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SHAREHOLDERS' AGREEMENT
This AGREEMENT is made on 1998 (the Effective Date) between:
1. DYERSBURG CORPORATION, a company organized and existing under the laws
of the State of Tennessee with its registered office at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America (the FOREIGN SHAREHOLDER).
2. PT TEXMACO JAYA, a limited liability company established and existing
under the laws of the Republic of Indonesia, with its principal
office at JI. H.R. Rasuna ▇▇▇. ▇-▇ ▇▇. ▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the
INDONESIAN SHAREHOLDER).
RECITALS
A. The Foreign Shareholder is a leader in the field of the manufacture
of circular knit fabrics.
B. The Indonesian Shareholder has contacts in the Indonesian industrial
and financial sectors.
C. The Foreign Shareholder and the Indonesian Shareholder wish to jointly
establish an Indonesian limited liability PMA joint venture company to
operate in the field of fabric manufacturing in the Territory.
D. The Foreign Shareholder and the Indonesian Shareholder wish to enter
into this Agreement to regulate their rights and obligations in
relation to the establishment of, and thereafter as shareholders in,
the Company.
IT IS AGREED as follows
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1. DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
In this Agreement (including the Recitals and Schedules), the following
definitions shall apply unless the context requires otherwise.
AFFILIATE means, in relation to a Party which is a company, that Party and any
company which is for the time being a holding company or a Subsidiary of a
holding company of such shareholder, where a company is a SUBSIDIARY of another
company (its HOLDING COMPANY), if that other company:
(a) holds a majority of the voting rights in it; or
(b) is a member of it and has the right to appoint or remove a majority
of its board of directors; or
(c) is a member of it and controls alone or pursuant to an agreement with
other shareholders or members, a majority of the voting rights in it,
or if it is a Subsidiary of a company which is itself a Subsidiary of that
other company.
Affiliate shall include, but is not limited to, ▇▇ ▇▇▇▇▇▇▇▇▇ or any entity he
controls directly or indirectly.
ARBITRATION NOTICE is defined in Clause 29.1.
ARTICLES OF ASSOCIATION means the articles of association of the Company
containing terms agreed by the Parties which are consistent with the terms of
this Agreement.
BKPM means the Badan Koordinasi Penanaman Modal (Capital Investment Coordinating
Board) of the Territory.
BOARD OF COMMISSIONERS means the Board of Commissioners (Dewan Komisaris)
of the Company.
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BOARD OF DIRECTORS means the Board of Directors (Direksi) of the Company.
BUSINESS means the business of the Company as defined in Clause 4.
COMMENCEMENT DATE means the date which is the later to occur of (i) the date on
which the Company has its first sale of more than 10,000 meters of fabric and
(ii) June 1, 1998.
COMPANY is defined in Clause 2.1.
DEFAULT is defined in Clause 8.1.
DEFAULTING PARTY is defined in Clause 20.5.
EXCLUDED TERRITORY means North and Central America and the Caribbean Basin.
EXPERT is defined in Clause 20.6(b).
INFORMATION is defined in Clause 19.1.
INNOCENT PARTY is defined in Clause 20.5.
LICENSE AGREEMENT means the License Agreement dated the date hereof between the
Parties.
PARTIES and a PARTY means the Foreign Shareholder and the Indonesian Shareholder
or any one of them.
PMA means penanaman modal asing or foreign capital investment in accordance with
Law Number 1 of 1967 of the Territory (as amended).
SHAREHOLDER means any individual, company or organization registered from time
to time as a shareholder of the Company.
TERMINATION NOTICE is defined in Clause 20.5.
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TERRITORY means the Republic of Indonesia.
1.2 INTERPRETATION
In interpreting this Agreement, headings are for convenience only and do not
affect interpretation. The following rules of interpretation apply unless the
context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(d) A reference to a person includes a company, an unincorporated body or
other legal entity and conversely.
(e) A reference to a Clause, Recital or Schedule is to a clause of or
recital or schedule to this Agreement.
(f) A reference to any Party or party to any other agreement or document
includes that Party's or the relevant party's successors and permitted
assigns (if any).
(g) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced from
time to time, except to the extent prohibited by this Agreement or that
other agreement or document.
(h) A reference to any law, enactment, regulation, decree or directive or
to any provision of any law, regulation, enactment, decree or directive
includes any modification or re-enactment of it, any legislative or
statutory provision substituted for it, and all regulations and
statutory instruments issued under it.
(i) A reference to DOLLARS or $ is to the lawful currency of the United
States of America.
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(j) A reference to RUPIAH or RP. is to the lawful currency of the
Territory.
(k) Each Schedule, and each certificate and document delivered under this
Agreement forms part of this Agreement.
2. FORMATION OF THE COMPANY
2.1 PARTIES TO OBTAIN ALL NECESSARY APPROVALS
The Parties shall proceed with the establishment of a limited liability company
with PMA joint venture status (the COMPANY).
The Indonesian Shareholder shall have primary responsibility for obtaining all
approvals and permits necessary for the establishment and commencement of
operations of the Company as, and with the full privileges of, a limited
liability company with PMA joint venture status under the Foreign Investment Law
of 1967 (as amended) of the Territory and its implementing regulations and
policies. The Parties shall cooperate in furnishing all information needed for
obtaining such approvals.
2.2 ESTABLISHMENT OF THE COMPANY
Upon receipt of the Notification of Presidential Approval (Surat Pemberitahuan
Persetujuan Presiden or SPPP) issued by BKPM for the establishment of the
Company with the privileges granted under the Law Number 1 of 1967 (as amended)
upon terms acceptable to the Parties, a Deed of Establishment (Akta Pendirian)
incorporating the Articles of Association shall be executed by the Parties
before a notary in Jakarta and shall be immediately submitted to the Minister of
Justice of the Republic of Indonesia for approval.
The Parties agree that notwithstanding that the approval of the Minister of
Justice has not yet been obtained for the establishment of the Company, the
Parties will at all times conduct themselves in accordance with the terms of
this Agreement.
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2.3 CONDITIONS PRECEDENT
The obligations of the Parties under this Agreement shall be subject to prior
satisfaction of the following conditions precedent:
(a) each Party obtaining all necessary approvals, licences and permits
required to be obtained from relevant government authorities under
applicable laws, regulations and policies in the Territory or the
jurisdiction of incorporation of that Party for the entry into and
performance of this Agreement by that Party; and
(b) each Party obtaining all approvals as may be required under its
Articles of Association or other constituent documents for the entry
into and performance of this Agreement by that Party.
3. NAME OF THE COMPANY
The name of the Company shall be "PT DYERSBURG TEXMACO FLEECE" (or, if that name
is not acceptable to the Minister of Justice, such similar name as is agreed by
the Parties and acceptable to the Minister of Justice).
If at any time in the future the Foreign Shareholder or any Affiliate of the
Foreign Shareholder (or a combination of these) ceases to be the registered
owner of at least 40% (forty percent) of the issued shares in the capital of the
Company, then prior to or promptly following that situation arising, upon the
written request of the Foreign Shareholder, each other Party shall do all things
necessary to procure that the name of the Company shall be changed to delete the
word, or any part, "Dyersburg" from the name of the Company.
4. BUSINESS OF THE COMPANY
The Company may engage in the following business activities and other actions
anywhere in the World, excluding the Excluded Territory (unless the Foreign
Shareholder gives its prior written consent) (collectively, the Business):
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(a) to engage in the manufacture and refining of circular knit fabric and
fabric related products and the sale of such fabric and fabric related
products to wholesale and industrial users and as allowed by law; and
(b) to perform all lawful actions and do all other things necessary to
achieve or otherwise related to or connected with the purposes
mentioned in paragraph (a) above and to establish or join in the
establishment of or participate in other companies or other
institutions either by way of joint enterprise or joint venture,
subject always to the prevailing laws and regulations having the force
of law in the Territory,
subject always to the obtaining and holding of all licences, permits, approvals
(if any) and the making of such filings and reports (if any) as may be required
from time to time to conduct such activities and actions.
5. RELATIONSHIP OF THE PARTIES
The Articles of Association shall, to the extent permitted under applicable laws
and regulations, at all times give effect to the terms of this Agreement.
By signing this Agreement (or any document by which another person or entity is
later admitted as a Party), each Party irrevocably agrees that if there is any
conflict or inconsistency between the provisions of this Agreement and the
Articles of Association then:
(a) as between the Parties, the provisions of this Agreement shall
prevail; and
(b) the Parties shall forthwith use their best endeavors to procure an
amendment to the Articles of Association so as to remove such conflict
or inconsistency.
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6. TOTAL INTENDED INVESTMENT AND CAPITAL
6.1 INITIAL TOTAL INTENDED INVESTMENT
The initial total intended investment in the Company (comprising the proposed
equity and debt capital of the Company) shall be $40,000,000 (forty million
United States Dollars).
