COLLABORATION
AGREEMENT
(ON STAMP
PAPER)
This
Collaboration Agreement (this “Agreement”) entered this
30 day of March, 2007 into between:-
MORE-GASTECH (INDIA) PRIVATE
LIMITED (hereinafter
called the "Indian Company"), incorporated under the Indian
Companies Act, 1956 and having its registered office at 1616,
VASTANT KUNJ , NEW DELHI-110070,
Moregastech LLC
(hereinafter called the "Foreign Company") a company registered in
United Sates Of America and a fully owned subsidiary of Energtek
Inc. having an address at 26 East Hawthorne Avenue, Valley Stream,
New York 11580, USA
Mr.
Mahinder Singh Khatkar ,(hereinafter called the "Indian Promoter") with
address at H-587, Palam Vihar, Gurgaon (Haryana)
WHEREAS, the
Foreign Company is in possession of technical know-how, designs and
drawings for manufacture of CNG KITS; and
WHEREAS, the
Indian Company and the Foreign Company have agreed to set up a
factory in India for the manufacture and sale in India and abroad
of the CNG KITS with the aid of Foreign Company's technical
know-how, .
NOW THEREFORE,
in consideration of the premises, it is hereby agreed between the
Indian Company and the Foreign Company as follows:
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As used in this
Agreement, "Product" means CNG KIT, accessories, cylinder or/and
other products designated by the Board of Directors of the Indian
Company.
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All words and
expressions which are not specifically defined in this agreement
shall have the same meaning as is given to them under the Companies
Act. 1956 ("the Companies Act"), to the extent such meanings are
aligned with the context.
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The Indian
Company shall take all required steps to obtain the consents and
approvals necessary for it to do business, including any
registration or license from the Government of India, Reserve Bank
of India or any other State or local authorities, as the case may
be.
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The Registered
Office of the Indian Company will be situated in the State of
Delhi.
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The Memorandum
and Articles of Association (hereinafter called the "Organizational
Documents") of the Indian Company shall incorporate, to the extent
relevant, all the terms and conditions set forth in this Agreement.
Changes/directions/ Rules/ Regulations notified by
RBI/SEBI/Department of Company Affairs should however be kept in
view in drafting various the Organizational Documents
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The
Organizational Documents of the Indian Company will provide for the
following:
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2.4.1
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Actions to be
taken with approval of shareholders
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2.4.1.1
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the merger or
consolidation of the Indian Company with another entity
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2.4.1.2
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the sale of all
or substantially all of the assets owned directly or indirectly by
the Indian Company
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2.4.1.3
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the
acquisition, by merger, issuance of securities of the Indian
Company or otherwise, of a significant part of the business, stock
or assets of another entity
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2.4.1.4
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the issuance of
securities of the Indian Company in connection with or for the
purpose of effecting or facilitating any of the foregoing
transactions
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2.4.1.5
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any
reclassification or recapitalization of any capital stock of the
Indian Company
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2.4.1.6
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and/or the
execution of any agreement in furtherance of any of the actions in
sub-clauses 2.4.1.1 to 2.4.1.5
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2.4.1.7
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authorize and
create any new securities
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2.4.1.8
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any
dissolution, liquidation, or winding up of the Indian Company or
any agreement to become so obligated
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2.4.1.9
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any redemption
or other purchase of any securities issued by the Indian Company,
other than pursuant to an option plan
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2.4.1.10
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the selection
of the auditor for the Company
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2.4.2
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Actions to be
taken by approval of the Board of Directors
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2.4.2.1
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issue or sell
securities, including, without limitation, any warrant, option or
right (contingent or otherwise) to purchase or acquire any security
of the Indian Company, or the adoption of any option, phantom
interest or similar plan, grants and the adoption and issuances
pursuant to a stock option plan
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2.4.2.2
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change the
business line or enter into any new business
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2.4.2.3
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the declaration
or making of any distributions payable in cash or other property
with respect to any equity securities of the Indian
company
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2.4.2.4
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engaging in any
material transaction with a stockholder of the Indian Company or
any affiliate thereof, including without limitation, hiring said
persons as employees or consultants of the Indian Company,
increasing their compensation or entering into any material
transaction out of the ordinary course of business
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2.4.2.5
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the
compensation and benefit arrangements payable to any officer of the
Indian Company
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2.4.2.6
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the
commencement or settlement of any litigation or threatened
litigation
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2.4.2.7
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any obligation
or incurrence of any debt in which the amount exceeds Indian Rupees
5 Lacs (Rupees five Lacs only)
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The total
capital investment for the project is Rs 82 Lacs (rupees eighty two
Lacs only).
