Exhibit 10.23
SHARE HOLDERS AGREEMENT
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This Share Holder Agreement made this 11th day of October 2005 is entered into
by and between:
Lakeland Industries Inc., a Delaware corporation having its principle place of
business at 000-0 Xxxxxxx Xxx, Xxxxxxxxxx, XX 00000, through Xx. Xxxxxxxxxxx X.
Xxxx (hereafter referred to as "Lakeland") which expression shall mean and
include its successors, administrators and permitted assigns, of the first part.
AND
Xx. X. X. Xxxxx son of Late Xx. X. X. Xxxxx resident of X-00, Xxx Xxxxxxx
Xxxxxx, Xxx Xxxxx - 110 065, India (hereinafter referred to as "PSR"), which
expression shall mean and include her heirs, legal representatives, successors
in interest, administrators and permitted assigns, of the second part
AND
Xx. Xxxxx Xxxxx son of Late Xx. X. X. Xxxxx resident of X-00, Xxx Xxxxxxx
Xxxxxx, Xxx Xxxxx - 110 065, India (hereinafter referred to as "KSR"), which
expression shall mean and include his heirs, legal representatives, successors
in interest, administrators and permitted assigns, of the third part
(Collectively "Parties").
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WHEREAS
A. Lakeland is desirous of having a manufacturing activity for industrial
gloves (the Products) in India;
B. PSR and KSR are engaged in the business of manufacture of the Products
from their manufacturing facility in the name of their company M/s RFB
Latex Limited of which they are the controlling shareholders;
C. In order to assess the market condition and potential of the business,
Lakeland has decided to initially procure the Products from the
manufacturing facility of PSR and KSR;
D. In order to carry out the intended activity, a joint venture company is to
be incorporated who will undertake the activity of procuring and sale of
the Products;
E. The Parties have joined hands to participate in the said business
activities by subscribing to the shareholding of a company to be
incorporated in the name of M/s RFB Lakeland Industries Private Limited;
and
F. The shareholding of the Parties hereto in the said company will be held in
accordance with this Agreement;
Now in consideration of mutually dependent covenant set forth hereafter, the
Parties agree as follows:
ARTICLE-1
DEFINITIONS
In this Agreement:
(a) the Article headings and numberings are for convenience only and shall be
ignored in the interpretation of this Agreement;
(b) the singular includes the plural and vice versa;
(c) references to any agreements or Applicable Law include any amendment or
replacement thereof, in whole or in part;
(d) references to Articles and Annexes are, unless the context otherwise
requires, references to Articles and Annexes of this Agreement; and
(e) terms defined in this Article shall have the meaning ascribed herein when
used in capitalized form elsewhere in this Agreement.
"Act" shall mean Companies Act, 1956
"Agreement" means this Agreement and includes all modifications, alternations,
additions or deletions thereto made or entered into in writing after the date of
execution hereof.
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"Applicable Law" means all statutory and un-codified laws, rules, regulations,
delegated legislation, ordinance, judicial pronouncements, decrees and orders of
courts to which either Party are subject by virtue of their being citizen of
this country or by reason of the performance of their respective obligations or
the enjoyment of their rights in accordance hereunder.
"Approval" means all permissions, consents, validation, confirmation, licenses
and authorization whether obtained and / or required to be obtained under
Applicable Laws to enable Parties to perform all their obligations and enjoy
their rights hereunder.
"Articles of Association" means the Articles of Association of the Company.
"Board of Directors" means the Board of Directors of the Company.
"Business" means the business of the Company and / or Subsidiaries of the
Company undertaken pursuant to this Agreement.
"Chairman" means the Chairman of the Board of Directors.
"Company" shall mean M/s RFB Lakeland Industries Pvt. Ltd.
"Deadlock Notice" means the Notice referred to in Article 10.
"Director" means a member of the Board of Directors.
"Effective Date" means that date on which the Parties declare the achievement
of, each and every condition precedent set forth in Article 2.
