Wednesday, August 3, 2011

DRAFT SCHEME OF AMALGAMATION

DRAFT SCHEME OF AMALGAMATION

In this Scheme, unless inconsistent with the subject or context:

(a) “The Transferor Company” means ABCD Limited an Existing Company under section 3 of the Companies Act, 1956, having its Registered Office at __________________, in the State of _______________.

(b) “The Transferee Company” means WXYZ Limited, a Company incorporated under the Companies Act, 1956, having its Registered Office at _____________________, in the State of _______________.

(d) “The Appointed Date” or “The Transfer Date” means April 1, 2005.

(e) “The Effective Date” means the date on which the last of the approvals hereinafter provided will have been obtained. However, for the purposes of Income Tax Act, the Effective Date shall be April 1, 2005, and for the purposes of allotment of shares of Transferee Company, the Board of Directors of the Transferee Company may fix the date.

(f) “The Scheme” means the Scheme of Amalgamation of ABCD Limited With WXYZ Limited as contained herein, or as sanctioned by the ___________ High Court, with modifications, if any.

(g) For the purpose of this Scheme, the Undertaking of the Transferor Company shall include all rights and privileges, powers and authorities, and all properties, movable and immovable, real or corporeal, incorporeal in possession or reversion, present or contingent, of whatsoever nature and wheresoever situated including in particular all licenses permits, quotas, approvals, rights, claims, leases, tenancy rights and liberties, patents, trade marks, and import quotas held by the Transferor Company o to which the Transferor Company is entitled, and all debts, liabilities and duties of the Transferor Company and all other obligations of whatsoever kinds including liabilities in respect of the employees of the Transferor Company agreed to be taken over by the Transferee Company, with regard to the payment of gratuity, pension benefits, provident fund or compensation in the event of voluntary retirement or retrenchment.

Share Capital

A. Transferor Company

On March 31, 2005, the Authorised Share Capital of the Transferor Company is Rs. 1,00,00,000 (Rupees One Crore) divided into 1,000,000 equity shares of Rs. 10 each and Rs. 10,00,000 (Rupess Ten Lakhs) divided into 1,00,000 preference shares of Rs. 10 each. The issued Capital is Rs. ____________ (Rupees _______________) divided into ___________ equity shares of Rs. 10 each and the subscribed and paid-up capital is Rs. _______________ (Rupees __________________) divided into ________ equity shares of Rs. 10 each.

B. Transferee Company

On March 31, 2005, the Authorised Share Capital of the Transferee Company is Rs. 20,00,00,000 (Rupees Twenty Crores) divided into 2,00,00,000 equity shares of Rs. 10 each and ____________ Preference Shares of Rs. _______ each. The issued capital is Rs. __________________ (Rupees _________________) divided into _____________ equity shares of Rs. 10 each and the subscribed and paid-up capital is Rs. ____________ (Rupees _______________) divided into _________________ equity shares of Rs. _____ each.

The Scheme of Amalgamation

1. (a) The Undertaking of the Transferor Company and particularly the immovable property incapable of passing by manual delivery including licences, permits, quotas, incentives, subsidies, approvals, rights, claims, leases, tenancy rights, liberties, patents, trade marks and import quotas shall under the provisions of Sections 391 and 394 of the Act and pursuant to the Orders of _______ High Court without any further act or deed but subject to the charges affecting the same as on the Effective Date, shall be transferred to and vested in the Transferee Company so as to become the Undertaking and property of the Transferee Company from the Appointed Date. Provided, however, that such charge shall not extend over or be deemed to be extended over any of the assets of the Transferee Company already owned and held by the Transferee Company.

(b) With effect from the Appointed Date, all debts, liabilities, duties and obligations of the Transferor Company (hereinafter referred to as “the said liabilities”) shall, pursuant to the Order under Section 394 of the Companies Act, 1956, of ______ High Court and without further act or deed be transferred or deemed to be transferred to and vested in and assumed by the Transferee Company so as to become the debts, liabilities, duties and obligations of the Transferee Company.

(a) Upon this Scheme becoming effective, the items appearing as Reserves and Surplus in the books of the Transferor Company as at the Appointed Date shall become the corresponding reserves and surplus of the Transferee Company.

