SHAREHOLDERS AGREEMENT
THIS AGREEMENT made this 26 day of June, 1996, among SEL-LEB MARKETING,
INC., a New York corporation with an office at 1435 51st Street, North Bergen,
New Jersey ("Sel-Leb"), B.B. ASSOCIATES, LLC, a New York Limited Liability
Company with an office at 000 Xxxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxx
Xxxxxxx"), and XXXX XXXXXXXXX residing at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 0X,
Xxx Xxxx New York 11021 ("Xxxxxxxxx") (Sel-Leb, Xxxx Xxxxxxx and Xxxxxxxxx are
sometimes hereinafter collectively referred to as the "Shareholders"), and XXXX
XXXXXXX SEL-LEB MARKETING, INC., a New York corporation, with its office at 1435
51st Street, North Bergen, New Jersey, (the "Corporation").
WITNESSETH:
WHEREAS, The Corporation is authorized to issue 200 shares of common stock
(the "Shares"), of which 100 Shares are currently issued and outstanding and
owned both of record and beneficially by the Shareholders as follows:
SEL-LEB MARKETING, INC. - 47.5 SHARES
B.B. ASSOCIATES, LLC - 47.5 SHARES
XXXX XXXXXXXXX - 5 SHARES
WHEREAS, Sel-Leb is in the business of celebrity marketing and
merchandising and has relationships with the major electronic retailers and mass
merchandisers; and
WHEREAS, Xxxx Xxxxxxx is in the business of designing and retailing fine
men's clothing, is the owner of the "Xxxx Xxxxxxx" trademark, and has
relationships with clothing manufacturers as well as with the television
personality Xxxxx Xxxxxxx ("Xxxxxxx"); and
WHEREAS, Xxxxxxxxx is an attorney who has relationships with both Sel-Leb
and Xxxx Xxxxxxx and initiated the discussions which led to the forming of the
Corporation; and
WHEREAS, the Shareholders have incorporated and organized the Corporation
for the purpose of creating a line of men's clothing and accessories designed
exclusively for Xxxxxxx by Xxxx Xxxxxxx to be sold initially via the electronic
retailer The Home Shopping Network ("HSN") and eventually through a mass
merchandiser or bridge retailers; and
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WHEREAS, the Shareholders and the Corporation deem it expedient for their
mutual best interests and the welfare of the Corporation to provide for the
consistent and uniform management of the Corporation and to provide for certain
mutual rights and obligations of the Shareholders;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
1. MANAGEMENT and OPERATION:
During the term of this Agreement, the parties hereto jointly and
severally agree that, as Shareholders and Directors, they will irrevocably vote
at all times so as to provide for the following;
A. Directors - A four (4) member Board of Directors consisting of
the following persons as long as each is ready, willing and able to serve
[subject to subparagraph "C" below]:
XXX XXXXXXXXX
XXXXXXX XXXXXXX
XXXXX XXXXXXX
XXXX XXXXXXXXX
B. Officers - The officers of the Corporation shall be the following
persons so long as each is ready, willing and able to serve [subject to
subparagraph "C" below]:
President -
Treasurer -
Secretary -
and such Assistant Secretaries as the Board of Directors may appoint.
C. Should any of the above named directors and officers be unable to
serve by reason of death, physical disability or legal incapacity, or be
unwilling to serve, or should any Shareholder make a disposition of all of the
Shares owned by him to any person or persons (unless such disposition be exempt
from the provisions of Paragraph "6"), or should all of his Shares be purchased
pursuant to Paragraph "6," he shall cease to be a director and officer and,
simultaneously with such inability or disposition, he shall be deemed to have
submitted his resignation as officer and director of the Corporation to become
effective immediately and the Board of Director shall fill any vacant
directorship and office with a person selected by the Board in its sole
discretion.
