SHAREHOLDERS AND VOTING AGREEMENT made as of the
1st day of January, 1997, by and among those
persons identified on the signature page attached
hereto (the foregoing individuals shall sometimes
be referred to individually as a "Shareholder" and
collectively as "Shareholders") and Premium Cigars
International, Ltd., an Arizona corporation
("Corporation").
RECITALS:
WHEREAS, The Shareholders are the sole owners of shares of all of the
common stock of the Corporation that is issued and outstanding as of the date of
this Agreement (the "Shares").
WHEREAS, The parties desire to promote their individual interests and the
interests of the Corporation by imposing certain restrictions and obligations on
the Shareholders, the Corporation, and the Shares.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT:
SECTION 1
SHAREHOLDER ACTIONS
1.1 Endorsement of Stock. Upon the execution of this Agreement, the
certificates representing the Shares shall be surrendered to the Secretary of
the Corporation and endorsed as follows:
The Shares evidenced by this Certificate are subject to a Shareholders
and Voting Agreement to which the Corporation and each of its Shareholders
are parties, and none of the shares represented by this Certificate, or any
interest in the shares, shall be transferred, pledged, encumbered or
otherwise disposed of except as provided in the Shareholders and Voting
Agreement. A copy of the Shareholders and Voting Agreement is on file in
the office of the Corporation and will be made available for inspection to
any properly interested person without charge within five (5) days after
the Corporation's receipt of a written request to inspect the agreement.
All common stock of the Corporation (and certificates evidencing the same)
issued after the date of this Agreement and not registered pursuant to the
Securities Act of 1933, as amended, and applicable state securities laws shall
bear the same endorsement and shall be subject to all the terms and conditions
of this Agreement and shall for all purposes be deemed "Shares" under this
Agreement.
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However, any common stock of the Corporation (and certificates evidencing the
same) issued after the date of this Agreement and registered pursuant to the
Securities Act of 1933, as amended, and applicable state securities laws shall
not, for any purposes, be deemed "Shares" under this Agreement.
1.2 Binding of Representatives, Successors and Assigns. This Agreement
shall be binding upon the parties, and their respective heirs, personal
representatives, successors and assigns and each Shareholder, in furtherance of
this Agreement, shall require in his will, trust and/or other testamentary
documents, if such documents exist, that his personal representative, trustee,
successor and/or other representatives ("Representative") perform the
Shareholder's obligations under this Agreement and execute all documents
necessary to effect the purposes of this Agreement. The failure to so provide
shall not affect the rights of any other Shareholder or the obligations of any
Representative as provided in this Agreement.
1.3 Additional Parties. Prior to issuing any shares of the Corporation to
additional or new Shareholders, the Corporation shall require that each such
additional or new Shareholder agree and become a party to this Agreement.
Additional or new Shareholders may become parties to and deemed a Shareholder
under this Agreement by executing and delivering to the Corporation a signature
page in the form of Exhibit "A" (the "Additional Party Form").
SECTION 2
PERMITTED TRANSFERS
2.1 Family Transfers. A Shareholder may, without obtaining the consent of
any other Shareholder or of the Corporation and upon notice to the other
Shareholders and to the Corporation, transfer any and all Shares owned by him to
any revocable or irrevocable trust of which he is the sole trustee, where as
trustee, he retains all voting rights with respect to the Shares, and he, his
spouse or his issue, or any of them are the sole beneficiaries. However, all
Shares so transferred shall remain subject to all the terms and conditions of
this Agreement, each transferee shall be deemed a Shareholder under this
Agreement, and each transferee shall, prior to and as a condition of the
transfer, agree in writing to be bound by the terms and conditions of this
Agreement.
2.2 Corporate Repurchases. Subject to the restrictions of Section 3.3
below, the Corporation may, at any time, offer to repurchase shares from a
Shareholder. Any such offer by the Corporation to repurchase Shares shall not be
"a bona fide offer from a third party" within the meaning of Section 4.1 of this
Agreement.
SECTION 3
STOCK TRANSFER RESTRICTIONS
3.1 Restrictions on Transfer or Encumbrance. Except as otherwise set forth
in this Agreement, no Shareholder shall, without the prior written consent of
the Corporation's Board of Directors (the "Board of Directors"), pledge,
encumber or in any manner use as collateral, transfer,
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sell or otherwise dispose of (individually and collectively, "Transfer") all or
any part of the Shares, or any interest in the Shares, whether legal or
beneficial, now owned or acquired after the date of this Agreement.
3.2 Void Transfers. Any Transfer made in violation of this Agreement or
that fails in any material respect to comply with any term or provisions of this
Agreement shall be void and of no effect and shall be treated by the Corporation
as if no Transfer had been made.
