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Exhibit 5
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is made and entered into
this 8th day of November 2000, by and among the FUENTE INVESTMENT PARTNERSHIP, a
Florida general partnership ("Fuente"), and ROBERT G. LEVIN ("Levin")
(hereinafter Fuente and Levin are referred to individually at times as a
"Shareholder" and collectively at times as the "Shareholders") and HCH
Acquisition Corp., a Delaware corporation ("HCH").
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the shares of the issued and
outstanding common stock, $.01 par value per share, of HCH (the "Stock");
WHEREAS, HCH and the Shareholders believe it to be in their best interests
to provide for the continuity of management and policies of HCH by imposing
certain restrictions and obligations on themselves and the Stock; and
WHEREAS, HCH and the Shareholders desire to facilitate liquidation of the
Stock of a deceased or disabled individual Shareholder by the creation of a
guaranteed market for his Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties hereto, the parties hereto
agree as follows:
1. RESTRICTION ON TRANSFER OF STOCK.
No Shareholder shall at any time during the term of this Agreement,
directly or indirectly, sell, assign, transfer, mortgage, encumber, pledge
or otherwise deal with or dispose of all or any part of the shares of the
Stock now owned or hereafter acquired by him, without first obtaining the
written consent of the other Shareholder and HCH or, in the absence of
such written consent, without first complying with the terms and
conditions of this Agreement.
2. TRANSFER OF STOCK DURING LIFETIME.
2.1 Offer to Sell. If a Shareholder desires to dispose of all or any
part of his Stock, and prior written consent to such disposition has
not been received from the other Shareholder and HCH pursuant to
Section 1 hereof, the selling Shareholder shall serve written notice
(the "Offer to Sell") of his desire to sell Stock upon the other
Shareholder and HCH, stating the
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number of shares desired to be sold or otherwise disposed of, the
proposed price and payment terms relating to the sale or
disposition, the name and address of the proposed purchaser, and
offering to sell such Stock to the other Shareholder and HCH in
accordance with the terms and conditions of this Agreement.
2.2 Deemed Offer to Sell. For purposes of this Agreement, the proposed
transfer of an interest in Fuente in such a manner whereby Carlos A.
Fuente, Carlos P. Fuente and/or Cynthia Fuente Suarez, whether
individually or any combination thereof, as a result of such
transfer, would no longer have direct or indirect voting control and
control over the management and business operations of Fuente, shall
be considered an Offer to Sell all of the Stock then owned by Fuente
on the terms set forth in this Section 2.
2.3 Procedure for Acceptance or Rejection of Offer to Sell.
2.3.1 The other Shareholder shall have the right (but not the
obligation) to purchase all or any part of the Stock offered
for sale by the selling Shareholder, as described in the Offer
to Sell, by giving written notice of acceptance to the selling
Shareholder and HCH within thirty (30) days after delivery of
the Offer to Sell.
2.3.2 If the other Shareholder fails to purchase all of the Stock
offered for sale by the selling Shareholder, then HCH shall
have the right (but not the obligation) to purchase all or any
part of the remaining Stock offered for sale by the selling
Shareholder, as described in the Offer to Sell, by giving
written notice of acceptance to the selling Shareholder and
the other Shareholder within thirty (30) days after the close
of the thirty (30) day period specified in Section 2.3.1
hereof. The selling Shareholder's representatives on the Board
of Directors of HCH (as identified pursuant to Section 11.2
hereof) shall not participate in HCH's determination whether
to purchase Stock pursuant to this Section 2.3.2. To the
extent necessary, quorum requirements shall be waived with
respect to the Board of Directors meeting at which this
determination is made, and the decision of the remainder of
the Board of Directors as to this matter shall be binding upon
HCH.
