Sample of Participation Agreement

PARTICIPATION AGREEMENT

THIS PARTICIPATION AGREEMENT (hereinafter referred to as the "Agreement") is made and entered into this __ day of ______, by and between:

1.            Mr. ______, private person, in this respect acting as majority shareholder and president director of and therefore representing and acting for and on behalf of PT ______, a company dully established and existing under the laws of the Republic of Indonesia, having its address at ______, (hereinafter referred to as the FIRST PARTY).

2.            PT ______, a company duly established under the laws of the Republic of Indonesia, having its registered office at___________, in this matter represented by Mr. ___________, in his capacity as _________ of the company, (hereinafter referred to as "SECOND PARTY");

The above mentioned parties separately shall be referred to as a "Party" and jointly as the "Parties".

WITNESSETH

A.            Whereas, FISRT PARTY is in the process of entering into a Pilot Project with ________ ("xxx") for a ________________(“Project”) , Indonesia.

B.            Whereas, SECOND PARTY has expressed interest with FISRT PARTY to invest in ______ Project and based on several discussions and meetings with FISRT PARTY, that SECOND PARTY is willing to invest in the ______ Project by way of participating in financing the funding requirements of the project.

C.            Whereas, for the above purpose, the SECOND PARTY is conducting a due diligence upon the FIRST PARTY as hereby confirmed by the Parties.

D.            Whereas, the FIRST PARTY has undertaken in accordance with the terms hereof to immediately convene an Extraordinary General Meeting of Shareholders of the Company after the signing of this Participation Agreement, and to complete all necessary requirements such that as a result thereof, the SECOND PARTY shall become the shareholder of the Company, together with the FIRST PARTY.

NOW THEREFORE in consideration of the premises set out above and mutual covenants hereinafter set forth, the Parties agree to enter into this participation agreement with the terms and condition as follows:

ARTICLE  1

DEFINITIONS

1.            In this Agreement, the following terms shall, except where the context otherwise requires, bear the meaning set out below:

  "Agreement" shall mean this Participation Agreement and its subsequent amendments or supplements;

"Amended Articles" shall mean the Articles of Association to be amended to give effect to the equity participation of the SECOND PARTY contemplated hereunder.

"Articles of Association" shall mean the Articles of Association of the Company, and all amendments thereto (if any).

"Assets" shall mean the assets of the Company from time to time, including with out limitation to project and license.;

"Business Days" shall mean Monday through Friday, except public holidays, in Jakarta, provided that if the due day falls on a Saturday or a Sunday, or public holiday prevailing at the relevant place where an obligation is to be performed, such due day shall occur on the next business day.

“xxx Project” shall mean________.

"Project Licenses" shall mean the approvals and other operating licenses required from time to time for the development and operating of the Project;

1.2          Headings

  The headings of the Articles and/or paragraphs of the Articles are inserted for convenience only and shall not be used or taken into consideration in the interpretation of any Articles or paragraphs herein.

ARTICLE 2

CAPITAL INCREASE AND SHAREHOLDING PROPORTIONS

The Parties acknowledge that in the event the Parties reasonably agreed that subscriptions for additional shares in the Company by its shareholders are necessary, the shareholders of the Company shall subscribe and pay for such additional shares pro rata their then current shareholding in the Company as called for by the Board of Directors of the Company. Any share issuance in the Company shall in no circumstance changes the shareholding composition percentage ratio of __ : __ of the Company’s issued shares capital between the FIRST PARTY and the SECOND PARTY, respectively, unless otherwise mutually agreed by the Parties, or to the extent of their not subscribing and paying for additional shares. The capital increase shall be made after the company optioned the profits.  

ARTICLE  3

PROJECT FUNDING

For the purposes of funding the development of any Projects the Parties agree that if, in the future the shareholders of the Company decided based on their unanimous approval that the Company require additional investment than the Intended Investment in this Agreement, the Parties shall use its reasonable endeavors to arrange loan funding for the Company subject to the Company providing adequate and satisfactory security to the lender(s).

ARTICLE 4

SHARE PURCHASE AGREEMENT AND SHAREHOLDERS’ MEETING

4.1.         The Parties shall enter into a mutually satisfactory Share Purchase Agreement and the following meetings shall be convened:

(a)        an Extraordinary General Meeting of Shareholders (Transfer Meeting) for the purpose of adopting the Amended Articles to amend the Articles of Association of the Company, inter alia, to change the shareholding composition of the Company consisting of the FIRST PARTY as holder of __% of the issued share capital of the Company and the SECOND PARTY as  holder of __% of the issued share capital of the Company; and

(b)        an Extraordinary General Meeting of Shareholders to resolve the appointment of the members of the Board of Commissioners and Board of Directors of the Company from candidates recommended for appointment by Parties which shall consist of:

(i)            2 (two) members of Board of Commissioner of which one member as the President Commissioner shall be appointed by the SECOND PARTY and other member shall be appointed by the FIRST PARTY;

(ii)           3 (three) members of Directors of which one member as the President Director shall be appointed by the FIRST PARTY and the other 2 (two) members, one being the Vice President Director shall be appointed by the SECOND PARTY;

4.2          The Parties further acknowledge that the Amended Articles shall stipulate matters concerning the management and organization of the Company, the obligations of shareholders, as well as of members of the Board of Directors and Board of Commissioners.

4.3          Term of Payment. The purchase price of the shares shall be US$ ________________ ( _______________ United States dollars). The SECOND PARTY shall transfer …..% (…… percent) of the total purchase price to a bank account designated by the FIRST PARTY within 3 (three) days as of the date of this Agreement. The SECOND PARTY shall transfer the …….% (……….. percent) of the total purchase price at the signing date of Share Purchase Agreement. The first payment (__ percent of total purchase price) cannot be refundable should SECOND PARTY cancel or withdraw its participation from the Project during or after the due diligence process or either before or after the Transfer Meeting.