3.3 Limitation on Corporate Acquisitions. Notwithstanding any other
provision of this Agreement, the Corporation may acquire Shares as provided in
this Agreement only to the extent that it has funds legally available therefor
under the applicable provisions of the Arizona Revised Statutes then in effect.
SECTION 4
VOLUNTARY TRANSFER OF SHARES
4.1 Transfer Notice. During the term of this Agreement, no Shareholder
shall voluntarily Transfer any Shares or any interest in the Shares, whether
legal or beneficial (the "Voluntary Transfer"), without first offering, pursuant
to Section 4.2 below, to transfer, encumber or dispose of such Shares to the
other Shareholders (the "Other Shareholders" or "Other Shareholder") of the
Corporation, and, if not acquired by the Other Shareholders, then to the
Corporation, as provided pursuant to Section 4.3 below. Any Shareholder who
wishes to make a Voluntary Transfer (the "Selling Shareholder") must promptly
provide notice of such desire to the Board of Directors (the "Offering Notice").
The Offering Notice shall identify the number of Shares and the interest in the
Shares that the Selling Shareholder proposes to Transfer (the "Offered Shares"),
and shall set forth the consideration for which the Offered Shares are proposed
to be Transferred (the "Offer Price"), the identity and the address of the
proposed purchaser (the "Proposed Purchaser"), the proposed closing date for the
Transfer of the Offered Shares, and all other material terms and conditions of
the proposed transaction. Upon provision of the Offering Notice to the Board of
Directors, the Selling Shareholder shall be deemed to have offered to sell to
the Other Shareholders and the Corporation at the terms and conditions of the
Offering Notice (the "Offering Terms") the Shares otherwise to be Transferred to
the Proposed Purchaser.
4.2 Shareholder Purchase. The Board of Directors shall have sixty (60) days
from the date of the Offering Notice in which to find Other Shareholders willing
to buy all or any of the Offered Shares in such proportion or amount as such
Other Shareholders or the Board of Directors shall agree upon.
4.3 Corporation Purchase. If the Other Shareholders are not willing to buy
all of the Offered Shares within the sixty (60)-day period specified by Section
4.2 above, the Board of Directors shall have sixty (60) days from the expiration
of such sixty (60)-day period in which to elect to have the Corporation buy all
or any of the Offered Shares the Other Shareholders did not elect to buy.
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4.4 Completion of Voluntary Transfer. If one or more of the Other
Shareholders and the Corporation do not agree to buy in the aggregate all of the
Offered Shares within the two (2) option periods specified by Sections 4.2 and
4.3 above, the proposed Voluntary Transfer may be completed at the Offer Price,
for all, but not less than all, the remaining Offered Shares not purchased by
the Other Shareholders and the Corporation, and upon all the terms and
conditions set forth in the Offering Notice. If a Voluntary Transfer is not
consummated within thirty (30) days after the expiration of such two (2) option
periods, the provisions of this Agreement will again apply to such remaining
Offered Shares as if no such Voluntary Transfer had been contemplated and no
notice had been given. A Voluntary Transfer is consummated, subject to
recordation on the Corporation's books, when (i) the Corporation has been given
notice that legal title to the Shares has been Transferred and (ii) the Proposed
Purchaser has delivered to the Corporation an executed Additional Party Form.
The Offered Shares shall for all purposes remain subject to this Agreement and
the Proposed Purchaser (including any person taking the Shares as collateral
pursuant to a pledge or other encumbrance) shall, upon completion of the
transaction, immediately be deemed a Shareholder under this Agreement and shall
be bound by all the terms and provisions hereof.
4.5 Purchase and Closing.
4.5.1 Purchase by Corporation and/or Other Shareholders. If the
Corporation and/or one or more of the Other Shareholders elect to purchase
any or all of the Offered Shares as specified by Sections 4.2 and 4.3
above, the Corporation and/or the Other Shareholders electing to purchase
such Offered Shares (the "Purchasers") shall make payment to the Selling
Shareholder, in the sole discretion of the Purchasers, either in cash in
full, payable at the time of the closing, or on the terms set forth in the
Offering Notice. The closing for the purchase of such Offered Shares shall
be held within ninety (90) days after the later of the elections made under
Sections 4.2 above 4.3 above. The closing shall be at the principal
executive offices of the Corporation during regular business hours or at
any other location and/or time mutually agreed to by the Purchasers and the
Selling Shareholder. The precise date and hour of the closing shall be
fixed by the Purchasers (within the time limits specified herein) with at
least ten (10) days' written notice to the Selling Shareholder. The Selling
Shareholder shall deliver to the Purchasers at the closing the stock
certificate or stock certificates representing all the Offered Shares being
purchased, duly endorsed for transfer or with duly executed stock power
attached.
