The following exhibits to the U.S. Polo Association, Ltd. Shareholders' are
omitted and will be provided to the Commission upon request.
Exhibit 1 License Assignment Agreement dated October 8, 1998 between Xxxxx Inc.
and U.S. Polo Association Ltd.
Exhibit 2 Indemnity Letter dated October 8, 1998
U.S. POLO ASSOCIATION, LTD
SHAREHOLDERS' AGREEMENT
AGREEMENT, effective the 8th day of October, 1998, by and among Iron
Will Group Ltd., a British Virgin Island Corporation, with an address c/o
Jordache Enterprises, Inc., 0000 Xxxxxxxx, Xxx Xxxx, XX ("Iron Will"), and
American Resources and Development Company, a Utah corporation, with an address
at 3855 5. 000 Xxxx, Xxxxx X, Xxxx Xxxx Xxxx, XX 00000 ("Ardco") (each a
Shareholder, and collectively, the "Shareholders") and U.S. Polo Association,
Ltd., a British Virgin Island Corporation (the "Corporation")
WHEREAS, each Shareholder is the record and beneficial owner of fifty
percent (50%) of the Corporation's issued and outstanding stock (each an
"Ownership Interest"); and
WHEREAS, the Shareholders consider it to be in their best interest to
discourage each other from engaging in a Transfer Event, as hereinafter defined,
and to ensure continuity of management.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows.
I. Transfer of an Ownership Interest
(a) Limitation of Transfer.
No Shareholder may, directly or indirectly, sell, assign, mortgage, hypothecate,
transfer, pledge, create a security interest in or lien upon, encumber, gift,
place in trust, or otherwise voluntarily or involuntarily dispose of its
Ownership Interest (collectively, a "Transfer Event") in the Corporation except
in accordance with the terms of this Agreement, and as required by the terms of
the loan being extended by Jordache Enterprises, Inc. to Ardco as of this date.
(b) Effect of Certain Transfers. No actual or purported transfer or encumbrance
of any Ownership Interest or interest therein, whether voluntary or involuntary,
not in accordance with the provisions of this Agreement, shall be valid or
effective to grant to the transferee of, or claimant with respect to, such
interest any right (including, without limitation, any right to cause the
registration of such interest in his name or on his behalf on the books of the
Corporation, to receive any distributions or to vote), title or interest in or
to such Ownership Interest (all such right, title and interest being hereinafter
referred to as "Ownership Rights") . Any purported transferor of any Ownership
Interest shall not be entitled to, and specifically waives, its Ownership Rights
from the date of such purported transfer or encumbrance until such transaction
shall be rescinded.
(c) Issuance of Shares The Corporation shall not issue any Shares or any
options, warrants or rights to purchase or acquire any Shares or other
securities convertible or exchangeable for any Shares, without the prior written
consent of all of the directors and Shareholders.
(d) Corporate Transactions. The Corporation shall not redeem, purchase,
reclassify, recapitalize or otherwise acquire for any consideration any Shares
other than pursuant to Section 2, without the written consent of all
Shareholders.
2. Shareholder Transactions. If either Shareholder (the "Selling Shareholder11)
shall wish to sell all, but not less than all, of the Ownership Interest in the
Corporation owned by it then, in such event, the Selling Shareholder may do so
only after strictly complying with the following provisions:
(a) The Selling Shareholder shall offer (the "Offer") to sell to the Corporation
and to the other Shareholder (the "Non-selling Shareholder") all (but not less
than all) of the Ownership Interest (i) at a purchase price (the "Purchase
Price") determined pursuant to section (b) immediately below. The payment terms
shall be twenty (20%) percent in cash at Closing with the
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balance payable pursuant to the promissory note terms described in Section 3
hereof (collectively, the "Buyout Terms")
(b) The value of the Corporation shall be determined pursuant to the following
formula: Ownership percentage in the Corporation
X [(i) Book value plus (ii)5 times (three times net pretax income for
the fiscal year preceding the year of the Offer plus two times the net
pre-tax income for the second fiscal year preceding the year of the
Offer plus the net pre-tax income for the third fiscal year preceding
the year of the Offer, with the total divided by six), but the
aggregate of (i) and (ii) shall not be less than book value]. If the
Corporation shall be in existence less than three fiscal years prior to
the year in which the Offer is made, the formula shall be adjusted to
adapt to such fact.
Book value and net pre-tax income shall conclusively be those amounts reported
on the Corporation's Financial Statements for the specific fiscal year involved.