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The authorized
capital of the Indian Company shall be Rs. 10 Lacs (rupees ten
Lacs) divided into 1 Lacs (one Lacs) equity shares of Rs. 10 each
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The issued
share capital of the Indian Company shall be held by the parties in
the following proportion:
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Foreign
Company 50
per cent
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The Promoters
and the Foreign Company commit to invest each the amount of Rs 41
Lacs (rupees fourty one Lacs) , either by way of equity capital or
by way of unsecured loans as specified in the Timetable and
Milestones in Appendix A.
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The Board of
Directors of the Indian Company (hereinafter called "the Board")
shall have, subject only to the provisions of this Agreement and
the Companies Act, the ultimate responsibility for management and
control of the Indian Company.
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The Board shall
consist of not less than 2 nor more than 14 members (hereinafter
called "Directors"), as fixed by resolution of the shareholders and
whose members shall be nominated proportionally by the shareholders
The initial Board shall consist of 4 Directors, 2 of whom shall be
the nominees of the Foreign Company and two of whom shall be the
nominees of the Indian Promoter.
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The Board shall
designate one of the nominees of the Foreign Company as the
Chairman of the Board and specify his term which in no event shall
exceed 2 years, after which the board may renew his
term.
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The Chairman of
the Board shall serve also as Chairperson of the Board meetings. If
the Chairman is not present at a meeting, before the commencement
of such Board meeting, the Directors shall appoint from amongst
themselves a Director to chair the meeting
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The Directors
need not hold any qualification shares.
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The Directors
`shall subscribe to and agree to be bound by the relevant terms of
this Agreement.
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The Board shall
arrange to procure the balance capital required after securing the
equity specified in section 3.3 above, by issue of debentures
(convertible or non-convertible), bonds, loans, etc. on terms and
conditions as determined by the Board.
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Managing Director of the company
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The Board shall
appoint the Managing Director of the Indian Company, subject to the
provisions of the Companies Act, and establish his remuneration. It
is agreed by the Indian Promoter and the Foreign Company that Mr.
Mahinder Singh Khatkar will be elected as Managing Director. Mr.
Khatkar will be asked by the Board to confirm his readiness to
serve as Managing Director for a period of at least 5 (five)
years.
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The Managing
Director shall serve as the Chief Executive Officer of the Company,
and shall represent the Company, enforce the matters resolved by
the Board and be responsible for the general management of the
Company.
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The Managing
Director shall exercise his powers, subject to the terms of this
Agreement and the powers reserved to the Board and to the
Shareholders by the Organizational Documents and applicable law,
under the general supervision, control and direction of the Board.
The powers and the duties of the Managing Director shall be as
determined from time to time by the Board and the powers and the
duties of all other officers of the Company shall be as determined
from time to time by the Managing Director or by the Board.
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Exercise of voting rights
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The Indian
Promoters and the Foreign Company shall exercise their respective
voting rights in the larger interest of the Indian Company and
observe in letter and spirit the various provisions of this
Agreement.
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The Indian
Promoters and the Foreign Company shall not exercise the voting
rights in the board meeting so as to removing the Managing Director
or the Chairman of the company without stating the reasons
therefore.
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The shares of
the company shall be fully transferable as provided under section
22A (3) of the Securities Contracts Regulation Act.
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Notwithstanding
the above, the Indian Promoters and the Foreign Company commit to
the restrictions relating to share transfers and issuances
specified in the Shareholders Agreement, including without
limitation Rights of First Refusal, Co-Sale Rights and Pre-emptive
Rights.
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The Foreign
Company shall be entitled to participate proportionally in all the
rights, payment of dividends, issuance of bonus shares and any
other benefit provided to a shareholder of the Indian Company as
other shareholders of the Indian company.
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It is not
contemplated by this Agreement that the Indian Company will dispose
of the whole or substantially the whole of its undertaking, assets
or investments by way of sale to any other party.
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The prior
written consent of the Foreign Company shall be required for the
grant of any mortgage or charge on the properties of the Indian
Company, and the same is to be recorded in the minutes of the Board
at which such action is authorized.
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Provision of technical
know-how
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The Foreign
Company shall provide the technical know-how required to
manufacture products in India as per the terms regarding payment of
lump sum amount, designs/ drawings fee, etc. as may be mutually
decided upon in due course of time and subject to such rules and
regulations as maybe stipulated by the Government of India or the
Reserve Bank of India.
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In
consideration of the use of the Foreign Company's trade mark by the
Indian Company, separate payment would be made as per the terms
mutually agreed upon between the Indian Company and the Foreign
Company.