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D. So long as this Agreement is in effect and for a period of three
years following its termination, no Shareholder or Director shall engage in the
manufacture, distribution, marketing or sale of any product bearing a label or
xxxx which includes the words "Regis" or "Xxxxxxx" or is endorsed, promoted or
sold by the television personality Xxxxx Xxxxxxx, or become affiliated with any
business, entity or enterprise, be an employee or consultant for any business or
enterprise, or have an ownership interest in any business or enterprise, whose
business includes the manufacture, distribution, marketing or sale of any
product bearing a label or xxxx which includes the words "Regis" or "Xxxxxxx" or
is endorsed, promoted or sold by the television personality Xxxxx Xxxxxxx.
Notwithstanding Paragraph "10" of this Agreement, the parties hereto agree that,
in the event of a violation of any provision of this subparagraph "D", the
Corporation and/or the non-breaching Shareholders and Directors shall have the
right to obtain immediate appropriate legal relief from any Court of competent
jurisdiction, including, but not limited to any form of injunctive relief.
E. Except as otherwise specifically required by the New York
Business Corporation Law or by this Agreement, all actions of the Corporation
shall require the unanimous vote of the Board of Directors and, where a vote of
Shareholders is required, the vote or written consent of the holders of all of
the Shares present in person or by proxy at a meeting of Shareholders and
entitled to vote thereat.
2. CAPITAL CONTRIBUTIONS by SHAREHOLDERS:
Sel Leb and Xxxx Xxxxxxx shall each make fifty (50%) per cent of the
capital contribution necessary to form, organize and commence the activities of
the Corporation.
3. EXPENSES of the CORPORATION:
Sel-Leb and Xxxx Xxxxxxx shall bear equal responsibility and
liability for all direct expenses associated with the activities of the
Corporation. The Corporation shall, within fifteen days of its receipt of an
expense receipt or voucher, reimburse any Shareholder, Director or Officer for
any direct expense made by said Shareholder, Director or Officer.
Indirect expenses such as office overhead shall be borne exclusively
by Sel-Leb.
All legal work for the Corporation shall be performed by Xxxxxxxxx
without compensation. Notwithstanding the foregoing, Xxxxxxxxx shall be
reimbursed by the Corporation for all disbursements made by him on behalf of the
Corporation in furtherance of his legal duties.
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4. COMPENSATION:
A. No salary or other compensation shall be payable to any party
hereto unless the Board of Directors shall so direct.
B. Upon the direction of the Board of Directors that a salary or
other compensation be paid to the parties hereto, each Shareholder shall be
compensated proportionately according to their percentage ownership of the
Corporation. Each time a Shareholder receives a salary, wage, bonus,
distribution of profit, dividend, payment in kind or any other method of
compensation, the other Shareholder shall receive his pro rata share of said
salary, wage, bonus, distribution of profit, dividend, payment in kind or any
other method of compensation.
5. ROLES OF SHAREHOLDERS:
It is understood, agreed and accepted by the Shareholders that
Sel-Leb shall be responsible for the day-to-day operations of the Corporation,
specifically, record keeping and custodian of the books and records of the
Corporation. Additionally, Sel-Leb shall be responsible for soliciting orders
for the products manufactured by the Corporation and invoicing therefore. Xxxx
Xxxxxxx shall be responsible for designing the products to be sold by the
Corporation and acquiring inventory sufficient to satisfy orders received by the
Corporation at the necessary price points. Xxxxxxxxx shall be responsible for
the legal work necessary to form and organize the Corporation as well as for all
ongoing legal work of the Corporation.
6. SALE OF SHARES:
A. Sale to Corporation or Shareholders.
(i) If any Shareholder shall desire to sell, encumber or
dispose of any or all of his Shares (the "Selling Shareholder"), then he shall
promptly give notice to the Corporation and the other Shareholders, offering to
sell to the Corporation and/or the other Shareholders, as the case may be, said
Shares ("Notice to Sell").
(ii) Once given, or where deemed to have been given as
provided for in this Agreement, a Notice to Sell shall constitute an offer to
sell and shall subject the Shares of the Selling Shareholder as the case may be,
as herein contained.