(c) The Corporation and the Non-selling Shareholder 3hall thereupon have the
right and option for a period of 60 days }after the receipt of the Offer (the
"Acceptance Period"), either (I) to accept the offer to purchase all (but not
less than all) of
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the Ownership Interest on the Buyout Terms by delivering a written notice
("Notice of Acceptance") to the Selling Shareholder within the Acceptance Period
or (ii) to reject the Offer. The Corporation shall have the first option to
exercise the rights to purchase. If the Corporation elects to purchase less than
all of the Subject Ownership Interest or declines to purchase any of the Subject
Ownership Interest, the Non-selling Shareholder shall have the option to
purchase the shares of the Selling Shareholder not acquired by the Corporation.
(d) If effective acceptance shall have been given, closing shall take place,
within 30 days after the delivery of the Notice of Acceptance, at the offices of
Jordache Enterprises, Inc., 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, or such other
place mutually agreed upon by the parties (the "Closing")
(e) If effective acceptance shall not have been given by the Corporation and/or
the Non-selling Shareholder by the delivery of a Notice of Acceptance within the
Acceptance Period, as aforesaid, then the Selling Shareholder may sell the
Ownership Interest at a price not less than the Purchase Price, and on terms not
materially more favorable to the purchaser than the Buyout Terms, at any time
within sixty (60) days (the "Option Period") after the expiration of the
Acceptance Period.
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(f) If the Selling Shareholder shall fail to sell the Ownership Interest as
contemplated above within the Option Period, then the Ownership Interest may not
be sold and the provisions of this Agreement shall continue to apply as if no
Offer had been given.
(g) Any transferee of any Ownership Interest shall hold such Ownership Interest
subject to the terms of this Agreement, and thereafter shall be referred to as
one of the Shareholders as that term is used in this Agreement. Such transferee
shall not have any rights, by virtue of his or her ownership of a Ownership
Interest to be employed by the Corporation or to receive any compensation or
benefits from the Corporation of any kind or nature whatsoever other than to
share proportionately in distributions made by the Corporation, if any.
3. Promissory Note Terms. Any promissory note issued by a Shareholder or the
Corporation pursuant to Section 2 hereof is hereinafter referred to as a
"Promissory Note" and the person making such Promissory Note is hereinafter
referred to as the "Maker". Each Promissory Note shall be payable in: (i) 120
equal monthly installments (such installments being herein referred to as
"Installments") of principal, plus (ii) interest in an amount sufficient to pay
all interest at the prime rate as declared from time to time by Citibank, N.A.
(the "Prime Rate") in effect when
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the Installment is due. Each Installment shall be applied first to the payment
of interest and then to the reduction of principal. Any unpaid interest will be
added to the outstanding principal balance of the Promissory Note and interest
shall accrue thereon at the rate provided for in the Promissory Note. Such
Promissory Note shall provide for the acceleration of payments thereunder upon a
default in the payment of principal or interest thereon, the voluntary or
involuntary bankruptcy of the Maker or a default under any other material
indebtedness of the Maker. Each Promissory Note may be prepaid by, and at the
election of, the Maker at any time without premium or penalty, but with interest
through the date of such prepayment. The Promissory Note shall be secured by the
Ownership Interest, the acquisition of which generated production of the
Promissory Note.
4. Management Each Shareholder agrees to vote his or her shares: (a) to cause
the By-laws of the Corporation to provide for four (4) directors; (b) to cause
Xxxxx Xxxxxx ("Xxxxx") and Xxxxxx Xxxxxx ("Xxx") to be elected at all times as
directors of the Corporation; and to cause Xxxxxx Xxxxx ("Xxxxxx") and Will
Xxxxxxxxx ("Will"), to be elected at all times as directors of the Corporation;
and (c) to cause Xxx at all times to be elected as Chairman of the Board, Xxxxx
to be elected at all times as secretary, Xxxxxx Xxxxx to be elected at all times
as president, and Will Xxxxxxxxx to be elected at all times as vice president of
the Corporation.
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Within 120 days after the execution of this Agreement, each of Iron Will and
Ardco shall file in writing with the Corporation the name and address of the
person(s) that it has selected to be its designee(s) in the event of the death,
resignation or removal as officer and/or director of Xxx or Xxxxx as to Iron
Will or Xxxxxx and Will as to Ardco. Each designating party shall have the right
to change its designee at any time.
5. Equitable Relief. The parties hereto agree and acknowledge that a breach of
the provisions of this Agreement could not be adequately compensated by money
damages. Accordingly, each party hereto shall be entitled, in addition to any
other right or remedy available to it, to an injunction restraining such breach
or any threatened breach to a specific performance of any such provision of this
Agreement, and in either case, no bond or other security shall be required in
connection therewith, and the parties hereto hereby consent to such injunction
and the ordering of specific performance. 6. Term. This Agreement shall be
effective for and have a term of twenty (20) years from the date written at the
head of this Agreement.