2.3.3 If the other Shareholder and HCH fail to purchase all of the
Stock offered for sale by the selling Shareholder, then
subject to the provisions of Section 2.5 hereof regarding
Co-Sale, and after
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the five (5) day waiting period specified in Section 2.5
hereof, the selling Shareholder shall be free to sell or
otherwise dispose of the shares of Stock described in the
Offer to Sell that have not been purchased by the other
Shareholder or HCH. Such sale or disposition of Stock by the
selling Shareholder must occur within sixty (60) days after
the expiration of the five (5) day period provided in Section
2.5 hereof, to the purchaser named in the Offer to Sell, and
on terms and conditions that are equivalent to or more
favorable to the selling Shareholder than those set forth in
the Offer to Sell. If the selling Shareholder's shares of
Stock are not sold to the proposed purchaser within the sixty
(60) day period described in this Section 2.3.3, the selling
Shareholder shall not be permitted to sell any such shares
without again complying with the provisions of Section 2
hereof.
2.4 Price, Terms of Purchase and Closing Date. Each share of Stock to be
purchased by the other Shareholder or HCH pursuant to this Section 2
shall be purchased at the price set forth in Section 8.1 hereof, and
on the payment terms set forth in Section 10 hereof. The closing of
the sale of Stock to the other Shareholder or HCH pursuant to this
Section 2 shall occur at 10:00 a.m. local time at HCH's offices
fourteen (14) days after the expiration of the last applicable
waiting period specified in this Section 2, or at such other time
and place as the parties may mutually agree.
2.5 Co-Sale Agreement.
2.5.1 If a selling Shareholder has complied with the terms of this
Section 2, and the other Shareholder and HCH have not elected
to purchase all of the Stock offered for sale, the other
Shareholder shall have the option to elect to sell a portion
of the Stock owned by the other Shareholder to the purchaser
named in the selling Shareholder's Offer to Sell, on the terms
and conditions set forth in the Offer to Sell. The other
Shareholder shall exercise this right by notifying the selling
Shareholder in writing of its election to do so within five
(5) days after the expiration of the thirty (30) day period
specified in Section 2.3.2 hereof. If the other Shareholder
does not respond in writing within said five (5) day period,
it shall be deemed to have elected not to sell any shares. If,
at the end of said five (5) day period, the other Shareholder
has not elected to sell any of its shares, the selling
Shareholder shall be free to sell any or all of its Stock
according to the terms of Section 2.3.3 hereof.
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2.5.2 If the other Shareholder has properly notified the selling
Shareholder of the other Shareholder's desire to sell shares
pursuant to Section 2.5.1 hereof, the other Shareholder shall
be entitled to sell some or all of such shares owned by the
other Shareholder along with the shares of the selling
Shareholder, in an amount to be determined according to the
provisions of this Section 2.5.2. The other Shareholder may
elect to sell up to the same percentage of the Stock owned by
him as the Stock which the selling Shareholder has included in
the Offer to Sell bears to the total Stock then owned by the
selling Shareholder. The selling Shareholder shall use his
best reasonable efforts to interest the proposed purchaser in
purchasing shares from the other Shareholder as well, and in
identifying additional interested purchasers in the event the
proposed purchaser is unwilling or unable to purchase all
shares which Shareholders desire to sell. If the selling
Shareholder is unable to obtain purchasers for all of the
shares proposed for sale by the selling Shareholder, then each
of the Shareholders shall be entitled to participate in the
sale to the proposed purchaser on a pro rata basis, based on
the total number of shares each Shareholder owns in HCH.
2.6 Transferred Stock Subject to this Agreement. In the event of any
sale, assignment, transfer, encumbrance, disposition or
hypothecation of any kind by a selling Shareholder of all or any
part of his Stock pursuant to this Section 2 (or the sale of any
Stock by the other Shareholder pursuant to Section 2.5), the
transferee shall receive and hold such Stock subject to the terms
and conditions of this Agreement and subject to the obligations
hereunder of his transferor. Every transferee shall be deemed to be
a "Shareholder" for purposes of this Agreement. By acceptance of the
transferred shares of the Stock, every transferee agrees to abide by
the terms of this Agreement. Upon the request of any party hereto,
the transferee shall acknowledge in writing that the Stock
transferred remains subject to this Agreement, and that such
transferee is bound by the terms and conditions of this Agreement.
3. SPECIAL TREATMENT OF CERTAIN TRANSFERS.
3.1 Transfer to Trust. Any Shareholder who is an individual may make a
gratuitous transfer during his lifetime, without the written consent
of the other parties to this Agreement (but with prompt written
notice of any such transfer to be given to the other parties to this
Agreement), of all or any part of his Stock to a revocable trust in
which the Shareholder retains the absolute power to have the
transferred Stock returned to him.
