing, the Company shall deliver to PIAC a share certificate duly stamped
and registered in PIAC’s name representing the number of Convertible Preference
Shares that PIAC is subscribing at Closing against payment of the Aggregate
Subscription Price, by wire transfer in accordance with the Company’s
instructions, which instructions the Company shall deliver to PIAC not less than
five (5) Business Days prior to Closing. 
 
Within five (5) Business Days of Closing, the Company shall deliver to PIAC a
certified copy of all relevant filings which shall have been made pursuant to
Applicable Law by the Company in relation to the Convertible Preference Shares
that PIAC is subscribing at Closing.
 
2

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

 
Use of Proceeds 
 
The Company will use the proceeds from Closing in the following manner:
 

 
(i)
retain USD 2,500,000 in its bank accounts in Mauritius;

 

 
(ii)
pay expenses, advisers’ fees and other costs incurred by the Company and its
Affiliates in connection with the transactions contemplated by the Transaction
Agreements, including previously contemplated asset acquisition and financing
efforts, as disclosed in writing to PIAC;

 

 
(iii)
investing USD 42,500,000 in the Group Company in order that the Group Company
shall acquire wind energy assets and develop new wind and other renewable energy
generation facilities in return for which the Group Company shall issue
16,955,375 equity shares of par value Rs. 10 at a premium of Rs. 90 and thus an
issue price of Rs. 100 each to the Company, to be calculated with reference to
the daily average exchange rate published in the Financial Times newspaper in
London.

 
The Company and each Promoter shall procure that the funds are utilized for
acquisition of assets in accordance with the terms and conditions set out in
this Agreement and the Shareholders’ Agreement and as may be agreed upon with
PIAC.
 

3.
Conversion of the Convertible Preference Shares

 
Conversion 
 
3.1 PIAC shall have the right to convert the Convertible Preference Shares, at
its option, at any time after twenty four (24) months following Closing, if an
IPO or other Liquidity Event has not taken place; provided however, the
Convertible Preference Shares shall mandatorily convert into Equity Shares at
the time of an IPO.
 
3.2 The Convertible Preference Shares owned by PIAC shall be convertible into
Equity Shares in the ratio of 8.25 Equity Shares for every Convertible
Preference Share. Accordingly, upon conversion of all of the Convertible
Preference Shares in issue, PIAC will own 37,142,857 Equity Shares. At Closing
the Equity Shareholders will own all outstanding Equity Shares aggregating to
20,000,000 (Twenty Million Only) shares with a combined value of USD 20,000 (USD
Twenty Thousand Only). After Closing, PIAC will own 65% of the Shares of the
Company and the Equity Shareholders will own 35% of the Shares of the Company on
a Fully Diluted Basis. This Section shall be without prejudice to the Promoters’
rights to subscribe to additional Equity Shares at par value pursuant to
Schedule III of the Shareholders’ Agreement.
 
3.3 The Promoters and the Company shall, on a best efforts basis, endeavour to
achieve an IPO within twenty four (24) months of Closing on any recognised stock
exchange, or other Liquidity Event, as may be mutually agreed upon by the
Promoters and PIAC in light of prevailing market conditions and the state of the
Company’s business and financial condition. The terms, timing and final pricing
as well as the selection of the investment banker or merchant banker shall be
subject to the approval of the Board of Directors of the Company.
 
3

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

 

4.
Conditions to PIAC’s Obligations to Subscribe to the Convertible Preference
Shares

 
PIAC’s obligation to subscribe to the Convertible Preference Shares at Closing
is subject to the satisfaction on or before Closing of the following conditions,
unless waived in writing by PIAC:
 
Representations and Warranties  
 
The representations and warranties made by the Company and the Promoters in
Section 6 herein shall be true and correct when made and as at Closing (unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date).
 
Covenants  
 
All covenants, agreements and conditions contained in the Transaction Agreements
to be performed by the Company or the Promoters on or before Closing shall have
been performed or complied with.
 
Shareholders’ Agreement 
 
Each of the Company and the Promoters shall have duly stamped and executed and
delivered the Shareholders’ Agreement and the same shall be in full force and
effect and shall be legal, valid, binding and enforceable against the parties
thereto in accordance with the terms thereof.
 
Memorandum and Articles 
 
The restated Memorandum and Articles, in form and substance satisfactory to
PIAC, shall have been duly adopted by the Company and the Group Company, by all
requisite Board and shareholder action, shall have been filed with the
respective Registrar of Companies, shall be in full force and effect and all
requisite approvals, consents and authorizations related thereto shall have been
obtained.
 
Ownership  
 
At Closing, all of the outstanding Equity Shares and options, if any, shall be
owned by the Equity Shareholders and all the outstanding Convertible Preference
Shares shall be owned by PIAC.
 
4

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

 
Closing Deliverables 
 
The Company shall have delivered to PIAC the following:
 

 
i.
duly executed copies of all Transaction Agreements (and any amendments thereto);

 

 
ii.
appropriate corporate documents authorizing the allotment, issuance and delivery
of the Convertible Preference Shares;

 

 
iii.
a certificate, dated as of Closing, certifying as to the incumbency and
signatures of certain Directors and/or officers of the Company and a certificate
from the Company, dated as of Closing, certifying as to the effectiveness of the
restated Memorandum and Articles and Board and shareholders resolutions attached
thereto, all of them required to be adopted and delivered in order to carry out
the transactions contemplated by this Agreement and the other Transaction
Agreements, including, without limitation, the authorization, allotment,
issuance and delivery and execution of the Convertible Preference Shares,
authorizations and execution of this Agreement and the other Transaction
Agreements to which the Company is a party and appointment of the PIAC Directors
(as defined in the Shareholders’ Agreement) to the Board in accordance with the
Shareholders’ Agreement;

 

 
iv.
a certificate from an officer of the Company, dated as of Closing, certifying as
to the accuracy of the representations and warranties of the Company herein and
in the other Transaction Agreements at and as of Closing and as to the
compliance of the Company with all agreements and conditions hereunder and under
the other Transaction Agreements required to be performed or complied by at or
prior to Closing;

 

 
v.
an opinion of counsel for the Company and the Promoters, in form and substance
satisfactory to PIAC, addressing matters as are customarily addressed in
transactions contemplated by the Transaction Agreements, including, without
limitation, to the effect that:

 

 
a.
The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the Republic of Mauritius, with full
corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business and to enter into and to perform
its obligations under the Transaction Agreements;

 

 
b.
The Convertible Preference Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of the Convertible
Preference Shares will not be subject to any pre-emptive rights, rights of first
refusal or similar rights, and, to the best of such Counsel’s knowledge, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or exchange any securities
for, shares of capital stock of the Company are outstanding;

 
5

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

 

 
c.
The Transaction Agreements have been duly authorized, executed and delivered by
the Company and the Promoters and constitute legal, valid and binding
obligations of the Company and the Promoters, enforceable against the Company
and the Promoters in accordance with the terms thereunder except: (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally; and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies or by general principles of
equity;