2. If any suit, appeal, or other proceedings of whatever nature (hereinafter called the “proceedings”) by or against the Transferor Company be pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the Transfer of the undertaking of the Transferor Company or of anything contained in the Scheme, but the proceedings shall be continued, prosecuted and enforced by or against the Transferee Company in the same manner and to the same extent as they would or might have been continued, prosecuted or enforced by or against the Transferor Company if the Scheme had not been made.

3. The transfer of undertaking under Clause 1 hereof and the continuance of the proceedings by or against the Transferee Company under Clause 2 hereof, shall not affect any transactions or proceedings already concluded by the Transferor Company, in the ordinary course of business on or after the Transfer Date to the end and intent that the Transferee company accepts and adopts on behalf of itself all acts, deeds and things done lawfully and executed by the Transferor Company in regard thereto as having been done or executed on behalf of the Transferee Company.

4. As from the Transfer Date, the Transferor Company shall be deemed to have carried on and to be carrying on its business for and on behalf of and on account of and in trust for the Transferee Company until such time that the amalgamation becomes effective in terms of the Scheme.

5. As from the Transfer Date, the Transferor Company shall carry on the business of the Transferor Company until the amalgamation becomes effective, with utmost prudence and shall not without concurrence of the Transferee Company alienate, charge or otherwise deal with the property or assets of the Transferor Company or any part thereof, except in the ordinary course of business.

6. With effect from the Transfer Date and up to and inclusive of the Effective Date, all the profits and incomes accruing or arising to the Transferor Company or expenditure and losses incurred or arising as the case may be by the Transferor Company shall, for all purposes, be treated and be deemed to be and accrue as profits or income or expenditure or losses, as the case may be of the Transferee Company.

7. Subject to the other provisions contained in the Scheme, all lawful contracts, deeds, bonds, agreements and other instruments of whatever nature to which the Transferor Company is a party subsisting or having effect immediately before the amalgamation shall be in full force and effect against or in favour of the Transferee Company and may be enforced as fully and effectively as if instead of the Transferor Company, the Transferee Company had been a party thereto.

8. (a) All employees of the Transferor Company in the employment of the Transferor Company on the Effective Date, shall, as from the said date become the employees of the Transferee Company on the basis that their services have not been interrupted by the vesting of the undertaking of the Transferor Company in the Transferee Company under the Scheme and that the terms and conditions of service applicable to them immediately after the Effective Date will not be in any way less favourable to them, than those applicable to them immediately before the Effective Date.

(a) As far as the Provident Fund, Gratuity Fund, Superannuation Fund or any other Special Fund created or existing for the benefit of the employees of the Transferor Company are concerned, upon the Scheme becoming effective, the Transferee Company shall be substituted for the Transferor Company for all the purposes whatsoever related to the administration or operation of such Schemes or Funds or in relation to the obligation to make contributions to the said Funds in accordance with provisions of such Schemes or Funds according to the terms provided in the respective Trust Deeds or other documents. All the rights, duties, powers, and obligations of the Transferor Company in relation to such Schemes or Funds shall become those of the Transferee Company. The services of the employees of the Transferor Company will be treated as being continuous for the purposes of the aforesaid Schemes or Funds.

9. (a) Upon the Scheme become effective, in consideration of the transfer to and vesting of the undertaking of the Transferor Company in terms of the Scheme, the Transferee Company shall, with any application being made by the shareholders of the Transferor Company, issue and allot to the equity shareholders of the Transferor Company, equity shares in the Transferee Company in the proportion of 1 (one) share of the face value of Rs. 10 each of the Transferee Company, credited as fully paid up for every 25 (twenty five) fully paid up equity shares of the face value of Rs. 10 each, held by the equity shareholders of the Transferor Company on such date as the Board of Directors of the Transferee Company may decide.