6.2 AUTHORIZED CAPITAL
The initial authorized share capital of the Company shall be the Rupiah
equivalent of $30,000,000 (30 million United States Dollars), calculated on the
basis of the Dollar to Rupiah exchange rate set out in the Notification of
Presidential Approval referred to in Clause 2.2.
6.3 INITIAL CAPITAL
The initial issued share capital of the Company shall be the Rupiah equivalent
of $16,000,000 (sixteen million United States Dollars) which shares shall be
subscribed for and fully paid up by the Parties in the following proportions:
(a) Foreign Shareholder: 49% (forty nine percent) of the issued
capital; and
(b) Indonesian Shareholder: 51% (fifty one percent) of the issued
capital.
The initial share capital will be paid in accordance with Clause 6.4.
6.4 EQUITY CONTRIBUTIONS
The Parties agree and acknowledge that their equity contributions shall be made
as follows:
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INDONESIAN SHAREHOLDER:
AMOUNT TIME DETAILS OF PAYMENT
US$8,160,000 Effective Date Cash or by suitable assets
for the Company, the form
and valuation of such assets
to be mutually agreed to by
the Parties.
US$4,000,000 Effective Date The Indonesian Shareholder
or one of its Affiliates
will on the Effective Date
contribute US$4,000,000 in
cash and contemporaneously
will assign to the Foreign
Shareholder the share
capital received in exchange
therefor in consideration of
the license of certain know-
how pursuant to the License
Agreement.
FOREIGN SHAREHOLDER:
AMOUNT TIME DETAILS OF PAYMENT
US$4,000,000 Effective Date The Foreign Shareholder will
on the Effective Date license
to the Indonesian
Shareholder, or one of its
Affiliates, certain know-how
pursuant to the License
Agreement. The Indonesian
Shareholder, or such
Affiliate, will transfer its
share capital of the Company
to the extent of $4,000,000
to the Foreign Shareholder in
consideration of such
license.
US$3,840,000 Dyersburg Corporation
common stock valued per
share at the greater of
(i) US$10.75 or (ii) the
average closing price
for the ten trading days
ending five trading days
prior to Dyersburg
Corporation's annual
meeting of shareholders
next following the
Effective Date.
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The Parties agree and acknowledge that any issuance of Dyersburg Corporation
common stock may be subject to the prior approval of the shareholders of
Dyersburg Corporation at the annual meeting of shareholders next following the
Effective Date. The Parties agree that if such approval is required and is not
obtained at such meeting, the Foreign Shareholder shall promptly make the
relevant equity contribution by way of cash. The obligation of the Foreign
Shareholder to make such equity contribution is subject to the fulfillment by
the Indonesian Shareholder of its obligations in Clause 6.9(a) hereof.
6.5 FURTHER SHARE ISSUES TO BE PROPORTIONAL
The Parties agree that in the case of any further issue of shares by the
Company, each Shareholder shall be given the opportunity first to purchase a
number of the shares to be issued pro-rata in proportion to the number of shares
of which it is the registered owner on the date of issue of the new shares,
subject to obtaining all necessary approvals (if any) of the appropriate
government authorities.
Subject to the provisions of this Clause 6, each Party shall fully subscribe for
and accept all duly authorized issuances of capital by the Company and shall
comply with all calls or requests for funds against subscribed capital which are
made from time to time by the Board of Directors. Funds shall be provided in
cash payments by each Party in proportion to its percentage ownership of shares
in the Company when and as requested by the Board of Directors.
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6.6 CONSEQUENCES OF FAILURE TO SUBSCRIBE FOR FULL PROPORTIONATE SHARE OR
PAY THE FULL SUBSCRIPTION PRICE
(a) If any Party at any time has failed to subscribe within a period of
30 (thirty) days after the relevant subscription is required to be
made or elects not to subscribe for its full proportionate
entitlement of shares in the Company then being offered (the NON-
SUBSCRIBING PARTY), then the other Party (provided that such other
Party has subscribed for its proportionate share of the total number
of shares then being offered by the Company) (the SUBSCRIBING PARTY)
shall have the right, but not the obligation, to subscribe for the
shares in the Company originally offered to the Non-Subscribing
Party, thereby increasing its percentage interest in the Company and
the Non-Subscribing Party shall have no further rights in respect of
those shares.
If there shall be more than two Parties to this Agreement at the time a
Party becomes a Non-Subscribing Party, then each Subscribing Party
shall have the right to subscribe for the shares in the Company
originally offered to the Non-Subscribing Party pro-rata in proportion
to the number of shares in the Company which it owns bears to the total
number of shares owned by all Subscribing Parties, unless otherwise
agreed by and among the Subscribing Parties. If any Subscribing Party
fails to purchase its full proportionate share of the Non-Subscribing
Party's shares, then the remaining Subscribing
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Party or Subscribing Parties shall have the right, but not the
obligation, to purchase such shares with the amount to be purchased by
each being determined as provided above as between themselves.
(b) If any Party at any time fails to pay the full subscription price for
shares subscribed for by that Party when such payment is due, as
determined by the Board of Directors (the NON-PAYING PARTY), such
failure shall constitute a breach of the subscription agreement
between the Non-Paying Party and the Company and shall also
constitute a breach of this Agreement and if such breach is not cured
within 30 (thirty) days by payment to the Company of the full amount
then in arrears, plus interest at the rate of 20% per annum on the
amount in arrears from the date such payment was due to the date
payment is made, then on the thirty-first day or within 14 (fourteen
days) thereafter the other Party (provided that such other Party has
paid the full subscription price for shares subscribed for by such
party) (the PAYING PARTY) shall have the right, but not the
obligation, to subscribe for and purchase the shares previously
subscribed for by the Non-Paying Party for the price at which the
Non-Paying Party had subscribed for those Shares. If the Non-Paying
Party had made a partial payment of the subscription price for the
relevant shares prior to such breach, then within 30 (thirty) days
after receiving payment of the full subscription price from the
Paying Party, the Company shall refund to the Non-Paying Party the
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amount previously paid by that Non-Paying Party on such shares minus
interest at the rate of 20% per annum on the amount in arrears from the
date such payment was due from the Non-Paying Party to the date payment
is received from the Paying Party.
If there shall be more than two Parties to this Agreement at the time a
Party becomes a Non-Paying Party, then each Paying Party shall have the
right to subscribe for and purchase the shares in the Company which
were originally subscribed for by the Non-Paying Party as the Paying
Parties shall agree between or among themselves or failing such
agreement between the Paying Parties, each Paying Party shall have the
right to subscribe for and purchase a proportion (such proportion for
each Paying Party to be equal to the proportion which the number of
shares in the Company which it owns bears to the total number of shares
owned by all Paying Parties) of the shares in the Company which were
originally subscribed for by the Non-Paying Party, and if any Paying
Party fails to purchase its full proportionate share of such shares,
then the remaining Paying Party or Paying Parties shall have the right,
but not the obligation, to purchase such shares with the amount to be
purchased by each being determined as provided above as between
themselves.
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6.7 POWER OF ATTORNEY
For the purpose of Clauses 6.5 and 6.6, each Non-Subscribing Party and NonPaying
Party shall be deemed to have granted power of attorney to the President
Director of the Company, to act for and on behalf of that Non-Subscribing and
Non-Paying Party, as the case may be, (i) to do all things necessary including
to sign and execute all documents required for performing the matters referred
to in Clause 6.5 and Clause 6.6, as the case may be, and (ii) to designate a
person to represent the Non-Subscribing Party and the Non-Paying Party at any
General Meeting of Shareholders which is necessary achieving for such purposes
(iii) to sign any application or notification to be submitted to BKPM in order
to obtain BKPM approval (if required) or otherwise for or in respect of
performing the matters referred to in Clause 6.5 and Clause 6.6, as the case may
be.
The powers of attorney referred to in the preceding paragraph form an integral
and inseparable part of this Agreement and shall be irrevocable. Accordingly,
the Parties waive Articles 1813, 1814 and 1816 of the Indonesian Civil Code in
respect of those powers of Attorney.
6.8 INCREASE IN AUTHORIZED CAPITAL
The authorized share capital of the Company may be increased when and as
authorized by a General Meeting of Shareholders, subject to obtaining any
necessary Indonesian Government authorizations.