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(iii) Within thirty (30) days after the giving of such Notice
to Sell, or within thirty (30) days after such Notice to Sell shall be deemed to
have been given, the remaining Shareholders and Directors shall cause a joint
meeting of Shareholders and Directors to be called and held. The Selling
Shareholder must be deemed in attendance at such meeting, whether in person or
by proxy, but must abstain from all votes taken thereat. At such meeting the
Shares of the Selling Shareholder shall be offered for sale and shall be subject
to an option to purchase on the part of the Corporation. In the event the
Corporation desires to exercise said option, it shall do so by resolution
adopted at the joint meeting of Shareholders and Directors, and within ten (10)
days the joint meeting, cause a written notice of acceptance to be given in the
manner hereinafter provided for (the "Notice of Acceptance").
(iv) If the Corporation shall be prohibited by law from
acquiring all or any portion of the Shares, or for any reason shall fail or
refuse to exercise its option or purchase all or any portion of the Shares, then
the Shares offered and not purchased by the Corporation shall be subject to an
option on the part of each of the non-selling Shareholders ("Non-Selling
Shareholders") to purchase a proportionate number thereof not purchased by the
Corporation. Any Non-Selling Shareholder may exercise his option to purchase the
Shares offered to him, by causing a "Notice of Acceptance," to be served within
ten (10) days after the aforesaid joint meeting of the Shareholders and
Directors in the manner herein provided. The exercise of such option by any
Non-Selling Shareholder shall be conditioned upon his agreeing to hold any
Shares so acquired in accordance with and subject to the terms and conditions of
this Agreement. As utilized herein, the term "proportionate number of Shares"
shall mean the number arrived at by (x) multiplying the total number of Shares
being offered for sale by (y) the percentage that the number of Shares held by
each Non-Selling Shareholder bears to the number of Shares owned by all
Non-Selling Shareholders. The Corporation shall have the right to allot Shares
so as to avoid fractional Share interests.
(v) The death or disability of a Shareholder shall constitute
a Notice to Sell by that Shareholder. Disability means unable to engage in
employment for a period of six (6) months.
B. Sale to Third Parties.
If the Corporation and Non-Selling Shareholders shall fail to
exercise their respective options to purchase all or any portion of the Shares
of the Selling Shareholder, the Selling Shareholder may, in accordance with an
exemption from securities registration, sell or dispose of any of his Shares to
any other person, firm, or Corporation, provided only that the Shares so
transferred shall thereafter be subject to all of the restrictions and
provisions of this Agreement.
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C. Price to the Corporation or Shareholders.
(i) The price per share shall be the net book value as
determined by the Corporation's accountant utilizing generally accepted
accounting principles, except that the Corporation shall be valued as a going
concern. The remaining Shareholders and the Corporation shall have the exclusive
right to continue to use the name of the Corporation or any assumed name,
without the payment of any additional consideration therefor.
(ii) The price for the Share shall be the price under
Subparagraph "C(i)" above, in effect on the day a Notice to Sell is given.
Notwithstanding the foregoing, in the case of the death of any person owning
Shares in the Corporation, the price paid to his executor or administrator for
each Share shall be the price in effect on the date of the death of such person.
(iii) In the event that at the time of purchase, the Selling
Shareholder shall be indebted to the Corporation for any sum whatsoever, the
amount of such indebtedness shall be paid to the Corporation by the Selling
Shareholder at closing, or in the event that the purchaser of the Shares of the
Selling Shareholder by the Corporation, then the amount of such indebtedness
shall be deducted from the purchase price to be paid by the Corporation. In the
event that the Corporation shall be indebted to the Selling Shareholder at the
time of purchase, then the amount of such indebtedness shall be paid by the
Corporation, in addition to the purchase price to be paid for the Shares the
Selling Shareholder.
D. Manner of Payment for Shares.
The payment of the total purchase price due to each Selling
Shareholder or deceased or disabled Shareholder shall be made as follows: To be
determined by the parties at time of offer to sell.