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In
consideration of the continued use of the patent rights by the
Indian Company pursuant to the transfer of technical know-how, the
Indian Company shall pay the Foreign Company a royalty of such
percent of the ex-factory sale price of the product as may be
mutually agreed upon between both the parties from time to time (
subject to withholding tax as applicable as per applicable laws in
India) , subject to such rules and regulations as may be stipulated
by the Government of India/Reserve Bank of India.
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The Indian
Company shall send its technical personnel to the factory of the
Foreign Company as per approved programme, for proper and
appropriate training of its staff in order to efficiently run the
factory in India.
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At the request
of the Indian Company, the Foreign Company will send its technical
personnel to the project site in India in order to construct and
commission the plant and to see through the trial production
successfully.
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At the request
of the Indian Company, the Foreign Company will take care to engage
such number of technicians with appropriate level of expertise in
order to train the plant personnel in problems of breakdown or snag
in the working of the plant, and on the equipment or apparatus
installed in India pursuant to the technical know-how
arrangements.
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The terms of
the remuneration payable to the technical personnel of the Foreign
Company shall be decided upon by the Indian Company and the Foreign
company by mutual agreement.
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The Indian
Company and the Foreign Company shall not in any way be liable or
responsible to each other for any delay in executing any
undertaking under this Agreement or for inaction or non-performance
thereof, if such delay or inaction is caused by reasons such as,
strike, lock-out, accident by fire, flood, cyclone, civil
commotion, internal rebellion, war or any other act of God over
which neither party has any control, no liability would attach to
either of the parties to this Agreement.
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The parties to
the Agreement shall give notice to the other party by telex, air
mail, speed post, email, or by any other means mutually agreed upon
from time to time. However, documents, correspondence and other
relevant papers shall be sent by courier only.
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Unless
otherwise indicated by notice, each party to this Agreement shall
send all communication only at the address provided in this
agreement.
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This Agreement
is subject to Indian laws and action will lie only within the
courts situated in the state of Delhi (India)
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All disputes
arising from and in connection with this Agreement shall be set as
per the procedures stated in the Shareholders Agreement.
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The parties to
this Agreement are entitled to specific performance of the terms of
this Agreement, including the obligations concerning transfer of
shares, exercise of voting rights, transfer of technology,
repatriation of funds, etc.
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Each party
agrees to the condition that commencing on the date hereof no
competing project shall be set up by them with any other company in
India for a period of 5 years from the termination of this
Agreement; however, the Foreign Company shall be permitted to enter
into collaboration agreements with corporate houses/ big
manufacturers for production of kits, cylinders etc for their
captive use.
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Each of the
parties to this Agreement hereby undertakes not to divulge any
technical and trade secrets known to each other, to any third
party, as more particularly set forth in the Shareholders
Agreement..
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The Indian
Company shall issue, within not more than 35 days from the end of
each quarter, quarterly financial statements reviewed by LODHA
& Co., as long as said firm remains the local representative of
BDO International.
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The Indian
Company shall issue, within not more than 35 days from the end of
each calendar year , audited (by the same CPA as above) financial
statements for the said year.
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All the
financial statements specified above shall be prepared in
accordance with US GAAP.
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This Agreement
may be signed in counterparts.
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In witness
whereof the parties have executed this Agreement on the date first
written above.
Signed, sealed
and delivered on behalf of the above:
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/s Mahinder
Singh Khatkar
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/s/ Mahinder
Singh Khatkar
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MoreGasTech
(India) Private Limited
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If at any time
prior to an initial public offering of its equity securities More
Gastech (India) Private Limited (hereinafter "the Company")
proposes to issue and sell any securities of the Company
(including, without limitation, Ordinary Shares or any class of
preferred shares), whether or not already authorized, or rights,
options or warrants to purchase such shares, and securities of any
type whatsoever that are, or may become, convertible into shares of
the Company (all the previous mentioned together hereby referred to
as the "Proposed Issue" or "New Securities" as relevant) the
Foreign Company (hereinafter "the Investor") shall have the right
to exercise the Proposed Issue as follows:
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1.1.
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In the event
the Company undertakes an issuance of New Securities, it shall give
the Investor written notice thereof, which notice shall be given
prior to such issuance, describing the type and amount of New
Securities offered and the price and the terms upon which the
Company proposes to issue the same, and offering the Investor the
opportunity to purchase such New Securities. The Investor shall
have thirty (30) days from the date of such notice to accept such
offer, in whole or in part, by written notice to the
Company.
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1.2.
