Second Legal Opinion on the Draft Management Service Agreement for Private Placement of Equity to be executed between 2 Companies

Mr. Z

Address….

Dear Sir,

Re:      Second Legal Opinion on the Draft Management Service Agreement for Private Placement of Equity to be executed between Company 1 and Company 2.

We refer to your letter dated 02 April 2007 and 11 April 2007 and our letter dated 09 April 2007 on the above subject.

In your letter you have stated that as COMPANY 2’s role does not extend to managing its clients fund and will not extend to underwriting or advising COMPANY 1 on Placement, COMPANY 2 in your opinion does not fall under the definition of a merchant banker under Rule 2 (j) of the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules dated 24.04.1996.

According to the Rule  any person who is a manager or adviser connected with securities falls under the definition of a merchant banker, the Rule is not only applicable to a person who is managing the funds of its client. As the definition is rather vague and wide, we are of the opinion that there is a high likelihood that the services to be rendered by COMPANY 2 will attract the applicability of the Rule.

As the transaction contemplated under the Agreement with COMPANY 2 concerns offshore entities, it will be prudent for STS to seek clarification from SEC.

If you have any further query, please do not hesitate to contact the undersigned.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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