E. Closing Matters.
(i) All credit cards and corporate property of the Seller
shall be delivered to the Corporation. The Selling Shareholder agrees to
indemnify the Corporation against any unknown and/or unauthorized charges on
such cards or property.
(ii) The Selling Shareholder shall submit to the Escrow Agent
his resignation of all corporate offices and directorships then held by him.
(iii) The legal representative of a deceased Shareholder shall
be required to deliver an appropriate tax waiver and a certificate of Letters
Testamentary or Letters of Administration to the attorney for the purchase upon
receipt of the purchase price in full.
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7. ACTIONS IN VIOLATION OF THIS AGREEMENT:
A. In the event the Shares of any Shareholder are pledged,
hypothecated, transferred or disposed of, in any manner, without complying with
the provisions of this Agreement, or if such Shares are taken in execution or
sold in any voluntary or involuntary legal proceeding, sale, bankruptcy,
insolvency or in any other manner, the Corporation and the other Shareholders
shall, upon actual notice thereof, in addition to their rights and remedies
under this Agreement, be entitled to purchase such Shares from the transferee
thereof, under the same terms and conditions, and at the same price as set forth
in the provisions of this Agreement dealing with the sale of the Shares held by
such transferee, as if the transferee had offered to sell such Shares, but in no
event shall the purchase price exceed the amount paid for said Shares by the
transferee. The Corporation may, at its option, refuse to transfer on its books
and its records any Shares transferred in violation of this Agreement.
B. A Shareholder who shall petition any Court for the dissolution of
the Corporation shall be deemed to have given a Notice to Sell under the same
terms and conditions set forth in Paragraph "6" of this Agreement.
8. TERMINATION of AGREEMENT:
This Agreement shall terminate on the occurrence of any of the
following:
(i) the merger or consolidation of the Corporation into or
with any other corporation which shall be the survivor of such merger or
consolidation; or
(ii) the sale of all or substantially all of the assets of the
Corporation; or
(iii) the dissolution of the Corporation, or the adjudication
of its bankruptcy, or the appointment of receiver for all or substantially all
of its assets, or the delivery by it of an assignment for benefit or creditors;
or
(iv) the determination by the Corporation by the holders of at
least 80% of the aggregate number of Shares then outstanding to terminate this
Agreement; or
(v) the acquisition of all Shares in Corporation by any
individual, firm, corporation or other entity; or
(vi) at such time as there is only one Shareholder of
Corporation.
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9. EFFECT OF NOTICE TO SELL:
Anything in Paragraph "8" to the contrary notwithstanding, this
Agreement and its terms shall continue in full force and effect so long as any
Notice to Sell Shares by a retiring Shareholder, or the representative of a
deceased or disabled Shareholder, is outstanding and/or until any pending sale
and purchase of Shares provided for in this Agreement is consummated by payment
in full therefor.
10. ARBITRATION:
Any dispute or controversy of any kind or nature, relating to this
Agreement or the breach of performance thereof, that shall arise among the
parties hereto or their legal representative, shall be settled and determined by
arbitration in the City of New York, in accordance with the rules then obtaining
of the American Arbitration Association, before an arbitrator or arbitrators
selected by said Association pursuant to its rules. All costs of arbitration
shall be borne as directed by the arbitrators. Judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having
jurisdiction. The arbitrator or arbitrators shall be entitled to compel specific
performance and/or injunctive relief by the parties of their duties and
obligations under this Agreement in order to more effectively accomplish the
intentions and desires set forth in the preamble to this Agreement.
11. LEGEND:
Each certificate evidencing any Shares of the Corporation in
existence or hereafter issued shall have stamped upon the face thereof the
following legend:
"This certificate of stock is subject to and is transferable only in
accordance with the provisions of a certain Agreement dated as of
June 18, 1996, on file with the corporation."