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6.9 FURTHER FINANCING OF THE COMPANY
The Parties agree that, subject to the provisions of this Clause 6:
(a) The Indonesian Shareholder shall, or shall cause an Affiliate to,
provide sufficient financing to the Company to enable it to commence
operations and fund its working capital needs following commencement of
operations. The Company and the Indonesian Shareholder, or such
Affiliate, shall enter into financing agreements on the Effective Date
to evidence such indebtedness in form and substance agreeable to the
Shareholders and approved by the Board of Directors. It is anticipated
that amounts borrowed from the Indonesian Shareholder will bear
interest at 11.0% per annum for periods from May 1997 through August
1997, 12.5% per annum for periods from September 1997 through October
1997, 14.0% per annum for periods from November 1997 through February
1998 and following that time will bear interest at the lower of 17.0%
per annum or the Indonesian Shareholders' cost of capital until the
Company is able to obtain financing from a third party on terms
acceptable to the Shareholders.
(b) So far as possible the Company shall satisfy all further financing
requirements by way of borrowings upon reasonable arms'-length
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commercial terms on its own account from third party banks and other
financial institutions.
(c) The Company shall obtain such further financing without any requirement
for guarantees or similar support from the Foreign Shareholder;
provided, the Foreign Shareholder agrees to extend its reasonable
assistance to the Company and the Indonesian Shareholder in their
attempts to obtain financing for the Company's working capital needs
from financial institutions known to the Foreign Shareholder.
(d) If shareholder guarantees or similar support are or is required in
respect of any financing by the Company and agreed to by each
Shareholder, each Party shall provide or procure to be provided such
guarantee or support, upon such reasonable arms'-length commercial
terms as may be required by the relevant bank or financial
institution providing the financing, on a several (not joint or joint
and several) basis pro rata in proportion to the level of the Party's
shareholding in the Company at that time and each Party undertakes
to indemnify in full each other Party so as to ensure that each Party
shall be liable only in proportion to the level of its shareholding
in the Company at that time.
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7. TRANSFER OF SHARES
7.1 COMPLIANCE WITH THE ARTICLES OF ASSOCIATION
Any sale, transfer, pledge, or any other manner of transfer or encumbrance
(including agreeing, whether conditionally or otherwise, to do any of the
foregoing) of part or all of any Party's shares in the Company shall be subject
to the procedures and requirements set out in the Articles of Association and
this Agreement.
7.2 TRANSFER TO AFFILIATE
Any Party (the TRANSFERRING AFFILIATE) may transfer part or all of its shares in
the Company to any of its Affiliates or other related parties (a GROUP
TRANSFEREE), without being required to follow the procedure set out in Clause
7.3, subject to and in accordance with the terms of this Clause 7.2.
The Transferring Affiliate hereby unconditionally and irrevocably guarantees to
each other Party in relation to any Group Transferee the due and punctual
performance by that Group Transferee of its obligations under this Agreement and
undertakes with each other Party as a continuing obligation that if for any
reason the Group Transferee does not perform any of its obligations the
Transferring Affiliate will, as primary obligor and not merely as guarantor,
perform such obligations on the Group Transferee's behalf and will indemnify and
keep indemnified the Other Party against all losses, damages, liabilities, costs
and expenses which each Other Party may sustain, incur or pay by reason of the
failure of the Group Transferee so
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to perform. In this respect, the Transferring Affiliate waives Articles 1831,
1833, 1837, 1843, 1847, 1848 and 1849 of the Indonesian Civil Code.
7.3 VOLUNTARY TRANSFER TO NON-AFFILIATE
If any Party (the TRANSFEROR) intends at any time to sell , transfer, or
otherwise dispose of, or an offer is made to acquire all or any part of its
shares (the OFFERED SHARES) and, if applicable, the Transferor wishes to accept
that offer other than in the case of a transfer to an Affiliate or other related
party of the Transferor pursuant to Clause 7.2 or other than on terms agreed in
writing by the Shareholders, it shall give irrevocable notice in writing of that
intention or the offer (a TRANSFER NOTICE) to each other Party (the OTHER
SHAREHOLDER(S)) offering to sell the Offered Shares to each Other Shareholder(s)
(the OFFER) at the price set out in the Transfer Notice (the SALE PRICE). In the
event that an offer has been made to the Transferor to acquire all or part of
its shares, the price in the Transfer Notice shall be the same price as in the
offer so received and the Transfer Notice shall include the identity of the
person making the offer. The Offer must be accepted by the Other Shareholder(s)
within the time period beginning at the date the notice is received and ending
45 (forty-five) days thereafter (the OFFER PERIOD). If there are more than one
Other Shareholder, the number of Offered Shares offered to the Other
Shareholders shall be made in proportion to the respective shareholding ratios
of each Other Shareholder as of the date of the Transfer Notice.
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Within 45 (forty-five) days after receipt of the Transfer Notice, each of the
Other Shareholders may accept the Offer made to it in whole or in part by
serving notice in writing to that effect (an ACCEPTANCE NOTICE) on the
Transferor, but if it does not so accept the Offer within the Offer Period then
the Offer shall lapse at the expiry of the Offer Period in respect of that
Shareholder.
If no Other Shareholder accepts the Offer in accordance with the above
requirements, then the Transferor shall be entitled to sell and transfer the
Offered Shares within 90 days of the expiry of the Offer Period, subject to
compliance with the requirements as set out in Clause 7.4, at a price not less
than the Sale Price (and, in the event that an Offer has been made to the
Transferor as stated above, the Offered Shares may only be sold and transferred
to the person making the Offer as identified in the Transfer Notice).
Upon the receipt by the Transferor of the Acceptance Notice, the Transferor and
each of the Other Shareholders which has given an Acceptance Notice shall be
obliged to complete the sale and purchase of the Offered Shares to be acquired
within 30 (thirty) days after the expiry of the Offer Period (exclusive of any
period which falls between a day upon which notice of a General Meeting of
Shareholders was given and the day upon which such meeting is held), at such
reasonable time and place in Jakarta as shall be specified by written notice
from the Other Shareholder to the Transferor
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received not less than 48 (forty-eight) hours before settlement of the Sale
Price.
The transfer of shares shall be in a manner agreed in writing by the
Shareholders and shall be in accordance with the provisions of the Article of
Association.
7.4 COMPLETION OF VOLUNTARY TRANSFERS
For completion of the sale and transfer of the Offered Shares by the Transferor
to the Other Shareholder in accordance with Clause 7.3:
(a) the Transferor and each of the Other Shareholders which has provided
an Acceptance Notice (or any other purchaser of the Offered Shares
in accordance with Clause 7.3) shall execute an instrument of sale
and transfer in favor of each such Other Shareholders, or any
Affiliate of the relevant Other Shareholder or other purchaser as
stated above as nominated by written notice received by the
Transferor not less than 5 days before completion and the Transferor
shall deliver the relevant share certificates and, if requested by
the relevant Other Shareholder, a power of attorney in a form and in
favor of a person nominated by the Other Shareholder or other
purchaser as stated above, so as to enable that Other Shareholder or
other purchaser as stated above to exercise all rights to ownership
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in relation to the Offered Shares including, without limitation, the
voting rights;
(b) upon the execution of the instrument of sale and transfer pursuant to
Clause 7.4(a), the Other Shareholder or other purchaser as stated above
shall pay the aggregate transfer price, being the Sale Price multiplied
by the number of Offered Shares to be acquired, to the Transferor for
value on the date of completion or in such other manner as may be
agreed by the parties before completion;
(c) the Parties shall procure that the transfer of the Offered Shares is
promptly registered in the Register of Shareholders of the Company in
accordance with the provisions of the Articles of Association;
(d) the Transferor shall do all such acts and/or execute all such documents
in a form satisfactory to the Other Shareholders or other purchaser as
stated above as the Other Shareholders or other purchaser as stated
above may require to give effect to the transfer of shares pursuant to
this Clause 7.4; and
(e) if the Offered Shares constitute all of the shares in the Company held
by the Transferor, the Transferor shall, as directed by the Other
Shareholders and with effect from completion of the transfer, procure
the resignation or removal of any members of the Board of
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Directors and the Members of the Board of Commissioners nominated by,
or on behalf of, the Transferor.
7.5 FAILURE BY OTHER SHAREHOLDER TO PURCHASE OFFERED SHARES
Except as otherwise agreed in writing between the Parties, if there are more
than one Other Shareholders and if any (but not all) of the Other Shareholders
fails to exercise its right to purchase all or part of the Offered Shares
allocated to it within the Offer Period, the Transferor shall notify every Other
Shareholder who has exercised its right to purchase the Offered Shares, of such
failure (FAILURE NOTICE).
Any Other Shareholder who is entitled to receive the Failure Notice shall have
the further right, exercisable by written notice given to the Transferor within
30 (thirty) days after receipt of the Failure Notice, to also purchase the
portion of the Offered Shares (TRANSFERRED SHARES) allocated to the Other
Shareholder who has failed to exercise its right to purchase such shares,
provided that the Transferor shall have the option not to sell unless all the
Transferred Shares are purchased provided always that if more than one
Shareholder is entitled and wishes to purchase the Offered Shares pursuant to
the preceding sentence, the Offered Shares shall be allocated to them pro-rata
in accordance with the number of shares of the Company owned by them at the date
of the Failure Notice.