4.5.2 Purchase by Proposed Purchaser. If any or all of the Offered
Shares are purchased by a Proposed Purchaser, the closing shall be at such
time and place agreed to by the Proposed Purchaser and the Selling
Shareholder and the price and terms of the purchase shall be as set forth
in the Offering Notice.
4.6 Valuing Non-Cash Consideration. If there is any non-cash consideration
with respect to a Transfer of the Offered Shares, the Offering Notice shall also
set forth the cash value of each item or non-cash consideration. If the Offering
Notice sets forth a cash value for non-cash
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consideration, the Board of Directors shall have thirty (30) days, beginning
with the day following receipt of the Offering Notice by the Board of Directors,
to make written, good faith objections to the cash value specified for all or
any part of the non-cash consideration. If the Board of Directors objects to the
cash value specified in the Offering Notice for all or any part of the non-cash
consideration, the Board of Directors shall notify the Selling Shareholder in
writing setting forth the cash value it would assign to the disputed non-cash
consideration and the reason(s) therefor. If after thirty (30) days, beginning
with the day following receipt of each such notice of objection by the Selling
Shareholder there remains any disagreement between Selling Shareholder and the
Board of Directors as to the cash value of any item of non-cash consideration,
the dispute over the cash value of such items shall be submitted for arbitration
pursuant to Section 10.16 below.
SECTION 5
INVOLUNTARY TRANSFERS OF SHARES
5.1 Termination of Shareholder as Employee. Any Shareholder who is an
officer, employee, or director (or some combination thereof) of Corporation (an
"Employee-Shareholder") and ceases to be, prior to earlier of the termination of
this Agreement or the date two (2) years from the date first written above, an
Employee-Shareholder as a result of (i) voluntary termination of employment by
Shareholder, (ii) termination of employment by the mutual consent of the
Shareholder and Corporation or (iii) termination of employment by Corporation
for Adequate Cause, shall, unless specified otherwise by the Board of Directors,
be deemed to have offered to sell, in the manner specified by Section 5.2 below,
all of the shares held by it. The Offer Date (as defined in Section 5.2 below)
shall be deemed the date on which such Shareholder ceases to be an
Employee-Shareholder. For the purposes of this Section 5.1, the term "Adequate
Cause" is limited to (x) a conviction of or a plea of guilty to a felony or a
misdemeanor that negatively affects or was directed against the Corporation, (y)
any act of dishonesty or other criminal conduct that negatively affects or was
directed against the Corporation or (z) a continued breach of the
Employee-Shareholder's duties and obligations arising under an employment
contract with Corporation or of any written policy, rule, or regulation of
Corporation, for a period of at least five (5) days following the
Employee-Shareholder's receipt of written notice from any officer of Corporation
or the Board of Directors specifying such breach.
5.2 The Involuntary Transfer.
5.2.1 Mandatory Option. Upon a Shareholder being deemed to have offered
its Shares for sale as of the date of the occurrence of a particular
condition as specified in this Section 5 (the "Offer Date"), the Other
Shareholders and the Corporation shall have the option to purchase such
Shares (the "Mandatory Offered Shares") from such Shareholder at the
Appraised Value (as defined in Section 6.1 below) of the Shares.
5.2.2 Shareholder Option. The Board of Directors shall have sixty (60)
days from the Offer Date in which to find Other Shareholders willing to buy
all or any of the Offered Shares at the Appraised Value of such Shares (as
defined in Section 6.1
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below) and in such proportion or amount as such Other Shareholders or the
Board of Directors shall agree upon.
5.2.3 Corporation Option. If the Other Shareholders shall not elect to
buy all of the Mandatory Offered Shares within the sixty (60)-day period
specified by Section 5.2.2 above, the Corporation shall have sixty (60)
days from the expiration of such sixty (60)-day period in which to elect to
buy all, but not less than all, of the Mandatory Offered Shares the Other
Shareholders did not elect to buy.
5.2.4 Completion of Involuntary Transfer. If the Other Shareholders and
the Corporation do not agree to buy in the aggregate all of the Mandatory
Offered Shares within the two (2) option periods specified by Sections
5.2.2 and 5.2.3 above, any remaining Mandatory Offered Shares shall be sold
by the Board of Directors to a third-party (the "Third Party Purchaser")
for a purchase price no lower than the Appraised Value of such Shares (as
defined in Section 6.1). The Mandatory Offered Shares shall for all
purposes remain subject to this Agreement and the Third Party Purchaser
(including any person taking the Shares as collateral pursuant to a pledge
or other encumbrance) shall, upon completion of the transaction,
immediately deliver to the Corporation an executed Additional Party Form
and be deemed a Shareholder under this Agreement and shall be bound by all
the terms and provisions hereof.