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3.2 Transfer to Controlled Entities or Partners. Either Shareholder may
make a transfer without the written consent of the other parties to
this Agreement (but with prompt written notice of any such transfer
to be given to the other parties to this Agreement) of all or any
part of his Stock:
3.2.1 in the case of Levin, to a partnership, corporation, limited
liability company, family partnership or other business
entity, but only if voting control and control over the
management and business operations of such partnership,
corporation, etc. is thereafter held and continues to be held
by Levin at all times;
3.2.2 in the case of Fuente, to Carlos A. Fuente, Carlos P. Fuente,
and/or Cynthia Fuente Suarez, individually or in any
combination thereof, or to a partnership, corporation, limited
liability company, family partnership or other business entity
but only if voting control and control over the management and
business operations of such partnership, corporation, etc. is
thereafter held and continues to be held at all times by
Carlos A. Fuente, Carlos P. Fuente, and/or Cynthia Fuente
Suarez, either individually or in any combination thereof.
3.3 Controlling Predecessor Shareholder. After any transfer under
Section 3.1 or 3.2 hereof, the Shareholder making such transfer
shall be referred to herein as the "Controlling Predecessor
Shareholder" with respect to such Stock.
3.4 Continued Application of This Agreement. Any Stock transferred
pursuant to this Section 3 shall remain subject to this Agreement,
and upon delivery of share certificates to the transferee
shareholder, the transferee shareholder shall be bound by the terms
and conditions of this Agreement, including but not limited to the
terms providing for purchase upon death or disability of Levin, or
upon the death or disability of Carlos A. Fuente, Carlos P. Fuente,
and Cynthia Fuente Suarez. Upon the request of any party hereto, the
transferee shareholder shall acknowledge in writing that the Stock
transferred remains subject to this Agreement, and that such
transferee shareholder shall be bound by the terms and conditions of
this Agreement. The making of any transfer permitted by this Section
3 shall not relieve or alter the Controlling Predecessor
Shareholder's obligations under this Agreement, and without waiver
of any rights of the non-transferring Shareholder under this
Agreement, the parties to this Agreement may enforce such
obligations directly against the Controlling Predecessor Shareholder
as if such transfer had not occurred.
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4. ENCUMBRANCE OR PLEDGE OF STOCK.
No Shareholder shall have the right to encumber or pledge all or any part
of his Stock without the prior written consent of the other Shareholder.
Such consent shall include, among other provisions, a requirement that the
pledgee of such pledged Stock accept such Stock subject to the terms and
conditions of this Agreement. Upon the request of the other Shareholder,
the pledgee shall acknowledge in writing that the pledged Stock remains
subject to this Agreement. Further, such consent shall require the pledge
agreement or arrangement, as the case may be, include the following
requirements:
4.1 in the event any pledged Stock is purchased in accordance with this
Agreement, the proceeds shall be paid to the pledgor and pledgee as
their interests appear, and the pledged Stock shall be released to
the purchaser;
4.2 in the event of any dispute or ambiguity regarding the respective
rights of the pledgor or pledgee, the purchaser of the Stock shall
be entitled to disburse all proceeds to the party in possession of
the share certificate representing the pledged Stock; and,
4.3 in the event the pledgee of any pledged Stock shall exercise any
right or remedy under any security or stock pledge agreement, as the
case may be, or attempt to cause a public or private sale of such
Stock, the pledgee shall notify the other Shareholder and such
notice shall be deemed to be an Offer to Sell made under Section 2
hereof at a purchase price determined in accordance with Section 8.1
hereof and on the terms set forth in Section 10 hereof.
5. PURCHASE OF STOCK ON DISABILITY OR DEATH OF LEVIN.
5.1 Obligation to Purchase. If Levin, whether in his capacity as a
Shareholder or as a Controlling Predecessor Shareholder, dies or is
deemed to be totally disabled (as that term is defined in Section 7
hereof), Levin (or his personal representative, if Levin is
deceased), shall be deemed to have made an Offer to Sell all of his
Stock in HCH, and HCH shall be obligated to purchase all of Levin's
Stock pursuant to the terms of this Section 5.