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7.6 COMPLETION OF SALE OF TRANSFERRED SHARES
For completion of the sale of the Transferred Shares by the Transferor to the
Other Shareholders in accordance with Clause 7.5:
(a) the Transferor and the Other Shareholders shall execute an instrument
of sale and transfer in favor of the Other Shareholders, or any
Affiliate or other related party of any Other Shareholder as the
relevant Other Shareholder may nominate by written notice received
by the Transferor not less than 5 days before completion in respect
of the shares which are to be transferred to that Other Shareholder,
together with the relevant share certificates and, if requested by
the Other Shareholders, a power of attorney in a form and in favor
of a person nominated by the Other Shareholders, so as to enable the
Other Shareholders to exercise all rights to ownership in relation
to the Offered Shares including, without limitation, the voting
rights;
(b) upon the execution of the instrument of sale and transfer pursuant to
Clause 7.6(a), the Other Shareholders shall pay the aggregate transfer
price, being the Sale Price multiplied by the number of Offered shares
to be acquired, to the Transferor for value on the date of completion
or in such other manner as may be agreed by the parties before
completion;
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(c) the Parties shall procure that the transfer of shares is promptly
registered in the Register of Shareholders of the Company in accordance
with the provisions of the Articles of Association;
(d) the Transferor shall do all such acts and/or execute all such documents
in a form satisfactory to the Other Shareholders as the Other
Shareholders may require to give effect to the transfer of shares
pursuant to this Clause 7.5; and
(e) if the Offered Shares constitute the Transferor's entire holding of
shares in the Company, the Transferor shall, as directed by the Other
Shareholders and with effect from completion of the transfer, procure
the resignation or removal of any members of the Board of Directors and
the Board of Commissioners nominated by, or on behalf of, the
Transferor.
7.7 INTEREST ON UNPAID AMOUNTS
If any sum payable under Clause 7.4 or 7.5 is not paid (otherwise than as a
result of default by the Transferor) the unpaid sum will bear interest
calculated on a daily basis which may, without limiting the rights of the
Transferor, be claimed as a debt or liquidated demand, for the period from and
including the due date up to the date of actual payment (after as well as before
judgment) at the rate of 20% per annum.
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7.8 FAILURE TO TRANSFER SHARES
If the Transferor fails or refuses to transfer all or any part of the Offered
Shares or the Transferred Shares to be acquired by the Other Shareholders or any
other purchaser in accordance with or as required under this Clause 7:
(a) the Transferor shall be deemed to have irrevocably authorized and
empowered, and hereby irrevocably authorizes and grants power of
attorney to, each member of the Board of Directors to execute and
deliver on the Transferor's behalf and in the Transferor's name the
necessary instrument of transfer and to do any and all other acts
and/or execute any other documents on the Transferor's behalf
required in connection with the transfer of shares under this clause
including, without limitation, revoking the existing share
certificates in respect of all or part of the Offered shares and the
Transferred Shares and issuing new certificates in respect of the
same;
(b) the Company may receive the purchase money on behalf of, and for the
benefit of, the Transferor and receipt by the Company of the purchase
money shall be good discharge for the Other Shareholders or other
purchaser in accordance with this Clause 7 who shall not be bound to
see to the application of the purchase money;
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(c) the Parties shall procure that the Company shall cause the Other
Shareholders or other purchaser in accordance with this Clause 7 to be
registered in the Register of Shareholders of the Company as the holder
of the Offered Shares or the Transferred Shares which have been
acquired; and
(d) once registration in the Register of Shareholders has taken place in
purported exercise of the power contained in this Clause 7.8, the
validity of the proceedings, including in relation to any prevailing
Indonesian regulations having the force of law, shall not be questioned
by any Party or other person in any respect whatsoever.
7.9 NEW SHAREHOLDER TO BECOME BOUND BY THIS AGREEMENT
Any person or entity becoming a new Shareholder shall (and the Parties shall
ensure that), as a condition precedent to having shares registered in its name
and that person or entity being entitled to exercise any rights with respect to
such shares, first sign an agreement with each of the Parties at that time by
which that person or entity agrees to perform and to be bound by all of the
terms and conditions of this Agreement.
8. PUT OPTION IN RESPECT OF FOREIGN SHAREHOLDERS' SHARES
8.1 GRANT OF PUT OPTION
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In consideration of the Foreign Shareholder entering into this Agreement, the
Indonesian Shareholder grants to the Foreign Shareholder a right to sell to the
Indonesian Shareholder (the Put Option) any or all of the Foreign Shareholders'
shares in the capital of the Company at any time following the expiration of 2
(two) years from the Commencement Date; provided, the Foreign Shareholder shall
have the right to exercise the Put Option prior to such time upon the failure of
the Indonesian Shareholder to fulfill in any material respect any of its
covenants contained herein or in the License Agreement (a DEFAULT). The Put
Option shall be exercisable at the fair value (the FAIR VALUE) of the relevant
shares as at the date of serving the exercise notice under Clause 8.2; provided,
that in the event the Foreign Shareholder shall exercise the Put Option
following a Default, the Fair Value shall be deemed to be the greater of (i) the
amount determined in accordance with Clause 8.2 and 8.3 herein and (ii) the
equity contribution by the Foreign Shareholder pursuant to Clause 6.4.
8.2 EXERCISE OF PUT OPTION
The Foreign Shareholder may exercise the Put Option by serving upon the
Indonesian Shareholder written notice of exercise. The notice must include
details of the number of shares, the date of the proposed transfer and
completion (which must be between 30 and 90 days thereafter) and the proposed
Fair Value of the shares.
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8.3 DISPUTE AS TO FAIR VALUE OF THE SHARES
If the Parties do not agree on the proposed Fair Value of the relevant shares,
as set out in the Foreign Shareholders' exercise notice, the dispute shall be
dealt with in accordance with Clause 20.6. (Reference to the terms Terminating
Party, Defaulting Party and Termination Notice shall, for present purposes, be
construed as Indonesian Shareholder, Foreign Shareholder and exercise notice
respectively.)
8.4 COMPLETION OF SALE PURSUANT TO PUT OPTION
For completion of the sale of the relevant shares by the Foreign Shareholder to
the Indonesian Shareholders in accordance with exercise of the Put Option under
Clause 8.2:
(a) the Foreign Shareholder and the Indonesian Shareholder shall execute
an instrument of sale and transfer in favor of the Indonesian
Shareholder, or any Affiliate of the Indonesian Shareholder as it may
nominate by written notice received by the Foreign Shareholder not
less than 5 days before completion, in respect of the shares which
are to be transferred to the Indonesian Shareholder, together with
the relevant share certificates and, if requested by the Indonesian
Shareholder, a power of attorney in a form and in favor of a person
nominated by the Indonesian Shareholder, so as to enable the
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Indonesian Shareholder to exercise all rights to ownership in relation
to the relevant shares including, without limitation, the voting
rights;
(b) upon the execution of the instrument of sale and transfer pursuant to
Clause 8.4(a), the Indonesian Shareholder shall pay the purchase price
to the Foreign Shareholder for value on the date of completion or in
such other manner as may be agreed by the Parties before completion;
(c) the Parties shall procure that the transfer of shares is promptly
registered in the Register of Shareholders of the Company in accordance
with the provisions of the Articles of Association;
(d) the Foreign Shareholder shall do all such acts and/or execute all such
documents in a form satisfactory to the Indonesian Shareholder as the
Indonesian Shareholder may require to give effect to the transfer of
shares pursuant to this Clause 8.2; and
(e) if the relevant shares constitute the Foreign Shareholders' entire
holding of shares in the Company, the Foreign Shareholder shall, as
directed by the Indonesian Shareholder and with effect from completion
of the transfer, procure the resignation or removal of any members of
the Board of Directors and the Board of Commissioners nominated by, or
on behalf of, the Foreign Shareholder.
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9. MANAGEMENT
9.1 COMPANY TO HAVE BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS
The Company shall be managed by a Board of Directors (Direksi) under the
supervision of a Board of Commissioners (Dewan Komisaris). Members of the Board
of Directors and members of the Board of Commissioners shall be appointed by the
General Meeting of Shareholders, subject to the provisions of this Agreement.