"Force Majeure" shall mean any event or combination of events or circumstances
beyond the reasonable control of either Party which cannot by the exercise of
reasonable diligence be prevented or caused to be prevented, cannot despite the
adoption of reasonable precaution and/or alternative measures be prevented and
which materially and adversely affect such Party's performance of its duties or
obligations or enjoyment of its rights under this Agreement and includes:
(a) acts of God including but not limited to fire, draught, flood,
earthquake, epidemics and other natural disasters;
(b) explosions, accidents, air crashes and shipwrecks;
(c) blockades, embargoes, and sabotage,; (d) strikes, work-to-rules or
similar labor difficulties not attributable to any unfair policies
of any Party; and
(e) the promulgation of or restrictions placed under, onerous Applicable
Law;
(f) any event or circumstances analogous to the foregoing.
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Provided that insufficiency of funds shall not constitute an event of Force
Majeure.
"Fundamental Issue" shall have the meaning set forth in Article 9.
"Memorandum of Association" means the Memorandum of Association of the Company.
"Notice" means a written communication by one Party to the other Party pursuant
hereunder forwarded for delivery by prepaid courier or registered airmail and
confirmed by facsimile at the following addresses and Fax numbers, such as may
be amended from time to time by Notice:
Lakleland Address: 000-0, Xxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Fax No.:
PSR Address: X-00, Xxx Xxxxxxx Xxxxxx,
Xxx Xxxxx - 110 065
Fax No.:
KSR Address: X-00, Xxx Xxxxxxx Xxxxxx,
Xxx Xxxxx - 110 065
Fax No.:
Unless otherwise proved by competent evidence under Applicable Laws, all Notices
shall be deemed to have been delivered one week after the date of their posting
by courier or twenty four hours after they are transmitted through facsimile
whichever is later.
"Party" means either Lakeland or PSR or KSR as applicable
"Parties" means collectively Lakeland, PSR and KSR.
"Subsidiary Company" shall have the same meaning as assigned under the Act.
ARTICLE -2
CONDITIONS PRECEDENT
AND
CONDITIONS SUBSEQUENT
2.1 Except as may be expressly waived by Parties in writing, it shall be a
condition precedent to the commencement of either Party's obligation to
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subscribe to or purchase the shares and make payment of share capital to
the Company pursuant to Article 4 that the Company (M/s RFB Lakeland
Industries Pvt. Ltd.) shall have been duly incorporated under the laws of
India;
ARTICLE-3
OBJECT
3.1 The Parties state that in entering into this Agreement, it is their intent
and commercial object:
(a) that they plan, implement, operate and conduct the Business of the
Company in accordance with this Agreement; and
(b) to provide Lakeland with an investment opportunity that ensures
returns commensurate with its investment in equity and other
contributions to the Company.
The Parties agree to exercise their best endeavor to achieve these stated
objectives and to ensure the success of the Business.
3.2 The Memorandum of Association and the Articles of Association shall be
amended to:
(a) be in form and substance acceptable to the Parties; and
(b) shall incorporate all the terms of this Agreement and such
amendments thereto as are made from time to time, to the extent
permitted under Applicable Laws.
ARTICLE-4
SHARE CAPITAL
4.1 The initial, authorized equity share capital of the Company shall be Rs.
1,00,00,000/- (Rupees one crore only) divided into 10,00,000/- shares of
Rs. 10/- each. The category of shares such as equity shares or preference
shares shall be decided by the Board of Directors of the Company in view
of the requirement of the Business of the Company. The initial paid up
capital of the Company shall be Rs. 1,00,000/- (rupees one lakh only).
4.2 Subject to and in accordance with this Agreement, Lakeland will hold 9,500
equity shares of the Company and PSR and KSR collectively will hold 500
equity shares of the Company. Thus, Lakeland shall hold 95% of the paid up
share capital of the Company and PSR and KSR collectively shall hold 5% of
the paid up share capital of the Company.
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4.3 At the time of incorporation of the Company, Xx. Xxxxxxxxxxx X. Xxxx and
Xx. X. X. Xxxxx and Mr. K. S. Xxxxx shall subscribe their names to the
Memorandum and Articles of Association of the Company.
4.4 Within five days of Effective Date, Lakeland, PSR and KSR agree to
subscribe to the initial paid-up capital of the Company. The initial share
capital shall be issued and subscribed and paid by Lakeland, PSR and KSR
in accordance with the requirements of the Company at par value.
4.5 Each share shall carry one vote at all general meetings.
4.6 KSR shall cause the Company to issue share certificates upon the allotment
of shares to the Parties expeditiously and, in any event, within the
stipulated period under the Act.