5.2 Price and Payment Terms. The price to be paid for Levin's Stock
shall be the price set forth in Section 8.2 hereof, and the terms of
payment shall be as set forth in Section 10 hereof.
5.3 Closing. The closing of the sale of stock from Levin to HCH pursuant
to this Section 5 shall occur at 10:00 a.m. local time at HCH's
offices sixty (60) days after the determination that Levin is
totally disabled, or is deceased, or at such other time and place as
the parties may mutually agree.
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6. PURCHASE OF STOCK ON DEATH OR DISABILITY OF ALL OF FUENTE'S PARTNERS.
6.1 Obligation to Purchase. If at any time all three of Carlos A.
Fuente, Carlos P. Fuente and Cynthia Fuente Suarez are deemed to be
totally disabled (as that term is defined in Section 7 hereof) or
are deceased (or any combination thereof as to the three (3)
individuals), Fuente shall be deemed to have made an Offer to Sell
all of its Stock in HCH, and HCH shall be obligated to purchase all
of Fuente's Stock pursuant to the terms of this Section 6.
6.2 Price and Payment Terms. The price to be paid for Fuente's Stock
shall be the price set forth in Section 8.2 hereof, and the terms of
payment shall be as set forth in Section 10 hereof.
6.3 Closing. The closing of the sale of stock from Fuente to HCH
pursuant to this Section 6 shall occur at 10:00 a.m. local time at
HCH's offices sixty (60) days after the determination that all three
(3) of Carlos A. Fuente, Carlos P. Fuente and Cynthia Fuente Suarez
are totally disabled or dead (or any combination thereof as to the
three (3) individuals), or at such other time and place as the
parties may mutually agree.
7. DEFINITION OF "TOTALLY DISABLED."
For purposes of this Agreement, an individual shall be deemed "totally
disabled" if he is so incapacitated that he is unable to engage in normal
bodily and mental functions, is unable to use substantially all of his
motor skills, and is only able to conduct respiratory bodily functions and
those other bodily functions that are required in order to be medically
certified as being alive, and such condition continues for a continuous
period of one hundred eighty (180) days (hereinafter referred to as the
"continuous period of disability"). In the event of any dispute as to
whether or not such disability has in fact occurred, the parties hereto
agree to abide by the decision of a physician chosen jointly by the other
Shareholder and the representative of the potentially disabled
Shareholder. Levin, Carlos A. Fuente, Carlos P. Fuente and Cynthia Fuente
Suarez agree to make themselves available for and submit to examinations
by such physician. Failure to submit to any such examination shall
constitute an admission of total disability. The expenses of such
physician shall be borne equally by the insured Shareholder and HCH. For
purposes of this provision, the term "day" shall mean any and all days of
the week, including any and all legal holidays.
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8. PURCHASE PRICE.
8.1 Purchase Price For Offers to Sell During Life. For purposes of
Section 2 hereof, the purchase price for each share of Stock shall
be equal to the lesser of:
- the price per share stated in the Offer to Sell; or
- the fair market value per share of HCH's Stock on the date of
the proposed closing of such purchase.
The parties hereto agree to mutually appoint an independent
certified public accountant to determine the fair market value for
the Stock. If the parties cannot agree on a mutually acceptable
independent certified public accountant, then each party shall
appoint an independent certified public accountant, and the parties'
appointees shall jointly select a third independent certified public
accountant. The panel of three independent certified public
accountants shall determine the fair market value of the stock. In
each case, the determination of valuation shall take into account
the then applicable customary valuation techniques associated with
valuation of privately held companies, shall not take into account
any premium or discount associated with the fact that the interest
being valued is a majority or minority interest, shall not take into
account any life insurance or disability insurance proceeds, and
shall be based upon all relevant financial information for the prior
thirty-six (36) month period immediately preceding the sale
transaction. The expenses of all independent certified public
accounts retained pursuant to a valuation under this Section 8.1
shall be equally by the selling Shareholder and the purchaser(s).