5.3 Purchase and Closing.
5.3.1 Purchase by Corporation and/or Other Shareholders. If the
Corporation and/or the Other Shareholders elect to purchase any or all of
the Mandatory Offered Shares as specified by Sections 5.2.2 and 5.2.3
above, the Corporation and/or the Other Shareholders electing to purchase
such Mandatory Offered Shares (the "Mandatory Purchasers") shall make
payment to the Selling Shareholder, in the sole discretion of the
Purchasers, either in cash in full, payable at the time of the closing, or
with a down payment of twenty percent (20%) of the total purchase price at
the time of Closing with the remaining portion of the purchase price being
paid in equal annual installments during the following four (4) year period
with interest at the rate of eight percent (8%) per annum on the unpaid
principal balance. This obligation shall be evidenced by a promissory note
in the form of Exhibit "B" attached hereto (the "Note") which will provide
for four (4) equal payments of the principal, plus interest, with each
payment payable on the four (4) succeeding anniversaries of the closing.
All or any part of the principal balance of the Note may be prepaid at any
time without penalty or premium.
5.3.2 Purchase by Third Party Purchaser. If any or all of the Mandatory
Offered Shares are purchased by a Third Party Purchaser, the terms of
payment by the Third Party Purchaser of the price specified by Section
5.2.4 shall be determined by the Board of Directors.
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5.3.3 Closing of Purchase. The closing for the purchase of the
Mandatory Offered Shares by the Mandatory Purchasers (the "Purchasers
Closing") shall be held within ninety (90) days after the later of any
elections made under Sections 5.2.2 and 5.2.3 above. The closing for a
Third Party Purchaser's purchase of the Mandatory Offered Shares shall be
at such time and place agreed to by such Third Party Purchaser and the
Selling Shareholder. The Purchasers Closing shall be at the principal
executive offices of the Corporation during regular business hours or at
any other location and/or time mutually agreed to by the Mandatory
Purchasers and the Selling Shareholder. The precise date and hour of the
Purchasers Closing shall be fixed by the Mandatory Purchasers (within the
time limits specified herein) with at least ten (10) days' written notice
to the Selling Shareholder. The Selling Shareholder shall deliver to the
Mandatory Purchasers at the Purchasers closing the stock certificate or
stock certificates representing all the Offered Shares being purchased,
duly endorsed for transfer or with duly executed stock power attached.
SECTION 6
VALUATION OF SHARES
6.1 Appraised Value. In each instance in which the purchase price for
Shares to be Transferred pursuant to this Agreement is to be the "Appraised
Value" of the Shares, the Appraised Value of the Shares shall be the Agreed
Value per Share as determined pursuant to Section 6.2 below using the most
recently executed Certificate of Agreed Value, provided, however, such
certificate has been completed within the eighteen (18) months immediately
preceding the date in which the shares are to be transferred. If a Certificate
of Agreed Value has not been agreed upon within such eighteen (18) month period,
then the Appraised Value of the Shares to be Transferred shall be determined by
an appraisal committee (the "Appraisal Committee"). The Appraisal Committee
shall be composed of two (2) independent, disinterested, and qualified
commercial appraisers, one (1) of whom shall be appointed by the Shareholder
transferring Shares and the other of whom shall be appointed by the Shareholders
acquiring Shares (by majority-in-interest of Shares), or, if no Shareholder is
acquiring Shares, by the Corporation, within thirty (30) days of the event
giving rise to the right to purchase. If the Shareholder transferring Shares
fails or refuses to name an appraiser within the time required, the Shareholders
acquiring Shares (by majority-in-interest of Shares), or, if no Shareholder is
acquiring Shares, the Corporation, may name two (2) appraisers. Likewise, if the
Shareholders acquiring Shares, or, if no Shareholder is Acquiring Shares, the
Corporation, fails or refuses to name an appraiser within the time required, the
Shareholder transferring Shares may name two (2) appraisers. The two (2)
appraisers so appointed shall constitute the Appraisal Committee and shall
determine the value of the Shares within thirty (30) days after their
appointment. If the Appraisal Committee cannot agree on a value, then they shall
appoint a third appraiser who shall determine the value of the Shares to be
purchased within thirty (30) days after appointment. Expenses of the appraisal
shall be paid by the Corporation.
6.2 Certificate of Agreed Value. All Parties to this Agreement shall
endeavor to agree upon a valuation of the Corporation on an annual basis. To
evidence such agreement, the Parties shall execute a Certificate of Agreed Value
in the form of Exhibit "C" attached hereto. The
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Certificate of Agreed Value shall show the valuation of the Corporation as a
whole as agreed to by all Parties to this Agreement, which amount shall be equal
to the Agreed Value. The Agreed Value divided by the number of outstanding
shares on the date of a valuation event shall be the Agreed Value Per Share
until a new certificate of Agreed Value is signed by all Parties hereto. Failure
of the Parties to agree on an Agreed Value shall not invalidate any portion of
this Agreement. The initial Certificate of Agreed value is attached hereto as
Exhibit "D".