(b) As a result of the issue and allotment of the share capital of the Transferor Company in the manner specified in sub-clause (a) to this Clause hereinabove, if any equity shareholder of the Transferor Company becomes entitled to any fraction of equity shares of the Transferee Company, no such fractional coupon shall be issued in respect of or representing such equity shares of the Transferee Company, but such fractional coupon shall be consolidated into whole equity shares and the Board of Directors of the Transferee Company, or a Committee thereof may allot any one or more of such consolidated shares to any nominee(s) as the Board of Directors or the Committee may their absolute discretion deem fit for the purpose of holding and selling of such consolidated equity shares. Every such sale of the consolidated equity shares shall be at such price or prices as may be approved by the Board of Directors or the Committee and upon receipt of the purchase price in respect of such sale (provided the Board of Directors or the Committee approved the purchaser), the Board of Directors or the Committee shall allot the equity shares to the approved purchaser/s. the total net sale proceeds of such consolidated equity shares (after defraying therefrom all costs, charges, and expenses of sale) shall be distributed and divided among those equity shareholders of the Transferor Company as would otherwise have been entitled to such fractions of the equity shares of the Transferee Company in proportion to their respective interest in such fractions.

(b) Equity shares so allotted by the Transferee Company to the shareholders of the Transferor Company will in all respects rank pari-passu with the existing equity shares of the Transferee Company for dividend, voting and other rights.

(c) Every shareholder of the Transferor Company shall surrender to the Transferee Company for cancellation, the relevant share certificate(s) held in the Transferor Company and thereupon the Transferee Company shall issue the certificate(s) for the shares in the Transferee Company he or she may be entitled to.

10. The ____________ equity shares of Rs. _____ each, paid up, in the Transferor Company are held by the Transferee Company. The said _________ equity shares shall be transferred by the Transferee Company before the date of allotment of shares by it pursuant to Clause 9 hereof, to such party/parties as the Board of Directors of the Transferee Company may think fit.

11. Upon the Scheme becoming effective, the Main Objects of the Memorandum of Association of the Transferor Company shall form part of the Main Objects of the Memorandum of Association of the Transferee Company.

12. On the Scheme being agreed to by the requisite majorities of the members of the Transferor Company and of the members of the Transferee Company, the Transferor Company and the Transferee Company shall with reasonable despatch, apply to the High Court of Judicature at Mumbai for obtaining sanction to this Scheme of Amalgamation under Section 391 of the Act and for an Order or Orders under Section 394 of the Act for carrying this Scheme into effect and for dissolution of the Transferor Company without winding up as also any Order or Orders as may be necessary and appropriate under the Act.

13. The Scheme is conditional upon and subject to: -

(a) The Scheme being agreed to by the respective requisite majorities of the members of both the Companies as are referred to in clause 12 hereof and the requisite Order or Orders referred to in Clause 12 being obtained;

(b) Such other sanction and approvals as may be required by law in respect of the Scheme being obtained.

14. This Scheme, although to come into operation from the Appointed Date, shall not become effective until the date on which the certified copies of the Orders under Sections 391 and 394 of the Act shall be duly filed with the Registrar of Companies, Maharashtra State, Mumbai.

15. In the event of any of the approvals or conditions required to be obtained or fulfilled are not obtained or complied with on or before December 31, 2005, or within such further period or periods as may be agreed upon by and between the Transferor Company and the Transferee Company (through their respective Board of Directors) the Scheme shall become null and void and in that event no rights or liabilities whatsoever shall accrue to or be incurred inter se between the Transferor Company and the Transferee Company.

16. All costs, charges and expenses of the Transferor Company and the Transferee Company respectively in relation to or in connection with the negotiation leading up to this Scheme or carrying out and completing the terms and provisions of this Scheme shall be borne and paid by the Transferee Company.

17. For the purpose of giving effect to the Scheme, the Board of Directors of the Transferee Company or any Committee thereof, is authorized to give such directors as may be necessary or desirable and to settle as they may deem fit, any question, doubt or difficulty that may arise in connection with or in the working of the Scheme including with regard to issue and allotment of Equity Shares under Clause 9 hereof, to the members of the Transferor Company and to do all acts, deeds and things necessary for carrying into effect the Scheme.

18. A copy of the order of the _________________ High Court sanctioning the Scheme of Amalgamation shall be filed by the Transferor Company and the Transferee Company with Registrar of Companies, ____________, within one month from the date the Order is received by the Transferor Company and the Transferee Company.