8.2 Purchase Price for Offers to Sell Upon Death or Disability.
8.2.1 Offers to Sell Made During The Initial Ten Year Term. During
the initial ten (10) year term of this Agreement (i.e. from
November 8, 2000 through and including November 7, 2010), for
purposes of Sections 5 and 6 hereof, the purchase price for
each share of Stock shall be equal to the greater of:
- Twenty-Two Million and no/100 Dollars, divided
by the then-outstanding number of shares of
Stock outstanding in HCH; or
- the fair market value per share of HCH's Stock
on the date of the proposed closing of such
purchase.
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The parties hereto agree to mutually appoint an independent
certified public accountant to determine the fair market value
for the Stock. If the parties cannot agree on a mutually
acceptable independent certified public accountant, then each
party shall appoint an independent certified public
accountant, and the parties' appointees shall jointly select a
third independent certified public accountant. The panel of
three independent certified public accountants shall determine
the fair market value of the stock. In each case, the
determination of valuation shall take into account the then
applicable customary valuation techniques associated with
valuation of privately held companies, shall not take into
account any premium or discount associated with the fact that
the interest being valued is a majority or minority interest,
shall not take into account any life insurance or disability
insurance proceeds, and shall be based upon all relevant
financial information for the prior thirty-six (36) month
period immediately preceding the sale transaction. The
expenses of all independent certified public accounts retained
pursuant to a valuation under this Section 8.2.1 shall be
equally by the selling Shareholder and the purchaser(s).
8.2.2 Offers to Sell Made After the Initial Ten Year Term. For all
offers to sell made after the initial ten (10) year term
specified in Section 8.2.1 hereof, for purposes of Sections 5
and 6 hereof, the purchase price for each share of Stock shall
be equal to the fair market value per share of HCH's Stock on
the date of the proposed closing of such purchase. The parties
hereto agree to mutually appoint an independent certified
public accountant to determine the fair market value for the
Stock. If the parties cannot agree on a mutually acceptable
independent certified public accountant, then each party shall
appoint an independent certified public accountant, and the
parties' appointees shall jointly select a third independent
certified public accountant. The panel of three independent
certified public accountants shall determine the fair market
value of the stock. In each case, the determination of
valuation shall take into account the then applicable
customary valuation techniques associated with valuation of
privately held companies, shall not take into account any
premium or discount associated with the fact that the interest
being valued is a majority or minority interest, shall not
take into account any life insurance or disability insurance
proceeds, and shall be based upon all relevant financial
information for the prior thirty-six (36) month period
immediately preceding the sale transaction. The expenses of
all
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independent certified public accounts retained pursuant to a
valuation under this Section 8.2.2 shall be equally by the
selling Shareholder and the purchaser(s).
9. PURCHASE OF LIFE INSURANCE.
During the initial ten (10) year term of this Agreement (i.e. from
November 8, 2000 through and including November 7, 2010), Levin and Fuente
hereby covenant and agree that they shall vote their Stock so as to
authorize HCH to purchase and maintain life insurance with respect to
Levin's life in the amount of Seven Million Five Hundred Thousand and
no/100 Dollars ($7,500,000). Levin agrees to make himself available for
and submit to any physical examinations required in connection with the
issuance of the life insurance called for hereunder. Failure to submit to
any such examination shall constitute a waiver by Levin of the obligation
that HCH maintain life insurance on Levin's life.
10. PAYMENT OF PURCHASE PRICE.
At the closing of any purchase of Stock under this Agreement, the
purchaser shall pay the purchase price for such stock as follows:
10.1 Insurance Proceeds. Any portion of the purchase price that is
covered by insurance proceeds shall be paid in full and in cash at
the closing or, if such proceeds have not been disbursed by the
insurance carrier as of the date of the closing, then within five
(5) days after receipt of the insurance proceeds by the purchaser.
Any excess of insurance proceeds over the purchase price for the
Stock shall be retained by the owner of the insurance policy.
10.2 Purchase of Levin's Stock Pursuant to Section 8.2.1. If the purchase
price is being paid to the estate of Levin pursuant to and Offer to
Sell made under Section 8.2.1 hereof, HCH shall pay to the estate of
Levin at the closing such amount in cash which, when added to the
amount paid to the estate of Levin from insurance proceeds pursuant
to Section 10.1 hereof, equals fifty percent (50%) of the purchase
price for Levin's stock. The balance of the purchase price shall be
paid according to the terms of Section 10.4 hereof.
