SUBSCRIPTION AGREEMENT

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 THIS AGREEMENT made at Mumbai on this the ……..day of …….. two thousand one between, ABC Power Corporation Ltd. a company registered under the Companies Act, 1956 and having its registered office at Mumbai in the State of Maharashtra (hereinafter referred to as "the Company", which expression shall, unless it be repugnant to the subject or context thereof, include its successors and assigns);

AND

THE XYZ FINANCE COMPANY LTD., a company incorporated under the Companies Act, 1956 and having its registered office at  ……..Mumbai 400001 (hereinafter referred to as "Subscriber", which expression shall include its successors and assigns as the subject or context may require).

Capitalised terms used herein shall have the meanings assigned in Schedule II hereto.

ARTICLE 1: ISSUE OF NCDs

The Company shall issue 54,00,000 Secured Redeemable Non-Convertible Debentures (hereinafter called NCDs) of the face value of Rs. 100 each aggregating to Rs. 54.00 Crores (Rupees fifty-four crores only) to the Subscriber.

The proceeds of the issue of the said NCDs shall be utilised for implementing the Project as defined in Schedule II. In case the Company fails, for any reason, to utilise the proceeds of the issue for the said purpose or utilises the same for any purpose other than the approved Scheme, the Subscriber would be entitled to rescind/avoid the contract on that ground and to call back the money, if any, paid towards subscription of the said NCDs.

ARTICLE II : AGREEMENT AND TERMS OF SUBSCRIPTION

2.1 Amount and terms of subscription

The Subscriber agrees to subscribe to and the Company agrees to allot to the Subscriber on the terms and conditions contained herein, 54,00,000 NCDs of Rs. 100 each aggregating Rs. 54.00 crores on private placement basis as set out against their name in Schedule I hereto.

2.2 Issue of Debenture Certificates

The Company shall issue the debenture certificates in such manner and form as will be required by the Subscriber. The Company shall amend its Articles of Association for such purpose where necessary.

2.3 Front-end fee

The Company shall pay front-end fee at the rate of 1%, plus interest tax, upfront, on the agreed amount of Subscription, i.e. on Rs. 54.00 crores.

2.4 Rate of interest/Coupon rate

The NCDs shall carry interest on the principal amount of NCDs outstanding from time to time at the prime lending rate ("PLR") of the Subscriber plus 3.5% per annum plus interest tax as prevailing on the date of each subscription, payable quarterly or at such oftler higher rate as may be applicable in terms of section 2.5 below. The first instalment of interest shall accrue for the broken period from the date of subscription upto the date immediately following 15th June and 15th December as the case may be and subsequently be payable on the said dates 15th March, 15th June, 15th September and 15th December. The interest for the broken period shall be payable together with the last instalment of the redemption of the said NCDs.

The applicable rate of interest would be fixed at the end of the total Subscription (for NCDs of Rs. 54.00 Crores) period on the basis of the weighted average of the interest rates at which the subscriptions were made.

In the event of any default in the payment of interest on the NCDs on the dates as stated above, compound interest at half-yearly rests at the said rates will become due and payable for the moneys due for the period of default.

2.5 Review of rate of interest

Subscriber would have the right to reset the rate of interest at the end of seven years from the date of first disbursement provided that the company will have the right to redeem the NCDs if the reset is adverse to the Company.

2.6 Further interest

All interest which shall become due during the currency of the NCDs or any part thereof and for the time being remaining unpaid and all other moneys which have become payable by Company to Subscriber, in case the same be not paid on the dates on which they accrue due, carry further interest at the maximum lending rate of the Subscriber (top of the Interest Rate Band), as applicable on the date of default or at the applicable rate under the Subscription agreement, whichever is higher, computed from the respective date(s) of such interest of moneys accruing due and all such interest and further interest which have become payable but not paid, shall become payable upon the footing of compound interest with rests taken or made quarterly as herein before provided.