ARTICLE - 5
INCREASE AND DECREASE IN CAPITAL
5.1 Any and all increase of the authorized share capital shall be decided in a
shareholders' meeting in accordance with Applicable Laws. Each Party shall
have the right to subscribe to any increase in the paid up capital of the
Company pro-rata to their shareholding in accordance hereunder. If either
Party will or cannot contribute, wholly or in part to the increased
capital, the other Parties shall have a right of first refusal to the
un-subscribed capital. Each Party recognizes that in the event it does not
take up the shares offered to it, its proportionate shareholding in the
increased equity capital of the Company shall stand diluted.
5.2 A decrease of the issued share capital shall also be decided by a
shareholders' meeting in accordance with Applicable Laws.
ARTICLE-6
MEETINGS OF SHAREHOLDERS.
6.1 The shareholders' meeting shall be the supreme body of the Company. Unless
otherwise provided in this Agreement, the general meeting of shareholders
shall have such powers as are conferred upon it under Applicable Laws and
under the Articles of Association as are from time to time in effect.
6.2 The statutory General Meeting of the Company shall be held within 6 months
from the date of incorporation of the Company.
6.3 The first Annual General Meeting shall be held not later than one year
from the date of the statutory General Meeting and thereafter within 6
months after the end of each financial year of the Company.
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6.4 The Board of Directors, upon request of members representing at least 10 %
of the shares having right to vote on that matter, shall call an
extra-ordinary General Meeting of the Company, and the Agenda for such
Extra-ordinary General Meeting shall include the terms as proposed by the
shareholders asking for such meeting.
6.5 The notice convening the General Meeting shall, unless otherwise
unanimously agreed, be sent by telex, telefax or cable and confirmed by
simultaneous dispatch of Registered mail to every shareholder and the
Parties, not later than 21 clear days before the meeting. Such notice
shall include the Agenda, and specify place and date of the meeting. Any
enclosures to the Agenda shall at least be specified in the telex, telefax
or cable and be forwarded with the confirmation letter.
6.6 Subject to the provisions of the Act, a shareholder shall have the right
to be represented at a General Meeting by a proxy who shall not
necessarily have to be a shareholder of the Company.
ARTICLE-7
BOARD OF DIRECTORS
7.1 The responsibility for the management of the affairs of the Company will
rest with its Board of Directors, which will be composed of representative
of the Parties nominated and elected in accordance hereunder.
7.2 The members of the Board of Directors shall be appointed by the
shareholders in a General Meeting. The members of the Board of Directors
shall not be required to hold any qualification share in the Company.
7.3 The Board of Directors will comprise of not less than two members and not
more than eight members.
7.4 It is agreed by and between the Parties that the Parties who have
subscribed to the Memorandum and Articles of Association of the Company
shall be the first directors of the Company. It is further agreed that
within one week of incorporation of the Company, the Board of Directors
shall be reconstituted with eight members, of whom six Directors shall be
nominated by Lakeland and two Directors shall be nominated by PSR and KSR
jointly. Each member of the Board of Directors will have one vote.
7.5 The Board of Directors shall cause one amongst them to be the Chairman.
The Chairman shall be a nominee of Lakeland. The Chairman of the Board of
Directors shall have a casting vote.
7.6 The Board of Directors shall have the overall responsibility for the
general course of business of the Company. The Board of Directors shall
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exercise supervision over the management of the Company and periodically
appraise the performance of the management.
7.7 The working language at the meetings and in all written material will be
the English language.
7.8 The Board of Directors shall meet at least four (4) times in every
calendar year when duly called for in writing by the Chairman. The notice
period shall be at least three clear days, provided that with the consent
of all the members of the Board of Directors, a meeting may be convened by
a shorter notice. The notice shall contain an Agenda for the called
meeting. The Board Meetings shall take place in Delhi, or at such other
place as the Parties may decide from time to time.
7.9 The quorum for a meeting of the Board of Directors of the Company shall be
one third of the total number of Directors including at least one Director
nominated by Lakeland.
7.10 A resolution in writing signed by all the Directors for the time being
entitled to receive notice of a meeting of the Board of Directors shall,
subject to the provisions of the Act, be as valid and effectual as if it
had been passed at a meeting of the Board of Directors duly convened and
held. Any resolution so adopted shall be placed on the Agenda for the next
meeting formally convened, for being taken on record.