DRAFT SCHEME OF ‘DEMERGER’

DRAFT SCHEME OF ‘DEMERGER’

SCHEME OF ARRANGEMENT & DEMERGER

BETWEEN

ABC LIMITED

AND

XYZ LIMITED

AND

THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS

(Under Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956)

1. PREAMBLE:

1.1 ABC LIMITED is a Company incorporated under the provisions of the Companies Act, 1956 having its registered office at ____________________________________________.

1.2 ABC LIMITED has 2 main divisions, namely; (a) ABC Products Division with factory located at _______________________________________________and (b) DEF Division with factory located at __________________________________________________.

1.3 The (a) ABC Products Division is engaged in the business of manufacturing & trading in all kinds of ______________________________________________; and (b) the DEF division is engaged in the business of manufacture, assembling and sale of all kinds of ______________________________________.

1.4 XYZ LIMITED is a company incorporated under the Companies Act, 1956 having its registered office at _____________________________________ and is engaged in the business of manufacture and sale of various kinds of ___________________________________.

1.5 As a measure of corporate restructuring, more efficient use of existing resources, operation on a broader scale, increasing efficiency in business operations and to realise the potential for further growth, ABC LIMITED has decided to demerge its DEF Division. The proposed demerger will enable ABC LIMITED to concentrate on its core business i.e. ABC Division and to combat fierce competition arising out of entry of global players. The demerger will provide a specialized DEF business to XYZ LIMITED, which in turn shall be able to chalk out growth plan thereby increasing profitability of the Division.

1.6 ABC LIMITED proposes by this Scheme of Arrangement to separate the DEF Division by demerging it to XYZ LIMITED and restructure the respective companies ABC LIMITED & XYZ LIMITED post demerger.

1.7 To give effect to the said proposal, the Scheme of Arrangement & Demerger is presented for approval of the Hon’ble High Court at Delhi.

2. DEFINITIONS:

In this Scheme unless repugnant to the meaning or context thereof, the following expressions shall have the following meaning:-

A. `The Act’ means the Companies Act, 1956.

B. The “Appointed Date” means April 1, 2005, the date with effect from which the scheme of Arrangement & Demerger shall be applicable.

C. “Court” means the Hon’ble High Court of Judicature at Delhi.

D. The `Effective Date’ means the date by which last of the approvals specified in this Scheme shall have been obtained.

E. The `DEF Division’ means the unit of ABC LIMITED at ………. (Delhi) and shall also include -

(i) all the assets whether moveable or immoveable, tangible or intangible including all rights , title , interest, covenant, undertakings, liabilities including continuing rights, title and interest in connection with the land and the buildings thereon whether leasehold or otherwise, plant and machinery whether leased or otherwise, together with all present and future liability including contingent liabilities and debts appertaining thereto, of the Transferor Company of all of which relate to the DEF Division, as more fully set out in the Schedule I hereof. In particular, the details of the material parcels of land are included in Schedule II hereof.

(ii) All permits, quotas, rights, industrial and other licences, branches, offices, depots and godowns, trade marks, trade names, know-how and other and other intellectual property, patents, copyrights, privileges and benefits of all contracts, agreements and all other rights including lease rights, licenses, powers and facilities of every kind, nature and description whatsoever pertaining to the DEF Division as set out in Schedule III hereof.

(iii) All permanent employees of ABC LIMITED engaged in or in relation to DEF Division at the factory, branches or other offices;

(iv) All earnest moneys and/or security deposit paid by ABC LIMITED in connection with or relating to the DEF Division;

F. “Record Date” means the date to be fixed by the Board of Directors of ABC LIMITED for the purpose of determining the member of ABC LIMITED to whom the shares of XYZ LIMITED will be allotted pursuant to this Scheme.

G. “Scheme” means this scheme of Arrangement & Demerger in its present form submitted to the Court for sanction or with any modification(s) approved or imposed or directed by the Court.

H. “ABC LIMITED’ or the Transferor Company” means ABC LIMITED, incorporated under the Companies Act, 1956 having its registered office at _________________________________________.

I. “XYZ LIMITED” or the Transferee Company” means XYZ LIMITED, the Transferee Company, incorporated under the Companies Act, 1956, having its registered office at ________________________________________________.

3. SHARE CAPITAL:

(a) Existing Share Capital of ABC LIMITED.