9.2 INITIAL COMPOSITION OF BOARD OF DIRECTORS
The Board of Directors shall be initially composed of 4 (four) directors
(including a President Director), and:
(a) where the Indonesian Shareholder and the Foreign Shareholder each hold
40% or more of the issued share capital of the Company, 2 (two) of whom
(including the President Director) shall be appointed upon the
nomination of the Foreign Shareholder and 2 (two) of whom (excluding
the President Director) shall be appointed upon the nomination of the
Indonesian Shareholder; or
(b) where the Indonesian Shareholder and the Foreign Shareholder do not
each hold 40% or more of the issued share capital of the Company, the
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nomination of appointments to the Board of Directors shall be based
upon the proportion of issued share capital held by the Parties, and
the President Director shall be appointed upon the nomination of the
majority Shareholder.
Each Party shall vote its shares to give effect to the nominations of the
members of the Board of Directors which have been made as stated above. Each
Party shall be entitled at any time to remove and replace at any time any of its
nominees on the Board of Directors and in such event each Party shall vote its
shares so as to give effect to the appointment of the nominated replacement to
the Board of Directors.
In the event of a vacancy on the Board of Directors caused by the death,
retirement, resignation or removal of a director, the vacancy shall be filled by
appointing another nominee of the Party whose nominee has died, retired,
resigned or been removed.
9.3 POWERS OF PRESIDENT DIRECTOR
The President Director shall be entitled to represent the Board of Directors and
therefore to act for and on behalf and in the name of and to bind the Company
within and outside the Courts of law, subject to any limitations set out in the
Articles of Association or by applicable mandatory laws and regulations.
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9.4 BOARD OF COMMISSIONERS
The Board of Commissioners shall be composed of 4 (four) members (including a
President Commissioner), at all times 2 (two) of whom shall be appointed upon
the nomination of the Foreign Shareholder and 2 (two) of whom (including the
President Commissioner) shall be appointed upon the nomination of the Indonesian
Shareholder.
Each Party shall vote its shares to give effect to the binding nominations of
the members of the Board of Commissioners which have been made as stated above.
Each Party shall be entitled to remove and replace at any time any of its
nominees on the Board of Commissioners and in such event each Party shall vote
its shares so as to give effect to the appointment of the nominated replacement
to the Board of Commissioners.
In the event of a vacancy on the Board of Commissioners caused by the death,
retirement, resignation or removal of a member, the vacancy shall be filled by
appointing another nominee of the Party whose nominee has died, retired,
resigned or been removed.
9.5 CONFLICTS OF INTEREST
The Parties shall be responsible for ensuring that any members of the Board of
Directors or Board of Commissioners appointed upon their nomination in
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accordance with this Clause 9 shall act in good faith in the best interests of
the Company at all times.
Persons nominated for the position of member of the Board of Directors or member
of the Board of Commissioners shall not be deemed disqualified to hold such
office by reason of their being officers, directors, commissioners or
shareholders of any other company incorporated within or outside the Territory.
In addition, no member of the Board of Directors or member of the Board of
Commissioners shall be deemed to have a conflict of interest in a matter and
shall not be disqualified to vote and/or serve on the ground that such Director
or Commissioner is appointed upon the nomination of a particular Shareholder and
the matter under consideration involves commercial, financial or other
relationship between the Company and that Shareholder or any Affiliate of that
Shareholder provided that the relevant member of the Board of Directors or Board
of Commissioners has disclosed to the Company the nature of any such
relationship prior to consideration of that matter.
9.6 APPOINTMENT OF EXECUTIVES
The President Director or his nominee shall have the right from time to time to
select for appointment and, as necessary from time to time, to require the
dismissal and replacement of employees (including senior executive non-board
level management personnel) of the Company.
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10. MEETINGS OF BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS
10.1 BOARD OF DIRECTORS' MEETINGS
The Board of Directors shall meet at least quarterly and more frequently as
required for the proper management of the Company.
The quorum for meetings of the Board of Directors shall be the attendance or
representation at the meeting of a simple majority of the members of the Board
of Directors. The level of affirmative vote required to pass a resolution at all
meetings of the Board of Directors shall be a simple majority of the members of
the Board of Directors present or represented at the meeting.
10.2 BOARD OF COMMISSIONERS' MEETINGS
The Board of Commissioners shall meet at least annually and more frequently as
required for the Board of Commissioners to duly perform its functions.
The quorum for meetings of the Board of Commissioners shall be the attendance or
representation at the meeting of a simple majority of the members of the Board
of Commissioners. The level of affirmative vote required to pass a resolution at
all meetings of the Board of Commissioners
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shall be a simple majority of the members of the Board of Commissioners
present or represented at the meeting.
10.3 GENERAL SHAREHOLDERS' MATTERS
The following matters shall be within the exclusive jurisdiction of the General
Meeting of Shareholders, subject to the requirements of applicable mandatory
laws and regulations:
(a) amendments to the Articles of Association;
(b) any increase or decrease in the authorized share capital of the Company
or the issuance or sale of any bonds, notes, warrants, preference
shares or other securities of any kind (other than the issuance of
additional shares out of the authorized share capital of the Company);
(c) the distribution of profits, including the declaration and amount of
dividends;
(d) the appointment and/or dismissal of the Company's auditors;
(e) the merger or consolidation of the Company into or with another
entity;
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(f) the dissolution or liquidation of the Company and the appointment of
a liquidator; and
(g) any change in the principal business of the Company.
10.4 SPECIFIC MATTERS ON WHICH CONCURRENCE OF THE BOARD OF COMMISSIONERS
IS REQUIRED
The following decisions and actions shall only be taken by the Company with the
prior approval of the Board of Commissioners:
(a) the Company making any borrowing from or lending amounts to any
Shareholder or third party in excess of an amount determined by the
Board of Directors from time to time other than making any drawing
under any credit facility which has previously been approved;
(b) the Company obtaining any financing requiring, or to be provided on
the basis of, a Shareholder guarantee or similar support from any
Shareholder(s);
(c) the Company giving any guarantee of or indemnity in respect of the
obligations or liabilities of any other person or company where the
aggregate value of such guarantee or indemnity is in excess of an
amount determined by the Board of Directors from time to time;
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(d) the Company creating any hypothec, pledge, fiduciary transfer of
property for security purposes, assignment for security purposes
(CESSIE), lien or other encumbrance or security interest in or over the
Company or the whole or any of its assets or properties having a value
in excess of an amount determined by the Board of Directors from time
to time;
(e) any sale, lease, transfer or other disposition of the whole or any part
of the undertaking, properties or assets of the Company having a value
in excess of an amount determined by the Board of Directors from time
to time;
(f) the issuance of additional shares in the capital of the Company;
(g) the formation, acquisition or disposition of any subsidiary of the
Company; and
(h) the entry into or material amendment of the terms of any transaction
with any member of the Board of Directors or any member of the Board of
Commissioners of the Company or with any person or company associated
with such member or with any Shareholder or any Affiliate of any
Shareholder.
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11. GENERAL MEETINGS OF SHAREHOLDERS
11.1 ANNUAL GENERAL MEETINGS
An Annual General Meeting of Shareholders shall be held once a year within 6
(six) months after the end of the preceding financial year of the Company.
11.2 EXTRAORDINARY GENERAL MEETINGS
An Extraordinary General Meeting of Shareholders shall be convened by the Board
of Directors whenever it is deemed necessary by the Board of Directors or upon
the written request of 1 (one) or more Shareholders holding or representing at
least 10% (ten percent) of the aggregate number of the issued shares of the
Company, stating in such request the matters to be dealt with.
11.3 CHAIRMAN OF GENERAL MEETING OF SHAREHOLDERS
Subject to the Articles of Association, the President Director shall act as the
chairman of all general meetings of Shareholders.
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11.4 EACH SHARE CARRIES ONE VOTE
At any general meeting of Shareholders a Shareholder shall have 1 (one) vote for
each share of which it is the registered Shareholder and one additional vote for
each other share which it represents at the meeting.
11.5 QUORUM AND VOTING AT GENERAL MEETINGS OF SHAREHOLDERS
Except as otherwise provided for in this Agreement or the Articles of
Association:
(a) the quorum for a general meeting of Shareholders shall be
Shareholders representing 60% of the total issued shares the Company;
and
(b) decisions at a general meeting of Shareholders shall be adopted if
approved by Shareholders representing 60% of the total issued shares in
the Company.
12. PRINCIPLES OF OPERATION AND COOPERATION
The Parties acknowledge and agree to the following corporate and operating
policies to be applied by and in respect of the Company:
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(a) (VOTING BY PARTIES' BOARD NOMINEES) The Parties agree to vote their
shares and to cause the members of the Board of Commissioners and
members of the Board of Directors which are appointed upon their
respective binding nominations as provided above to give effect to the
terms of this Agreement (including the policies stated in this Clause)
during the continuance of this Agreement.