7.11 If any member of the Board of Directors is expected to be prevented for
a period of more than 3 (three) months to participate in the meetings
of the Board of Directors, the nominating Party of such member may
appoint a person to act as alternate member during such absence, and
the Board of Directors shall accept such appointment.
ARTICLE-8
FUNDAMENTAL ISSUES
8.1 Not withstanding any power conferred to the Board under this Agreement or
the Act or the Articles of Association, no resolution, in respect of the
following matters (the `Fundamental Issues'), shall be deemed to have been
duly passed by the Board of Directors, unless approved by a majority of
Directors, which majority shall comprise of an affirmative vote of at
least one Director nominated by Lakeland.
a) any reorganization of the share capital of the Company including any
new issue of share capital or obligations convertibles into shares,
capitalization/ redemption of shares;
b) the making of any loans or the giving of any guaranties or
indemnities by the Company;
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c) any borrowing or financial accommodation;
d) the sale or disposal of any fixed assets of the Company, with or without
consideration, with a market value in aggregate in excess of INR 110,000
(Rupees one lakh ten thousand only) except in the ordinary course of
business;
e) disposal of any assets of value INR 110,000 (Rupees one lakh ten thousand
only) below fair market value to individuals, or related parties;
f) the sale or disposal of the whole or a substantial part of the assets of
the Company;
g) the amalgamation or merger of the Company with any other company or
concern;
h) any alteration or amendments to the Memorandum of Association and Articles
of Association;
i) the commencement of a new activity or business by the Company, or any
change in the geographical area of business, other than as envisaged in
this Agreement;
j) the formation of any subsidiary of the Company and the
appointment of its Directors;
k) the acquisition by the Company of any shares or investments in any other
company;
l) compromising or compounding of any third party claims or disputes
concerning the Company;
m) the giving or granting of any lien or security interest over any assets of
the Company, other than statutory liens arising by operation of law, or
pledging or encumbering any of Company's assets, and entering into any
guarantee or indemnity by the Company;
n) all contracts and arrangements between the Company and any Party;
o) the acquisition of any business either directly by the Company or
indirectly through any other firm or company whether carried on
individually or through a partnership or otherwise
ARTICLE 9
MANAGEMENT
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9.1 The Board of Directors shall appoint the Chief Executive Officer of the
Company who shall also be its Managing Director. It is agreed by and
between the Parties that so long as Lakeland continues to be the majority
shareholder of the Company, Xx. Xxxxxxxxxxx X. Xxxx shall be the Chief
Executive Officer of the Company. The terms of agreement between the
Company and Xx. Xxxxxxxxxxx X. Xxxx shall be incorporated in the
Management Agreement.
9.2 The management, headed by the Chief Executive Officer of the Company,
shall be responsible for its day-to-day business.
ARTICLE 10
DISTRIBUTION OF DIVIDENDS.
The Annual General Meeting shall be the final body to determine the amount
of profits out of the distributable reserves that are available for actual
distribution to the parties as share holders of the Company, taking into
account that no dividend will be paid out until positive accumulated cash
flow has been achieved.
ARTICLE 11
TRANSFER OF SHARES
11.1 A Party's ability to sell, assign, transfer, pledge, encumber or otherwise
dispose of (collectively referred to as a "Transfer") any or all of its
shares in the Company shall be governed by the provisions of this Article.
11.2 No shareholder shall be permitted to Transfer shares held by it in the
Company prior to the end of five years from the date of either allotment
or purchase of shares of the Company unless the Transfer is approved by
the Parties.
11.3 If the Disposing Shareholder wishes to Transfer any or all of its shares
in the Company ("Share Package") to a third party (which expression shall
include an existing shareholder in the Company), the other shareholders
and the Company shall be promptly informed by Notice in writing setting
out the identity of the third party and the price and other terms offered
by the third party. In this event, the other Party shall have a right
either to purchase the entire, but not part of the, Share Package at the
price and on the terms offered by the third party or sell its shareholding
along with the Disposing Shareholder on prorata basis (Tag Along Right).