(i) Authorised Share Capital Rs. 3, 60,00,000.00

36,00,000 equity shares of Rs. 10/- each

(ii) Issued Share Capital Rs.3,23,80,140.00

32,38,014 Equity Shares of Rs.10 each

(iii) Subscribed and paid up Capital Rs.3,17,07,750.00

31,70,775 equity shares of Rs.10 each fully paid up

(b) Existing Share Capital of XYZ LIMITED

(i) Authorised Share Capital Rs…………

(ii) Issued Share Capital Rs…………

……………….. Equity Shares of Rs.10 each

(iii) Subscribed and paid up Capital Rs…………

…………… Equity shares of Rs.10 each fully paid up.

4. TRANSFER OF DEF DEVISION:

4.1 The DEF Division of ABC LIMITED shall be Demerged and transferred to and vested in or be deemed to be transferred to and vested in XYZ LIMITED in accordance with Section 2(19AA) of the Income tax Act, 1961 and in the manner enumerated in ensuing paragraphs.

4.2 With effect from the Appointed Date, the DEF Division shall, without any further act or deed, be transferred to and vested in or be deemed to have been transferred to and vested in XYZ LIMITED for all the estate and interest of ABC LIMITED, subject to existing securities, charges and mortgages, if any subsisting thereon in favour of banks, financial institutions, as may be modified, re-adjusted, apportioned or re-allocated by them.

4.3 All debts, liabilities, contingent liabilities, duties and obligations of ABC LIMITED relating to the DEF Division as on the Appointed Date whether provided for or not in the Books of Accounts of ABC LIMITED, whether disclosed or undisclosed in the Balance Sheet of ABC LIMITED shall, without any further act or deed, be the debts, liabilities, contingent liabilities, duties and obligation of XYZ LIMITED and XYZ LIMITED undertakes to meet, discharge and satisfy the same.

4.4 XYZ LIMITED undertakes to pay, discharge and satisfy all debts, liabilities, duties and obligations of ABC LIMITED relating to DEF Division as on the Appointed Date and all liabilities, debts, duties, obligations relating to the said division which may accrue or arise after the Appointed Date.

4.5 It is expressly clarified that with effect from the Appointed Date, all taxes, duties, excess payable by Transferor Company relating to the DEF Division and all or any refunds/ credit including MAT credit/ claims relating thereto shall be treated as the liability or refund/ credit including MAT credit/ claims, as the case may be, of Transferee Company.

4.6 Transferor Company shall permit Transferee Company to use its brand "PQR" and corporate logo as a part of its brand name and marketing I promotional material for products, namely ___ Assemblies, subject to such terms and conditions as may be agreed to between Transferor Company and Transferee Company.

5. CONTRACTS, DEEDS, BONDS AND OTHER INSTRUMENTS

5.1 Subject to the other provisions contained in this Scheme all contracts, deeds, bonds, agreements and other instruments of whatever nature relating to the DEF Division to which ABC LIMITED is a party subsisting or having effect immediately before the arrangement shall remain in full force and effect against or in favour of XYZ LIMITED and may be enforced as fully and effectually as if instead of ABC LIMITED, XYZ LIMITED had been a party thereto.

5.2 With effect from the Appointed date, all permits, quotas, rights, industrial and other licences, branches, offices, depots and godowns, trade marks, trade names, know-how and other and other intellectual property, patents, copyrights, privileges and benefits of all contracts, agreements and all other rights including lease rights, licenses, powers and facilities of every kind, nature and description whatsoever pertaining to the DEF Division of ABC LIMITED to which ABC LIMITED is a party or to the benefit of which ABC LIMITED may be eligible and which are subsisting or having effect immediately before the Effective Date, shall be and remain in full force and effect in favour of or against XYZ LIMITED as the case may be, and may be enforced as fully and effectually as if, instead of ABC LIMITED, XYZ LIMITED had been a party or beneficiary or obligee thereto.