10.3 Mandatory 25% Cash Payment. If no insurance proceeds have been
disbursed in connection with Section 10.1 above, then a minimum of
twenty-five percent (25%) of the purchase price must be paid by the
purchaser in cash at the closing.
10.4 Balance of Purchase Price. Any part of the purchase price that is
not paid with insurance proceeds or in cash at the closing pursuant
to Sections 10.1,
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10.2, or 10.3 hereof shall be evidenced by a negotiable promissory
note substantially in the form attached hereto as Exhibit A. All of
the Stock being purchased shall be pledged as collateral security to
secure the full payment of the principal and interest on the
negotiable promissory note, pursuant to a Pledge Agreement
substantially in the form attached hereto as Exhibit B. Upon full
payment of the principal and accrued interest on the negotiable
promissory note, the Stock pledged as collateral security shall be
released and delivered to the purchaser.
11. AFFIRMATIVE COVENANTS.
11.1 Material Events. The Shareholders covenant and agree that, to the
extent permissible by law giving due regard to the Shareholders'
positions as both Shareholders and directors of HCH, from the date
of this Agreement and until the termination of this Agreement, the
Shareholders shall not permit HCH or HCH's Board of Directors or
officers to take any action concerning a Material Event (as defined
herein) without first obtaining the consent of Levin and Fuente and
notwithstanding any vote or action by a majority of the Board of
Directors or the Shareholders to the contrary. For purposes of this
Agreement, the term "Material Event" shall mean any of the following
actions proposed to be taken by or with respect to HCH:
11.1.1 Any merger, consolidation, acquisition, or sale of
substantially all of HCH's assets;
11.1.2 Any joint venture or similar transaction involving HCH;
11.1.3 Declaration and payment of any dividend or distribution in
respect of the Stock, reclassification, recapitalization,
issuance, or similar transaction affecting the Stock in any
manner;
11.1.4 The issuance of any additional shares of Stock in HCH or the
authorization of any additional classes of Stock in HCH;
11.1.5 Any decision to change the status of HCH for United States
income tax purposes;
11.1.6 Entering into any loan agreement or similar financing
program relating to working capital financing, acquisition
funding or similar material borrowings with a dollar value
in excess of $500,000, other than a $3,000,000 line of
credit secured by HCH's inventory and accounts receivable to
be used as operating funds;
11.1.7 Any pledge of assets or granting of a security interest in
any assets in HCH;
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11.1.8 Any license, royalty or similar agreement or business
relationship involving any trademark (whether registered or
unregistered) owned or controlled by HCH;
11.1.9 Any decision to use any trademark (whether registered or
unregistered) owned or controlled by HCH on goods other than
cigars, cigar related goods, or apparel;
11.1.10 Settlement of any claims or litigation asserted or brought
against HCH in excess of $250,000;
11.1.11 Liquidation or dissolution of HCH, commencement of any
voluntary bankruptcy or insolvency proceedings with respect
to HCH or the making of an assignment of its assets for the
benefit of creditors or appointment of a receiver for any
portion of its assets; and
11.1.12 Any fundamental change in the present business operation of
HCH.
11.2 Composition of the Board of Directors. The Shareholders agree to
vote their shares of Stock, in trust, so that the Board of Directors
of HCH is composed of five (5) members; with two (2) members
nominated by Fuente, and three (3) members nominated by Levin. Levin
hereby agrees to cause his shares of Stock to be voted in favor of
the election of any two (2) of Carlos A. Fuente, Carlos P. Fuente or
Cynthia Fuente Suarez to the Board of Directors of HCH. Fuente
hereby agrees to cause its shares of Stock to be voted in favor of
the election of Robert G. Levin to the Board of Directors, and in
favor of any two (2) additional individuals nominated by Robert G.
Levin.
11.3 Officers. The parties agree that they shall support the appointment
of Levin as the President and Chief Executive Officer of HCH.