11.4 If under the procedures referred to in Articles 11.3 above, the other
Party do not elect within the stated period to purchase all of the Share
Package or Tag Along Right, then the Disposing Shareholder shall within a
period of 3 (three) months following expiry of the stated periods as
aforesaid, have the right to sell the Share Package to the third party
identified in
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Article 11.3 at the price (but not below the price) and on the terms
originally proposed. It is a pre-condition for the registration of a third
party as a shareholder that such third party agrees to be bound by all the
terms and conditions of this Agreement and to assume all of the
obligations hereunder and under other agreements to the same extent as the
Disposing Shareholder and that such third party is neither a competitor of
Parties nor a convicted felony in any jurisdiction in India or USA.
11.5 If under the procedures referred to in Articles 11.3 above, the other
Party elect for Tag Along Right, the third party shall purchase the shares
and the Disposing Shareholder shall cause the third party to purchase
shares from the other Party on prorata basis at the price (but not below
the price) and on the terms originally proposed. It is a pre-condition for
the registration of a third party as a shareholder that such third party
agrees to be bound by all the terms and conditions of this Agreement and
to assume all of the obligations hereunder and under other agreements to
the same extent as the Disposing Shareholder.
11.6 In the event that a shareholder goes bankrupt, suspends payments or is
otherwise subjected to a general creditor arrangement, then such
circumstances shall be deemed as a proposed Transfer enabling the other
Party to exercise their right of first refusal to the shares. The price to
be paid for such shares shall be the market price of such shares. In the
event of Parties inability to agree on the market price, the price of such
shares shall be fixed by an internationally recognized firm of chartered
accountants.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
12.1 PSR and KSR hereby represents and warrants to Lakeland that:
(a) they have requisite legal power and authority to enter into this
Agreement and perform their duties and obligations under this
Agreement;
(b) this Agreement constitutes the legal, valid and binding obligation
enforceable against them in accordance with the terms hereof;
(c) the execution, delivery and performance of this Agreement shall be
duly authorized by all requisite actions and will not to their
knowledge constitute a violation of (1) any relevant Applicable Law,
and (2) any indenture, contract or agreement to which they are party
or by which they or their property are bound.;
(d) there are no actions, suits or proceedings pending or threatened
against them before any court or tribunal that could reasonably
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be expected to affect materially and adversely their financial
condition or operations or their ability to perform their duties or
obligations hereunder; and
(f) no representation or warranty made by it herein contain any untrue
statement of material facts or omits to state a material fact
necessary to make any statement made not misleading.
ARTICLE 13
TERM AND TERMINATION.
13.1 Subject to its provisions, the Agreement shall be binding upon the Parties
from the date of its execution and shall remain valid and in effect for so
long as the Parties are shareholders in the Company. This Agreement shall
terminate forthwith and with effect from the date when any Party's entire
shareholding in the Company is sold in accordance with its provisions so
far as the Party selling the shares is concerned. The Agreement shall
continue to be valid and binding on the remaining Parties who continue to
be the shareholders of the Company.
13.2 In the event that within two months of the date of execution hereof, the
condition precedent set forth in Article 2 has not been achieved, either
Party shall be at liberty to terminate this Agreement by a thirty day
Notice. Provided however that such termination shall be without prejudice
to either Party's accrued rights prior to the issue of such Notice of
termination.
13.3 This Agreement may be terminated at the option of any Party:
(a) if so agreed in writing by all the Parties; or
(b) if any Party hereto fails to observe or perform any of its material
obligations under this Agreement (`Defaulting Party') and such
failure is not remedied within thirty days after written Notice
thereof by the Party not in default (the `aggrieved Party')
13.4 In the event of termination of this Agreement pursuant to Article 13.3,
the following shall apply:
(a) the Defaulting Party shall be liable to compensate the Aggrieved
Party for any and all damages payable under Applicable Law as a
result of such default; and
(b) the Defaulting Party, at the option of the Aggrieved Party, shall
transfer at the lower of market value or par value, its entire
shareholding in the Company.
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13.5 Any shares sold by the Defaulting Party pursuant to this Article shall be
sold by the Party as owner and free from encumbrances and such sale shall
include all rights attaching to those shares.
ARTICLE 14
FORCE MAJEURE.