5.3 With effect from the Appointed Date, any statutory licenses, no objection certificates, permissions or approvals or consents required to carry on operations in the DEF Division of ABC LIMITED shall stand vested in or transferred to XYZ LIMITED without further act or deed, and shall be appropriately mutated by the statutory authorities concerned therewith in favour of XYZ LIMITED upon the vesting and transfer of DEF Division of ABC LIMITED pursuant to the scheme. The benefit of all statutory and regulatory permissions, factory licenses, environmental approvals and consents including the statutory licenses, permissions or approvals or consents required to carry on the operations of the DEF Division shall vest in and become available to XYZ LIMITED pursuant to the scheme.

5.4 The XYZ LIMITED, at any time after the coming into effect of this Scheme in accordance with the provisions hereof, if so required under any law or otherwise, will execute deeds of confirmation or other writings or arrangements with any party to any contract or arrangement in relation to the DEF Division of ABC LIMITED to which ABC LIMITED is a party in order to give formal effect to the above provisions. XYZ LIMITED shall, under the provisions of this Scheme, be deemed to be authorized to execute any such writings on behalf of ABC LIMITED and to carry out or perform all such formalities or compliances referred to above on part of ABC LIMITED.

6. LEGAL PROCEEDINGS

All legal or other proceedings including any suits, appeals, arbitrations, execution proceedings, references, review, revisions, writ petitions, if any, by or against DEF Division of ABC LIMITED under statute, whether pending on the Appointed Date or which may be instituted in future in respect of any matter arising before the Effective Date and relating to the DEF Division (including those relating to any property, right, power, liability, obligation or duties of ABC LIMITED in respect of the DEF Division ] shall be continued and enforced by or against XYZ LIMITED only. If proceedings are taken against ABC LIMITED, ABC LIMITED will defend the same as per advice of XYZ LIMITED at the cost of XYZ LIMITED and the latter will reimburse and indemnify ABC LIMITED against all liabilities and obligations incurred by ABC LIMITED in respect thereof.

7. TRANSFEROR COMPANY’S STAFF, WORKMEN AND EMPLOYEES

(a) All permanent employees of ABC LIMITED engaged in the DEF Division at its factories, branches and other offices and elsewhere and who are in the employment of ABC LIMITED shall stand transferred to XYZ LIMITED with continuity of service and on the same terms and conditions on which they are engaged as on the Effective Date by ABC LIMITED. XYZ LIMITED shall undertake to continue to abide by any of the Agreement/Settlement etc entered into by ABC LIMITED in respect of DEF Division with any Union/employees of DEF Division. XYZ LIMITED agree that the service of all such employees with ABC LIMITED upto the Appointed Date shall be taken into account for purposes of all retirement benefits for which they may be eligible in ABC LIMITED upto the Effective Date. XYZ LIMITED further agree that for the purpose of payment of any retrenchment compensation, gratuity and other terminal benefits such past services with ABC LIMITED shall also be taken into account and agrees and undertakes to pay the same as and when payable.

(b) XYZ LIMITED undertakes that the existing Employees Welfare measures including funds, trusts and arrangement, organised and created by ABC LIMITED for its employees of DEF Division shall be continued for the benefit of such employees, including employees who may join XYZ LIMITED after the Appointed Date on the same terms and conditions and with effect from such day XYZ LIMITED shall make the necessary contributions for such employees taken over by XYZ LIMITED until XYZ LIMITED constitutes its own arrangements and obtains necessary approval for the same.

8. CONDUCT OF BUSINESS BY TRANSFEROR COMPANY TILL EFFECTIVE DATE

With effect from the Appointed Date and upto and including the Effective Date:

(a) Transferor Company shall be deemed to have been carrying on and to be carrying on all business and activities relating to the DEF Division of Transferor Company for and on behalf of Transferee Company.

(b) All income, expenditures including management costs, profits accruing to Transferor Company and all taxes thereof or losses arising or incurred by it relating to the DEF Division of Transferor Company shall, for all purposes, be treated as the income, expenditures, profits, taxes or losses, as the case may be, of Transferee Company.

(c) ABC LIMITED hereby undertakes upto and including the Effective Date to carry on its business with proper prudence and without the prior written consent of XYZ LIMITED not to alienate, charge or otherwise deal with or dispose off the DEF Division or any part thereof (except in the usual course of business) or undertake substantial expansion of its existing business pertaining to the DEF Division.