 

 
d.
The execution and delivery of the Transaction Agreements by the Company, the
performance by the Company of its obligations pursuant to the Transaction
Agreements, the consummation of the transactions contemplated by the Transaction
Agreements and the allotment, issuance and delivery of the Convertible
Preference Shares will not result in any violation of, or conflict with, or
constitute a default under, the Articles or Memorandum, each as amended to date,
or any Applicable Law or any agreement or other instrument binding upon the
Company that is material to the Company;

 

 
e.
The execution and delivery of the Transaction Agreements by the Promoters and
the performance by the Promoters of their obligations pursuant to the
Transaction Agreements will not result in any violation of any Applicable Law;

 

 
f.
The Shares outstanding prior to the issuance of the Convertible Preference
Shares have been duly authorized and are validly issued, fully paid and
non-assessable;

 

 
g.
There is no pending or, to the best of such counsel’s knowledge, threatened
action, suit or proceeding by or before any Governmental Entity or any
arbitrator involving the Company or its property; and

 

 
h.
The Company has complied, and is in compliance with, all Applicable Laws, and
the Company has all Permits (as defined below in Section 6.11) to, and necessary
in, the conduct of its business as currently conducted and as currently planed
to be conducted; and

 
6

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

 

 
i.
The restated Memorandum and Articles have been duly adopted by the Company by
all requisite Board and shareholder action, are in full force and effect, have
been filed with the applicable Governmental Entity and all requisite approvals,
consents and authorizations related thereto have been obtained.

 

 
vi.
drafts of all relevant filings to be made by the Company in relation to the
Convertible Preference Shares that PIAC is subscribing to at Closing.

 
No Material Adverse Event  
 
No event, occurrence, fact, condition, change or development shall exist or have
occurred or come to exist since the Effective Date that, individually or in the
aggregate, has had or could reasonably be expected to have a material adverse
effect on the business, prospects, operations, properties, condition (financial
or otherwise) or results of operations of the Company or the Group Company (a
“Material Adverse Effect”).
 
No Injunctions or Restraints; Illegality  
 
No order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement shall be in effect, nor shall any
proceeding seeking any of the foregoing be pending, nor shall there be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or threatened, which makes the consummation of the transactions
illegal.
 
Absence of Proceedings 
 
There shall not be pending or, with reasonable likelihood of success, threatened
any suit, action or proceeding (a “Proceeding”) (i) seeking to prohibit or limit
the ownership by PIAC of any securities of the Company, or to compel PIAC, its
Affiliates or the Company to dispose of or hold separate any securities of the
Company as a result of the transactions contemplated by the Transaction
Agreements or (ii) seeking to impose limitations on the ability of PIAC to
acquire or hold, or exercise full rights of ownership of, the Shares or
(iii) seeking to prohibit PIAC or any of its Affiliates from participating in
any material respect the business or operations of the Company.
 
Due Diligence
 
Completion of the due diligence with respect to the Company and the Group
Company to the satisfaction of PIAC.
 
7

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

 
Co-operation
 
The Company and the Promoters having extended all reasonable cooperation to PIAC
in obtaining all approvals and other corporate authorisations in connection with
the consummation of the transactions contemplated by this Agreement and the
Shareholders’ Agreement.
 

5.
Conditions to the Company’s Obligations to Issue the Convertible Preference
Shares

 
The Company’s obligation to allot, issue and deliver the Convertible Preference
Shares at Closing is subject to the satisfaction on or before Closing of the
following conditions, unless waived in writing by the Company:
 
Representations and Warranties  
 
The representations and warranties made by PIAC in Section 7 hereunder and in
the other Transaction Agreements shall be true and correct when made and as of
the date of Closing (unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date).
 
Covenants  
 
All covenants, agreements and conditions contained in this Agreement and the
other Transaction Agreements to be performed by PIAC on or before the date of
Closing shall have been performed or complied with.
 
Approvals
 
PIAC having obtained all approvals and other corporate authorisations as may be
necessary in connection with its subscription to the Convertible Preference
Shares under this Agreement; provided that, to the extent required, the Company
and the Promoters shall extend all reasonable cooperation to PIAC in obtaining
such approvals.
 
Shareholders’ Agreement  
 
PIAC shall have duly executed and delivered the Shareholders’ Agreement and the
same shall be in full force and effect and shall be legal, valid, binding and
enforceable against the parties thereto in accordance with the terms thereof.
 
No Injunctions or Restraints; Illegality  
 
No order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement shall be in effect, nor shall any
proceeding seeking any of the foregoing be pending, nor shall there be any
action taken, or any statute, rule, regulation or order enacted, entered or
enforced, which makes the consummation of the transactions illegal.
 
8

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

 

6.
Representations and Warranties of the Company and the Promoters

 
The Company and each of the Promoters represent and warrant to PIAC, as of the
date hereof and as of the date of Closing (with reference to the facts and
circumstances then existing), as follows:
 
Organization, Good Standing 
 
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the Republic of Mauritius, and has made all filings
and secured all approvals necessary for the conduct of its business and as
required by law, other than such filings and approvals, the absence of which
would not result in a Material Adverse Effect. The Company has requisite
corporate power and authority to own, lease and operate its properties and
assets, to carry on its business as currently conducted or currently proposed to
be conducted and to execute and deliver, and to perform its obligations pursuant
to the Transaction Agreements to which it is a party. The Company has requisite
corporate power and authority to allot, issue and deliver the Convertible
Preference Shares and to perform its obligations pursuant to the Articles and
the Memorandum. 
 
(b)  The Group Company is a corporation duly organized, validly existing and in
good standing under the laws of the Republic of India, and has made all filings
and secured all approvals necessary for the conduct of its business and as
required by law, other than such filings and approvals, the absence of which
would not result in a Material Adverse Effect. The Group Company has requisite
corporate power and authority to own, lease and operate its properties and
assets, to carry on its business as currently conducted or currently proposed to
be conducted and to execute and deliver, and to perform its obligations pursuant
to the Transaction Agreements.
 
Capitalization 
 
(a) As of the date hereof, the issued, subscribed and paid up capital of the
Company is USD 20,000 (Twenty Thousand Only) comprising 20,000,000 (Twenty
Million Only) Equity Shares and no Convertible Preference Shares have been
issued. At Closing, all of the outstanding Equity Shares will be owned by the
Equity Shareholders, as set forth in Schedule I. Following Closing, all of the
outstanding Equity Shares will be owned by the Equity Shareholders, and all of
the outstanding Convertible Preference Shares will be owned by PIAC. 
 
(b) As of the date hereof, the issued, subscribed and paid up capital of the
Group Company is Rs. 500,000 of which 50,000 equity shares have been issued. At
Closing, all of the issued and outstanding shares of the Group Company will be
owned as set out in Schedule I.
 
9

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

 
(c) All issued and outstanding Shares have been duly authorized and validly
issued and allotted in compliance with Applicable Law, including without
limitation Applicable Laws concerning the issuance of securities, are fully paid
and non-assessable and free of all Liens.
 
