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 701-7 Koehler Ave, Ronkonkoma,
NY 11779, through Mr.
Christopher J.
Ryan (hereafter referred to as "Lakeland") which expression shall mean and
include its successors, administrators and
permitted assigns, of the first part.
AND
Mr. P. S. Ratra son of Late Mr. G. S. Ratra resident of A-33, New Friends
Colony, New Delhi - 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
Mr. Kamal Ratra son of Late Mr. G. S.
Ratra resident of A-33, New Friends
Colony, New Delhi - 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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<PAGE>
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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<PAGE>
"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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<PAGE>
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: 701-7, Koehler Ave.
Ronkonkoma, NY 11779
Fax No.:
PSR
Address: A-33, New Friends Colony,
New Delhi - 110 065
Fax No.:
KSR
Address: A-33, New Friends Colony,
New Delhi - 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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<PAGE>
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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<PAGE>
4.3 At the time of incorporation
of the Company, Mr.
Christopher J. Ryan
and
Mr. P. S.
Ratra and Mr. K. S. Ratra 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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<PAGE>
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 Di