9. ISSUE OF SHARES BY THE TRANSFEREE COMPANY

a) Upon the Scheme being sanctioned by the Hon’ble High Court of Delhi and it becoming effective and the transfer of the DEF Division, becoming effective in terms of the Scheme, XYZ LIMITED shall without any further application or deed, issue at par and allot on proportionate basis to each member of ABC LIMITED, whose name is recorded in the Register of Members of SPML on the Record Date or his/her heirs, executors, administrators or the successors-in-title, as the case may be, __________ Equity shares of Rs. _______ each in XYZ LIMITED credited as fully paid-up in the ratio of for every ______________ fully paid-up equity shares of Rs. _______ each held by each such member of ABC LIMITED. The paid-up share capital of ABC LIMITED shall stand reduced to the extent of net value of assets (including reserves) and liabilities being transferred to XYZ LIMITED.

b) The reduction of capital as mentioned above in this Scheme of Arrangement shall be effected as a part of this composite Scheme itself and not under a separate process in terms of Sections 100 to 103 of the Act as the same does not involve either diminishing of liabilities in respect of unpaid share capital or any paid up capital.

10. DIVIDENDS, PROFITS, BONUS/RIGHTS SHARES

10.1 ABC LIMITED shall not declare any dividend for the period commencing from and after April 1, 2005 without the written consent of the Transferee Company.

10.2 Subject to the provisions of the Scheme, the profits of the ABC LIMITED for the period beginning from April 1, 2005 shall belong to and be the profits of the Transferee Company and will be available to the Transferee Company for being disposed of in any manner, as it thinks fit, including declaration of dividend by the Transferee Company in respect of its financial year ending 31^st March, 2005 or any year thereafter.

10.3 ABC LIMITED shall not issue or allot any Rights Shares or Bonus Shares, out of its Authorised or unissued Share Capital for the time being.

11. TERM LOAN AND BANK BORROWINGS/FACILITIES:

a) ABC LIMITED has obtained term loans and bank borrowings/facilities from banks and financial institutions in respect of the DEF Division against the security of the assets of the said division created as per the details given in the annexure hereto.

b) Pursuant to the scheme, XYZ LIMITED agrees and undertakes to pay the said term loans and bank/borrowings/facilities with interest cost, charges and expenses as remain due upto the Transfer date, pertaining to the DEF Division vested in it under the scheme and comply with all terms and conditions on which such loans have been granted with such modification as the aid institution/banks may stipulate.

c) The securities created by ABC LIMITED in favour of any of the financial institutions/banks as mentioned hereinabove for the amounts of their outstanding loans, borrowings/facilities on the movable and immovable properties of the DEF Division, will continue to be in full force and effect and shall remain binding on XYZ LIMITED for the amount of debt, liabilities, and obligations.

d) All loans raised after the Appointed Date but before the Effective Date and used and liabilities incurred by ABC LIMITED after the Appointed Date but before the Effective Date for operations of the DEF Division shall be discharged by XYZ LIMITED.

12. APPLICATIONS TO HIGH COURT

On the Scheme being agreed to by the requisite majorities of the members of ABC LIMITED and the members of XYZ LIMITED, both ABC LIMITED as well as the XYZ LIMITED shall respectively with all reasonable dispatch, make applications / petitions to the Court for sanctioning this Scheme of Arrangement under Section 391 of the Act read with Section 100 to 103 and other applicable provisions of the Act for carrying this Scheme into effect. It is hereby clarified that submission of the Scheme to the Court and to any authorities for their respective approvals is without prejudice to all rights, interests, titles and defences ABC LIMITED and XYZ LIMITED has or may have under or pursuant to all applicable laws.

13. MODIFICATIONS/AMENDMENTS TO THE SCHEME

ABC LIMITED and XYZ LIMITED may in their full and absolute discretion, assent from time to time, on behalf of all persons concerned to any modifications or amendments to the Scheme or agree to any terms and / or conditions which the Court and / or any other authorities under law may deem fit to approve of or direct or impose or which may otherwise be considered necessary or desirable or appropriate by them in the best interest of the members for settling any questions or doubt or difficulty that may arise, whether by reason of any order of the Court or of any directive or orders of any other authorities or otherwise howsoever, arising out of, under or by virtue of this Scheme and for the implementation and / or carrying out of the Scheme, or in any matter connected therewith and to do all acts, deeds, matters and things and take all such steps as may be necessary, desirable or expedient for putting the Scheme into effect. The aforesaid powers of ABC LIMITED and XYZ LIMITED may be exercised by their respective Boards, a committee or committees of the concerned Board or any Director authorized in that behalf by the concerned Board.