6.3 Valuation If Publicly Traded. Notwithstanding the provisions of
Sections 6.1 and 6.2 above, if any of the Shares have been registered pursuant
to the Securities Act o 1933, as amended, and applicable state laws and are
publicly traded on a national securities exchange, the Appraised Value Per Share
and Agreed Value Per Share shall be equal to the closing price per share for
such Shares as specified on the Offer Date by the applicable securities
exchange.
SECTION 7
GENERAL RESTRICTIVE COVENANTS
7.1 Non-Use and Non-Disclosure of Information. Each Shareholder recognizes
and acknowledges that he, she, or it, has been and will be given access to
confidential and proprietary information of the Corporation by virtue of being a
Shareholder, director, officer and/or employee of the Corporation, and that such
information is a valuable, special and unique asset of the Corporation's
business and one that the Corporation has a legitimate and important interest in
protecting. Accordingly, no Shareholder will, during or after the term of his,
her, or its ownership of Shares, disclose any confidential information of the
Corporation to any person, firm, corporation, association, or other entity, or
otherwise use the same, for any reason or purpose whatsoever. For purposes of
this Agreement, "confidential information' shall include, but not be limited to
the Corporation's mailing lists, business plans, marketing strategies, financial
statements, forecasts, internal memoranda on any subject whatsoever, any
document marked with the word "confidential," the Corporation's operational
methods and processes in their entirety, and any and all facts, ideas,
proposals, plans, methods, processes, reports, computer programs, papers, or
documents, or other information of any kind or character, whether oral or
written, relating to the Corporation's business, except any of the foregoing
that is in the public domain. Further, confidential information shall include
all information to which access is restricted by the Corporation or is
designated as confidential in writing.
7.2 Covenant Not to Compete. No Shareholder, so long as it holds any
Shares, shall engage, as principal, partner, agent, employee, shareholder,
director, officer, or in any other manner or capacity, or have any financial
interest, in any business which is directly competing with the business of the
Corporation.
7.3 Enforceability. Each of the Shareholders and the Corporation represent
and warrant to and covenant with one another that:
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7.3.1 Reasonableness. The covenants set forth in this Section 7 are a
material inducement to each of the Shareholders and the Corporation
entering into this Agreement, are reasonably necessary for the protection
of the interests of the Corporation and the Shareholders, are reasonable as
to duration, scope, and territory, and are not unreasonably restrictive
upon any Shareholder's rights. These covenants are in addition to and
therefore do not limit any similar covenants contained in other agreements
between the Shareholders and the Corporation.
7.3.2 Injunctive Relief. The Corporation's and the other Shareholders'
remedies at law for breach of any of the covenants set forth in this
Section 7 will be inadequate. In addition to any other rights or remedies
which the Corporation and the other Shareholders may have, they shall be
entitled to injunctive relief.
7.3.3 Limited Enforcement. Notwithstanding the provisions of Section
7.3.1, if any court determines that any of the covenants in this Section 7
are unreasonable as to duration, scope, or territory, the covenant shall be
enforceable as provided herein with respect to such duration, scope, and
territory as the court determines to be reasonable.
SECTION 8
VOTING AGREEMENT
8.1 Special Members of Board of Directors. At any time during the term of
this Agreement in which the Board of Directors of the Corporation consists of an
even number of directors, the following rules shall apply: If the Board of
Directors "deadlocks" on any issue (meaning directors in favor of a motion are
equal in number to those against the motion), and if the president or chairman
of the board of the Corporation thereafter gives notice to the Shareholders of a
special meeting of the Shareholders for the purpose of electing one or more
additional directors to break the deadlock, the Shareholders shall meet and
attempt to select a single additional director, to be elected to the Board of
Directors solely to break the deadlock. If at least fifty-one percent (51%) of
the Shares vote in favor of the same proposed additional director, that person
shall become a member of the Board of Directors for the limited purpose of
breaking the deadlock. If at least fifty-one percent (51%) of the shares do not
vote in favor of the same additional director, each of the Shareholders shall
vote its shares to add three (3) directors to the Board of Directors solely for
the purpose of breaking the deadlock.
