The parties hereby wish to record the terms and conditions of the arrangement and inter alia of theissue:**1. Amount and Terms of Optionally Fully Convertible Debentures:**The Subscriber agrees to invest in, and subscribe to, the securities of the Company, and theCompany agrees to allot to the Subscriber ‘Zero Percent Optionally Fully Convertible Debentures’ ofRs 10/- each of the Company, by adjusting the amount paid by the subscriber, for an amount notexceeding Rs 1200 crore, on the terms and conditions contained herein. The amount payable on theOFCDs, shall be paid in one or more tranche.**2. Security****:**The Debentures to be issued shall be secured by Pari-passu charge on Company’s land admeasuring2026.36 square yards equivalent to 1694.26 sq.mtrs, bearing Survey No.37 situate, lying and beingat Mouje Ishwarpura of Kadi Taluka, District Mehsana in the State of Gujarat.**3. Allotment of Debentures:**i) The Company shall allot OFCD by adjusting the outstanding subscription money, within a periodnot exceeding 90 (Ninety) days from the date of receipt of the subscription form/money. In theevent of failure on the part of the company to allot the OFCD’s as aforesaid, it shall pay interestto the subscriber, at a mutually agreed rate (exclusive of interest tax), on the outstandingsubscription amount.ii) The company shall issue OFCD Certificate in such lots as may be required by the Subscriber andshall sub-divide or consolidate, re-materialize or de-materialize the certificates at any timewithout payment of any fee.iii) Pending issuance of OFCD Certificate/s the Company shall issue Letter of Allotment in physicalor demat form as acceptable to the subscriber.iv) The documents shall be freely transferable to other Companies in Promoter Group of SIIL byexecution of transfer deed and delivery in physical form or through depository if it is held indematerialized form. However, the OFCD’s shall not be a marketable security and shall not belisted.**4. Redemption Date:**i) The Company shall redeem OFCD at the end of 5 years or earlier as per the mutually agreedpremium with the subscriber, from the date of allotment if not converted to equity sharesbefore the maturity date.ii) The Company may in suitable circumstances, revise, vary or extend the redemption of OFCD orthe balance outstanding upon such terms and conditions as may be agreed by the Subscriber.
 

 
iii) The record date of the redemption of OFCD shall be the preceding last business day at the endof five years from the respective dates of allotment.**5. Option to Convert:**i) The either party shall have an option to convert OFCD in part or in full of equity shares of Rs10/- each or at such premium, as may be mutually agreed, at any time from the date of allotmenteither in full or in part before the redemption date .ii) Call Option Notice: The either party shall be required to give 7 days clear notice in writingto the Company for exercise of the Call option. The Company shall however be within its right towaive the specified period and agree for shorter notice.**6. Conversion Formalities**The Company shall carry out all necessary formalities and obtain all necessary approvals so asto enable issuance of equity shares on conversion of OFCD’s.**7. Allotment of Equity Shares**The Company shall allot equity shares of the Company in physical or in demat form. The equityshares shall be subject to the Memorandum and Articles of Association of the Company and shall rankpari passu with the existing equity shares of the Company, save and except they shall eligible fordividend pro rata from the respective dates of allotment.IN WITNESS WHEREOF, the parties have signed the above on 23rd day of December, 2007, at Mumbai.         For **VEDANTA ALUMINIUM LTD.**  For **STERLITE INDUSTRIES (I) LTD.**         /s/ Virendra Agarwal /s/ P.L. Chockalingam /s/ Sushil Gupta /s/ B. Anand**(Virendra Agarwal)** **(P.L. Chockalingam)** **(Sushil Gupta)** **(B. Anand)****Authorised Signatories**