PART - III - Udyog Bandhu

egulatory approvals, foreign participation, strategic partner review; access to information,investment intent, source of funds, technical proposals and shareholding structure.5. Agreements on Representations and Warranties: It describes the various representationsand warranties given by both the parties.6. Covenants of the parties: It describes the actions to satisfy closing conditions, therequirements of preservation of records and of making public announcements.7. Conditions precedent: It lays down that the representations at the closing time be true andaccurate. It also lays down the performance of obligations, receipt of closing documentation,consents, authorisations and registrations.8. Indemnification: It lays down the conditions for the indemnification by the strategicpartner.9. Termination: It lays down the conditions for termination of the contract and effect of thistermination.10. Waiver/Survival: The waiver/survival clause is added at the end of the agreement.11. General: The general section includes the various provisions regarding expenses, notices,assignment, further assurances, dispute resolution/submission to jurisdiction, amendments,governing law, appointment of agent and severability.3.2.5 Shareholders' AgreementShareholders' Agreement is a very important agreement. It defines the rights and obligations ofboth the parties. Concerns of Government on protection of employees' rights, future investment/ business plans and the precautions against assets stripping are generally reflected in it. It laysdown the survival period after which the claims become time barred and the indemnificationlimit to which a purchaser can be indemnified. It also lays down the terms and conditions ofindemnification for any disputed tax liabilities, litigation liabilities and environmentalliabilities. It lays down the procedure for management of the company after disinvestment. Italso includes various representations and warranties given by both the parties. It lays down thedispute resolution mechanism for both the parties.Shareholders' Agreement is entered into among the Hon'ble Governor of the State (actingthrough the Secretary of the Administrative Department), the company, the strategic partnerand other principals as applicable.It contains the following sections:1. Definitions and principles of interpretation: It contains the various definitions andrules of interpretation given in the agreement.2. Purpose and scope: It defines the purpose and the scope of the agreement. It also laysdown the conditions for compliance with the agreement.3. Equity participation, financial support: It lays down the conditions for equityparticipation, additional capital and dilution of Government Equity Interest.93