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In the event
that the Investor fails to accept such offer as to all of the New
Securities, the Company shall have the right within one hundred and
twenty (120) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall
be closed, if at all, within sixty (60) days from the date of said
agreement), to sell the New Securities as to which such offer was
not accepted, provided however that no such sale be effected at a
price or upon terms more favorable to the purchasers thereof than
those specified in the Company's notice to the Investor. In the
event the Company has not sold or entered into an agreement to sell
such New Securities within the periods specified above, the Company
shall not thereafter issue or sell such New Securities without
first complying with the procedure set forth in this
Article.
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2.1.
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No transfer,
sale, assignment, pledge or other disposition (each, a
“Transfer”) of shares by any Shareholder, other than a
transfer to a Permitted Transferee, shall be effective unless the
Transfer has been approved by the Board of Directors. The Board of
Directors may refuse to approve a Transfer to a competitor of the
Company, or if the Board of Directors determines that such Transfer
is detrimental to the best interests of the Company, in each case,
as shall be determined in good faith, by the Board of Directors, or
if the Transferee is not willing to undertake the same obligations
that Transferor has as a holder of shares.
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2.2.
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The limitations
set forth in Article 2.1 shall not apply to any Transfer to (i) a
transferee by operation of law; (ii) a spouse, children, or
grandchildren of the Shareholder, other than to minors and persons
incapacitated as a matter of law; (iii) a person controlling or
controlled by such Shareholder (for the purposes of this
definition, “control” [including, with correlative
meanings, the terms “controlled by”] shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person,
whether through the ownership of voting securities or the power to
appoint most of the directors or the CEO), provided that such
transferee (each transferee as defined in this section, a
“Permitted Transferee”) becomes a party to and agrees
to be bound by all agreements binding upon the transferor
immediately prior to such transfer, and the shares so transferred
remain subject to such agreements and the Company's
Articles.
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2.3.
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Each Transfer
of shares shall be made in writing in the form appearing
hereinbelow, or in a similar form, or in any form approved by the
Directors from time to time:
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I,
_____________ , of __________________, for valuable consideration
paid to me by ______________ of ___________________ ("Transferee"),
do hereby transfer to the Transferee _____ share(s), par value
Rupees 10 each, numbered ________ to _________ (inclusive), in the
company called MoreGastech India Private Limited to hold unto the
Transferee, his executors, administrators and assigns, subject to
the same terms and conditions on which I held the same at the time
of the execution hereof; and I, the said Transferee, do hereby
agree to take the said share(s) subject to the aforesaid terms and
conditions.
In witness
whereof we have hereunto set our hands this ____ day of _______,
____.
__________________ _________________
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2.4.
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Such form shall
be executed both by the transferor and transferee, and delivered to
the Office together with the transferred share certificates, if
share certificates have been issued with respect to the shares to
be transferred, and any other proof of the transferor's title that
the Directors may require. The share transfer deed with respect to
a share that has been fully paid may be signed by the transferor
only. A deed of transfer that has been registered, or a copy
thereof, as shall be decided by the Directors, shall remain with
the Company; any deed of transfer that the Directors shall refuse
to register shall be returned, upon demand, to the person who
furnished it to the Company, together with the share certificate,
if furnished.
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2.5.
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The transferor
shall be deemed to remain a holder of the shares until the name of
the transferee is entered into the Register in respect
thereof.
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2.6.
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The Company may
impose a fee for registration of a share transfer, at a reasonable
rate as may be determined by the Directors from time to
time.
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2.7.
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Upon the death
of a Shareholder or the dissolution of a Shareholder, the remaining
partners, in the event that the deceased was a partner in a share,
or the administrators or executors or heirs of the deceased, in the
event the deceased was the sole holder of the share or was the only
one of the joint holders of the share to remain alive, shall be
recognized by the Company as the sole holders of any title to the
shares of the deceased. However, nothing aforesaid shall release
the estate of a joint holder of a share from any obligation to the
Company with respect to the share that he held in
partnership.
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2.8.
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Any person
becoming entitled to a share as a consequence of the death or
bankruptcy or liquidation of a Shareholder shall, upon such
evidence being produced as may from time to time be required by the
Directors, have the right either to be registered as a Shareholder
in respect of the share, or, instead of being registered himself,
to transfer such share to another person, in either instance
subject to the Directors' power hereunder to refuse or delay
registration as they would have been entitled to do if the deceased
or the bankrupt had transferred his share before his death or
before his bankruptcy, and subject to all other provisions hereof
relating to transfers of shares.
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2.9.
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A person
becoming entitled to a share because of the death of a Shareholder
shall be entitled to receive, and to give receipts for, dividends
or other payments paid or distributions made, with respect to the
share, but shall not be entitled to receive notices with respect to
company meetings or to participate or vote therein with respect to
that share, or to use any other right of a Shareholder, until he
has been registered as a shareholder with respect to that
share.