8.2 Duties of Special Directors. Each special director elected to the Board
of Directors of the Corporation pursuant to Section 9.1 shall act as an
arbitrator of the dispute between the deadlocking directors, and shall decide
the disputed matter in accordance with the rules of the American Arbitration
Association. If there is one additional director, his or her resolution of the
disputed matter shall be final, conclusive, and binding upon the Shareholders,
the Board of Directors and the Corporation, and shall be enforceable in any
court of competent jurisdiction. If there are three additional directors, the
resolution of the disputed matter shall be by majority vote of the
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additional directors, whose resolution shall be final, conclusive, and binding
upon the Shareholders, the Board of Directors and the Corporation, and shall be
enforceable in any court of competent jurisdiction. The expenses of arbitration
director shall be borne by the Corporation.
SECTION 9
ATTORNEY'S REPRESENTATIONS
The Shareholders all acknowledge that Corporation's legal counsel
("Corporate Counsel") prepared this Agreement on behalf of and in the course of
his or her representation of the Corporation, and that:
(i) the Shareholders have been advised by Corporate Counsel that a
conflict exists among their individual interests; and
(ii) the Shareholders have been advised by Corporate Counsel to seek the
advice of independent counsel; and
(iii) the Shareholders have had the opportunity to seek the advice of
independent counsel; and
(iv) the Shareholders have received no representations from Corporate
Counsel about the tax consequences of this Agreement; and
(v) the Shareholders have been advised by Corporate Counsel that this
Agreement may have tax consequences; and
(vi) the Shareholders have been advised by Corporate Counsel to seek the
advice of independent tax counsel; and
(vii) the Shareholders have had the opportunity to seek the advice of
independent tax counsel.
SECTION 10
MISCELLANEOUS
Except to the extent inconsistent with the express language of the other
provisions of this Agreement, the following provisions shall govern the
interpretation, application, construction, and enforcement of this Agreement.
10.1 Termination. This Agreement shall terminate upon the occurrence of any
of the following events:
10.1.1 Voluntary Termination. Voluntary agreement of the Corporation,
as expressed by a majority vote of the Corporation's Board of Directors,
and the vote of fifty-one percent (51%) or more of the total outstanding
Shares of the Corporation;
10.1.2 Bankruptcy of Corporation. Involuntary bankruptcy or
receivership proceedings or the dissolution of the Corporation. For
purposes of this Agreement, "bankruptcy" shall be defined as: (i) the
filing by or against the Corporation of any proceeding under any state or
federal bankruptcy or insolvency laws now or hereafter existing or any
similar statute now or hereafter in effect, and, if the proceeding is filed
against the Corporation, the proceeding is not dismissed within sixty (60)
days of filing; (ii) the appointment of a receiver, trustee, custodian or
conservator or all or any part of the assets
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of the Corporation; (iii) the execution by the Corporation of an assignment
for the benefit of creditors; or the convening by the Corporation of a
meeting of its creditors, or any class of creditors for the purpose of
effecting a moratorium upon or extension or compromise of its debts; (iv)
the admission in writing of the corporation that it is unable to pay its
debts as they mature; or (v) any other act or condition which constitutes
an act of bankruptcy or insolvency under state or federal law.
10.1.3 Registration of Shares. The registration of any shares of the
Corporation's issued and outstanding capital stock pursuant to the
Securities Act of 1933, as amended and applicable state securities law.
10.2 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties, their heirs, personal representatives, successors and
assigns; provided, however, that except as otherwise expressly provided in this
Agreement, no Shareholder shall Transfer any interest in the Shares without the
express prior written consent of the other Shareholders or in any manner not
permitted by the provisions hereunder. Any attempted Transfer in violation of
this Agreement shall be void.
10.3 Amendment. This Agreement may only be amended by a written agreement
approved by the Board of Directors of the Corporation and all Shareholders. Any
agreement so approved shall be executed by the Corporation and the Shareholders
and filed in the Corporation's minute book.
10.4 Notices. Any notice required under this Agreement shall be
hand-delivered or sent by registered or certified mail, postage prepaid and
return receipt requested, to the principal place of business (or if an
individual, to the principal place of residence) of the party to which such
notice is being provided or such other address as a party may specify in
writing. Notices shall be deemed delivered three days after deposit in the
United States mails or upon delivery if hand-delivered. Actual receipt of notice
shall not be required to effect notice hereunder.
10.5 Additional Acts and Documents. Each party agrees to do all things and
take all actions, and to make, execute and deliver all other documents and
instruments, as are reasonably requested to carry out the provisions, intent and
purposes of this Agreement.
10.6 Authority. Each party represents and warrants to each other party that
this Agreement has been duly authorized by all necessary action and that this
Agreement constitutes and will constitute a binding obligation of each party.
10.7 Attorney's Fees. If suit is brought (or arbitration instituted) or an
attorney is retained by any party to this Agreement in any matter arising under
or to enforce the terms of this Agreement or to collect any money due under this
Agreement, or to collect money damages for breach of this Agreement, the
successful or prevailing party shall be entitled to recover, in addition to any
other
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remedy, reimbursement for reasonable attorney's fees, court costs, costs of
investigation, and other related expenses incurred in connection with the
action.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, and all counterparts shall constitute one and the same instrument
and shall be an original.
