Negotiation

Opening Statement

Amruth

A very good afternoon! Hope you are doing well amidst these troubled times. At the outset,
thank you for agreeing to negotiate regarding this matter of reaching to a consensus regarding the
various terms of the MoA of the Company to run a garage business chain in Bangalore. For the
benefit of all , I am the counsel representing Mr Ashita , who has over 10 years of experience in
the automotive sector and have full authority to negotiate and make any settlement on her behalf.
However if there are any issues that are beyond the scope of my powers, i may have to reserve
my rights to consult my client . I kindly request you to introduce yourselves before we proceed.

Akash

I am Akash and I represent the legitimate interest of my client, Mr. Kenny who plans to finance
the Company upon incorporation. I have the full authority to negotiate on his behalf. During the
conduct of the proceeding, I hope that all parties present here today conduct themselves in a
professional manner and avoid the usage of unparliamentary language. Since we have moved to
the virtual setting, in order to prevent cross-talking, I request the parties to raise their hand up
and we can proceed in the order of the hands being raised to listen to the other party.

Anurag

Thank you Mr. Anand and Mr. Thomas, I represent the legitimate interest of my client Mr.
Mokshith who plans to provide real estate assistance to the organization. I have full authority to
negotiate.

Charan

Thank you Mr. Shah, Anand and Mr. Thomas, I represent the legitimate interest of my client
Mr. Harsh who is the subject expertise in the field. I have full authority to negotiate.
Actual negotiation
Anurag -
As per the discussion of our clients, we can proceed to decide the issues based on the agenda
circulated. If either party present here today wishes to proceed to with any other issue than in the
order stated, we can proceed with the same with the consensus of all the parties. Since we are
discussing the clauses to be included in the MoA, we can primarily proceed by deciding the
name of the Company, registered office, manner of incorporation, objects, equity stake, debt to
equity, the composition of the board of directors, role of the parties, lock-in period, exit strategy
and the manner of resolving disputes. If there are no objection, we can proceed in the said order.

Gurucharan -
As per the preliminary discussion and decided by our clients, there is a consensus to name the
garage as Saravana Garage and furthermore, as decided the place of incorporation would before
the Bangalore RoC.

**** All agrees ***

Object:
Gurucharan
As regards the next clause - the object clause of the Company - In the opinion of my client, it
would be better not to diversify the company reasons being, it would be difficult to manage
sectors in which my client has no expertise and also there are many studies showing industries
which are not diversified are in better condition to provide services in their respective areas.

Akash
In the opinion of my client, Mr. Kenny there is a requirement that other ancillary objects as well
be included in the objects clause, since by virtue of diversification there could be economies of
scope. If I understand you correctly, your client’s concern is regarding the manner of
management and not being able to effectively manage the same presently at its inception. I
suggest that at the present instance we include this so that there is no requirement to amend the
MoA at a later point of time and the business decision to diversify can be taken after all the
parties are confident regarding the relative functioning of the garage business.
Charan
I agree with your point that it would be much better to have this clause in the objective clauses so
that there is no need to make the amendment at the later stage. Also, we can see how the garage
industry works and later we can a decision whether to diversify or not. I think my client would
be fine with including this clause.

Amruth
Considering the current situation and a massive surge in online retail and services , it is in my
clients interest that the business is primarily online. this is in view of both staffing and
management being far easier. I would insist that a clause be put up in the memorandum to this
effect

Anurag
With respect to the view about making the objective broad enough to encompass online retail
and services, my client would like the business to operate through brick and mortar setup in
order to make sure that his involvement in the company remains relevant.

Amruth
I must reiterate that with the pandemic being a concern and labour shortages , going online
would also be less expensive , we will still require your clients physical locations for
warehousing and other logistical applications. This will also result in the investment brought in
by the mr kenny is put to the best use

Anurag
In such a situation my client would request that moving forward, we follow a hybrid model
where we keep brick and mortar and online retail.

** Akash: I agree as this would also help with the diversification process, so to sum it up -
ancillary objects would be included of exclusive agreements and sale of spare parts and secondly
to have a hybrid model. All agrees**
Equity and Lock-in
Akash:
Having the financials kept in mind, my client proposes that he be given a 30% equity stake in the
Company, followed by 25% for Mr. Mokshit and divided . Furthermore, it is also propose that
there be a 5-year lock in period from the date of incorporation so that there is a reasonable
stability.