(b) (INDEPENDENT STATUS OF THE COMPANY) The Company shall function as an
independent business enterprise, maintaining an arms'-length
relationship with the Shareholders and their Affiliates as normal
business practice. Without limiting the generality of the previous
sentence, the Parties agree that all transactions between the Company
and any Shareholder or any Affiliate of any Shareholder shall be upon
arms'-length commercial terms.
(c) (GENERAL OPERATING POLICY) The Company shall be managed and operated on
a sound and efficient commercial basis and in accordance with the
prevailing laws and regulations of the Republic of Indonesia.
(d) (SERVICES FROM FOREIGN SHAREHOLDER) The Foreign Shareholder (or an
Affiliate of the Foreign Shareholder) shall provide technical,
management and marketing services to the Company to assist with the
conduct of the Business in accordance with and subject to the terms set
out in the Technical Services Agreement. For the provision of
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such services, the Company shall pay to the Foreign Shareholder (or the
relevant Affiliate of the Foreign Shareholder) a fee of $0.25 per meter
of fabric manufactured by the Company, or any Affiliate of the Company,
for a period of three years from the Commencement Date, and thereafter,
a fee as may be agreed between the Parties and the Company. This fee
will remain payable by the Company despite the earlier termination of
this Agreement or the Technical Services Agreement or the exercise by
the Foreign Shareholder of the Put Option.
(e) (DIVIDEND POLICY) The distribution of dividends by the Company in
respect of any financial year shall be discussed and determined at the
Annual General Meeting of Shareholders in respect of the relevant
financial year based on the audited annual accounts of the Company
provided that:
(i) dividends may only be paid from profits of the Company in
the relevant financial year or from retained earnings from
previous financial years;
(ii) the Company shall not borrow funds in order to pay any
dividend; and
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(iii) the distribution of dividends by the Company shall be
subject always to the requirements of financially prudent
management of the Company.
Subject to compliance with the provisos stated immediately above and
the Articles of Association, the Board of Directors may resolve to pay
one or more interim dividends in any financial year.
(f) (PARTIES TO ASSIST SUCCESS OF THE COMPANY) Each of the Parties
undertakes that it shall cooperate with each other as expeditiously as
possible to perform all those tasks reasonably necessary to make the
operations of the Company successful in accordance with the terms of
this Agreement.
(g) (PARTIES TO ACT IN GOOD FAITH) Each of the Parties undertakes to act in
good faith and to cooperate with each other Party to amend this
Agreement if required by the laws and regulations of the Republic of
Indonesia and in accordance with the spirit of this Agreement.
(h) (NON-COMPETITION) The Parties will not participate, either directly or
indirectly, in any facility, operation or entity producing circular
knit fabrics, or otherwise acting in competition with the Company,
anywhere in the Territory during the operation of this Agreement.
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13. SEVERABILITY
If any one or more of the provisions contained in this Agreement or any document
executed in connection herewith shall be invalid, illegal, or unenforceable in
any respect under applicable law, the validity, legality and enforceability of
the remaining provision contained herein shall not in any way be affected or
impaired; provided that in such case the Parties shall use their best efforts to
achieve the purpose of the invalid provision by a new legally valid provision or
provisions.
14. FORCE MAJEURE
14.1 EFFECT OF FORCE MAJEURE EVENT
The failure or delay of either of the Parties hereto to perform any obligation
under this Agreement (other than any obligation to make any payment of money)
solely by reason of acts of God, acts of government (except as otherwise
enumerated herein), riots, wars, strikes, lockouts, accidents in transportation
or other causes beyond its control shall not be deemed to be a breach of this
Agreement; provided that the Party so prevented from complying herewith shall
not have procured such force majeure, shall have used reasonable diligence to
avoid such force majeure or to ameliorate its effects, and shall continue to
take all actions within its power to comply as fully as possible with the terms
of the Agreement.
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14.2 FORCE MAJEURE EVENT TO BE REMEDIED
Except where the nature of the event shall prevent it from doing so, the Party
suffering such force majeure shall notify the other Party in writing within 14
(fourteen) days of the occurrence of such force majeure and shall in every
instance, to the extent reasonable and lawful under the circumstances, use its
best efforts to remove or remedy such cause as soon as possible.
15. BOOKS, RECORDS AND REPORTS
15.1 COMPANY TO MAINTAIN RECORDS AND ACCOUNTS
The Company shall maintain, at its principal office:
(a) accurate and adequate accounting books and records maintained in
Dollars and Rupiah in both English and Bahasa Indonesia in accordance
with generally accepted Indonesian accounting principles and practices
which shall accurately reflect the Company's financial position in
accordance with established financial practices of recognized
international accounting standards;
(b) such other accounting or other records as may be required by the laws
of the Territory;
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(c) all original agreements, records, and reports relating to its
activities and operations.
All assets, liabilities and transactions of or involving the Company shall be
recorded properly in its accounts and records and shall be fully disclosed to
the auditors of the Company.
15.2 FOREIGN SHAREHOLDER REPORTING REQUIREMENTS
In addition to the records required to be maintained in accordance with Clause
15.1, the Company shall also provide to the Foreign Shareholder records and
financial information in the form necessary to comply with the Foreign
Shareholder's reporting requirements including financial information prepared on
the basis of accrual accounting.
15.3 QUARTERLY DIRECTORS' REPORTS
The Board of Directors shall make quarterly reports to the Shareholders and as
otherwise required by the laws of the Territory. Without limiting the
information contained in the quarterly reports, the reports shall include
financial information required by the Shareholders prepared on an accruals
basis.
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15.4 ANNUAL AUDIT OF THE COMPANY
Within 120 (one hundred and twenty) days after the end of each financial year,
Deloitte Touche Tohmatsu or such other independent Indonesian public accounting
firm affiliated with an international accounting firm as approved by the
Parties, shall audit the books and records of the Company. The Board of
Directors shall provide to the Shareholders at the Company's expense a report
presented in accordance with generally accepted Indonesian accounting
principles, subject at all times to the requirements of Indonesian law.
The auditors of each Party shall also have the right to review the books and
accounts of the Company on an annual basis at the expense of the relevant Party.
The audited accounts and Board of Directors' report shall be submitted in both
English and Bahasa Indonesia for approval at the Annual General Meeting of
Shareholders in respect of the relevant financial year to be held in accordance
with the Articles of Association and upon such approval being granted, the
audited accounts and Board of Directors' report shall
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be final and binding upon the Parties as to the matters set out or
reflected therein, in the absence of manifest error or fraud.
15.5 FINANCIAL YEAR OF THE COMPANY
The accounting year of the Company shall commence on the first day of January of
each calendar year and end on the thirty-first day of December of the same
calendar year, unless otherwise agreed at a General Meeting of Shareholders.
16. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to each other Party that:
(a) it has full power to enter into this Agreement and to perform its
obligations hereunder according to the terms of this Agreement, and
that it has taken all necessary corporate or other actions to authorize
its entering into and performance of this Agreement;
(b) subject to Clause 2.3, it is duly authorized and licensed by all
relevant governmental authorities to enter and to perform this
Agreement and that it has made and will make all required reports and
disclosures to any applicable government or agency thereof with respect
to this Agreement or any activity undertaken in connection with this
Agreement;
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(c) the statements made by that Party relating to itself in this Agreement
are true and that nothing further needs to be stated to prevent such
statements from being incorrect or misleading; and
(d) it has no outstanding commitments or obligations, contractual or
otherwise, which would in any way impede right and ability of that
Party to enter into this Agreement and/or fulfil any and all of its
obligations hereunder and that all necessary corporate approvals
required in order to enter into this Agreement and carry out the
transactions contemplated hereby have been obtained.
17. INDEMNITIES
Each Party (in this Clause, the Warrantor) shall indemnify and hold each other
Party harmless from, against and in respect of any and all liabilities, losses,
costs, damages, commissions and expenses which the other Party may sustain or
incur by reason of the Warrantor's breach of any representations and warranties
made by the Warrantor under Clause 16 and/or the breach of any material
obligation of the Warrantor under this Agreement.
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18. COVENANTS
18.1 PARTIES TO OBTAIN ALL APPROVALS
The Parties agree and covenant that during the term of this Agreement each Party
shall use its best endeavors expeditiously to obtain and maintain all approvals,
licenses and permits required under applicable laws, regulations and policies
and its articles of association or other constituent documents for maintaining
its shareholding in the Company and the continued existence and operations of
the Company.
18.2 COMPANY TO MAINTAIN INSURANCE
The Parties agree to procure that the Company shall at all times obtain and
maintain all proper and adequate insurance coverage customarily effected having
regard to the nature of the Business.
18.3 PARTIES TO PROCURE BUSINESS ETHICALLY
The Parties shall use all reasonable endeavors to procure that the affairs of
the Company and the Business from time to time shall be conducted in accordance
with sound and good business practice and the highest ethical standards
generally, as well as in accordance with all applicable
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regulatory requirements and best practices of the jurisdictions and markets
in which the Business is to be conducted.