10.9 Time. Time is of the essence of each and every provision of this
Agreement. Any extension of time granted for the performance of any duty under
this Agreement shall not be considered an extension of time for the performance
of any other duty under this Agreement.
10.10 Waiver. Failure of any party to exercise any right or option arising
out of a breach of this Agreement shall not be deemed a waiver of any right or
option with respect to any subsequent or different breach, or the continuance of
any existing breach.
10.11 Integration Clause; Oral Modification. This Agreement represents the
entire agreement of the parties with respect to its subject matter. All
agreements previously entered into are revoked and superseded by this Agreement,
and no representations, warranties, inducements, or oral agreements have been
made by any of the parties except as expressly set forth in this Agreement, or
in other contemporaneous written agreements.
10.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, and (subject to any provision
in this Agreement providing for mandatory arbitration) suit to enforce any
provision of this Agreement or to obtain any remedy provided in this Agreement
shall be brought only in the Superior Court of the State of Arizona in Maricopa
County, Arizona, and for this purpose each party expressly and irrevocably
consents to the jurisdiction of that court.
10.13 Indemnity. Each party to this Agreement shall indemnify, defend and
hold each other party harmless from and against all claims, damages, costs and
expenses (including attorneys' fees) attributable, directly or indirectly, to
the breach by the indemnifying party of any obligation under this Agreement or
the inaccuracy of any representation or warranty made by the indemnifying party
in this Agreement or in any instrument delivered pursuant to this Agreement or
in connection with the transactions contemplated hereby.
10.14 Interest on Overdue Amounts. If any amount becomes due and owing
under this Agreement, the party to whom such amount is payable shall be entitled
to receive, in addition to such amount, interest on the amount at the rate of
twelve percent (12%) per annum (or such lower rate as shall be the highest
permissible rate under applicable law) from and after the date on which notice
of delinquency is given to the party or parties owing the amount so due.
10.15 Equitable Remedies. In addition to any other remedies available under
applicable law, the remedies of specific performance and/or injunctive relief
shall be available and proper if any party fails or refuses to perform its
duties under this Agreement.
-12-
10.16 Arbitration. If any dispute or controversy arising out of this
Agreement cannot be settled by the parties, the controversy or dispute shall be
submitted to arbitration in Phoenix, Arizona. For this purpose each party
expressly consents to such arbitration in Phoenix, Arizona. If the parties
cannot mutually agree upon an arbitrator to settle their dispute or controversy,
then the Presiding Civil Judge of the Maricopa County, Arizona Superior Court
shall select an arbitrator, or at the election of the parties, an arbitrator
shall be selected pursuant to the then existing rules and regulations of the
American Arbitration Association governing commercial transactions. The decision
of the arbitrator shall be binding upon the parties to this Agreement for all
purposes, and judgement to enforce any such bidding decision may be entered in
the Maricopa County, Arizona Superior Court (and for this purpose each party
expressly and irrevocably consents to the jurisdiction of the court). At the
request of any party, arbitration proceedings shall be conducted in the utmost
secrecy. In such case, all documents, testimony, and records shall be received,
heard, and maintained by the arbitrators in secrecy, available for inspection
only by either party and by their attorneys and experts who shall agree, in
advance and in writing, to receive all such information in secrecy. In all other
respects, the arbitrator shall conduct all proceedings pursuant to the Uniform
Arbitration Act as adopted in the State of Arizona and the then existing rules
and regulations of the American Arbitration Association governing commercial
transactions to the extent such rules and regulations are not inconsistent with
such Act or this Agreement. Costs of arbitration shall be borne as determined by
the arbitrator.
10.17 Gender. When the context in which the words in this agreement
indicate that such is the intent, the singular and plural number shall be deemed
to include the other, and, the masculine, feminine and neuter genders shall be
deemed to include the other. The term "person" shall include an individual,
corporation, partnership, trust, estate or any other entity.
10.18 Section Headings. The section headings contained in this Agreement
are for convenience only and shall in no manner be construed as part of this
Agreement.
10.19 Savings Clause. Notwithstanding any other term or provision of this
Agreement, if any right or interest created by or in connection with this
Agreement would be invalid or unenforceable if not subject to the terms
contained in this sentence, such interest or right shall terminate twenty (20)
years after the date of death of the last to die of the following persons: all
attorneys employed at the time of creation of such right or interest by Bonn,
Luscher, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Chartered, an Arizona corporation, and the children
of such attorneys living at the time of creation of such right of interest.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
written above.