(d) The rights, preferences, privileges and restrictions of the Shares will be
as stated in the Articles, the Memorandum and the Transaction Agreements.
 
(e) The Shares will be, as at Closing, duly authorized, validly issued, fully
paid, non-assessable and in compliance with the provisions of this Agreement and
Applicable Law. As at Closing, the Shares will be free of any Liens; provided,
however, that the Shares are subject to restrictions on Transfer as set forth in
the Shareholders’ Agreement. As at Closing, except as set forth in the
Shareholders’ Agreement and the Articles, the Shares will not be subject to any
pre-emptive rights, rights of first refusal or any similar rights.
 
(f) Except for the rights provided pursuant to this Agreement and the
Shareholders’ Agreement, there are no options, warrants or other rights or
agreements to subscribe to, or based on the value of, any of the Company’s
unissued share capital. There are no other securities, including any bonds,
debentures, notes or other indebtedness of the Company which carry the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which holders of shares of the Company may vote (“Voting
Company Debt”). Except as set forth above and in the Shareholders’ Agreement, as
at Closing, there will not be any options, warrants, rights, convertible or
exchangeable securities, “phantom” stock rights, stock appreciation rights,
stock-based performance units, commitments, agreements, arrangements or
undertakings of any kind to the Company is a party or by which it is bound
(i) obligating the Company to issue or deliver, or cause to be issued or
delivered, additional shares of capital stock or other equity interests in, or
any security convertible or exercisable for or exchangeable into any capital
stock of or other equity interest in, the Company or any Voting Company Debt or
(ii) obligating the Company to issue, grant, extend or enter into any such
option, warrant, call, right, security, commitment, contract, arrangement or
undertaking. As at Closing, there will not be any outstanding contractual
obligations of the Company and / or the Group Company to repurchase, redeem or
otherwise acquire any shares.
 
Authorization
 
(a) The Company has all requisite power and authority to execute and deliver the
Transaction Agreements, to carry out and perform its obligations under the terms
hereunder and to allot, issue and deliver the Convertible Preference Shares
hereunder. All action on the part of the Company necessary for the
authorization, execution, delivery and performance of the Transaction
Agreements, and the performance of all of the Company’s obligations thereunder,
has been taken or will be taken before the authorization, execution, delivery
and performance of the relevant Transaction Agreement. 
 
(b) As at Closing, the Transaction Agreements, when executed and delivered by
the parties thereto, will constitute valid and legally binding obligations of
the Company, enforceable in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies or by general principles of
equity.
 
10

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

 
Material Contracts 
 
The Company and / or the Group Company have not entered into any contract with
any third parties that are material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Company and
/ or the Group Company, except for the contracts set out in Schedule III.
 
Intellectual Property
 
(a) The Company and the Group Company own or possess the legal rights to the
“Citius Power” trade name and/or trademark and internet domain “citiuspower.com”
(the “Intellectual Property”) as is necessary to the conduct of the business of
the Company as currently conducted and as currently proposed to be conducted,
without any material conflict with or infringement of the rights of others.
 
(b)  All the Intellectual Property has been duly registered in, filed in or
issued by the appropriate Governmental Entity where such registration, filing or
issuance is necessary for the conduct of the business of the Company as
presently conducted or as currently proposed to be conducted and the Company has
the right to use all of such Intellectual Property. The consummation of the
transactions contemplated by the Transaction Agreements do not and will not
conflict with, alter or impair any such rights. The Company has not received any
communication from any person asserting any ownership interest in any of the
Company’s Intellectual Property and, to the best knowledge of the Company and
each Promoter, as the case may be, no other person is violating, conflicting
with or infringing the Intellectual Property of the Company.
 
(c) The Company has not received any written notice that the conduct of its
business as currently conducted or currently proposed to be conducted is
violating or infringing the Intellectual Property of any other person or entity.
To the best knowledge of the Company and each Promoter, as the case may be, no
such written notice is expected or threatened and the conduct of its business as
currently conducted or currently proposed to be conducted does not and will not
violate or infringe the Intellectual Property of any other person or entity.
 
(d) The Company is not obligated to make any payments by way of royalties, fees
or otherwise to any owner or licensor of or claimant to any Intellectual
Property with respect to the use thereof in connection with the conduct of its
business as currently conducted or currently proposed to be conducted.
 
11

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

 
Title to Properties and Assets; Liens
 
The Company and the Group Company have good and marketable title to all its
properties and assets, and has good title to all its leasehold interests, in
each case free and clear of all Liens, except (i) Liens for current Taxes (as
defined below) not yet due and payable and (ii) Liens imposed by Applicable Law.
With respect to the property and assets it leases, the Company and the Group
Company are in compliance with such leases in all material respects and holds a
valid leasehold interest free of any Liens, subject to clauses (i) and (ii)
above. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company and the Group Company are in
good operating condition and repair (ordinary wear and tear excepted) and are
reasonably fit and usable for the purposes for which they are being used. 
 
Compliance with Applicable Law and Other Instruments 
 
The Company and the Group Company are not in violation in any material respect
of: (i) any term of the Articles or Memorandum; (ii) any Applicable Law in
respect of the conduct of its business or the ownership of its properties; or
(iii) any term or provision of any permit, license, agreement, contract,
mortgage, indebtedness, instrument, judgment, order or decree to which it is
party or by which it or its properties is bound. The Company and the Group
Company are not in violation in any material respect of any Applicable Law. The
Company and the Group Company have not received any written communication that
alleges that it is not in compliance with any Applicable Law. 
 
No Conflicts 
 
The execution and delivery of the Transaction Agreements by the Company, the
performance by the Company of its obligations pursuant to the Transaction
Agreements, the consummation of the transactions contemplated by the Transaction
Agreements and the allotment, issuance and delivery of the Convertible
Preference Shares will not result in any violation of, or conflict with, or
constitute a default under, (i) the Articles or Memorandum, each as amended to
date or (ii) any Applicable Law or, to the best knowledge of the Company and
each Promoter, as the case may be, result in the suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
 
Litigation
 
There are no private and governmental actions, suits, proceedings, claims,
arbitrations, investigations or show cause notices pending or, to the best
knowledge of the Company and the Promoters, as the case may be, threatened
against the Company, the Group Company or their respective properties before any
Governmental Entity. The Company and / or the Group Company are not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any Governmental Entity. There is no action, suit or proceeding initiated by the
Company or the Group Company currently pending or which the Company or the Group
Company currently intends to initiate.
 
12

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

 
Consent
 
No consent, approval or authorization of or designation, declaration or filing
(other than the filings set out in this Agreement) with any Governmental Entity
or third party on the part of the Company is required in connection with the
valid execution and delivery of the Transaction Agreements, the performance by
the Company of its obligations thereunder, the allotment, issuance or delivery
of the Convertible Preference Shares or the consummation of any other
transaction contemplated by the Transaction Agreements, except such filings with
Governmental Entities as may be required under Applicable Laws, which will be
timely filed within the applicable periods therefor.
 