Provided, however, if Levin becomes "totally disabled" within the
meaning of Section 7 hereof, or if Levin is not "totally disabled"
within the meaning of Section 7 hereof, but he becomes so
incapacitated that he is unable to carry on substantially all of his
normal duties as President and Chief Executive Officer of HCH, then
Levin shall resign as President and Chief Executive Officer of HCH,
and either Carlos A. Fuente or Carlos P. Fuente shall be elected as
President and Chief Executive Officer by the parties to this
Agreement. Levin shall resume the positions of President and Chief
Executive Officer if his health so permits in the future, provided
Levin is still a Shareholder of HCH at that time. Similarly, if
Levin should resign as President and/or Chief Executive Officer for
any other reason, then either Carlos A. Fuente or Carlos P. Fuente
shall be elected as President
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and Chief Executive Officer by the parties to this Agreement, and
shall hold such position until Levin expresses a desire to return to
those positions, provided Levin is still a Shareholder of HCH at
that time.
12. ENDORSEMENT ON SHARE CERTIFICATES.
Simultaneously with the execution of this Agreement, the Shareholders
shall deliver to HCH any share certificates subject hereto and the
following endorsement shall be placed on the face of each certificate:
The sale, encumbrance or other disposition of the shares represented
by this certificate is subject to the terms and conditions of a
Shareholders' Agreement dated November 8, 2000 by and among the
holder of this certificate and other parties, a copy of which
Shareholders' Agreement is on file in the office of this Corporation
and will be furnished without charge to any shareholder upon
request.
After such endorsement, the certificates shall be returned as soon as
practicable to their respective owners who shall be entitled, subject to
the terms hereof, to exercise all rights and interests therein. All share
certificates hereafter issued by HCH while this Agreement is in effect
shall bear the same endorsement. Upon the termination of this Agreement,
such certificates shall be surrendered to HCH and new certificates without
the foregoing endorsement shall be issued in lieu thereof.
13. GOVERNING LAW; VENUE; PROCESS.
The validity, construction, and enforcement of, and the remedies under,
this Agreement shall be governed in accordance with the laws of Delaware
(except that if any choice of law provision under Delaware law would
result in the application of the law of a state or jurisdiction other than
Delaware, such provision shall not apply). The parties to this Agreement
agree that jurisdiction and venue shall properly lie in the courts of the
State of Delaware, with respect to any legal proceedings arising under or
connected with this Agreement. The parties further agree that the delivery
by courier of any process shall constitute valid and lawful process
against them.
14. AMENDMENT.
This Agreement may be amended, altered or revoked at any time upon the
unanimous written agreement of the Shareholders and HCH.
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15. TERMINATION OF AGREEMENT.
15.1 Events of Termination. This Agreement shall terminate upon:
15.1.1 Execution of a written instrument by the Shareholders and
HCH terminating this Agreement;
15.1.2 The bankruptcy, receivership or dissolution of HCH; or
15.1.3 The complete fulfillment of this Agreement according to its
terms upon the disposal of all of the Stock of one of the
Shareholders in such a manner as there remains only one
Shareholder of HCH.
15.2 Enforceability of Rights, Benefits and Duties after Termination. All
rights, benefits and duties that accrue hereunder prior to the
termination of this Agreement shall nevertheless be enforceable by
the parties to this Agreement and their legal representatives,
successors and assigns after the termination of this Agreement.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterpart execution pages may be
circulated and signed by telecopy, followed within a reasonable period of
time by original (inked) signature pages.
17. NOTICE.
All notices, consents, acceptances and any other communication required
herein shall be in writing and shall be deemed delivered upon receipt, if
delivered in person; upon transmission, if sent by telecopy (facsimile) or
e-mail, with electronic confirmation of receipt, or four (4) days after
posting, if sent by recognized international expedited delivery service.
No notices, consents etc. may be sent by mail, due to the unreliability of
the Dominican Republic mail service. All notices, etc. shall be sent to
the parties at their respective addresses set forth below (or at such
other address for a party as shall be specified by notice given
hereunder):
If to Levin: Mr. Robert G. Levin
c/o HCH Acquisition Corp.