Amruth
I disagree Mr thomas. This does not best interest of my client in mind, At the outset , my client
and mr charan’s client. is actively managing the the business on a day to day basis and when
dividends are declared , this would leave my client with very little gain for all the effort that he
puts in.

Charan
I agree with Mr.Amruth on this and also regarding the lock-in period, it would be better to cut it
down to 2 years

Anurag
My client has a solution to this, in which we provide a 30 Percent equity stake to Mr. Kenny, 25
Percent to Mr. Mokshith and 22.5 Percent of participating and cumulative preference shares to
Ms. Ashita, Ms. Harsha for their experience, followed by a lock in for 2 years and post that a
vesting schedule for both of them for a period of 3 years until Mr. Kenny's exit.

BoD and roles

Amruth
This would be agreeable, thank you Mr thomas and anurag for understanding my client’s
position. This brings me to what positions we are to hold on the board. Considering that my
client both has the experience and the skills, it would be advisable to appoint him as the MD and
CEO.
Charan
My client would be in a better position to act as an MD than Ms. Ashitha since my client has the
relevant expertise in the field.

Amruth-
The value of experience cannot be understated. I understand, yet it would be unfair on my client
to give up the position entirely. I would therefore propose that my client , along with his position
on the board , be made the CEO with a fixed remuneration in the form of a salary and other
accorded benefits. Mr Harsha can be the MD.

Akash
Both Mr. Shah and I are obliged to have either of your clients as the MD and since we have
arrived at consensus that Ms. Harsha would act as the MD, we have no further objection
regarding the same. However, since we bring in the finances and assets, we propose that our
client’s be respectively given a position in the Board, however with merely observer rights. I
hope that is acceptable to all the parties.

Akash
Additionally, since there has to be effective control with the finance, my client proposes that we
the auditor of the Company and furthermore, the CFO be appointed by my client.

Amruth: as long as my client still retains a position of authority and the CFO is agreeable to
both Mr Kenny and my client. This would be acceptable. Termination of the CFO however will
be a management decision.

Akash: Thank you very much for understanding the position Mr. Anand.

Anurag - This would be in agreement with my clients interests. For the next matter, I would like
us to discuss the exit strategies for Mr. Kenny after five years and my client, Mr. Mokshith and
returns on such exit. We propose that Mr. Mokshith be given all the four boiler plate exit
opportunities (IPO, Third Party Sale, Put Option and Buyback) in case he wants to exit the
company along with equivalent remuneration by the company for the assets being unutilized.

Akash - Adding to what Mr. Shah said, my client, Mr. Kenny would like a put option on his
investment after five years. Additionally, Mr. Kenny would also like to ensure that if there is any
material breach of the covenants in the transaction documents, then the company should buy
back the shares of Mr. Kenny

Amruth - as CEO and member of the board , my client will be at a disadvantage if the
company were to come under any adversity. It must be considered that both Mr Kenny and Mr
Mokshit are owners of multiple businesses , Mr Harsha and my client do not have any such
alternative opportunities. I therefore propose more favourable exit options for the both of us.

Charan:
Adding on to the points made by Mr. Anand, I would like to propose that we will provide Mr.
Kenny and Mr. Mokshith with the exit rights requested by them, however we would require them
to accept that we chart out good leaver and bad leaver provisions in the Employment agreements
of my client and Ms. Ashita.

Amruth- that would be acceptable , with a severance package, that may be decided on a later
date. for the CEO if such circumstances arise

Akash - we accept the same as well. I would now propose we move to the final matter today,
which is the dispute resolution in case of any dispute. My client would like a multi tier dispute
resolution that gives us an option to refer a matter to arbitration in Bangalore followed by
exclusive jurisdiction to the courts of Bangalore.

Amruth- being management personnel , my client would like to have as little involvement in the
dispute resolution process as possible. I would further insist that any minor issues may be sorted
out through internal negotiation.
Amruth - if everyone is in agreement with all of the issues we decided above , we shall start
with the process of circulating a draft settlement agreement with all of you and your clients.

Akash - Thank you very much, it was an extremely fruitful session. If there are any other
concerns, the same can be incorporated into the AoA of the Company after a consensus is
reached among the parties.