Permits 
 
Each of the Company and the Group Company has all franchises, permits, licenses,
approvals and any similar authority (“Permits”) necessary for the conduct of its
business as now being conducted and as currently planned to be conducted. The
Company and the Group Company are currently not in default under any of its
Permits, and are in compliance with all the material terms and conditions of its
Permits, including payment of any license fees, amounts and charges thereunder
to, and the making of filings, reporting and submissions required to be made
with, any Governmental Entity. Neither the Company nor the Group Company has
received written notice of any suit, action or proceeding relating to the
revocation or modification of any of its Permit and none of such Permits will be
subject to suspension, modification, revocation or non-renewal as a result of
the execution and delivery of the Transaction Agreements or the consummation of
the transaction contemplated therein. 
 
Offering 
 
The allotment, issuance and delivery of the Convertible Preference Shares to be
issued in conformity with the terms of this Agreement, constitute transactions
exempt from the registration or qualification requirements of all applicable
securities laws in Mauritius, and none of the Company, the Group Company or any
authorized agent acting on their behalf has taken or will take any action
hereafter that would cause the loss of such exemption. None of the Company, the
Group Company or any agent on their behalf has solicited or will solicit any
offers to allot and issue or has offered to allot and issue or will offer to
allot and issue all or any part of the Shares to any person or persons so as to
bring the allotment of such Convertible Preference Shares by the Company within
the registration provisions of all applicable securities laws in Mauritius.
 
13

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

 
Voting Rights 
 
Other than the Shareholders’ Agreement, no shareholder of the Company or the
Group Company has entered into any agreement with respect to the voting of its
shares.
 
Obligations to Related Parties 
 
No employee, officer, director or stockholder of the Company nor any entity
controlled by any such individual or entity or in the case of an individual,
member of his or her immediate family, is indebted or obligated to the Company,
nor is the Company indebted or obligated (or committed to make loans or extend
or guarantee credit) to any of them other than (i) for payment of salary for
services rendered, (ii) reimbursement for reasonable expenses incurred on behalf
of the Company and (iii) for other standard employee benefits made generally
available to all employees. To the best knowledge of the Company and each
Promoter, as the case may be, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is an
Affiliate or has a business relationship, or any firm or corporation that
competes with the Company, except in connection with the ownership of stock in
publicly-traded companies. To the best knowledge of the Company and each
Promoter, as the case may be, no employee, officer, director or stockholder, nor
any member of their immediate families, is, directly or indirectly, interested
in any property or contract of the Company (other than as separately disclosed
in writing to PIAC and such contracts as relate to any such person’s ownership
of capital stock or other securities of the Company or the employment agreements
with the Company in the ordinary course of business).
 
Employees  
 
Neither the Company nor the Group Company is a party to any collective
bargaining agreements with respect to any of their employees. There is no labour
strike, dispute, slowdown or stoppage actually pending or threatened against or
affecting the Company or the Group Company. There is no industrial or trade
dispute or any dispute or negotiation regarding a claim with any trade union
that relates to or involves the Company or the Group Company. No employee of the
Company or the Group Company has been granted the right to continued employment
or to any compensation following termination of employment. No current or former
director, officer or employee of the Company or the Group Company will be
entitled to (i) any severance, separation, change of control, termination, bonus
or additional compensation or benefits or (ii) any acceleration of the time of
payment or vesting of any compensation or benefits or the forgiveness of
indebtedness owed by such current or former director, officer or employee, in
each case as a result of the transactions contemplated by the Transaction
Agreements (alone or in connection with any other event) or in connection with
the termination of such person’s employment on or after Closing. The Company is
not aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company or the Group Company.
There are no actions pending or, to the best knowledge of the Company and the
Promoters, as the case may be, threatened by any former or current employee
concerning such person’s employment by the Company before any Governmental
Entity. Neither the Company nor the Group Company has violated any labour laws.
 
14

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

 
Disclosure 
 
Neither the Transaction Agreements nor any other documents or certificates
delivered in connection therewith, when taken as a whole, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein not misleading in any material
respect in light of the circumstances under which they were made. The financial
projections relating to the proposed business of the Company and the Group
Company delivered to PIAC were prepared on the basis of assumptions the Company
and each Promoter, as the case may be, reasonably believed in good faith at the
time of preparation to be reasonable and the Company and each Promoter, as the
case may be, have no knowledge of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any material
respect; it being recognized by PIAC that such financial projections as they
relate to future events are not to be viewed as fact and that actual results
during the period or periods covered by such financial projections may differ
from the projected results set forth therein.
 
Existing Indebtedness 
 
Neither the Company nor the Group Company has any existing indebtedness except
liabilities arising or incurred in connection with the organisation of the
Company and the Group Company and financing efforts and in connection with
proposed asset acquisitions as separately disclosed in writing to PIAC. 
 
Financial Statements 
 
(a) The audited financial statements of the Company and the Group Company for
the period ended December 31, 2007 and a balance sheet of the Company as of
February 28, 2008 (the “Financial Statements”), true and correct copies of which
have been provided to PIAC, have been prepared in conformity with International
Financial Reporting Standards, consistently applied and followed throughout the
period indicated (except for any notes to the Financial Statements which
indicate to the contrary therein), and on that basis present fairly and
accurately in all respects the financial condition, and results of operations
and cash flows of the Company and the Group Company as of date and for the
respective periods indicated. 
 
(b) The Company and the Group Company have no liabilities or obligations of any
nature, whether known or unknown, accrued, contingent or otherwise, except (i)
for liabilities and obligations in the respective amounts reflected or reserved
against in the Financial Statements and (ii) for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since.
 
(c) The balance sheets reflected in the Financial Statements present true and
complete representations of the assets and liabilities of the Company and the
Group Company as of the dates specified therein.
 
15

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

 
(d) The Company and the Group Company have established and maintains, adheres to
and enforces a system of internal accounting controls that are effective in
providing assurance regarding the reliability, completeness and accuracy of
financial reporting and the preparation of its Financial Statements in
accordance with Applicable Law and International Financial Reporting Standards.
 
(e) The Company and the Group Company keep books, records and accounts in
reasonable detail that accurately and fairly reflect the acquisitions and
dispositions and all other transactions and the value of inventory is calculated
in accordance with International Financial Reporting Standards.
 
Insurance 
 
The Company and the Group Company maintain policies of fire and casualty,
liability and other forms of insurance in such amounts, with such deductibles
and against such risks and losses as are, in its reasonable judgment, reasonable
for the business and assets. The Company and the Group Company are insured by
institutions that the Company believes to be financially sound and reputable
with insurance policies in full force and effect. All premiums due and payable
under all such policies have been paid. The Company and the Group Company are in
no default with respect to any of the material provisions contained in any such
insurance policy and has not failed to give any notice or present any claim
under any such insurance policy in due and timely fashion, and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancellation. The Company is not aware of any matters with respect to which
it may claim under any such insurance policy. The consummation of the
transactions contemplated in the Transaction Agreements will not cause a
cancellation or reduction in the coverage of such policies. There are no
insurance claims and liabilities outstanding or otherwise payable to any Person
by the Company or the Group Company.
 