12270 Townsend Road
Philadelphia, PA 19154
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Telephone: 215-676-8778
Telecopy: 215-676-9085
With a copy to: Matthew H. Lubart, Esq.
Fox, Rothschild, O'Brien & Frankel, LLP
997 Lenox Drive, Building 3
Lawrenceville, NJ 08648-2311
Telephone: 609-896-3600
Telecopy: 609-896-1469
If to Fuente: Carlos A. Fuente, General Partner
Fuente Investment Partnership
c/o Fuente Cigar Ltd.
Zona Franca Industrial
Santiago, Dominican Republic
Telephone: 809-570-2688
Telecopy: 809-575-3542
With a copy to: William M. Sharp, Esq.
Sharp, Smith & Harrison, P.A.
4830 W. Kennedy Blvd., Suite 630
Tampa, Florida 33609
Telephone: 813-286-4199
Telecopy: 813-286-4197
Any notice required to be given hereunder to the estate of a deceased
Shareholder shall be sent to the personal representative of the estate at
his address, or if no personal representative is appointed, to the
deceased Shareholder at his last designated address. As soon as practical
after being appointed, the personal representative of the estate of a
deceased Shareholder shall notify the other parties hereto of his address
by notice sent in conformity with the foregoing requirements. Any party
from time to time may change his address to which notice is to be sent
pursuant hereto by sending a notice of such change in conformity with the
foregoing requirements to the other parties and the legal representative
of the estate of a deceased Shareholder.
18. SEVERABILITY OF PROVISIONS.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid, but if any provision of this
Agreement shall be prohibited by applicable law, unenforceable in any
jurisdiction or invalid under applicable law, such provision shall be
ineffective to the extent of such
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prohibition, unenforceability, or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement,
or affecting the validity or enforceability of such provision in any other
jurisdiction.
19. ASSIGNMENT.
Neither this Agreement nor any rights or privileges hereunder shall be
assigned, transferred, shared or divided, by operation of law or
otherwise, in any manner, by a party hereto without the prior written
consent of the other party, which consent may be arbitrarily withheld. Any
purported assignment or transfer not having the written consent of the
party required hereunder to give such consent shall be null and void and
shall constitute a default hereunder.
20. ENTIRE AGREEMENT; AMENDMENT.
This Agreement (including the exhibits hereto and all documents and papers
delivered pursuant hereto and any written amendments hereof executed by
the parties to this Agreement, as specified herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, oral and
written, among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by written agreement executed
by all of the parties hereto. Time is of the essence of this Agreement and
each of its provisions, and no extension of any time period shall be
binding upon any of the parties hereto unless expressly provided herein or
in writing and signed by all of the parties hereto.
21. FURTHER ASSURANCES.
The parties hereto shall execute and deliver, or cause to be executed and
delivered, such additional or further transfers, assignments, endorsements
or other instruments as the other party or its counsel may reasonably
request from time to time for purposes of carrying out the transactions
contemplated by this Agreement.
22. PARAGRAPH HEADINGS; PLURAL; GENDER; MISCELLANEOUS.
The paragraph headings contained herein are for reference only and shall
not be considered as substantive parts of this Agreement. The use of the
singular or plural form shall include the other form and the use of the
masculine, feminine or neutered gender shall include the other genders.
The words "hereof," "herein," and "hereunder" and words of similar import
when used in this Agreement, shall refer to this Agreement as a whole,
including all exhibits hereto, and not to any particular provision of this
Agreement unless otherwise specified; all references herein to paragraphs,
sections or exhibits shall refer to paragraphs or sections of this
Agreement or exhibits to this Agreement. The parties hereto acknowledge
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and agree that the recitals immediately following the preamble of this
Agreement are true and correct and are incorporated herein as a part of
this Agreement. This Agreement shall be binding upon the parties hereto.
IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first above written.
FUENTE INVESTMENT PARTNERSHIP
By: /S/ Carlos A. Fuente
---------------------------------------
Carlos A. Fuente, General Partner
"Fuente"
/S/ Robert G. Levin
---------------------------------------
Robert G. Levin, Individually
"Levin"
HCH ACQUISITION CORP.
BY: /S/ Robert G. Levin
---------------------------------------
Robert G. Levin, President
"HCH"
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