14.1 Subject to such specific exclusions as are set forth in this Agreement,
neither Party shall be liable for any failure or delay in complying with
or performing its obligations and duties under this Agreement to the
extent such failure or delay is due to one or more events of Force
Majeure, and/or a breach hereunder by the other Party, and the period
allowed for the compliance or performance by a Party of such duties and
obligations shall be extended for the duration of such event of Force
Majeure and/or breach as above said.
14.2 The occurrence of an event of Force Majeure shall entitle the Party
directly affected thereby to postpone any measure in performing its
obligation under this Agreement which is prevented or rendered
unreasonably burdensome, provided that the Party so affected shall use its
best efforts to mitigate such event of Force Majeure and shall recommence
performance hereunder with the utmost dispatch wherever such effect
ceased.
14.3 A Party claiming the effect of an event of Force Majeure shall not be
entitled to the benefit of this Article unless it expeditiously gives the
other Parties Notice thereof. Upon cessation of the event of Force
Majeure, the Party claiming Force Majeure shall by Notice communicate such
cessation.
ARTICLE 15
GENERAL PROVISIONS.
15.1 This Agreement shall not be amended or modified in any respect except in
writing executed by a duly authorized representative of each Party.
15.2 This Agreement supersedes all prior arrangements, understandings,
negotiations, representations, warranties, agreements, memorandum of
understanding, whether verbal or written, with respect to the subject
matter hereof.
15.3 Except as specifically set forth herein, the rights and obligations
hereunder cannot be assigned by any Party to any other party without the
prior written consent of the other Party.
15.4 The failure of any Party to insist upon strict adherence to any term of
the Agreement on any occasion shall not be considered a waiver of any
right
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hereunder nor shall it deprive such Party of the right thereafter to
insist upon strict adherence to that term or any other of the Agreement.
15.5 Each right, power and remedy provided for herein or hereafter existing at
law, by statute or otherwise, shall be cumulative and the exercise or the
forbearance of exercise by any Party of one or more of such rights, powers
or remedies (including termination) shall not preclude the simultaneous or
later exercise by such Party of any of all of such rights, powers or
remedies.
15.6 If any provision of the Agreement, or the application thereof to any
person or circumstances, shall for any reason or to any extent, be invalid
or unenforceable, such invalidity or enforceability shall not in any
matter affect or render invalid or unenforceable the remainder of the
Agreement, and the application of that provision to other persons or
circumstances shall not be affected but, rather, shall be enforced to the
extent permitted by law. In the event of the invalidity or enforceability
of any provision of the Agreement or of the application thereof to any
person or circumstances, the Parties shall, at the request of any of the
Parties, negotiate in good faith to agree on changes or amendments to the
Agreement which are required to carry out the intent and accomplish the
purpose of the Parties pursuant hereunder and the Company in the light of
such invalidity or enforceability.
15.7 Each Party hereto shall cooperate and shall take such further reasonable
action and shall execute and deliver such further documents as may be
reasonably requested by the other Parties hereto in order to carry out the
intent and accomplish the purpose of this Agreement and the Company.
ARTICLE 16
OBLIGATIONS OF PSR AND KSR
16.1 During the currency of the Agreement and the Supply Agreement, PSR and KSR
agree that they will not in any way, directly or indirectly, manage,
operate, control, accept employment or a consulting position with or
otherwise advise or assist or be actively connected with, directly or
indirectly, any enterprise which engages in, or otherwise carries on, any
business activity in competition with the Company or the business to be
optionally acquired by the Company, if their activity or service to such
enterprise could have an adverse effect on the Company or the optionally
Acquired Business in any geographic region in the world. PSR and KSR agree
that during the currency of the Agreement they will not take any action
which might divert from the Company or Lakeland, or their respective
successors or assigns, any opportunity which would be within the scope of
any of their respective present or future operations or business.
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16.2 PSR and KSR agree not to disclose at any time to other than the Company or
any of its affiliates or use, except in each case in pursuit of the
business of the Company or its affiliates, any proprietary information of
the Company or of any of its affiliates whether they have such information
within their memory or it is embodied in writing or other physical form.
For purposes of this agreement, the phrase "proprietary information" means
all information, such as, without limiting the generality of the
foregoing, customer accounts, sales, development or financing procedures
or methods of the Company or any of its affiliates or related entities to
specific business matters such as, without limiting the generality of the
foregoing, the identity of suppliers, customers, contractors or lenders or
accounting procedures of the Company or its affiliates.