Business 
 
Neither the Company nor the Group Company has, since the date of incorporation,
carried on any business, conducted any operations or owned, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any other person.
 
Unlawful Practices 
 
None of the Company, the Group Company or any of their respective directors,
officers, agents, employees or any other persons acting on their behalf has, in
connection with the operation of the its business, (i) used any corporate or
other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures relating to political activity, to government
officials, candidates or members of political parties or organizations, or
established or maintained any unlawful or unrecorded funds in violation of
Applicable Law, (ii) paid, accepted or received any unlawful contributions,
payments, expenditures or gifts, or (iii) violated or operated in non-compliance
with any export restrictions, anti-boycott regulations, embargo regulations or
other Applicable Laws.
 
16

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

 
Taxes 
 

(a)
As used in this Agreement,

 
“Taxes” means all (i) federal, national, state and local, domestic and foreign,
taxes, assessments, duties or similar charges of any kind whatsoever, including
all corporate franchise, income, sales, service, use and occupation, ad valorem,
receipts, value added, profits, wealth, license, withholding, employment,
excise, property, net worth, capital gains, transfer, stamp, documentary, social
security, payroll, environmental, alternative minimum, occupation, recapture and
other taxes, and including any interest, penalties and additions imposed with
respect to such amounts; (ii) liability for the payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group; and (iii) liability for the
payment of any amounts as a result of an express or implied obligation to
indemnify any other person with respect to the payment of any amounts of the
type described in clause (i) or (ii).
 
“Taxing Authority” means any federal, national, state or local, domestic or
foreign, governmental body (including any subdivision, agency or commission
thereof), or any quasi-governmental body, in each case, exercising regulatory
authority in respect of Taxes.
 
“Tax Return” means all returns, declarations of estimated payments of Taxes,
reports, estimates, information returns and statements, including any related or
supporting information with respect to any of the foregoing, filed or to be
filed with any Taxing Authority in connection with the determination,
assessment, collection or administration of any Taxes.
 

 
(b)
The Company and the Group Company have timely filed all Tax Returns required to
be filed in the manner prescribed by law.  All such Tax Returns are complete and
correct in all material respects. The Company and the Group Company have timely
paid all Taxes due from it with respect to the taxable periods covered by such
Tax Returns and all other Taxes for which it is liable other than Taxes not yet
due, for which adequate reserves, in accordance with International Financial
Reporting Standards, have been established. The Company and the Group Company
have no liability for any Taxes of any person other than itself (i) as a result
of being a member of an affiliated, consolidated, combined, unitary or aggregate
group, (ii) as a transferee or successor or (iii) by contract or otherwise.

 
17

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

 

 
(c)
No Tax Return of the Company or the Group Company is or has ever been under, or,
to the best knowledge of the Company and the Promoters, as the case may be, has
been threatened with, audit or examination by any Taxing Authority, and no
written notice of such an audit or examination has been received.

 

 
(d)
No Liens for Taxes exist with respect to any assets or properties of the Company
or the Group Company.

 

 
(e)
There is no Tax deficiency outstanding or assessed or proposed against the
Company or the Group Company, nor has the Company or the Group Company extended
the period for the assessment or collection of any Tax.

 

 
(f)
Neither the Company nor the Group Company is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes.

 

 
(g)
The Company and the Group Company have complied with all Applicable Laws
relating to the payment and withholding of Taxes (including withholding against
employees) and has, within the time and the manner prescribed by Applicable Law,
withheld from and paid over to the proper Taxing Authority all amounts required
to be so withheld and paid over under Applicable Laws.

 
Foreign Exchange Regulations 
 
The execution of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated under this Agreement and the other
Transaction Agreements is in compliance with all applicable foreign exchange
regulations and the issue, allotment and delivery of Convertible Preference
Shares to PIAC hereunder is permissible under the foreign exchange regulations
and requires no prior approvals from or filings with any Governmental Entity.
 
Subsidiaries
 
Except as disclosed in Schedule IV, the Company does not own or control,
directly or indirectly, any equity interest in any Person. 
 

7.
Representations and Warranties of PIAC

 
PIAC hereby represents and warrants to the Company, as of the date hereof and as
at Closing, as follows:
 
18

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

 
Authorization 
 
(a)  PIAC has all requisite power and authority to execute and deliver the
Transaction Agreements to which it is a party, to carry out and perform its
obligations under the terms thereunder and to subscribe to the Convertible
Preference Shares hereunder. All action on the part of PIAC necessary for the
authorization, execution, delivery and performance of the Transaction Agreements
to which it is a party, and the performance of all of PIAC’s obligations
thereunder, has been taken or will be taken before Closing. It is specifically
noted and understood that the authorisation of the shareholders of PIAC is
required prior to PIAC subscribing to the Convertible Preference Shares and
transferring the funds necessary for the purchase of the Convertible Preference
Shares. PIAC intends to file the requisite proxy asking for such approval.
 
(b) As at Closing, the Transaction Agreements to which PIAC is a party, when
executed and delivered by the parties thereto, will constitute valid and legally
binding obligations of PIAC, enforceable in accordance with their terms, except:
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights
generally; and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies or by general
principles of equity.
 
(c) Subject to shareholder approval as set out in Section 7.1(a), PIAC has the
requisite legal ability and possesses all requisite approvals to subscribe to
the Convertible Preference Shares. No consent, approval, authorization, order,
filing, registration or qualification of or with any court, Governmental Entity
or third person is required to be obtained by PIAC in connection with the
execution and delivery of this Agreement by PIAC or the performance of PIAC’s
obligations hereunder.
 

8.
Indemnification

 
Indemnification
 
From and after Closing, the Company shall indemnify and hold harmless PIAC from
and against any and all actual losses, claims, damages, liabilities, fines,
penalties and reasonable fees and expenses but excluding any consequential loss
or loss of profit (“Losses”) to PIAC in connection with or as a result of:
 

 
(a)
any breach of, any representation or warranty of the Company or the Promoters
contained in this Agreement, or in any certificate, instrument, document or
agreement delivered by the Company or the Promoters pursuant to this Agreement
or in connection with the transactions contemplated hereby, or any such
representation or warranty being untrue or incorrect as of the applicable date;

 

 
(b)
the failure by the Company to perform any covenant or agreement in this
Agreement or in any certificate, instrument, document or agreement delivered by
the Company, up to Closing, pursuant to or in connection with this Agreement,

 
19

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

 

 
(c)
any and all actions, suits, proceedings, demands, assessments, judgments,
damages, awards, costs and expenses (including fees) incident to any of the
foregoing or incurred in connection with the enforcement of the rights of PIAC
under this Section 8.1 with respect to the foregoing.