12. CONFIDENTIALITY:
In addition to, and not in limitation or in lieu of, any
non-disclosure or confidentiality agreement signed by any Shareholder, each
Shareholder agrees that without the prior written consent of the Corporation
neither they nor any of their officers, directors, or employees shall use for
their own benefit or purposes or for the benefit or purposes of any other
person, or disclose in any manner to any person, any confidential information,
belonging to or relating to the assets or the business of the Corporation.
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13. FURTHER ASSURANCES:
Each Shareholder shall execute and deliver such consents, proxies,
certificates, instruments, and documents as shall be necessary to carry out and
make effective the provisions set forth in this Agreement and, if and so long as
any Shareholder shall be a director of the Corporation, he shall vote in such
manner and otherwise use his best efforts to ensure that all actions taken by
the Board of Directors are in conformity with such provisions.
14. TERM:
This Agreement shall become effective upon its execution and, unless
sooner terminated as provided in Paragraph "8" above.
15. REMEDIES:
The parties hereto agree that any breach of Paragraphs "1D", "6" and
"12" of this Agreement will cause irreparably harm to the non-breaching parties
and thereafter do consent to the issuance of a temporary restraining order or
injunction restraining any such disposition pending the determination of such
controversy pursuant to any court having competent jurisdiction.
16. INVALIDITY OF PARTICULAR PROVISIONS:
If any term or provision of this Agreement or the application
thereof to any person or circumstances shall, to any extent, be invalid, or
unenforceable, the remainder of this Agreement, or the application or such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
17. NOTICES AND ADDRESSES:
All notices under this Agreement shall be in writing and shall be
sufficiently given if delivered to the addresses in person or if mailed by
express mail or certified or registered mail, return receipt requested, postage
prepaid to the person at the address set forth in the preamble to this
Agreement, or to such other addresses as any of them, by notice to all the
others, may designate from time to time.
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18. BINDING EFFECT:
This Agreement (a) shall be binding upon (i) the legal
representatives, beneficiaries, heirs and distributees of any person who is a
party hereto or otherwise bound hereby as a Shareholder, (ii) the successors and
assigns of the Corporation, and (iii) transferees by operation of law of any
person party hereto or otherwise bound hereby, and all other holders of Shares
(including a bona fide purchaser who acquires Shares pursuant to Paragraph "6"
hereof), whether or not any such person shall have executed this Agreement or a
counterpart hereof or otherwise agreed in writing to become a party hereto and
bound hereby, and (b) shall inure to the benefit of (i) the legal
representatives of any person who is a party hereto, and any person who by
reason of the provisions of Paragraph "6" is entitled to the benefits of a
Shareholder, and (ii) the successors and assigns of the Corporation.
19. MERGER AND MODIFICATIONS:
This Agreement contains the entire agreement of the parties hereto
with respect to the Subject matter hereof, and no modification or waiver of any
provisions hereof shall be valid unless in writing and signed, by all of the
parties hereto.
20. CHOICE OF LAW:
This Agreement will be executed and delivered in the State of New
York and will be governed by, and constructed and enforced in accordance with,
the laws thereof.
21. OTHER DEFINITIONS:
The term "person" as used herein shall be deemed to refer to
individuals, and corporations, partnerships, trusts or other entitles. Any
pronouns and any variation thereof, as used herein shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
undersigned may require.
22. COUNTERPARTS; EFFECTIVENESS:
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument. This Agreement shall become effective when counterparts
executed by all parties have been delivered to the Corporation.
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23. PARAGRAPH HEADINGS:
The paragraph headings of this Agreement are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this Agreement, nor in any way affect this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed and acknowledged this
Agreement the day and year first above written.
XXXX XXXXXXX SEL-LEB MARKETING, INC.
Sel-Leb Marketing, Inc. - Shareholder
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Xxx X. Xxxxxx
Exec. Vice President
B. B. Associates, LLC - Shareholder
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx, Managing Director
Xxxx Xxxxxxxxx - Shareholder
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
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