18.4. TECHNICAL SERVICES AGREEMENT
The Company and the Foreign Shareholder shall enter into a technical services
agreement in respect of technical services to be provided by the Foreign
Shareholder to the Company.
19. CONFIDENTIALITY
19.1 CONFIDENTIAL TREATMENT/PERMITTED DISCLOSURES
The Parties agree and undertake that during the term of this Agreement any and
all other information received by any Party or the Company in connection with
this Agreement which is derived from another Party or the Company (however
acquired and in whatever form) (the Information) shall be treated by it and the
Company as confidential and it shall not disclose all or any part of it to any
third party (other than, in the case of the Parties, to the Company) or
otherwise seek to exploit all or any part of it without the prior written
consent of the Company and each other Party and shall procure that the Company
shall not, provided that this clause shall not apply to Information which:
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(a) at any time comes into the public domain through no fault of any
Party or the Company; or
(b) is required to be furnished to any government or public authority
pursuant to any law, rule, regulation or judicial order applicable to
the Company or any Party or any Affiliate of a Party; or
(c) is required to be disclosed in compliance with the rules of a stock
exchange on which the shares of a Party or an Affiliate of a Party is
listed; or
(d) is disclosed to a Party's bankers, lawyers, accountants, tax advisors
or other consultants who agree to maintain the secrecy of such
Information.
19.2 IMPLEMENTATION
Each Party further agrees to make all reasonable efforts, and to take all
reasonable precautions, to prevent any of its employees or personnel, or any
other persons, from obtaining or making any unauthorized use of, or effecting
any disclosure of the Information. 19.3 TREATMENT OF INFORMATION BY THE COMPANY
Each Party shall procure that the Company treats all Information as confidential
and shall not disclose all or any part of it to any third
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party or otherwise seek to exploit all or any part of it without the prior
written consent of the Party from which it was derived.
19.4 PARTIES RETAIN PROPERTY RIGHTS
It is understood by the Parties that Information shall remain the property of
the Party from which it was obtained and upon termination or expiration of this
Agreement for any reason whatsoever, the Company and the Party receiving
Information shall cease to use the same and shall return the same to the Party
from which it was obtained together with all related documents and copies.
19.5 OBLIGATIONS TO SURVIVE
Notwithstanding any other term of this Agreement, the obligations contained in
this Clause 19 shall bind the Parties during the term of this Agreement and
shall continue to bind the Parties after this Agreement is terminated (for
whatever reason) or expires for a period of two years thereafter.
19.6 PUBLIC ANNOUNCEMENTS
Except as required by applicable law or the requirements of any regulatory body
(including any relevant stock exchange), all press releases and other
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public announcements relating, directly or indirectly, to the Company must be in
terms agreed by the Parties.
20. TERM AND TERMINATION
20.1 TERM OF THIS AGREEMENT
This Agreement shall become effective on the date hereof and shall remain in
full force and effect as long as the Company continues to exist, unless earlier
terminated by agreement between the Parties or pursuant to any other provisions
of this Agreement.
20.2 TERMINATION OF THIS AGREEMENT
If at any time any Party commits any of the following acts or any of the
following events occurs in respect of a Party (the Party which commits such act
or the Party in respect of which the event occurs being referred to as the First
Party), any other Party (the Notifying Party) may terminate this Agreement by
written notice to each other Party:
(a) if the First Party becomes insolvent or goes into liquidation (other
than a voluntary liquidation for the purposes of merger or
reorganization) or if a receiver or administrator is appointed in
respect of one third or more of the First Party's assets;
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(b) if the warranties or representations made by the First Party under or
in connection with this Agreement are found to be materially false or
misleading and are not remedied within 60 (sixty) days of receipt of
notice from the Notifying Party to so remedy;
(c) if the First Party shall fail to perform or observe any material
obligation under this Agreement and such failure shall continue for a
period of 90 (ninety) days after written notice of such failure has
been received by the First Party from the Notifying Party;
(d) if the First Party shall be or become incapable for a period of 180
days of performing any of its obligations under this Agreement because
of any event covered by Clause 14.
Any Party may terminate this Agreement by written notice to each other Party if
the approval of the President of the Republic of Indonesia for the establishment
of the Company (as amended and modified from time to time), as notified by BKPM
or any other necessary approvals, permits or licences of the competent
Indonesian authorities for or in respect of the Business and/or for any and all
other material actions to be taken by the Company or any Party hereunder, and
for enjoyment of the benefits to be secured by each Party hereunder, cannot be
obtained or is withdrawn, or if any subsequent enactment of law or regulation
or any subsequent act of any
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governmental authority in Indonesia shall, in the reasonable opinion of the
Party desiring to terminate this Agreement:
(i) make performance under this Agreement impossible; or
(ii) materially alter the rights and obligations of and to the
detriment of that from those agreed and contemplated by this
Agreement; or
(iii) materially interfere with benefits contemplated herein to be
received by that Party.
20.3 VOLUNTARY TERMINATION
A Party may voluntarily terminate this Agreement by giving not less than 90
(ninety) days written notice of termination to the other Party, in which case
the provisions of Clause 20.5 shall apply mutatis mutadis as if references to
the "Innocent Party" in Clause 20.5 were references to the Party receiving the
written voluntary termination notice and references to "Defaulting Party" were
to the Party giving the voluntary notice of termination.
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20.4 ACCRUED RIGHTS NOT AFFECTED
Termination of this Agreement shall be without prejudice to the accrued rights
and liabilities of the Parties at the date of termination.
20.5 RIGHTS OF TERMINATING PARTY
Notwithstanding anything to the contrary in this Agreement, if this Agreement is
terminated in accordance with the provisions of this Clause 20, the Party (the
Innocent Party) which gives written notice of termination (Termination Notice)
shall, at its option (but subject to the obtaining of necessary Authorizations,
if any, of the competent Indonesian authorities), be entitled within 30 (thirty)
days of the date of termination either:
(a) to require the other Party (THE DEFAULTING PARTY) to sell to the
Innocent Party (or its designee) all of the Defaulting Party's shares
in the Company for the Fair Value for the shares determined in
accordance with Clause 20.6 less 20% of the Fair Value thereof; or
(b) to sell its shares in the Company to the Defaulting Party for the Fair
Value determined in accordance with Clause 20.6 or, if the Defaulting
Party does not acquire the shares within 14 days of the determination
of the Fair Value thereof in accordance with Clause
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20.6, then to any third party chosen by the Innocent Party in its
discretion without being subject to the sale and transfer requirements
set out in this Agreement or the Articles of Association for the Fair
Value for the shares determined as stated above.
20.6 FAIR VALUE
For the purposes of Clause 20.5 (and Clause 8), the Fair Value of the shares in
the Company shall be:
(a) the price for the shares as shall be agreed in writing between the
Terminating Party and the Defaulting Party; or
(b) in the absence of agreement within 21 (twenty-one) days after the
service of a Termination Notice (pursuant to Clause 20.2) the Fair
Value will be determined in accordance with the principles stated in
the paragraph (c) below by an independent internationally respected
accounting firm with an associated office in Indonesia (the EXPERT)
nominated by agreement between the Terminating Party and the Defaulting
Party or, failing agreement between them within 14 (fourteen) days
after they commence to discuss the selection of that Expert, as
nominated by the President or other head for the time being of the
International Chamber of Commerce at the request of either the
Terminating Party or the Defaulting Party.
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The Expert shall be requested to give due weight to any representations
put forward by a Party within any time limit prescribed by the Expert.
The Expert shall act as an expert and not as an arbitrator and his
written determination shall in the absence of manifest error be final
and binding on the members and not subject to review in any way. For
the foregoing purposes, the Expert shall have access to all books of
account and records and all vouchers, cheques, papers and documents
which in any way relate to the business of the Company; or
(c) the Expert will certify the Fair Value of the relevant shares in the
Company as at the date of the Termination Notice on the following
assumptions and bases:
(i) valuing the shares as on an arm's length sale between a
willing, but not too anxious, vendor and a willing
purchaser;
(ii) if the Company is then carrying on business as a going
concern, on the assumption that it will continue to do so;
(iii) that the shares are capable of being transferred without
restriction;
(iv) taking into account the total of amounts which the
Defaulting Party is obliged to provide or pay to the Company
pursuant to the terms of this Agreement or otherwise but
which remains
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outstanding and unpaid at the date of the Termination
Notice; and
(v) valuing the relevant shares as a rateable proportion of the
total value of all the issued shares of the Company. For the
avoidance of any doubt, any majority or minority position in
respect of the relevant shareholding shall not be taken into
account in valuing the relevant shares.