 
The maximum liability of the Company to PIAC in connection with or resulting
from the causes set out in Section 8.1(a) shall be USD 35,000,000 (USD Thirty
Five Million Only), except that any Losses in connection with, or resulting
from, fraud shall not be subject to or included in such limits. There will be no
liability for any Loss unless the amount of any single head of Loss is at least
USD 150,000 (USD One Hundred and Fifty Thousand Only) and all Losses in
aggregate amount to at least USD 500,000 (USD Five Hundred Thousand Only).
 
The obligations of the Company under this Section 8 will survive the payment or
Transfer of any of the Shares or the enforcement, amendment or waiver of any
provision of this Agreement but shall expire twenty four (24) months after
Closing; provided, however, that claims of PIAC based on fraud shall survive
indefinitely, subject to Applicable Law, and, provided further, that the
Company’s obligations to indemnify and hold harmless shall not terminate with
respect to any item as to which PIAC shall have, before its expiration,
previously made a claim by delivering a written notice of such claim to the
Party to be providing the indemnification.
 

9.
Miscellaneous

 
Termination 
 
Notwithstanding anything to the contrary in this Agreement, this Agreement may
be terminated and the transactions contemplated by this Agreement abandoned at
any time prior to Closing: 
 

 
i.
by mutual written consent of the Company and PIAC;

 

 
ii.
by the Company if any of the conditions set forth in Section 5 shall have become
incapable of fulfilment, and shall not have been waived by the Company;

 

 
iii.
by PIAC if any of the conditions set forth in Section 4 shall have become
incapable of fulfilment, and shall not have been waived by PIAC; or

 

 
iv.
by either the Company or PIAC, if Closing does not occur by May 15, 2008;

 
provided, however, that the Party seeking termination pursuant to clause (ii),
(iii) or (iv) is not then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
 
20

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

 

 
(a)
In the event of termination by the Company or PIAC pursuant to this Section 9.1,
written notice thereof shall forthwith be given to the other Parties and the
transactions contemplated by this Agreement shall be terminated, without further
action by any Party.

 

 
(b)
If this Agreement is terminated and the transactions contemplated hereby are
abandoned as described in this Section 9.1, this Agreement shall become null and
void and of no further force and effect, except for the provisions of Sections
9.4, 9.7, 9.8, 9.9, 9.10 and 9.11. Nothing in this Section 9.1 shall be deemed
to release any Party from any liability for any breach by such Party of the
terms and provisions of this Agreement prior to such termination or to impair
the right of any Party to compel specific performance by any other Party of its
obligations under this Agreement.

 
Advise of Changes
 
The Company shall promptly advise PIAC in writing of the occurrence of any
Material Adverse Effect.
 
Access to Information
 
The Company shall afford to PIAC and its accountants, counsel and other
representatives reasonable access, upon reasonable notice during normal business
hours during the period prior to Closing, to all the personnel, properties,
books, contracts, commitments, Tax Returns and records of the Company and,
during such period, shall furnish promptly to PIAC any information concerning
the Company, as PIAC may reasonably request.
 
Publicity
 
No announcements or other disclosure concerning the transactions contemplated by
this Agreement or any ancillary matter shall be made before Closing by any Party
save in the form agreed between the Parties or where required by Applicable Law
or regulation or any Governmental Agency or authority. The Parties shall consult
with each other in advance in connection with the content and timing of the
announcement to be made on the Effective Date and Closing. 
 
Best Efforts; Conduct of Business
 
(a)  On the terms and subject to the conditions of this Agreement, each Party
shall use its best efforts to cause Closing to occur, including taking all
reasonable actions necessary to comply promptly with all legal requirements that
may be imposed on it with respect to each Closing. 
 
21

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

 
(b) From the Effective Date to Closing, each of the Company and the Group
Company shall conduct its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted and use all reasonable
efforts to keep intact its business, keep available the services of its current
employees and preserve its relationships with customers, suppliers, licensors,
licensees and others with whom it deals to the end that its business shall be
unimpaired at the date of the valid and binding execution and delivery of the
Shareholders’ Agreement. Without prejudice to the foregoing, from the Effective
Date until the date that the Shareholders’ Agreement is in full force and
effect, legal, valid, binding and enforceable, neither the Company nor the Group
Company shall take and/or implement without approval of PIAC any of the
following actions (except for actions taken to implement, or in pursuance of,
provisions of this Agreement or the other Transaction Agreements):
 

 
(i)
Entry into any new lines of business, which are unrelated to the business, or
making any substantial change in the business;

 

 
(ii)
Change to the company’s constitutional documents;

 

 
(iii)
Winding up or liquidating the company or take any action in furtherance thereof;

 

 
(iv)
Any merger, consolidation, amalgamation, scheme or other similar transaction
involving the company;

 

 
(v)
The sale of assets of the Company for consideration greater than USD 300,000
(USD Three Hundred Thousand Only) or the equivalent of the assets of the company
except for the sale of products or services in the ordinary course of the
business;

 

 
(vi)
Issuance of additional securities, any recapitalization, reclassification or
other change in the company’s capital structure, including changing the rights
and preferences of securities;

 

 
(vii)
Declaration of any dividend or any buy back of securities of the company;

 

 
(viii)
Issuance or guarantee of any indebtedness or undertaking any leasehold
obligations by the company in excess of USD 25,000 (USD Twenty Five Thousand
Only);

 

 
(ix)
Entering by the company or any subsidiary into any major agreements whose total
net present value exceeds USD 50,000 (USD Fifty Thousand Only) or the
equivalent.

 
22

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

 
Post-Closing Covenants 
 
9.6 Unless otherwise set forth in this Agreement, immediately after Closing, but
in no event later than five (5) Business Days from each Closing, the Company
shall make all applicable filings under Applicable Law.
 
Notices 
 
9.7 Notices, demands or other communication required or permitted to be given or
made under this Agreement shall be in writing and delivered by hand or sent by
prepaid post with recorded delivery or by telefax to the intended recipient at
its address set forth herein, or to such other address or telefax number as each
Party may from time to time duly notify to the others:
 
if to the Company:
 
Citius Power Limited, c/o Matco Limited, Suite 137 2nd Floor, Harbour Front
Building, President John Kennedy Street, Port Louis, Mauritius. Fax +230 213
6861 Attn: Mr. Bruno Hardy;
 
with a copy to: Mr. L. Keith Hughes, Dewey & LeBoeuf, No.1 Minster Court,
Mincing Lane, London EC3R 7YL, UK. Fax: +44 20 7444 7305 (Attn: Mr. L. Keith
Hughes);
 
if to PIAC: 590 Madison Avenue, 6th Floor, New York, NY 10022, USA. Fax + 1 646
224 8019 Attn: Mr. Ramesh Akella;
 
if to the Promoters: Mr. Ravi Kailas and Mr. Deepak Kochhar, 618 Maker Chambers
V, Nariman Point, Mumbai 400021, India. Fax: +91 22 2287 5584
 
Any such notice, demand or communication shall, unless the contrary is proved,
be deemed to have been duly served at the time of delivery in the case of
service by delivery in person or by post, and at the time of dispatch in the
case of service telefax. For the avoidance of doubt, electronic mail shall not
be a valid means of making a communication required by this Section.
 
