MEMORANDUM OF UNDERSTANDING

MODEL FORM

This Memorandum of understanding is made and entered into at _______, this_____ day of ________20___, amongst Mr. ________________________________________, an adult Indian Citizen, r/o___________________________________________, Mumbai-___________, hereinafter referred to as the ‘Party of the First Part’ (which expression shall unless it be repugnant to the context and meaning there of, include his legal heirs, executors, administrators and assigns); Mr. _______________________________________, an adult Indian Citizen, r/o___________________________________________________, Mumbai- ________, hereinafter referred to as the ‘Party of the Second Part’ (which expression shall unless it be repugnant to the context and meaning there of, include his legal heirs, executors, administrators and assigns); Mrs. __________________________________, an adult Indian Citizen, r/o ________________________________, Mumbai- ___________, hereinafter referred to as the ‘Party of the Third Part’ (which expression shall unless it be repugnant to the context and meaning there of, include her legal heirs, executors, administrators and assigns ); Mr. _____________________________, an adult Indian Citizen, r/o _______________________________________, Nasik, hereinafter referred to as the ‘Party of the Fourth part’. (Which expression shall unless it be repugnant to the context and meaning there of, include his legal heirs, executors, administrators and assigns) and Mr. ________________________, an adult Indian Citizen, r/o _______________________________________, Nasik, hereinafter referred to as the ‘Party of the Fifth part’. (Which expression shall unless it be repugnant to the context and meaning there of, include his legal heirs, executors, administrators and assigns)

WHEREAS Mr. ____________________________, the ‘Party of Second Part’, Mrs. __________________, the ‘Party of third Part’ and Mr. ____________________________, the ‘Party of Fourth Part’ are the directors and members of ‘M/s. ABCD Private Ltd.’ a private limited company incorporated under the Companies Act, 1956 as a private limited company (limited by guarantee). The said company has its registered office situate at _______________________________, District-Nasik and it is engaged in the business of purchase, manufacture and sale of synthetic rubber and other allied products and such other incidental and ancillary businesses as are mentioned in the Memorandum and Articles of Association. That the said company is established with the authorised capital of Rs. 10,00,000/= (Rs. Ten Lac Only) divided into 10,000 shares of Rs. 100/-each.

AND WHEREAS, the ‘Party of the First Part’ and the ‘Party of Fourth Part’, herein are the Partners in “M/s. XYZ Industries”, a Partnership Firm registered under the provisions of the Indian Partnership Act, under a Deed of Partnership dated __________ and the said Partnership is engaged principally in the business of purchase, manufacture and sale of synthetic rubber and other allied products and the same is carried on at _____________________________, District-Nasik.

AND WHEREAS “M/s. XYZ Industries” and ‘M/s. ABCD Private Ltd.’ are sister concerns for all practical purposes and intents, both of them being engaged in the same business and both of them have joint and unseverable business ties.

AND WHEREAS due to unforeseen circumstances, natural calamities and vagaries of business, “M/s. XYZ Industries” has run into losses and has incurred heavy debts and liabilities, whereas in comparison ‘M/s. ABCD Private Ltd.’ is a sound business concern with bright future.

AND WHEREAS the ‘Party of the First Part’, ‘Party of the Second Part’ and ‘Party of the Third Part’ herein wanted to quit both these firms for good on the terms and conditions acceptable to them and the ‘Party of the Fourth Part’ and the ‘Party of the Fifth Part’ were ready to accede to their proposal for renunciation and retirement. After due negotiations all the parties herein have arrived at a mutual agreement, the terms whereof are hereby recorded as follows:-

NOW THIS MEMORANDUM OF UNDERSTANDING WITNESSETH AS FOLLOWS:-

1) It is agreed by and amongst the Parties herein that the ‘Party of the First Part’ and the ‘Party of Fourth Part’ will execute a Deed of Dissolution to dissolve the Partnership Firm “M/s. XYZ Industries” and the said dissolution will take effect from the date of execution of the agreement in that regard. It is also agreed by and amongst the Parties herein that the ‘Party of the first part’ will forgo and renounce his entire right, title and interest in respect of all the assets and properties of the partnership firm “M/s. XYZ Industries” in favour of the ‘Party of Fourth Part’ in lieu of the latter partner taking over all the liabilities, debts and outstanding amounts owed by the said partnership firm.