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3.
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Rights of
First Refusal Transfer Notice.
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3.1.
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If at any time
any shareholder of the Company proposes to Transfer any securities
of the Company (including, without limitation, Ordinary Shares or
any class of preferred shares), whether or not already authorized,
or rights, options or warrants to purchase such shares, and
securities of any type whatsoever that are, or may become,
convertible into shares of the Company (“Various
Securities”) to one or more third parties other than a
Permitted Transferee, then such shareholder
(“Transferor”) shall give the Company and the other
shareholder (a "Holder") written notice of the Transferor’s
intention to make the Transfer (“Transfer Notice”),
which Transfer Notice shall include (i) a description of the
Various Securities to be transferred (“Offered
Shares”), (ii) the identity of the prospective
transferee(s) and (iii) the consideration and the material
terms and conditions upon which the proposed Transfer is to be
made.
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3.2.
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Holder’s Option
. The Holder shall have an option
for a period of twenty (20) days from receipt of the Transfer
Notice to elect to purchase the Offered Shares at the same price
and subject to the same material terms and conditions as described
in the Transfer Notice. The Holder may exercise such purchase
option and, thereby, purchase all or any portion of the Offered
Shares, by notifying the Transferor and the Company in writing,
before expiration of the twenty (20) day period as to the number of
such shares which it wishes to purchase.
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3.3.
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If a Holder
gives the Transferor notice that it desires to purchase the Offered
Shares then payment shall be by check or wire transfer, against
delivery of the Offered Shares at a place agreed upon between the
parties and at the time of the scheduled closing therefore, which
shall be no later than ten (10) days after the delivery of the
notification to the Transferor.
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4.1.
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Subject to
section 3 above, after receiving a notice from the Transferor, the
other Holder may notify Transferor in writing, within fifteen (15)
days after delivery of the Transfer Notice referred to in
Section 3, about its intention to participate in the sale of
Offered Shares (a "Selling Holder") and shall have the right to
participate in such sale of Offered Shares with the Transferor, on
the same terms and conditions as specified in the Transfer Notice,
and, subject to agreement amongst the Selling Holders, in
proportion to the number of shares owned by the Selling Shareholder
to the number of shares owned by all Selling Shareholders,
including the Transferor.
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4.2.
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Selling
Holder’s notice to the Transferor shall indicate the number
of Various Securities the Selling Holder wishes to sell under its
right to participate, subject to the limitation in section 4.1
above.
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4.3.
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Each Selling
Holder shall effect its participation in the sale by delivering
within ten (10) days to the Company for transfer to the prospective
purchaser one or more certificates, properly endorsed for
transfer.
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4.4.
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To the extent
that any prospective purchaser or purchasers refuses to accept such
assignment or otherwise refuses to purchase Various Securities from
a Selling Holder exercising its rights of co-sale hereunder, the
Transferor shall not sell to such prospective purchaser or
purchasers any Offered Shares (and the Company shall not record
such transfer) unless and until, simultaneously with such sale, the
transferee shall purchase such Various Securities from such Selling
Holder for the same consideration and on the same terms and
conditions as the proposed transfer described in the Transfer
Notice.
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4.5.
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Non-Exercise of
Rights. Notwithstanding anything to the contrary, to the extent
that the Transferor shall have not received requests from the
Holders (together) to purchase all of its Offered Shares, the
Transferor shall be entitled to sell the Offered Shares, in whole
or in part, to any third party, upon terms and conditions no more
favorable than those specified in the Transfer Notice, within 60
days after the expiration of such rights of the Holders. Without
derogating from the above, to the extent that any party has not
exercised its rights to join the selling of the Offered Shares the
Transferor shall have a period of sixty (60) days from the
expiration of such rights in which to sell the Offered Shares, upon
terms and conditions (including the purchase price) no more
favorable than those specified in the Transfer Notice to the
third-party transferee(s) identified in the Transfer Notice. The
third-party transferee(s) shall acquire the Offered Shares subject
to rights of first refusal and co-sale rights under this Agreement.
In the event a Transferor does not consummate the sale or
disposition of the Offered Shares within the sixty (60) day period
from the expiration of these rights, the first refusal rights and
co-sale rights shall be applicable to any subsequent disposition of
the Offered Shares until such right lapses in accordance with the
terms of this Agreement. Furthermore, the exercise or non-exercise
of the rights shall not adversely affect rights as to subsequent
purchases and/or sales.
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5.
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Limitations to Rights of Refusal and
Co-Sale.
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