Governing Law 
 
9.8 This Agreement shall be governed and interpreted by, and construed in
accordance with English law.
 
Arbitration 
 
9.9(a) Any and all disputes or differences, arising out of or in connection with
this Agreement or its performance shall, so far as it is possible, be settled
amicably through consultation between the disputing Parties.
 
(b) If after 30 (thirty) days of consultation, the disputing Parties have failed
to reach an amicable settlement, on any or all disputes or differences arising
out of or in connection with this Agreement or its performance, such disputes or
differences shall be submitted to final and binding arbitration at the request
of any of the disputing Parties upon written notice to that effect to the
other(s).
 
23

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

 
(c) Such arbitration shall be in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce and shall be held in
London. All proceedings of such arbitration shall be in the English language.
 
(d) The arbitration panel shall consist of three arbitrators, one each appointed
by the disputing Parties and the two arbitrators so appointed shall agree on a
chairman.
 
(e) The applicable procedural rules shall be the Rules of Conciliation and
Arbitration of the International Chamber of Commerce.
 
(f) Arbitration awards rendered shall be final and binding and shall not be
subject to any form of appeal. The losing Party shall pay all reasonable
out-of-pocket expenses (including, without limitation, reasonable attorneys’
fees) incurred by the prevailing Party(ies), as determined by the arbitrators,
in connection with any dispute unless the arbitrators direct otherwise.
 
(g) Any controversy concerning whether a dispute is an arbitrable dispute,
whether arbitration has been waived or as to the interpretation or
enforceability of this Section 9.9 shall be determined by the arbitration panel.
 
Expenses 
 
9.10 Each Party shall bear its own expenses incurred in connection with this
Agreement, including all professional and advisory fees.
 
Survival  
 
9.11 The representations, warranties, covenants and agreements made in this
Agreement shall survive for the period indicated in Section 8.3 and shall not be
limited or otherwise affected by or as a result of any investigation made by any
Party hereto and the closing of the transactions contemplated hereby. However,
any Party aware of a breach shall have the duty to notify the other Parties
promptly upon becoming so aware.
 
Assignment; Benefit; Amendment and Waivers
 
9.12(a) Subject to the provisions of the Shareholders’ Agreement, the rights and
obligations hereunder shall not be assignable without the prior written consent
of the other Parties except that PIAC may assign its rights, obligations and
duties hereunder to any of its Affiliates without consent of the other Parties;
provided that the assignee is bound by the Shareholders’ Agreement. Each of the
Parties understands, acknowledges and hereby affirms that such assignment may be
by novation that will release PIAC from all of its obligations and duties
hereunder. 
 
24

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

 
(b) This Agreement shall be binding upon and shall inure to the benefit of the
Parties hereto, and their respective successors and permitted assigns, and there
shall be no third-party beneficiaries to this Agreement.
 
(c) No amendment or waiver of any provision of this Agreement will be valid and
binding unless it is in writing and signed, in the case of an amendment, by each
Party or, in the case of waiver, by the Party against whom the waiver is to be
effective.
 
Entire Agreement
 
9.13 This Agreement supersedes all prior discussions and agreements (whether
oral or written, including all correspondence), if any, between the Parties with
respect to the subject matter of this Agreement, and this Agreement (together
with any amendments or modifications thereof) contains the sole and entire
agreement between the Parties hereto with respect to the subject matter hereof,
subject to the Shareholders’ Agreement.
 
Severability
 
9.14 Any provision of this Agreement which is invalid or unenforceable shall be
ineffective to the extent of such invalidity or unenforceability, without
affecting in any way the remaining provisions hereof.
 
Counterparts
 
9.15 This Agreement may be executed in any number of counterparts, all of which
together shall constitute a single instrument. 
 
Specific Performance
 
9.16 This Agreement shall be specifically enforceable at the instance of any
Party. The Parties agree that any Party not in default will suffer immediate,
material, immeasurable, continuing and irreparable damage and harm in the event
of any material breach of this Agreement and the remedies at law in respect of
such breach will be inadequate (each Party hereby waives the claim or defense
that an adequate remedy at law is available) and that such Party shall be
entitled to seek specific performance against the Party in default for
performance of its obligations under this Agreement in addition to any and all
other legal or equitable remedies available to it.
 
Further Actions
 
9.17(a) Each of the Parties shall execute and deliver all such future
instruments and take such other and further action as may be reasonably
necessary or appropriate to carry out the provisions of this Agreement and the
intention of the Parties as expressed herein.
 
25

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

 
(b) As soon as possible after the Effective Date, the Company shall furnish to
PIAC the audited financial statements of the Company and the Group Company for
the period ended December 31, 2007 and a balance sheet of the Company as of
February 28, 2008.
 
Third Party Rights
 
9.18 No Person other than a Party may enforce this Agreement by virtue of the
Contracts (Rights of Third Parties) Act 1999.
 
Headings; Schedules
 
9.19 All Article and Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or inference shall
be derived therefrom. The Schedules attached hereto and referred to herein are a
part of this Agreement as if fully set forth herein. All references to Sections
and Schedules shall be deemed references to such parts of this Agreement, unless
the context shall otherwise require.
 
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

26

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

 
IN WITNESS WHEREOF, the Parties have entered into this Agreement the day and
year first above written.
 
Citius Power Limited
   
By:
/s/ Ravi Kailas
Name:
Ravi Kailas
Title:
CEO        
Phoenix India Acquisition Corp.
   
By:
/s/ Ramesh S. Akella      
Name:
Ramesh S. Akella      
Title:
President

Ravi Kailas
/s/ Ravi Kailas  
Deepak Kochhar
/s/ Deepak Kochhar

27

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

 
SCHEDULE I

PROMOTERS

Promoter Name
Indirect Holding of Equity Shares on Effective Date (%)
Ravi Kailas
47.5
Deepak Kochhar
47.5

 
EQUITY SHAREHOLDERS

Shareholder Name
Holding of Equity Shares on Effective Date (%)
RSK Holdings (BVI) Limited
47.5
DVK Holdings (BVI) Limited
47.5
Rohit Phansalkar
5
TOTAL
100%

CITIUS POWER INDIA

Shareholder Name
Number of Shares held at Closing
Percentage of Equity Shares held at Closing
Citius Power Limited, Mauritius
49,994
99.99
Ravi Kailas
1
<0.01
Charitha Kailas
1
<0.01
Rama Krishna Thondepu
1
<0.01
Uma Thondepu
1
<0.01
Sree Ramlu Kailas
1
<0.01
Vasudevi Kailas
1
<0.01
TOTAL
50,000
100%

28

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

 
SCHEDULE II

DEFINITIONS

“Affiliate” shall mean with respect to any Person, any company, corporation,
association or other entity, which, directly or indirectly, Controls, is
Controlled by or is under Common Control with, such Person. If such Person is an
individual, the term Affiliate shall include the spouse and lineal ascendants
and descendants of such Person;
 