14. SCHEME CONDITIONAL ON APPROVALS/SANCTIONS

The Scheme is conditional upon and subject to the following approvals/permissions and the Arrangement shall be deemed to be completed on the Effective Date.

a) The approval of the Scheme by the requisite majorities of such classes of persons of ABC LIMITED and XYZ LIMITED, as may be directed by the Court on the applications made for directions under Section 391 read with section 100 to 103 of the Act for calling meetings and necessary resolutions being passed under the Act.

b) The sanctions of the Court of the Scheme of Arrangement under Sections 391 and 394 of the Act read with Section 100 to 103, in favour of ABC LIMITED & XYZ LIMITED and to the necessary Order or Orders under Sections 391, 392 and 394 of the Act.

c) The approvals of public financial institutions, banks and creditors wherever necessary, under any contract entered into with them by ABC LIMITED and XYZ LIMITED.

d) The Sanction or Approval under any law of the Central Government or any other agency, department or authorities concerned in respect of any of the matters in respect of which such sanction or approval is required.

e) The Scheme shall be subject to such modifications as the Court while sanctioning such arrangement of ABC LIMITED with XYZ LIMITED may direct the Scheme once sanctioned will be binding on all concerned.

f) Notwithstanding anything contained hereinabove, the Scheme shall also become effective in terms of and upon the fulfillment of requirements of any other law that may be brought into force in this behalf before the Scheme otherwise becomes effective as hereinbefore provided.

15. EFFECT OF NON-RECEIPT OF APPROVALS/SANCTIONS

In the event of any of the said sanctions and approvals referred to in clause 14 above not being obtained and / or the Scheme not being sanctioned by the Court and / or the order or orders not being passes as aforesaid, the Scheme of Arrangement shall become null and void and shall stand revoked, cancelled and be of no effect and in that event no rights and liabilities whatsoever shall accrue to or be incurred by parties inter se, save and except in respect of any act or deed done prior thereto as is contemplated hereunder or as to any right, liability or obligation which has arisen or accrued pursuant thereto and which shall be governed and be preserved or worked out as is specifically provided in the Scheme or may otherwise arise in law. ABC LIMITED and XYZ LIMITED shall bear their own costs, charges and expenses in connection with the Scheme unless otherwise mutually agreed.

16. EXPENSES CONNECTED WITH THE SCHEME

a) All costs, charges and expenses in connection with the Scheme and of carrying on or completing the terms and provisions of the Scheme including any incidental charges shall be borne and paid by ABC LIMITED and XYZ LIMITED in equal shares.

b) In the event of non-fulfillment of any or all obligations under the Scheme, by either ABC LIMITED or XYZ LIMITED, the non-performance of which will put the other company under any obligation, such defaulting company will indemnify all costs / interests etc. to the other company, subject to a specific provision, if any, to the contrary under the Scheme.

c) All costs, charges, taxes including duties, levies and all other expenses, including legal expenses, if any (save where expressly provided otherwise) of ABC LIMITED or XYZ LIMITED respectively in relation to or in connection with this Scheme including negotiation leading upto the Scheme and for carrying out and completing the terms and provisions of this Scheme and / or incidental to the completion of arrangement of ABC LIMITED in pursuance of this Scheme shall be borne and paid equally by ABC LIMITED and XYZ LIMITED.

17. RESOLUTION OF DOUBTS/DIFFERENCES

If any doubt or difference or issue shall arise between the parties hereto or any of their shareholders, creditors, employees and / or any other person as to the construction hereof or as to any account or apportionment to be taken or made of any asset or liability transferred under this Scheme or as to the accounting treatment thereof or as to anything else contained in or relating to or arising out of this Scheme, the same shall be decided by the mutual agreement between the Board of Directors of ABC LIMITED and XYZ LIMITED whose decision shall be final and binding on all concerned.