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7. Arbitration.
(a) Forum. Any dispute arising out of or relating to this Agreement or the
breach, termination or invalidity thereof, shall be finally settled by
arbitration conducted in New York City in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
(b) Costs and Expenses The successful party (as determined by the arbitral
tribunal) shall be entitled to recover interest from the date of any breach and
reimbursement of costs and expenses of the arbitration, including reasonable
attorneys' fees incurred in connection therewith.
8. Miscellaneous.
(a) Notices: Any and all notices, designations, consents, offers, acceptances,
or any other communication provided for herein shall be made by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopies, or overnight air courier guaranteeing next day delivery to the
intended recipient: 9 To Iron Will Group Ltd.
With a copy to:
c/o Jordache Enterprises, Inc. 0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Mechanic, Esq.
Xxxxxxxx, Xxxxxx & Golieb, P.C.
000 Xxxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
To American Resources and Development Company:
0000 X. 000 Xxxx, Xxxxx X
Xxxx Xxxx Xxxx, XX 00000
with a copy to:
Except as otherwise provided in this Agreement, each such notice shall be deemed
given at the time delivered by hand, if personally delivered; five (5) business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next business day after timely deliver to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Entire Agreement; Amendment. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, representations and agreements. No change or
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modification of this Agreement shall be valid, binding or enforceable as against
any Shareholder unless the same shall be in writing and signed by all of the
directors and by shareholders owning at least two thirds (3/4) of the
Corporation's issued and outstanding shares.
(c) Waiver. No failure or delay on the part of any Shareholder in exercising any
right, power or privilege hereunder, and no course of dealing between an Entity
and the Shareholders or either of them shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights and remedies that the Shareholders or either of them
would otherwise have. No notice to or demand on any Entity in any case shall
entitle such Entity to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Shareholders or any of
them to take any other of further action in any circumstances without notice or
demand
(d) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11 (e) Governing Law. This Agreement shall be governed and construed in
accordance with the law of the State of New York applicable to contracts made
and performed within New York, unless specifically prohibited by the law of the
country of incorporation.
(f) Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of each of the Shareholders, and their respective
executors, administrators and personal representatives and heirs and assigns,
and any holder of a Promissory Note as such.
(g) Attorneys' Fees. In any action or proceeding brought to enforce any
provisions of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonably
attorneys' fees in addition to any other available remedy.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first above written.
Iron Will Group Ltd. American Resources & Development Company
By:s/s Xxxxxx Speigeelman By:s/s Xxxxxx Xxxxx, Vice President
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RIDER
TO
SHAREHOLDERS AGREEMENT DATED OCTOBER 8, 1998
BY AND AMONG IRON WILL GROUP LIMITED,
RESOURCES AND DEVELOPMENT COMPANY AND
U.S. POLO ASSOCIATION LTD.
9. The Company shall not without the unanimous approval of the
Shareholders, take any of the following actions;
(a) purchase or redeem any equity securities, pay or declare a
dividend, whether in cash or in property, or otherwise
authorize any distribution to shareholders;
(b) purchase equity securities or loan to or invest in any
business entity;
(c) incur debt in any twelve month period in excess of $250,000.00
(d) sell or otherwise transfer securities of any subsidiary to any
third party;
(e) make any fundamental change in the operations of the Company
as now conducted or as proposed to be conducted
(f) make any change in the Articles of Incorporation or Bylaws of
the Company.
(g) adopt or amend the Corporation's Articles of Incorporation or
Bylaws
(h) elect or remove officers and directors of the Company.
(i) issue any stock of any class of the Company.
(1) approve any change in the number or classification of
authorized shares of the Company.
(k) Approve any merger or consolidation of the Company with or
into another corporation or other entity, or exchange of
shares with another corporation, whether or not shareholder
approval is required under the Act.
(l) Approve any action which would result in shares of any class
to the Company's securities being made subiect to a public
offering.
(m) Approve any sale of any patent or intellectual property right
owned by the Company.
(n) Approve the sale, 1ease, exchange or other disposition of all
or substantially all of the property of the Company.
Iron Will Group Ltd. American Resources & Development Company
By: s/s Xxxxxx Speigeelman By: s/s Will Xxxxxxxxx, President
Dated: October 8, 1998 Dated: October 8, 1998
U.S. Polo Association, Ltd.
s/s Will Xxxxxxxxx, President
Dated: October 8, 1998