“Applicable Law” shall mean any statute, law, regulation, ordinance, rule,
judgment, order, decree, by-law, approval from the concerned authority,
government resolution, directive, guideline, policy, requirement, or other
governmental restriction or any similar form of decision of, or determination
by, or any interpretation or adjudication having the force of law of any of the
foregoing as may from time to time be the case in the jurisdictions of India,
Mauritius, or any other jurisdiction in which the Company carries out a material
part of its business or in which the Company owns any material asset or assets;
 
“Articles of Association” or “Articles” shall mean the Articles of Association
of the company, as amended;
 
“Board of Directors” or “Board” shall mean the Board of Directors of the Company
in office at applicable times and as appointed in accordance with the terms of
the Shareholders’ Agreement;
 
“Business Day” shall mean a day on which the scheduled commercial banks are open
for business in Mauritius and New York;
 
“Control”, “Controlled” or “Common Control” for these purposes shall mean the
power to direct the management and policies of a Person whether through the
ownership of over 50% of the voting power of such Person, through the power to
appoint more than half of the members of the board of directors or similar
governing body of such Person, through contractual arrangements or otherwise;
 
“Convertible Preference Shares” shall mean convertible preference shares of the
Company, of face value USD 10 each, issued in accordance with the terms and
conditions of this Agreement and as set out in Schedule V;
 
“Director” shall mean a director of the Company or his or her alternate director
appointed in accordance with the provisions of the Shareholders’ Agreement;
 
“Equity Shares” shall mean the Class A Ordinary Shares of the Company with no
par value;
 
“Equity Shareholders” shall mean holders of the Equity Shares;
 
29

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

 
“Fully Diluted Basis” means the total of all classes and series of Equity Shares
outstanding on a particular date, combined with all options (that have been
granted), warrants, convertible securities of all kinds, including the
Convertible Preference Shares, debentures or any other arrangements relating to
the Company’s equity, and the effect of any anti-dilution protection regarding
previous financings, all on an “as if converted” basis. For the purpose of this
definition, “as if converted” basis shall mean as if such instrument, option or
security had been issued and converted into Equity Shares;
 
“Governmental Entity” shall mean any agency, commission, authority, central
bank, department, legislature, minister, ministry, official or public,
regulatory or statutory Person or state-owned organization (whether autonomous
or not) of, the government of, that state or any political sub-division in or of
that state, any Person who in any capacity whatsoever then owns, holds,
administers or controls any of the reserves of that state, any court, tribunal
or judicial body or any other governmental authority or instrumentality, in each
case, domestic or foreign;
 
“Group Company” shall mean and include Citius Power India;

“IPO” shall mean an initial public offering of Shares or other securities
(including depository receipts), either domestic or overseas, of the Company and
consequent listing of the Shares or other securities of the Company on one or
several stock exchanges, domestic or overseas with minimum offering proceeds of
at least Rupees 1,500,000,000;

“Liens” shall mean all mortgages, liens, security interests, charges, easements,
leases, subleases, covenants, rights of way, options, claims, restrictions or
encumbrances of any kind;
 
“Liquidity Event” shall mean any of: (a) an IPO; or (b) a trade or a strategic
sale of the Company;
 
“Memorandum” shall mean the Memorandum of Association of the company, as
amended;
 
“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, company,
institution, public benefit corporation, other entity, government (whether
federal, central, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof),
Governmental Entity or any other entity that may be treated as a person under
Applicable Law;
 
“Rupees” or “Rs.” shall mean the lawful currency of the Republic of India;
 
“Share Capital” shall mean the total paid up share capital of the Company
determined on a Fully Diluted Basis taking into consideration the Equity Shares,
the Convertible Preference Shares and any other securities of the Company,
entitled to vote generally in any General Meeting which is called to seek
shareholder approval or in any other circumstances upon which a vote, consent or
other approval (including by written consent) is sought from the shareholders of
the Company;
 
30

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

 
“Shareholders” shall mean the shareholders of the Company;
 
“Shareholders’ Agreement” shall mean the shareholders’ agreement of even date
between the Company, PIAC and the Promoters;
 
“Shares” shall mean the Equity Shares, the Convertible Preference Shares and any
other equity securities into which such shares are reclassified or
reconstituted;
 
“Transaction Agreements” shall mean the Shareholders’ Agreement and the
Subscription Agreement;
 
“Transfer” shall mean to directly or indirectly transfer, sell, assign, pledge,
hypothecate, create a security interest in or lien on, place in trust (voting or
otherwise), transfer by operation of law or in any other way subject to any
encumbrance or dispose of, whether or not voluntarily;
 
“US Dollars” or “USD” or “$” shall mean the lawful currency of the United
States.
 
31

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

 
SCHEDULE III

MATERIAL CONTRACTS

32

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

SCHEDULE IV

SUBSIDIARIES

 
1.
Citius Power Limited (“Citius Power India”).

33

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

 
SCHEDULE V

TERMS OF ISSUE OF CONVERTIBLE PREFERENCE SHARES

The terms of issue contained herein shall apply to the Convertible Preference
Shares issued at par pursuant to this Agreement.

1.
Definitions

 
Capitalised terms not defined herein shall have the meaning as set out in the
Agreement.
 

2.
Voting

 
The Convertible Preference Shares shall be entitled to the same voting rights as
are available to the Equity Shares.
 

3.
Dividends

 
The Convertible Preference Shares shall not be entitled to any dividend.
 

4.
Conversion

 

 
(a)
PIAC shall have the right to convert the Convertible Preference Shares, at its
option, at any time after twenty four (24) months following Closing, if an IPO
or any other Liquidity Event has not taken place; provided however, the
Convertible Preference Shares shall mandatorily convert into Equity Shares at
the time of the IPO or the occurrence of any other Liquidity Event, whichever is
earlier.

 

 
(b)
The Convertible Preference Shares owned by PIAC shall be converted into Equity
Shares in the ratio of 8.25 Equity Shares for every Convertible Preference
Share, which if converted at Closing would represent 65% of the Share Capital.

 

5.
Liquidation Preference

 

 
(a)
Subject to Applicable Law (in particular the provisions of the Act), in the
event of a liquidation, dissolution or winding-up (voluntary or otherwise)
(“Liquidation Event”) the holders of the Convertible Preference Shares will be
entitled to receive in priority of, and in preference to, the holders of any
other shares of the Company, an amount per Convertible Preference Share equal to
the Aggregate Subscription Price (“Liquidation Preference”).

 

 
(b)
If, upon the occurrence of such a Liquidation Event, the assets of the Company
are not sufficient to permit the payment of the Liquidation Preference in full
to all of the holders of Convertible Preference Shares, then the entire assets
of the Company available for distribution (after repayment of debt) shall be
distributed rateably among the holders of the Convertible Preference Shares.

 

6.
Notices

 
Any notice or other communication given or made in respect of the Convertible
Preference Shares or the exercise of any right in relation to them or any amount
payable in respect of them shall be given in the same manner as a notice is
required to be given to the holders of the Convertible Preference Shares
pursuant to this Agreement.
 
34

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