CORPORATION:
Premium Cigars International, Ltd.
an Arizona corporation
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Its Chief Executive Officer
---------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
-14-
EXHIBIT "A"
FORM OF AGREEMENT FOR ADDITIONAL OR NEW SHAREHOLDERS
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the ____ day of ______________ between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
Date:______________ __________________________
[name]
-15-
EXHIBIT "B"
FORM OF PROMISSORY NOTE
Phoenix, Arizona
___ day of _______, 199_
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
[payee], at [payee address], in lawful money of the United States of America,
the principal sum of [amount in words] ($[amount in digits]) payable in [number
of payments {words (digits)}] annual installments of [amount in words] ($[amount
in digits]) each, commencing on the ____ day of _______, 199_; with interest on
the unpaid balance of this note at the rate of [interest rate {words (digits)}]
per annum to maturity, interest payable at the same time as principal. All past
due payments of principal or interest or both shall bear interest at [interest
rate {words (digits)}] the highest lawful annual rate allowed by contract under
Arizona law until paid.
Upon default in the payment of any installment of principal or interest or
both when due, the entire remaining principal balance, with interest thereon,
shall immediately become due and payable at the option of the holder hereof
without notice to or demand upon the undersigned. In the event of garnishment,
attachment, levy or execution is issued against any of the property or effects
of the undersigned and/or in the event of an assignment for the benefit of the
creditors, application for the appointment of a receiver or filing of a
voluntary or involuntary petition in bankruptcy by or against the undersigned,
the same shall, at the option of the holder hereof, constitute an event of
default and holder hereof at its option may declare this note immediately due
and payable.
The undersigned hereby waives diligence, grace, demand, presentment for
payment, exhibition of this note, protest, notice of protest, notice of dishonor
and notice of nonpayment, and agrees to any and all extensions or renewals from
time to time without notice and, to any partial payments hereon made before or
after maturity and that no such extensions, renewals, or payments shall release
it from obligations of payment of this note or any installment hereof, and
consent to offset any bank balance of any party hereto.
The undersigned promises to pay all costs and expenses of collection,
including a reasonable attorneys' fee as determined by the judge of the court
and all other costs, expenses and fees in the event suit is instituted to
collect the note or any portion thereof. It is expressly agreed that the
acceptance by the holder of this note of any performance which does not comply
strictly with the terms of this note shall not be deemed to be a waiver of any
right of the holder.
The undersigned may at any time prepay this note in whole or from time to
time in part without penalty or premium.
________________________________
Maker
-16-
EXHIBIT "C"
FORM OF CERTIFICATE OF AGREED VALUE
As of the _____ day of ___________, 199_, the undersigned, constituting all
the Shareholders of [corporation name], an Arizona Corporation, do hereby agree
that the Agreed Value of the Corporation as a whole is [value}. Furthermore,
with [number of shares] shares of the Corporation's common stock issued and
outstanding, the Agreed Value per share is equal to [value per share].
------------------------------
[Corporation]
By:______________________
Its:_____________________
------------------------------
[party 1]
------------------------------
[party 1]
-17-
EXHIBIT "D"
INITIAL CERTIFICATE OF AGREED VALUE
As of the 1st day of January, 1997, the undersigned, constituting all the
Shareholders of Premium Cigars International, Ltd., an Arizona Corporation, do
hereby agree that the Agreed Value of the Corporation as a whole is One Hundred
Twenty-Six Thousand Two Hundred Fifty Dollars ($126,250.00). Furthermore, with
Two Hundred Fifty-Two Thousand Five Hundred (252,500) shares of the
Corporation's common stock issued and outstanding, the Agreed Value per share is
equal to Fifty Cents ($0.50).
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Premium Cigars International, Ltd.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Its: Chief Executive Officer
--------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇ ▇▇▇▇▇▇▇
Dated as of: January 11, 1997 -----------------------
▇▇▇ ▇▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Dated as of: January 9, 1997 ------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇ Charleston
Dated as of: January 9, 1997 --------------------------
▇▇▇▇ Charleston
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇ ▇▇▇▇▇
Dated as of: January 9, 1997 --------------------------
▇▇▇▇ ▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dated as of: January 9, 1997 --------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Dated as of: January 9, 1997 --------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
Dated as of: January 9, 1997 --------------------------
▇▇▇▇▇ ▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Dated as of: January 9, 1997 --------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AGREEMENT TO
SHAREHOLDERS AND VOTING AGREEMENT
The undersigned has executed this instrument to evidence the undersigned's
agreement to be a party to and be bound by that certain Shareholder's Agreement
dated as of the 1st day of January, 1997, between Premium Cigars International,
Ltd. and those Shareholders who are presently parties thereto.
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Dated as of: January 10, 1997 -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