16.3 PSR and KSR agree that any and all improvements, inventions, discoveries,
formulae, processes or methods relating to Business which they may
conceive or make during the currency of this Agreement for the Company
shall be the sole and exclusive property of the Company. PSR and KSR will,
whenever requested to do so by the Company and at the Company's expense,
execute and sign any and all applications, 'assignments or other
instruments and do all other things which it reasonably may deem necessary
or appropriate in order to apply for, obtain, maintain, enforce and defend
letters patent of the United States or of any foreign country for such of
the improvements, inventions, discoveries, formulae, processes or methods
as shall be the sole and exclusive property of the Company or as the
Company shall have elected to acquire as provided for above, or in order
to assign and convey otherwise make available to the Company or any
affiliate, as the case may be, the sole and exclusive right, title and
interest in and to said improvements, inventions, discoveries, formulae,
processes or methods.
16.4 PSR and KSR shall make their best efforts and devote an appropriate
portion of their time in the manufacturing of the Products and for sales
of Company's Products. In consideration of their obligations as contained
hereinabove and in consideration of their efforts resulting into increase
in sales and profits of the Company, Lakeland shall sell a part of its
shareholding to them in the manner and to the extent as detailed herein
below:
In the case of KSR:
(a) on October 2006, Lakeland shall sell 280 equity shares out of the
total shares held by it to KSR at par subject to the condition that
the sale of the Product of the Company by KSR personally in the year
one has exceeded $ 700,000 USD;
(b) on October 2007, Lakeland shall further sell 280 equity shares out
of the total shares held by it to KSR at par subject to the
condition
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that the sale of the Product of the Company by KSR personally in the
year two has exceeded $ 1,000,000 USD;
(c) on October 2008, Lakeland shall further sell 280 equity shares out
of the total shares held by it to KSR at par subject to the
condition that the sale of the Product of the Company by KSR
personally in the year three has exceeded $ 1,500,000 USD;
(d) on October 2009, Lakeland shall further sell 280 equity shares out
of the total shares held by it to KSR at par subject to the
condition that the sale of the Product of the Company by KSR
personally in the year four has exceeded $ 1,850,000 USD;
(e) on October 2010, Lakeland shall further sell 280 equity shares out
of the total shares held by it to KSR at par subject to the
condition that the sale of the Product of the Company by KSR
personally in the year five has exceeded $ 2,100,000 USD.
In the case of PSR:
(a) on October 2006, Lakeland shall sell 280 equity shares out of the
total shares held by it to PSR at par subject to the condition that
the year one net profits equal or exceed 9% of net sales;
(b) on October 2007, Lakeland shall further sell 280 equity shares out
of the total shares held by it to PSR at par subject to the
condition that the year one net profits equal or exceed 12% of net
sales;
(c) on October 2008, Lakeland shall further sell 280 equity shares out
of the total shares held by it to PSR at par subject to the
condition that the year one net profits equal or exceed 15% of net
sales;
(d) on October 2009, Lakeland shall further sell 280 equity shares out
of the total shares held by it to PSR at par subject to the
condition that the year one net profits equal or exceed 18% of net
sales;
(e) on October 2010, Lakeland shall further sell 280 equity shares out
of the total shares held by it to PSR at par subject to the
condition that the year one net profits equal or exceed 20% of net
sales.
ARTICLE 17
GOVERNING LAW AND ARBITRATION.
17.1 The Agreement shall be governed by, interpreted and construed in
accordance with the laws of India.
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17.2 Any disputes arising from or in connection with this Agreement, including
any disputes relating to the existence, validity, interpretation or valid
termination of its provisions shall be exclusively and finally settled by
an arbitral tribunal formed and administrated in conformity with the
Indian Arbitration and Conciliation Act, 1996. The language to be used in
the arbitral proceedings shall be English. The venue of arbitration shall
be Delhi. The award of the arbitration tribunal shall be final and binding
on the Parties.
IN WITNESS WHEREOF, THE PARTIES HERETO, HAVE AFFIXED THEIR SIGNATURES ON THE
DAY, MONTH AND YEAR ABOVE WRITTEN.
Lakeland Industries Inc. X.X.Xxxxx K.S. Xxxxx
In the presence of: In the presence of
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