2) It is agreed that on effecting the above referred quid-pro-quo arrangement the ‘Party of the Fourth Part’ will be entitled to continue the business of the Partnership Firm in the same name and will also be entitled to retain all the assets and properties of the said Partnership Firm, subject to all the debts and liabilities of the Partnership Firm and subject to the payment of all taxes, rates, assessments, dues and duties payable to the Government or Municipal Corporation or any other public body and to that extent the said partner, will be deemed to have retired from the said Firm.

3) It is also agreed by and amongst the parties hereto that the ‘Party of the Second Part’ and ‘Party of the Third Part’ herein do hereby forgo and renounce their entire right, title and interest in respect of all the assets and properties of ‘M/s. ABCD Private Ltd.’ in favour of the ‘Party of Fourth Part’ in lieu of the latter party taking over all the liabilities, debts and outstandings owed by the said company i.e. ‘M/s. ABCD Private Ltd.’ including the liability of the Parties of the Second & Third part.

4) It is also agreed by and amongst the parties hereto that in order to give effect to the arrangement contained in the foregoing paragraph, the ‘Party of Second Part’ and ‘Party of Third Part’ shall renounce, forgo and transfer their entire share in the capital of ‘M/s. ABCD Private Ltd.’ (i.e. 30% & 20% respectively) in favour of the ‘Party of Fourth Part’ and the ‘Party of the Fifth Part’ and thereby shall cease to be the members of the said company.

5) It is also agreed by and amongst the parties hereto that the ‘Party of Fourth Part’ shall be at liberty to admit the ‘Party of the Fifth Part’ or any other proper person as the member of the company during or after the tenure of the ‘Parties of the Second & Third Part’, and shall also be entitled to effect any change in the composition of the Board of Directors by appointing new Directors and ‘Parties of the Second & Third Part’ shall cooperate with him in that regard.

6) It is also agreed by and amongst all the parties hereto that on effecting the arrangement referred to in the foregoing paragraphs, the ‘Parties of the Second & Third Part’ shall be deemed to have been released from all their liabilities, debts and obligations in respect of ‘M/s. ABCD Private Ltd.’.

7) It is also agreed by and amongst all the parties hereto that the ‘Party of Fourth Part’ shall be at liberty to run the business of “M/s. XYZ Industries” in the same name as a sole proprietorship concern or as an adjunct or a subsidiary concern of ‘M/s. ABCD Private Ltd.’ If the ‘Party of Fourth Part’ decides to continue the business of “M/s. XYZ Industries” as a sole proprietary concern, he himself shall be liable for all its debts, liabilities and obligations. On the other hand if “M/s. XYZ Industries” is taken over as an adjunct or a subsidiary unit by ‘M/s. ABCD Private Ltd.’, it shall be the obligation of the latter company to meet former’s obligations, debts and liabilities from its profits, business reserves and from all other permissible sources.

8) It is also agreed by and amongst all the parties hereto that on the dissolution of “M/s. XYZ Industries” the benefits of or rights to all permits, licences held by it shall belong to the Party of Fourth Part alone to the exclusion of the all other parties.

9) Each of the parties hereto agrees and undertakes to sign all applications, documents, and other papers as may be required to properly transfer the properties and other assets allotted, assigned or released to the Party of Fourth Part, in respect of “M/s. XYZ Industries” and in favour of the surviving and/or newly admitted members of ‘M/s. ABCD Private Ltd.’, including all licenses and permits issued by the Government or Municipal bodies, but the costs, charges and expenses in respect thereof will be borne by the party requiring such documents to be signed.

10) The ‘Parties of the First, Second & Third Part’ shall not for a period of three year from the date hereof, carry on or engage, either directly or indirectly, in the same or identical business as carried on by the said Partnership Firm or the Company in the Districts of Nasik and Mumbai and in the vicinity there of.

11) In the event of any dispute arising between the parties hereto, in the course of effecting the arrangements set out herein or concerning the interpretation of the terms here under, the same will be referred to the arbitration of a common arbitrator if mutually agreed upon or to the arbitration of two or more arbitrators, each party to the dispute appointing his arbitrator, and the decision of the arbitrator/arbitrators shall be final and binding on the parties.

IN WITNESS WHEREOF the parties hereto have set out and subscribed their hands the day and year first herein above written.