If any difficulty shall arise in applying any of the foregoing
assumptions or bases, then that difficulty shall be resolved by the
Expert in any manner as it shall in its absolute discretion think fit.
The Company will use its best endeavors to procure that the Expert determines
the Fair Value within 30 (thirty) days of being requested so to do.
20.7 LIABILITY FOR EXPERT'S FEES
The costs and expenses of the Expert in determining the Fair Value shall be
borne equally by each of the Parties.
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20.8 WAIVER OF CIVIL CODE PROVISIONS
The parties hereby waive the provisions of Article 1266 of the Indonesian Civil
Code to the extent that they require a court order to terminate this Agreement.
21. EXPATRIATE WORK PERMITS AND COSTS
21.1 OBTAINING EXPATRIATE WORK PERMITS AND VISAS
The Indonesian Shareholder shall assist the Company and the Foreign Shareholder
to obtain all work permits and other visas as may be required from time to time
to enable expatriate personnel seconded by the Foreign Shareholder to, or
otherwise employed or engaged by, the Company to lawfully enter, reside and work
in and depart from the Territory.
21.2 COMPANY TO PAY EXPATRIATE COSTS
The Company shall pay (or, as applicable, reimburse to) the Foreign Shareholder
all salaries, accommodation costs and other benefits payable to or in respect of
expatriate personnel seconded by the Foreign Shareholder to, or otherwise
employed or engaged by, the Company.
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22. NOTICES
Any notice given under this Agreement:
(a) must be in writing addressed to the intended recipient at the address
shown below or the address last notified by the intended recipient to
the sender:
INDONESIAN SHAREHOLDER:
PT TEXMACO JAYA
JT. H.R. Rasuna ▇▇▇. ▇-▇ ▇▇. ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: President Director
Fax: ▇▇-▇▇-▇▇▇▇▇▇▇
FOREIGN SHAREHOLDER:
DYERSBURG CORPORATION
15720 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
(b) must be signed by a person duly authorized by the sender; and
(c) will be taken to have been given or made:
(i) in the case of delivery in person, when delivered;
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(ii) in the case of delivery by post two business days after the
date of posting (if posted to an address in the same country)
or fourteen business days after the date of posting (if posted
to an address in another country); and
(iii) in the case of fax, on receipt by the sender of a transmission
control report from the dispatching machine showing the
relevant number of pages and the correct destination fax
machine number and indicating that the transmission has been
made without error,
but if delivery or receipt occurs on a day on which business is not
generally carried on in the place to which the communication is sent or
is later than 4 pm (local time) it will be taken to have been duly
given or made at the commencement of business on the next day on which
business is generally carried on in the place.
23. ENTIRE AGREEMENT AND AMENDMENT
This Agreement may be amended only by another agreement in writing executed by
all Parties who may be affected by the amendment.
This Agreement contains the entire agreement of the Parties with respect to its
subject matter. It constitutes the only conduct relied on by the Parties (and
supersedes all earlier agreements, understanding and other conduct by the
Parties) with respect to its subject matter.
24. ASSIGNMENT
Except as expressly stated herein, the rights and obligations of each Party are
personal and cannot be assigned, charged or otherwise dealt with, and
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no Party shall attempt or purport to do so, without the prior written consent of
each other Party.
25. NO WAIVER
No failure to exercise and no delay in exercising any right, power or remedy
under this Agreement will operate as a waiver. Nor will any single or partial
exercise of any right, power or remedy preclude any other or further exercise of
that or any other right, power or remedy.
26. COSTS
Each party shall bear its own costs arising out of the preparation of this
Agreement.
27. GOVERNING LANGUAGE
This Agreement has been negotiated and agreed in the English language which
shall be the governing and determining language of and in respect of this
Agreement for all purposes, notwithstanding that it is translated into any other
language for any reason or purpose whatsoever.
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28. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the Republic of Indonesia.
29. RESOLUTION OF DISPUTES
29.1 DISPUTES TO BE RESOLVED THROUGH AMICABLE SETTLEMENT OR ARBITRATION
All disputes, controversies or differences which may arise between the Parties
out of or in relation to or in connection with this Agreement, or relating to
the construction, termination or breach hereof, shall be resolved amicably by
consultation between a nominated managing director (or similar officer) of each
Party with sufficient power and authority to represent and bind the relevant
Party. If such dispute, controversy or difference cannot be resolved by such
consultation within thirty (30) days after referring the matter to the
respective managing directors, then the respective positions of each Party shall
be forwarded to the chairman of each Party for discussion to attempt to resolve
the relevant dispute controversy or difference amicably. If such dispute,
controversy or difference still cannot be resolved amicably within thirty (30))
days after the matter has been referred to the respective chairmen, then any
Party may by written notice to the other Party (the ARBITRATION NOTICE), refer
the matter to settlement by arbitration conducted in accordance with the
UNCITRAL Arbitration Rules as in force on the date hereof by one (1) independent
arbitrator (if the Parties are able to agree upon the joint appointment of one
arbitrator within thirty (30) days of service of the Arbitration Notice) or by a
Board of Arbitration comprising three (3) independent arbitrators appointed in
accordance with Clause 29.2 (if the
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parties are unable to agree upon the joint appointment of one arbitrator within
thirty (30) days of service of the Arbitration Notice).
29.2 BOARD OF ARBITRATION
If the parties are unable to agree upon the joint appointment of one arbitrator
within thirty (30) days of service of the Arbitration Notice, then the parties
shall each appoint one (1) independent arbitrator within forty-five (45) days of
service of the Arbitration Notice. The two arbitrators thus appointed shall
appoint a third independent arbitrator within sixty (60) days of service of the
Arbitration Notice. The third independent arbitrator thus appointed shall be a
lawyer experienced in matters of international, financial and commercial
matters. In the event that the two independent arbitrators shall fail to appoint
a third independent arbitrator within sixty (60) days of service of the
Arbitration Notice, the third arbitrator shall be appointed in accordance with
the UNCITRAL Arbitration Rules as in force on the date hereof.
If any Party shall fail to appoint an arbitrator within the time stated, then
any arbitrator appointed within such time period shall sit alone as a single
arbitrator and shall expeditiously hear and decide the dispute.
29.3 LOCATION OF ARBITRATION
The arbitration shall be conducted in Singapore.
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29.4 LANGUAGE OF ARBITRATION
All communications during the arbitration proceedings shall be in the English
language.
29.5 ARBITRATION AWARD
The arbitrator or the Board of Arbitration shall render its award applying
strict rules of law and principles consistent with the explicit terms of this
Agreement and shall have the authority to include in such award a decision
binding upon the Parties, enjoining them to take or refrain from taking specific
action with respect to the matter in dispute or disagreement. The award of the
arbitrator or the Board of Arbitration shall be final and binding on the Parties
and the Parties hereby irrevocably exclude any right of application or appeal to
any Court in any jurisdiction whatsoever in connection with any question arising
in the course of any arbitration or in respect of any award made. For this
purpose, the Parties expressly agree to waive the operation of Article 641 of
Reglement of de Rechtsvordering (RV) and Articles 15 and 108 of Law No. 1 of
1950 (Supreme Court Rules). An order of judicial acceptance or an application
for enforcement of the arbitration award may be sought in any Court of competent
jurisdiction within or outside Indonesia. The costs of any arbitration shall be
borne in accordance with the determination of the arbitrator or the Board of
Arbitration.
The Parties hereby irrevocably agree to cause the Company to observe and give
effect to the award of the arbitrator or the Board of Arbitration.
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29.6 MANDATE OF ARBITRATOR NOT TO EXPIRE
The Parties hereby irrevocably waive Article 260 section 1 and Article 650
section 2 of RV so that the mandate of the arbitrator or Board of Arbitrators
duly constituted in accordance with the terms of this Agreement shall remain in
effect until a final arbitration award has been issued by the arbitrator or
Board of Arbitration.
29.7 ELECTION OF DOMICILE FOR ENFORCEMENT OF AWARD
For the purposes of enforcing any arbitration award only, each of the Parties
hereby irrevocably elects domicile at the Clerk's Office of the District Court
of Central Jakarta (▇▇▇▇▇▇ Panitera Pengadilan Negeri Jakarta Pusat), without
prejudice to any Party's right to commence proceedings in respect of the
enforcement of the arbitral award in any other Court whether within or outside
the Territory having jurisdiction over any other Party or any of its assets.
EXECUTED on the date first stated above.
SIGNED for and on behalf of )
DYERSBURG CORPORATION )
In the presence of: )
----------------------
Signature
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Witness Print name
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Print name
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SIGNED for and on behalf of )
PT TEXMACO JAYA )
In the presence of: )
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Signature
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Witness Print name
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Print name
